Making companies act with integrity
It’s sometimes asserted that nationalisation of Northern Rock should be opposed because competition from a state owned bank would be unfair to the rest. But an effect on the rest is precisely what is needed.
The financial barrow boys who misled so many, abusing the integrity suggested by ‘Northern’ and the solidity implied by ‘Rock’, are not alone. NR is just an example of the unprincipled way in which private sector financial outfits now operate.
‘Competition’ has come to mean little more than competition for maximum profit by whatever means. These include misusing the loyalty of longstanding - usually elderly - savers by slipping them into derisory rates of interest and acting as an unconstituted cartel by holding back, in whole or in part, on reductions in bank rate and delaying responses to those who should benefit from changes up or down.
Creeping cartelisation is a feature of other so-called competitive industries too - witness power companies managing their latest price hikes. Regulators range from inadequate to useless and consumer groups complain into the ether but are powerless. Unmitigated ‘competition’, meaning little more than an economic free-for-all, is passing its sell by date.
But there is a way of making these and other industries heed the public interest and behave with integrity. If each of these sectors had a publicly owned firm acting as an exemplar, treating people in a respectful, honest and straightforward fashion rather than merely as profit fodder this would introduce competition that is worthwhile to society as a whole. It would offer security and fairness to ordinary people, presently suffering relentless abuse by commercial predators.
Whatever happens to NR, as I’ve suggested elsewhere in a Birmingham context there would be no better place to start than with the recreation of a Municipal Bank - in so far as the Government would still allow a fully fledged Municipal Bank to operate in a meaningful way.
