In the few minutes available, I shall primarily address issues relating to the criminal finance Bill. In introducing the subject, I can do no better than to recognise the extremely thoughtful contribution of Mr Clarke on Tuesday. In his peroration, he made these comments in referring to the Bill:
“we in this country are very bad at dealing with white-collar crime, and there is growing awareness of that. If someone wishes to rob a bank, they go to the LIBOR market;
they do not put on a balaclava and pick up a shotgun—that is much less profitable…
I hope I can be reassured that the Bill will tackle not just tax evasion, which is quite rightly high on the public agenda, but money laundering.”
He concluded this part of his speech by saying:
“London is still the money-laundering capital of the world.”—[Official Report,
Vol. 611, c. 450.]
The right hon. and learned Gentleman rightly pointed out the nature of the challenge we face. Many of the biggest crooks are working in the City of London. This is a major challenge that we should all be willing to address. It would be commendable if the Government eventually produced a very strong Bill, but as is sometimes said in my part of the world, “I hae ma doubts”.
If people’s behaviour and motivation are so important, that raises a fundamental concern in my mind about the flawed approach to economics that seems to dominate much of current thinking. We find that Treasury civil servants and central bankers have presided over not only corrupt practices and economic failure, but intellectual failure, too. For example, their devotion to what most people know as neo-classical economics led to their failure to anticipate the largest recession since the 1930s, and revealed their powerlessness as policymakers in the face of the subsequent stagnation of output.
The penchant of the neo-classicals for putting all their eggs in the basket of simple mathematical and statistical forecasting is based on remarkably few variables, which leads them to ignore economic problems that are not easy to measure—whether they be legal or illegal. Even Mervyn King in his book “The End of Alchemy” hinted at this critique when pointing out the failure of existing models to take into account critical changes such as the political reforms in China that led to its rapid growth. I add the inability to see how attractive the City of London has become to—