At the end of August, I wrote a column headlined – “2011, the year of global indignation“. I suggested that there was a global mood of anti-elite anger, linking outbreaks of popular protest in countries as different as Egypt, India, Chile, China, Israel, Greece and Spain. It is Spain and France that gave birth to the movement, known as the indignados (the indignant). I also wrote, however, that there was “one striking exception to the this pattern – the US.” Perhaps I spoke too soon. The arrest of more than 700 anti Wall Street protesters in New York - and the possibility that similar protests could spread to other cities in the US - means that the wave of global unrest has now arrived on America’s shores. The whole thing has a whiff of 1968 about it.
The tinder for such a development has been lying around for some time. Unlike in previous corporate scandals – such as Enron and Tyco – there have been no high-profile arrests, following the Wall Street crash of 2008. And yet the economic and fiscal consequences of the crash have been incomparably more severe. than the post dot.com scandals. That fact, plus the survival of the “bonus culture” in the big banks, has fed the public perception that Wall Street has “got away with it”.
I have been struck by the extent to which people in finance, “just don’t get it” (to use a nasty cliche). About a month ago, speaking to a group of bankers in London, I said that I was surprised that there had not been more of a public backlash against high finance, given the events of the last couple of years. My audience was horrified. “What, more!”, said one Italian banker. As far as they were concerned, they had already paid a high and unfair price, in the form of higher taxes and public odium. Just try admitting you are a banker at a dinner party, I was told. But rage on the streets is likely to feel a lot more uncomfortable than a frosty atmopshere at a dinner party.
The role of politicians in all this is interesting. I am sure Barack Obama will be accused of having stoked things up, with his call for higher taxes on “millionaires and billionaires”. If the European banks have to be bailed out, yet again – and their troubles spread to Wall Street – anti-financier rage will take on a new force. In Britain, meanwhile, I think it would become politically impossible for George Osborne to reduce the 50% top-rate of tax. I am sure it will make plenty of bankers think hard about a change of domicile. I have just returned from impeccably orderly Singapore – where the top tax-rate is 15%.
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