UK prime minister Theresa May is on a roll, in more than one direction.
She wants the bank of England to stop QE; she wants to put an end to “irresponsible capitalism”; she chastised CEO pay; and she is after tax dodging companies.
May is also firmly behind Brexit and a supporter of government spying.
Irresponsible Capitalism
May says she is ‘coming after’ tax-dodging companies, and puts irresponsible capitalism ‘on warning’
Theresa May criticised irresponsible behaviour by big business and put the housing, energy and broadband industries on notice for radical reforms in a speech that prompted comparisons with Ed Miliband, the former Labour leader.
In a speech steeped in rhetoric about the role of the government to bear down on irresponsible capitalism, the prime minister said she would tackle “unfairness” wherever she found it, from tax evasion to high household energy bills.
The government would be “coming after” tax-dodging companies and their advisers.
The prime minister repeated her plans to shake up corporate governance in UK boardrooms by putting worker and consumer representatives on boards, introducing annual binding pay votes and making companies publish pay ratios.
Among those “put on warning” by the prime minister was “a household name that refuses to work with the authorities even to fight terrorism”.
Social media sites have been accused by the authorities of failing to combat the use of their sites to promote terrorism. The Commons home affairs committee recently criticised social media sites such as Facebook, Twitter and YouTube for “consciously failing” to prevent the use of their sites to promote radicalisation.
Mrs May also criticised an unknown “director who takes out massive dividends while knowing that the company pension is about to go bust”, a rich boss who did not look after his staff and an international company that treated tax laws as an “optional extra”.
MPs have issued reports in recent months criticising the behaviour of both Sir Philip Green, the retail tycoon, and Mike Ashley, the owner of Sports Direct.
Sir Philip held BHS from 2000 until 2015 when it was sold for £1 to Retail Acquisitions, a consortium of investors. The collapse of the business this year became acutely political thanks to concerns about the BHS pension deficit of £571m.
Sir Philip took the dividends when the pension fund was still in surplus. But a joint report by two Commons committees, for business and for work and pensions, claimed he had “systematically extracted hundreds of millions of pounds” from BHS. He had enriched himself and his family while “leaving the company and its pension fund weakened to the point of the inevitable collapse of both”.
Mr Ashley was accused by MPs of presiding over almost “Victorian” working conditions at a Sports Direct warehouse in the Midlands.
Mrs May’s comments came just hours after George Freeman, head of her policy board in Downing Street, warned of “anti-capitalist riots” if the government did not urgently reform the economic system — including with a more muscular state. “We have got to have capitalism working more in partnership with the state,” he told a fringe event. “Responsible capitalism is completely essential if we are going to tackle the social justice agenda.”
Change is Coming
Theresa May’s says ‘A change is going to come’.
Theresa May ended the Conservative conference as she started it: in command of her party and looking to extend her hegemony. “A change is going to come,” she said, as she mapped out the contours of May’s Britain.
The prime minister’s pitch to the country is that on June 23 Britain did not just vote for Brexit; it voted for fundamental change.
The first message was that she is now fully signed up for Brexit and for seizing “the opportunities” afforded by a break with the EU, with a strong emphasis on cutting immigration. “We are all Brexiteers now,” said one minister. Mrs May’s talk of “taking control” and restoring Britain’s “independence” comes straight from a Leave campaign leaflet and has helped to dispel any doubts among Tory activists that she is serious.
This week, even liberal pro-Europeans such as Amber Rudd, the new home secretary, have been talking tough on immigration and rebuking companies for employing foreign staff.
Mrs May’s tone and policy announcements — including a review of workers’ rights, new housing schemes and a promise to take on big business — are intended to extend her political grip to areas that used to be out of reach to the Tories.
May Goes After QE
Finally, please consider Theresa May Takes Swipe at Capitalist Elite.
Theresa May has denounced a rootless “international elite” and vowed to make capitalism operate more fairly for workers, as she promised profound change to reunite Britain after June’s vote to leave the EU.
In a speech to the Conservative party conference, Mrs May said the Brexit vote was a cry for a new start, setting out an agenda of state intervention, more workers’ rights, an assault on failing markets and a crackdown on corporate greed.
The prime minister’s speech drew comparisons with the supposedly anti-business rhetoric of former Labour leader Ed Miliband, but one Tory official said: “Perhaps only a Tory government can save capitalism from itself.”
Mrs May told activists that the Conservatives would respond to the Brexit vote by putting “the power of government squarely at the service of ordinary working-class people”, adding: “It’s time to remember the good that government can do.”
The prime minister also repeated her plans to shake up corporate governance in UK boardrooms by putting worker and consumer representatives on boards, introducing annual binding pay votes and making companies publish pay ratios.
Mrs May’s comments came just hours after George Freeman, head of her policy board in Downing Street, warned of “anti-capitalist riots” if the government did not urgently reform the economic system — including deploying a more muscular state.
It was wrong that half of people in rural areas could not get a decent broadband connection, that two-thirds of energy customers were “stuck” on the most expensive tariffs or that the housing market was failing working people, she said.
She suggested the Bank of England’s quantitative easing programme should draw to a close, saying that it had caused some “bad side effects”, pumping up asset prices but leaving people without assets, or living on savings, worse off.
Mrs May ended the conference at the head of a party largely united in support for Brexit and eyeing an “opportunity” to remake British politics to take the lessons of the upheaval on June 23.
Quite a Set of Tirades
Wow. That quite a set of tirades, launched in all directions.
May is giving something big to everyone in a massive attempt to consolidate power. She appeased labour, UKIP, and the Tories in a “something for everyone speech”.
Brexit is a good idea. May embraced it far more than most expected. And I salute anyone in power who launches an attack on QE.
But this notion that government needs to save capitalism from itself is complete madness. If corporations abuse tax law it is because politicians wrote tax laws that could be abused.
Mike “Mish” Shedlock
Politicians didn’t write tax laws, lobbyists wrote them. Why not fix them? I think that clawbacks should apply to excessive executive pay if pension funds go bankrupt. The question is: what is excessive?
People with responsibility to save for their own pensions. No roadblocks laid in the way of them doing so. No more “that guy gave me a buck for helping move his lawn one day. So he is responsible for my pension” nonsense. Problem solved.
The pathetic, progressive idea that ostensibly free people are somehow rank ordered into Mom and Pop Job Creator Boss and Leader on one hand, and all the hapless and helpless little worker children on the other, ultimately does nothing more than make that silliness self reinforcing. Turning the world into the progressive labor camp wet dream of: They the labor organizers, with the rest stuck doing the labor and begging for handouts.
Pensions are a contractual part of worker pay. If an exec pays himself dividends and wrecks the pensions, that should be fraud.
Change the law to enforce pension solvency. There should be a reserve fund that acts just like a bank’s loan loss reserve. Definitely have employee and consumer reps on corporate boards. Otherwise, go incorporate somewhere else and pay tariffs to import to the UK.
No free rides to corps. And corporations should not have free speech for political purposes. Human beings vote. A corporation is a piece of paper with no rights.
There’s a lot more behind this than is even in those statements. Sometime you have to reverse statements to get the picture.
A “Britain that works for Everyone” becomes “Everyone works for Britain”.
What does that mean? A gradual attack on areas of endemic unemployment where demand for employees has been met with foreign labour whilst the UK benefits bill remains stubbornly high. This is not the foreign workers fault, it’s the system that has the problem.
All UK businesses are being asked to name foreign workers. This is partly to help quantify but to also identify areas of scarcity of labour not satisfied by UK workers. It can also be used as part of the negotiations as the UK became the employer of last resort for the EU. What will the EU do if they have cohorts of young people heading back to no jobs? Migrant crisis 2, the sequel.
The UK has its own underclass of unemployed that has become intergenerational in areas. This will be addressed and it may be unpleasant. For each statement she made that sounded interventionist and pro-people I fully expect there is another list (not announced) to cut demands on government. I do not expect her to be big government.
There is some joined up thinking going on. Recently young Doctors threatened strike action due to changing works contracts. Response – more money to train more Doctors. More future middle class, more voters with kids that might become Doctors, more supply of Doctors = less bargaining power by Doctors in the NHS. No one was/is able to complain as they will look silly.
UK employees shouldn’t expect an easy ride. I think the Government will come down pretty hard on areas that are not contributing or “working for Britain”. These speeches we against “fat cats” for good reason, not to scare the horses.
The UK Conservative party is the longest surviving political party in the world. That’s not just a result of good fortune.
I lived and worked in Britain for over five years. (I’m a US citizen).
It was a hostile place to be a foreign worker even under Tony Blair and Gordon Brown. May’s proposal just makes it even worse.
The idea that “getting rid of foreign workers” will help the British economy is ridiculous. As a highly qualified and scarce commodity in my industry, I created six jobs for UK residents and an almost $2 million annual line of business in the country. We expanded to a second floor in our office, paying rent to landlords.
We contributed to private pensions. We paid hundreds of thousands of incremental sterling a year to UK companies for air travel, printing services, hotels, restaurant/pub bills, and more.
The UK tightened their immigration restrictions while I was there, extending the time that I’d need to be resident for another three years before I could get the British equivalent of a green card, called “indefinite leave to remain.” I opted to wave the bird at Whitehall and headed home.
I ended up at a company where I’ve helped create eleven new American jobs. And those British jobs I helped create? Without me to help build and guide the business, as well as mentor employees, the entire business unit withered away. Every last person was laid off over the ensuing six years, and all the economic activity associated with my residency in the UK evaporated.
THAT should be “named and shamed,” not the fact that a British company employed me.
PS — for all the nativism in the United Kingdom, there is a truly enormous community of British expats who work abroad with a staggering amount of entitlement and expected access to the US and Canadian labor markets. If the British get more protectionist on labor, you could very well discover that the cushy job you thought you were going to get in New York, LA or Chicago with that fancy Oxford or Cambridge degree isn’t open to you.
This is problem. In going for things that are wrong, the government arrogates power to itself and thus starts intervening in areas where it should not. Tax laws, CEO compensation, clawbacks, jail term for inappropriate corporate action etc. are much needed.
I for one would be glad to have the wings of the central bankers clipped or disbanded as a good beginning to a complete overhaul of the economic system including monetary system. The central bankers are like wild beasts on a rampage now and going after them would be a good idea. First and foremost let them be accountable not be allowed to make up as they go along.
If common man is so close to her heart let her ask a few simple questions of these central bankers…
How long are you going to screw savers, retirees and prudent people in the guise of it being good for the world?
How can impoverishing a section of society be good for the country as a whole?
Do you need for ever for your policies to work?
If your policies are not working will you consider changing it or doing more of the same? Who is going to be responsible if it does not work.
How do you expect growth through debt when people are saturated with debt?
If you cannot think of ways to get us out of the mess (created by you) can you at least put in your papers and go so that we can get a better, fresh and more sensible perspective.
Let us have some common sense in addition to knowledge please.
I doubt you will find May is big government. She is the type to make everyone sit up straight and she will come down on areas of abuse. There are a few areas that do need addressing and it plays well to the gallery.
A quick call for an election wouldn’t surprise to reduce opposition and give a free reign to more radical changes needed.
Finally someone is looking to make a change….it’s a start, after all.
Yet, there are always those out there with something to complain about.
No matter how noble the intentions, as long as career politicians exist, fraud, corruption, and waste will grow. Short term-limits, where politicians must live by the laws they pass, is a core requirement for any real reform. See Step-1: http://twistedlittlethings.com/tlt/the-5-steps/
May represents the beginning of the end of Libertarian thought in the Western world.
There are more Libertarians out there than most people realize. We keep a low profile since most people have no idea what Libertarians actually represent, and they think we are a wacky anarchist cult. I have seen more Gary Johnson yard signs around my area than Hillary signs, and there are a lot of liberal democrats around here. They are probably ashamed to admit they would vote for Crooked Hillary but will anyway.
The problems with energy, transit, and broadband are the result of misbegotten neo-Liberal privatizations: Some services are by their nature monopolistic and these should not be in the hands of privateers abusing their priveleges for a toll-booth economy. Many of the other problems are also the errant seed of neo-Liberal policies, when people thought that market forces would correct any abuses. This is simply not true. The strangely lopsided gains to some people and some managers do not reflect market forces or competition, but reflect abuse of power and privilege or temporary arbitrage opportunities. The best way to get rid of such situations is not to demand compliance to better morals, but to force cut throat competition on these people, by whatever means possible: usually the abolition of privilege, enforcing existing law, and in some cases adapting existing legal principles to new circumstances. For frauds such as underfunded pension schemes, obviously public oversight has failed, and the money should be clawed back.
Look at the pathetic British Rail system compared to other European countries. Privatisation of monopolistic services in the UK resulted in underinvestment and obscene price increases. Great for shareholders, terrible for commuters.
webej – good rant! Those at the top make sure there is no competition flowing their way while at the same time insisting on competition in labor markets, bringing in foreign workers. IF there was good, clean competition at the top, prices would come down and people wouldn’t need to keep asking for raises. But the top don’t want that. They want to milk everybody and then when they get squeezed themselves, start crying, “Yeah, but capitalism, free markets…..”
As for the dividends that were paid out to that Sir Philip Green and everybody else, of course they should be clawed back. If they can’t be, he should be sent to jail.
Pennsylvania has an interesting and worth looking at approach to the “Natural monopoly” issue of electricity supply. They split the deliverer from the supplier: the last mile monopolist is solely in the business of providing the infrastructure to deliver, and their prices are strictly controlled, providing a decent, safe and sure dividend for the risk averse but no ten-baggers. Consumers can choose from a bunch of electricity suppliers ranging from the Green, to the nimble to the long term stable in terms of price per KWH- about 8 cents or so last time I looked was ballpark, if one of them goes belly up who cares?
There is nothing wrong with holding corporations, their upper management and board members to standards which he People of a country must abide.
Companies, CEOs, and BODs who exploit should be held accountable. Transparency is preferred over government regulations which somehow impose pay ratios. Regulations on funding of promised pensions are necessary, unfortunately, because too many companies have exploited the deferred payments of a promised pension, only to enrich themselves with no intention of fulfilling the obligation to employees. This is theft. Perhaps if these CEOs and BODs were imprisoned for such theft, it would be less of a problem.
It is true that is crony capitalism is not policed by the legal system, eventually, the People will do something about it, and unfortunately, history shows us that this usually means communism/fascism.
Corporations do nothing.
People who purport to be acting on the corporations behalf perform all the actions that the corporations putatively perform.
No corporation anywhere, not even in Joe Bagman Biden’s Delaware can be incorporated to perform illegal acts.
Therefore any illegal acts that “the Corporation” performs are those of the individual performing them, who were not acting on behalf of the corporation.
Jail the Phuckers.
Seems pretty simple to me.
Pretending we have free-market capitalism, so it can be denigrazed, while the true culprit of destruction – central planning (socialism, fascisim, marxism, etc.) avoids blame is the natural reaction of the establishment.
The sheeple simply pretend their vote matters to avoid responsibility. Unfortunately, procrastination, one of the worst human emotions that never changes, will cause a crash and burn that can’t be avoided, and man’s mistakes will be repeated once again.
The unavoidable business cycle, by definition is a cycle. Govt intervention, and their lies that it can be manipulated and managed to win votes, only exaggerates the amplitude of the cycle. If “creative destruction” was allowed, instead of bailouts for big donors, and we prepared for the natural cycles, be it businesd or climate, then free-market capitalism would be able to produce the best results in an imperfect/cyclical world.
+100
Yes, “The best way to get rid of such situations is not to demand compliance to better morals, but to force cut throat competition on these people,”
QE – a change will be announced in the Autumn statement. I’m beginning to wonder if there might be some move towards an “infrastructure bond” type of offering for pension funds too. A change is most certainly coming to help savers and pivot away from existing policy that was intended to be temporary when instigated.
Hammond is in the US currently to talk to the US big banks, probably trying to convince them not to ship out of London. Possibly to gain feedback on ideas for the future and trying to get a feel for what large groups would realistically like to see as policy actions to maintain the role of London.
A 2017 election is not out of the question to add to the uncertainties. It shouldn’t occur until 2020 but it could be called for a number of reasons.
BT did itself no favours (Broadband) as it openly campaigned to remain in the EU and has not serviced various communities well whilst maintaining a last mile virtual monopoly.
Far from some of the policies being ant-business I think some will achieve their aims via increasing competition. There is a move towards encouraging smaller business and SMEs to help maintain employment and in which there is considerable innovation in the UK.
Wow is right! How about a more constructive approach to relations with Russia to poke another finger in the neocons’s eyes?
Vegas set the odds yet?
Down in small plane?
Jump out of (locked) window in tall building?
The term of art is “Involuntary defenestration”.
You have to wonder about the increasing risk of capital flight in the UK. Currency is floating and we import a hell of a lot of raw materials and food. How that plays out with reduced/no QE and interest rates to help defend if it gets out of hand? Generating inflation will not be a problem for the UK if only due to imports.
Taking advantage of growing negative social mood to advocate changes in policies she helped to generate, like Hillary in the first debate and multiple financiers recently. Defensive CYA behavior and talk is cheap.
Freeman, head of her policy board in Downing Street, warned of “anti-capitalist riots” if the government did not urgently reform the economic system — including with a more muscular state. “We have got to have capitalism working more in partnership with the state,” he told a fringe event. “Responsible capitalism is completely essential if we are going to tackle the social justice agenda.”
Sounds like fascism. Isn’t fascism what Britain fought in WW2?
Exactly what I was also thinking, Ron. Even some of the better politicians still seem to want more & more power, achieved with more & bigger government.
“Note to Theresa May: Capitalism isn’t the problem; Big government is the problem!”
The more the government intervenes in the market, the more the government distorts the market. Government has driven up the cost of health care and college. Government has driven up the cost of replacing decaying infrastructure. Government has driven the out sourcing of American jobs.
+100
Presumably, this was a domestic speech. Otherwise, she could have promised to develop strong ties with Russia to make Britain and Europe relevant. Leading the way, and showing the neocons the finger is just an icing on the cake.
She wants to stop QE. Good for her. At least someone has mercy on the average person, and in particular the fixed income elderly.
I will say that CEO pay – and most of the “C-Suite” pay, is absurd.
In the U.K. all business are actually or are assumed to be public utilities. It is a top down government system masquerading as a democracy. It’s also a marvel how well some firms do despite the onerous drag government adds to the task. We’re next.
So Theresa May promised to be all things to all people. Everyone will get free rides to work on magic unicorns, free health care provided by doctors who wasted 12 years training so they could get paid less than union janitors, taxes will be 0% and 100% at the same time, she will support the EU while dissolving it at the same time.
If she doesn’t grow up and act like an adult she won’t last a year.
Mish, I have followed you regularly for some time now. Your search for the “best” truth is very mendable (is this the right word?…) So I thought i will come to you for a question about oil. Here it is: The price of oil (Cushing the one that I am following) is dependant on a significant numbers of factors but It could be fair to say that two factors are dominant, geopolitical ( not easy to control) and level of reserves printing every week. It is the reserves that interest me; we never hear about how IMPORTS influence this number. What is the percent of import as a percentage of the reserves and do you think imports have a more important role than production numbers on reserves. Thanks for your investigative knowledge. Claude >