Welcome to the city
Ever seen one of these? When you pass one you are either entering, or leaving the City of London. You may think, wasn’t I already in London before? Well yes, but not the City, which is something very different.
The City of London is a political island in the centre of our capitol which has managed to quietly maintain a state of special exemption from the values upon which we have built British society for several centuries. The City is represented by a Member of Parliament voted in, not by constituents, but rather a coalition of corporate interests; each business that is registered there enjoys voting rights relative to the amount of employees they have, around half of these business are foreign owned. As well as a political organ, the City is also a private corporation which owns the land of the City of London and manages its own amenities; it even has its own police force. Unsurprisingly, the mayor of London has no authority in the City which is, instead, run by the Lord Mayor of the City of London, from whom the queen must ask permission to enter the City of London.
With all the pomp and ceremony, it may appear as though this may be just part of our quirky English tradition which, like the Queen, in reality does not infringe upon our fundamental democratic rights. On the contrary, this unaccountable little “state within a state” exerts huge influence in this country and the world through its representative in parliament (Strangely, it’s the only borough to have one) and the millions that it contributes as donations to political parties. In fact, the Conservative party have quadrupled their financial dependence on donations from the City since Cameron came in. Also, as they manage their own affairs, and with the help of some effective anti-trust laws, obtaining evidence and information relating to a criminal investigation is almost impossible. Finally, although tax levels are the same for the City of London, it is well known that through political manoeuvring and imaginative accountancy, the City pays well below their required contribution in taxes. One such example is that of Goldman Sachs who were recently just “let off” £5 million missed tax contributions.
The City do not deny their special status, in fact, they claim that they deserve it due to their “special role” in British society as “the beating heart of the financial services industry which accounts for 10% of British GDP”. So basically, as with the whole banking sector, it seems to be a case of “better the devil you know”. However, many are now beginning to question the real worth of the City of London to the British economy; is renouncing our democratic values worth the financial gain we, as a nation, get from the city? Are we even better off economically because of the City?
The Financial services sector contributed £53.4bn in the last tax year and accounts for 2.4% of national income. However, this tax contribution is eclipsed by the £850billion outlay that UK tax payers have had to pay in order to bail out the banks and the billions we are paying to the IMF in order to stabilize economies such as Greece; victims of the unfettered capitalism practised in the City of London. Furthermore, it is estimated that the total damage to the economy from the banking crisis and its resultant repercussions has been between 11 and 13% of GDP; so overall, we are experiencing a net loss from the City of London. Aside from economics, the actual social value of the City of London is not reflected in its financial contribution; “On best estimates it contributes 3 per cent a year in value added compared to 12.5 per cent value added contributed from manufacturing.”
However, it must be kept in mind that 300,000 people are employed in the financial services sector in the City of London and this rises to over a million when we take the whole country into account. Many are afraid that regulation of the City would cause the big banks to up and leave, taking with them valuable jobs. However, as always, it is not as simple as this. The Tobin Tax, a tax on speculative financial transactions, is one way in which it is possible to ensure the banking sector make a fair contribution to society while also acting as a tool with which to control market volatility. This will only affect pure speculation whilst leaving the socially useful parts of the finance industry intact. For example, shares are already taxed (stamp duty) and pension and investment funds will not be affected because they buy and hold and hardly ever sell. So it’s not like bringing financial services into line will cause the whole sector to up and leave. Rather, it would be good riddance to a small wealthy group of financial speculators whose only value to this country can be justified by the widely disregarded theory of “trickle down” economics.
Finally, the City of London acts as a “coordinating hub” for a global network of tax havens in which the assets of the rich are stashed, allowing dictators and multi national corporations to continue robbing the poor of the world. Many of these tax havens are British dependencies and the fact that we have it in our power to dismantle this backbone of international organized crime yet do nothing is a shame on this nation. “All that is necessary for the triumph of evil is that good men do nothing”; did we worry about loss of jobs and wait for international consensus when we became the first western power to ban slavery?
For better or for worse, Britain has been changing the world for the last 300 years. These days however, we have become a nation of hand-wringers, worrying about our ever dwindling resources. The opportunity to change the world and improve the lives of billions of people sits right on our doorstep. Not taking it will doom as to live as the intermediaries between the capitalist slave masters and the hungry masses of the world.
We must finally wake up to the fact that unregulated capitalism is bad for us due to it’s fundamental tenant of a separation of economics and politics being a complete myth; the case of the City of London stands testament to this. Have your doubts? Check out this banker chatting on the BBC. Our politicians must normalize the City of London and take measures such as the Tobin Tax in order to regulate the financial services sector. As citizens, we must demand of them this as well as not recognize the legitimacy nor authority of the City of London as it stands. Remember, their power is based on nothing more than our obedience.