unoriginalname38 – the blog of Dave Cole

Ken, the City and the Competition Commission

Disclaimer: this post was written on the bus, while under the influence and not all in one go, so if it's rubbish, that's why.

If only City had a hard 'C'...

London Lite (nothing else to read on the way home on the bus) reports that Ken Livingstone has called for any takeover of the London Stock Exchange to go before the Competition Commission as a special case because of its importance to the City of London and London as a whole.

I find this rather interesting; Ken, who was accused of being such a left-wing nutter that even Hugo Chavez thought of him as an electoral liability, is probably not a fan of the excesses of the City. Certainly, the rather large bonuses paid to people in the city is driving house price inflation in London to a large extent, quite apart from the inquity in some in the City earning quite spectacular sums of money while others clean toilets for the minimum wage.

It does, I think, show Ken as pragmatist, by which I do not mean an arch-compromiser. He is pragmatic here in three ways; for his own immediate political interests, for the interests of London and for 'the cause'.

I am not by any means knowledgable in finance and so on, but it seems that a lot of what goes on in the City - hedge funds, derivatives trading, private equity funds - makes people a lot of money without actually doing or creating anything. In the particular case of private equity funds, it strikes me as a means of having a public company without a lot of the regulation. This is not just the rantings of a leftie - the FSA are doing an investigation.

However, it does push money round the economy and raises an awful lot in tax, one way and another. While it would be desirable to do away with some of the more egregious examples of excess in the City, doing away with the whole kit and kaboodle by ramping up the regulations controlling these transactions would, I think, simply cause those transactions to move elsewhere, losing both revenue and regulatory oversight. Keeping the LSE owned in Britain and having a principle of not selling it to any Tom, Dick or Harriet helps protect this. At the same time, Ken, through things like pushing the living wage, does, I believe, help things. It would require global agreements and particularly the acquiesence of the US to make significant changes worldwide.

It does help London; as I said above, it is pragmatic in that it allows the government to, albeit slowly, push the agenda away from rampant capitalism, while not putting people off by seeming to threaten something that does make money. One of the cost-cutting measures private equity use is slashing wages to the bone (and less, if they could, than the minimum wage). By encouraging the living wage, the contrast when such a fund moves in is all the starker.

It does, of course, help Ken - interest in the City ameloriates some of the damage (not that much was done) of his trip to Cuba.

xD.

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