I chaired a session at the Just Banking conference at Edinburgh University last week. The speakers were good. The audience was intelligent. The panel answered their questions nicely. I was pleased.
Then afterwards a woman came up to me, and said that she wanted me to know that she had cancelled her subscription to this magazine. Why? Because we don’t write enough about how to help others. And there isn’t enough on ethical or community investing. She doesn’t want to invest in ‘ordinary’ companies. She wants to invest in those that do good and that do so locally. She also didn’t want to hear so much about making money: she wanted to help other people with her money.
I nodded, had a slug of wine and explained that our aim is to help our readers to grow and protect their wealth. It seems clear to us that one of the best ways to help the poor is not to be one of them. If you can establish your own financial security to the point where you will never be a burden to the rest of the nation’s taxpayers or to your children, you’ve already helped a whole load of people. If you want to help more – by giving to charity, or by volunteering, you can do so from a stable core. She nodded nicely, we agreed that perhaps she should find another magazine to read, and that was that.
But as I mulled this conversation over later I found myself getting increasingly irritated. It is nonsense to attribute ill will to all companies that don’t explicitly claim to be helping communities. Almost by definition companies help people. How? They give them jobs. They make things and provide services. They create the stability and growth that keep us all going. That’s the beauty of capitalism.
Bad apples? Of course there are. But the idea that the corporate world is inherently bad is childish. The same goes for the demonisation of finance. Yes, our system of financial capitalism needs to distribute its takings more fairly. And yes, it needs to be, as Robert Shiller puts it in his new book Finance and the Good Society, “expanded, democratised and humanised”.
But finance has also facilitated “some of our greatest achievements”. Finance is necessary for “managing the risks that enable society to transform creative impulses into vital products and services”. So while it makes sense to be angry about management pay and the dangerous incentives it creates, being hostile to finance as a whole is stupidly Luddite.
As for localism, I’m all for supporting local businesses. But let’s not forget that it is globalisation that has got us where we are today. Comparative advantage and the prosperity offered by mostly free trade have taken us to the point where we can have one of the greatest financial crises of all time and yet still all have TVs, cars, roofs and clothes. Let’s not knock it.