(If you read my last post you might want to miss this. It is simply a shortened, and updated, version. Last time there was too much Adam Smith, however fascinating he might be.)
We have finally put austerity behind us. We’re no longer frightened of deficits, here or in the USA. $1.9 trillion is Biden’s rescue package, and then some. More than ever, in these times, we need financial probity. How government interacts with the private sector, in all its aspects, is a key issue for our time.
As a convenient reminder, we have the lobbying scandal involving Cameron and Greensill Capital. And in the last two days we learn that, in March last year, Boris Johnson was exchanging text messages with his friend and Tory supporter Sir James Dyson. We needed ventilators quickly, Sir James could provide, and Johnson promised (‘“I will fix it tomo!’) no negative tax implications for Dyson staff who came to the UK to help.
It was a time of crisis, Johnson argued in the House of Commons. That doesn’t excuse. It only exemplifies how government without proper supervision, of the kind exemplified by the government’s plans to reduce the scope of judicial review, can operate via back doors and personal contacts. Whether ‘cronyism’ is the appropriate word I’ll leave for the reader to judge.
I’ll skip direct quotes from Adam Smith, but will include a pivotal quote from Jesse Norman’s book about Adam Smith: ‘Yet as technology spreads big data, insider knowledge, digital technologies, there are increasing dangers of a new tech-enabled crony capitalism: a self-reinforcing cycle in which greater insider power encourages the development of bent markets…’
What intrigues me is that Jesse Norman is a Tory MP and Financial Secretary to the Treasury, and like Cameron, an Old Etonian. He will, I trust, have been making his views on crony capitalism widely known. (There was, quite co-incidentally, a curious spat between Cameron and Norman over House of Lords reform back in 2012.)
‘What me, guv?’ I imagined Cameron as saying. The game is so entrenched. Market forces as experienced by ordinary consumers are one thing. Financial engineering and derivatives are another story. Begetters of boom and bust, and multiple shenanigans.
Greensill Capital, advocacy for which got Cameron into trouble, was a clever financial idea (I wondered about the term ‘ruse’) where business bills are settled immediately for a fee, assisting thereby with the issue of late payments.
Cameron, a humble politician earning a relative pittance, stood to make a lot of money. Big share options were on offer. I sense he simply got out of his depth. That’s the kindest thing one can say.
And finally (as I mentioned in my last post) …I was intrigued to see how the Daily Mail is trying to turn the lobbying scandal into a plot by Labour anti-Brexit insiders within the Civil Service trying to blacken the government. It goes with Palace ‘insiders’ telling us what really went at the Duke of Edinburgh’s funeral between Harry and Kate and Will.
As always with the Mail, don’t believe a word of it.