| • | Introduction |
| • | Banking Reform |
On 2 July 2010, Graham Watson wrote in an email that next week the European Parliament will vote vote on (among other things) the controversial new banking regulation proposals.
This was my response to him.
On the banking front, for what it's worth...
I don't want to cut down the banks' profit. I want to cut down the size of the sector.
Banking adds nothing to human happiness, so we should aim to build a society in which as little money as possible is spent on banking. It is a necessity of modern life, and should be treated as such. We need efficient banks like we need efficient sewerage disposal.
A strong financial services sector is not a sign of a healthy economy - it is a sign of an economy out of balance. Building an economy on the basis of a strong finance sector makes as much sense as building it on a trade in tulips. It works for as long as they stay in fashion.
A healthy economy must be based on goods and services which make peoples lives better. Complex financial regulations and products only benefit the people who can be paid to sell the products and help others negotiate the complexity we have created. We need food and homes; we don't actually need complex financial regulations, whatever the bankers may say.
Having lots of highly paid bankers seems to be good because of the strange way we calculate the health of our economy. It is equally as 'good' to have lots of people paid a lot of money to repair broken and crashed cars. But in the real world, it is much better not to spend money on repairing crashed cars, it is better not to crash the cars and spend it on food, houses or even entertainment instead. This argument is valid whether you are looking at human happiness, or CO2 production.
Changing the banking rules should not be a high priority for us at this stage. What we need to do is change the assumptions on which the rules are based. This obviously needs to be a phased strategy, and cannot all be implemented by the EU alone. But we can make a good start. And if the EU can gain a real economic benefit by reducing the size of our financial services industry, the rest of the world may choose to follow suit.
