Bankers, bonuses and brains

by Mike Marqusee
(published in The Hindu, 24 October, 2010
At a fringe meeting at last month's Conservative party conference, one of the sp
eakers began a defence of British bankers' bonuses (£7 billion this year) by obser
ving that “When God gave out brains, he didn't give them all out equally, and so w
e have to live in an unequal society."
The speaker in question was Stuart Fraser, a multi-millionaire stockbroker and l
eading light in the City of London Corporation, which governs the “square mile” of t
he financial district as an autonomous enclave within but separate from the Grea
ter London Authority. It runs its own police force and controls its own very con
siderable assets (including Hampstead Heath and Highgate Wood, far from the City
's borders). Successive local government reforms pursued by administrations of a
ll political hues have left the City's peculiarities and prerogatives intact. Un
iquely its electorate is made up not only of the 9,000 residents but of another
24,000 for whom it is a place of business, among them a substantial number of th
e nation's wealthiest people. These are the people who elected Fraser and for wh
om it is his job to speak.
Back in June 2008, Fraser described the gathering financial storm as a "phoney c
risis". But that's not the only reason to wonder – if we are to accept Fraser's co
arse terminology – where he was “when God gave out brains”. Can he really believe that
the distribution of wealth corresponds to the distribution of intelligence? Doe
s he think that FTSE-100 chief executives – whose average reward last year was £3.2
million – are 741 times more intelligent than people living on a state pension and
277 more intelligent that those living on the minimum wage? Does he think that
the richest 45,000 people, the 0.1% of the population who control one third of t
he country's liquid assets, also possess one third of its collective intelligenc
e?
Probably not. In the end Fraser's comment is another illustration of one of the
very few constants in human history: the beneficiaries of the social hierarchy a
lways believe they are where they are by right – whether derived from God, heredit
y, hard work or “brains”. They believe they are entitled to their wealth and power,
and that this wealth and power reflects their own superiority. In order to susta
in this illusion, to bolster their sense of entitlement, they'll buy into any th
eory and disregard any fact.
Fraser, like many others who consider themselves blessed with it, treats human i
ntelligence as a uniform commodity that is “given out” in measurable quantities. But
surely it's clear that this protean capacity has many and varied manifestations
and always exists, in any individual, in partial, selective forms. The world is
not divided between the “brainy” (or as the Americans say the “smart”) and the “stupid”. T
ere is no “intelligent” person who is not capable of the gravest stupidity.
One result of thirty years of neo-liberalism is the a widespread assumption that
if you're unhappy dominating or exploiting your fellow human beings it must be
because you're stupid or incapable. Since, according to Fraser, we are unequal e
conomically because we are unequal intellectually, it follows that the only reas
on for failing to make tons of money is intellectual inadequacy.
The bonus-driven banking praised by Fraser was a critical factor in driving the
world into recession. In repackaging bad debts with good ones, the bankers aimed
to make something out of nothing, value not from investment, jobs or innovation
but from sleight-of-hand. The toxic debt spread through the larger system, lead
ing to a credit crunch and recession, which in turn led to deficit growth and th
e current attack on public spending. And yet there is no accountability. Billion
s in bonuses were paid and never returned, regardless of the long-term unsoundne
ss of the deals that secured the bonuses. The government bail-out ensured that b
ankers' salaries and pensions were protected. Of all those who had a hand in cre
ating the financial crisis, not one has suffered a meaningful fall in his living
standard because of it. The same cannot be said for the far greater numbers who
neither promoted nor benefited from unregulated speculative accumulation but wh
o have paid for it with jobs, wages and now vast reductions in social support. I
t's often argued that those who take the greatest “risk” deserve the greatest reward
. But as we've seen in recent years, the rich use their wealth and political clo
ut to ensure they do not pay for their mistakes: the burden is shifted on to the
wider public.
That is what is happening now in Britain. In order to shave some £85 billion off t
he deficit in the coming four years, the government is proposing unprecedented c
uts in public spending, accompanied by reorganisation in the provision of health
, education and housing that will exacerbate inequalities and further segregate
the rich from the rest.
£850 billion was found to bail-out the banks. But we're told that health spending
will have to shrink by some £20 billion (close to 20%) in the next four years. Ove
r the same period, corporation tax will be cut by 4%, bankers will award themsel
ves about £35 billion in bonuses, and through tax evasion and avoidance, the rich
will withdraw some £280 billion from the public purse. Any proposals to ensure tha
t the rich pay something closer to a fair share in tax or that bonus-driven bank
ing be restrained are met by Fraser, in his role as mouthpiece for the City, wit
h threats to pull out of the country and feeble arguments like the one he tried
out at the Conservative fringe meeting. It seems that what's required for succes
s in Fraser's world is not so much “brains” as indifference to the consequences of o
ne's actions for other people.
Now the financial institutions whose solvency was propped up by government threa
ten Britain and other countries with a downgrading of their credit ratings shoul
d they fail to implement public spending cuts and privatisations. The result of
these policies, should they run their course, will be that the top 20% will acqu
ire control of a larger portion of national wealth while the bottom 50% lose out
. I'm sure there will be no shortage of “intelligent” people telling us why this is
the natural order of things.
Many of those who glide through our institutions and media with the halo of inte
lligence owe their success to a determined lack of imagination. The capacity for
glibness, the ability to regurgitate received wisdom is not the same as an abil
ity to analyse, discriminate or innovate. The higher stupidity of the rich is no
t a reflection of anyone's innate intellectual capacity or lack of it but of a b
lunt insensitivity to the wider human environment.