Moral Low Ground

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Bank of England Exec Andrew Haldane: Occupy Right about Inequality Causing ’08 Crash

Haldane: Occupy is right. (Photo: Bank of England)

A top official at the Bank of England has praised the Occupy Wall Street movement for its role in inciting a “reformation” in the financial services industry and for correctly attributing the 2008 global financial collapse to economic inequality.

The Telegraph reports that this unlikely alliance between the Occupy Movement and Andrew Haldane, executive director of financial stability at the Bank of England (BOE), is based on a common understanding of the underlying causes of the 2008 mega-recession.

“Occupy has been successful in its efforts to popularize the problems of the global financial system for one very simple reason– they are right,” Haldane said at a central London debate hosted by Occupy Economics, an offshoot of Occupy Wall Street.

Haldane, 45, said Occupy was right about the excessive greed, salaries and bonuses that have infected the financial services industry.

“I do not just mean right in a moral sense,” he said. “It is the analytical, every bit as much as the moral, ground that Occupy has taken. For the hard-headed facts suggest that, at the heart of the global financial crisis, were– and are– problems of deep and rising inequality.”

For example, in the United States, birthplace of Occupy Wall Street, inflation-adjusted after-tax income for the wealthiest 1 percent of households soared 275 percent in the years 1979-2007. For the poorest 20 percent of households, income rose a modest 18 percent over that same period. If wealth were viewed as a pie, the slice held by the top 1 percent more than doubled from 1979 to 2007 while the slice held by the poorest 20 percent actually shrunk.

While Haldane’s acceptance of Occupy philosophy is a welcome departure from the capitalist script, fraud– mortgage fraud, derivatives fraud and ratings fraud, for the most part unpunished by the US government– is much more responsible for the economic crisis than inequality. The (often criminal) actions of Wall Street executives, not the actual inequality that those actions exacerbated, are the cause of the crash.

Haldane also praised the Occupy movement for being a catalyst for change in the way the financial services industry is run.

“If I am right and a new leaf is being turned, then Occupy will have played a key role in in this fledgling financial reformation,” he said.

“You have helped win the debate.”

Haldane pointed to regulations limiting credit use, which will likely stymie efforts by the rich to accumulate massive property and financial wealth at the expense of the rest of British society, as one positive outcome of the movement’s demonstrations. BOE will enact the stricter credit rules once it takes over control of the lending industry from the Financial Services Authority next year; they will take effect in 2014.

Occupy London protesters staged large-scale demonstrations as part of the global Occupy Wall Street movement that began in New York City last October. Protesters occupied the grounds of St. Paul’s Cathedral, where they camped for three months before being forcefully evicted by riot police in February.

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