The front pages in the UK this week are a-spread with the news of record profits at Barclays Bank, with accompanying bonuses for top bankers. This echoes last week’s story at Goldman Sachs. Given the recent bailouts and government support, the Economist is right to note that ‘such largesse looks cheeky at best’!
Although the two crises have little in common, this obstinate reminder of how little has changed in the financial sector prompts me to deeper pessimism in the environmental crisis.
Why? We’re perhaps only a year into, and most certainly nowhere near out of, the greatest economic crisis in living memory. Many people are still in the thick of it, as witnessed, for example, by record unemployment levels on both sides of the Atlantic. Yet it seems that we are incapable of learning, or changing in the face of significant crisis.
The potted history goes something like this – the potential to earn ever-greater salaries prompts a spiraling risk appetite amongst poorly regulated bankers. Remuneration is paired to their gains, with little downside or effective regulation. This is compounded by an arrogant (and subsequently proven) assumption that (most) banks can’t be allowed to fail. Given the almost unlimited up and limited down, everyone jumps on the bandwagon to make as much money as possible, regardless of the underlying wisdom. After all, it would contradict the sector’s basic principles for bankers to have acted any other way.
Then, despite warnings from many of the wisest, assets underpinning the façade devalue, causing the foundations to erode. In order to prevent massive economic subsidence, governments are forced to step in to shore up our economies and promise to regulate to prevent this ever happening again. Although some of the oldest and strongest houses come tumbling down, it seems we’ve done enough to avert the worst of the storm – and we begin the slow process of rebuilding confidence and trust.
Yet a mere few months have passed since millions of taxpayer dollars/pounds have been pumped into the financial sector to avert disaster, banks are totting up record profits and paying record salaries. And so, despite government promises it would not, the process begins again.
Now, I’m normally not one to be pessimistic. Quite the opposite, as I hope this previous article of mine indicates. I’m also not one to be overly jealous when bankers are earning 7-figure sums if they are deserved, or wallow in schadenfreude when they come a tumbling down. But I find it hugely alarming to see history repeating itself so swiftly and so unashamedly, especially when so many of us have suffered so directly and so recently.
Which makes me all the more pessimistic about our ability to deal with climate change or other aspects of the environmental crisis. After all, how can we ever expect to deal with a crisis that will have a much more indirect, slower and subtler impact?