Good article about Big Business and the EU

Re my post of yesterday, from today's City AM Forum:

ONE OF the biggest myths in UK politics is that the free-market and Eurosceptic [sic] wings of conservatism are beholden to the interests of big business. Many mistake a shared desire for a lower tax and regulatory burden for a common agenda.

Yet in reality, some of the biggest divergences in economic opinion occur between these two groups. Established businesses often favour state-led "industrial strategies", with "government investment" into "strategically important industries", and expensive state-led infrastructure projects like HS2 – which pro-market types often oppose.

Further, big business tends to be far more sanguine about our relationship with the EU. Large companies with established HR departments can perhaps afford the EU red tape and social legislation that affect small businesses operating at the margins of existence. Large firms are often more interested in the ability to shape laws, protecting the state grants and "support" that help their businesses.

As such, a Single Market with harmonised regulations and a centralised bureaucracy is less unappealing to multinationals. Many of their leaders have been vocally supportive of continued membership. The Confederation of British Industry's (CBI) report on British EU membership must be seen in this context…

Fun Online Polls: Velvet Underground albums & Poppies

The results to last week's Fun Online Poll were as follows:

Apart from "The Velvet Underground & Nico", which are your favourite Velvet Underground albums?

White Light, White Heat - 12 votes
The Velvet Underground - 6 votes
Loaded - 4 votes
Live at Max's Kansas City - 3 votes
Squeeze - 1 vote
1969: The Velvet Underground Live - 4 votes
VU - 2 votes
Another View - 4 votes
Other, please specify - 5 votes

Thank you everybody (all 31 of you) who took part.

So now we know. I find that you've got to be in the mood for "White Light, White Heat", the other albums you can listen to any time.
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I am pretty sure that when I was a kid, people only wore poppies for the last couple of days before 11 November. Nowadays some people (especially broadcasters, politicians and people who are on trial for phone hacking) start wearing them up to two weeks beforehand.

It hasn't been as bad this year as in other years, but a bit annoying nonetheless.

So that's this week's Fun Online Poll: "When is it appropriate to start wearing a poppy?"

Vote here or use the widget in the sidebar.

A very worrying development

From the BBC:

Labour is urging the government to explain how a terror suspect under surveillance went missing after changing into a burka at a mosque.

If terror suspects can escape surveillance by changing into a random item of clothing like a burka, then what's to stop them escaping from escaping from jail by changing into a pair of shoes or something which a visitor slips on and smuggles out when they leave?

I blame Harry Potter, so I do.

Well, they would say that, wouldn't they?

MHO, the EU was originally a good idea (free movement of people and goods etc) especially when membership was restricted to a dozen or so similarly wealthy west European countries, but over the past twenty years it has changed into a massive horrible bureaucracy which does nothing other than rubber stamp regulations and subsidies on behalf of large businesses and other rent-seekers which act as barriers to entry or growth for small and medium sized businesses but over which larger businesses can easily vault (i.e. corporatism, which is a hybrid of the worst elements of Communism and of capitalism).

So it's interesting to compare and contrast what the various UK business lobbying groups say about the UK and the EU, although they all go along with the general politically correct message that overall it is better for the UK to stay in the EU subject to renegotiation blah blah blah (and none of them seems to have a clear single overall policy).

(And there's a heck of a lot of hairshirt bansturbation emanating from the EU, separate topic.)

1. The lobby group for very large businesses, the Confederation of British Industry is unashamedly pro-EU (and pro-subsidy etc), the only thing they moan about is the Working Time Directive:

The CBI is calling for the debate on Europe to focus on credible options for the UK's future relationship with the EU, warning that half-way house models such as Norway and Switzerland are not the answer.

Ahead of a key debate in the House of Commons on the timing of a potential EU referendum, the CBI is today (Friday) publishing new analysis of Norway's and Switzerland's relationships with the EU and rejects the notion that a similar form of associate membership would work for the UK.

2. The British Chambers of Commerce include more medium sized businesses. They tend to be apolitical but they are a tad more sceptical:

The manufacturing sector is still facing many challenges, but we know from our survey that many firms are enthusiastic, confident, and looking to expand and drive the recovery, as long as there is a supportive environment that fosters enterprise.

The trade figures continue to demonstrate the importance of diversifying our exports outside the EU. While progress is being made, the pace of rebalancing towards net exports is still inadequate.

There is huge untapped potential among British exporters, and the government must do more to help those firms enter new export markets. This will help them to compete on a level-playing field in areas such as trade finance, insurance, and promotion.

3. The Institute of Directors represents more small businesses (and tends to be traditional Conservativism) and so are more sceptical still:

Among the IoD membership there will be a broad range of views on EU membership, reflecting the country at large. For some, the free movement of goods and people within a single market is a triumph of our time. For others, the regulatory and financial burdens of membership raise questions about how well the system works - and for whom it is working.

There will also be many people who view the issue as a simple question of sovereignty. The financial crisis, combined with some very real concerns about the politics of Europe, has presented this country with an opportunity to examine the foundations of our EU membership…

79 per cent of IoD members have some form of business link with the EU, and 60 per cent agreed with the statement that "continued access to the Single Market is important to my organisation". However, there is a broad appetite for deep reform. Members cite home affairs, employment law and corporate governance as areas where powers should be repatriated.

4. The Federation of Small Businesses is unsurprisingly the most negative of all (they would like to turn the regulations on their heads so that they place a larger burden on large businesses while exempting small businesses entirely):

Small businesses are often hampered by EU legislation. The flow of regulation on employment, environmental issues, as well as health and safety can discourage businesses from expanding. It can even contribute to their closure.

Our Action not Words campaign highlighted the administrative burdens facing small businesses. We have long called for Europe to 'Think Small First' and consider exemptions, special measures and lighter regimes for micro businesses.

5. I'm not sure how big or small the member firms of the Engineering Employer's Federation are (probably a fair mixture of both) but they are always reliably and surprisingly left wing (some of the stuff they come out with makes them sound like a trade union):

As we once again debate the UK's future within the European Union, EEF has been consulting with manufacturers – across all sectors, sizes and regions across the UK – on their views. And what we have concluded is that manufacturing support for continued membership remains strong.

While there is much that could be improved, the benefits that the EU offers in terms of access to markets, efforts to level the playing field, free movement of people, access to partners and funding for greater levels of innovation are all important.

Reader's Letter Of The Day

From the FT:

Queen Bess was the first Georgist (1)

Sir, In your report Taxpayers to lose out over 'Crossrail effect' on property (October 29) you quote transport expert Christian Wolmar as saying: "In the UK we've never developed a sophisticated way of capturing that added value."

The system was developed and introduced hundreds of years ago by Queen Elizabeth I and was known as Poor Rates, an early or simplified form of land value tax and the direct precursor of Agricultural Rates, Domestic Rates (both phased out long ago) and Business Rates (still in existence).

It is worth noting that Poor Rates were used to finance a very basic welfare system, thus making her the first Georgist!

The beauty of land value tax is that there is no need to establish exactly why rental values go up or down or to correlate it to particular amenities, whether provided by the government, natural features or the general benefits of "location, location, location".

But in the case of Crossrail, it is worth noting that the resulting rental value uplift on the eastern end of Oxford Street alone, if captured by land value tax, would be sufficient to cover a half the costs of the entire Crossrail project.(2)

Mark Wadsworth, Treasurer, Young People's Party, Buckhurst Hill, Essex

1) They accompanied the letter with a picture of Henry George, with the caption "Henry George was an American writer, politician and political economist"

2) Workings here.

They probably aren't even aware they are doing it.

This month's edition of British Airway's Business Life magazine ("Total reading time 57 minutes", it says on the cover) includes half a dozen main articles (one page or longer) all of which are about rents and rent-seeking:

1. Interview with the CEO of Canada Goose, the premium cold weather clothes manufacturer:

When [my grandfather] first arrived, he worked in a clothing factory as a cutter and then decided at some point that he wanted to open up his own place, which he did. It was very small and in downtown Toronto, which was the home of the garment industry back then. Now it's the night-club district…

Most brands these days are not real brands, they're some product mass-produced in some factory somewhere else that has a fancy store woven in front of it by marketing departments…

I went to Europe, where I learned how valuable the term 'Made In Canada' is for us. I realised that for a lot of people a Canada Goose jacket is like a Swiss watch. The place where it is made is really important. We're a quintessentially Canadian product. All of our jackets are made in Canada. It's impossible to imagine us not making them in Canada.

2. Article about football players' salaries:

Manchester City, the 2011-12 Premier League champions, spend more than £200 m each year on player wages along, a figure that equates to 87 per cent of the club's total turnover… it's not as if it's the players or even their agents who are ultimately deriving up wages, it's the broadcasters - and one in particular.

In the summer of 2012, BSkyB signed a new three-year deal to cover 166 games a season, worth a record £2.3 bn to the Premier League… It's interesting to contrast that with Sky's first deal to cover Premier League in 1991. Back then it paid just £340 m.

3. Article about a private business which wants to build reusable rockets for space travel:

"I think there's nothing positive or constructive I could say about Kenneth Clark" [Managing Director Alan Bon] told an interviewer earlier this year.

It was Clark, in his role as Minister for Trade and Industry during Margaret Thatcher's final term, who 25 years ago pulled the plug on government funding of HOTOL - Horizontal Take-Off and Landing - the admittedly flawed spaceplane being developed by Bond and his colleagues…

Earlier this year, however, the government did a volte-face and over next two years it is to plough £60 m into the development of Sabre, a revolutionary engine tipped to transform the economics of putting satellites - and indeed people - into space…

… The technology behind Reaction's pre-cooler is so commercially valuable that rather than take out a patent - which would perforce lead to publication of its workings - the company is avoiding the risk of feeding copycat competitors by treeing it as a trade secret, like the recipe for Coca Cola.

… a new backer emerged in the shape of Nigel McNair Scott, a Conservatie Party donor and chairman of property investment company Helical Bar.

4. Article about commercial property syndicates:

Commercial proeprty is bounding back. Figures from industry monitor IPD who that UK commercial real estate returned1.9 per cent in the three months to June, the highest return in two years…

Many hope that this heralds a definitive upturn in the property cycle, and a signal to invest in shops, offices and factories on the back of a recovering economy.

5. Article about local loyalty card schemes:

My Sant'Ambrogio card, issued by the eponymous market of central Florence, is about two tubs of fresh pest away from marking me as a most loyal customer indeed.

Supported by the local council, this card is designed to encourage me to shop not in the international chain supermarkets and stores on the edge of town, but instead with the market stall holders and local businesses who risk being left behind if everyone moves to the suburbs.

6. Article about hotel renovation:

You could argue that a quality new build might be cheaper but that misses the point. The Prince de Galles has an established location on Venue George V and a proven trading history, and offers considerably less market risk.

Finding suitable land in an established European city is all but impossible, and what's more, a speedy renovation can improve a hotel's fortunes in months, while building from scratch takes years.

The Middleman Strikes Back.

When I first learnt about peer-to-peer lending, I thought, "Oh dear, the banks aren't going to like that, I wonder how long it will be until they get their mates in the government to put a stop to it."

Now the fightback has started. As Matthew Lynn points out in Moneyweek "P2P is doing to finance what the web has done to dozens of other industries, - cutting out the middlemen" and then, unsurprisingly: "From April next year, the fast-growing P2P lending and crowd-funding industries will start being regulated by the Financial Conduct Authority".

The FCA, of course professes that they are trying to protect investors from taking "inappropriate" levels of risk, whatever that may mean, but it is fairly obvious that they are just doing the job of every regulator, which is to protect incumbents from nasty upstart competitors by raising barriers to entry, one of the only things the FCA and its predecessor, the FSA, manages to do with any degree of success.

As Matthew Lynn points out "Indeed, if there is anything customers need protecting from, it is the traditional banks and fund managers, not the people offering a better deal than they do."

Interesting Article about the effects of the Internet on Media

From the BBC

In the high-pressure, high-spending world of modern football, clubs feel they have a brand to protect.

"Times are changing," Ben White, media and communications manager at Nottingham Forest, said. "We have a media team of our own who are fully focused on keeping fans updated.

Since January, however, Forest has ceased to allow journalists from the city's newspaper and radio station daily interaction with its management and players.

It is a far cry from the club's halcyon days under Brian Clough in the 1970s and 80s, when not only were Forest European champions but local journalists such as Duncan Hamilton, who wrote an award-winning book based on his years of dealings with Clough as a reporter for the Nottingham Evening Post, were virtually permanent guests in the manager's office.

All breaking news about the Championship club is now released via the club's website and social media channels.

Forget all the halcyon days, newspapers-as-part-of-the-community stuff. You really can't compare football from the 1970s (hardly any TV coverage, terraces, bars in grounds) with today. Clubs might have needed the publicity back then, and you had limited outlets for that publicity, so you had to be close to the press.

Today, most football clubs not only run their own "media channels", they also sell it to fans. They own the value (the story) and so why should they give it away to newspapers to do a bit of reformatting and take all the money?

Birmingham (not Alabama)

From The Independent

The citizens of Birmingham are keenly aware of the snobbery and accent-mocking humour about their beloved home, emanating mostly from London’s chattering classes. But, for the second time in two years, England’s second city has received glowing praise from an international destination that outdoes London in many respects: New York.

New York Magazine has advised its readers to go to “Birmingham instead of London” in an article this week that trumpeted the city’s attractions from the culinary delights of the Balti Triangle to “the world renowned” Birmingham Royal Ballet, its thriving jewellery trade and music scene. A lack of tourist hordes was another reason.

The lack of tourist hordes is because actually, there's not much that visitors want to see. If there was, there would be tourist hordes. Unfortunately, that's how it works. You can find places that appeal to a niche that you have that aren't too busy, but as a rule, the good places get visitors.

I wouldn't agree with that advice about Birmingham at all. The curries are great. And cheap. And most of the places in Sparkbrook don't have licenses, so you bring your own which is a lot cheaper. And yes, the ballet and the CBSO have a good reputation. But the Jewellery Quarter is nothing to write home about and as for the music scene, there might have been 30 years ago, but if there's a place to see bands, I couldn't find it. And it's mostly architecturally horrible in the centre.

They missed the best thing to visit which is the Edgbaston Botanical Gardens which are really lovely, and some of the best I've been to.

A comparison between the Communist, Home-Owner-Ist and Georgist Manifestos

The Original Communist Manifesto:

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
10. Free education for all children in public schools.

The Home-Owner-Ist Manifesto

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
10. Free education for all children in public schools.

So approximately half the original Communist Manifesto has been gleefully adopted by the Homeys.

The Georgist Manifesto

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
10. Free education for all children in public schools.

Only about a third of the original Communist Manifesto re-appears in the mainstream Georgist Manifesto, and even less than that in the Geo-Libertarian Manifesto (let's not niggle).

There are overlaps between the Home-Owner-Ist and Georgist Manifestos as well of course, but at least we don't need to argue over those.

So now we know: Home-Owner-Ism is far closer to Communism than the Homeys would like to admit and certainly closer to it than Georgism is!
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It's also interesting to show the Communist/Homey overlaps in purple and the Communist/Georgist overlaps in green, bits common to both Home-Owner-Ism and Georgism are in grey:

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
10. Free education for all children in public schools.

There's a lot more purple than green, doesn't there?