At the Free Life blog, Alan Bickley considers the recently reported rash of prominent (and not-so-prominent) critics of the British government being refused service by their banks and further refused permission to open new accounts with any other chartered bank. Being “cancelled” by social media companies is bad, but being “de-banked” in a modern economy is worse than being declared a “non-person” by a totalitarian regime:
“The bank of England. London.”by Demetrio Neri_1959 is licensed under CC BY-NC-SA 2.0
In the past month, we have heard that various rich and well-connected people have had their bank accounts closed, seemingly because of their dissident political opinions. The same has happened to other people who are much poorer and without connections. Twenty years ago, the same happened to the British National Party. There is a simple libertarian response to this.
No one has the right to coerced association with anyone else. If someone comes to me and asks me to provide him with services, I have an absolute right to say yes or no. If I am uncharitable enough to dislike the colour of his face or what he does in bed, so much the worse. I may lose valuable business. But it is my time, and it is my choice. If anyone starts a whine about the horrors of discrimination, he should be ignored. We have an absolute right to discriminate against others for any reason whatever.
This being said, the position becomes less clear when state power of some kind is involved. Banks in this country require a licence from the State to operate. This protects them from open competition. It also gives them access to services and information from the State that are not given to other persons or businesses. If a bank finds itself in serious financial difficulties, it has at least a greater chance than other large businesses of being saved by the State – by a coordination of support by others or by direct financial help. The State has also made it illegal for many transactions to be made in cash. If I try to buy a car with £20,000 in cash, the car dealership is obliged to refuse my business, or to make so many enquiries that accepting my business is too much trouble. In effect, anyone who wants to spend more than a few thousand pounds in cash is obliged by various actual and shadow laws to use a bank account.
So we have privileged corporations and an effective legal obligation for people to do business with them. This entirely changes the libertarian indifference to commercial discrimination. The banks are a privileged oligopoly. The banks compete for custom among a public that is free to choose one bank rather than another, but that is compelled to choose some bank. For this reason, since the relevant laws will not be repealed, it is legitimate to demand another law to offset some of the effects of the others. Banks should be legally obliged to accept the business of any person or group of persons without question. Limitations on what services are provided must be justified on the grounds of previous financial misconduct as reasonably defined. For example, it should be permitted for a bank to refuse an overdraft to someone who is or has recently been bankrupt, or whose spending habits are obviously reckless. Perhaps it should be permitted for a bank to refuse to lend money for purposes it regards as scandalous as well as commercially unviable. Therefore, a representative of the White Persons’ Supremacy Foundation, or the Vladimir Putin Appreciation Society, should be able to walk into any bank and open an account – with no questions asked. If an account is refused, there should be a legal obligation on the bank to provide a full explanation of the refusal. If the refusal is not made on valid commercial grounds, there should be a right of appeal before a tribunal which does not award costs, and this tribunal should have the power to grant punitive damages against any bank found to be discriminating on any grounds but the validly commercial.
The refusal of banking services is only the beginning of a new and sophisticated totalitarianism. What the banks can do can also be done by supermarkets, by Internet service providers, by hotel chains, by airlines and railway companies, and by utility providers. There is indeed a good case for insisting on a law forbidding any organisation that has the privilege of limited liability from any but obviously commercial discrimination.
