Bailed-out banker praises capitalism, attacks parasites

Matt Ridley's book The Rational Optimist is about mankind's long-term ability to make things better, not worse. Sounds great! But it's also got some stuff attacking wealth-redistributing bureaucratic parasites who stifle businesses by intervening in free markets. This is interesting because Ridley is the discredited Northern Rock chairman whose company received a $40bn state bailout after the company's near-collapse and the first run on a British bank since the Victorian era. [Guardian]



  1. Look up sociopath and douchebag bankers. If the descriptions don’t line-up like base-pairs, I will eat a bug.

    Shakespeare’s “Dick The Butcher” was only half right.

  2. I for one am glad that fabulous wealth and riches haven’t ruined Ridley’s ability to stay in touch with the common man.

  3. To be fair, there is a difference between the government supporting a bank with a loan and outright gifting money to various groups.

    Accordng to Wikipedia the government is getting their $40bn back, whereas social welfare programs tend to be ongoing cost obligations.

    I’m not saying I agree with the guy, but you can be for certain types of government action and against other types. It’s not all just Anti-Government vs. Pro-Government.

    1. Well first not sure where you got your “loan” information. The money given to Northern Rock was not a loan. The bank was nationalized. It is no longer a privately owned bank but is now actually owned by the British govt. It is for sale. It’s like when the banks reposes someones house and sell it off to pay down the note. If you call that a loan I guess you could call the Northern Rock deal a loan.

      1. Just from skimming the Wikipedia article.

        “As of 3 March 2009 the bank was repaying the loan well ahead of target, owing a net balance of only £8.9 billion”

        Reading further, it looks like the loan was taken well before the nationalization.

        But anyway, we don’t need to get into all the lengthy specifics for the sake of a blog comment. My original point still stands, that this was a temporary measure where the government intends to get their money back. As opposed to an ongoing social program which is a regular part of the budget. It’s like apples and oranges. Both fruit, but not the same.

    2. Not a meaningful one:

      The use of money, for a period of time, has a market value, even for borrowers deemed essentially certain to pay back on time. If the borrower is a shit credit risk(and, if you are getting a loan from the state, rather than from the private sector, this is a possibility worth considering…) the cost to use the money is higher.

      Now, a 40 billion loan is worth less than a 40 billion gift; but it is a handout, just not a 40 billion dollar one.

  4. I’m sure, if asked, he’d assert that it was government regulation that prevented the bank from accomplishing its financial goals and being profitable.

    As @David Carroll noted, sociopathic.

    1. Because the proposals and theses contained therein have been shown, by the author’s own experiences, to be an accurate representation of the truth?


      This fellow ignores evidence, and calls it wisdom!

  5. Clearly the function of governments to support corporations and keep the stock market going. Concern for well being of individual citizen is a waste of time and money.

    @Rayonic Is ROI only about getting money back? Yes, there is waste and sometime intended goals are not met. This happens in the private sector too. Should governments take Marie Antoinette’s stance and “Let them eat cake?”

    1. The government intervention with Northern Rock did help people. All the people with bank accounts, for starters. The employees of Northern Rock too. And theoretically it helped stabilize the economy, which ordinary people do rely on.

      Looking out for the welfare of the populace is more complex than just helping out the needy. Sometimes the government has to look at the big picture too.

      I’m not a strawman. I’m not saying that any particular government programs are bad. I’m just saying that the bank bailouts and social welfare are two different ways that a government can look out for the interests of its citizens. And that you can be for one type of government assistance and critique the other types without being a hypocrite (as the parent summary implies.)

      1. Yes, the 2 are not the same. Yes, looking out for the well being of populace is complex. Yes, helping the banks helped employees and account holders. But, just helping the big guys with the notion that the little guy is helped too is bunk. I am not inferring that this is your view. What I witnessed “trickle down” in the Eighties was not what prosperity.

  6. Claiming Matt Ridley as a “banker” is a misleading at best, dishonest at worst. Yes, he *worked* for a time at Northern Rock as a *non-executive* chairman, but he is primarily a science writer with a a doctorate in biology, and has written such well known books as “The Red Queen: Sex and the Evolution of Human Nature”.

    1. He was paid 300,000 pounds per year for being chairman, according to his wikipedia entry. That’s sounds like he was a significant officer at a bank, which is essentially the definition of a “banker”.

      1. So, George Orwell was a “bookseller”, Einstein a “patent clerk”, and Melville a “customs agent”? Like Ridley, they were primarily supported by things other than what they were famous for. But most reasonable people define Orwell and Melville as writers and Einstein as a physicist.

        1. If Melville wrote about customs, it might be prudent to say he was a customs agent, and if he commented on importing whale-product, it might be ok to say: ‘Melville, customs agent, whaler, and writer, said…’. If Einstein commented on the same issue, it is ok to say ‘Einstein, physicist and patent clerk, didn’t know what he was talking about.’
          As Ridley is commenting on a fiscal phenomenon, his banking background is worth mentioning.

          Ridley is doing the same thing he did in ‘Red Queen’ – conflating insights into genetics and evolution with other things that involve heritage and progress, using the strictly linguistic equivalency of the terms to do grand scale apple-oranging.

        2. So, George Orwell was a “bookseller”, Einstein a “patent clerk”, and Melville a “customs agent”? Like Ridley, they were primarily supported by things other than what they were famous for. But most reasonable people define Orwell and Melville as writers and Einstein as a physicist.

          It seems churlish to exclude Ridley from the list of people famous for doing something other than their day jobs simply because he was an unmitigated disaster in his dilettanteish activity of choice, whereas Orwell et al were not.

        3. Again, he was paid approx 1.2 million pounds by a bank over four years. Hopefully he did some banking for them. The bank that he was (nonexecutive!)chairman for may have foundered for things that had had nothing to do with his performance.

          At the time the bank he worked for foundered, it would not be reassuring to hear someone described as a director at the bank saying “I’m not a banker”. If he refunds his salary and takes it off his CV, I’ll happily stop calling him a banker. If he was being paid that much and didn’t consider banking his day job, that is really not to his credit.

          Based on his viewpoints though, even if he gave me a really nice toaster, I’d bank elsewhere.

          Asimov was a scientist. I knew the scientist who fired him for writing instead of researching, but we all know of Asimov as a scientist. The others you mentioned were those professions, Grisham was/is a lawyer, Arthur Conan Doyle was a doctor. Obama is a politician and a lawyer, though I think he made more from writing than being a politician or lawyer.

          Members of the “Rock Bottom Remainders” are writers first and foremost, but are all described as amateur musicians.

          I don’t think you can be an amateur banker.

          Dave Barry quotes:
          “We play music as well as Metallica writes novels.”
          “Roy (Blount Jr). actually coined the term for our genre of music; ‘hard-listening music.’

          1. “The bank that he was (nonexecutive!) chairman for may have foundered for things that had had nothing to do with his performance.”

            Well, to grossly over-simplify, what happened at Northern Rock was that the managers were given bonuses based not on performance (short or long-term) but on market share.
            So, not surprisingly, they started to aggressively go after what we now call the sub-prime market, which was a generally unexplored area in the UK at the time. And, equally unsurprisingly, Northern Rock suddenly became one of the biggest mortgage brokers in the country. The managers got their huge bonuses, but since they weren’t linked to the consequences of their actions, they didn’t have to do any due diligence or worry about whether there might be reasons why this market was unexplored…
            And the non-executive directors (and, presumably, chairman) didn’t think there was anything odd about the sudden growth in market share – just that Northern Rock was returning good results in what seemed to be a pretty competitive market.
            So yeah, I think Ridley might be a little nit responsible, in a similar way to the Madoff investors deluding themselves that >10% growth was plausible. It’s the job of non-execs to try and keep the company safe, not to sit back and applaud.

  7. Give the guy a break, the banks selflessly took that money to induce a ‘trickle down effect’. We’re the real parasites here.

  8. One: advocates of “free markets” are often the very same people whose actions provide the strongest incentives for regulation.

    Two: the human ability to simultaneously hold wildly inconsistent views of what is right and wrong -depending on whether it puts money in your pocket or not- cannot be underestimated.

  9. The people who most want free markets are generally the ones who plan on stripmining the economy as soon as the rules that prevent it are removed.

  10. What this idiot and other fake capitalists don’t understand is that the so called invisible hand of capitalism is just natural response to game theory, assumed risk to benefit ratio. If the Government socializes the risk side of the equation everything goes crazy, no document required home loans and all. The US has not had a free market for a very long time, we are paying the price now.

    Now spreading risk and costs over a whole national population like with the military, fire, police and medical has been assumed by all advanced nations. The US just uses the ER (expensive room) as the entry point for the uninshured and collections agencies to make back part of the loss to the employed indigent sick, but it ends up costing everyone more in the end.

  11. If people really realized that banks are allowed to charge interest that they digitally create, think printing you the money on a xerox, for every loan you take out they would burn every bank to the ground.

    OK I will admit fractional reserve is one of the main things, along with powered mechanical work devices, that helped western civilization claw its way out of the Roman empire super-millennial depression after over 1500 years but it lets the bankers run away with massive skimming of the GNP for acting as middle men for the exchange medium.

  12. There’s nobody better at rooting out cheaters than other cheaters. They have a very strong incentive to make sure whoever is in charge removes their primary competition (other cheaters).

    So when a scumbag tells us about other scumbags I listen. He’s probably right if you accept that he’s also being self serving.

  13. Daemon: The people who most want free markets are generally the ones who plan on stripmining the economy as soon as the rules that prevent it are removed.

    You are confusing free markets with state (crony) capitalism. Free markets are the enemies of the state-capitalist, regulate-my-enemies-but-not-me, lobbyist-wielding types. The revolving door between Washington and the corporate executive suites should be your first clue.

  14. Considering most of the economic problems we have now were caused by regulations not being enforced in the first place, anyone still pushing deregulation is, in short, a fool.

  15. Jonathan Badger: “Claiming Matt Ridley as a “banker” is a misleading at best, dishonest at worst. Yes, he *worked* for a time at Northern Rock as a *non-executive* chairman, but he is primarily a science writer with a doctorate in biology…”

    You are splitting meaningless hairs. As chairman of the board of Northern Rock, he was a banker. Given his background and what he achieved at NR, he apparently wasn’t a very good banker, but he was absolutely a banker. If he tries to hide behind his biology degree to shield himself from criticism, he’s a cowardly banker.

    1. The point is Matt Ridley’s claim to fame is an award-winning science writer and was never the executive (boss) of NR (that was Adam Applegarth at the time of the collapse). The “Rational Optimist” may not be a good book (I haven’t read it), but calling Ridley a “banker” for merely being on the board of NR is as silly as calling Al Gore an “electrical engineer” for being on the board of Apple.

  16. Read Melville’s Bartleby, the Scrivener to learn about how terrible business types can be.

  17. Whatever Ridley’s political beliefs, The Red Queen and The Origins of Virtue are both good books, well worth reading. I can’t speak of his other books, I haven’t read them.

  18. A capitalist will sing the praises of a free market while doing everything in his power to create a closed market or monopoly.

    How can a free market, anti-government capitalist justify government support (interference?) in the form of laws, agencies, and offices in such venues of intellectual endevor as “copyright”, “patent”, and “trademark”? For that matter, what about government support of unsecured loans (credit cards) in the form of laws?

    Hearing a “free market capitalist” complaining about government intrevention is a little like hearing a toddler complaining about a bath.

  19. I agree that calling Ridley a “bailed out banker” is pretty silly. I’d also appreciate if Rob could enlighten us about the “stuff attacking wealth-redistributing bureaucratic parasites who stifle businesses by intervening in free markets”.

    Sounds pretty vague and inflammatory. Here’s what Ridley himself said about it on the Freakonomics Blog:

    Q: Maybe ask him why, given his boundless faith in the wonders of unregulated markets, he was so quick to run to the government with a begging-bowl when his company went bust, at a cost of some billions to the British taxpayer. I have no criticism of Ridley as a gneticist, but it beats me how anyone can take him at all seriously as an economic / social theorist after the costly damage that his incompetent management has caused. — Mo

    A: I don’t have boundless faith in anything, let alone unregulated markets. I have a balanced view: you will find very little about deregulation in the book, let alone of asset markets. It’s commerce that I praise, not a lack of regulations. What I write is not always the same as what others say I write! – Matt Ridley

  20. Tried to register to comment, but ran into some problems…

    Guys, I think you should consider the actual thrust of the book before dismissing it based solely on the synopsis above. Consider this:

    “The progress (and occasional retardation) of innovation is the central theme of Mr Ridley’s sweeping work. He starts by observing that humans are the only species capable of innovation. Other animals use tools, and some ants, for example, do specialise at certain tasks. But these skills are not cumulative, and the animals in question do not improve their technologies from generation to generation. Only man innovates continuously.

    Why should that be? Some have suggested that perhaps it is the chemistry of big brains that leads us to tinker. Others that man’s mastery of language or his capacity for imitation and social learning hold the key. Mr Ridley, a zoologist by training, weighs up these arguments but insists, in the end, that the explanation lies not within man’s brain but outside: innovation is a collective phenomenon. The way man’s collective brain grows, he says cheekily, is by “ideas having sex”.

    His own theory is, in a way, the glorious offspring that would result if Charles Darwin’s ideas were mated with those of Adam Smith. Trade, Mr Ridley insists, is the spark that lit the fire of human imagination, as it made possible not only the exchange of goods, but also the exchange of ideas. Trade also encouraged specialisation, since it rewarded individuals and communities who focus on areas of comparative advantage. Such specialists, in contrast with their generalist rivals or ancestors, had the time and the incentive to develop better methods and technologies to do their tasks.”


    I haven’t read the book, but I would like to — it sounds like a really interesting take on human civilisation.

  21. Until someone comprehensively rebuffs the ugly portrait painted by Monbiot, I’m with the ‘he’s a shamelessly hypocritical douchebag’ faction. Sounds like he could even give Tony Blair a run for his money in a dissembling contest.

  22. he’s just somebody who has delineated what he considers to be a Big Truth. Big Truths make me suspicious when they’re made up of smaller truths welded together, especially since judging by monbiot and jones’s responses, not even the little truths contain enough truthyness to be good enough components. life’s just too complicated for this sort of lumbering machine to work.

    i’m only guessing from the reviews though – i refuse to buy his book since i’ve given him enough money already through part buying his bank.

  23. Jonathan Badger: “So, George Orwell was a “bookseller”, Einstein a “patent clerk …”

    Einstein was a patent clerk, among other things (scientist, statesman, etc.). You seem to think think that people can only have one profession, which is pretty simpleminded. Ridley is both a writer and a banker. It’s not all that complicated. The fact that he is a more successful writer than banker does not mean that you can just ignore the banker part.

  24. I’m surprised that people took this long to catch on to him. His earlier books tell you everything you need to know about him. They’re good on the molecular biology, questionable on the sociology, and have a wodge of market fundamentalism stuffed in there, for no apparent reason.

    The really surprising thing is that he’s a great fan of Richard Dawkins. Evidently he didn’t get as far as page 2 of “The Selfish Gene”, where Richard neatly dispatches the mistake that Matt makes all the time.

  25. Matt Ridley was a Thatcherite from way back. I remember finding it quite distracting when reading “Genome” when he would lurch off into unexpected and irrelevant digressions about how the Conservative government’s response to the BSE / v-CJD crisis was “wrong but responsible” (as opposed to those scientists who were concerned about prions in the human food chain, who were presumably irresponsible, even though they were right).

    IIRC he inherited his position in Northern Rock (and the attached remuneration) rather than earn it by banking acumen, though I don’t know if that clears him of charges of parasitism.

  26. Quite why we’re listening to the next Viscount Ridley for our economic advice, I don’t know.

    Americans, which is worse? Soft socialism or a hereditary aristocracy? Ridley wouldn’t be taken seriously if not for his background.

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