Fraser Nelson is wrong about the deserving rich

On Friday, the Daily Telegraph published an article by Fraser Nelson arguing, essentially, that we should not make a fuss about the rise of the super-rich.

On Friday, the Daily Telegraph published an article by Fraser Nelson arguing, essentially, that we should not make a fuss about the rise of the super-rich.

Nelson says that there’s not much that can be done to constrain the runaway growth in the incomes of top-earners, and it isn’t a big problem anyway – bankers’ bonuses and executive pay packages are a broadly accurate reflection of their economic value.

Though it’s a thought-provoking piece and makes some valid observations, much of the evidence that Nelson presents to explain how he arrived at his conclusion is misleading.

The article begins by relating the pay of figures like David Beckham or JK Rowling to those of “architects, lawyers, computer programmers – and, yes, financiers”.

Many highly-paid executives are fond of this comparison – who wouldn’t be? – but it isn’t valid. Beckham and Rowling are paid lots (arguably too much) because their talent or contribution is tangible and unique. No-one else would have authored the Harry Potter books if Rowling had not done so. For many years, Beckham’s ability to kick a football about while maintaining a nice haircut was unparalleled in all of England.

Executive ‘talent’ is more difficult to quantify. Nearly all FTSE 100 CEOs are managers, not entrepreneurs. Rather than having started their own company from nothing, they have taken over successful businesses with long histories and established revenue streams.

While some executives have advanced their organisations, rapid pay escalation in the UK has not been limited to these cases  – the below chart shows that though the value of the FTSE 100 index fluctuated throughout the noughties, executive pay increased inexorably.

Graph luke

Though Nelson points out that in a globalised economy “the difference a good (or bad) chief executive can make is far greater nowadays because the companies are so much bigger”, this means it is increasingly implausible to argue that the fate of a company with hundreds of thousands of employees and operations on multiple continents is dictated by one or two individuals in the head office.

A supposedly successful CEO might rely on advice from colleagues closer to specific areas of the business; innovations lower down the company hierarchy; and the commitment and efficiency of all employees when implementing strategy

That’s not to mention the extent to which companies are dependent on external factors – the economic development and stability of their key markets; the availability of skilled and educated workers; wider technological advances (in the UK the government provides around a third of R&D funding).

Even if a company’s success could be attributed to brilliant leadership, this would not necessarily justify the current extraordinary levels of pay (around £4.3 million per year for a FTSE 100 CEO, 175 times the national average).

Research from the University of Delaware found that on average CEOs promoted from within an organisation are significantly more successful than those recruited from another company. The findings suggest that it is not innate leadership qualities that make for a successful CEO, but a good understanding of the company, its culture and its strength and weaknesses.

This results from nurture and experience, rather than inherent talent – thoughtful succession planning and investment in employee development is a better way of guaranteeing a high quality CEO appointment than an excessively lavish pay package.

This explains why the notion of super-rich ‘wealth creators’ bestowing prosperity on the hapless masses is not only a bit demeaning, but also wildly inaccurate. It still doesn’t explain why it is important, and Fraser Nelson says that it isn’t.

“While there is not much David Cameron can do about the rich, there is still plenty he can do about the poor,” Nelson adds.

However, this is not a choice between two mutually exclusive options. The poor are poorer because the rich are taking an ever greater share of the national income – 14 per cent for the top 1 per cent, up from less than 6 per cent in the late 1970s, according to the World top incomes database.

The economy’s capacity for growth is finite – if the rich take a bigger slice of the cake, that means less for everyone else. Indeed the economist Gavyn Davies explicitly links the two. Davies argues that the global stock market boom that has greatly enriched executives and financiers – and inflated pay for other high-earning professions such as lawyers, consultants and public sector managers – has been achieved largely by holding down the wages of ordinary workers.

Seen in this light, the growth in top pay is not the benign irrelevance caricatured by Nelson, but the defining economic narrative of recent decades, and the product of an immensely damaging transfer of wealth from the poorest to the richest.

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32 Responses to “Fraser Nelson is wrong about the deserving rich”

  1. Addison Jones

    Totally agree with the article even Adam Smith was concerned about income inequality and its effect on economic activity. The rentier class is not economic development.

  2. Stephen

    Perhaps Fraser Nelson should take a read of the NEF’s a bit rich

    Top City bankers destroy £7 of value for every £1 they are paid privately. Hospital cleaners provide £10 of benefits for which they are directly paid only £1.

  3. OldLb

    Stop winging. Go out, make a billion and then give it away.

  4. OldLb

    And what’s the state? It’s run up 8 trillion in debts. It can’t even supply basic welfare.
    30% of council tax payments aren’t going on services but on payment for past workers, because they didn’t invest.

    The DWP takes 5% of all NI payments, for themselves. That excludes their share of the massive civil service pension debts.

    The state is the rentier class.

  5. Matthew Blott

    Excellent article.

  6. blarg1987

    That is a skewed estimate as the vast majoirity of council income is from local goverment and others 75-80%. Local Goverment has to take on full pension provision though.
    so what is 30% of 20 – 25%? think you will find it works out the same percentage overall as most private companies pay into their pensions for their employees. Also local goverment pensions are invsted in various assets such as property and the FTSE.

  7. Anthony Masters

    Pay is a prospective incentive, rather than a retroactive reward. However, there are a number of issues with claims made by the author in the final three paragraphs.
    Firstly, it is claimed “[t]he poor are poorer because the rich are taking an ever greater share of the national income.” To use the cake analogy, if you ask someone whether they want a quarter or a third of a cake, their answer will depend on the size of the cake. It is not the case that “if the rich take a bigger slice of the cake, that means less for everyone else”, since the cake (the economy) has gotten bigger over time. In short, the absolute condition of the poor may be improved, as their ‘share’ dwindles.
    Secondly, concerning oneself with income brackets ignores how people move through income brackets over the years. A person may be in the bottom 20% of earners in one year, but then move out the next.
    Thirdly, it is claimed that the growth in top pay represents “the product of an immensely damaging transfer of wealth from the poorest to the richest”. However, it is new wealth, i.e. income, that is being distributed differently. It is not right to say that there has been a transfer of wealth, only that new wealth has been distributed in a different manner to the old wealth.

  8. Addison Jones

    Thanks for the response. The fact is the is no alternative except for a cabal of self interested corporations, who would export any profits to places where the rates are in their favour.
    This was typical of the plantation class, in the W.I.

  9. blarg1987

    I think some pf the problem is that it is not new wealth as you call it. The big fashion for many companies has been to close down final salary pension schemes, reform term and conditions of employees and offshore jobs where cost effective.
    So overall the existing workforce is less well off, and those who claim the large pay packets for saving money have not realy done anything innovative to actually earn their money, they have just done what most ordinary people could do, they just got paid alot mmore for it.

    I think that is the underlying point of the last 3 paragraphs.

  10. Cole

    I’m all in favour of people getting wealthy by being creative and entrepreneurial. What’s alarming are the astonishing salaries paid to corporate bureaucrats who are often quite useless (eg CEOs of many banks). We’ve been told high salaries have to be paid because these people are exceptionally talented. The events of 2008 and beyond show what nonsense this all is. And when these buffoons are eventually fired, they usually get vast pay-offs.

    The disease has spread into the public sector where council and quango chiefs expect to be paid ludicrous amounts.

  11. OldLb

    Doesn’t answer the question.

    What do you do when a political class run up an 8 trillion pound bill?

    Ah yes, from both of your responses, its ignore the question and in the case of Addison, blame someone else.

    The state won’t pay. The profits aren’t the states. They are the owners.

    So what is it? Invade Germany because BMW isn’t paying all its tax in the UK?

  12. OldLb

    Ignores what the state has done with the pension money.

    GIven a 26K a year worker would have been hundreds of thousands of pounds better off if their money hadn’t been looted we can see the agenda.

    Blame someone else.

  13. OldLb

    Look the banks in general have paid nearly 300 bn to the state over the last 4-5 years. That’s the sums of money these CE0s and the state have generate for Westminster.

    Here’s a test. If you think they are worthless, return the cash.

    In the meantime, what’s the state going to do with its 8 trillion debt problem? Yep, screw the poor.

  14. Cole

    The bottom line is that we taxpayers had to rescue the banks in 2008 because they had been run incompetently by Fred the Shred and the rest of them. Most of the financial woes in most of the developed world stem from that.

    Market fundamentalism has failed dismally, with millions thrown out of work and standards of living for those in work falling. That’s what’s screwing the poor and them them poorer.

  15. blarg1987

    Your right it does not answer both points you raise but answers one of the points and corrects an error as all debate should be about.

  16. blarg1987

    Bear in mind that the banks benefited from ove rhte last decade subsidised interest rates allowing them to borrow money at a discount (works out costing taxpayers 10 bn a year over the last decade) and add to that the costs of bailing them all out and write downs (estimated at a minimum of 200bn) the city is either cost neutral or a loss to the country.

  17. blarg1987

    And how does that have a direct effect on CEO’s downgrading staff terms and conditions? As yu said blame someone else and raise a different point rather then the point that is directly being raised and pointed out.

  18. OldLb

    So come back the the point.

    There are state pensions, and there are private pensions.

    For private pensions, we can tell what state the are in.You complain about what companies are doing to their pensions, but at least we have a solid financial picture as to where they are. Some are charging high fees, such as 1% pa. Now that can be stopped easily with a bit of legislation.

    So lets do the same to public sector pensions. How are they doing in comparison?

    Er, 5% pa charges on payouts. That’s the DWP cut of the action.

    What about assets? Er, there aren’t any.

    How do the payouts compare to the private sector (after private sector charges, and a 10% cut for the insurance element of NI)?

    er. 20% of what you would have got from the private sector.

    Governments dirty secret. No wonder as a statist you don’t want to let people know you’ve ripped them of for hundreds of thousands of pounds.

  19. OldLb

    Where’s QE money gone?

    It’s all gone to the state.

    Why are rates so low?

    The state has set the rates low.

    It’s the state

  20. OldLb

    The bottom line is that we taxpayers had to rescue the banks in 2008 because they had been run incompetently by Fred the Shred and the rest of them.


    So much so that they have paid billions in taxes since then.

    However, lets take your argument and see how it pans out when we change the actors.

    Lets see. We’ve had muslims grooming kids for sex.

    So following your logic, because some Muslims (Fred the shred) are criminals (bankers) grooming kids, then all Muslims are paedophile criminals.

    Yep, all those clerks selling mortgages were criminals. All the HR department are bankers. The banks that weren’t involved are criminals.

    So following your logic, any muslim is a child molesting criminal. All blacks must be criminals too, …

    Yep, Cole, that’s your logic summed up in a nutshell.

  21. blarg1987

    Well to torpedo your argument not all public sector pensions are trough the DWP, secondly, some public sector pensions have assetts, such as stocks, shares, property etc.

    So again, please be more accurate in your comments.

  22. blarg1987

    That is a seperate point to how much money the city has benefited / cost taxpayers although related to the financial crisis.

  23. blarg1987

    P.S. how have I ripped them off in hundreds of thousands of pounds? Since as you said you left the country in 97, did you not rip them off, as by your own admision you claim this has been going on for decades yet you did not stop them?

  24. OldLb

    So you need to specify which have assets.

    Then you need to specify the liabilities.

    Then the real position can be assessed. What’s the net position?

    I can help. For the civil service, and the state pensions (1 and 2 whatever the current name is), the net position is that they are down 6,500 bn.

    Ho hum, Blame the bankers,. Er, but they aren’t involved.

    Blame the bankers. Er, but they have paid 250 bn in taxes since the crash.

    Blame the bankers. They have been given billions. Er, they were lent. They have repaid.

    Blame the bankers. QE money hasn’t gone into the economy. Er, the QE money was all lent to the state. That was the idea. They state wanted to borrow, and no one was lending. So they made money and had the banks launder it.

    So cough up.

    Tell us what the net debts are. That’s the critical part.

    Then tell us how much its been going up year on year.

    Or are you going to avoid answering any question with a number. Yes, that will be it. We can’t have the masses knowing we’ve spent all their contributiuons.

  25. OldLb

    1. The regulations have been changed. It is no longer cost effective to provide final salary schemes.

    So they have gone.

    2. Back to the critical point. Why are the poor poor? Its because they do not have any surplus to invest to get richer.

    Why don’t they have a surplus?

    They are taxed so they don’t have any left over.

    Even their NI is spent, leaving them with a very risky 20% of what they should have had.

    All roads lead to the state making people poor.

  26. blarg1987

    1. The regulations have been changed. It is no longer cost effective to provide final salary schemes.

    If that is the case then why do CEO’s and people very high up in many private comapnies have very generous pension packets while those further down do not if it is not “cost efective”. Naything that costs a private company mpney that is profit taken away form shareholders is not going to be cost effective even providing a pension.

    I accept that botth political parties should not have taxed pension pots, but also many private companies were at fault for taking pension holidays as well.

    Back to the origional point, of this debate do you think CEO’s deserve the pay they do for simply putting in policies that kpost people can think of and so are not really that innovative?

  27. blarg1987

    Well the ones I know which are funded through employment contributions whch go to but assets are local authority and teacher pensions.
    Police pensions they do pay a large amount towards (up to 15%) and believe this is also invested.

    I can not comment on civil service, armed forces or NHS pensions.

  28. OldLb

    Because they are looking after themselves. Wake up!

    Now wake up. What do you think the state is doing to the poor? Yep, screwing them even more.

    At least most CEOs are providing cash so people can invest in assets.

    ie. Look at the assets held by pension funds run by the CEO’s you criticise. Look at the assets held by individuals in Money Purchase schemes.

    Now tell us again how much the state owes? 6.500 bn

    What assets does it have booked against those debts? Ah yes, the only number we know with certainty is that its zero.

    [The fully funded with black holes pensions schemes not included in the above. MP’s pensions for example]

  29. blarg1987

    I am wide awake thank you, and what you mean fully funded schemes with blakc holes? If your referring to schemes which currently face a funding shortfall, these are schemes whereby by public and private pension fund managers have said the shortfall is down to the current economic climate and it is expected to return to normal later on.

    Unless you are admitting the idea that NI contributions invested on the FTSE (which public and private pensions are) has black holes in which case you have admitted your idea would also have shortfalls in it.

    I also see CEO’s screwing over people with oh thanks for your loyal service we are closing down your pension giving you a money purchase shceme and with the money saved awarding ourselves a bonus.

    This is what the above debate is about and is focused on. SO either engage in this debate by either supporting the idea that the article does that some CEO’s are only stewards of industry and maybe should not be awarded the pay they are on. Or giving a logical justifiable reason why CEO’s should be paid what they are.

  30. Ross

    I don’t understand why it has to be either, or… just because some bank managers are good at their job doesn’t mean there is not a serious economic and ethical crisis in banking (one which even FT pundits refer to). Similarly just because CEOs may or may not be over-paid does not mean that we can come to a conclusion on whether or not the last two governments have squandered taxes. Both are in fact true and what’s more, they are directly linked in most EU countries. If we scale up to a Europe wide debate you can see most major European banks (and some US banks) have been involved in lending massive unjustifiable sums to local councils e.g. the Italian councils that have gone bankrupt over the last year or so – not only does this demonstrate that managerial risk taking went too far, it also demonstrates that local government is economically incompetent in many EU countries. So if you want to e.g. blame public sector unions for council overspends, we could look at why such generous pensions were offered – 1) Banks specifically set up sales departments which targeted naive local council officials for ‘rate-swaps’, there by providing the immediate liquidity required for them to overspend in the short term 2) Unions new this and also new that there was a pay disparity between many public sector jobs and equivalent private jobs e.g. private vs. public medical professionals, so traded wages for pension rights and better shift patterns in their negotiations. I always find it strange how people want to apply free market principles to trade and commerce but then ascribe some mystical evil quality to ‘the state’ employees as if it runs by some other economic principles than a corporation’s. The reason why the NHS is sucking funds out of our tax pot and into doctors salaries and pensions is not because ‘it would be better done by business’ – it’s because it is running exactly like a PFI where the doctors are the employee and the shareholder rolled into one, where as some other manager or civil servant is running HR and finance. This is why Adam Smith asserted that complete separation of management of any organisation from its ownership would lead to disaster for a free market (as is the case in the aforementioned banks) – and I would rather trust his definition of free market, than your half baked attempt based on some resentment of public sector workers’ ability to negotiate improved terms along with some vague concept of the evil state. A system of governance run by corporations would be little different given the cross pollination of ideas between the two.

  31. OldLb

    just because some bank managers are good at their job doesn’t mean there is not a serious economic and ethical crisis in banking


    I don’t see one. Where the problem lies was with people who don’t pay their debts. Why ignore people who took money, then didn’t pay back?

    Where you don’t make the standard mistake is to state that all bankers are barmy because one or two are. They should have stuck two fingers up to Labour and said we are not lending to the poor because odds are they won’t repay.

    Now, look at the hard facts. The state has taken 250 bn off the banks. Even on the bailout loans, they made a profit. The losses are just where Gordon thought he could nationalise the banks on the cheap.


    So if you want to e.g. blame public sector unions for council overspends


    Where did I say that? I’ve blamed the state for the mess because the state is running a ponzi pension scam. Look at the numbers again.

    For the state pensions in total, as they stand, they owe 6,500 bn with no realisable assets. So those public sector workers are going to be screwed. The public will not tolerate no NHS, but big pensions.

    Next, do a comparison. What would a median wage earner (26K) have got if their NI had been invested. 627K. State pension costs 152K and they can’t pay that. Even taking into account the insurance element that pays out 10% of contributions, its yet another rip off.

    One councils and swaps. There is no issue with swaps. Where there is an issue were councils acting ultra vires. They were trying to manipulate so they could spend above limits. What happened then is the contracts were declared illegal. All at the behest of the crooked councils. In the process the councils that prudently used swaps, lost. They were also acting illegally.

    Public sector wages are above private wages, and they have pensions on top. They are over paid. However, they will lose badly on the pension fronts. If you are a bigger debtor of the state when the state defaults you lose the most. Not nice.

    So ban the state from any form of debts. None. If they want the Olympics, save up.

    You’re Adam Smith example applies even more to the state. If a company goes bust, the management is out. If the state screws up, they don’t lose. We lose for years and years.

    So lets put some numbers on it. With pensions included, the state owes 8,000 bn. The annual increase is 850 bn a year. [ONS and DMO numbers, not mine, official government numbers].

    Taxation raises 600, and they are spending 722 bn a year.

    So work out the consequences. They will default.

    That means the poor are screwed.

    ie. 26K a year worker has lost over 400,000 pounds because the state has taken the money from them to pay your public sector workers.

  32. Ross

    ‘My’ public sector workers – you mean ‘our’ – there are exceptions – Doctors obviously get paid too much but that has a lot more to do with disproportionate power of the medical council compared to the nurses union, than with govt. policy. Similarly, there are unnecessary support staff and failing departments of government – I have no issue with a streamlined govt. – but when you are referring to the idea of further reduction of pensions, on top of the one’s most public sector workers have already agreed, I have to take exception. Quoting selected figures as an intimidation tactic, as per UKIP et al, does not justify the overall logic or philosophy of your argument i.e. that this mystical evil ‘state’ is to blame and the corporate banks are essentially blameless – this is like some sort of inverse Marxism you are indulging in. The state’s ridiculous debt management policies don’t somehow demonstrate the innocence of the banking managerial class – which coincidentally mainly come from exactly the same universities and intellectual circles as the politicians. The average wage of a public sector worker may be higher than the average wage of non-managerial private sector – but I said EQUIVALENT jobs, not the average. A private nurse is paid more than a public one. You can’t compare a civil servant to a shelf stacker. Public sector wages increase according to what colour of party is in government and what their union is doing – not some attempt to drive down private sector wages and make them a subordinate class. Similarly, the example you give of a typical private pension return based on National Insurance contributions for a 26K average wage being freed up, is based on what? – why would we assume working class folk would invest their money rather than spending it and why would we assume that most would profit- pointless hypotheticals. The current pay outs from private pensions are extremely poor – many of my friends and family are badly affected by that – some have virtually nothing and this is not the first time its happened over the last couple of decades – the problem is not that a state pension exists, discouraging a buoyant private sector pension, but rather that it is compulsory yet not managed in a sensible way as we expect a public service to be, separate from other government spending and so will likely have a very poor yield as has happened to those in Southern Europe. If we are to have NI, it should be a small figure and invested in something other than public stocks. Personally, I avoid all pensions – to me the idea of investing in something that you are assuming will pay out based on the stock market in 30 years time, is economically ridiculous. Indeed rich people invest most of their money in property and bullion, not pension schemes – recently the governments of S. Korea, Japan, Russia and China all purchased massive reserves of Gold, which demonstrates how trust worthy they think stocks are. The councils did not go looking for rate swaps to ‘fund the poor’ – ALL major european banks (not a couple as you so euphemistically put it) e.g. Credit Suisse, Deutsche Banke, JP Morgan, RBS and so on – all major investment banks (including ones that have PROSPERED from the recession), had departments specifically assigned to acquiring more loan contracts with local authorities – it was identified as a weak spot in government that had less experienced financial managers. This is the mismanagement I refer too – not recognising the risk avoidance of the separation of business and state – banks trying to punch above their weight e.g. RBS trying to acquire a controlling stake in the Bank of China and purchasing Abn-Amro. Obviously PPI mis-selling and sub-prime building societies are other examples of reckless risk taking which they are still losing massively from. Similarly, every rate swap was designed to either default or tie the councils into impossible arrangements, so they could get their hands on what property they speculated the councils had – some councils pulled out all the stops to avoid that and those speculators lost out, better informed ones with very selective investments like JP Morgan won big time.The main difference between the successes and failures is which councils they targeted and in what areas of the organisation i.e. what was their property. The way you explain it, you would think the likes of Barclays were fucking philanthropists generously giving scrounging councils a leg up – come on! I agree that there should be strict limits on what private debt all areas of government should be permitted, and indeed the idea of having an Olympics, Jubilee or any major public works as per Obama’s ‘stimulus’ policies in the USA (all of which was jeered on by the major corporate banks/sponsors I may add) is preposterous when the level of private debt is so high, but there is no guarantee that it will only be certain corporations that go bankrupt and pay the price for the defaults (so far that has not happened in the UK by and large – rather it is small to medium business that is filing) – councils are already going bankrupt across the globe – one of the worst examples in Detroit last month – they are not just rolling on and swallowing up the banks – its the other way around. Eventually the IMF steps in (as in Korea in the 90s) to disastrous consequences. On an EU level we can see what has happened in Greece and Cyprus as examples of how the ‘state’ is not omnipotent and can in fact be forced by international organisations to steal money from everyone’s bank accounts at the behest of private banks. Don’t misunderstand me: I’m not suggesting some sort of “statist” totalitarianism is the solution here – I’m simply pointing out that what you regard as the principle evil, is no longer distinct from the corruption that exists in the corporate world – the difference I suppose, is that corporations have no legal duty to behave ethically, where as the state supposedly does, although only the most naive reader of history ever believed they paid any heed to that. Nevertheless, the idea that the govt. is bullying companies like RBS is somewhat ridiculous – I know one man, friend of my family, on the board of RBS and the way he explains it, they have the govt over a barrel and the token powers to select board members is meaningless – every time the govt. proposes a change as principle shareholders the board members threaten them with leaking information to the stock market – they are forced to appoint conservatively minded managers from other city institutions, not reforming civil servants sent in to break up the banks and sell them off at profit, like some terribly clever con to steal from the as you suggest. The first meetings with Brown and Darling over the bail-out were requested by RBS, not like the state ‘vultures’ circling round them. Cameron couldn’t institute banking reform if he wanted to – the idea of bonus reform is a token, easily avoidable through existing legal tax evasion using share options. The corporations are running the state and any other reading of the situation is superficial fantasy. And its been heading that way for some time. Which is why I’m a socialist libertarian – yes government should be limited in what it does, but certain public services are essential to our way of life and we should not have to apologise for that because successive governments have mismanaged their finances, or for paying a fair wage to those workers if they perform. Rather than slashing the pensions of hard workers (many of whom worked through periods before New Labour and worked for considerably lower wages than their private counterparts), get rid of the thousands of unnecessary support staff that Labour artificially created jobs for to conceal the fact that it was killing the manufacturing base (just as Thatcher did) and was not replacing those jobs with equivalent industries, as other European nations were. The average front line service provider is easily more stressed out than their private counterparts and deserve the pay and pension incentives – its the lazy bastards that work behind them in generic support services under vague meaningless job titles that are ripe for scrapping along with the endless stream of wars that never seem to achieve any of their objectives. Rather than investing in wasteful crap like the Olympics and the
    monarchy and wars – invest in SCIENCE – the only part of govt. spending
    which still generates a large net profit – this must be done immediately to create new industry since the idea of cutting our way back to fiscal balance alone never works in the modern context – the IMF has forced this policy on numerous nations throughout the world from the late 80s onwards and it has never succeeded – only new industry and the correction of house, food and fuel prices brings us back to a manageable position – Osbourne of course is doing the opposite by propping up the value of his corporate allies property bubble using the BoE’s QE. Privatised health care, police, education, civil amenities are not done better by companies – in fact, if you ever worked in the NHS you would realise how much of the private sector mess IT clears up – botched operations, transfusions, laboratory services. There is no replacement for good management practice – the free market cannot do everything and indeed Smith never claimed it could – the current success of German industry with its workers councils and excellent workers rights demonstrates this.

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