For years now we’ve been vilifying that banks. It’s easy to get an audience howling with rage if you say what dreadful people bankers are — and howling with approval if you propose punitive measures against them.
It is true that before and after the crisis, some banks did some very silly things. And they failed to anticipate how bad things would get, and how lending that seemed safe might go bad. But hands up anyone who did see how bad things would get. Not too many, I suspect. The misjudgement of the bankers was shared by most of us. It’s just that they were making bigger decisions than most of us, so the consequences were greater.
As I have often written, the seeds of the crisis go back to mistakes by politicians (Bill Clinton and even Jimmy Carter, who wanted home ownership for Americans who couldn’t afford mortgage repayments) and Central Bankers like Alan Greenspan, who kept interest rates too low for too long, and said that asset bubbles would resolve themselves. So they did, and we’re living with the consequences.
Meantime we’re asking banks to do totally incompatible things, like increasing lending to small businesses while at the same time building their balance sheets and lending more responsibly. Oh, and paying back government/taxpayer loans into the bargain.
We need to ask whether our righteous indignation is killing the goose that lays the golden eggs. Financial services remain a major strand of UK PLC, and we need to remember that if we make life miserable for bankers, and treat them like public enemies, they can go elsewhere, and we shall all be the poorer.
Now attention is turning to the tax paid by international corporations. John Sentamu, no less, the Archbishop of York, has said that those who (legally) minimise their tax liability are “morally bankrupt”, and has suggested that they are little better than criminals. I wonder whether the good Bishop has any ISAs, or perhaps a pension fund? Both ISAs and pension funds are tax avoidance devices, and a great number of people use them. Are all these people “morally bankrupt”? Is the Archbishop morally bankrupt?
Now the debate turns to the taxes paid by international corporations. Vodafone is the latest in the frame. I was watching Sky News this morning (June 8th) and they had the most wonderfully ignorant conversation about Vodafone. We heard that Vodafone had paid no tax on £5 billion of “earnings” (they meant revenue). Shock horror.
But Vodafone has invested massively in UK infrastructure (which is a great benefit to the UK economy), and of course they can offset some of that investment against tax. At the same time, Vodafone has contributed £523 million to the Exchequer in indirect taxes like National Insurance, and invested £700 million + in infrastructure and 3G licences. It spent £8 billion on UK staff (who presumably pay tax).
So. Here is a company which builds vital infrastructure, employs a great number of people, invests in UK licences, pays large NI bills to the Exchequer, and is fully compliant with UK tax law. They deserve a big Thank You from all of us.
We are damaging our economy with our perverse attacks on major industries. We’re hanging up a sign that reads “Britain: Closed for Business”. We’d better watch out. International corporations may just take us at our word.