You may not agree with the Persimmon bonus policy but it’s not the fault of capitalism

“We are intensely relaxed about people getting filthy rich as long as they pay their taxes.” So famously said Peter Mandelson at the height of New Labour’s power and influence.

Often that quote is truncated to remove what is the fairly important point about paying tax, so it became a phrase focused on high earnings. But regardless it became not only a symbol of how far Labour had come on its journey into capitalism but ended up firmly part of the zeitgeist.

As I read the headlines and opinion pieces on what happened with Persimmon and its now former CEO Jeff Fairburn, I can’t help but feel that everyone has forgotten what capitalism actually is.

Even the people who are notionally trying to defend it, can’t help but gloat about Fairburn’s demise, or whine about his earnings. It’s termed a “pay scandal” and “crony capitalism”, but I would argue it’s neither of those things.

Let’s keep this simple: Jeff Fairburn has made a lot of money. You can argue as much as you like as to whether he has earned it, or whether he deserves it, but he had a job, which included rewards and incentives including a salary and bonuses. He didn’t steal this money. The system gave it to him.

He’s been CEO since 2013 and since then Persimmon has done well. The CEO was rewarded accordingly.

Now wait just a minute, I hear you say. And before I hear your protestations, let me try and get in there first.

“The only reason Persimmon has done so well is because of the inept housing policy of successive governments, including most recently the Help to Buy scheme.”

“Even his reduced bonus of £75m is an obscene amount of money.”

“There should be a cap on bonuses and the board should never have approved such a scheme linked to corporate value.”

“People like this give capitalism a bad name.”

“It’s a gift to Jeremy Corbyn’s Labour party.”

Any of those sound familiar? Maybe all of them.

But all these arguments are fundamentally missing the point. A pay scandal is where somebody hasn’t been paid what they are rightfully owed. It’s when different groups of people get paid wildly different salaries because of who they are, not the job they are doing.

This isn’t a pay scandal, it’s the politics of envy, plain and simple. How could anyone earn such a large amount of money? They must be awful.

Of course, Fairburn’s media appearances haven’t done him any favours. But he was hired as head of a house builder, not a PR agency.

But I’m not defending him personally or any action he has or hasn’t taken. The point is, the company he was hired as Chief Executive deemed it right to pay him this money (and they certainly made enough of it) and so in return he did a job.

Just because he has, so far, seemed incapable of reading the mood of the nation, doesn’t mean he should have earned less, yet I keep coming across articles that seem to suggest that for every public miscommunication an extra £5m should be lopped off his bonus.

Yet this isn’t how we treat footballers. Yes there are those who think that their pay is obscene, but they tend not to be the people who pay for the tickets or TV subscriptions to watch them play.

So where are we all going wrong? Well let’s start with this term “crony capitalism”.

I knew we shouldn’t have chosen the crony type of capitalism. We should definitely have chosen some kind of fluffy bunny type of capitalism instead. No, I’ve got it – “caring capitalism”. That’s what we’ve been missing all along. Just whatever we do, let’s not choose “death capitalism” – things could all get a lot worse.

Let’s call things what they are. Cronyism is cronyism. You don’t need capitalism for it to exist. In fact, far from it. You couldn’t get a system that encourages more cronyism than a collectivist one like socialism. Just look at Stalin’s Russia, or Maduro’s Venezuela.

The fact is that cronyism exists in every system, and the more a government intervenes, the more opportunities there are for people to get in on the gig.

Free markets are a tough sell. There’s no doubt about that. Explaining to people why Carillion going bust is ultimately a good thing takes some work, but it’s what true advocates of freedom should be doing, not becoming apologists for capitalism.

As soon as you start to advocate “good” capitalism over “bad” capitalism, you instantly fall into the trap the political left has set. And it was the easiest trap they’ve ever laid.

Because if you take one CEO, one company, one industry, then of course you will find things that you personally find unacceptable, unfair, or downright appalling. Your opinions on those entities or people will be valid. Problems will undoubtedly exist. But they aren’t a case for intervention.

Because truly free markets are driven by consumers. Free markets punish failure and reward success. They are bound by the aggregate decisions of everyone’s individual choices.

Competition for custom, and the permanent threat of failure is what drives companies to succeed.

If Carillion couldn’t make money, and were being propped up by government contracts, then it’s a good thing it no longer exists, so that a better company (or companies) can fill its shoes.

If Persimmon now think they paid too much to their CEO, they’ll review it and lower it. If the act of paying their CEO too much causes them somehow to completely fail, then it will be because they made the wrong decisions, and the market will see to it they are replaced by people making better decisions.
We must start explaining again the benefits of the system that has produced more wealth in the world than any other before it.

If there is a scandal here it’s that housing is treated differently by the state to other parts of the economy. We see the same in the financial sector and very much in healthcare.

While house builders are encouraged by the current regulations and government policy to land bank, and while they aren’t allowed to build on viable, useful (and not green) land in the green belt, the housing market won’t be free.

While there is quantitative easing, pushing up asset prices, and stamp duty discouraging sale, the housing market won’t be free.

Yes, in a free market economy, businesses will fail. But those are the businesses that should fail.

And yes, in a free market economy, some people will be paid handsomely for what they do.

But we must work to gradually remove the encumbrances from the housing market and others, as otherwise we will end up piling on more changes, more regulations and more intervention. Of course more intervention will all be with the best of intentions. But those intentions will have the unintended consequences we are already seeing. A small number of large incumbent providers lining their pockets, because the system encourages them to.

When I see the terms “broken markets” or “crony capitalism”, I can’t help but think we need to wake up from this delusion that the right person, the right policy or the right amount of intervention will “fix” the markets in the name of fairness.

The real scandal is that we’ve forgotten what free market capitalism really is.

What have Cowperthwaite and Corbyn got in common?

If you can’t measure it you can’t manage it – so the mantra goes.

As Philip Hammond gets ready to deliver his budget speech, I’m reminded of that phrase, which I myself have used on occasion in order to justify gathering more data in business in order to be able to make decisions.

You can see the appeal of it. When you need to manage something, your instinct is to find out as much about it as you can first.

Then after you’ve instigated some changes you want to know how it’s gone so you go about getting some new measurements and probably do a comparison.

It’s in that vein that the Office for Budget Responsibility does its thing and produces a whole load of numbers and statistics for government, opposition and the media to pore over at budget time.

Some of the figures have already been trailed and leaked so that we have a sneak preview of the kinds of policies and decisions that the Chancellor will talk about.

It’s the usual politics. Can spending be increased (because that’s seen as the politically acceptable thing to do) and will the deficit be narrowed further so that the Tory party can somehow hang it’s hat on “austerity” as being a necessary evil?

It’s all about the numbers and it’s all about whether those numbers give Spreadsheet Phil the room he wants to either spend money on things or change tax policy.

MPs on the right of the Conservative party have lined up saying cut taxes, and those on the so called centre ground talk of increasing “investment”, meaning spend, spend, spend.

But they all do it based on the OBR forecasts and measurements of the economy.

Now I could start talking about the futility of “forecasts” and even try to do a study of how wrong they always are. I could also invoke the Heisenberg Uncertainty Principle: whatever you study, you change.

But actually, I’m reminded of economic hero Sir John Cowperthwaite, the financial secretary of Hong Kong in the 1960s, who was in a large part responsible for the economic miracle of this tiny colony, turning it into the powerhouse it is today while rocketing up the global league tables of wealth.

One of the things Cowperthwaite is famous for (other than the genius of positive non-interventionism) is refusing to collect macroeconomic statistics.

In his view the trouble with collecting figures, say the measuring of economic growth, then some idiot would want to try and control them.

He literally sent British government officials packing when they came from Whitehall to insist on the data collection.

His view was that you should just do what’s right to encourage growth and that other good effects would follow on.

That more money in people’s pockets would mean higher living standards all round.

Now we all know that the major political parties in the UK all have statist policies (although some are obviously worse than others).

But I think I’ve found a similarity between how Cowperthwaite treated the numbers and Corbyn-led Labour.

No I haven’t gone mad, and no, Corbyn hasn’t suddenly started espousing small state, low tax, free market economics like Cowperthwaite.

But what him and his cohort do have in common is that they so don’t care about the numbers. Oh they will use them today to try and bash the Conservative party to paint them as being bad at government and bad for the country. But that’s just politics as usual.

If Jeremy Corbyn and the socialist left come to power then they will act entirely without care for the numbers.

They might invent some forecasts of their own of course or rely on some “economists” they like so as to support their policies. But in truth they are acting on ideology. They BELIEVE they are right and so act because they know that they are on the right track. Regardless of what the evidence may ever articulate.

But this is what the other side is lacking. Ideology is gone. Replaced by what George Osborne calls “wise government intervention”.

Sir John Cowperthwaite believed in something. It happened to be economic freedom and non-interventionism. It was also massively successful, unlike the catastrophic policies of socialism in everywhere it’s been tried.

But he didn’t let the numbers get in the way. He chose not to measure and also not to manage.

It’s time for ideology again and it’s time to for someone to articulate positive non-interventionism. Something tells me Philip Hammond isn’t going to do that in his speech.

Why people call themselves centrists

Centrism is one of those terms that people put a lot of effort into claiming. It doesn’t seem to matter where the political Overton Window is, people (and parties) always try to insist that they have the centre ground.

People tweet about how centrism is the best way. That being a centrist means realising your side doesn’t have all the answers. That centrism is somehow synonymous with reason, with the sensible middle ground. The non extreme view.

Here in the UK, there’s lots of talk about how Britain is crying out for a new centrist party.

Why is this?

I believe it is firmly routed in the way politics is taught in the West. Think about it, for a minute. What is everybody taught from a young age? Communism is on the far left and Fascism is on the far right. Most people, understandably, want to be as far away from those two abhorrent ideologies as possible. Certainly anyone who has any grasp at all of 20th century history. And where is the furthest away from both of those on the standard, left/right political spectrum? The very centre.

I believe this is the reason why so many people claim the centrist position, even when they all disagree where it is. They want to believe that their position is reasonable. That their views are what normal people should have (if only they had the same information as them, as if often the case). Stray from the very centre? That’s a slippery slope to extremism, my friend!

One of the problems here is, of course, that Communism, Socialism and Fascism are all so similar. The idea that they are somehow on opposite ends of the spectrum falls down with minimal scrutiny. One of the reasons for this is that the political spectrum is not just left/right. The political compass, with its four quadrants, isn’t perfect but is a lot better.

The additional axes on the spectrum detail the difference between authoritarianism and libertarianism, whether you believe in force or freedom. A fan of state regulation? Top half. Tariffs on external goods? Top half. Nationalisation? Top of the top half. Believe in free markets? Bottom half. Free speech? Bottom half. Think everyone should be able to run their own lives? Bottom half.

It’s that authoritarian/libertarian axis that’s far more important to me. It doesn’t bother me if you’re on the left or the right, as long as you don’t want to run everybody else’s life. If you want to live in a commune, feel free? As long as you don’t expect me to subsidise you. If you want to control my life, however, I don’t care which side you’re on.

The standard left/right paradigm doesn’t really have anywhere for classical liberals or libertarians, either. Where am I supposed to go? Liberals are usually branded right wing simply for being ‘not left wing’, but nobody can ever explain to me the connection between small government, freedom loving Austrian economists and totalitarian, big state fascists.

Ask a random person now where they’d put people who want small government & low taxes on the standard scale and I bet 99% of them would place them on the right – regardless of whether they attribute those things as positive or negative in political or social terms.  The same applies these days to freedom is speech.  Safe spaces, no-platforming, thought crime – these are features of the current left.  If you advocate true freedom of speech with no exceptions then you are automatically considered far right.

Ask those same people how those stances can lead to fascism and you’ll just hear crickets.

Maybe they’ll argue that by defending people who share (in their minds at least) abhorrent views, it somehow encourages and promotes those views and makes them spread.  Heaven forbid that the light of day would allow intelligent people to challenge and refute what is necessary, and present evidence to counter the negativity.

But what they miss entirely is that fascism was about not being allowed a voice, by having to adhere to the party line or be “disappeared” by the secret police.  Doesn’t sound like free speech to me.

And the idea that by thinking you may pay too much tax is somehow a route to racial superiority is as laughable as it is sad.  Fascism and the right wing have been wrongly equated for too long.  If anything left and right have now lost all meaning in political and social terms.

It’s no wonder people and their politicians have grabbed onto centrism with both hands as a way of distinguishing themselves from the extremists.  The trouble is though, freedom now seems to be an extreme ideology.  When did that happen?

The Leave Campaign Needs Donald Trump – But Not The Way You Think

Many Leavers have suggested we need someone like Donald Trump in the Brexit Campaign. Someone with a strong track record in winning negotiations. Someone confident who isn’t afraid to stand up to world leaders. I can understand the appeal. The same has been said of Margaret Thatcher, suggesting she’d come back from Brussels with them paying us for the privilege of a trade deal (and not the other way around).

Whilst I can completely understand this reasoning, I think there would be a better place for him. As EU President.

Just bear with me for a moment on this. Think about it. It’s a win:win situation.

As one of the EU Presidents, say, instead of Tusk (The inferior Donald T), Trump could be amazing. Firstly, almost all of Remainers would switch sides. One of the reasons they love the EU is the big state, big government approach. What they’ve never appreciated is the EU has the potential to be led by the “wrong people”. Think back to the USA under Barack Obama. SJWs & leftists were all for state control until their party lost the 2016 election.

If Trump was in charge there’d be no more calls for a People’s Loser’s Vote. Oh no. Remainers would be trying to leave as soon as possible. There’d be marches in the streets with people wearing Never Trump t-shirts, setting fire to the EU flag, stamping on Make Europe Great Again hats. It would be marvellous.

Secondly, if, as I’ve said before, we don’t actually end up leaving, who better to lead the EU than a small state, free trade entrepreneur? He’d be slashing regulation, tearing up unnecessary legislation and breaking down trade barriers like there was no tomorrow. Now, I know Trump has put up tariffs on some items in the US, which I disagree with wholeheartedly, but the end game for him has always appeared to be completely free trade. He’s said as much himself on numerous occasions. As a fan of unilateral free trade I disagree with his tactics, but agree with his end goal.

So yes, a Trump or a Thatcher would be great on our side, but they’d be even more value on the other.

Why another Brexit referendum is a bad idea

There’s been lots of talk recently about a “People’s vote” or, as I’ve heard it more accurately described, a “Losers’ Vote”. The arguments are as follows:

More information has come to light since the referendum.

People should be able to change their minds in a democracy.

The first point shouldn’t really need arguing against, but I will. Of course more information has come to light! New information is known every day! Are we supposed to wait until every registered voter knows every single thing about the EU (and can prove it by passing a test) before we vote? The EU is so overwhelmingly large that no single person could ever know how it all works, so this is a problem that can never be solved.

In any referendum, you draw a line in the sand and say “We’re making a decision, now.”. This is what happened in 2016 and we should stick by it. If we have a “People’s Vote”, more information will be known the day after. Should we organise another referendum when that happens? No.

The second point is a sneaky trick Remainers use to try and con Leavers. They use weasel words and will tell you that they love democracy, which is why they want more of it. They’ll probably ask you if you’re afraid of more democracy and ask you why you don’t trust the people. Where were these people for the 41 years prior to 2016? I don’t remember any of them calling for more democracy then.

And how much more democracy do we need? How often should we have another referendum? We haven’t even had time to implement this first one. Should we have one a year? A month? How about every 5 minutes? This is another reason why democracy is a bad thing. It’s far too easy to have too much. Don’t know what I mean? Should we use democracy to decide which car we all drive? How about what clothes we all wear? And for those who don’t know my views on this, I’m not talking about replacing it with authoritarianism, but freedom. Which would of course mean leaving the EU without even needing a referendum.

SO this brings me to my main point about the referendum. If we’re going to use democracy to decide these things, then we shouldn’t have another vote until we’ve given this one a good go. I would suggest at least ten years after we’ve actually left, as that’s enough for another two terms in government.

Currently, the government is massively pro-remain, as is parliament in general. If we have referendums too often, it gives the government (and the wider parliament) the ability to screw up the implementation and ask for another vote, which is exactly what Remainers are trying to do right now.

I don’t believe that Brexit was a vote purely to stick two fingers up at politicians. Of course it’s quite nice to do that, but I genuinely think that the British People wanted to leave the European Union for perfectly rational reasons. A consequence of that was voting against the establishment. Can you imagine the precedent it would set if we let them screw up every decision we made that they didn’t like? What would it say for future referendums? You can vote any way you like, but we’ll mess things up in a such a catastrophic way that you’ll want to go back to the way things were every time.

We need at least ten years after we leave before we even think about asking the British People for another say. We need whoever is in government now , whoever is in government when we leave and whoever is in government in the term after that to make a good go of Brexit. The only ballot a politician fears more than a referendum is a general election. Politicians should fear being voted out more than they fear another Brexit referendum. The only way to do that is not to have one for a sufficient amount of time.

Big Tent Ideas Festival 2018

Just got back from the Big Tent Ideas Festival near Cambridge.

If you’ve not heard of it, it’s a gathering of all sorts of political types, journalists, think tankers with open discussions and debates on all manner of topics.

There are tents on Society, Hopes and Fears, Politics, Economy, Innovation, Technology, Global Britain.

In particular the IEA, one of my favourite think tanks, ran the last two sessions in the economy tent and I got to meet Lee Rowley MP and Kristian Niemietz.

If you haven’t read it yet, you must read his IEA paper entitled The Mirage of Democratic Socialism.

Its an alternate history where the German Democratic Republic (East Germany) became a “true” socialist state after the fall of the Berlin wall.  Niemietz has such a way of making the right points in the right way. It’s a must read. And no guesses where this socialist paradise ends up even when it’s non violent.

He was also a total gent when I asked him to pose with me against the art wall when I saw a particular phrase was there…

Nic with Kristian Niemietz at the Big Tent Ideas Festival

There was a surprise at the end of the day when none other than George Osborne arrived for a final interview and initially I was encouraged by his views on why he lost the EU referendum (them not being the usual remainer nonsense about being lied to or knowing more now, or not being educated enough) but then he started losing me when he talked about explicitly trying to get to a post-liberal era in the 2015 election.

His talk of “wise intervention from government” just struck me as more of the same statism we’ve unfortunately come to expect from all major political parties.

But the highlight has to be meeting Lee Rowley MP and hearing him talk.  I’d not heard of him until today but after hearing him speak clearly and passionately for classical liberal values I decided to ask him afterwards where all the other classical liberal Conservative MPs were! He assured me they do exist and that the new intake had some ones to watch.

If the Conservative Party actually espoused liberal values then that might actually give me a party to vote for! Maybe I need to move to Lee’s constituency…

Why don’t socialists donate to the government?

It seems that every day some virtue signalling celebrity comments on how they should pay more tax. We discuss this very issue in the latest edition of Sounding Board.  If you haven’t listened already, it’s available here.

In it, we analyse statistics from the British Government on how much people actually donate to the treasury. Spoiler: virtually nothing.

It would appear then, that these are just weasel words, designed to elevate the sayer’s status without actually doing anything or backing them up with actions. A couple of days after publishing the podcast, as if by magic, one such person ended up on my Twitter timeline.

This was his original tweet:

Classic virtue signalling. “I’d willingly pay more tax”. I thought I’d see if he actually did.

Well, colour me shocked. No extra, whatsoever.

So there we go. It’s always, always the same:

“I should pay more tax.”

“Great! Here’s how.”

“I didn’t mean just me. I’m not unless we’re all forced to.”

If you ever encounter anyone saying they should pay more tax, point them in the direction of the treasury.

Charlottesville Counter Protests – A Success Or A Failure?

On Sunday, August 12th 2018, A second white supremacist rally was held in Washington DC. “Unite The Right 2” was planned as a sequel to the first rally, one year ago in Charlottesville, Virginia, where far right protestors and far left counter protestors clashed violently, resulting in the death of a young woman (and many more injured).

The first rally had hundreds in attendance, possibly up to a thousand. Angry young men with their tiki torches, chanting. This year? Approximately twenty people showed up. Not even a single bus load. They were vastly outnumbered by counter protestors from around 40 anti-racism organisations.

Now, you may think this is a good thing. That the far right have been, as near as makes no difference, eliminated. But have they? Interviews with protestors state that many of their colleagues did not attend due to fear. The protests last year became very violent due to clashes with Antifa, the so called anti-fascist organisation, who have a history of administering extreme violence in their black face masks against anyone (including young women & the elderly) who isn’t far left, and other counter protestors.

So what has actually happened? Has Fascism been eliminated? Of course it hasn’t. It’s been driven underground. Which is one of the worst things that could have happened. This is exactly why we need free speech. Free speech is how individuals and groups improve their opinions. They can air their thoughts, debate, argue and have alternative opinions given to them. They can then strengthen their opinions, or perhaps change their minds when presented with other evidence. None of this can happen now for white supremacists. So how are these people ever going to have their minds changed, now that they can’t speak in public? How can young, foolish individuals ever hope to change their dumb opinions under these circumstances?

Pushing things underground never works. Look back to prohibition in the 1930s. How well did that work? Or the war on drugs. How’s that going? Pushing opinions underground never works, either. In Britain the British National Party (BNP) were a growing political movement, some years ago. Although labelled “far right”, their policies were firmly in the left wing (mass nationalisation, etc.). They were just extremely racist. The BBC invited their then leader, Nick Griffin, onto Question Time, the popular political programme. There was uproar from the left wing. People went crazy and petitioned the BBC to change their mind as they shouldn’t give such a man a platform. To their credit, the BBC went ahead with the programme. Nick Griffin came on and made himself look like a fool (without any help from the weak panellists also on the programme). Support for the BNP evaporated, almost overnight.

The way to change people’s minds is to engage with them. To converse, to debate, to counter. We should be shining a light on people with white supremacist opinions. We should be inviting them to debates, to share the stage with us. If you don’t think your opinions will stand up to scrutiny from a white supremacist, maybe you should ask yourself why.


Entitlements. The new privilege.

I’ve just been delayed on my flight abroad by more than 3 hours. It’s actually going to be the other side of 4 hours. With two small children, my wife and I have been feeling the strain and using up the myriad ideas, techniques and distractions that we had already planned for the flight itself to keep the children entertained.

Thanks to the passenger who sat next to me I now know that we’re entitled to compensation as a result of an EU directive.

I could get north of €250 per person for my troubles.

Now obviously if enough of us passengers (customers they kept telling me) successfully claim then the logic is that the airline will learn the hard way and try to avoid such a payout again.

And this is where there is always an interesting discussion of what the market does and does not do.

The EU created this entitlement for me. The market didn’t.

Had the market been left alone completely would I be in the position of being able to claim compensation?

Surely if it’s what consumers want then providers will compete for the best compensation package? As far as I can read of this EU directive while sat waiting to take off, it’s all based on the rules the EU has come up with so it’s a straight and simple entitlement.

And that’s the term I’ve fixed on. Even the pilot said it in his announcement. We will be entitled.

I don’t want to be entitled. To anything.

Ironically I think it’s just as bad, if not worse, than being that other dreaded lefty word: privileged.

Entitlements are just state sanctioned privileges. State designed ones.

Its where the state elites have worked out where we should and shouldn’t have privilege, presumably as a way of “levelling the playing field” or certainly in this case, of bashing corporate greed in the name of the consumer.

Some privileges are earned. Others come by luck. Some by birth.

Theres another form of privilege now and it’s wrapped in the language of equality. The entitlement.

Not born of the market or of hard graft but delivered on a plate by our benevolent masters. Because the world is too scary for it not to be run by our betters.

At least, that’s what they think.

Government – everyone thinks they can run it better

People who are “literally” communists are basically saying they could have done communism better than all the ways that have already been tried.

Ignoring the fact that all the ways tried so far have all been communism or socialism, it leads me to think that this highlights an important part of why government does or doesn’t work.

For a while we believe that if only the right people come to power that everything will be ok.

“Once our guys are in, things will get better”

But then, it became clear to me at least, that there are a number of problems that aren’t always obvious.

I suppose the obvious one is the maxim that power corrupts.

Another is that the only people who become political leaders are those who want power, which are the people you least want to have it.

But each of them think that they will do it better, only to discover that the same big-state issues will always exist.

One thing it curiously made me think about recently was our monarchy in the UK.

Now lots of people on the right and left in politics think that in a democratic society, it is clear that we should abolish the monarchy.

But this is where our constitutional monarchic system has its genius. It’s responsibility without power. It’s power that you aren’t allowed to use. That you must not use.

It’s an argument I heard once that totally converted me to a monarchist. That and the three word argument that I have heard a few times against a democratically elected head of state: President Tony Blair.

If only our government had the same mantra. That it was their responsibility to hold on to power but not to wield it, in favour of it being wielded directly by the people.

That they were custodians of power, there to stop others from taking advantage of that power.

It’s very unlikely to happen, but we need to recognise where the British system of government has got things right, and a head of state there to make sure nobody becomes head of state is pure genius.