You couldn’t write the script. A bunch of fabulously wealthy elites arriving by private jet to a luxury mountain resort to discuss…the inequities of capitalism…To add insult to injury, Donald Trump is wrapping up the session. Pandering to his POTUS role, they seem to have developed amnesia towards his recent tax bill which slashes corporation tax, rewards the individually better off and inflates the deficit leaving less money to help ease what…oh yes, the inequities of capitalism…

Most sensible people know free markets work and the State should be a facilitator and only a part contributor, aiming to provide equality of opportunity and protecting those who simply can’t manage on their own.

But to limit the role of the State, the rules of economic engagement must be applied equally and they are not currently. The richer you are, the more you can avoid paying tax (global corporations for example, well represented at Davos…). Add to that executive greed, frequently found in privatised industries, exposure to rising property prices and stock markets, all under the scrutiny of social media, and you have a toxic mix that allows the rich to get richer, in full visibility of the ordinary voter.

Making capitalism work fairly involves corporations paying fair taxes globally; executive remuneration based on long term incentives for wealth creation, and the State not over-promising in its role as facilitator and contributor to investment whether it be infrastructure, health care, education, to name but a few services.

The solutions lie partly in active corporate governance. Owners of our pension funds for example need to act in a wider capacity than simply short term gain because in the longer run, it benefits us all. Privatised industries need their monopolies breaking up. Public services under strain also don’t need the exaggerated claims of competing political visions but genuine reform driven by cross-party consensus. There is always a role for government but just think, for example, how valuable free markets are in the area of the environment, where competing firms are driving hugely beneficial technological developments.

When we talk about capitalism and free markets, we really mean a mixed economy. If the tilt is to be away from an ever growing State, the Davos crowd need to step up to the plate and make a few expensive sacrifices. If there is acknowledgement that this is necessary, then through the snow blizzards, you might just see evidence that the system is working…

This has not been a good week for the private sector generally and the role of privatisation in particular. Carillion was apparently a disaster waiting to happen. Its collapse has left a range of public services and smaller company suppliers under threat. Then the Secretary of State for Transport has rescued train operators from East Coast rail franchise terms they willingly signed up to. The political fallout provides further support to the depressing narrative from Corbyn and his team that only state control of public services works.

Can you really imagine the inept Labour frontbench grabbing power over a range of privatised companies and running services better? The collapse of Carillion at least goes to show that civil servants and ministers simply don’t have the skills to oversee complex companies let alone run their services from scratch.

There is a further, long-term narrative from all this however. How far is the private sector and free markets as they stand, serving the wider interests of society? Theresa May once had ambitions to make the governance of companies work better for all stakeholders. Damn Brexit burning up band-width and a barely workable majority put paid to this. A real shame as it could have been her legacy initiative.

Asset managers in alliance with asset owners are at least putting their shoulder to the wheel on companies they invest in, in relation to Environmental, Social and Governance (‘ESG’) issues but is it time to be more radical? Should there be greater, even compulsory, intervention in executive pay deals that are grotesque in size and short-term in nature? Remuneration must be aligned to the long term interests of all stakeholders. Should there be more scrutiny of excessive dividend payments which detract from long term investment? This is often a downside of quoted companies. What is wrong with having employee representation on company boards? It works fine in Germany. Is it time for the Government to wield its influence with golden shares in companies that provide key public services? That’s how many privatisations started.

There is a comprehensive debate to be had. But, in the meantime, what is clear is that there should be at least more business and procurement skills within the civil service. Markets and the way they allocate capital must also work better for all stakeholders (including the tax payer) and shorter term greed and rewarded incompetence must not be allowed to outweigh the manifest benefits of private sector competition. If that takes bolder corporate governance legislation from a Conservative administration then so be it.

If the Conservatives don’t act, Corbyn will, and the results will be very messy indeed for all concerned, not least the consumers of public services.

Oh dear. The best that could be said about the last two days is that reshuffles don’t really matter. Most names are unheard of by the public and it is the longer term, overall perception of Prime Ministerial/Government competence and key policies that matter.

Umm…this week does not contribute to the perception of a Prime Minister in command. At the very least, like a lot of her predecessors, she needs better HR advice/procedures!

How could the mistake be made about Chris Grayling, Chairman of the Party for 27 seconds…? Why wasn’t the disappointing departure of Justine Greening foreseen? Why was Jeremy Hunt’s rumoured promotion allowed to gain legs? Surely it was also obvious he wouldn’t want to be pushed sideways in the middle of an NHS crisis. Why has the awful Andrea Leadsom been allowed to stay on? The list of gripes is endless. Reshuffles are much harder to execute than it seems from the outside but this one involved a series of unforced errors exacerbated by an unpleasant and inaccurate advance rumour mill.

At Cabinet level, there has been a revolving door of Justice, Education, DWP ministers to name but a few. No wonder there is a belief that the Civil Service really runs government.

The good news is that there is a talented cadre of up-and-coming ministers seen on the second day of the reshuffle. If only the public knew some of them, they would realise there is far more depth to the Conservative Party than simply visible around the Cabinet table. Theresa May staying on is good news if it means the next leader comes from this generation.

Lastly, insiderightpolitics (that is me…), will be in the audience (sadly not on the panel…) of this week’s Question Time cheering Gina Miller and booing Piers Morgan. Tune in!

 

2018 will not be a vintage year politically. In particular, here in the UK, it will be a depressing slog through Brexit with badly needed political initiatives in other areas such as social care making little progress. The reshuffle won’t change much in the shorter term (more on that another time) and Theresa May’s imminent pronouncements on a series of domestic policies are awaited with less than feverish excitement…

Elsewhere, intractable problems accompanied by erratic political leaders, will hardly inspire confidence although it is a golden time for satirists. Two positives, however, stand out: reasonable global economic growth subject to a geo-political crisis and Macron.

So in more detail, what can we expect? Emboldened by the predictive failures of the ‘experienced commentariat’ here are a few ‘insiderightpolitical’ predictions for this year:

• There will be no General Election in the UK. Theresa May’s sheer perseverance and fears of a Labour victory will keep Tory MPs onside.  In fact Theresa May herself will go on well into 2019 and perhaps beyond, buoyed by a lack of alternatives and the determination to resurrect her reputation from the calamitous 2017 election.
• However, the Tories electoral position will gradually deteriorate unless there is a radical over-haul of its organisation and policy offering. A lamentable political membership base with unpopularity building in areas such as the NHS will be corrosive and take time to fix. Local election results will be poor and London a disaster. Only the extremism of Corbyn and his allies combined with their sheer incompetence on Brexit alone currently stand between the Tories and the political Armageddon many people think they deserve.
• The Liberal Democrats will go nowhere. With such definitive issues to tackle this is no time for wishy-washy hand wringing even if ultimate solutions have to come from the centre ground of politics at some stage.
• Elsewhere, despite the chaos reigning in the White House, the midterm elections whilst poor will be better than expected for the McDonald’s munching Trump. The Democrats, badly led, and offering no clear alternative, will not make the progress hoped for. There is still a real chance of an 8 year Trump presidency. Scary…
• Merkel will go. Her authority is starting to drain away as coalition talks fail to make progress. She has simply made too many major mistakes (Brexit, asylum seekers) and her competent but bland consensus style of politics will not save her.
• Macron will shine. Despite missteps through hubris, he is gradually making progress. Confident in what he wants to achieve, he will be an increasingly influential leader in Europe and beyond – a model for the next generation of politicians in western democracies.
• The global economy will continue to prosper, increasingly divorced from the actions of clowning political leaders. Business matters more and only a war in Korea or a significant Middle East crisis will change this outlook.
• Lastly, watch Iran. By far the most interesting country in terms of potential if demonstrations lead to any real, positive change.

So there you go.  If much of it feels same old, same old…then take comfort from the fact these predictions may well be wrong. For the last time in 2018: Happy New Year…