Archive for February, 2009

Waking up to money

Sunday, February 8th, 2009

Apart from the snow, the story of the past few days and probably for a few more will be the bonuses that banks are planning to pay their “top” executives. The people whose expertise was such that the banks had to be taken over by the state – virtually nationalized.

For years I Woke up with Money – that is, with the Radio 5 programme of that name which runs from 05.30 to 06.00 each weekday. Often there was news of the bonuses paid to the kings of financial jungle. Huge sums. Many of them earned more in a week than I do in a year and bonuses came in millions of pounds. Sir Fred Goodwin at RBS was “worth” 30 million or more, Andy Hornby “earned” 1.4 million. It was, in the end, rather depressing to hear daily about the rewards of these people whose annual salary alone would be about 20 times the average wage and whose bonuses allowed them to exist in an entirely different universe. Sir Fred apparently had a vicious management style which no-one dared challenge and about which former colleagues will only speak if they aren’t identified. How dangerous. Sir Fred may, in fact, have needed some care but when cushioned by more money than most people earn in a lifetime, I don’t suppose that worried him much.

What has changed of course is that Wake up to Money now reports the sad demise of businesses almost daily with the misery that brings to those involved . And I’ve noticed additions to our vocabulary developing alongside the huge financial slump. The wretched “quantative easing” (printing money) features almost daily – I heard it again this morning on the Andrew Marr show. On the same show I heard for the first time a reference to directors of “rescued institutions”. Rescued Institutions. I loved that. It made me think of rescue pets – poor abandoned creatures, thin and downcast with dirty, rank fur.

Actually, these poor victims of their own hubris and incompetence are far from that. I truly believe that many of the super wealthy still haven’t properly re-entered earth’s atmosphere. Protected as they are from the contempt with which so many people hold them they are still able to believe that they not only have earned these huge sums, eye watering by most people’s standards, but they are actually worth them. And worth even more. A bit more humility from those whose institutions had to be rescued wouldn’t go amiss – and now they might like to start thinking of themselves more as civil servants than the princes of Planet Plenty.

I’m reminded of another bit of financial vocabulary that I like. In the early days of my economics course, we discussed the purpose of business which is primarily to make a profit. Of course, no profit, no business. What about the small business I worked in as a partner when my children were small I asked. Almost no profit at all and only a small wage for my partner Gill and I; but we were able to stay in the workplace and in the market when we had the demands of small children. It allowed us to acquire the technology and marketing experience we could later use and kept us in the world beyond Thomas the Tank Engine, to everyone’s advantage. The sort of business like a corner shop where there is somewhere for the family to live above the shop, a job for the family members, a living wage for all and a place in the community. Yes, said my tutor, “we call it a sufficing business”.

That business was sufficient for Gill and I and an investment in both our futures. As Keynes so succinctly put it, “in the long run, we’re all dead” but maybe if more businesses and people had heard about sufficiency we might all enjoy the long run rather better than we are doing now. Sometimes enough can be enough.