Remember who elected you

· by Steve · Read in about 5 min · (1055 Words)

I generally don’t have a lot of time for politicians. I’m of the opinion that a large number of those who actively pursue political power are also the ones least suitable to wield it, and that even the few that enter the halls of power with the best of ideals will have most of them eroded away within a few years, or be largely marginalised.

I live in a jurisdiction which has leaned towards a conservative approach to government for decades (our island has it’s own government, separate from the UK). Early on in life I just kind of assumed political conservatism was a normal, sensible approach that was probably for the best - after all I grew up during the Thatcher years. However, as I’ve matured and gained more life experience, I’ve become more liberal in my views and have come to realise that I disagree fundamentally with many aspects of traditional, right-wing conservatism. I’m far from a militant, banner-waving leftie, but I definitely have a greater sense of my own political opinion, rather than taking what other supposedly ‘knowledgeable’ people say on face value, and whilst I consider myself mostly in the centre ground, if I lean anywhere at all it’s slightly to the left.

I’ve talked about the banking crisis a little on this blog already, but this week it very much came home to roost in our little rock when Landsbanki Guernsey was taken into administration, a victim of the general meltdown in Icelandic financial affairs. I don’t have any money in Landsbanki thank goodness, but a lot of ordinary local people did, as well as many ex-pats. Now, banks are failing in other places too, but for the most part ordinary personal depositors have been protected in those circumstances, either through ad-hoc political guarantees (Ireland led the way here), or existing depositor protection schemes.  However, Guernsey has no depositors protection scheme, and no ability to make an ad-hoc guarantee since despite the huge amounts of money sloshing about in trust funds here, next to none of it generates tax revenue (only local people pay tax), which means that at least in theory, personal depositors stand to lose every penny of their life savings. These aren’t millionnaires, for the most part they’re ordinary people who have worked really hard for their nest egg. Now, they almost certainly won’t lose everything (although it’s very unlikely that they’ll get it all back I think) but the point is that they have absolutely no idea what to expect - the most they’ve had is wishy-washy attempts at calming their nerves from some politicians that frankly are worth less than the newspaper they’re printed in.

The fact is that uncertainty is to a large part responsible for the current financial mess, and a lack of a depositor protection scheme just adds to that. It’s incredible to think we’re one of the few places in the world not to have one of these schemes, despite supposedly being a ‘respected financial centre’ - the idea has been floated in the past, particularly after such collapses as Barnett Christie and BCCI in the 70s and 80s, but in the end nothing happened; the reason being that the banks didn’t much feel like setting up such a scheme, since it obviously has a cost implication for them. Our government, which has become utterly dependent on the financial industry, ultimately didn’t want to rock the boat and quietly let the issue drop. Their excuse for such negligence has been that ‘no-one could have predicted this crisis’ which even if we ignore the precedents already set by other collapsing banking institutions, is frankly entirely missing the point; it’s like saying that you’re not at fault for not taking out house insurance, because you couldn’t have predicted your house would catch fire. It’s drivel. The simple fact is they didn’t want to upset their industry backers, and just hoped that it wouldn’t happen again, despite historical evidence to suggest such things were an inevitability as cycles come and go.

Our government has for years now bowed to pretty much whatever the financial services industry wanted, in order to keep them happy. While the stance is completely understandable to a degree, some people (myself included) believe it’s been taken too far in recent years. A case in point is that our entire taxation system was changed this year solely in order to satisfy the needs of this sector; an enormous, costly and disruptive task which also now places the taxation system on a footing that requires considerable year-on-year local growth to avoid having to raise additional taxes from the common man. This was always a dubious gamble given that, as an island, we’re limited by land and population - clearly many members of financial sector lobbying groups couldn’t give a damn about whether they caused even more overpopulation and relative poverty problems, so long as they can keep the money rolling in. But now, with a protracted recession looking likely, these already rather optimistic growth targets look impossible, and that will ultimately require a ‘rethink’ - which is political speak for finding ways to raise more tax from everyday residents (since non-residents pay no tax no matter how much money they make through investments here).

Personally, I say it’s time to re-evaluate our priorities. Government is elected by regular people, and this is who they need to answer to first, not to lobby groups from particular industries. There have been years of decision making based on the premise that by keeping the rich (sorry, ‘high net worth individuals’) happy, the rest of the population will benefit from the trickle-down effect. That’s certainly true up to a point, but there is always a delicate balance to be maintained to avoid going from making sensible trade-offs for mutual benefit, to allowing bare-faced exploitation, and in my opinion at some point in the last few years we tipped over it. There seem to be a few politicians in our government that see this, but they are so far in the minority. Maybe when others have to face down members of the electorate who have lost their savings because of a decision that was made in the interests of industry rather than the people who gave them their jobs, it will start to finally dawn on them.