Politicians are frequently criticised for having pre-packaged opinions on every subject under the sun, so it’s a refreshing change to take stick for not having expressed a view on a current issue.
A recipient of my newsletter is upset that I haven’t written about the global financial crisis. More than that: he insists that I should drop everything to campaign on the issue. I should write articles, call public meetings, go out on the street. This is an interesting idea, but what would I actually say at such public meetings? My failure to act, he says, is proof that I don’t take it seriously. But of course I do indeed have opinions on the issue. I believe that the financial crisis is a very serious threat to our prosperity. I think the US administration is right to consider a substantial bail-out, but I also think that House Republicans are right to urge that other solutions, including an insurance guarantee scheme, should at least be considered.
I believe that US public opinion is wrong to regard the proposed bail-out as a tax-payers’ bung to rich bankers, or a freebie for Wall Street at the expense of Main Street. If the US economy goes pear-shaped, Main Street will suffer most as jobs are lost and banks fail.
The media are stuffed with news reports and opinion pieces on the subject, and while of course I have my own opinions, I don’t believe I have much that is new or original to add to the debate, which is why I haven’t written about it (until now). Some are saying it is the end of capitalism. That of course is nonsense. As long as people instinctively believe in their natural right to own property, and a consequent right to trade property, there will be capitalism. As Winston Churchill didn’t quite say, capitalism is the worst way we know of organising an economy — apart from all the other ways. Over the last century, we’ve seen all the other ways tried out, and they manifestly lead to greater disasters than our current problems.
Others are calling for Draconian new regulation of the banks. This advice should be approached with caution. We are all too familiar with the dangers of knee-jerk reactions. We have seen the dangerous dogs act and the post-Dunblane gun laws. Closer to the financial world, we have seen in America the Sarbanes-Oxley legislation of 2002. This was a well-meant attempt to clean up Corporate America, but it is widely seen not only to have failed, but to have done huge damage to the US, and indeed to have driven capital markets off-shore — to the great advantage of London. Excessive bank regulation could damage the City of London, could make it much less attractive to invest in the UK, and much more difficult for UK companies and citizens to borrow the money they need. We should also apportion blame to Gordon Brown’s show-case reorganisation of financial oversight, between the Treasury, the Bank of England and the FSA. His initiative has failed at the first serious challenge, and it can be credibly argued that if the Bank of England had retained full responsibility for banking supervision, it would have acted earlier over suspect mortgages and derivatives.
Of course we need to look at bonuses in the financial sector, so that they incentivise long-term prosperity, not short-term deals (and note that Richard Fuld, the Chairman of the failed bank Lehman Brothers, actually lost much of his personal fortune which was tied up in the bank’s shares and share options). We also need to look at the capital ratios and lending practices of banks. These are issues that shareholders are likely to address anyway, without new regulation.
Looking more broadly at threats to our prosperity, I personally believe that serious as the financial crisis is, there is an even greater threat to Britain, and that is the question of energy security. On current energy policies, and especially with the Labour government’s over-reliance on wind power, we could see rolling black-outs in a few years’ time. We could see the lights go out. This is an issue where I do indeed feel that I have something important to add to the debate, which is why I have written articles, organised public meetings, and published a DVD about it. I prefer to concentrate on issues which are not only important, but where I have a genuine contribution to make. For a copy of my DVD, “Straight Talking on Climate Change”, send a pre-addressed A5 envelope to me at 9 Prospect Court, Courteenhall Road, Blisworth, Northamptonshire, NN7 3DG.
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