Those who have studied development economics will be familiar with the term ‘resource curse’ – a paradox of plenty, when countries or regions with abundance of natural resources tend to have less economic growth and worse development outcomes.
The recent developments in Greece reminded me of another phenomenon – finance curse – which is a story about ‘country capture’ where an oversized financial sector comes to control the politics of a finance-dependent country and to dominate and hollow out its economy.
One particular quote seems to be so timely to mention here: “Beyond a certain point, financial development is bad for an economy. Instead of supplying the oxygen that the real economy needs for healthy growth, it sucks the air out of the system and starts to slowly suffocate it.”
This is what happens when you choose to cooperate with a building society, not a main-street bank: you have rights to elect the Board of your building society, agree or disagree with their propose changes to the Rules and Memorandum as set by the AGM (Annual general meeting). Building society’s customers are also asked to approve its Annual report and accounts, director’s renumeration report and appoint its auditors.
Nationwide, is the biggest building society in the UK, its profits last year increased by 54% to 1 billion GBP and it is not the sec on largest mortgage lender in the country.
The main difference between ‘normal’ banks and building societies is that building societies do not have shareholders therefore they are not pressurised to make massive profits. This means that essentially they are able to run on lower costs and therefore offer cheaper products to their clients. Moreover, they are mutual institutions meaning – their clients make decisions on how the building society operates. They exist in UK since the 18th century. Building societies are not companies and are not listed on the stock market.
When thinking about the financial market, banking sector and the recent crisis which is still overshadowing lives of many people, it’s worth remembering that there ARE alternative ways of doing things. And, sustainable, people-friendly, fair and transparent banking can be profitable too.
“People generally are reluctant to accept the fact that paying performance bonuses make things worse not better – the executives themselves are certainly in denial – but there is wealth of research to show this is the case. A recent paper by Michael Cooper, Huseyin Gulen and Raghavendra Rau says bluntly: “we find evidence that chief executive pay is negatively related to future stock trends.””
Sadly, it’s starting to become as a trend. A French restaurant in the City – Coq D’Argent, nicely located on the top floor of one of the office buildings – is infamous for being the jumping board already for at least three suicidal City workers.
in 2012 three City workers did suicides, but from 2013 i recall this shocking suicide of an intern working for the Merrill Lynch. There was also a City lawyer who killed himself in front of the tube train. But overall it is close to impossible to find statistics over the last 5 – 10 years about the total number of suicides committed (and i wonder why? are PR departments of the sector trying to safeguard the reputation of their stressful workplaces?), but clearly this trend is alarming. 100 hour working weeks, competition, pressure, overworking, stress have been mentioned just as some of the reasons behind this tragic trend.
Maybe the financial institutions should learn from the Apple, which is dealing with Chinese factory workers’ suicides by installing suicide nets. They could also function as ‘umbrellas’, which may particularly be appreciated in rainy London.
p.s. I am slightly cynical here and not because I dont feel compassion for those who have taken their lives as a result of the work they had been doing, but for the cold-blooded attitude and reaction (meaning – silence and ‘no-comments’ tone) of the financial institutions with respect to the real work conditions in their organizations. Shame.
In these difficult times in countries, which are hit particularly hard by economic crisis, people choose different protest actions: some leave, some distance themselves from everything, some try to profit from this misery, but some choose to fight. This is a new documentary about those who have chosen to struggle and fight for better future in Greece. Inspiring actually. and thought-provoking..