Darling’s Dilemma

(z) Zoonabar

Alistair Darling must be confused this morning. Having thrown a strop at Nicolas Sarkozy’s decision to appoint Michel Barnier as EU commissioner for the Single Market, he cited the fact that the city must be protected, lest we lose our talented bankers to more prosperous environments.

Yet today, he appears to be doing precisely the opposite – stifling bankers’ pay at the Royal Bank of Scotland. The difference is that RBS are majority owned by us, but they still need to attract the best bankers to be successful. So doesn’t Darling’s approach appear contradictory?

It might not be too far fetched to wonder whether our benevolent Chancellor is taking the opportunity to be politically, rather than financially expedient, but it did leave me wondering – which side of the coin should we settle on? Restricting bankers’ pay because it is the moral thing to do, or encouraging them to prosper so that we may have a larger slice of the world’s financial cake?

As a realist-idealist, I find this question particularly difficult. On the one hand, it seems as though the principle the bankers seek to be applied is that one should be free to make the most of his or her talents, and subsequently, profit from those talents. Yet this logic appears faulty, when it is evident that bankers are immune from failure. Surely a system where one is able to be free to be all they can be, should not only reward the successful, but punish the failures. These bonuses are still rewards for failure, and RBS will be a banking failure until they have paid the taxpayer back with interest.

Yet of course if we punish the banks’ collective failure, we punish ourselves indirectly. The best bankers will flee to the bigger banks, those which are not taxpayer controlled. Subsequently RBS will be less successful, we won’t make our money back (as quickly, at least) and it will be longer until taxes can fall. Meanwhile, Britain’s position as the financial epicenter of Europe will be at risk, and our leading talents will flee to the Far East.

So I will infer Darwinism in order to come to a logical conclusion. If we go with the second option – financial expedience – we are saying that money is the most important thing. We are putting our cards on the table, and showing that what we really care about, is money. It will be a slap on the back for our good friend capitalism, that system which relies on one person’s increased wealth coming about as the result of another’s depreciating assets.

And whilst I am very grateful to capitalism for all it has done, it appears that it is a flawed system.  Of course, to give it some credit, it has proven far more effective than any other system the world has seen. Let’s not be ungrateful to capitalism.

At the same time, capitalism is inherently ungrateful itself. It destroys the very things that keep it sustained; it relies on harvesting resources with only short term intentions, thus causing an ecological and resource time bomb. It places disproportionate pressure on the working classes whose support is essential to the capitalist model. These are the people whose money fosters excessive luxuries for the rich and bail out the poor and unemployed. The system squeezes the resources of its most vital class group. In short, capitalism has done a lot for us; but it does more for the more selfish and financially motivated.

Yes, this is human nature. My position on this is one of a traditional Conservative – humans are fundamentally selfish by nature. But once humans were barbaric by nature. We aren’t today. Human nature has over time, improved significantly. Darwin’s logic dictates that a woman choosing a partner looks for key qualities – the ability to look after her, but also, emotional support. As such, human nature naturally becomes better as time goes on. And whilst Capitalism is currently the best system, because of the fact that humans are currently a selfish race by nature, that is subject to change.

And for Britain, we can help proliferate that change, if we create an environment in which those who seek riches above all can’t prosper. If we fail to do this, we risk alienating those who care more about society, whilst encouraging those whose concern is with their wallet. To be quite blunt and to invoke Darwin, if we alienate the rich and cause bankers to flee abroad, good. If the RBS board want to resign – good. We should be proud to promote a system based primarily on decency, rather than greed.