This morning's Today programme included an interview with John Cridland from the CBI discussing the state of the economy, the Pfizer bid, and more.
The comments Cridland offered were extraordinary. He blamed politicians in the UK for the uncertainty business now faces. According to him business certainty is now rising (despite the fact that if he though for a moment that phrase is itself an oxymoron). It felt as if he sighed when saying this: 'we know we live in a democracy' as if this was not very obviously a good thing; a point he then went on to reinforce by saying that 'All parties must offer pr0-enterprise policies' which he explained was because 'all wealth is created by the private sector and so all job creation is dependent upon it'.
So Cridland wants us to live in a democracy without choice where all policy must be aimed to make it easier for those who own businesses to get richer with minimum risk because the state removes their uncertainty. That was his message and it is staggeringly wrong.
First, all wealth creation is not dependent upon the private sector. Let me take one very simple example: trains from London to Edinburgh via York are currently run by a state-owned company whilst there is another going up the west coast of England that is managed by private sector companies. Is it possible, using Cridland's logic, for one route to be a wealth creator, and the other not? Clearly that is not the case.
Second, we know big business is simply not investing in the UK economy now: it doesn't matter how pro-enterprise the government now is, big business is not because it has no clue what to do with its money which is why it is sitting on great piles of it and is instead doing takeover and merger deals.
Last, we know that actually most investment that creates wealth is government funded now. Mariana Mazzucato has shown that.
So Cridland is wrong. He does not understand risk and uncertainty. He does not want democracy because he demands just one option be available to an electorate. He is wrong about the nature of wealth creation. And he is wrong about the role of business.
It was not an impressive performance.
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“So Cridland wants us to live in a democracy without choice where all policy must be aimed to make it easier for those who own business to get richer with minimum risk because the state removes their uncertainty. That was his message and it is staggeringly wrong.”
One of the few justifications for the potentially limitless rewards a capitalist can expect from his/her investments is the uncertainty and attached risk involved in investment. If these self-regarding gamblers now want the state to act in order to ameliorate or minimize the uncertainty and risks involved, then surely they’ll be more than willing to accept a commensurate reduction in their returns or perhaps higher taxes on capital gains?
Returns on capital already outpace ‘returns on labour’ in the western world. What more could they possibly want! Want to ameliorate risk, get off your bums and work for a living rather than expecting ‘gambling’ to keep paying off with greater and greater rewards!
@Lee Hyde
Couldn’t agree more, Lee. As I’ve told Richard before, on occasions when we’ve met, most of these “businessmen” like Cridland wouldn’t recognize entrepreneurialism unless it bit them on the backside, and probably not even then.
Instead, they’re actually apparatchnicks of a business bureaucracy, a sort of nomenklatura, dedicated to sucking at the teat of Government support, whose sole purpose, in their eyes, is to cushion them from risk, and to perpetuate their comfortable – VERY comfortable, thank you very much -existence.
If you want to see REAL welfare scroungers, look no further than the world Cridland supports and defends – all of them a million miles away from the world of the real entrepreneur that Richard, and many others champion and applaud. Bottom of the class, Cridland!
Andrew
Cridland has only ever worked for the CBI. He has no clue what running a business is like
He has the ultimate low risk career
Best
Richard
Entrepreneurialism is a term much vaunted by the likes of Cridland (and of course the Government) without any real examination of its ramifications. From a national, economic and social point of view there are ‘good’ entrepreneurs and ‘bad’ entrepreneurs. Many of the businessmen the CBI represent have been responsible for the flood of second rate Chinese goods that now fill the shelves of the Pound shops that dominate our High Streets. The results, both for our BoP and our manufacturing base, have been catastrophic, while well paid technical manufacturing jobs have been translated into low-paid, unskilled (and frequently insecure)work in retail. With that seismic shift has come the diminution of social collateral within the societies that once thrived in industry and, of course, the tax-take available to Government.
Numerous(mainly Tory) governments have, with typical economic illiteracy, found this to be a highly laudable situation, and now we are paying the price for it.
I doubt many of the ‘good’ entrepreneurs (who invest in British technologies and British workers) would feel that Cridland and his ilk speak for them.
Interesting example. After 2015 it is very unlikely we will need two heavily subsidised main lines to Scotland. Moreover, if Scotland wants a fast line to London, it should pay its end of the costs. It would enable fairer treatment to be given to other areas, dare I suggest East Anglia? Railway economics have been a problem area since 1830 as too many investors discovered in the past.
East Anglia needs the money – especially the Norwich line
And so too do lines to the South West and Wales
We need train lines from London to Manchester and Leeds.
All good public investment increases local land values. If you taxed land values (LVT) you would have a virtuous circle of increasing investment => increasing land values => increasing revenues => increasing investment. It’s a mystery that no government has ever thought to put this into practice.
I take it Cridland wasn’t taken to task for backing the union without asking any Scotish busineses? Scottish people are not in the least bit surprised by the CBI’s distain for democracy.
He was actually
He said they got it wrong
“All good public investment increases local land values. If you taxed land values (LVT) you would have a virtuous circle of increasing investment => increasing land values => increasing revenues => increasing investment. It’s a mystery that no government has ever thought to put this into practice.”
Carol, you can maybe answer this question for me. Did the founders of the original Labour party have as a policy Land Value Tax in their manifesto?
Yes, indeed, Simon. All the Labour manifestos included LVT until WWII. They actually enacted it in 1931, although it was quickly repealed by the tories and never implemented. After WWII Labour seems to have lost the plot and started talking land nationalisation.
Have you a copy of that statute?
There are links to both the 1931 Act and the 1939 Site Value Rating for London Bill here http://www.labourland.org/about_us/history/labour_and_land.php.
Thanks!
“Yes, indeed, Simon”
Who’s Simon? I’m Stevo!! 🙂 Seriously though, I thought I had read somewhere that early Labour policy included a Land Value Tax! Thanks for confirming this. 🙂
Oh dear, sorry Stevo. Rushing
I don’t think the CBI is as representative of business as it likes to think it is.
It is not even so for large business, and certainly not for small and medium ones.
OK the suggestion that private enterprise is the sole creator of wealth is insulting.
But for many years post WW2 the culture of the UK had been so anti private enterprise there had to be a reaction against that. But we must define what private enterprise is viz a viz oligopolies and monopolies. And not decry wealth creation- just tax it properly.