From
Guardian today:
Lord Turner, a former director general of the CBI, attacked the current head of the employers' body for refusing to concede that parts of the City were "socially useless".
Wow! Former director of the CBI (very pro-free market UK lobby organisation) criticising the current head, something I've not seen before.
Now chairman of the Financial Services Authority, Turner criticised CBI director general Richard Lambert for arguing that politicians or regulators should not decide what parts of society are useful.
Ah, now that's more like the CBI we love to hate - rabid pro-business, 'free-market' ideology.
Turner has argued that "socially useless" parts of the City could be restrained by a Tobin tax on transactions. He admitted at the CBI conference that as head of the CBI in the late 1990s he had argued for market liberalisation and labour market flexibility. But "markets are not always wise".
This is interesting because the business community and especially 'the city' has been long against the Tobin tax or any other kind of restriction, regulation or tax incentive. It is also a break with the orthodoxy of the last 20 years that has claimed markets are always inherently wise and seeking equilibrium (if only the Government would step out of the way so the argument goes)
As he declared that the UK economy was now stabilising after a "forceful and appropriate policy response", he said it was important to analyse what had gone wrong. Banks had been allowed to operate with too much leverage, and financial innovation hid some of that leverage. Now they needed to hold more capital.
Again, criticism of the banking community, previously almost unheard of, perhaps coming as a result of the fact that much of the UK banking sector has been effectively nationalised following the financial crisis.
"But a debate about the economic value of the financial system should not focus solely on challenging potentially negative aspects of the pre-crisis financial system." Instead it should look at the "positive functions" provided by banks – savings, credit, and allocating capital to efficient use.
What? We're having a debate about the economic value of the financial system? Wow, things must be bad. Seems like business is on the defensive which may mean there are now serious cracks in the hegemony of free-market business knows best ideology for the first time in a long time. We'll see how long that lasts though ....
