A wake-up call for capitalists
WHEN the Prime Minister feels the need to defend capitalism in a series of speeches, you know you’re in trouble. As Theresa May herself pointed out, everybody thought the great 20th Century battle of ideas had been won.
With the fall of the Berlin Wall, state socialism had been vanquished. We were all capitalists now. The financial crisis and its aftermath have put paid to that consensus and the arguments have to be made all over again.
It’s just unfortunate that the bullying, buccaneering side of capitalism has been on such florid display this week just as she launched her counterblast.
The Government’s weakness has been all too evident in the Boeing affair. Despite concerted lobbying by Theresa May and her Canadian counterpart Justin Trudeau, the US Department of Commerce has slapped a tariff of nearly 220 per cent on imports to the States of planes built by Bombardier, whose state-of-the-art carbon fibre wings are made in Belfast.
If the decision is upheld, it will put at risk thousands of jobs in Northern Ireland – as well as being a body blow to UK manufacturing, research and development.
President Trump and Boeing have been deaf to British pleas. So much for a sunlit world of post-Brexit trade deals.
That fantasy hasn’t survived its first encounter with Trumpian protectionism and the desire of a large US corporation to quash a smaller rival. Then there is Ryanair, which has descended into an omnishambles of its own making, by treating its staff and customers with equal contempt. Pilots have defected to rivals in droves and its boss, Michael O’Leary, seems to have been taking lessons at the Mike Ashley school of management.
Fellow low-cost operator Monarch is teetering on the cusp of financial disaster, and an airline at risk of administration is not what you want at Tory conference when the PM is trying to win young converts to capitalism.
Over at Uber, London Mayor Sadiq Khan has been heavyhanded but the company’s cavalier attitude to workers’ rights left it vulnerable to attack.
The Prime Minister is right to observe that many young people see business as the enemy and are attracted to the dangerous backward-looking politics of Jeremy Corbyn because they are too young to remember the 1970s.
But it runs deeper than a few companies and individuals pushing the boundaries. A generation of young people has grown up in the aftermath of the financial crisis in an environment that could hardly be less conducive to faith in a capitalist system. For youngsters who have come of age in the past decade, the only economic backdrop they have ever known, and presumably perceive as normal, is in fact far from it. Take one very simple example: the Bank of England, which celebrated 20 years of independence this week, has kept interest rates freakishly low for eight years.
Who can blame young people who have never known base rates of more than 0.5 per cent for believing it is perfectly natural to take on vast amounts of cheap-seeming debt and that it is pointless to save?
Politicians on both sides have failed to respond adequately to the huge economic traumas of the past decade. It isn’t just about supervising banks better, important though that is.
The other great development of the past ten years is that technology has sparked a huge wave of disruption to old business practices and new frontiers for capitalism, such as robot workers, are being tested.
This is tremendously exciting but regulators and tax authorities are struggling to deal with new technology and new business models that don’t fit the current rule books. They need to catch up fast. Capitalism is a great liberating force, but it must be tempered to benefit society as a whole. We deserve better than a choice between state socialism and the Wild West.
We deserve better than a choice between state socialism and the Wild West