Tuesday, 10 July 2012

Banks, Free Markets and Hilaire Belloc's Ideas

Just listening to The Spectator podcast and they are defending the free market viz the banking crisis.

I thought Daniel Hamman MEP made a good point on (Radio 4's) Any Questions when he said the bank bail-out was against the Free Market. As a Free Marketeer he believed banks should be allowed to go bust, shareholders (not taxpayers) should take the hit, was his take on it.

Then we had Ed Miliband this week saying banks should not be about profits at the expense of people, rather they should be promoting the Common Good.

I have some sympathy with that viewpoint.

I know banks have to make a profit (though some might argue they could be not for profit enterprises) but why does it have to be billions and billions more via screwing customers.

Take credit cards and mortgages as an example. Most people have them. Yet at a time when the base rate is 0.5% the banks make over 100% profit on mortgages and charge circa 29% on most credit cards.

Like Hilaire Belloc, the great Catholic writer and radical MP, I do not believe in the Free Market(FM). FM basically means the profiteers make the rules and the customer tends to suffer.

Today, for example, if the politicians weren't bankrolled by banks and The City (the last secretary to the Cabinet left to work in a bank, the current one is an ex-banker - and think of all the Blair ministers who went on to get bank stipends), we might expect them to protect 'the people' struggling at this time via limiting percentages on cards mortgages etc; e.g. 10% above the base rate-- still a very healthy guaranteed profit! Not to mention the scandalous rates of loan companies.

But a business sector that employs so many ex MPs, PMs and Chancellors clearly has too much power over the political class (much more than Leveson is glimpsing viz the Murdoch Empire, and of greater impact on the average man's income etc.)

To deconstruct the FM idea just imagine a small town's market. Let it run its own affairs. A rich man (let's call him Mr Tesco) will sell items cheaply, undercutting all others. He can afford to lose money for a few years (hiding his losses in mega profits in his other businesses).

Then after two years most competition has folded, shut down, gone bust etc. he can then buy up their stalls, put up his prices, cut the quality of his stock and so control the market to a large extent, and then start to bully the suppliers who really have to go through him if they wish to sell serious volumes of their product.

That is what FM delivers. It favours the rich, the bullies, the cheats, the shysters...

If you believe in the Common Good, fair trade, choice in goods and suppliers, then a market must have rules.

Of course Socialists argue that the market should be owned by the State and all profits go to the State and you end up with grey monotony, the Party cherry picking the best, and a rampant black market (and queues for bread).

Like Belloc, Catholics and all men of goodwill should IMHO say no to the FM and State control. The Catholic answer is the traditional 'English' answer - a nation of shopkeepers!

No FM, controls in place for the Common Good, limits on bank charges, help for small businesses and localism. This also fits the current 'green' agenda.

There could also be huge drops in business rates to encourage start-up small businesses and many other inventive initiatives to get the country back on its feet.

I also think the govt should limit profits (by percentage) on utilities, leaving them with healthy profits, but freeing peoples' wages to spend in local shops and not just to a handful of big businesses - but then Belloc also argued that large national companies (e.g. railways) should be made into co-ops. This in turn would make more money available to local high streets, markets etc.

Better wages for the working man (promoted by various popes) also means more money spent in local shops.

There are answers to the mess we are in, whether the banks, the media, the economy, the high street, home ownership, etc. -- and if Catholics read more of what Belloc, and those around him, espoused as Common Sense practical answers for the Common Good, then we might use our influence, contacts, and networks to start arguing this case, showing that there is hope and stopping the bankers and their chums stitching us all up for another 100 years.

Just a thought.

1 comment:

  1. I agree with your ideas here, but what of the larger utilities and the industries which are too large to split up? What do you think of an economic approach mixing elements of Distributism, Guild Socialism and Syndicalism?


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