I was taken aback last week to be told that I wasn’t living in the ‘real world’ for criticising Stephen Hester’s £5.8m ‘golden goodbye’ on being sacked as the chief executive of RBS NatWest. It got me thinking: Just who lives in the Real World?
In this supposed ‘Real World’ of business and high finance, tough people make tough decisions, bargains are struck, big money is made (and lost). Of course you have to pay serious money to buy the services of a top global executive of Stephen Hester’s calibre. He’s done a good job ‘turning round’ RBS, and he’s worth every penny of his £4.5 million.
Those of us who chose to question this are just empty headed idealists, who don’t understand – let alone live – in the ‘Real World.’
The views of the banker interviewed by Poly Toynbee for her book, Unjust Rewards may well sum up the candid views of those who inhabit this ‘Real World’:
‘It’s a fact of modern life that there is disparity and ‘is it fair or unfair?’ is not a valid question. It’s just the way it is and you have to get on with it.’
As we learned this week, there are almost half a million people in the UK who might have good reason for sharing this view of the ‘Real World.’ According to the latest Global Wealth Report, Britain is home to the fifth-largest group of super-wealthy individuals (with more than $1 million in disposable assets), with 465,000 super-rich individuals, up from 441,000 in 2011.
The Real World disconnect
Surely, part of the problem we are now in – the longest economic crisis in living memory – is that the world that the likes of Stephen Hester inhabit is almost completely disconnected from the real world. The banking crisis was the result of the world of ‘high finance’ losing touch with reality.
Far from operating in the Real World, our major financial institutions (if not the City of London as a whole) has built a parallel universe, far from the reality or lived experience of the rest of us.
One of Stephen Hester’s achievements, apparently, was to ‘shrink’ the RBS balance sheet by a mind boggling £1 trillion (one thousand million pounds). To put this in context, £1 trillion equates to the total amount owed of debt (including mortgage debt) owed by every household in the UK. How was it possible for one institution to have amassed this amount of money (let alone write it off) in the first place? Where did it come from, and where did it go to? Was any of it ever part of the ‘real world’ or simply imaginary money moving across the screens of traders in the City, and other shady institutions across the globe? Imagine how much better those of us living in the Real World would have felt if Mr Hester had been able to ‘shrink’ all our household debt from £1 trillion to zero – but of course, in the ‘Real World’ such things aren’t possible. How silly of me!
The Masters of the Universe inhabit a parallel universe, where normal rules don’t apply.
Back here in the Real, Real World…
Sadly, what goes on in that parallel universe have profound and costly impacts in the Real Real World. Adair Turner – ex head of the CBI and the Financial Services Authority – and therefore someone who should know, described much of what goes on in this parallel universe as ‘socially useless’ activity. I would go further. It is socially destructive behaviour.
Tax dodging hurts the poor, as the slogan on the Christian Aid/Church Action on Poverty Tax Bus spelt out. Anything from £35 billion to £100 billion dodged in taxes in the UK alone. That is, £35-£100 billion not available to spend on health, education, or other essential public services – or on welfare benefits for poor, vulnerable or disabled people.
Excess corporate profits and boardroom salaries made at the expense of low wages for ordinary employees. As the High Pay Commission has documented, the rules of boardroom remuneration operate in a parallel universe to those of the staff the employ. Whilst average salaries have been stagnant for the best part of a decade, boardroom pay for FTSE 100 directors has continued on an ever upward path.
In the Real World, half million other folk now don’t have enough money to feed themselves and their families and have had to turn to foodbanks in the past year.
In the Real World, millions have seen their benefits cut in real terms this April for the first time in living memory, and tens of thousands are suffering real hardship as the result of the £18 billion cut to the welfare budget.
In the Real World, families are being made homeless, uprooted from friends, family, schools and communities as a result of cuts to housing benefit.
In the Real World, pensioners ‘chose’ between heating or eating, as food and fuel bills escalate at rates far above the ‘headlline’ rate of inflation.