Vir Cantium

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Saint Peston Declares Year Zero

What’s life like in Lefty la-la-land? Ask Robert Peston, the BBC’s economic affairs editor.

He has spent quite some time recently talking about the “New Capitalism” and about how, now that the government has a stake in nearly everything, business will now have to be answerable to “us” – i.e. the taxpayers. The passage from his essay (pdf 37kb) sums it up:

So if we’ve witnessed a semi-permanent nationalisation of the banking system and will soon see significant taxpayer support for real companies in the real economy, then our banks and private-sector companies will have to work much harder to sustain the goodwill of those who are keeping them alive: millions and millions of taxpayers.

Peston falls into the old trap of confusing the State with the people, but that we expect. What he also misses is the small fact that most businesses don’t get far without listening to people in the first place – i.e. their customers. Ignore your customers and they will go elsewhere and your business dies. Unless, that is, you have a state-sponsored monopoly, or some way of raising revenue without needing to have regard to your customers. I wonder why a BBC employee would think business was run more along the lines of the latter case?

Anyway, the deification of Peston by his employer gathers pace (in stark contrast to his reputation among those in the thick of it), with his featuring prominently in some trailers for BBC news and current affairs coverage (aren’t you glad the BBC doesn’t have adverts?) and last night he presented a piece on his “new capitalism”. From now on, we will see business being more ethical, less about a mad grab for profit and having to think more about their role in society. Even David Cameron was wheeled on to support the idea of more ethical business practices.

Except it’s all a load of cobblers. Most businesses do recognise their place in their communities, and why wouldn’t they? Their leaders, managers and staff and, of course, their customers are all part of those communities. Most businesses are small or medium sized enterprises that are naturally pretty close to the ground. Thus, by most reasonable definition of “ethics” they have been ethical for years and will continue to be so – the ones that survive the next couple of years, anyway. For larger companies, their shareholders will include individuals and their pension funds. In fact, the best way to sever the link between the ownership of a business and society must be to have the State take a stake in it – either through forced nationalisation, or by dilution of existing capital with a the State’s share.

Of course there are some stereotypical ruthless uncaring capitalists around, just as there are some socialists driven by spite, bitterness and class hatred, but we’re into rotten apple analogies here.

It has been interesting to see the Left wetting themselves with glee over recent months and predicting the “end of capitalism”. Talk of a “new capitalism” is just a slightly more refined version of that idea. The concept, much beloved of at least one notorious left wing regime in recent history, is of a “year zero”, albeit an economic one. As if the recent turmoil – the bust that followed a state-assisted boom – is something more than a particularly hard downturn in the economic cycle. Recent events no more herald a “new capitalism” than the earthquake that triggered the 2004 Indian Ocean Tsunami heralded a new tectonic system. It’s nonsense.

Ironically, an economy with a higher degree of nationalisation and state interference is more reminiscent of the misguided socialism of the post WW2 era, rather than anything “new”. One also cannot ignore that fact that US governments, starting with the Clinton administration, pushed banks to lend to riskier cases in the name of fairness, and in the UK the sham of Bank of England independence was underpinned by inflation targets that were based on measures that significantly understated real inflation, and thus resulted in unnaturally low interest rates.

And that is what Peston and his ilk conveniently forget – perhaps because it was all before their unilaterally announced year zero.


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