Has government become anti-business?


There is a lot of chatter around the place that somehow the government is becoming anti-business with the way it welcomed the de-knighting of Fred Goodwin and the pressure it put on RBS's board to slash Stephen Hester's bonus.

That doesn't feel quite right - not least because business is not some homogeneous collection of individuals and institutions, all of which have a common outlook and interest.

To state the obvious, the private sector is a great cacophony of entrepreneurs, bureaucrats, sales people, lenders, investors and so on - all of whom are perhaps united by the profit-motive, but not much else.

Also, many non-bankers would say that banks aren't proper businesses, in the sense that the big banks benefit from the kind of state protection that few other industries enjoy. Or to put it another way, the banks and bankers make a ton of money in the good years, and are bailed out by taxpayers when it all goes horribly wrong - because they are regarded as too central to the functioning of the economy to be allowed to fail.

Institutions where the rewards are not symmetrically matched by the potential for losses are not - most would say - proper private-sector institutions, especially when it's the state and taxpayers who pick up the bill for any reckless pursuit of short-term rewards.

So when bankers are bashed, few others in business or commerce fear they are in the line of fire.

If anything, business people are as cross with the bankers as the most militant member of the Occupy movement - partly because they don't believe the banks are providing adequate financial support to so-called "real" wealth creators and partly because they believe that bankers' shenanigans are bringing wealth creation into disrepute.

Even within the banking industry, there's a rich diversity of view. Current employees of RBS, struggling to rebuild a business desperately important to the UK's economic future, are not weeping about the mistering of Fred Goodwin, whom they blame for the mess they're trying to sort - though some are grumpy that their bonuses are shrivelling under the unforgiving glare of MPs.

So although it's tempting to read some great trend or revolution into the drama of a bonus sacrificed or a title wrenched back, that's almost certainly to overstate what's going on.

What these theatrical events show, probably, is that the rehabilitation of banks and bankers is work in progress that's become doubly difficult because of an economic malaise that many lay at their door.

But we all knew that, didn't we?

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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