I thought I had better get my two "pen'orth" in as everyone else appears to be so doing. I lived through that period and was engaged in many struggles against her policies. This is not however going to be a rant - I hope it will be a more balanced assessment. MT obviously believed in the power of markets - we now know that, simply applied, this belief is dangerous leading to corruption and enormous inequalities occasioning social breakdown. On the other hand markets do offer the possibility of economic growth and wealth creation. MT shew that it need not be inevitable that the future for Great Britain (in the last decades of the 20th century) would be managing decline. The "big idea" was implemented - freeing up capital markets, floating currency rate, liberalisation of markets and de-regulation. As is so often the case the full implications of such policies had not been properly gauged - if ever that is possible. Consequences in Great Britain were the destruction of manufacturing industries and the elimination of some basic industries (Coal and Steel). With that a new moneyed class was created that traded money or its derivatives while those displaced by these changes were thrown out of work and progressively pauperised. Apologists for MT will say this was not foreseen nor intended but sometimes it is better in politics to own up and say (at least) we should have done better. We are still living with these consequences today. No work contributing to family breakdown and welfare dependency. The destruction of work communities leading to the disappearance of geographical communities with resultant increased crime and misanthropy. "There is no such thing as society" means it's every person for themselves and less concern for the consequences (see City Traders for example).
Maybe the country needed that kind of shock. Certainly we have witnessed the end of the dream of state socialism so the task for progressives is to marry economic prosperity, a place in the nations of the world and societal strength at home rather than the destructive militant individualism that was the central tenet of MT's beliefs and programme.
Tuesday, 9 April 2013
Sunday, 24 March 2013
Reducing Greed
If you have money to invest should you consider where and how it is invested or should you just look for the greatest possible return without considering the implications of that decision. Now before all those investors come back and say we always put our money into things that we would be happy with let me ask how it is that so much of our money is invested in countries that are not democracies (the biggest being China) or run by despots (just think of oil - Saudi Arabia) or where working conditions for the people who have to do the physical labour are not what we would accept (Bangladesh) or whose Human Rights record is shameful (Uzbekistan, Burma). This is not an attack on globalization but we do have a choice!! as to where we invest. Delegating that responsibility to Fund Managers is a cop out not a sufficient reason. The consequence of this global investment strategy is that rates of return are greater outside Europe but that is not without effects in Europe to which I shall refer in a moment. The chase after high rates of return means that local investment i.e. GB and Europe have to compete with economies whose wage rates for example might be one hundredth of those locally in GB and Europe. However if this nonsense is to be addressed then we should start at home and this is what I wish to comment upon here.
A good example would be the Private Finance Initiative (PFI). These contracts for government projects/facilities are typically for 25 to 30 years and predominantly are design, build and operate e.g a Hospital or School. As a government project/facility there are a very safe investment i.e. the level of risk is very low! How is it then that in negotiations the private sector seeks to show that it is risky and therefore they have to be paid what many would consider exorbitant if not extortionate rates. And those negotiations also have extortionate fees paid by the tax payer! Why is it therefore that rates of return on these projects/facilities have to be similar to those in the developing world. If truth be told our greed condemns Bangladeshi textile workers to a (short) life of poverty!
So starting at home:
PFI
1) Enforce re-financing to reflect current (UK) interest rates with the savings shared. To my certain knowledge finance rates were set at around 7.5% - this could easily be reduced to 3.5% (Bank of England is currently 0.5%). This should be applied retrospectively. On present rates none of the schemes would be value for money when compared with Public Sector provision.
2) Independent forensic audit of each scheme paid for by the company and provided to the Public Accounts Committee of the House Of Commons. Most providers have used serpent like PR where similar questions have been raised saying, "We operate "open book"". It is, of course, nothing of the sort! Within a nano second that refuge of the snake oil salesperson appears in the form of "commercial confidentiality". These are publicly funded projects - we have a right to consider whether we are being cheated. I think most would agree we are so it is up to those commercial entities to prove that is not the case - after all we are paying!
3) Where a price escalator exists then this should be based on CPI rather than RPI - if it is good enough for Public Service pensioners and wage negotiations its good enough for them.
4) Fees in preparation for and/or adjustments to PFI contracts may only be levied following full and open competition for the work.
5) A new provision to be applied to existing and future contracts of "Indigenous provider comparison" such that the recipient of the PFI service can determine that they are not being "ripped off" - the £200 to change a light bulb scam.
The purpose of these measures would be to properly reflect the security of these contracts with the very low level of risk and thereby give rise to a more realistic appreciation of the necessary rate of return. So those financiers who would not get out of bed for a rate of return of less than 10% to 12.5% could stay there. Expectations should reduce and more stability should help to develop ethical investment. Rates of return of around 5% for these projects would still be good (Long term rates over 80 0r 90 years have been about 6.5% in {see Independent 21/03/2013 p.55 Satyajitt Das}). The present conditions can now be seen to have many more disadvantages than advantages so it is time to change! Since it is public money then this is all the more urgent because aren't we all in this together.
A good example would be the Private Finance Initiative (PFI). These contracts for government projects/facilities are typically for 25 to 30 years and predominantly are design, build and operate e.g a Hospital or School. As a government project/facility there are a very safe investment i.e. the level of risk is very low! How is it then that in negotiations the private sector seeks to show that it is risky and therefore they have to be paid what many would consider exorbitant if not extortionate rates. And those negotiations also have extortionate fees paid by the tax payer! Why is it therefore that rates of return on these projects/facilities have to be similar to those in the developing world. If truth be told our greed condemns Bangladeshi textile workers to a (short) life of poverty!
So starting at home:
PFI
1) Enforce re-financing to reflect current (UK) interest rates with the savings shared. To my certain knowledge finance rates were set at around 7.5% - this could easily be reduced to 3.5% (Bank of England is currently 0.5%). This should be applied retrospectively. On present rates none of the schemes would be value for money when compared with Public Sector provision.
2) Independent forensic audit of each scheme paid for by the company and provided to the Public Accounts Committee of the House Of Commons. Most providers have used serpent like PR where similar questions have been raised saying, "We operate "open book"". It is, of course, nothing of the sort! Within a nano second that refuge of the snake oil salesperson appears in the form of "commercial confidentiality". These are publicly funded projects - we have a right to consider whether we are being cheated. I think most would agree we are so it is up to those commercial entities to prove that is not the case - after all we are paying!
3) Where a price escalator exists then this should be based on CPI rather than RPI - if it is good enough for Public Service pensioners and wage negotiations its good enough for them.
4) Fees in preparation for and/or adjustments to PFI contracts may only be levied following full and open competition for the work.
5) A new provision to be applied to existing and future contracts of "Indigenous provider comparison" such that the recipient of the PFI service can determine that they are not being "ripped off" - the £200 to change a light bulb scam.
The purpose of these measures would be to properly reflect the security of these contracts with the very low level of risk and thereby give rise to a more realistic appreciation of the necessary rate of return. So those financiers who would not get out of bed for a rate of return of less than 10% to 12.5% could stay there. Expectations should reduce and more stability should help to develop ethical investment. Rates of return of around 5% for these projects would still be good (Long term rates over 80 0r 90 years have been about 6.5% in {see Independent 21/03/2013 p.55 Satyajitt Das}). The present conditions can now be seen to have many more disadvantages than advantages so it is time to change! Since it is public money then this is all the more urgent because aren't we all in this together.
Wednesday, 13 March 2013
All in this together?
What would be necessary to show, that in dealing with our economic difficulties. we are all in this together?
This could be difficult as many seem to have made up their mind that this is just another ruse by the wealthy and powerful to pauperize the already disadvantaged. Let's just look at the state of play in Europe now (March 2013) - Greece - further General Strikes planned, unemployment approaching 30%, hospitals finding it difficult to obtain drugs; Spain 26% unemployment - under 25's approaching 55%; Slovenia - Conservative government near to collapse due to public demonstrations against austerity; and Italy where many seem to have concluded that if comedians have been running the country for decades rather than have an amateur get a professional in!! (Beppe Grillo). Even in staid Switzerland the electorate has just mandated it's government (despite it's opposition) to limit severely corporate pay and bonuses. A reasoned assessment would lead one to conclude that the the limits of what is politically acceptable/feasible are close by!!
Meanwhile serpentine PR people from corporates and banks try and tell us that the remedy is more of the same when the same is precisely that which got us into this mess in the first place. The political class, wealthy and powerful need to get real. In the UK 40 hours on the national minimum wage gives a person a take home pay of £216.98 per week (£942.83 pcm). A one bedroom flat in this area costs a minimum of £300 pcm - average for a family property of two bedrooms it is £550 pcm (and I bet most would not want to live over a shop on a main road). Council Tax would be between £63.47 pcm (Single Person occupancy -Band A) to £112.84 pcm for a Band C property. Water and Sewerage Charges £31.39 to 43.02 pcm. Energy £67 to £117 pcm. Transport £91 pcm (this is on the bus!). By this stage it should be easy to see that there is not much left for the other classifications made by ONS (Office of National Statistics - Food and Non-Alcoholic Drinks, Recreation and Culture, Miscellaneous Goods and Services, Household Goods and Services, Clothing and Footwear, Communication, Alcohol and Tobacco, Education and Health. Try telling a person in that position that it is just as difficult for the FTSE Chief Executive on £800k pa before bonus!! Its the market I hear the neo liberal Neanderthals say. Well if it is then it is certainly dysfunctional!!
And if you think this is a rant then I would ask you to read Janet Daley in the Sunday Telegraph sometime and reflect at the lack of evidence and facts compared to this blog!!
Very few actually believe that codswallop that we are all in this together and here are some facts and evidence to show how that was never the case!!
References;
Unfair to Middling, TUC/Touchstone 2009
Eurostat.eu
Joseph Rowntree Foundation
HMRC
ONS
Salford City Council
United Utilities
TFGM
Zoopla
Moneysupermarket.com
This could be difficult as many seem to have made up their mind that this is just another ruse by the wealthy and powerful to pauperize the already disadvantaged. Let's just look at the state of play in Europe now (March 2013) - Greece - further General Strikes planned, unemployment approaching 30%, hospitals finding it difficult to obtain drugs; Spain 26% unemployment - under 25's approaching 55%; Slovenia - Conservative government near to collapse due to public demonstrations against austerity; and Italy where many seem to have concluded that if comedians have been running the country for decades rather than have an amateur get a professional in!! (Beppe Grillo). Even in staid Switzerland the electorate has just mandated it's government (despite it's opposition) to limit severely corporate pay and bonuses. A reasoned assessment would lead one to conclude that the the limits of what is politically acceptable/feasible are close by!!
Meanwhile serpentine PR people from corporates and banks try and tell us that the remedy is more of the same when the same is precisely that which got us into this mess in the first place. The political class, wealthy and powerful need to get real. In the UK 40 hours on the national minimum wage gives a person a take home pay of £216.98 per week (£942.83 pcm). A one bedroom flat in this area costs a minimum of £300 pcm - average for a family property of two bedrooms it is £550 pcm (and I bet most would not want to live over a shop on a main road). Council Tax would be between £63.47 pcm (Single Person occupancy -Band A) to £112.84 pcm for a Band C property. Water and Sewerage Charges £31.39 to 43.02 pcm. Energy £67 to £117 pcm. Transport £91 pcm (this is on the bus!). By this stage it should be easy to see that there is not much left for the other classifications made by ONS (Office of National Statistics - Food and Non-Alcoholic Drinks, Recreation and Culture, Miscellaneous Goods and Services, Household Goods and Services, Clothing and Footwear, Communication, Alcohol and Tobacco, Education and Health. Try telling a person in that position that it is just as difficult for the FTSE Chief Executive on £800k pa before bonus!! Its the market I hear the neo liberal Neanderthals say. Well if it is then it is certainly dysfunctional!!
And if you think this is a rant then I would ask you to read Janet Daley in the Sunday Telegraph sometime and reflect at the lack of evidence and facts compared to this blog!!
Very few actually believe that codswallop that we are all in this together and here are some facts and evidence to show how that was never the case!!
References;
Unfair to Middling, TUC/Touchstone 2009
Eurostat.eu
Joseph Rowntree Foundation
HMRC
ONS
Salford City Council
United Utilities
TFGM
Zoopla
Moneysupermarket.com
Sunday, 1 July 2012
The Corruption of our Country
It's difficult to get away from the corruption in much of our Country's public life: MP's expenses, criminal behaviour (allegedly) by many in the media plus much unethical activities e.g. entrapment, secret recording of conversations and what many suspected - that the Financial Sector was and probably is incredibly corrupt. I do not sigh and reflect that it was always so and we do need to understand how we got here. 1986 is an important date in the de-regulation of financial markets. If we understand history and human behaviour we are drawn to the conclusion that what we have now is the inevitable ultimate end of the Thatcher (inspired by Hayek) neo Liberal economic and social experiment. Markets are there to be manipulated by large and powerful players and just as Diplomats are employed to lie on behalf of their country (see WikiLeaks) then corporate executives quite often perform a similar function for their companies. Remember the initial response of NI to the hacking scandal - it was a rogue reporter!. We now know this was not true and it is probable that many others in the business knew and at best silently condoned such actions. The pathetic PR which daily insults ordinary people's intelligence about these issues just shows how ex reality these people are!! The establishment rush to contain the crisis by incremental release of damaging information thinking that it will calm down if not blow over. Don't insult our intelligence any more! Most people now realise this is a charade designed to keep existing post holders and power wielders in position. Show some real backbone and clear out the criminal and immoral now this year!
I leave this post with John of Gaunt's speech about England beautifully given last evening by Patrick Stewart. Read it and weep for what our country has become!
I leave this post with John of Gaunt's speech about England beautifully given last evening by Patrick Stewart. Read it and weep for what our country has become!
William Shakespeare
Richard 11
Act 2 Scene 1
Gaunt.
Me thinkes I am a Prophet new inspir'd,
And thus expiring, do foretell of him,
His rash fierce blaze of Ryot cannot last,
For violent fires soone burne out themselues,
Small showres last long, but sodaine stormes are short,
He tyres betimes, that spurs too fast betimes;
With eager feeding, food doth choake the feeder:
Light vanity, insatiate cormorant,
Consuming meanes soone preyes vpon it selfe.
This royall Throne of Kings, this sceptred Isle,
This earth of Maiesty, this seate of Mars,
This other Eden, demy paradise,
This Fortresse built by Nature for her selfe,
Against infection, and the hand of warre:
This happy breed of men, this little world,
This precious stone, set in the siluer sea,
Which serues it in the office of a wall,
Or as a Moate defensiue to a house,
Against the enuy of lesse happier Lands,
This blessed plot, this earth, this Realme, this England,
This Nurse, this teeming wombe of Royall Kings,
Fear'd by their breed, and famous for their birth,
Renowned for their deeds, as farre from home,
For Christian seruice, and true Chiualrie,
As is the sepulcher in stubborne Iury
Of the Worlds ransome, blessed Maries Sonne.
This Land of such deere soules, this deere-deere Land,
Deere for her reputation through the world,
Is now Leas'd out (I dye pronouncing it)
Like to a Tenement or pelting Farme.
England bound in with the triumphant sea,
Whose rocky shore beates backe the enuious siedge
Of watery Neptune, is now bound in with shame,
With Inky blottes, and rotten Parchment bonds.
That England, that was wont to conquer others,
Hath made a shamefull conquest of it selfe.
Ah! would the scandall vanish with my life,
How happy then were my ensuing death?
And thus expiring, do foretell of him,
His rash fierce blaze of Ryot cannot last,
For violent fires soone burne out themselues,
Small showres last long, but sodaine stormes are short,
He tyres betimes, that spurs too fast betimes;
With eager feeding, food doth choake the feeder:
Light vanity, insatiate cormorant,
Consuming meanes soone preyes vpon it selfe.
This royall Throne of Kings, this sceptred Isle,
This earth of Maiesty, this seate of Mars,
This other Eden, demy paradise,
This Fortresse built by Nature for her selfe,
Against infection, and the hand of warre:
This happy breed of men, this little world,
This precious stone, set in the siluer sea,
Which serues it in the office of a wall,
Or as a Moate defensiue to a house,
Against the enuy of lesse happier Lands,
This blessed plot, this earth, this Realme, this England,
This Nurse, this teeming wombe of Royall Kings,
Fear'd by their breed, and famous for their birth,
Renowned for their deeds, as farre from home,
For Christian seruice, and true Chiualrie,
As is the sepulcher in stubborne Iury
Of the Worlds ransome, blessed Maries Sonne.
This Land of such deere soules, this deere-deere Land,
Deere for her reputation through the world,
Is now Leas'd out (I dye pronouncing it)
Like to a Tenement or pelting Farme.
England bound in with the triumphant sea,
Whose rocky shore beates backe the enuious siedge
Of watery Neptune, is now bound in with shame,
With Inky blottes, and rotten Parchment bonds.
That England, that was wont to conquer others,
Hath made a shamefull conquest of it selfe.
Ah! would the scandall vanish with my life,
How happy then were my ensuing death?
Wednesday, 20 June 2012
The biggest theft in History?
When the Governor of the Bank of England says that there isn't a liquidity problem in the context of lending to business but one of solvency what exactly does he mean and why hasn't there been more on this. Most Banks do not have enough capital to cover their liabilities i.e. they were and are bust! And if they claim they are solvent how come the Russians, Chinese and Indians do not believe them both by word and deed. (see various pronouncements from each of these governments in the past couple of years especially Jin Linqun - November 2011)[1]
Well, of course, this is deeply embarrassing to the political and business class of Britain and Europe because it would make clear that there is more pain to come! Taxpayers in Britain and Europe are going to have to fund these losses! Increasing liquidity as has just been announced today (19th June 2012) by the Bank of England - £5bn per month for at least the next 6 months in the UK does not solve the problem but may buy time. That is time to grow the economy so as to generate wealth to help fund the banks' losses.
Another embarrassing aspect is the conspiracy of silence about the exact nature of those losses - what they are and how much of a loss they represent. Without transparency there will continue to be a lack of interbank confidence! That's right they do not trust fellow bankers. Without that confidence there can be no resolution of the problem - everything else is the equivalent of sticking plaster! (See particularly Liam Halligan over many months. [2]. What then happens - and I speak from personal experience ( I am legally prevented from disclosing full details) is Bank borrows from Bank of England at 2.5% and then lends to a platinum plated (public sector) project at 7.9% - the 5.4% then goes straight into the banks bottom line. Colloquially the public is being screwed again by the self same organisations who largely created this mess in the first place and they continue to pay themselves exorbitant and outrageous salaries and bonus's.
This conspiracy of silence (well speaking very quietly without emphasis and moving on very quickly) is a scandal since it is 4 years on from Lehman Bros.! If they do not know their actual liabilities now they are either incompetent or too scared to say. I very strongly believe the latter! Now politicians are not generally dumb so they will have worked this out and clearly their plan is fudge and muddle through rather than radical surgery and a rebuild of the control systems. From the political and business class this approach has (for them) a most desirable consequence - it is the least threatening strategy to their position! Which brings me to the question posed by Niall Ferguson in Reith Lecture 1 19th June 2012 - have the pre-dominance of personal relations in politics and business so corrupted the institutions of government that decline is now inevitable? I believe we are very close to this! I just say in business and politics thinking of a job for life is corrupting - arranging it to be just so is corrupting - and is about obtaining and retaining power - remember Lord Acton on power! So at least some pretty short term limits must be introduced for senior politicians and not as Russia, I have in mind 10 years as an absolute maximum - of course politicians and some business people are arrogant - as Gordon Brown said of Tony Blair his exceptionalism about himself knew no bounds. Having seen many of them over the years this is invariably not justified! Moreover this attitude, which the insiders will say does not exist despite the overwhelming evidence on a daily basis, is profoundly undemocratic. We have the best educated and potentially best informed electorate in history yet we cannot be trusted to take more decisions?
So who pays:
It's the same the whole world over It's the poor what gets the blame It's the rich what gets the pleasure Ain't it all a bloomin' shame?
Billy Bennett - 1930
This Music Hall song sums up how most people feel and why wouldn't they? If you
are on the minimum wage in Portugal and Greece then you have just had your
income cut by 20%. They would like to know how they caused the financial crisis of
2008. Of course they did not! But their politicians are likely to be very culpable by
not reforming and especially not securing the transparency necessary for markets
to operate effectively and not collecting taxes from the rich! We should also not
forget the contribution of massive de-regulation from the 1980's and light touch
regulation have made to the financial crisis. Too many thought this meant they
could do as they pleased and did so! This puts into context those who argue that
a significant part of the solution is more de-regulation? This cannot be right unless
you are a free market fundamentalist. No it is about designing systems that
require appropriate behaviour and the failure to behave appropriately results in
prohibition from that area of business. Anything less will not work and will
encourage just the sort of corruption to which I referred to earlier.
What is the skeleton of appropriate behaviour - ask yourself these questions:
a) is this action I am about to take about putting myself first before anything or
anyone else?
b) will this action I am about to take strengthen the institution within which I work
or weaken and corrupt it?
c) does this proposed action increase or decrease transparency in the market
place?
d) does this action have a purpose other than simply enriching me - e.g. will it
create employment?
e) against the background of the moral framework within which I wish to work
is this proposed action the right thing to do?
Notes and background references used in this article
[1] http://www.theresilientfamily.com/2011/11/chicoms-call-european-socialists-slothful-indolent/
[2] http://www.telegraph.co.uk/finance/comment/9336435/Bank-throws-kitchen-sink-at-credit-problem.html 16th June 2012
published 19th June 2012
http://www.independent.co.uk/news/business/comment/satyajit-das-europes-problem-is-not-one-of-liquidity-but-rather-solvency-6281205.html 24th December 2011
6th October 2011
Tuesday, 29 May 2012
The casual mendacity of Tony Blair
The media, in the main, seem to think today that Tony Blair gave a virtuoso performance at the Leveson Inquiry into Media practices and ethics yesterday. If that is the depth of analysis we can expect - have come to accept - it is no wonder the country is in dire straights with Cameron (self appointed heir to Blair) at the helm.
I write this as a Labour Party Member and voter.
Two things Tony Blair said make clear his mendacity (if I am generous it could be self deception/delusion but these guys are highly intelligent so they say!!). So they know precisely what they are saying, what they are not saying and the impression they wish to give!
First he sought to say that the reality of politics in the UK was that they had to deal with the media. Even if true, which to some extent it is, that is not the same as according them (the media) special treatment! So Mr Murdoch (Snr) was accommodated with three discussions prior to the invasion of Iraq! I don't remember having discussion with the then PM about it and I am a UK voter which is more than Mr Murdoch (Snr) - originally Australian but now a USA citizen so he can have a substantial interest in an American media company.
Second Mr Blair claims NI (News International - Mr Murdoch's company) never got anything from the government which he (TB) led. However since these people are very clever one does not have to be explicit - you will have worked out beforehand what was required and the requirement was to recognise the reality of political power in UK (in TB's view and many in New Labour). Hence although there was a demand from Labour for limitation of foreign ownership of UK media (the then Culture Secretary Chris Smith was working on it) TB saw to it that no legislation was put before Parliament. TB claims that to do so would have de-railed much needed reforms in Health and Education. I do not know of anybody in Parliament then or now who represents the Murdoch constituency (well maybe a couple but not enough to cause trouble).there was no legislation in the period 1997 to 2010 restricting the ability of NI (and indeed the media in general) to do as it wished. So TB's judgement is suspect to say the least.
Shame on Britain, shame on us all for allowing it to happen.
Sources used:
Daily Telegraph 29th May 2012
Independent 29th May 2012
BBC News 28th May 2012
Channel 4 News 28th May 2012
Published 29th May 2012
Revised 30th May 2012
I write this as a Labour Party Member and voter.
Two things Tony Blair said make clear his mendacity (if I am generous it could be self deception/delusion but these guys are highly intelligent so they say!!). So they know precisely what they are saying, what they are not saying and the impression they wish to give!
First he sought to say that the reality of politics in the UK was that they had to deal with the media. Even if true, which to some extent it is, that is not the same as according them (the media) special treatment! So Mr Murdoch (Snr) was accommodated with three discussions prior to the invasion of Iraq! I don't remember having discussion with the then PM about it and I am a UK voter which is more than Mr Murdoch (Snr) - originally Australian but now a USA citizen so he can have a substantial interest in an American media company.
Second Mr Blair claims NI (News International - Mr Murdoch's company) never got anything from the government which he (TB) led. However since these people are very clever one does not have to be explicit - you will have worked out beforehand what was required and the requirement was to recognise the reality of political power in UK (in TB's view and many in New Labour). Hence although there was a demand from Labour for limitation of foreign ownership of UK media (the then Culture Secretary Chris Smith was working on it) TB saw to it that no legislation was put before Parliament. TB claims that to do so would have de-railed much needed reforms in Health and Education. I do not know of anybody in Parliament then or now who represents the Murdoch constituency (well maybe a couple but not enough to cause trouble).there was no legislation in the period 1997 to 2010 restricting the ability of NI (and indeed the media in general) to do as it wished. So TB's judgement is suspect to say the least.
Shame on Britain, shame on us all for allowing it to happen.
Sources used:
Daily Telegraph 29th May 2012
Independent 29th May 2012
BBC News 28th May 2012
Channel 4 News 28th May 2012
Published 29th May 2012
Revised 30th May 2012
Monday, 23 April 2012
Financial Regulation and the Corporate Psychopaths
"The dumbest idea in the world", so said Jack Welch former head of General Electric (USA), about shareholder value. He was talking about the guiding principle in capital and financial markets for at least the last 30 years. Never the less this is what we were told was necessary and behaviours complied or businesses declined. This is part of the discussion/struggle between the returns for lenders and the cost to borrowers. For that last 30 years the great economic boom sheltered many people from the reality that if growth stalled they could be in a lot of financial trouble. But we now know that it was unsustainable - the basics were wrong - if you like greed, incomprehensible financial products and the triumph of ego over common sense you had a ball and now everybody else pays.
This brings me to the current discussion of moral capitalism. I am not sure that the Ken Costa approach (see Sunday Telegraph 6th November 2011) is going to bear fruit - it strikes me as wishing things were other than they are: "You cannot legislate into existence a culture of honesty, integrity, truthfulness and responsibility and at the end of the day, it is precisely these values that we need.". He goes on to talk about reconnecting the separated parts of humanity - economic, moral and spiritual. However I believe it is evident that without a general agreement on the rewards for lenders and the costs to borrowers then the so called free market will determine price and, of course, since the market is amoral there is very little limitation on bad/unprincipled behaviour. Ken Costa does say there is a need for reform of the market and of government but does not specify any particular change. What we need to do is press for reform where the rules are very clear and which are equitable between lenders and borrowers. They are clearly not equitable now where banks get money in (often from Central Banks) at 2.5% and then seek to lend it out at 8% or much more.
Into this market world, where we (were) are told the almost exclusive objective is to maximise your profit, enter the Corporate Psychopath. Professor Robert Hare (Psychology, University of British Columbia - expert in criminal psychology and the study of psychopaths) identifies that about 1% of home sapiens have no conscience or empathy. He is quoted in the Independent (29th December 2011, Business Section p.49 Outlook, Brian Basham); "I should have spent some time inside the Stock Exchange as well. Serial killer psychopaths ruin families. Corporate and political and religious psychopaths ruin economies. They ruin lives.". Straying a little from their area of expertise Basham and Hare assert that never ending growth requires monsters. However I think this has the ring of truth. Basham goes on to say: "In attempting to understand the complexities of what went wrong in the years leading to 2008. I've developed a rule:<In an unregulated world, the least principled people rise to the top>And there are none who are less principled than corporate psychopaths."
From this, the type of regulation necessary becomes very strict. Since most psychopaths are incurable only controllable! Not only must there be the certainty of enforcement as I have said previously but also lifetime exclusion from (in this case) participation in financial markets plus as is the case in the USA the prospect of physical detention (prison). Developing the principles of moral capitalism and markets requires very strong political will which is rarely evident. But if lenders start by scaling back their demands (rates of interest) on the grounds of risk (I have seen Banks charge 7.9% interest for a gold plated investment backed by the British Government) but reaching sensible agreements with borrowers then we might stand a chance of avoiding a crash like that we have experienced in the past 4 years. Governments have to lead in this not follow irrational behaviour in markets. Transaction taxes, capital ratios and the like are sticking plaster compared with the necessity to get growth, pay off debt and, most important get people back to work. It is simply not sustainable as is the case in Spain where 50% of the under 25's are unemployed - the social consequences both indirect and possibly direct are much worse than this so called austerity cure which in truth gives enormous pain to the most disadvantaged but leaves the psychopaths untouched. These last 30 years have been good for some but it is for the life chances of those wanting to work now that we must plan. No generation should be left to rot!
By the way many of these psychopaths have infiltrated the public services - they must be identified and rooted out also! More later.
Robert Hare www.hare.org
Brian Basham www.prweek.com/uk/
Ken Costa www.godatwork.org.uk
This brings me to the current discussion of moral capitalism. I am not sure that the Ken Costa approach (see Sunday Telegraph 6th November 2011) is going to bear fruit - it strikes me as wishing things were other than they are: "You cannot legislate into existence a culture of honesty, integrity, truthfulness and responsibility and at the end of the day, it is precisely these values that we need.". He goes on to talk about reconnecting the separated parts of humanity - economic, moral and spiritual. However I believe it is evident that without a general agreement on the rewards for lenders and the costs to borrowers then the so called free market will determine price and, of course, since the market is amoral there is very little limitation on bad/unprincipled behaviour. Ken Costa does say there is a need for reform of the market and of government but does not specify any particular change. What we need to do is press for reform where the rules are very clear and which are equitable between lenders and borrowers. They are clearly not equitable now where banks get money in (often from Central Banks) at 2.5% and then seek to lend it out at 8% or much more.
Into this market world, where we (were) are told the almost exclusive objective is to maximise your profit, enter the Corporate Psychopath. Professor Robert Hare (Psychology, University of British Columbia - expert in criminal psychology and the study of psychopaths) identifies that about 1% of home sapiens have no conscience or empathy. He is quoted in the Independent (29th December 2011, Business Section p.49 Outlook, Brian Basham); "I should have spent some time inside the Stock Exchange as well. Serial killer psychopaths ruin families. Corporate and political and religious psychopaths ruin economies. They ruin lives.". Straying a little from their area of expertise Basham and Hare assert that never ending growth requires monsters. However I think this has the ring of truth. Basham goes on to say: "In attempting to understand the complexities of what went wrong in the years leading to 2008. I've developed a rule:<In an unregulated world, the least principled people rise to the top>And there are none who are less principled than corporate psychopaths."
From this, the type of regulation necessary becomes very strict. Since most psychopaths are incurable only controllable! Not only must there be the certainty of enforcement as I have said previously but also lifetime exclusion from (in this case) participation in financial markets plus as is the case in the USA the prospect of physical detention (prison). Developing the principles of moral capitalism and markets requires very strong political will which is rarely evident. But if lenders start by scaling back their demands (rates of interest) on the grounds of risk (I have seen Banks charge 7.9% interest for a gold plated investment backed by the British Government) but reaching sensible agreements with borrowers then we might stand a chance of avoiding a crash like that we have experienced in the past 4 years. Governments have to lead in this not follow irrational behaviour in markets. Transaction taxes, capital ratios and the like are sticking plaster compared with the necessity to get growth, pay off debt and, most important get people back to work. It is simply not sustainable as is the case in Spain where 50% of the under 25's are unemployed - the social consequences both indirect and possibly direct are much worse than this so called austerity cure which in truth gives enormous pain to the most disadvantaged but leaves the psychopaths untouched. These last 30 years have been good for some but it is for the life chances of those wanting to work now that we must plan. No generation should be left to rot!
By the way many of these psychopaths have infiltrated the public services - they must be identified and rooted out also! More later.
Robert Hare www.hare.org
Brian Basham www.prweek.com/uk/
Ken Costa www.godatwork.org.uk
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