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Laurie Penny: Don't be fooled by the Fred Goodwin sideshow

Gesture politics are good for only one thing: taking the edge off public outrage.

Bang goes the knighthood. Last week, one of the men most responsible for the financial crisis in Britain was stripped of his honorary title by the queen, following public outrage around the extravagant bonus that was due to be lavished upon his successor. The former Sir Fred Goodwin was chief executive of the Royal Bank of Scotland, which had to be bailed out by the British taxpayer and is still largely publicly owned. It is somewhat of an indictment on the limp, panting capitulation of the so-called opposition in Britain today that the confiscation of this meaningless imaginary trinket by the constitutional monarch actually looks like rebellion of a sort.

Every party has joined in the scrum for empty symbolic gestures to placate creeping public fury against bankers. The unfairness is terrifically difficult to spin: as disabled people and terminally ill cancer patients are threatened with pauperisation by the state, there are those at the top to whom the much vaunted "end of the something-for-nothing culture" seems by some margin not to apply. We are supposed to applaud meekly at this point. We are supposed to clap and be quiet as one or two of the best-reported travesties of financial feudalism are rectified in a manner likely to make little practical difference to the current and former chief executives of RBS, who remain fabulously wealthy men. Removing knighthoods from bank directors, of course, is no likelier to democratise contemporary capitalism than spending the winter in a tent city - like the Occupy protests, the trend is a portent rather than an agent of change. But what change?

Many liberal critics have grudgingly conceded that the removal of Fred Goodwin's knighthood and Stephen Hester's bonus are a step in the right direction. They are absolutely no such thing. They are a vacuous, cynical sideshow designed to distract attention from the fact that not a bloody thing is being done to rein in the power of the financial sector to do precisely whatever the hell it likes and force the global poor to pick up the tab. Away from the field of the symbolism Cameron and his Bullingdon bag-carriers have been lobbying hard at Davos against the proposed EU financial transactions tax, which might actually oblige actual banks to take slightly fewer crazy risks with other people's money. It's not much. It won't do anything to combat wage repression or the exploitation of workers on the breadline in Europe, and its sub-clauses make it laughably escapable for the larger multinationals, but it's a start - and our government is determined to stop it. It's okay, though, because Fred the Shred is no longer a knight of the realm.

Goodwin's humiliation is part of a broader cultural trend: the suggestion that the worst excesses of capitalism can be reined in by authoritarianism. You see it when the Archbishop of Canterbury suggests that bankers' bonuses and urban riots are equivalent symptoms of moral decline rather than of economic chaos - although they hardly come with equivalent penalties. You see it when the MP for Tottenham suggests that we'd have had fewer riots if only black and working-class youths had been beaten more thoroughly in childhood.

Free-market feudalism adapts to survive. Capitalism has always been able to neutralise its own discontents by absorbing them, and the politics of moral gesture are fast becoming a part of that process. There is an idea slowly growing in the public consciousness that Queen, country, duty, respect, faith and family can get us out of this fix. Removing a piece of royal frippery from a man who can do no more damage to our economy is part of this new code, the idea that fiscal ethics can be played out purely in the terrain of symbolism - although the young people serving jailtime for celebrating the August riots on Facebook could be forgiven for failing to see anything symbolic about their prison walls.

Gesture politics are good for only one thing: taking the edge off public outrage. Ultimately, walloping individual city workers is no more likely to make them behave than brutalising poor children is likely to keep them quiet the next time a young man is gunned down by police in inner London. All of this showmanship is about mood management - as if the entire country had been invited to go away and punch a pillow until we feel a bit calmer.

Gesture politics can give us a dirty thrill, but that's all they can do. We could insist that a tithe of bankers be sent every year to be publicly spanked with a traditional bristle birch in Hyde Park by a cohort of unemployed, low-waged and disabled people and indignant left-wing bloggers, and I'm sure we'd all feel a bit better about things, but at the end of the day they would still walk away rich and we would walk away poor. The idea that Britain is undergoing a moral rather than financial collapse - a moral collapse that can be rectified with selective public humiliation for the super-rich and beatings and prison for the rest of us - is not just deceptive. It's dangerous.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.