In the Guardian newspaper yesterday was a piece entitled ‘How George Osborne’s tough words on bonuses proved to be so much hot air‘. The article describes how, in spite of tough words when he was shadow chancellor, Osborne and the coalition government he represents have failed to impose any restrictions on banking sector bonuses.
The banks appear to have found this news entirely unsurprising. Indeed, one banking source is quoted as saying:
“All the banks have known for some time that as long as we do the necessary things – being prepared to lend and not saying anything silly – then the government wants us go ahead and be successful.”
Yet as recently as August 2009 Osborne said:
Large City bonuses should be outlawed in banks that have received any sort of government guarantee
“It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees… It must stop. “
So why the sudden change of heart now that he and his party are in government and therefore, in theory, in a position to act decisively on this issue?
The Simple truth is that, whatever his intentions, George Osborne cannot act. He is entirely prevented from doing so by the threat of job losses and capital flight.
Regular readers of this blog will recognise this as the phenomenon that undermines all modern politics – the threat of ‘first mover disadvantage’ that follows inevitably and inexorably from a system based entirely on destructive international competition.
This issue, then, shows just how dire the state of modern politics is and how necessary it is for the voters to take charge. This article highlights yet again the importance of Simpol and the Simultaneous Policy process as the only realistic mechanism for lasting positive change.