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FAIRNESS played a central role in Barack Obama's state-of-the-union address, and I suspect it will play a central role in the president's re-election campaign. But what does Mr Obama have in mind when he deploys the f-word? It may not be the case that fairness is, as Scott Adams, the creator of Dilbert, puts it, "a concept invented so dumb people could participate in arguments". But it cannot be denied that fairness is an idea both mutable and contested. Indeed, last week's state-of-the-union address seems to contain several distinct conceptions of fairness worth drawing out and reflecting upon.
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THE man who the polls suggest will be the next French president, Fran�ois Hollande, claims that finance is his �real adversary� in the coming election. Britain has just stripped the former chief executive of the Royal Bank of Scotland of his knighthood. Even Newt Gingrich is attacking the �vulture capitalists� in the private-equity industry. Perhaps the West is set for a �war on finance� along the lines of the �war on terror�, with similar uncertainty about how to define victory.
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Toward the beginning of his speech, as Mr Obama was trying to draw a parallel between post-second world war America and today's post-Iraq war America, he offered this rather stark choice:
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Politicians seem to have three main beefs with the financial sector. The first is that bankers earn too much. The second is that banks take reckless risks and then need rescuing by governments. And the third complaint is that investors in financial markets have undue influence over an economy through their ability to affect bond yields and equity prices.
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We can either settle for a country where a shrinking number of people do really well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.
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The first two problems are really related. People do not worry too much about footballers� high pay. The problem with bankers is the extent to which they are subsidised by explicit and implicit taxpayer support. (Of course, you might worry about income inequality in general but that is not specific to banks and can be tackled by redistributive taxation.) It is hard to disagree with Paul Tucker of the Bank of England, who has written that: �Those who most espouse the disciplines of capitalism�bankers and financiers�should live by them.�
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The problem of banks being �too big to fail� is being addressed, albeit slowly, by the higher capital ratios being imposed by regulators. Higher capital ratios should mean lower returns on equity; over time, this should lead to less rapid pay growth for bankers. Andrew Haldane, a colleague of Mr Tucker�s, has found that the pay of bank bosses correlated well with returns on equity, but not with returns on assets�in other words, managers prospered by gearing up bank balance-sheets. That is now harder to pull off.

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