Very true. An entire country held hostage by a tiny proportion of workers deciding to go on strike. I can definitely see the argument that any private body with that kind of power has to have that power removed.
Did the bankers choose to simply turn off everyone's electricity in the evening? They aren't holding anyone hostage. They're just taking all the money they can get their hands on and we're choosing to hand it over.
They were in a position where all the ATMs and point of sale machines would stop (Chip-n-Pin is critical in the UK). The UK goverment was actually at the stage of considering whether it would have to implement emergency powers to prevent widespread civil unrest.
For a start of your talking retail banking rather than trading banking?
All deposits were guaranteed up to £25k which is now £100k. Why the hell would a high street bank profit from cutting of ATM or chip and pin? Do you know how much merchant fees are!
Quite the opposite they do everything they can to make people spend more. Granted they aren't lending money as easily as they used too, but that was what created the mess we were in before.
So you're assuming all high street banks are RBS? That the government wouldn't have been able to support the payment deposit scheme?
I think you're a little bit confused between retail and commercial banking. It was the latter which was bailed out, not the former. A collapse in it wouldn't have stopped ATMs working, but would have quite likely had dire consequences for the global economy and businesses, simple things like an airline hedging their fuel price would have suddenly turned into an airline losing their money (depending on the product bought it might just be a premium or a the whole lot). In that one simple example imagine the main airlines going bust, owing all the money for previously sold tickets etc. That is the kind of doomsday disaster a collapse of commercial banking could have lead too.
The ATMs would still be there, there just might be no cash in them due to hyperinflation and lack of consumer confidence. However the retail banks would do all they could to keep operating.
As for reading Alistair Darling's autobiography, I don't really get why I would, the guy didn't really get round to doing anything, but had been a cheerleader for the team that deregulated much of the commercial banking industry. People forget that all Thatcher did was to open it up to people outside of Eton, Brown's light touch and continued deregulation helped encourage it to grow and grow.
So the guy was only Chancellor of the Exchequer - what would he know?
If he says that the Government was worried that a collapse of RBS, HBOS and others might have led to the banking system ceasing to function in the UK then I'm inclined to believe him.
Is that what the bankers said? Is there some collective banker mafia who chose to destroy the economy because we didn't hand over protection money when they came calling? No.
They were greedy and incompetent and we let them do it. No holding hostage. No extortion. No protection rackets. Greed and incompetence and lack of oversight and deregulation.
This happens a lot in any industry that loses its relevance.
I grew up in Massachusetts. Cities like Lowell and Worcester are very depressed now because they lost what made them big - manufacturing. Should we have subsidized that industry despite it being overpriced and underperforming compared to its competitors? What about the horse and buggy industry when automobiles came around? The whaling industry once petroleum refineries started being built?
Those coal mines were outdated and inefficient. Unfortunately, the government subsidized them for far too long, which created dependence on them as well as the assurance that the jobs would always be there.
Sadly, there is displacement whenever there is a change. But it's far worse to cling to the status quo when it's blatantly impractical. We should be learning the opposite lesson from the hardship created by these mine closings - it's far better to bite the bullet and take the immediate effects than prop up an outdated system and finally get rid of it once it becomes too much to bear.
The change could have been done more smoothly. Or to put it another way, how could it have been worse?
I don't pretend to have a perfect solution, but going to some of the areas hit by this is really depressing. The towns may never have been flash to start with but visiting mines and talking to people there is not that different to talking to someone who is describing to you a war they were in.
Or to put it another way, how could it have been worse?
Easy. The coal mining industry could have continued existing for another thirty years, bringing huge losses each year, subsidized by the taxpayer. Like, say, in Poland, which is where you get your cheap labor from, and not the other way around, and the two facts are not entirely unrelated.
Head out to some of the Rust Belt states - New York. Pennsylvania, Ohio, and Indiana. You'll find towns that are just that - empty and gutted. There are cities that lost more than 80% of their manufacturing jobs in less than 10 years.
It was just the way of the future - the Southeast had lower labor costs, lower cost of land, and advantageous shipping arrangements. The cities just couldn't keep up, and they fell by the wayside.
And yes, it's pretty crappy to go to these cities and tell the people who are struggling there that their businesses deserved to go bankrupt or leave, but there's no other way to do it. The alternative is to subsidize them, and that ends up discouraging progress and also creating a culture of dependence on the government. After all, why invent new stuff if the government will increase the subsidy to keep up with your new manufacturing process?
Letting the free market purge badly competing industry is good for the country and also good for everyone in the long term.
I wouldn't call what Thatcher brought in 'free market' per se, although I dont think this is what you are saying. Many of the formerly nationalised companies that are now supposedly private depend heavily on state subsidies. Her implementation of change swapped one inefficiency for another while setting vast swaths of the country at loggerheads. Other countries have managed to implement painful change without the friction experienced in the UK. It's a sad period of history.
