My pal Lionel Barber does not blame the culture of bonuses for the financial crisis of the past few years. The editor of the Financial Times, dubbed the "demon Barber of Fleet Street", told me that bankers were inspired by the noble aim of trying to help poor people buy their own houses. I don't know if the man who runs the pink paper is unduly influenced by the fact that his twin brother is a banker, but I find this generous to the point of absurdity.
I doubt if the denizens of Wall Street give a fig whether Joe Shmoe in Omaha lives in a house, a tent, or sleeps on a park bench. In fact, if they could securitise the benches and flog them around the world, they probably would do so, pausing only to kick Joe to the ground in the process. But home financing suited their purposes pretty well and they got filthy rich on the proceeds.
When the markets crashed, the governments of the world were the lenders of last resort. Some US$700 billion (Dh2.57 trillion) was earmarked as bailout cash for the banks, until everybody baulked at the language. So they called it a rescue package instead, and Henry Paulson, then US Treasury secretary, went down on his knees, and the money went whooshing around. Heroically, Wall Street was saved.
It seems almost comical now, but back then it really seemed possible that Goldman Sachs and Morgan Stanley might go to the wall. In Britain, a number of the banks were effectively nationalised. The Royal Bank of Scotland (RBS), once a bold and aggressive beast, became almost an adjunct of the British treasury. I recall speculating that soon bankers would be an endangered species, and we would have to find new uses for them, such as turning them into BlackBerry trainers or even using them as road cones.
I fear I underestimated the blighters. Two years on, and the bonuses are back. It does not irritate me that the bosses of HSBC, Standard Chartered and Barclays are set to trouser healthy pay cheques. After all, they fought pretty hard to avoid accepting government money. But I do question why the bosses of Lloyds and RBS, both in existence only because of government largesse, should be equally rewarded.
Stephen Hester, the chief executive of RBS, is in line for a bonus of about £2.5 million (Dh14.32m), while Eric Daniels, the outgoing chief executive of Lloyds, could pocket a similar sum.
The British Bankers' Association (BBA), the industry trade body, claims that Britain already has the toughest bonus regime in the world. "Outside the UK, the concern on bonuses is either much more limited or hardly exists at all," it said.
Oh really? Maybe the BBA has not heard of the internet. Because if it were to put "banker bonus" into Google, it would immediately find a series of vituperative articles, berating the bankers for their impudence, incompetence and downright villainy. Bankers are nearly as unpopular as journalists these days, and many people are very concerned. The so-called experts described the crisis as a "storm" or a "once in a lifetime shock" and like little boys on a beach who had just had their sandcastles totalled by a wave, set out to rebuild them without bothering to ask what would happen if another big wave were to come along.
Ha-Joon Chang, a Korean economist based at Cambridge University in England, rather than rushing to the shore with his bucket and spade, tried to work out whether it was worth all the effort. In his book 23 Things They Don't Tell You About Capitalism, published by Penguin, he sets out to demolish some of the myths, in effect trampling on the sandcastle. For while he says his aim is not to produce an anti-capitalist manifesto, it is quite clear that he does not like neo-liberal economics.
Among other things, he thinks there is no such thing as a free market; shareholder value is nonsense; people in rich countries are paid more than they should be, and that the trickle-down effect rarely trickles down to the poor.
Personally, I find little to argue with this. Does this make me a dangerous neo-Marxist? I rather hope so. Even so, I am pleased to find that I don't agree with everything he says. For example, he thinks that Africa is not destined for underdevelopment, but was brought to its knees by the introduction of liberal economics. I find this rather simplistic.
But I'm pleased to see that he has as low an opinion of economists as I do. "Economics has been worse than irrelevant," he writes. "Economics, as it has been practised in the last three decades, has been positively harmful for most people."
Unfortunately he rather ruins it by giving his own advice on how we can rebuild the sandcastle, in the hope that this time it won't get washed away. His prescription includes more government, greater regulation and that we stop believing that people are always paid what they "deserve". Bang goes my bonus, then.