These are financial times: a human rights perspective on the UK financial services sector

Abstract

This article explores the relationship between finance, financial institutions and human rights in an increasingly financialised world. Though developments have been made in human rights with respect to business, particularly with the United Nations' endorsement of UN Special Representative John Ruggie's Guiding Principles in Business and Human Rights, there remains a dearth of research into the ways that, specifically, the financial industry maligns human rights worldwide. This article bolsters discussion of the financial sector, human rights and the government and explores how these organisations, specifically in the United Kingdom and United States context, exploit the defuse nature of their operations and the lax government regulations on the financial industry to ensure the continuing prosperity of the financial and business world to the detriment of human rights.

Keywords:

• finance
• human rights
• commodities
• financialisation
• inequality
• capital
• regulation
• recession
• austerity

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributors

Manette Kaisershot is a researcher, activist, and lecturer at the Institute of Commonwealth Studies, University of London (her research primarily concentrates on Business and Human Rights but also encompasses cultural studies, politics, sociology, and law). Manette is a member of the editorial team for the International Journal of Human Rights and is on the steering committee for the Institute of Commonwealth Studies' Corporate Power and Human Rights working group.

Samuel Prout is a guest lecturer at the University of London, a student barrister at BPP Law School (London), and works in Public and Social Work Law.

Notes

1. Joshua Zumbrun, ‘World's Most Economically Powerful Cities’, Forbes, 15 July 2008, http://www.forbes.com/2008/07/15/economic-growth-gdp-biz-cx_jz_0715powercities.html (accessed 4 August 2013).

2. Stephen Burgess, Conjunctural Assessment and Projections Division, Bank of England, ‘Measuring Financial Sector Output and its Contribution to UK GDP’, Quarterly Bulletin (2011), Q3.

3. United Kingdom House of Commons, Financial Services: Contribution to the UK Economy, Standard Note by Lucinda Maer and Nida Broughton (SN/EP/06193), 21 August 2012.

4. Department for Business Innovation and Skills, Industrial Strategy: UK Sector Analysis, BIS Economic Paper No.18, September 2012, http://www.bis.gov.uk/assets/BISCore/economics-and-statistics/docs/I/12-1140-industrial-strategy-uk-sector-analysis.pdf (accessed 4 August 2014).

5. Those being the International Covenant on Economic Social and Cultural Rights (ICESCR), the International Covenant on Civil and Political Rights (ICCPR), the Convention Against Torture (CAT), the Convention on the Elimination of Racial Discrimination (CERD), the Convention on the Elimination of Discrimination Against Women (CEDAW), and the Convention on the Rights of the Child (CRC). Found at http://www.publications.parliament.uk/pa/jt200405/jtselect/jtrights/112/11209.htm (accessed 4 August 2013).

6. William Schomberg and Ana Nicolaci Da Costa, ‘UK Economy Basks in Manufacturing Growth, IMF Upgrade’, Reuters, 8 April 2014, http://uk.reuters.com/article/2014/04/08/uk-britain-economy-manufacturing-idUKBREA370H120140408 (accessed 4 August 2014).

7. ‘IMF Warns UK Government over Housing Bubble Risk’, BBC, 6 June 2014, http://www.bbc.co.uk/news/business-27731567 (accessed 4 August 2014).

8. Joseph Stiglitz, ‘The North Atlantic Malaise: Failures in Economic Policy’ (public lecture, Oxford Martin School, Oxford, 22 May 2014), https://www.youtube.com/watch?v=asV5_O6glbA&list=UUmXB98lpzelFrlryV2llXUQ (accessed 26 May 2014).

9. Ibid.

10. Ibid.

11. Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (New York: Free Press, 2004).

12. Jeremy Sarkin and Mark A. Koenig, ‘Developing the Right to Work: Intersecting and Dialoguing Human Rights and Economic Policy’, Human Rights Quarterly 33, no. 1 (2011): 2.

13. Alex Kirkup and Tony Evans, ‘The Myth of Western Opposition to Economic, Social, and Cultural Rights: A Reply to Whelan and Donnelly’, Human Rights Quarterly 3, no. 1 (2009): 354.

14. Ibid.

15. Diane Elson, ‘The Reduction of the UK Budget Deficit: A Human Rights Perspective’, International Review of Applied Economics 26, no. 2 (2012): 180.

16. See for example: Lanse Minkler and Shawna Sweeney, ‘On the Interdependence and Indivisibility of Basic Rights in Developing Countries’, Human Rights Quarterly 33, no. 2 (2011): 351–96; Kirkup and Evans, ‘The Myth of Western Opposition to Economic, Social, and Cultural Rights', 354; Elson, ‘The Reduction of the UK Budget Deficit’, 177–90.

17. Minkler and Sweeney, ‘On the Interdependence and Indivisibility of Basic Rights in Developing Countries’, 351–95.

18. Ibid., 354.

19. Daniel J. Whelan and Jack Donnelly, ‘The West, Economic and Social Rights: Setting the Record Straight’, Human Rights Quarterly 29, no. 4 (2007): 908–49.

20. Sethi S. Prakash, David B. Lowry, Emre A. Veral, H. Jack Shapiro, and Olga Emelianova, ‘Freeport-McMoRan Copper & Gold, Inc.: An Innovative Voluntary Code of Conduct to Protect Human Rights, Create Employment Opportunities, and Economic Development of the Indigenous Peoples’, Journal of Business Ethics 103, no. 1 (2011): 1–30.

21. Thomas Piketty and Arthur Goldhammer, Capital in the Twenty-first Century (Cambridge, MA: Belknap of Harvard University Press, 2014); Joseph E. Stiglitz, The Price of Inequality (New York: W.W. Norton, 2012); Ed Howker and Shiv Malik, Jilted Generation: How Britain Has Bankrupted Its Youth (London: Icon, 2010); Piya Mahtaney, Globalization and Sustainable Economic Development: Issues, Insights, and Inference (London, Palgrave Macmillan, 2013); Darnell Hunt and Ana-Christina Ramon, Black Los Angeles: American Dreams and Racial Realities (New York: New York University Press, 2010).

22. A phenomenon which is explained by Abhijit Banerjee and Esther Duflo in Poor Economics (London: Penguin, 2011).

23. Ibid.

24. Mary Dowell-Jones and David Kinley, ‘Minding the Gap: Global Finance and Human Rights’, Ethics & International Affairs 25, no. 2 (2011): 183–210.

25. Penelope Simons, ‘International Law's Invisible Hand and the Future of Corporate Accountability for Violations of Human Rights’, Journal of Human Rights and the Environment 3, no. 1 (2012): 5–43.

26. Howker and Malik, Jilted Generation, 2.

27. For more discussion of student debt and its effects see: Manette Kaisershot, ‘The Next Crisis: Student Debt’, Human Rights Consortium Blog, 7 March 2014, http://humanrights.blogs.sas.ac.uk/2014/03/07/the-next-crisis-student-debt/ (accessed 26 May 2014).

28. Stephen Valdez and Philip Molyneux, An Introduction to Global Financial Markets (Basingstoke and New York: Palgrave Macmillan, 2012), 201–4.

29. Stiglitz, ‘The North Atlantic Malaise’.

30. Ibid.

31. Robert Shrimsley, ‘The Nine Stages of The Piketty Bubble', The Financial Times, 30 April 2014, http://www.ft.com/cms/s/0/2d492786-cf90-11e3-bec6-00144feabdc0.html (accessed 26 May 2014).

32. Piketty and Goldhammer, Capital in the Twenty-first Century, 294.

33. Ibid.

34. Ibid., 377–429.

35. Stiglitz, ‘The North Atlantic Malaise’.

36. Ibid.

37. Stiglitz, The Price of Inequality.

38. Mahtaney, Globalization and Sustainable Economic Development.

39. Ibid., 190.

40. Piketty and Goldhammer, Capital in the Twenty-first Century; Mahtaney, Globalization and Sustainable Economic Development; Stiglitz, The Price of Inequality; Elson, ‘The Reduction of the UK Budget Deficit'; Howker and Malik, Jilted Generation.

41. Elson, ‘The Reduction of the UK Budget Deficit'.

42. Ibid., 182.

43. Ibid., 183.

44. Ibid., 180.

45. Ibid., 181.

46. Mahtaney, Globalization and Sustainable Economic Development.

47. Stiglitz, ‘The North Atlantic Malaise’.

48. Mahtaney, Globalization and Sustainable Economic Development.

49. Dowell-Jones and Kinley, ‘Minding the Gap’, 183–210.

50. Judge Julia Laffranque, ‘Opening of the Seminar on Implementing the European Convention on Human Rights in Times of Economic Crisis’ (European Court of Human Rights, Strasbourg, 25 January 2013), http://www.echr.coe.int/Documents/Speech_20130125_Laffranque_ENG.pdf (accessed 4 August 2014).

51. Mahtaney, Globalization and Sustainable Economic Development.

52. Eric Onstad, Laura MacInnis, and Quentin Webb, ‘Special Report: The Biggest Company You Never Heard Of’, Reuters, 25 February 2011, http://uk.reuters.com/article/2011/02/25/us-glencore-idUSTRE71O1DC20110225 (accessed 4 August 2014).

53. Barclays Investment Bank, ‘Commodities’, http://realizations.barclays.com/global-markets/commodities#.U5MtmvldX4U.

54. Goldman Sachs, ‘Securities Commodities’, http://www.goldmansachs.com/what-we-do/securities/products-and-business-groups/products/commodities.html.

55. MacQuarie, ‘Commodities’, http://www.macquarie.com/mgl/com/globalcapabilities/trading/commodities.

56. Ben Lilliston and Andrew Ranallo, ‘Excessive Speculation in Agriculture Commodities: Selected Writings from 2008–2011' (Institute for Agriculture and Trade Policy, 2011), http://www.iatp.org/documents/excessive-speculation-in-agriculture-commodities (accessed 4 August 2014).

57. Johann Hari, ‘How Goldman Gambled on Starvation’, The Independent, 2 July 2010, http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-how-goldman-gambled-on-starvation-2016088.html (accessed 4 August 2014); F. Kaufman ‘The Speculative Scrum Driving Up Food Prices’ The Guardian, 20 December 2011.

58. Murray Worthy, Broken Markets: How Financial Market Regulation Can Help Prevent Another Global Food Crisis (London: World Development Movement, 2011), http://www.wdm.org.uk/sites/default/files/files/resources/broken-markets.pdf.pdf (accessed 18 December 2014).

59. European Commission, ‘Commission's Response to the High Oil and Food Prices EC MEMO/08/421' (Press release, 10 June 2008), http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/421.

60. Ibid.

61. Glass-Steagal, The Banking Act 1933 (US) enacted June 1933; effectively repealed - in this context - by the Financial Services Modernization Act (US) 1999.

62. Odette Murray, David Kinley, and Chip Pitts, ‘Exaggerated Rumours of the Death of an Alien Tort: Corporations, Human Rights and the Peculiar Case of Kiobel’, Melbourne Journal of International Law 12, no. 1, (2011): 57–94.

63. See for example: Bakan, The Corporation; Noam Chomsky, Profit over People: Neoliberalism and Global Order (New York: Seven Stories, 1999); Greg Palast, Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates, and High-finance Carnivores (New York: Plume, 2012).

64. Dowell-Jones and Kinley, ‘Minding the Gap'.

65. ‘Foxconn Admits Labour Violation at China Factory’, BBC News, 11 October 2013, http://www.bbc.co.uk/news/business-24486684 (accessed 21 May 2014); ‘Five Ex-Employees of Taiwan's Foxxconn Indicted for Bribery', Yahoo! Finance, 21 May 2014, https://uk.finance.yahoo.com/news/five-ex-employees-taiwans-foxconn-085549226.html (accessed 21 May 2014).

66. Tom Randall, ‘Inside Apple's Foxconn Factories’, Bloomberg, 30 March 2012, http://www.bloomberg.com/slideshow/2012-03-30/inside-apple-s-foxconn-factory.html#slide9 (accessed 4 December 2014).

67. See UN, ‘Status of Ratification Interactive Dashboard’ (at http://indicators.ohchr.org/) for the most up-to-date information on the status of all UN covenants by country.

68. David Barboza, ‘Worker Deaths Raise Questions at an Apple Contactor in China’, New York Times, 12 December 2013, http://www.nytimes.com/2013/12/12/business/international/worker-deaths-raise-questions-at-an-apple-contractor-in-china.html?_r=1& (accessed 9 June 2014).

69. Connie Gugliemo, ‘Apple's Supplier Labor Practices In China Scrutinized After Foxconn, Pegatron Reviews’, Forbes, 12 December 2013, http://www.forbes.com/sites/connieguglielmo/2013/12/12/apples-labor-practices-in-china-scrutinized-after-foxconn-pegatron-reviewed/ (accessed 21 May 2014).

70. Apple, ‘Fair Labor Association Begins Inspections of Foxconn’, 13 February 2012, http://www.apple.com/uk/pr/library/2012/02/13Fair-Labor-Association-Begins-Inspections-of-Foxconn.html (accessed 21 May 2014).

71. Fair Labor Association, Final Foxconn Verification Status Report, December 2013, http://www.fairlabor.org/sites/default/files/documents/reports/final_foxconn_verification_report_0.pdf.

72. Ibid.

73. Charles Duhigg and David Barboza, ‘In China, Human Costs Are Built Into an iPad’, The New York Times, 25 January 2012, Business Day, http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html?pagewanted=all&_r=0 (accessed 21 May 2014).

74. Thomas I. Palley, ‘Financialization: What It Is and Why It Matters’, Working Paper No. 525 (Washington, DC: The Levy Economics Institute, 2007), http://www.levyinstitute.org/pubs/wp_525.pdf (accessed 4 August 2013); Bakan, The Corporation; Stiglitz, The Price of Inequality.

75. Palley, ‘Financialization’.

76. Bakan, The Corporation.

77. Ibid., 63. In the case of Anderson v. General Motors, a car accident resulting in a fire from a badly designed car that left the plaintiff, her three children, and a friend horribly disfigured was the result of a known fault in a general motors car that was not recalled based on a financial computation that worked out it would cost the company more to pay out damages than to recall the faulty vehicle.

78. Elson, ‘The Reduction of the UK Budget Deficit’, 177–90.

79. David Harvey, The Crisis of Capitalism (London: RSA Animate, 2010), http://davidharvey.org/2010/05/video-the-crises-of-capitalism-at-the-rsa/ (accessed 1 December 2014).

80. Valdez and Molyneux, An Introduction to Global Financial Markets, 273–4.

81. Ugo Albertazzi, Ginette Eramo, Leonardo Gambacorta, and Carmelo Salleo, ‘

Securitization Is Not That Evil After All’, Bank of International Settlements Working Papers No. 341 (Basel: Monetary and Economic Department, March 2011).

82. Benjamin J. Keys, Tanmoy Mukherjee, Amit Seru, and Vikrant Vig, ‘Did Securitization Lead to Lax Screening? Evidence from Subprime Loans', The Quarterly Journal of Economics 25, no. 1 (2010): 307–62.

83. Financial Conduct Authority, ‘FCA Fines RBS and NatWest For Failures in Mortgage Advice Process’ (Press release, 27 August 2014), https://fca.org.uk/news/fca-fines-rbs-and-natwest-for-failures-in-mortgage-advice-process (accessed 4 December 2014); Kate Palmer, ‘RBS-NatWest Fine: Were You Also Mis-sold a Mortgage?’, The Telegraph, 27 August 2014, http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11058040/RBS-NatWest-mortgage-mis-selling-were-you-also-mis-sold-a-mortgage.html (accessed 4 December 2014).

84. International Monetary Fund, ‘Iceland: Financial System Stability Assessment­­ –Update’, IMF Country Report, No.08/368 (Washington, DC: IMF, December 2008), 5.

85. Valdez and Molyneux, An Introduction to Global Financial Markets, 43–4.

86. Ibid., 116.

87. Goldman Sachs, Goldman Sachs Annual Report, 2008, http://www.goldmansachs.com/investor-relations/financials/archived/annual-reports/2008-entire-annual-report.pdf (accessed 4 December 2014).

88. For a brief discussion of this subject see Eichengreen, B. (2008) Origins and Responses to the Crisis, University of California, Berkeley, http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/origins_responses.pdf (accessed 29.08.2014).

89. See, for example, the collapse of MF Global in 2011.

90. Basle Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards (Basel: BIS, 1988).

91. Valdez and Molyneux, An Introduction to Global Financial Markets, 37–8.

92. European Commission Green Paper, Shadow Banking (Brussels: European Commission, 19 March 2012), http://ec.europa.eu/internal_market/bank/docs/shadow/green-paper_en.pdf; Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis (London: FSA, March 2009), http://www.fsa.gov.uk/pubs/other/turner_review.pdf; Financial Stability Board, Shadow Banking: Strengthening Oversight and Regulation, Recommendations of the Financial Stability Board, 27 October 2011; George Osborne and Jun Azumi, ‘Beware the Risks of the Rush to Regulate’, The Financial Times, Opinion, 22 February 2012.

93. Financial Services Authority, The Turner Review, 22–4.

94. Ibid., 22.

95. David Colander, Hands Follmer, Armin Haas, Michael Goldberg, Katarina Juselius, Alan Kirman, Thomas Lux, and Brigitte Sloth, ‘The Financial Crisis and Systemic Failure of Academic Economics’, Working Paper No. 1489 (Kiel, Germany: Kiel Institute for the World Economy, February 2009), https://www.ifw-members.ifw-kiel.de/publications/the-financial-crisis-and-the-systemic-failure-of-academic-economics/KWP_1489_ColanderetalFinancial%20Crisis.pdf (accessed 4 December 2014).

96. Basel Committee on Banking Supervision, The Joint Forum: Credit Risk Transfer (Basel: BIS, March 2005), http://www.bis.org/publ/joint13.pdf (accessed 4 December 2014).

97. James Crotty, ‘The Great Austerity War: What Caused the US Deficit Crisis and Who Should Pay to Fix It?', Cambridge Journal of Economics 36, no. 1 (2011): 79–104.

98. Basel Committee on Banking Supervision, Core Principles for Effective Banking Supervision (Basel: BIS, September 2012), http://www.bis.org/publ/bcbs230.pdf (accessed 4 December 2012); House of Commons Library, Voting Behaviour in the EU Council, Standard Note SN/IA/6646, 23 May 2013, 17.

99. Financial Services Authority, The Turner Review, 89.

100. Crotty, ‘The Great Austerity War’.

101. Ibid.

102. ‘Osborne and the Politics of Austerity’, The Financial Times, 24 June 2013, http://www.ft.com/cms/s/0/aa1b570e-dcc3-11e2-9700-00144feab7de.html#axzz2b6jsfUg1 (accessed 5 August 2013); Jeffrey Dorman, ‘Austerity in Europe: It Will Work If It's Ever Tried’, Forbes, 1 August 2013, http://www.forbes.com/sites/jeffreydorfman/2013/08/01/austerity-in-europe-it-will-work-if-its-ever-tried/ (accessed 5 August 2013).

103. Ibid.

104. Ed Ferrari, ‘Excess Commuting to School’, Blog, 27 July 2011, http://ed-ferrari.staff.shef.ac.uk/blog/blog/2011/07/27/excess-commuting-to-school/ (5 August 2013); Jill Sherman, ‘Children Join Big Commute as Benefit Cap Forces Out Families', The Sunday Times, 23 May 2014, http://www.thetimes.co.uk/tto/news/politics/article3773349.ece (accessed 5 August 2014).

105. Ibid.

106. Financial Conduct Authority, ‘How We Are Funded’, http://www.fca.org.uk/about/how-we-are-funded# (accessed 28 July 2013).

107. Bank of England, ‘Prudential Regulation Authority', http://www.bankofengland.co.uk/PRA/Pages/default.aspx (accessed 28 July 2013).

108. Financial Ombudsmen, ‘About’, http://www.financial-ombudsman.org.uk/about/index.html (accessed 28 July 2013).

109. Citizens Advice Bureau, http://www.citizensadvice.org.uk/ (accessed 28 July 2013).

110. Laffranque, ‘Opening of the Seminar on Implementing the European Convention on Human Rights in Times of Economic Crisis'.

111. Grainger and Others v. The United Kingdom, 34940/10, 10 July 2012, Paragraph 42.

112. House of Lords and House of Commons Parliamentary Commission on Banking Standards, Proprietary Trading: Third Report of Session 2012–2013, Vol. I & II, 15 March 2013, http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/138/138.pdf, http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/138/138vw.pdf (accessed 4 December 2014).

113. Cabinet Office, The Rt Hon Francis Maude MP and Civil Service Reform, ‘Future of Government Services: 5 Public Service Reform Principles' (Speech, 10 February 2014), https://www.gov.uk/government/speeches/future-of-government-services-5-public-service-reform-principles (accessed 4 December 2014).

114. Department for Communities and Local Government, Implementing Self–financing for Council Housing, February 2011, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6005/1831498.pdf (accessed 4 December 2014).

115. United Nations Office of the High Commissioner for Human Rights, Economic, Cultural and Social Rights: A Handbook for National Human Rights Institutions (Geneva: UN, 2005), 12.

116. HM Treasury and Office of National Statistics, Country and Regional Analysis, November 2013, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264286/Country_and_Regional_Analysis_2013.pdf (accessed December 2014); HM Revenue & Customs, Rates and Allowances: Corporation Tax, 14 April 2013, https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax (accessed 4 December 2014).

117. Valdez and Molyneux, An Introduction to Global Financial Markets.

118. National Audit Office, ‘Taxpayer Support for UK Banks: FAQS’, National Audit Office webpages, http://www.nao.org.uk/highlights/taxpayer-support-for-uk-banks-faqs/, (accessed 4 December 2014); ‘Taxpayers Bail-Out of Banks is “Justified”, says NAO’, BBC News, 4 December 2009, http://news.bbc.co.uk/1/hi/8394393.stm (accessed 4 December 2014); HM Treasury and The Rt Hon George Osborne MP, ‘Chancellor Says Today's Figures Show that Britain is Coming Back’, UK Government, 29 April 2014, https://www.gov.uk/government/news/chancellor-says-todays-figures-show-that-britain-is-coming-back (accessed 4 December 2014).

119. Bakan, The Corporation.

120. Frances Coppola, ‘Credit Suisse is Too Big To Jail’, Forbes, 24 May 2014, http://www.forbes.com/sites/francescoppola/2014/05/24/credit-suisse-is-too-big-to-jail/ (accessed 4 December 2014).

121. Ibid.