Over the last half century the British public’s growing distrust in its institutions has led to a tendency to ignore advice and make choices based on short-term self-interest and incomplete information – a trend that has become known as Populism.
During the last era of moral certitude in post-war Britain of the ’50s, when women were housewives and men wore hats, when PC Dixon patrolled Dock Green and Mr Brown went up to town on the eight-thirty-one, his bowler hat and tightly rolled umbrella symbols of his fiscal propriety, and every village church had its own vicar, the public still trusted the institutions – their politicians and policeman, clergymen and bank managers, teachers, judges and the Metropolitan Police, the BBC and the editor of the Daily Telegraph.
It was in this period of shared righteousness that Prime Minister Harold Macmillan delivered a speech:
“Indeed let us be frank about it – most of our people have never had it so good,” he said famously. “Go around the country, go to the industrial towns, go to the farms and you will see a state of prosperity such as we have never had in my lifetime – nor indeed in the history of this country.”
In the post-war boom, this was the truth; the people were inclined to believe and trust the Prime Minister.
But during the next decade this a long-held confidence in the Ruling Classes began finally to unravel under the scrutiny of the satirists – the new-born Private Eye, Beyond the Fringe, That Was The Week That Was. John Profumo, Secretary of Sate for War, cavorted with Christine Keeler, whose other lover was a Russian spy; the Great Train Robbers pulled off their spectacular heist; former government minister, Lord Boothby was found hobnobbing with the Kray brothers.
Public perceptions were being rapidly altered under an onslaught of cultural change: mini-skirts, Mods and Rockers, Liverpool Cathedral, the long hair and studied grubbiness of the Rolling Stones, the legalisation of abortion and homosexual acts, cannabis, the Pill, and the News of the World’s increasingly prurient revelations of the sexual activities of politicians, teachers, firemen and vicars.
All the old, protective layers of privacy were being peeled like onion skins from the personal lives of the formerly great and good. As the century progressed this uncovering increased and the public were becoming inured to the successive scandals. But the discovery that MPs had for years been topping up there meagre salaries with creative expense chitties came as a far bigger shock than it should have done, and significantly increased the public’s distrust.
More genuinely shocking and indicative of serious moral malaise was was the banking crisis of 2008. It was by no means the first City scandal to affect Britain – the South Sea Bubble of 1702, the crisis of confidence in the Panic of 1772, when a run on British Banks caused twenty of them to go out of business; the speculative bubble of Latin American investment of 1825, when Scottish conman, Gregor MacGregor invented a Central American state, ‘Poyais’, into which thousands poured, then lost their money. And in 1932 Britain was caught in the wake of the Great US Depression.
But these crises came and went and British bankers had developed a system, in the pragmatic interest of greater efficiency in which a man’s word really was his bond and which lasted more or less until the so-called Big Bang revolutionised the way the City operated and electronic confirmation of a deal replaced the human handshake.
But the Credit Crunch crisis of ten years ago perhaps did more damage than had ever been done to the reputation of bankers and, more crucially, to the governments that claimed to regulate them, and the judiciary and police who failed to chastise them. It is almost incredible that it should ever have been allowed to happen, but few commentators or regulators waved warning flags, and when they did, they were ignored. The primary driving factor behind the crash was the Clinton administration’s policy that mortgage lending criteria should be lowered in order to accommodate people “who have historically been excluded from home-ownership.” This greatly relaxed the traditional safeguards against risky lending in the subprime market, which was further encouraged when, during George W Bush’s first term, the US Federal Bank single-mindedly pursued a policy of creating a cheap dollar, in line with the wishes of the US exporting businesses’ lobby. Thus mortgage lenders who were buying their money very cheap were encouraged to lend it to subprime borrowers at five, even ten times the rate they were paying – like a greengrocer buying spuds at 5p/lb and retailing them at 50p/lb. It was outrageously profitable, and it was legal. Of course, there were risks, failures and repossessions, but the asset could always be sold to recoup the capital – as long as the by then heavily inflated housing market stood up.
But in 2007 the Fed realised that they’d drastically over-egged the money supply, and tightened the reins; the well from which the lenders had all been drinking abruptly dried up. House prices crashed almost instantly, and the steady stream of repossessions became a torrent.
That so many banks, including most British banks, became involved, either as principals, or secondary wholesale lenders was a direct result of opportunistic greed and atrocious financial judgment. Although as a result of the crash, a number of prominent American bankers were indicted by American courts, convicted and jailed for financial crimes, none of their British counterparts were – although Sir Fred Goodwin was stripped of his knighthood – poor chap!
It’s shouldn’t be surprising that large swathes of the British public don’t trust the Institutions anymore, and will no longer take a lead from politicians and economic experts. Populism and Brexit have been a predictable – albeit unpredicted result of this lack of trust.