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.
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The banks are at the center of this rising inequality and are utterly out of control with the FCA offering no more than polite wrist slaps and ‘loose-change’ fines. Social unrest, at some point, will arise and these people will be responsible for it. They rely on their murky world of leverage and money creation not being understood by the general public and being couched in a euphemistic language.
The University guide to recruitment states:
‘The financial services industry accounted for seven of the top 10 recruiters, as identified by students responding to the survey. PricewaterhouseCoopers recruited the second-largest number into graduate jobs (485), with Deloitte in third place with 445.’
This means being in the financial sector is now seen as the only ‘worthwhile’ career for many! Where are the moral quibbles?
As someone who worked at PWC in the 70s and 80s and was involved, in a limited way, in the student recruitment process, I must point out that, even all those years ago, they went to considerable lengths to recruit the “best” students and routinely hired in the region of 500 graduates a year.
I am in no way an apologist for the big accountancy firms but the fact is that the numbers of graduates they hire each year is very old news. I’d be far more interested in knowing who the other financial sector recruiters are – it seems to me that they must be banks – and how their annual intake has changed over the years.
As reprehensible as any of us might believe it is for students to choose the financial sector as the only “worthwhile” career option, I completely understand that, presented with an opportunity to actually be able to clear very significant student debt and/or own their own homes at some time in the not too distant future, many young people jump at the opportunity.
Let’s not blame students for exploiting opportunities many of us would have jumped at 30-40 years ago. They carry no responsibility for the sins of the financial sector, nor do many of them have, in my humble opinion, the life experience to understand fully what they’re getting into. For most of us, the moral quibbles develop as the years pass.