Good luck with this Owen, good luck

The task ahead is to ensure Trump’s defeat – as decisively as possible – and Democratic control of both Houses of Congress, and then to build pressure from below to enact progressive legislation.

I can imagine Trump losing although I’m definitely not sure that he will (I think it will be a landslide one way or the other though) but D control of both Houses? Don’t think so, really don’t think so.

But of course we want to have regional banks!

One of the demands of those economics conservatives, the British left and assorted progressives, is that we must have regional banks again. Because, you know, well, regional banks YEAH!

The problem with this being Chesterton’s Fence. We used to have regional banks, why don’t we now? Because we had them, the market considered them and then they all merged to become national banks.

But Chesterton’s Fence. Why did they merge?

Because a regional bank can cause terrible, terrible, problems if it gets into trouble:

From a distance, Vicenza does not look like a city engulfed in turmoil. On the elegant Corso Andrea Palladio, named after the Renaissance architect whose work defines this city, a finely dressed woman clutches a Chanel handbag during her evening passeggiata. Locals sit back and enjoy their Campari spritz cocktails in the July heat. A black Maserati rolls slowly down the street.

But this apparent serenity belies an ugly truth. The regions of Veneto, where Vicenza is located, and Tuscany are the epicentres of Italy’s banking crisis, which has cost citizens hundreds of millions of euros.

If there’s that one dominant regional bank then it getting into trouble can bring the whole region to its knees:

Wealthy northern Italian manufacturing strongholds like Vicenza were the financial engine behind Italy’s postwar economic boom, and are critical for the country’s hopes today. About 30% of Vicenza’s 100,000 companies have a direct relationship with BPV, according to Variati, and those companies need lines of credit and support.

“What I hope, as mayor, is that the bank stays as close as it can to the companies. Those 30% cannot be abandoned, they have to be supported if they are healthy. BPV will be able to survive over time if the territory is strong. There will be no future for the bank if the territory is poorer,” Variati said.

The flip side is also true. Imagine a regional economy with a strong specialisation. That major industry (and in Italy it’s likely to be a cluster, hundreds or thousands of firms all working in roughly the same industry. There’s one little area that produces most of the world’s spectacle frames for example) tanks, what happens to the bank?

Quite, that’s why regional isn’t the way to go, you want banks that are geographically diverse so they’re not exposed to that one industry or one geography risk.

Which brings us back to Chesterton’s Fence and why we used to have regional banks and now do not.

Why don’t we have regional banks? Until that question is answered, A Reverse Chesterton’s if you like, we cannot sensibly discuss whether we should have them again.

And of course the moment anyone says we should have local banks with local worthies (usually, local politicians, unions and locally based businesses) running them we have only to point to Spain’s cajas. Absolutely every one of which went bust from memory.


“This would break open the chest of secrecy that exists in UK tax havens – places including the British Virgin Islands, which featured heavily in both the BHS affair and the Panama Papers.”


So Jezza didn’t offer that peerage then, eh, Ritchie?

Or, to put it not too unsubtly, it’s been an argument about whether ideas I have promoted (the Green New Deal to create jobs, tackling the tax gap to beat austerity, delivering tax haven transparency and People’s Quantitative Easing to fund investment) are what Labour is about or not.

Which is why I am now a little annoyed to be told I’m a Blairite when I have had to acknowledge that Jeremy Corbyn cannot (and may not even want to) deliver this radical agenda, when I wished he could.

For the record, I think that Owen Smith would deliver the agenda I have proposed: the hype Wearing offers in the second half of his article is just that, and wrong. It’s time he worked out fact from fiction. There is only one chance of a Green New Deal right now, and Jeremy Corbyn has never been near the idea.

Charles Pooter had nothing on this bloke, eh?

Richard Murphy says:
July 26 2016 at 4:33 pm
There is one and only appropriate term for team Corbyn


Yep, that no peerage he was chuntering about hurts.

Richard Murphy says:
July 26 2016 at 3:21 pm
And let’s be honest, it was also just the pure drivel I have come to expect from Corbynistas that I think shows an absolute lack of judgement or ability to think critically in any way

If you honestly think Owen Smith is Tory lite, or a neoliberal then you left your ability to appraise a situation behind long ago

But there’s always another chance, eh?

Carol Wilcox says:
July 26 2016 at 8:44 pm
Jeremy Corbyn is not an economist. He’s a trade unionist, a pacifist and an internationalist. John McDonnell deals with the economy – as he has been doing for many, many years.

Richard Murphy says:
July 26 2016 at 8:56 pm
But he isn’t

That’s the problem

Although it’s true that bridges can be burnt prematurely…..

Well, yes Ritchie

But this does not just apply to pensions. It also applies to tax. And corporate reporting. And the environment and so much else.

But this requires three other things.

The first is that business should realise that regulation exists for a purpose.

The second is that they should stop the talk of the burden on business: fair competition that does not leave innocent victims behind is not a burdensome activity; it’s a necessity, but so are the rules that let it happen.

Third, the law should be enforced and right now in tax, company law and I am sure many other areas that is not done because of a lack of resources and a importantly a lack of willing on the part of a government that doe not really believe in its own role.

Business ethics are vital. But so is the rule of law.

Care to point out which laws have been broken?

The Green New Deal

There are two ways of doing this. The first involves the Treasury taking advantage of low interest rates to borrow for long-term investment. Not just in roads, railways and airports but in Britain’s digital infrastructure and its human capital. One of the country’s most glaring structural weaknesses is that the unemployment rate for young people who leave school with the most basic education is among the highest in the developed world.

Why not reduce the minimum wage that keeps them out of employment?

Paul Mason’s logic

What is striking, when you consider the modern reality of precarious work and coercive management, is how the concept of human rights stops at the factory gate. The workers of Georgian England had no democratic rights or access to law. But the 21st century is supposed to be an age of universal rights. Every one of the practices described at Sports Direct appears to not just have broken employment law, but also violated the human right of the citizen not to be bullied, shamed, endangered or sexually harassed.

So today’s workers do have democratic rights and both access to law and protection under it.

That’s good then, isn’t it?

what worries is that neither Mason nor any of his editors saw the error there.

Not really Frank, no, not really

Much of the Green family’s enormous wealth was built up during the early years of Green’s stewardship of BHS.

Umm, Tina had substantial funds already. And it was Arcadia, not BHS, that provided the really big money. It’s true that BHS and Arcadia were contemporaneous but that is a very politician’s phrasing, isn’t it?

And yet there is no evidence whatsoever from this period of the improved turnover, market share, or major increase in investment that might be expected from a leading retailer.

You don’t know how business works, do you Frank?

The decay which set in at individual BHS branches mirrors that of its pension fund – it was allowed to decline from a surplus of £43m in 2000, when Green bought the business, to a £571m deficit last year. Companies that are suppliers to BHS are now also under threat. So the picture that was presented to us in evidence was clear – the Green family’s wealth escalated beyond the dreams of avarice, while the health of BHS and its pension fund was neglected.

And of course low interest rates had nothing to do with that, did it?

What a wonderful word – crorepati

United Spirits has more crorepatis than Wipro, 52 executives earned more than Rs 1 crore last year

South Asian numbering uses lakh and crore. Crore is 10 million, or, in rupees converted to $, call it $150,000.

Pati means “master” or “lord”.

Crorepati. Literally, manager who earns $150 k a year or more.

Our little game for the day – what’s a proper English translation of that?

Corporate fat cat? Don’t know if crorepati really has the derogative implications of that. Anyone?

This isn’t actually junk food though

So, the Mail on junk food:

Junk food-loving fathers raise their future daughters’ risk of breast cancer

Entirely possible, obviously. It’s the illustration though:


I’m happy enough to call the ground cows’ arseholes that make up the average fast food burger junk food. But that’s not that…..that’s ground beef (as in, you know, beef!) with cheese, salad and bread.

Not much that’s junk food about that.

And why am I feeling hungry?

The influence of the libel lawyers

After the report was published Field went on to make several even more critical comments on BBC Radio 4’s Today programme, without the protection of parliamentary privilege afforded by the report.

Note that The Guardian mentions only very lightly the things that Field said without Parliamentary Privilege…..

I do wonder whether everyone is going to be so careful…..

Mr Chakraborrty really doesn’t get it

Staffing Shirebrook alone was worth £50m a year to these two companies, estimate the MPs. Some people were making a lot of money from the degradation of others.

Err, no, not really.

The vast majority of that £50 million was the wages paid to the temp staff. For that is the turnover, not the profit. Thus the actual phrase should be that the tempt staff were masking near £50 million a year….

And this is fun too:

Blair bestowed that honour despite Green having engineered the payment of a £1.3bn dividend to his wife, Tina, in the tax haven of Monaco – a historic handout that avoided around £300m in taxes. The tax savings on that one payout were worth 10 large secondary schools

Where the the avoidance in a foreigner living in foreign not paying British taxes? BHS had already paid corporation tax (oh yes it did!) so, err?

Deeply unconvincing argument about ARM

No, really, no:

On the face of it, Mr Son is paying a fabulous price for ARM – a mouth-watering 60 times last year’s earnings, and a near 50pc premium to the company’s pre-bid value. But if he’s right in his vision, then it’s going to look a bargain ten years from now. Already, there are mutterings that he is underpaying, amid reports of strong sales growth.

Forgive the terrible pun, suggested by a well known City fund manager who won’t forgive me if I attribute it to him, but is SoftBank paying an arm a leg, or is ARM being sold for a son?

It will be a while before we know, yet it seems to be one of those other British deficiencies that we are good at innovation and start-ups but atrocious when it comes to developing them into global players. Too often companies are sold before they properly get going.

We really cannot use the example of ARM to show that we don’t build companies into world beaters. Because ARM is a world beater. So it’s an example of entirely the contrary, that we can and do build companies into world beaters. This is also wrong:

One of the things Theresa May promises to address in a still somewhat ill-defined and unconvincing agenda for revitalising the UK economy is Britain’s productivity deficit. This is of course the holy grail of successive post-war UK governments, and whereas some have done better than others, none has so far managed any more than limited progress in closing the productivity gap. So we must wish her luck.

One place she could usefully start is in taking on the endemic problem of “short-termist” thinking among UK investors and managers, a mind set that is deeply ingrained in British corporate, investment and banking culture.

I’ve long thought this a major part of Britain’s productivity challenge, and I’m happy to see that the City veteran and corporate financier, Sir Simon Robertson, a former stalwart of Kleinwort Benson and Goldman Sachs, agrees with me.

Measurements of productivity have sweet fuck all to do with who owns a company. they’re measures of the output (per hour normally) of people working within the British economy.

Who owns, who gets the profits, makes completely sod all difference to productivity measures. Productivity is measured by the hours those 3,000 around Cambridge put in as against the value of their output. And that’s it. British productivity will change by not one whit or iota as ownership moves from roughly 43% US, 35% UK, balance European to 100% Japanese.

It’s simply trying to measure things using entirely the wrong ruler.

Not convinced by Frank Field’s report at all

The Seriously Terrible Report Into BHS, Sir Philip Green And The Pensions Collapse

The point being that the report notes that low and falling interest rates play merry havoc with pension valuations and deficits.

Yet absolutely nothing at all is done to explain how interest rates falling from 5% to 0.5% has affected that pensions deficit at BHS.

Personally, without knowing how to do the calculations, I’m entirely happy with the idea that Green bears some blame. But so too does the general xhange in macroeconomic conditions. And I do think that the report should at least tried to show us which was which.

It doesn’t which I think is a huge gap in it.

Almost, you know, brash Jewboy in the schmutter trade being badly treated by the establishment sorta sized gap in it.

Oh, well done Ritchie!

But some of their solutions are too timid. Asking for a review of the audits is not good enough: these audits were grossly deficient by not referring to the payment of dividends when there were no funds to pay them.

When were the BHS dividends paid?

When did the pensions hole blow out?

Which happened some years before the other?

Bad idea

John McDonnell would look to reform or scrap a £1bn tax relief that was initially designed by the previous Labour government as a means of promoting innovation in companies, including in the pharmaceutical industry.

The shadow chancellor said the so-called patent box, which boosts profits from patented innovations by halving the rate of corporation tax due to 10%, was a “potential tax loophole with limited impact on research”.

McDonnell said the benefit was enjoyed mainly by large corporations and was not proven to drive up research. He proposed using the savings to set up a fund for Alzheimer’s research.

You can see why it attracts of course.

A tax break allows us to use the market and its associated incentives to sort through what might produce the best result.

A fund allows John McDonnell to spend the money as he sees fit.

Have they actually got this right about BHS?

From the report:

BHS, which was founded in 1928, was bought by Sir Philip Green in 2000. It became part of the Taveta group, which is ultimately controlled by Lady Green, in 2009.

I thought it was always part of Taveta? In 2009 the merger was of Arcadia and BHS, wasn’t it? The two Taveta subsidiaries merging?

I am firmly under the impression that Sir Philip never actually owned it.