What The City should tell St Paul’s

Posted by RDN under Economic affairs / Politics & campaigns on 16 November 2011

The City faces a severe test from the sort of protest centred on St Paul’s. Whether it at last responds properly comes down to character, or its institutionalised cousin – professionalism.

The protestors are asking The City to explain itself, and (so far as this dedicated reader of the Financial Times can see) there’s been no reply. Where is The City’s answer to the question: Does The City do a good job?

The Big Question for The City
There are dozens of compelling questions, but we can cut our way through them by stressing that the overwhelming – the prior – question is: does The City produce sustainable finance?

This question is urgent, but also searching. The financial system has no merit – no chance of doing good, or of reform – if it collapses, is too volatile or can say little about the future.

So I agree that the Long Finance initiative is on the money when it asks: “When would we know our financial system is working?” The question has the merit both of ordering and of challenging subsidiary questions.

So the question is not whether The City is good for more obviously exciting things such as:

  • equity
  • the environment
  • resource sustainability
  • climate change
  • the Third World
  • work/life balance
  • gender equality
  • manufacturing vs services
  • philanthropy
  • its employees
  • fast growth.

 

People who ask The City about such questions have to prove their relevance to reliability. It’s that way round.

Getting a response from The City
The City is the trade association for the totality of its trades and professions. But is it one brand and one business? For all I know, different sectors of The City have profoundly differing interests. Some may thrive on financial catastrophe, for instance.

Even so, I long to see some body – Gresham College, Long Finance, the City’s Corporation, or anyone – making coherent arguments about what The City does, what its benefits – and yes, its tensions – are, and what it seeks from government. It can’t make those cases without first of all saying what it does well enough to need to be left alone, or encouraged, to do. Come to that, it will need to be clear about where it fails, and where it needs to be regulated.

The City cannot merely say it has been part of Britain’s economic success. Its history now includes its recent history which shows dramatic failure to be good at its job.

I can see that there is an argument for The City’s saying very little, for fear of exposing profound conflicts, uncertainties and even sheer nastiness. Better to muddle through and hope for the best.

I can see that some players may not like to make an issue about the incompetence or wickedness of the Square Mile for fear of its revenge.

If those gloomy thoughts are true, then what follows is wishful thinking.

I am, though, inclined to argue that The City’s Corporation is in some sense a professional body whose business is to align the pro bono with the capitalist.

This is importantly a matter of character: if The City was a person, what sort should it be? I imagine it should be ambitious, greedy, reliable, honest, frank. Such a person would seek the advantage of himself; his firm; his firm’s owners and investors and also – in some limited but limiting sense – society and even the future. Some of these are mutually exclusive or at least in tension, and some are unquantifiable.

But such a person would begin where Long Finance begins. He or she would ask: Am I stressing and exploring the importance of The City delivering returns for the longer term? The answer might be: I am contributing to the future by being short-termist. Or: I am contributing to sustainability by being a shark.

The point is: the question must be asked and answered by each City person and The City as a whole. And the proper replies and proper actions will only come from people of character: those prepared to be awkwardly decent and awkwardly frank.

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