Across the world, dreadlocked, falafel-fuelled protesters are gathering in their dozens to camp out outside stock exchanges and areas of commerce to decry the greed that exists in our Corporate world. It is an injustice that cannot be denied. People lining their pockets with millions while so many struggle to just get by from one day to the next is far from an ideal model of how to run a fair and just society.
That said, it’s not clear what the end game is, not at all clear what success looks like from these makeshift campsites and Dylan songs wafting in the evening air. I popped my head by the Occupy London site at St Paul’s just a moment ago and there is little space for the extra protesters that would be required to turn the efforts into a movement that might actually get somewhere. I’m not being cynical but realistic. These particular efforts look set to come to nothing.
Hopefully a partial solution to the huge profits, salaries and bonuses that do exist out there will come through the Parliament, and particularly through pressure from Labour, the Greens and indirectly from the SNP (or directly through independence, but that’s not what this post is about). One of the big problems with the UK right now is that wealth is concentrated in London and the South East of England. Pulling and spreading that wealth out to other parts of the UK is difficult when the majority of profits come from market sectors that would not leave London for love nor money.
My hope is to see policies such as the following come into being:
(1) No one salary in any organisation being more than 10x to 20x the salary of the lowest paid person
(2) All pensions being of equal size irrespective of the role taken within the organisation.
But, perhaps there is something a bit more radical and a bit more distinctly Scottish that can be done to ensure a bit of financial fairness across the UK, and to give Scotland a jumpstart to its economy: – create a Scottish Stock Exchange.
Edinburgh is reported to be the second largest financial centre in the United Kingdom after the City of London and, this may surprise some people, the fourth in Europe by equity assets. On top of this, it is one of the fastest growing city regions in Europe,[2] with strong rates of growth in banking and financial services at the forefront of this success. It can’t build a tram, sure, but it has a very strong European and even global reputation behind it that deserves to be built upon.
Yes, despite not having a stock exchange to revolve Scottish trade and dealing around, we are beating major cities that do – Stockholm, Vienna, Prague, Copenhagen, Helsinki, Dublin and Oslo to name a few. Even cities like Ljubljana, Bratislava, Belgrade, Podgorica (Montenegro), Skopje and Valletta have stock exchanges while Scotland does not.
We wouldn’t want to occupy an Edinburgh Stock Exchange, but we could own and mould it in the Scottish traditions of equality and fairness that would perhaps please even the most leftist of potential protesters north of the border. The opportunity to create increased activity around start-ups, business angels, joint ventures and mergers & acquisitions with such a centre in Scotland’s capital would be a golden one that could usher in a new great age for Scottish fortunes. It would also help Scotland build a can-do mentality by having one thing that we currently leave to other nations out there.
Can one agree with the #Occupy protests while still argue in favour of a new stock exchange for Scotland? I certainly hope so.
#1 by Douglas McLellan on October 17, 2011 - 1:27 pm
The answer to both your questions is yes. Stock exchanges themselves are not intrinsically good or bad so if they are better regulated then they can be more stable and fair. And Scotland should have a stock exchange as it would help smaller and local businesses access the benefits of a stock exchange without all the London hassles. Lib Dem manifesto for 2010 had the idea of regional stock exchanges so this could be extended to the north of England.
In terms of your points about salary differentials & pensions I agree but I’d make stock options and good performance bonuses a little less tied up in the same way.
#2 by William Brown on October 17, 2011 - 2:57 pm
Did we not have a kind of Stock Exchange in Edinburgh (and Glasgow?) before? If so, what happened to it?
#3 by Richard on October 17, 2011 - 3:57 pm
In Glasgow, from 1844 to 1973 – see: http://en.wikipedia.org/wiki/Glasgow_Stock_Exchange
Also found this: http://news.bbc.co.uk/1/hi/scotland/8628438.stm
#4 by Doug Daniel on October 17, 2011 - 3:01 pm
“(or directly through independence, but that’s not what this post is about)”
That almost sounds like a challenge… 😛
#5 by Sean on October 17, 2011 - 4:10 pm
There were several stock exchanges in Scotland until 1971 when they merged to form the Scottish Stock Exchange. It was based in at the Glasgow Stock Exchange. It’s a Italianate beautiful building; you can see it here http://g.co/maps/zcwah note the entrance sign beside Starbucks.
Watch a video of the opening day from Scottish Screen Archives http://ssa.nls.uk/film.cfm?fid=T1204
Just a couple of years later the 11 “regional” British & Irish stock exchanges merged with the London Stock Exchange in a big shake-up – women and foreigners were allowed to trade for the first time!
After the “Big Bang” in 1986 which radically altered the way the stock market worked memories of the precursor markets faded away.
#6 by Shooter on October 17, 2011 - 5:07 pm
lol, I love this. I work in the industry (in Edin) and a scottish stock exchange would be an awful idea. The main problem is that scotland has very few decent businesses outside of finance and oil/gas. For example, check out the latest GVA figures by region and industry from the Scottish Govt. Off the top of my head, the size of financial services in Edinburgh alone is something like 80% of all business in Glasgow and Oil/Gas is around 110%. Basically, there is nothing else there apart from retail and the government (although engineering is picking up a bit).
What is more, financial services and, to a lesser extent O&G, is basically walled off from the rest of the economy. Most of the money isn’t from Scotland and it isn’t being managed by Scottish people. This highlights the basic problem which is most people (particularly, young people) in Scotland just aren’t that interested in business. Or if they are, they feel completely alienated from society. Unfortunately, you highlight the problem as you seem to see high profits and salaries as a problem to be solved. Of course, the kids are quite right tho…why would you bother with business when you can get a decent salary in the public sector and skive the rest of your life? I love Scotland and I am choosing to stay here despite the damage that it may do it my career but the “something for nothing” culture is endemic…just to repeat, apart from financial services and O&G which aren’t in any way Scottish, there is nothing in the economy apart from the government.
(You should also know that between Quayle Munro, Noble Grossart and private equity (government-funded, of course) the whole corporate finance business in Scotland is locked up tight. In addition, you wouldn’t be able to float start-ups or anything like that on a stock exchange…again…worrying)
#7 by Indy on October 17, 2011 - 5:50 pm
You may be right that there is nothing doing in the economy but lazy generalisations about the public sector don’t really help.
If there is a problem, it is in the private sector not the public sector.
So maybe it would be more useful to look at what stops people starting up a business or growing a business rather than slagging off people in public service.
What is the problem – is it in the schools? Is it lack of access to finance? Is it an unhelpful tax regime? Too much red tape? These are the kinds of questions I think people would be genuinely interested in.
#8 by Roll on Sausage on October 17, 2011 - 6:23 pm
Plenty of listed companies (elsewhere) that are Scottish that are not Oil and Gas or Financials (the dominance of Financials is a problem on other Exchanges too). Aggreko, First Group and so on. Plenty of scope in other sectors for more localism – research and development, energy, biotechnology, food and drink and transport. Recommend you read the link at 3, for what a Scottish Stock Exchange *could* be used for.
And what about dual listing (LSE/ISE, for example)?
And besides, isn’t the something or nothing culture best exhibited in “your industry”? A wee bit of recklessness here and we’ll be bailed out by the taxpayers. Or a bit more QE there and that will grease the wheels………lol
#9 by Doug Daniel on October 17, 2011 - 8:16 pm
What a disgusting attitude.
#10 by Shooter on October 17, 2011 - 9:44 pm
It may or may not be disgusting but I represent the views of people (maybe not many) who are actually making money for the country (again, check the stats, Edinburgh financial services and oil/gas make up a disturbing portion of the economy). Just to be clear, “my industry” didn’t get bailed out and you misrepresent the views of most in the “industry” (in its broadest terms). I look after people’s money, I make them rich.
The problem is the public sector because it isn’t as productive as the private sector. Economic growth is complex but greater productivity = greater real wages. The size of the public sector (higher than many socialist economies) atm is wasteful if you actually care about productivity.
I told you what the problem with starting business was (it is far more complex than I have suggested, obviously, but this is just my view). In my opinion, it is cultural although education probablly fits too. When it gets down to it, people aren’t interested in business. You have great grads and great institutions (the government will literally give you money) but smart kids have either already left or leave after uni. There are too few good jobs for grads in Scotland relative to England. However, I wouldn’t be suprised if finance isn’t a problem (I am always suprised that Edin Uni spin offs don’t get more funding)…but its difficult to get solid stats. In short though, I feel a large public sector has blunted ambition and innovation in young people. Getting a job in the public sector is relatively straightforwad, high security and average pay however, most grads don’t think past the first few years (why would they?)
Your obviously correct that there are quite a few Scottish businesses on LSE (I would add IndigoVision as that is a new “exicting” company that is a great example of Scotland’s potential). As I said it won’t work. You can’t have a small stock exchange like Birmingham and expect anything exciting, the business are too small, there is no liquidity and investors aren’t interested. You need a country that already has big businesses and there is a big need for more funds. If you think these small, exciting companies need funds (perfectly possible in my view) then you need more venture capital and private equity interest rather than exchanges. In that regard, the Edin financial community needs to be less conservative and leverage its experience in raising funds from pensions in the US. I am not going to hold my breath though as it is far easier ripping people off in mutual funds. I’ll leave it there, don’t take it all too seriously chaps.
#11 by Erchie on October 17, 2011 - 10:22 pm
I work in the public sector supplying the same services as some private suppliers. I have several instances when I ave bid for work in the internal Market.
I keep coming in at 1/5 the price and 1/4 the time
And there was me thinking the free Market kept the private sector competitively priced and efficient
#12 by Indy on October 18, 2011 - 7:27 am
Your attitude isn’t disquieting Shooter, it’s just silly. The public sector is not supposed to be productive, it’s supposed to be about public service. People don’t go into it for the money – you don’t get paid a lot looking after elderly people for example, helping them get washed, helping them to get dressed, helping them to eat and to go to the toilet, and doing it all in a way that helps them maintain their dignity. We’ve seen what happens when that kind of service is provided on the basis of making money rather than providing a service. It’s not good. That’s why people want stuff like that to be provided as a public service, not for profit.
And it is just silly to say that the public sector is too big. A quarter of our workforce are employed in the public sector. That leaves three quarters who aren’t. So that’s three quarters of the workforce who could be more productive. Maybe you should focus on that, rather than the quarter who are doing something completely different?
#13 by Shooter on October 17, 2011 - 9:46 pm
Sorry forgot to add that giving Scot govt some corp tax powers could be interesting. Don’t know what will happen but it could make everything I said in para 3 wrong.
#14 by Barbarian on October 18, 2011 - 12:24 am
I don’t know if a Stock Exchange is a viable option nowadays, but having worked in the Armed Forces, the private, public and charitable sectors I take some offence with the suggestion that the public sector is an easy option. There are people there who work damned hard, and it is sometimes harder to develop a career because nepotism is rife in some sectors.
#15 by Shooter on October 18, 2011 - 2:46 pm
Its funny how the main thing people are pointing out my hostility to the public sector…makes you think.
Either way, you can say whatever you want about public services and being a good person. Productivity=wages. If you have a lot of resources applied to something unproductive then don’t expect living standards to be good. The economic significance of the public sector is far larger than you seem to think. Again, look at GVA figures, retail is suprisingly large (you should be able to work out why). I don’t care who provides those goods, all I care about is lower living standards for people who don’t have a choice.
I don’t believe the public sector is the easy option. Rather I am suggesting that more money is being applied than necessary. Nepotism is most common in the public sector because there is no link between productivity and wages. This is almost a logical identity because if you do something that doesn’t make money in the private sector, its over. The reason why people can’t get jobs is because, in Scotland, there aren’t any businesses to employ them or pay a decent wage (I recently went to a graduate event at Edinburgh. The only places from Scotland were law, investment management and two engineers. The rest were all based somewhere else…disappointing).
#16 by Ken on October 18, 2011 - 3:20 pm
I hope your line “Productivity=wages” does not imply “More productivity = higher wages”.
#17 by Indy on October 18, 2011 - 4:28 pm
You haven’t really addressed the point.
If you have 25 per cent of the workforce in the public sector how can that drag down the productivity of the 75 per cent working in private sector? Where is the connection? Things like elderly care are never going to be productive in an economic sense but people live longer lives, so what can you do? The public sector is cutting back on things e.g. less frequent bin collections, people not getting expensive cancer drugs etc. But in what way does that translate into a benefit for the private sector?
What is the supposed correlation between cutting the public sector and growing the private sector? That is what I don’t get and no-one has been able to explain. If you cut the number of social workers you won’t increase the number of entrepreneurs, you know? Because social workers don’t have the same qualities as entrepreneurs and vice versa.
Even if the public sector was slashed to a fraction of its current size, all that would happen is that we would go back to the days of churches and charities providing the services rather than the taxpayer. The demand for the services would not vanish, neither would the people providing them. Whether provided by public finance or private charity there is no money being made, so it’s all non-productive by your reckoning.
Therefore why not just forget about that side of things. Surely the focus should be on why the private sector in Scotland isn’t making enough money. What is wrong there?