[R-G] `1979 Moment' for Casino Capitalism

[Richard Menec]

<http://www.ft.com/cms/s/0/255b23b2-909e-11dd-8abb-0000779fd18c.html>

Financial Times                     October 2, 2008

`1979 Moment' for Casino Capitalism

By John Monks

At its congress in Seville in 2007, the European Trade Union Confederation
resolved to expose 'casino capitalism' and short-termism and press for them
to be fought by taxation, regulation and worker involvement. Now, as the
subprime crisis unravels around the world, casino capitalism has exposed
itself. Everyone is learning that a powerful financial sector has crowded
out other industries and made the economy dependent on short-term, fast
buck-making deals that are rarely in the interest of sustainable business or
improved long- term growth.

Today's dark economic reality has exposed the financial world's claims to
have increased world liquidity and reduced investment risk. Decision-making
has centred on personal enrichment and even now, with honourable exceptions,
most of those responsible have ensured that they will not be the ones to
suffer the consequences.

There is absolutely no evidence that these huge fortunes have been linked to
record levels of company or business performance. Top business leaders have
grabbed a larger share of the cake themselves. The 'trickle down' effect
peters out very quickly as you descend the income ladder. The share of wages
and salaries in national income in many countries has fallen sharply in the
past 30 years while the already affluent are taking larger shares of the
slice that goes to wages and salaries.

This is not a story of trade union success. We have not been able to prevent
this transfer of money from the ordinary to the very affluent. We have, in
Europe at least (but not in the US), generally improved average living
standards. But we are losing the equality battle. Now is the time to expose
the titans of the world based in New York, London and other major financial
centres, who have patronised us with the message that there is no
alternative to a world run by Goldman Sachs and the others.

To express even mild doubts about the way the system was developing was to
invite, from City of London financiers and leading UK ministers alike, the
accusation of being incorrigibly Old Labour. To question executive pay in
Wall Street and the City invited the accusation of stirring the politics of
envy. An excellent Trades Union Congress paper answers these points and
exposes the Bourbon-style carelessness about others that was on display in
City boardrooms and trading floors.

But make no mistake, just as 1979 was a turning point for British trade
unions when the accusations of over- mighty unions stuck in the public mind
to devastating political effect, so will 2008 be seen as a turning point for
those in the banking system who have contributed to the present mess.

In the London declaration on the crisis, issued by European trade union
leaders last weekend, we are urging that publicly funded bail-outs should
carry with them public influence and, if necessary, control. We want banks
to have higher capital requirements and we must end the 'off balance sheet
practices' that developed to avoid regulation and tax. How was that allowed
to happen by the authorities? We are calling, too, for a European-level
response to be developed urgently before national rescue plans such as the
one announced in Ireland become 'beggar thy neighbour' schemes.