Cameron said a lot to agree with today, yet one has to doubt whether any of it is worth spit. I rather like the idea of a private sector that builds our infrastructure through a regulated utility programme – but think here the very system we could do with operating like this is banking. Leave that as it is and the private companies who come in will do their accounting offshore, evade tax (it’s not avoidance) and we’ll end up paying them economic rents.
He’s right, of course, that we have lacked vision – but why then rely on building a historic myth about the private sector (as big business) on which to build a vision? We need to build our vision on reality, not a pack of cards. To get private money one has to compete for it and productive business has been failing in this regard since the 1970s – because money has been allowed to make money in the manner that has led us to the banking collapse and the redirection of tax-payer money to fund what were actually losses. Presumably, no private sector money is going to come to Britain unless the return on its capital matches or beats what the financial cavaliers offer?
Even Apple, about as “successful” as it gets, has done this through offshore manufacturing and tax evasion made legal. It is worth more than the total of all US retailing in market capitalisation, and responsible for how many US jobs? The big problem for the Cameron dream is not the sensible vision of new technology, infrastructure and the rest – it’s the total failure to address how we can get investment in such sensible things without ending-up paying unsustainable rents to companies evading tax, and why such an obvious and rational ‘plan’ (I can remember Wilson’s ‘white heat of the technological revolution’ – which was not dissimilar) isn’t already built all around us.
The financing of the Channel Tunnel was a disaster – interestingly the private sector couldn’t even manage to finance and run a near-monopoly. I’m all for a decent private sector, but not one that needs to route its profits and due tax through offshore transfer pricing and obtains these profits through economic rents rather than innovation, continuous improvement, re-investment and the kind of good management John Lewis represents.
Cameron is right we need to encourage investment. Why then so little focus on how this needs to be structured? And why are we so dumb as a public we are probably inclined to see his speech as inspirational? I was so dumb at ten in the days of Wilson I was inspired to go to university to study chemistry. He saw much of the problem as to do with ‘hot money’ and banks that did not finance the right things in Britain. Cameron’s speech is just rhetoric to draw our gullible attention away from what really needs fixing.
I wouldn’t actually start with the banking system, though I do believe banking needs to be reduced to a utility that matches savers and borrowers – and probably should also regulate proper accounting. This is a global problem needing a democratic solution agreed and set by the peoples of the globe. Government has no place other than administration in this. It’s pathetic we can’t come up with Cameron’s plan or our version of it and get it funded. The real first place is ideology and the ease with which politicians manipulate this.
Nationalisation versus privatisation has long been a dead duck except in political manipulation. What we really need to do is plan and implement investment that pays off for the planet and lives lived on it. The pathetic assertions of economics and government have clearly failed to do this for at least a century after the point we knew what to do. The problem is the very competition Cameron assumes in his thinking. We don’t actually create the conditions for this other than through literature and myth working on mass ignorance.
The answers are pretty clear, but we lack the balls. I can’t remember Cameron’s politer term today (nerve?). Most of us live and die within a few miles of the end of our streets, and barely develop understanding beyond that culture, formed through habit. One has to say such geographic parochialism didn’t stop Kant, but he was a rare bird. One only has to look to the Internet and its use to see how easily this parochialism transfers to the global. Pornography and gossip still dominate what is searched for. Facebook and the rest attract quite brutal “local” behaviour. The first problem is admitting how bad most of us remain – though I’m a believer in underlying goodness and redemption.
I think a good historical case study of sport might show this up rather well. I played rugby league in days not long after high tackles moving from being the specialism of some players, to illegality. To side-step was to risk one’s teeth and jaw and I don’t remember much protection from the referees. In soccer, ‘Old Firm’ and other derby matches were brutal and I was coached more man-and-ball tackles in that game than in rugby. No we have the use of technology in decision-making (I crave a retrospective use on tours to Pakistan!) – the drift is towards ruling out cheating, though it’s clear from the tunes played by the merry whistle-blowers and such matters as Thierry Henri’s hand-ball that plenty still goes on. One ‘games’ the rules – of course. There’s a story on human nature in this and, importantly, what we can do to change behaviour. The transparency and technically aided refereeing of sport could transfer to banking and the business of productive investment.
I’ve played in some far away places (including Ellesmere Port!) in unrecorded games of utterly bent refereeing – amazed the bastard concerned had the brass balls to give his decisions in front of us. I was generally a good sport, but lost it in such circumstances. The banks want to play without recourse to rules and yet introduce the ‘goals’ scored in the Dark Pool in the game we can watch. This is akin to Wigan being allowed to claim points scored in an alternate universe next Friday against Warrington, or, if the Wire play as badly as last week, store them up for the next game they find themselves losing in.
I would take the highly elevated pay of today. But I know most sportsmen would be content with a fair salary cap. To take lower pay now is to cut off one’s nose to spite one’s face – but all that’s needed is structural and regulatory change – everyone in the dressing room was once on the same match fee contract. Widen this across all industries and bring about severe taxation on economic rents and a land tax and what do we lose? Watch the 1978 Rugby League Challenge Cup Final and tell me the lads playing then couldn’t put on a show as good as any now. That’s from the days when losing pay might equate to the buys fare home.
What we’d lose is the rich – and why would this be a bad thing? The only excuse they ever give us is that they will desert the country. They do in time of wars with conscription too. It’s time we worked out who and what they are from facts and not myth. Try not to be so stupid you won’t know what an economic rent is until the day you can’t afford to use one of the new toll roads!
Why do we allow institutions to set rates of pay and bonus? Why do we allow banks to lend money as though the money belongs to them? What would you think about someone who brought his own Monopoly Money printing press to a game and bought up Mayfair with it? Why is government money always the alternative to private money – note it’s never ‘yours’? What really motivates people (we know quite a lot from experiment)? What happens when people get so rich they can buy politics (we’ve known for over two millennia)? Economics proceeds as though none of this matters.