The annual autumn political party conference season is upon us. I state as much for those who might thus far have missed it – and that could be most of us because the Liberal version has already been and gone to nil effect, but what’s new about that?
Currently the Labour equivalent is cranking into life, with much attendant consideration of the fall-out from the Prime Minister’s Salzburg humiliation over Brexit and whether – if Labour plays its card right – this might lead either to a second Referendum, a General Election and/or even a Corbyn Government.
Elsewhere we are now getting signals as to how a future Labour Government might take its vision of Britain forward.
There’s talk of renationalising the railways, re-negotiating Brexit and yesterday Shadow Chancellor John McDonnell unveiled his plan to put workers on the boards of private sector companies with over 250 employees and also give them a share of the profits.
Here’s a link to a representative report upon the latter initiative by Rob Merrick, Deputy Political Editor of – THE INDEPENDENT
Sometimes one wonders about the extent to which politicians – and their policy wonks, advisors and camp followers – actually think through the policies that they hatch in their efforts to come up with something new to put before the electorate.
[I’m coming at this here from a personal viewpoint of not knowing a great deal about the working of the City or the ways of business and commerce].
In Labour’s case I’m not entirely sure whether the current regime is bent upon destroying capitalism or simply reforming it under the general heading of ‘letting the workers share in the proceeds of their work’.
However, today I just wanted to make a single if not facile point.
In the public sector – underwritten by the taxpayer – workers have a degree of certainty and protection from the vagaries of the market place. They may or may not be paid as well or better (or is it worse?) than their counterparts in the private sector but they get gold-plated pensions and plenty of other guaranteed benefits besides.
The key difference between those who work in the public sector and those who work in the private one is the ‘security’ that the public sector enjoys from the ups and downs that may occur in the latter.
I’m referring to sudden runs on the pound sterling, bull and bear markets in the world of stocks and shares, geo-political upheavals and God knows what else.
When it comes to considering the merits of Mr McDonnell’s proposals on potentially giving workers £500’s worth of upside, and indeed taking for the Government a further tranche above that to put towards good works that might benefit the country, I just wonder whether he understands some of the essential facts of life.
For example, when anyone is given a ‘share’ in the profits that a company makes, there’s another factor to consider. In the real world yes, there are substantial commercial organisations that are always going to make significant profits. So far so good.
But in the real world there are always companies large and small – sometimes through no fault of their own – who make losses, either temporary or catastrophic. And those losses can either be big or small. Sometimes big enough to send those companies to the wall.
And then where does that leave their employees? Often out on the street with no job at all, or having lost a proportion of their pension, or even all of it.
There’s very little danger of this kind in the public sector. If you play your cards right and keep your nose clean, in the public sector you can have a job for life, plus a very healthy pension thank you.
Yes, if their employer thrives – whether that be through brilliant invention, hard efficient work, creative marketing, sheer devotion to the cause … or separately, simply through some unexpected quirk of the market which fires their product into the stratosphere against all the odds, even sometimes quite by random chance – and thereby turns overnight into a Google or Amazon, they can acquire excellent salaries, pensions and even life-changing ‘shares in the profit’.
But, just as easily, private sector organisations can do the opposite, i.e. founder or implode and go bust. When that happens their shareholders can sometime lose their entire investment. And potentially their pensions as well if they’re employees.
To an extent, it seems to me, with some of its policy ideas the Labour party fails to appreciate some the ironies and contradictions of ‘seeking to make the world a better place for the greatest number of people’.
By which I’m referring to the fact that – with big private sector commercial companies – the Governmental policies that would best assist them making more profits (and thereby not only provide the country generally with higher tax revenues but also their employees greater salaries, pension arrangements and security) are the quite opposite of those that instinctively the Labour party would seek to impose via their traditional ‘tax the rich until the pips squeak’ (to use the phrase that Dennis Healey once famously deployed) theory.
Similarly, though perhaps their Socialist (or is it Communist?) leanings would lead a potential Labour Government of Corbyn and McDonnell design to impose policies upon those in the business community that would play exceedingly well with their hardcore supporters, those self-same policies might drive the business community to either move their businesses elsewhere or otherwise stop investing in a Britain that was pursuing anti-business measures.
I suppose the issue is whether you support the concept of capitalism, but simply want to adjust the tiller in order to ‘make the country a better place’, or whether (alternatively) you want to destroy capitalism and build in its place something else.
You can call me an old-fashioned 18th Century Whig if you wish, but throughout human history – and some might argue – human nature, it seems to me that the ‘risk and reward’ factor has always played its part. Those who have or do take risks, sometimes at great cost to themselves materially and mentally, then potentially reap the rewards if the scheme in question takes off.
But then again, just as many don’t (take off, I mean).
The conundrum facing the Labour party is that, to be able to afford to spray money at the public sector, at public infrastructure and all the other ‘good things’ that theoretically would make a greater number of people’s lives better and more comfortable, it needs somebody, somewhere, to make vast amounts of money – and then pay their taxes.
The trouble is, however, when you begin ‘squeezing the rich in order to pay the poor’ you may cause the rich to react and seek pastures anew which have more favourable tax regimes and trading conditions.
And then you have less tax revenue coming in … and then you cannot afford all those ‘good things’ you aspired to do.