by Dan McCurry
I grew up in the east end after the docks had died. We used to go fishing for eels in the place that is now called Canary Wharf, although it wasn’t called anything back then. These days, when I look out of the kitchen window of my ex-council flat in Bow, this is what I see. Beautiful, isn’t it?
So when people say that there is no drip down effect from financial services, I don’t understand what they mean. If there is no drip down, then who is paying for those windows to be cleaned? For those computers to be maintained? For the sandwiches to be made and payroll to be calculated?
Are they honestly saying that behind every window in that glittering 3-dimensional city, is a bonus-earning banker, and no one else? I’d say that only one in a hundred windows has a banker, and the others are ordinary people doing ordinary jobs. Those jobs are derived from the wealth created by financial services?
The City hasn’t ended (wiped out) poverty, and maybe that’s what they mean, but no other industrial sector would do that. They may also be arguing that the City has contributed to inequality, due to the very high pay of the few. That is a legitimate point, but it’s not the same argument as “no drip-down effect”. Regardless of this, the people in the City who occupy the lower rungs are highly unionised and are usually paid well. This is an obvious asset to our country.
We’ve heard a lot of talk about re-balancing lately, but I haven’t seen any new industry emerge to replace the business inside these towers. There is no great march of the makers. Although we do need to create space for other sectors to flourish, it doesn’t follow that we have to destroy finance in order to achieve that.
The reason we have a large financial services sector is mostly due to our location. 300 years ago the first globalisation occurred in the age of empire. Is it a coincidence that the centre of world finance is located in exactly the same place as those historic merchants and seamen? 300 years ago, the world was globalised by wind in sails, today it is binary code in fibre optic cables, but the effect is still the same. We are the geographical centre of the Earth, and that is our advantage.
In the Labour party, we have a constant stream of analysis about how we can copy the Germans to make our economy more like them. Are you aware that the Latvians are also having that same conversation? Also the poles and the Chinese. Everyone in the world wants to mimic the German economy. Do policy makers in the Labour party think it is a good idea to try to enter that same crowded space?
We have this industry because we have a comparative advantage over our neighbours. Our location, our language, our history. To reject these advantages without a clear alternative would be foolish.
Why would we fight with our weaknesses when we can deploy out strengths? Why copy when we can innovate? Why would we dismiss our winner without having anyone else in the race?
When Blair was criticising the party a few weeks ago, he said that we should do more than be a “repository for people’s anger”. He’s got a point, because I don’t think that all our banker bashing earned us a single vote in the recent elections. Slagging off the city has been a huge great big waste of time. Unless people had fun doing it, but that’s a different thing.
The towers that I see when I look from my kitchen windows contain the industry that pays for our schools and hospitals. We should appreciate that industry not run it down. If we are to have an industrial policy then it should include financial services.
Dan McCurry is a Labour activist who blogs here
Tags: Canary Wharf, City of London, Dan McCurry, re-balancing the economy
There is no great march of the makers
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Here’s why.
I was looking at buying a CNC machine to make prototypes.
1. Shipping cost
2. VAT on the shipping cost
3. Insurance for shipping
4. Tax on the insurance
5. VAT on the insurance
6 VAT on the tax on the insurance
7. Customs duty
8. VAT on the customs duty – another tax on a tax
9. Fees for clearing customs.
…
That’s without getting started on the costs of employing someone, with taxes on creating a job.
So, instead, its going to be outsourced to China.
The city can be divided into Four different things business (big and small) the financial centre and the civil sevice and the media, as there’s a growing feeling among the centre left that we should leave the EU and, the EU seems to be dominated by finance, if we did leave we’d loose our palce as the financial capital, but that’s not a bad thing, the first thing, that business is run there is certainly something That Labour should try to encourage, as for the civil service reputation and our relations with it, maybe we went to far with that,
Dan you have demonstrated your lack of understanding of the city.
Wealth created by financial services, the city is a parasite that imposes huge costs on the British economy.
How many billion did the city cost in 2008 (hint half a trillion is the right ball park, nine zeros). How many sandwiches is that ?
The city is a mechanism to give huge salaries to the children of the rich and privileged.
Bashing the bankers might produce an economy not based on rising house prices with regular crashes, and facilitating a few live like Saudi Royal Princes at the expense of the rest of the economy.
Despite been mercantalist the German economy works better for the German people, not something you can say of the city.
The industry you see from your window is a huge vampire squid on the face of the British economy. We would be richer without it.
Bill for ‘The City’ peaks at One Trillion in 2009
http://www.guardian.co.uk/news/datablog/2011/nov/12/bank-bailouts-uk-credit-crunch
What a a complete fool.
…because I don’t think that all our banker bashing earned us a single vote in the recent elections.
I wonder how many votes being nice to the bankers is worth?
Dan
For once I will agree with everything you have written, which is a first for me.
The financial services industry is a huge contributor to the UK employment figures and generates huge tax revenues for the treasury. We should be defending it from idiots within the EU who want to tax it for their own ends and destroy our dominance. Would Germany let the EU impose some Robin Hood tax on the car industry – absolutely not!!
The simpletons who equate bankers with something bad do our country an injustice. The root cause of the financial meltdown was US government policy and pressurising the financial industry to solve a political problem of the US housing market. This meant giving mortgages to those who could not afford to pay through “creative ” financial arrangements and then selling on the debt. The was done with the full knowledge of the politicos in Washington and banks worldwide were sucked into this. Of course this exposed institutions to severe risk and when liquidity dried up as the large banks withdrew lending to the smaller institutions it set in motion a train of events that culminated in the bank bailouts.
Labours continued “banker bashing” is petty and ridiculous and should stop immediately – the public are tired of it so its time to move on. It’s worth noting of course that the tax generated by London and the south east is spread across the Uk as a whole.
We do need to rebalance our economy though so as not to be too reliant on financial services and the government need to be more creative in this area. They have to go further than just tinkering around the edges and be more proactive with policies in the manufacturing sector and encourage global companies to invest in UK facilities.
This of course means lefties have to stop whinging on about tax.