I am beginning to like Nick de Bois, MP. For a start, he has always been wonderfully polite in response, even when I have criticised things he has said.
And secondly, in this latest blog for Conservative Home, I find we actually agree!
(OK, so having a Tory MP agreeing with me won’t do my ‘left-wing’ rep any good, but there are some things that are just true.)
‘These Attacks On People Are Merely A Sign Of Parliament’s Impotence’
Writing about exactly what I did on Friday, Nick opines:
"The attacks [on Stephen Hester and Fred Goodwin] have been satisfying, cathartic even, and frankly in the case of Goodwin he almost definitely deserved it … BUT…"
… and then he goes on to speak about the damage to Britain’s business interests he fears that these gratuitous attacks will do in the long term:
"Regardless of the understandable temptation to bash the bankers, the prevailing anti-business climate is in danger of pulling down the shutters on the entrepreneurial agenda."
Having discovered that I agree fairly much with a Tory MP, then, am I going up up-scuttle my Labour Party membership and follow Luke Bozier into the Tories?
I’m afraid not.
Because – although I might agree that the attacks on these individual bankers is mistaken; although I find the anti-business rhetoric of phrases such as ‘predator businesses' unfortunate – I still think the Tories have got it 100% wrong on the economy.
Faults in the Tory Model of Economic Growth I – the myth of the ‘wealth-creator’
Let’s look at what Nick de Bois – who is a caring and motivated man – says.
First, let’s look at how he feels this anti-business rhetoric will harm Britain:
"The danger with the anti-capitalist rhetoric against entrepreneurs, those at the top of the food chain, is that Britain needs them, and they don't necessarily need us. Twenty-something entrepreneurs or financiers with no family ties, a great deal of personal wealth and a lot of ideas for future ventures, are incredibly mobile. If in Britain we suggest to these wealth-creators that they are greedy, out of touch or, to borrow a phrase from the Leader of the Opposition, a 'predator', then they'll pack their bags and go to Dubai, or America, or Brazil. Those countries will happily take their ideas, jobs and taxes…"
The first thing you will notice is that Nick’s logic runs along very different lines to my own on Friday. There – when I wrote of the damage of attacking individual businessmen – I had argued very differently:
"Do you honestly think that ANY business will risk setting up office in Britain, or will ever make a deal with the British government, if we establish a reputation as a country which turns on you if we later FEEL that we don’t like this deal any more?"
Note that I was talking about businesses, engaged in making impersonal long-term investment decisions based on the stability of trading conditions in Britain.
Nick’s argument, by contrast, was based around the need to attract individuals, and used the redundant language of the ‘wealth-creators’.
Any of you who have read this blog regularly will know that the term ‘wealth-creators’ is an anathema to me! I have long argued that these people are not ‘wealth-creators’ at all – they are ‘wealth thieves’ and ‘wealth hoarders’ … and in doing so, they actually wreck the economy
You see, the Tory argument on business simply does not make any sense.
‘We have to let these brilliant individuals use Britain on their own terms,’ they argue, ‘because otherwise they will go elsewhere … so we must let them take as much as they want’.
But have you seen the illogicality?
If, to get them to come here, we have to let them keep everything they make, what are we getting out of it? And the more we let them take, the less we get.
If there is not going to be a pay-back in terms of jobs, ideas and taxes, then there really is no point in having them here. Or, putting it another way, there is no point in attracting them to Britain to help increase our tax revenues (and reduce the deficit) if the cost of attracting them is to let them get away without paying taxes.
I have argued consistently that we need to distinguish clearly between the business, and the individual businessmen … between the ‘Banks’ and the bankers who work for them.
And – for the moment while I move to consider another point – I’m going to leave you with a question: do the Banks care about the bankers?
Faults in the Tory Model of economic Growth II – the danger of ‘cutting red tape’
Second, let’s look at how Nick de Bois would attract these people:
"Governments must set the macro picture then back off. Liberating the regulatory burdens, loosening employment laws … were a big step in the right direction."
And, here again, Nick lapses into the Tory language of economic growth by repeating the jaded mantra of ‘cutting red tape’.
To be fair, there IS a common sense logic in this. Businesses are forever bleating about ‘prohibitive regulations’ and ‘administrative burdens’. Indeed, a myth has grown up and received general acceptance in both Conservative and Labour Parties that the business environment in Britain in constrictive, and needs loosening.
But what specific ‘regulatory burdens’ do we mean?
I have a suspicion that, as far as most businessmen are concerned, it means anything that stops them doing exactly as they please.
An obvious example is the new Planning Policy Framework, which seeks to loosen up planning restrictions by essentially allowing businesses to build anything, anywhere, as long as they can say that it is ‘sustainable’ (whatever that might mean).
And when Nick mentions ‘loosening employment laws’, he is referring to recent Tory legislation to reduce employees’ rights to contest dismissals.
But hang on a minute…
Those planning laws were put in place by intelligent people to try to PREVENT development destroying our environment, and those employment laws were put in place by motivated legislators to try to PROTECT employees against unfair treatment.
So you’ve got to ask yourself, what great benefits will you and I see from attracting these so-called ‘wealth-creators’ if the cost of doing so is to see our town turned into a wasteland and our personal rights-at-work compromised.
This is why it is SO important to distinguish between ‘business’ and ‘individual businessmen’.
I know and have known many businessmen. To be honest, I have not come across many who fitted the description ‘predator’, and many have been kind and generous to a fault. We have in Newton Aycliffe a Rotary Club of local businessmen who pour money into the community, who genuinely care for their workforce, and who are continually engaged in ‘good works’.
This is why we need to stop making attacks on individual businessmen, and start talking about corporate business – or, in the language of the left, why we need to stop trying to identify individual ‘capitalists’ to victimise, and to turn our attention instead to ‘capitalism’ itself.
Because – just as there is a ‘hidden hand’ which drives capitalism to meet the needs of society – there is also a ‘hidden hand’ which inexorably drives it to oppress people.
Too extreme? Think about it.
What does ‘big business’ care about?
Almost exclusively and very properly, the primary aim of business is profit.
EVERYBODY agrees with this. Unless you are one of the very few who refuse to buy shares, YOU agree with this too – you seek to invest in a firm, or a bank, which will give you the best return … to do otherwise would be mad.
The Aim of Business is Profit
And thus, since both capital and labour are means of production, business will always AND RIGHTLY seek to maximise its return on capital, and to reduce its payment to labour.
We see this everyday. What did Dyson do as soon as he got the chance ... he moved his vacuum factory to Czechoslovakia where the workers came cheaper. What have many big firms done with their call centres …why? Where do TESCO source their clothing … why?
Businesses, and therefore businessmen – not because they are wicked tyrants but because they are involved in a dog-eat-dog struggle to survive in a competitive marketplace – MUST always seek to drive down the costs of labour. And therefore they naturally seek to reduce wages and loosen employment laws.
People have to realise that expecting a capitalist system of business to operate to the benefit and prosperity of its workers goes entirely against the grain … which is why, of course, there have needed to be regulations to MAKE industry reward its workers fairly.
And that, of course, is why an argument that we need to attract industry by loosening employment regulation is entirely counter-productive as far as we the people are concerned – its logical end result is a Britain where the workers are paid and treated like workers in China … so THEN we’ll be able to compete.
At the moment, we have got ourselves backed down a cul-de-sac which criticises British workers as lazy and out-of-date because they want industry to give them a good standard of living without working themselves to death – but, surely, that is what we ALL ultimately want?
Surely this is what even workers who vote Tory want?
The Bankruptcy of the Tory Model of Economic Growth – and what an Alternative would Look Like
Overall, therefore, the Tory narrative of business growth offers the ordinary working classes NOTHING. Austerity involves an unyielding assault on their state benefits, and the Tory business model involves steadily-removing legislation which protects workers and granting the rich licence to neglect their societal obligations.
I suppose the next question is whether, in a recession, there is any alternative?
If I ruled the world, I would formulate a business model which made the distinction I made above between business and businessmen.
We obviously need to create a business environment in which BUSINESSES prosper, but in which we also insist that the rich meet their societal duties.
Let’s continue to reduce taxes and rates upon business … linking that, perhaps, to employment – the more workers a firm employs, the lower its taxes (I have already shown, for example, that even allowing a firm to take ALL an extra workers’ income tax would be financially advantageous for the government and the economy).
But let’s lose this redundant language of ‘wealth-creators’, which makes us feel we have to offer what amounts to a huge personal bung to the captains of industry to get them here.
And let’s rather make them play their proper part in balancing the rewards of industry by taxing them progressively. As you know, I would tax bonuses at 90%, and I cannot for the life of me see why the 50% tax rate should not be increased. If they want to live here and enjoy our wonderful society, let them pay to support it (is a wonderfully capitalist principle!)
At the heart of this is my answer to the question I asked you early about whether you thought the Banks cared about the bankers.
Basically, I suspect the answer is no.
If you develop a system in which BUSINESS can prosper in Britain, you can be sure that those firms will recruit businessmen to run those businesses, and recruit people to take those positions, whatever the tax rate.
For illustration, I cannot see Coca Cola, sensing an opportunity to benefit from low corporation tax, passing up that opportunity because their top executives here will incur a zero-loophole 70% tax on all incomes over £250,000 and they don’t want to upset them.
If business sees the chance of profit, it WILL come – but we need to make sure that the opportunity for profit lies in a positive corporate tax regime and increased employment, not in reducing wages and workers’ safeguards.
Thus, whilst I sometimes cringe at the anti-business LANGUAGE he uses, I think it is Ed Miliband, rather than Nick de Bois, who has got it right on the economy.
YES we need to attract industry – everybody agrees over and over again with that (it was, for example, a major basis of David Miliband’s recent article).
But Ed is right; there is no point in attracting industry if we, the people, experience only reductions in benefits, wages and rights as a result.
And that involves people at the top of society doing more … ‘simple as’, as my son would say.
They will not like it, but providing that we demand from the individuals rather than from the firms, then we will be alright.