IT is time for Sir Fred to become once again plain Mr Goodwin. He should be stripped of his knighthood, awarded in 2004 for services to banking at a time when the Labour party and the Scottish establishment thought he was a genius and a great business hero. He was no such thing and ended up doing banking, shareholders and taxpayers a disastrous disservice. That is the danger in awarding people who are still in their jobs an honour: there is nothing harsher than the verdict of history.
But this move should be handled carefully. It is absurd to believe that Goodwin was solely or primarily responsible for the crisis. Yet everybody else that shares responsibility will retain titles and awards, including Sir Alan Greenspan (another Brown knighthood) who did infinitely more to destroy the global economy than Goodwin ever did.
In this instance, however, better selective justice than none at all. But in future the rules governing the British honours system should be tightened so that more people who subsequently discredit themselves lose their titles. But while that will hopefully deal with rewards for failure in the private sector or if people commit crimes, it is unlikely to solve the hugely prevalent system of honours-for-failure in the public sector, including when politicians who destroy the country and are thrown out by electors are subsequently rewarded by their party, or when civil servants award each other honours on retirement, regardless of performance. But that is not a reason to forgive Goodwin.
THERE are two ways a human being can get another to do something. The first is to use force or the threat of force; the second is to persuade them to do so voluntarily. Capitalism, defined to include all non-state action, is part of the second system. If you don’t do what a government wants you to do, it will take money from you (a fine), deprive you of your liberty (prison) or worse. If you don’t want to do what your boss tells you, you can quit; if you don’t want to buy goods in a particular shop, you can take your custom elsewhere; if you don’t want to give money to a charity, you can keep it or find another deserving cause.
The critical distinction between these two ways of organising human relationships is often overlooked. This is partly because the status quo – an economy partly free and partly controlled by government, and where barriers to entry, quasi-monopolies, bailouts, subsidies and other forcible redistribution are rife – is wrongly conflated with a real market economy.
The fact that proper capitalism is based on voluntary action makes it inherently more moral than systems based on coercion. Compulsory “kindness” is amoral; it is not true kindness. Not all voluntary actions are moral; and of course fraud, lies and dishonesty are wrong. But these failings are inherent to the human condition. In any case, the state’s primary duty is to crack down on people who cheat and try to defraud others.
Beyond that, the best way to tackle cronyism, rip-offs, sharp practices, irresponsibility and unaccountability is to reduce the sphere of human action based on coercion and increase that based on voluntary action. It means empowering consumers and making it easier for new, cheaper or more honest companies to enter markets. Choice – real choice, not the saccharin variety that is often currently on offer – is the answer to many of our problems.
Follow me on Twitter: @allisterheath