by Tim Worstall, Adam Smith Fellow (October 13 2008)
Published in The Times here
There’s a surprise benefit of nationalising the banks
Look on the bright side: we may be about to solve one of our most intractable political problems – the financing of political parties.
You’ll recall that the various attempts to do so recently have always foundered on the issue of large donations. If the Tories can’t get millions from companies or those who own them, why should Labour be able to get the same from unions? The travails of the banks allow us to slice through that Gordian knot.
A short-term nationalisation of the banking sector may well be both necessary and the right thing to do. But I think we should go farther and make such a nationalisation permanent. Yes, publicly owned and publicly accountable: that’s the way forward for our banks. Not out of any desire to control the commanding heights of the economy, but rather to underpin the finances of that most essential part of a democratic system, the political party.
For publicly accountable does not mean accountable to you and me, nor to the public. It means accountable to our elected representatives. And what happens when politicians control the access to money is something we know about. As P.J.O’Rourke has pointed out, legislation that determines what is bought and sold leads to legislators themselves being bought and sold.
Long-term nationalisation of the sources of finance, though, would be a better deal: that way we’d only need to borrow a politician, not buy one. Need your credit card applications approved? That would be, say, a few weekends’ leafleting. A mortgage? That might require actual membership of a party. Which businessman, looking for hundreds of millions to build a new factory or launch a new company, would not remember to ask: “And so how are the election funds, then?”
Who knows, perhaps we will find that politicians, taking advantage of their privileged access in borrowing money, will invest in businesses themselves: it would be nice to see some of them with experience of the real economy. In various places around the world, such as Italy or Spain, the appointment of bankers depends on political affiliation – and the Italians and Spanish have a much better work-life balance than the British do.
Who could possibly object? This is not an echo of Maundy Gregory, the celebrated seller of peerages between the wars. His problem was he just didn’t think big. Of course we should hand over the allocation of finance to the politicians: they’ll never again run out of money to buy our votes.
Tim Worstall is a blogger and Fellow of the Adam Smith Institute