This week saw a report published by the Parliamentary Commission on public standards which advocated, amongst other matters, that bankers should face jail for the commission of a newly defined offence, “reckless misconduct in the management of a bank“.

I would suggest that, as ever, the approach of those who sit in power above us is both too late, acting after the horse has bolted, and inappropriate and misconceived. It is also the default position of the present generation of politicians if they don’t like something to pass a new law about it, rather than to apply the existing law, or to address the root causes of the problem. Hence New Labour’s torrent of criminal offences, more than 3,000 in total and more than one for every day in office, ranging from selling grey squirrels to creating a nuclear explosion.

Threatening to jail errant bankers is gesture politics, useless, and misconceived. Let’s be clear, the crop of soi disant financial “geniuses” who have caused incalculable damage to the nation’s finances are culpable in the extreme. But so too are the politicians who idly sit by and sanction waste and an endless and exponential increase in national expenditure without the means to pay for it. Jail one for recklessness, then jail both. But I can’t see that one really flying for some reason …

In both cases the root cause is that the actors in the drama are dissociated from any adverse consequences of their actions. In order to control both, both must become associated with the consequences of their actions or neglect.

Long, long ago, in a land far, far away (one which “we” have recently invaded and occupied for no apparently discernable reason, before leaving it in a state of utmost confusion, but I digress) there lived a mighty and wise king called Hammurabi. Hammurabi was a law maker and his Code, or Law, dating back to about 1770 BC, can be found recorded on various rather impressive stone tablets, including a diorite stele in the shape of a huge index finger (at least I hope that it is what it is meant to be).

The part of the Hammurabi’s Code which is relevant to banks and bonuses is in fact his Code written for architects. Hammurabi declared that if an architect built a house and that house later fell down and caused the death of the owner of the house, the architect himself must be put to death. And if the house collapsed and killed the son of the owner, the architect’s son must suffer the same fate too.

The Romans adopted the same principle in respect of engineers who built bridges. The engineer was expected to sleep for a certain time under the bridge, just to make sure it was up to scratch. It was a great incentive to good workmanship, and against cutting corners.

Hammurabi’s Code was brought to my attention by the brilliant and insightful former New York trader, now turned academic and philosopher, Nassim Taleb author of “The Black Swan” and other books rather over my head.

This aspect of the Code is often characterised as being “an eye for an eye” philosophy, but Taleb argues that is not quite right. What it is really about is risk management. In a functioning society risk and reward are good things, but only to the extent that there is symmetry; that if there is a downside to your actions, you must pay an equal price. Taleb argues that Banks have for quite some time been in the business of hiding risks, and those who develop their strategies have done so safe in the knowledge, conscious or unconscious, that if they win, they collect huge bonuses, but there is no come back on any individual if the result of their actions is to wreck the bank, or indeed the country. The banking crisis is thus the result of a flawed version of capitalism, in which there are no consequences for those who gamble. What one needs therefore is not a new criminal offence and an unwieldy and expensive show trial after the event, but to create a system which creates this symmetry of risk. The potential for a “de-bonus”, so to speak. It is thus less important that the appalling ex-Sir Fred Goodwin should lose his knighthood, than that he should repay his bonuses and pension pot, and lose his house in the event that he should be proved to be a complete and utter banker.

A short clip of the impressive and accessible Taleb opining on this issue and the Occupy Wall Street movement can be found here.

I mentioned above the question of applying the same principle to politicians. Here is one way it might work; at the end of each Parliament MP’s salaries are increased, or decreased, in a direct mathematical relationship to the extent that the country’s deficit and debts have been cut. It might be in inverse proportion, but you probably get the point. In that case, I really wonder whether the extraordinary expenditure of the Blair/Brown years would really have been so freely allowed.

Care for the sick and elderly and the lack of responsibility – it is time to boot out the leech class

Consideration of King Hammurabi’s Code has also led me to consider its application, or rather its non application, in other areas of British public life, and to ponder the way in which values have become distorted.

Over the past couple of weeks I have been travelling around the country, engaged in matters temporal. In my distracted state, I have had some difficulty in keeping on top of the news, but a number of stories stood out as I toddled about.

Having mentioned the disgraced ex-Sir Fred, a man not only of ill judgment but seemingly personally arrogant and unpleasant, and thus lauded by our Establishment until his massive hubris and incompetence was truly revealed, I came across another Knight of the Realm, namely Sir David Nicholson, KCB, CBE, for the moment Chief Executive of NHS England, graduate of Bristol Polytechnic with a 2:1 in History and Politics, and former member of the Communist Party of Great Britain.

Sir Dave Nicholson-Spart was, of course, former head of the notorious Mid Staffs Health Care Trust. An institution which appeared to be carrying on its business in a fair imitation of a Soviet Gulag, but without the frills, and under whose “care” it is estimated up to 1,200 people died needlessly.

Sir Dave (£210,000 per annum) was being grilled by the Public Accounts Committee about payments made in so called “gagging agreements” which prevented the person leaving the NHS from revealing why they had been dismissed or resigned. Nicholson, it transpired, had previously suggested to the Committee that such gagging clauses were rare, and that the case of Gary Walker, the whistle blowing former head of United Lincolnshire Hospital NHS Trust who got a £500,000 pay off to ensure his silence was an isolated one. Nicholson had been asked (that means ordered) by the Committee to find out some figures on how common this practice in fact was. It turned out that for a variety of reasons which seemed to me, and indeed to the highly sceptical committee, hugely unconvincing at best, he had unilaterally decided he was not in a position to have done that. Something to do with remits and departmental changeovers, and changes in definitions and so on. He had not had the courtesy of informing the committee that he had decided he would not or allegedly could not carry out the task, however. The Committee was not impressed. Neither was I.

For once, Parliament was shown in a good light, as the Committee piled into the hapless Nicholson, a man so evasive that, as Blackadder might have said, he gave a good impression of having just been appointed Professor of Evading the Bloody Question at Oxford University. Or perhaps at Bristol Poly, because he actually wasn’t that good at it. That is an intellectually snobbish remark for which I have no intention of apologizing, by the way.

In fact the Committee was quite impressive and I will even give my commendations to Margaret Hodge, who normally drives me to despair, as well as Steve Barclay, whose dogged pursuit of information via FOI Act requests revealed that contrary to what Nicholson would have had the Committee believe, the use of such clauses was pretty widespread, if not endemic.

Nicholson struck me as a man who was skilled at the corporate management speak of all quango apparatchiks, of filling in forms, of going to blue sky thinking groups and sending out press releases and mission statements. I would not trust him to run the local St John’s Ambulance Brigade’s attendance at a school fete. I wonder what his pension will be? Why could we not have a surgeon, or a matron, who has a track record of care on the wards, and an understanding of the inside track of what patient care is all about, in charge of the NHS? Why not someone who might be prepared to walk the wards of a hospital under his or her charge unannounced and actually spot that patients are lying in filth, de-hydrated and hungry? Why not? Because in modern Britain, such good people are trying to do their job, whilst the “Greasy Pole” of aggrandizement is being climbed by those whose instincts are more politically tuned.

Next, earlier this week, news reached my ears of Operation Jasmine. This is, or was, the seven year Gwent Police investigation into the scandalous abuse of the elderly in care homes under its jurisdiction, costing £11 million and identifying more than 100 potential victims. In the end, no one was charged.

I also caught a glimpse of a BBC Panorama investigation into care for the elderly called “Condition Critical”. I say a glimpse because after the tales of starvation, dehydration, lack of basic care, bullying and the sight of a clearly confused and distressed elderly woman screaming in agony as her doubtless poorly paid and poorly trained “carers” used the incorrect technique to change her clothes, and told her to shut up and stop moaning and she screamed, I had to turn off.

I was thus reminded of the recent case of the case of 83 year Muriel Price, recorded on film left waiting in distress for her “carers”, who didn’t show up on time or sometimes not at all.

And as I listen to the radio this morning, I am informed that the “Care Quality Commission”, a body charged with investigating care for the weak and vulnerable around the country, has been implicated in a cover up of lethal and scandalous poor standards at Morecambe Bay NHS Trust. Naturally, “Data Protection” was wheeled out as the reason for not revealing the names of the persons in question. This was not an interpretation of Data Protection laws with which the Information Commissioner agreed.

I understand at the time of writing that the CQC has rightly recanted and that these people have now been named. One is a “media manager”. Excuse me, but what does a “media manager” do? How much was she paid? And why does the CQC need a “media manager” at all?  And the salaries of these people and pension pots are apparently beyond most people’s wildest dreams…

As result of all these matters, all these deaths, not one single person has been prosecuted, and I cannot find any clear evidence of anybody being sacked. Resigned, maybe, in the case of CQC, but not sacked. There have been some convictions for cruelty it is true, as a result of undercover reporters, as I understand it, rather than the seemingly pointless, mission statement generating quango that is the CQC. CQC? It might as well be the bloody QVC shopping channel for all the good it is doing at the moment.

One infamous sacking was not, of course, the result of undercover reporters. I was reminded of the case of Sue Angold, a caring worker who was sacked on ‘Elf and Safety grounds by the Sutton Housing Trust, a topic upon which I have blogged before.

Her crime? Coming to the aid and lifting of a 95 year old woman who had been left to sit stuck on her commode for hours, soaked in her own urine, and lifting her to a more comfortable place rather than wait for “trained carers” to arrive, in breach of “risk assessment” rules. The ‘Elf and Safety Stasi swooped, a compliant Employment Tribunal shrank before their mighty and righteous hands, and a great wickedness was done. In my opinion, it was one of the great travesties of justice of modern times.

Meanwhile, for the heinous crime of allegedly listening to people’s voicemail’s, Operation Weeting trundles on remorselessly, with 23 arrests at the last count. Operation Yewtree seems to have left almost no “celebrity” of the 1960’s and 70’s still free on the streets. My point is not to defend phone hackers and dirty old kiddy fiddlers, but that there is a lack of balance in all of this. It is clear that the lack of care for those who are sick and elderly and especially both in our society is in places disastrously, and in many cases indeed criminally low. Elderly people are suffering, going hungry, being treated with lack of care, sometimes even with cruelty whether by default or design, and dying before their time without dignity and peace. This is because, once again, wrongdoing is too often divorced from any real consequence. We need to radically reform the way in which care for the elderly is managed and policed. There should be heads on poles. There should be a widespread cull of failed and useless executives and managers and apparatchiks and media managers. There should be a body to oversee care for the weak and elderly with real bite, real drive, run by formidable and energetic men and women of serious mind and almost militant zeal. And here is a heresy: it should be run and staffed by people who have spent time on the shop floor, on the wards and in the homes, who know the business end of care.

And here is another heresy, even greater than before! One which will strike horror, utter revulsion and outrage amongst many in the insular quango establishment. This body should be staffed not by those who are so skilled at writing their CV’s and attending the correct diversity awareness courses, but by those appointed by invitation. Why? Because what we have generated in this country is a class of apparatchiks who dominate public office, who are on the one hand the least skilled in doing the job, and on the other the most aggressive and cunning in gaining public employment. A locus class, a leeches class, a class of mosquitoes and vampires and mountebanks. Whereas the people who do know about the real world, who understand their profession, whether medical or legal, are often those who are the most modest and least likely to blow their own trumpet who are actually getting on with it.  I may have to take a ride to the tumbrels for even uttering that one. I expect – to borrow a phrase from the mighty Old Holborn – that hordes of Diversity Coordinators will descend upon me, baying for my ritual slaughter in a very non PC way.

There should be real and robust sanctions for failures, not whitewashes and pay offs and gagging orders. There should, in appropriate cases, be criminal sanctions. We need a kind of Hammurabi’s law here too, and urgently, because the care of the elderly is a national scandal.

  Gildas the Monk

Elena ‘andcart
June 24, 2013 at 14:04

Is there some reason for why people being offered money to keep their
mouths shut couldn’t just refuse? Or have I missed something?

Dave June 24, 2013 at 12:08

I think the solution to the current crisis in the local government, the
NHS, the BBC and all the bloted quangos would be to adopt the Roman policy of
Decimation.
It may not need to involve the shedding of blood (but perhaps
we should execute a few “to encourage the others”)
Day one. Call all the
staff together. No exceptions- especially the HR departments that grow as the
rest of the workforce decreases. Draw lots. Irrespective of rank or position
10% of the workforce to clear their desks without delay- and probably at
gunpoint. The remaining staff to organise themselves to get the job
done.
Keep repeating until they get the idea.

And I agree that any “performance based bonuses” must be deferred until the
results of their actions have been fully analysed. A minumum of five years
would be a start.

Moor
Larkin June 24, 2013 at 12:45

@ I think the solution to the current crisis in the local government, the
NHS, the BBC and all the bloted quangos would be to adopt the Roman policy
of Decimation. @

Given that the civilised version, termed bankruptcy, is unavailable to
tax-payer funded organisations, you must-needs think out of the box I
suppose………….

rabbitaway June 24, 2013 at 00:18

In fact, all the comments are worth a butchers

rabbitaway June 24, 2013 at 00:16

@Moor – I liked one of the comments from your link

March 2013 …… in other news Iceland President Olafur Grimsson died
mysteriously in his sleep last night. He apparently shot himself in the back
of the head from 20′ away while sleep walking.

Moor
Larkin June 23, 2013 at 23:53

“Why do we consider banks to be like holy churches?” is the rhetorical
question that Iceland’s President Olafur Ragnar Grimson asks (and answers) in
this truly epic three minutes of truth from the farce that is the World
Economic Forum in Davos. Amid a week of back-slapping and self-congratulatory
party-outdoing, as John Aziz notes, the Icelandic President explains why his
nation is growing strongly, why unemployment is negligible, and how they moved
from the world’s poster-child for banking crisis 5 years ago to a thriving
nation once again. Simply put, he says, “we didn’t follow the prevailing
orthodoxies of the last 30 years in the Western world.”
http://www.zerohedge.com/news/2013-01-26/only-3-minutes-worth-listening-davos

NielsR June 24, 2013 at 16:47

I would hazard a guess that Iceland’s banking system is rather smaller
than the UK’s, even as a proportion of GDP. Happy to be proved wrong, but
size is rather important if the whole ruddy thing goes pop.

Moor Larkin June 24, 2013 at 21:06

I vaguely know that Iceland’s banks ended up bigger than Iceland’s
economy, so presumably they couldn’t have bailed them out even if they had
wanted to. I still remember the old Financial Times TV advert, from the
Eighties where a voice asked, with regards to “all the money”, what would
happen if we tried to spend it? I vouchsafe that perhaps we found out what
happens – in 2008………..

I recall that when all the banks were being bailed out, it was on the
premise of our avoiding another 1929-style worldwide Depression – Buddy
can you spare me a dime, and all that.

Edna Fletcher
June 23, 2013 at 15:36

“That is an intellectually snobbish remark for which I have no intention of
apologizing, by the way.”

Why apologise for someone who would put you ‘right in it’ if they had the
intellect to do so themselves.

I wouldn’t be proud of attending Bristol Poly having been lucky enough to
escape a poly that was willing to accept lower entry points than the old
university that I actually subsequently attended. The Guardian newspaper it
seems had to print an apology to the public because it wrongly stated
Nicholson was an alumni of Bristol University- the university bods were
clearly put out by this heresy to their robust reputation.

JimS June 23, 2013 at 15:34

I can understand that a hierarchy is one way to organise a system; I don’t
undestand why pay scales follow the hierarchy.

Suppose that a foreman supervises six workmen, the CEO might claim to be
‘responsible’ for 100,000 people but in reality that is delegated to six
directors and so on ‘down’. The work is divided. Accounting for a budget of
£100 we keep and eye on every penny. Accounting for billions and we count in
millions. The task, regardless of ‘rank’ is scaled to the human
capability.

Yet we pretend that the ‘senior’ people are more ‘responsible’ and need to
be ‘compensated’ with high pay and ‘motivated’ with bonuses comparable with
their basic salaries. So, for example, a director of rail safety might be paid
several £100k with a bonus of another £100k if a year goes by with no
passenger deaths. The reality though is that the director has no control, the
task being delegated, while real safety is achieved by a track worker
tightening a bolt in pouring rain at three in the morning on a windswept
hillside, desperate to finish to meet the operating timetable. In the event of
an accident the former might change his job, the later could spend 10 years in
prison. Funny sort of responsibility and funny system of rewards.

To add to this nonsense we layer on management and regulatory review
boards. And when things go wrong overpaid select committees haul in overpaid
CEOs to demand answers to questions that probably neither party understands
anyway. But it doesn’t matter because ‘lessons will be learnt’ and things will
be re-organised under the same ‘leaders’, which has the advantage that the
slate is wiped clean.

Remember, quality is built in, it isn’t achieved by inspection, or even
worse, judicial process.

johnd2008 June 23, 2013 at 14:32

It seems that the lack of consequences for any infringement of law or
morals covers the entire population. It does not matter if you kill old people
by neglect or run amok on the streets,there are no meaningful sanctions
imposed by society. Gone are the days of the punishment fitting the crime.

John Galt
June 23, 2013 at 12:34

When Cynthia Bower was installed at the CQC she was immediately told how
dire things were based upon all of the measures available and assessments.

Her innovative and positively Stalinist solution was to improve matters
dramatically by not collecting the statistics that show how bad things are in
the first place and ban staff from going into do assessments when they would
only come up with the wrong (i.e. horrifying) results anyway.

Ms. Bower view seems to be “If you don’t want horrific newspaper heads
about thousands of elderly starving to death in care homes that cost a small
fortune then stop counting the bodies”.

What does she do for a hobby? drown babies?

Don Cox June 23, 2013 at 11:09

The problem this post discusses is not confined to Britain, or to the Banks
and the NHS. It is a universal result of the managerial revolution, best
described by Pournelle’s Law:

“In any bureaucracy, the people devoted to the benefit of the bureaucracy
itself always get in control and those dedicated to the goals the bureaucracy
is supposed to accomplish have less and less influence, and sometimes are
eliminated entirely.”

Ted Treen June 24, 2013 at 12:22

Oft have I quoted Jerry Pournelle’s “Iron Law of Bureaucracy” on various
forums.

It seems more and more apposite with each passing day…

Don Cox June 23, 2013 at 11:05

“Money, like energy, is neither created nor destroyed”

Not true.

When a bank borrows £100 (as deposits) and lends £1000, it has created
£900.

In the days when money meant gold, new money was created by miners. Digital
money, however, can be created at any time simply by changing a figure in a
spreadsheet.

KevinS June 23, 2013 at 12:11

This is also not true. At the end of the banking day the bank has to
balance its books, and to do this it has to borrow the £900 from another
bank. The money doesn’t come out of thin air.

Don Cox June 23, 2013 at 14:55

And where does this other bank get its £900 ?

From deposits of £90. All banks lend more than they borrow. Banks and
governments create money.

The recent troubles came from banks lending too big a multiple of what
they had borrowed.

Joe Public June 23, 2013 at 10:37

I admit that “Economics” was never my strong point, but why does everyone
pick on “the Bankers”?

A banking transaction, entirely voluntary, involves two parties.

Money, like energy, is neither created nor destroyed*.

If one ‘loses’, then there is an equal and opposite ‘gain’, by a different
banker.

*Except by that euphemism known as ‘Qunantitive Easing’, but that is a
Political, not Banking, decision. So, the price of its failure MUST be paid by
politicians, not bankers.

Over there
June 23, 2013 at 13:08

The basic problem is that there is an element of a banking transaction
which is not voluntary. It’s the free insurance which governments provide
(explicitly or implicitly) to the bank’s creditors, in particular to their
depositors. The free insurance is what allows the banks to take asymmetric
risks and require bailouts.

Joe Public
June 23, 2013 at 15:51

On the contrary, the transaction is entirely voluntary – in that no one
is forced to enter into one.

That every transaction has ‘conditions’ (“you do this, I’ll do that”)
is to be expected. If one doesn’t like one bank’s ‘insurance’, go to
another bank, or don’t borrow.

Mudplugger June 23, 2013 at 10:13

Any genuine risk/reward balance in large organisations has long gone,
more’s the pity. The top-level operators now all know how the formula
works.

You optimise reward by embarking on an infinite number of ‘initiatives’,
none of which are ever completed, as that would then enable post-event benefit
evaluation to expose their costly ineffectiveness.

You minimise risk by ensuring that every action is first run through an
impentrable web of committees, separating yourself from the action thus, when
it goes predictably wrong, the ‘blame’ cannot be attributed to you, or indeed
to any other individual who might later implicate you in their own defence –
this mutual-dependency committee network (i.e. ‘we’re all in this together’,
or ‘when you’ve got them by the balls, their hearts and minds will follow’) is
key to the elimination of any personal accountability.

Get both of those strategies right and you are ensured a healthy career,
lucrative rewards, escalating honours, enviable pensions and never a hint of
criticism which can be proven. Whether the organisation operates successfully
is quite irrelevant, that was never part of your objective.

Examples can be found in almost every aspect of public service and a
substantial amount of the private sector too.

NielsR June 24, 2013 at 14:37

^–This.

Basically, the larger any organisation, public or private, the easier it
is to gloss for glory and ignore the front-line problems. It may even become
necessary, as your customers/voters demand something is done *now* when
careful research, design, testing and implementation are the only way to
turn the colossus around.
Unfortunately, technologies can demand large
organisations – you need to develop and test at Big Pharma’s level to have
enough success to pay for all the failures. Plus, large companies can skew
the market in their favour by demanding high barriers to entry on any
competition.

Solutions? Claim a scalp for any failure by any organisation drawing on
tax-revenue. Anyone vaguely plausible will do, but the company must nominate
someone to hold the bag in at least one respected jurisdiction.
Middle-management will soon learn to protect themselves from
senior-management-arse-covering, moreso if you offer plea-bargains. It is,
unfortunately, absolutely necessary that government learn to design clear
requirements and service-agreements, to assign responsibility. Most
governments will probably mess this up, deliberately or
accidentally.
Ruthlessly encourage competition, dropping barriers to
entry to keep companies small and focussed on customer satisfaction. You
won’t eliminate unnecessary failures/deaths, but if you get the service
agreements right both care and prosecution rates should improve.
Find a
business model that pays for aggressive investigation/review of
organisations and services. The media will oversimplify, that’s inevitable,
and as public services (and publicly-funded/insured services) get more
complex Joe Public isn’t going to get very far with tripadvisor style
reviews. CQC won’t want to embarrass the government if at all possible.

Mark June 23, 2013 at 09:51

Wrongdoing being dissociated from consequences for the wrongdoer is called
a “lack of justice” is it not? I am reminded of the person who complained re
satellite TV: “What we want is better programmes, what we get is more
channels” We don’t need more laws we need justice.

ZeroTolerance
June 23, 2013 at 08:59

Sensationalist, lost all sense of scale and proportion ?

Not exclusive to tax-dodging unelected non-Brit Rupe’s mind warping bent
media, and his populist pawns NuLab=OldeTory.

Anna’s aforementioned, ‘horror’, 3,000+ so called ‘Criminal Offences’
brought in by NuLab, comprise 1,238 as primary legislation debated in
Parliament.

But nearly twice as many were mere local bye-law type contemptible
infractions, e.g. “magistrates found smoking after having lawful sex with a
clerk”.

Q: Do you smoke after sex?

A: Dunno, I never looked !

SagaxSenex June 23, 2013 at 08:39

Regarding the bankers, I have for a long time advocated what I call a
Stalinist solution. Demand a list of the 240 (say) most prominent bankers in
the country, have Lavrenti Beria load up the old Makarov and shoot two dozen
of them. At random. Review behaviour of the remainder and repeat as needed.
Not too sure that would work for the Quangocracy, though, sadly.

mark polden June 23, 2013 at 07:51

I agree entirely, in the modern idiom make bankers personally liable for
any losses before investors, depositors or the public purse.

Engineer June 23, 2013 at 14:13

The best way to have ensured that bankers were made personally liable for
their failures would have been to allow bust banks to go bust. Sadly, the
politicians did not allow that; they made the taxpayer liable, instead. Also
sadly, a precedent has now been set, in that any bank in trouble in the
future mere has to say to government that they’re too big to fail, so hand
over the taxpayers’ spondoolicks, please.

Who has the least say in all this? The poor bloody Joe paying for it all.
The taxpayer. Interestingly, the same bloody mug who pays for and uses
failed public services like the utterly disfunctional and inefficient No
Hope Service.

Engineer
June 23, 2013 at 14:21

Oh – another thought. Why did the politicians not allow the bust banks
to go bust? Because they were the same politicians that allowed (even
encouraged) the banks to do the things that led to their eventual
failure.

There is good cause for making certain politians personally liable for
the banking failures alongside the bankers.