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Banking and the Seven Deadly Sins

This is the second in a six part series studying whether bankers are good or bad for society:

[If you just want to get the slides and download the
whole speech, click here
]

Today, we ask the question:

Are bankers a force for good or bad?

To answer this question we must take a religious and historical journey through time. Personally, I am not comfortable with that as I am not deeply religious, but the associations of bankers being a force for good or for bad are intrinsically associated with religious beliefs throughout history and the use of the fear of Gods to constrain financial markets.

Today, as mentioned, the fear of God is no more so it is more the fear of the Chancellor … but the reason for the associations with Gods is that money was created by priests to control society and bankers are at the heart of controlling society because the goods they manage – money – is at the core of all power.

This is why banking has continually been faced with a challenge from a moralistic and religious viewpoint throughout history.

It is only by maintaining a strong moral and ethical stance that bankers can be good for society, and these rules must be enshrined in the fabric of how bankers are managed.

Without such fear, morals and ethics will be allowed to slide and many would contend that this has been the case in this most recent crisis. When this happens, then banking is a force for bad.

This moral and ethical challenge is why banking has such a strong link to religion. It is why money, and its potential for positive or negative impacts, is discussed regularly in the Bible, Qur’an and Talmud.

This is why the Bible states: “For the love of money is a root of all kinds of evil” in the Book of Timothy, because money can create sorrow and misery. Equally it can create happiness and joy. It all depends whether money is managed by bankers who see it as a source for good or bad in society.

A banker’s role in society should therefore be not to love money and get rich, but to manage money on our behalf and be rewarded appropriately for managing it prudently on our behalf. The essence of banking should be to ensure money is protected, as it holds such a strong position in making or breaking societies and civilisations.

Without effective management of money, societies breakdown, wars arise and anarchy prevails.

After the Great Depression, a decade of high unemployment ensued and then a Second World War. A World War built on the back of economic hardship that allowed Hitler to sweep into power thanks to hyperinflation in the early 1930s Germany and an economy that was destroyed.

This is why money and its controllers are so critical to our lives, as they can build progress for good or hardship for bad.

Money is at the heart of most of our sins in fact, as the overindulgence in the seven deadly sins breaks people, economies and societies, and it is only money that restricts the indulgence.

For example, we’ve already discussed sex, so that’s lust off our list but let’s take envy.

Envy is being jealous of what other people have got and is the core of materialism.

Keeping up with the Joneses is all about envy and envy therefore is all about having cash to buy the goods to show you’ve got something better than they have.

Envy is fuelled by money as is lust which is why the love of money is the root of all evil.

The same is true with anger.

What makes us angry?

Stress?

And where does stress come from?

In many instances from money, or the lack of it.

In fact, money is at the core of why relationships fall apart as illustrated by this line from divorce.com: “The most common communication problems that create stress in a marriage are usually related to finances and sex.”

This is backed up by a recent study of 2,500 Australian couples between 2001 and 2007 which found that 16% of respondents who were poor or where the husband was unemployed separated, compared with only 9% of couples with healthy finances.

Money and sex are the twin engines powering everything we do, and banks and bankers control money and therefore have a critical role to play in whether we are saints or sinners.

Think about the next sin: sloth, for example.

Sloth is indicative of being lazy and who do we think of as being laziest?

The unemployed and the seriously rich.

The former are the poorest of society who may or may not have chosen to be slothful; the latter, thanks to money, can choose to indulge in sloth.

If you are not wealthy, you cannot indulge in this sin happily and this is the reason why lotteries are so successful around the world because what’s the first thing a lottery winner does with their winnings?

You got it, they give up work.

Which brings me to the sin that’s almost the opposite of sloth: pride.

Pride.

What’s money got to do with pride?

Well, we take pride in things we have and money allows us to have more things to be proud of therefore. It’s back to materialism.

In fact, if you don’t recognise this factor, just think about the most famous book about Pride, Jane Austen’s Pride and Prejudice.

Money plays a central role in the plot of Pride and Prejudice because the Bennet women are left with a bleak financial future after Mr. Bennet dies. As a result, Mrs. Bennet's pursuit of husbands for her daughters takes on a sense of urgency that supersedes her foolish behaviour.

Austen describes people's financial situations throughout Pride and Prejudice in terms of actual monetary amounts:

“Is he married or single?”

“Oh! Single, my dear, to be sure! A single man of large fortune; four or five thousand a year. What a fine thing for our girls!”

Translating this into modern mantra using figures from a UK Government research paper entitled Inflation: the value of the pound 1750-2005 shows the pound valued at an all time low.

The price index for 1813 was 16.3, and that for 2005 was 757.2.

So in 2005 the average price level was roughly 46.5 times the 1813 level.

This means that to have the same purchasing power in 2005 as £5,000 had in 1813, you would need to be earning around £230,000 a year to qualify as a possible suitor to one of Mrs. Bennet’s children.

Meanwhile, Mr. Darcy is not simply rich, he has £10,000 pounds or nearly £500,000 a year in today’s money. He must be a banker.

Oh yes, and when Elizabeth's father dies, she will not only be poor but will have a mere £40 or £1,850 a year.

Just £150 a month to live on.

No wonder her mother was desperate to marry them all off.

And so, as can be seen, pride is all about having money and wealth.

Which brings us to our sixth and penultimate deadly sin: gluttony.

Gluttony is indulging in eating and drinking to one’s heart’s content, but do you want to eat gruel or foie gras?

Of course you can be a glutton for MacDonalds, but would you rather not have fine dining at Gordon Ramsay’s to pig out?

And would you prefer an alcopop or a Petrus?

I know which would be the natural choice, but money prohibits us from being a Ramsay and Petrus glutton and so we have to gird our stomachs on MacDonalds and alcopops.

Then there’s the final sin most closely associated with all things banking: greed.

It’s funny to be honest that we have everything encapsulated in greed.

Greed is good, as Michael Douglas declares in the movie Wall Street.

Greed is a sin but hey, being a capitalist pig is no bad thing is it?

Pigs, piggy banks, pigs at the trough, greedy pig … anything and everything piggy is all about banking and money.

And that is because, without constraints, bankers will be gluttons of greed.

There has to be a tether to this bull in the china shop, and that tether is fear.

Fear of God historically and fear of regulations today.

So there you have it.

The seven deadly sins are fuelled by money.

Bankers should be the guardians of money enabling us to avoid excess access to the seven deadly sins.

Bankers are good for society as long as they have a tether to constrain them from indulging in greed particularly and, when they are allowed to be unconstrained, they will indulge themselves and become sinners.

This is why money and bankers hold the core of power and control, because basic human nature seeks to indulge in those basic sins.

And it is this balance between good and evil, power and politics, control and anarchy, where sex and money plays a key position, with bankers being the priests of the money halls.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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