I have just noted what appears to be the systemic capacity of the banking system to be corrupt. Despite this Mark Carney, the new governor of the Bank of England last week predicted a bright future for UK banking – suggesting it would grow quickly so that its assets – now four times the size of UK GDP might be nine times the size of UK GDP by 2050.
My immediate reaction to this suggestion was that he was naive: this appears to embrace the normal fallacy of growth prediction by extrapolating what has happened without thinking about the constraints on it continuing. I dismissed the thinking as absurd as a result: I did not even blog on it.
Martin Wolf has not reacted in the way I did. He questions, quite rightly, the thinking at the core of this vision. As he has said in the FT this morning:
Is the future Mr Carney outlines good for the UK? Here, Mr Carney is right: the financial sector has become a crucial source of incomes and jobs. But this industry also generates instability and rising income inequality. At least, the UK needs to understand the implications of becoming a greater Hong Kong.
His answer is, of course, a very clear ‘no’. It’s worth reading his article in full.