As has been noted by the media, many people do not like the fact that bankers earn a lot. These people are made aware of the large earnings and the discontent over it by, of course, the media. Over the past few weeks the tales of two men who work or worked for RBS has dominated the news. The obsession for personalisation and scapegoats means the tales of two men who work or worked for RBS seemingly gets more attention than other more worthy ‘progressive’ stories: tax evasion, rising inequality, the Eurozone crisis and so on.
To blame the bankers for the financial crisis is useful for many parties. It allows the Left to criticise wealth and the financial services; the Right to claim there is no overall problem with capitalism, just with one industry for a few years; the tabloids to get into their favourite self-rifghteous mode; and the politicians and the public to find someone to blame, arguably to shirk responsibility for their own part in the disaster.
The decision by Stephen Hester to forgo his bonus is the right one, and Fred Goodwin does not deserve a knighthood. However, the way in which both events happened does not exactly make things ‘fairer’. It is not justified to single out two individuals and lump on them every criticism of the banking sector. Hester is actually regarded to have done a good job in rescuing RBS (a point made by Alastair Darling in today’s Times). Taking away Goodwin’s knighthood in such an arbitary manner – barely any process has been undertaken to determine that he does not service a knighthood for ‘services for banking’, even if everyone knows it – further undermines the honours system. It becomes (some would say continues to be) a cheap political tool and personality contest.
It is also true to say that neither action will have many wider consequences. Making Hester’s pay lower does not make other executives’ pay lower or change boardroom culture. It makes the job of leading a government-owned organisation less attractive to the most skilled people, especially due to the media scrutiny. Why punish the bank we own and therefore will hopefully profit from, for the sake of about 1.6p per taxpayer? As for Goodwin, taking away his knighthood does not amount to any sort of banking reform, such as introducing the Financial Transactions Tax or encourage an end to short-termism.
In essence, this is symbolism, but whether it is a symbol of anything meaningful and positive is doubtful.