Plan 'B"

A state bank is a good idea but why should the business it has built up then be sold to private investors? If the state can do it then let it continue doing it. If private investors think they can do it better then let them build up their own business and compete.

Thanks Hobbes :) (changed date from August to October -- all those 8's, 10's and "Eights" in both month names...)
BigC - I think there are lessons that should be kept from the 60's and 70's nationalisations. One is that competition often has a real role in curbing the natural tendency of bureaucracy to serve its own interests---competition is a form of "divide and rule". We don't want the finance equivalent of British Leyland serving us. Of course, hyper-competition has been part of the problem we're in and needs to be kept in check - part of the information generated by the "10th bank".
But I guess we've also learned from the 80s utilities privatisations that _ownership_ is not acutally fundamental---regulation is the important part. We could have the 10 banks all state owned and rely on "good" competition to do the work it can do within state ownership. But when the state is 100% owner, can we trust the regulation to be in our interest? We face the same problem towards our elected representatives as Brown and Darling faced towards the banks: with their superior information and executive power, how will we find out the truth about what they're up to? Divide and rule can work against natural potential abuses of power, but it does not work all by itself; the invisible hand is also the weakest one!---it needs us to be political as well.

Tony

I'm not against competition per se Tony. It should be encouraged for those areas which cannot be better served by democratically accountable agency. However, if it needs to be facilitated, as I think you're suggesting then perhaps it's not appropriate. The private sector is good at creating business where there previously was none and I think it would be better left to look for opportunities overlooked or rejected by the main bank. Carving up the business and handing it over is rather like preparing a tiger for hunting by handing it a fully prepared side of beef.

I think competition should be a tool of democractically accountable agency - it is not a substitute for it. It should be one of the ways we keep control of those with power. If you think of every financial transaction carried out in a day in the UK; each one needs some amount of oversight; that oversight requires some amount of information extracted and brought to salience. It is truly a huge task.

A single financial monopoly will need a lot of tracking, no matter who it is owned by. There was a great Buffet quote I linked to from "The World" the other day, over here: "

BUFFETT: ... managing complex financial institutions where the management wants to deceive you can be very, very difficult.

Having several institutions all of them doing similar things does not solve all the problems of accountability --- that was certainly the mistake of neo-liberal ideology from utilities to finance --- but it is part of the toolkit. You can ask: ``why is your lending for new hospitals so much smaller than the other institutions?" rather than ``why is your lending for new hospitals £xxxm?" The first question is tougher on the institution than the second question.

So I'd like to see the 9 banks separated off and independent _of_each_other_ (though I don't really mind where the ownership is) because accountability can't afford to throw away "divide and rule" as a way of controlling concentrations of power.

Elites have repeatedly proven themsleves incompetent, in the UK possibly more than elsewhere in Europe --- my current genealogy of missed opportunities points the finger at the Wilson era's failed modernisation of the 1960s, when elites (of both capital and labour) had no more imagination and leadership than to try to find a social arrangement that would preserve the divisions of imperial Britain. This is not (yet) a society where responsible democratic accountability on its own can do the work done by the divide and rule of competition.

Tony