Bob Diamond is typical of the private sector. He wants power but no responsibilityDeborah OrrGuardian
As victims go, the former head of Barclays, Bob Diamond, seems unlikely. He has resigned under terms that award him pounds 20m, carrying the can after his bank was found guilty of manipulating Libor interest rates over a period of years in the noughties. Diamond says he knew nothing about the long-running practice among his traders. He did, he says, know that the other banks were doing it, although he didn't think to check whether his own was at it, too. He was, he says, frustrated that his strenuous attempts at whistle-blowing on the other banks were ignored. Indeed, it is suggested, the people who should have been most keen to listen to his warnings, senior figures in the government and the Bank of England, were themselves issuing nods and winks to the banks, which bade them to manipulate the rate "in the public interest".
Wiser heads than mine have pointed out the implausibility of this scenario. Most implausible of all is the hilarious portrait of bankers hanging on every word of politicians and civil servants, eager to serve, and straining to pick up any tiny sign that the government might be expecting them illegally to massage their figures, even though such a thought would otherwise never enter their heads.
Because bankers just aren't that good at picking up signals from government, even straightforward ones delivered in the form of repeated, public pleas such as: "Lend more money to small businesses"; "Tackle your appalling bonus culture"; "Pay your taxes." In fact, banks seem marvellously able to do as they please, even when they have been bailed out by the state at breathtakingly massive public expense. The banks appear to have all the power in this abusive relationship, not the state. The banks have power without responsibility. The state has responsibility without power. This doesn't seem like a sensible way to arrange matters.
Yet, it's a pattern that emerges again and again. Very often, when a government complains that its bill for something or other is too high, it's because the state is subsidising market failure. Only last week, the coalition floated the idea of denying housing benefit to the under-25s, the group that is being hit most badly by post-crash unemployment, and also by the dearth of affordable housing. But the rising cost of housing benefit is a consequence, surely, of the private sector's failure to provide enough jobs paying a living wage, or enough affordable housing for rent or purchase. The private sector has all the power in both cases. The state has all the responsibility.
It seems plain that this state of affairs has pertained since the Conservative government elected in 1979 began its putative project of shrinking the state. By the time that government had lost power in 1997, state spending had increased, not decreased, as mass unemployment and social decay became a way of life across huge sections of the population, in the wake of selling off or shutting down nationalised industries. As for homelessness, or inadequate housing, it was a hellish problem by that time, and a baleful counterpoint to early promises that Britain was going to be transformed, through the right-to-buy scheme imposed on local councils, into a property-owning democracy.
After the housing crash of 1987, many property owners experienced a decade of paying high interest rates on their mortgages, as their homes slid into negative equity. The private sector repossessed the homes of owners who hadn't made their payments. The state paid for them to live in expensive but inadequate bed-and-breakfast accommodation.
Likewise, it's impossible to forget the dreadful condition of public services at the time of Tony Blair's election. Schools were crumbling as they delivered sometimes appallingly poor levels of educational attainment. Hospitals were frighteningly dingy and under-resourced, coping with giant waiting lists and regularly generating horror stories about vulnerable people left on trolleys in corridors for days. All this happened because the state was trying to shuck off its responsibilities and the private sector wasn't taking them on.
Conservatives may well condemn Blair and Brown for profligate spending. But what the Tories cannot deny is that when they were last in power, their neoliberal agenda left public services in a dreadful shambles. They cannot deny either, that they changed the political landscape, inspiring the Labour party to commit itself to a strange and hybrid form of neoliberalism even more deluded than their own.
Labour believed, or seemed to believe, that state responsibility was state power. They presided over a period of madness, during which private sector power without responsibility blossomed at an alarming rate - the boom - and the state heaped responsibility without power on to itself in the form of public-spending commitments. By the time the bust came and the banks needed bailing out, Brown rather gave the impression that he relished his opportunity to throw money at them.
Now, under the coalition, neoliberalism has entered a phase even more dangerous and insane than the Blair/Brown one. Having begun the process of divesting the state of power under Thatcher, literally all they have left to divest is responsibility. Their zeal in setting about achieving this Sisyphean task is something to behold. But every time they attempt to shift the boulder, it rolls back on them, in yet another U-turn. Up they bounce, stunningly unaware that the task is impossible.
And it is impossible, unfortunately. The state can only divest itself of responsibility by imposing responsibility on the private sector. But, of course, it has little power to do so. Anyway, the private sector is powerful enough to exercise its own implacable opposition to engagement in such an unappealing transaction.
It is perfectly happy for the state sector to supplement its low wages, stump up the shortfalls in its high rents, and offer subsistence to those that it doesn't employ. It grumbles at the way in which the state educates and trains its workforce and keeps that workforce in good health. It complains about the transport infrastructure, but does not wish to invest in improving it without a guarantee of a fast and generous return. It sees no contradiction, even, in leaving the state to remove the rubbish that is largely composed of its extravagant packaging.
It evades and avoids its taxes, because it has the power to do so, and it does not like the way in which the government goes about fulfilling its responsibilities. It says it wants a smaller state, but refuses to accept that the only way to do this is to place a pulley at the top of the hill and heave the boulder of responsibility towards it.
Bob Diamond is blatant in denial of his responsibilities. But it's important to remember that in this, he is typical.
An unlikely victim . . . Bob Diamond says that he 'knew nothing'