Monday, 14 September 2009

Lefties and the crisis

One fairly common thought that seems to struck lefties over the past few months is why haven't we done better out of the financial crisis. So here a few of my own quick answers to why we continue to be in a mess.

1. We didn't predict the crisis. No we didn't. We talked a lot about turbo-capitalism, financialisation, hedge funds and private equity. Some of us said (and had been saying for a very long time) that this would 'inevitably' all end in tears. But I don't think there was consistent and coherent critique advanced that was widely articulated, and who on the Left was suggesting that the banks would be the focal point of any crisis?

2. Allied to the failure to predict has IMO been the the failure to apportion blame to the right people. You can see this misdiagnosis at work in the desire to put one over on hedge funds and private equity while the crisis still affords us the opportunity. Clearly there are reasonable criticisms that can be levelled at both groups (though the former is much more disparate than the latter) but neither was at the centre of what went wrong, and both have emerged less damaged than many of us expected. And just to reiterate: Madoff wasn't a hedge fund.

3. We have tended to underestimate/play down what has happened. Again there are lots of criticisms that could be aimed at our and other goverments' responses to the crisis, but let's not pretend that some reasonably significant shifts haven't occured. Regulatory intervention is very clearly back on the agenda (and if you believe the pitch of the Turner Review, the philosophy of regulation is fundamentally altered by recent events), in my bit of the world there are noticeable moves away from a market-driven shareholder-focused approach to governance towards regulation - ie the FSA getting more involved at BOFIs. We've got a higher tax rate for the highest paid that so many lefties wanted, and look at all the sound and fury around remuneration.

I'm not saying that more could not have been done, at that some of these things are a bit of a sideshow, but lefties do seem to adopt the default position that 'nothing' has changed because capitalism hasn't been abolished. And that message does filter out to the punters (btw there is the same problem with TUs constantly slagging Labour off for not doing enough, and then being surprised when TU members aren't enthusiastic Labour supporters come election time).

4. Lack of a coherent set of alternative ideas. Let's be honest, a lot of the Left's response to the crisis has consisted of variations on 'tax the rich' and 'regulate the rich'. It's often simply come across as vindictive. On one level this is understandable, but it only takes you so far, and certainly isn't any kind of programme that deserves public support. More broadly there's been a tendency to suggest 'obvious' solutions despite the lack of evidence that they would make any difference (reinstating Glass-Steagall, developing longer-term remuneration policies, 'tighter' regulation etc etc etc).

5. We have no preordained right to benefit politically from financial crises. End of.


Nick Drew said...

We didn't predict the crisis

Don't fret, you're in good company

I notice t'unions are determined to see my prediction chez vous of fighting in the streets come true

Tom Powdrill said...

Yes I was surprised to see my old boss quoting the Kaiser Chiefs...