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.
Banking Reform
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.