Focus on banks is a “giant displacement activity”

Last night Rob Killick spoke in a debate in London on whether the big banks should be broken up, along with Kitty Ussher of Demos and Philip Blond of Res Publica, and he has posted the text of his sharp speech on his blog (here).

Killick argues that the focus on banking misses the point: 

The financial boom and bust was not the product of risky behaviour by bankers, something that those who argue for the break up generally contend. Rather it was the outcome of government sponsored credit expansion policies, here and elsewhere. Low growth rates were artificially stimulated by easy credit policies. The banks were certainly complicit in this behaviour as executors of a strategy of bolstering consumption instead of investment, but they were not the cause. The banks have become scapegoats for the recession, accused by many of the same politicians who encouraged them to keep on lending when times were good....

The constant harping on about banks and bankers has acted as a giant displacement activity. Being envious about bonuses is far easier than working out how to solve the growth problem.