Tuesday, 7 July 2009

LSE Director's Dialogue with Stephen Green, Chairman of HSBC

LSE Director's Dialogue with Stephen Green, Chairman of HSBC
Author of Good Value: Reflections on Money, Morality and An Uncertain World 
2 July 2009

Shoot me, this was a bit of a boring talk.

Stephen Green is not only a banker banker but also an ordained minister in the Church of England which makes for an intriguing combination. I suppose the idea of talking about morality and money and business at the same time would be attractive to people at the moment given the 'financial crisis'/recession that we are in. Howard Davies asked him why he wrote the book and I forget what the reason was - something about why even more so a book like this was needed. If I think in hindsight, I am not entirely clear about how much the idea of a lack of morality or having morality will explain the financial crisis. Sure, we have heard about the greed of Wall Street and the Bush regime but would that really explain the screw up? Well anyway. 

Green had some interesting things to say including: 

i) We aren't in a unipolar world any longer but a multi polar one. This could be illustrated by the fact that we now have a G-20 . 
ii) Chinese and Western philosophy and culture are not that different. Both are driven by rationality. The Chinese are not becoming more like the West but the other way around. The urbanisation in China is also producing the individualistic culture as happened in the West. Something to do with Confucianism. 
iii) He has an optimistic view of the Islamic world but we must bear in mind it shouldn't be lumped together. It is not a homogenous world. 
iv) London is a world city, the most international city in the world although the infrastructure could be better. It also begs the question whether we have the right kind of government for an international city.
v) The UK is a less racist and class-ridden country than 30-40 years ago.
vi) Against compartmentalisation of work and personal life. 
vii) Unsupervised open market capitalism is not sustainable. However markets are the main engines of growth and progress. There is no serious alternative. Markets should be the servants of people, not the other way around. 
viii) Financial crisis - they didn't pay enough attention to liquidity.
ix) Islamic finance is a significant part of the industry now and should be made available as a service for those who want it. He wasn't entirely convinced of or agrees with the concept of risk-sharing though which is the basis of Islamic finance. 
x) Are some banks too big to fail? Even small banks are too big to fail. 
xi) One question from the audience - what do you think about the financial crisis, global warming and the expenses of MPs? Yes, these were the three big evils of our time. Isn't economics too limited in defining intangible concepts? A blah blah answer. 

So what was this talk about? No idea. What do I think about it? Dunno. I didn't hear anything interesting or insightful or maybe it all went over my head. But then again, what did I expect? A banker - even though he is a minister - is not going to go all out and damn the system right? He's not going to say 'this is decaying capitalism and it will soon implode and Marx is back.' He says yes, we got a bit too greedy, we need to do more regulation and get back to good old fashioned values. And let's be optimistic. The world is still a great place to be. We can control global warming, we can push it back. All is good. Ta da! 

On the other hand, yes, a Marxist view might appear pessimistic. The world-is-full-of-injustice and capitalism-is-the-root-of-all-evil is a lot of doom and gloom. 

Let's see, what did Jeffrey Sachs say? Well, he was also very aware of the horrible and the awful of this world but we have to find a way to correct it. You know, the man Sachs is clearly sincere about his compassion as far as the plight of the poor. However, is it possible really to know that there is so much injustice and imbalance in the world and still believe that the system we have can still work? In his book The End of Poverty he does acknowledge Western imperialism, the legacy of slavery and colonialism but he Sachs pretty much said that on the whole, human history is about poverty and misery. Most humans who have come and gone have lived in poverty, including Europe. Prosperity only really came about recently when man was able to harness resources and create the kind of wealth that exists today. 

If I have to really distill it any further, I think it is a matter of how we see the world - with its misery, poverty, injustice, inequality - and how it came to be so. Therein lies the rub.

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