Let’s demand a better British agricultural system post-Brexit

With Brexit looming, the time to discuss the future of British agriculture is now. “Britain’s farmers will need help” says the Financial Times; “Farmers who vote leave now in deep regret” claims the Independent. But don’t worry, there’ll be some provision, promises Theresa May’s government, in some form, and at some time. But what do we really want and, more importantly, need to see in the coming months of negotiation?

Well, The National Trust has called for a total reform of the subsidies programme, and that is a fantastic place to start. It is time to tear back the basic income support system and consider the work of our farmers in an environmental market context. As it stands, the current system sidelines successful arable methods, crushes incentives to innovate, and wraps agribusiness in regulatory red tape.

Subsidies, and the broader government approach to farming, entirely fails to account for the negative externalities created by the industry that effect not just the UK, but contribute massively to the global climate change dilemma. Ignorance is no longer an option for us, we cannot continue to ignore this pressing issue, no matter how politically inconvenient it may be.

Once upon a time, subsidies for agriculture made a lot of sense. When you have inelastic demand for goods and an inelastic supply of produce, you need to be able to stay in business and produce even when you have a bad year. But a lot has changed since then: our crops are much hardier now, and more controversially, we pump our cattle with so many chemicals and antibiotics before killing them off within just a few years that we overwhelmingly over-supply animal-products. This means that the British consumer has access to British milk and Angus steak at a cheaper price, but  is not paying the full cost. The subsidised price does not take in to consideration the environmental implications that the product has had throughout the process.

The peculiar thing is that no other industry is still subsidised this way, because when an industry struggles and fails, we don’t tolerate it. Instead we import from another country that has a comparative advantage in that sector. In this sense, protectionism over free trade has very serious consequences for our environment and the taxpayer.

Ultimately, there are two points to take away from this discussion:

First, this is a golden opportunity to do something about the disaster that agricultural subsidies have become. The system is a cesspit of government failure, and it is draining obscene quantities of money that can be better spent elsewhere. Brexit provides not only the opportunity to reevaluate the system, incentivise innovation in farming, and put the free market first… but it presents the chance to save billions.

Second, it is time to start talking about agriculture in the environmental context that is the unfortunate reality. Pastoral agriculture is the leading cause of water pollution, deforestation, and emissions contributions globally. We need to internalise those externalities, and we can do so through the free market price mechanism and allowing producers to embrace consumer demands.

This is a big discussion, and one that is long over due. However, we have a very real opportunity to demand a better system that not only helps the industry and consumers, but helps the environment.

Why Do So Many Traders Fail?

The idea that 90% of people who take up trading fail and end up blowing their accounts is a commonly heard one in articles, videos and on trading forums. The exact number varies, with 95% and 99% also being commonly quoted, but the general idea seems to be that the vast majority of retail traders end up losing money and never succeed.

To start with, this statistic is very hard to source. Different brokerages give different figures for their proportions of profitable clients, and these are skewed by the time frame being assessed, the mix of asset classes in question and various other factors.

However it does remain true that a large proportion of new traders never manage to get off the ground. It isn’t hard to find a large volume of online commentary from people who lost out and wrote the whole concept off as a giant scam. A look at social trading networks like Etoro reveals an massive proportion of loss making accounts.

The likely major cause of this lies in basic human psychology. People come into trading looking for big, short-term profits. They want money now, and they aren’t prepared to invest time or effort in the education, be that self-education or something more formal, that’s essential to getting anywhere in the markets.

That means that a lot of these traders are going in far too inexperienced to ever stand a realistic chance of success. If you can’t read price action, analyse a chart or understand fundamental news releases, you’re going to get wiped out pretty quickly.

But even those who do take the time to study and learn still have another hurdle to overcome.

When people are trying to do something like lose weight, give up smoking or take up exercise, it’s quite common for them to give up after a short period of time. Activities like these don’t deliver their rewards straight away; it takes several weeks of dietary change or exercise before the body starts to seriously change.

Trading is much the same. You start out losing in demo mode, then ideally progress to breaking even and then profiting in demo mode before moving to a live account. But the way that trading feels completely changes when the money becomes real, and there’s a complete repeat of that process of building up to profitability once live trading starts.

It’s at this point when it’s really easy to throw the towel in. In my own experience I had nine weeks of live trading losses, wiping out a quarter of my account, before I broke back through my deposit and started profiting. Most people aren’t prepared to wait that long on top of the months of demo trading before it, especially if inexperienced trading takes their losses even lower.

On the psychological front, revenge trading is another common killer of accounts. This is where a major loss leads to an urge to ‘make back’ the lost funds, resulting in greater risks, larger lot sizes and a complete abandonment of rational strategy. Keeping a cool head is essential, as is knowing when to acknowledge that it’s time to walk away, do something else and return when the mind has moved past the emotional reaction.

It’s all too easy to dismiss the system as rigged when it takes far more effort, time and dedication to succeed than most people are willing to invest. True enough, some products offered by brokerages are just gambling, particularly binaries and some derivatives, but trading in of itself is a skill that takes serious effort to hone.

The fact that some countries, including the UK, treat the unfortunately named ‘spread betting’ as gambling doesn’t mean it actually is. It’s a far more involved and detailed system than a simple binary bet. There’s a lot more to it than just ‘will this market go up or down?’, which is nicely illustrated by comparing real technical trading on a market to betting on a binary derived from that market.

Trading will always involve losses. It’s impossible to be right all the time, and in the case of binaries, the words of Qui Gon Jinn certainly apply. “Whenever you gamble, my friend, eventually you’ll lose”. But most trading is a matter of skill and strategy, and with the right commitment and the right approach personally suited to your own psychology, risk appetite and aptitude, consistent profitability is certainly possible.

The fact that there are people who do it should be a sign that it can be done. The fact the majority don’t is more a reflection on them than on the concept.

This article does not constitute investment advice. Please see our full disclaimer.

The Interest Rate: Will They, Won’t They?

Hardly any time seems to have passed since the last time the Bank of England was gearing up to reveal its new interest rate.

That time, of course, the BOE defied expectations and kept the interest rate at 0.5%, the same level it’s held since 2009 when rates were slashed as the central bank rushed to react to the financial crisis.

This time, as was the case a few weeks ago, markets are anticipating a rate cut down to 0.25%. However, this time, probabilities as high as 98% are being quoted for the cut to go ahead.

The high probability comes off the back of the Purchasing Managers’ Index data released a few days ago, which along with a slowdown in employment growth indicated that the economy was going into a post-Brexit contraction.

That led banking experts to heap pressure on the Bank of England to take action to steady the economy.

But current BOE governor Mark Carney has demonstrated a reluctance to cut interest rates in the past, most recently in the previous announcement on 14 July, where the decision to keep the rate at 0.5% sent the pound into an unexpected, albeit brief rally.

Carney has indicated in the past that he is decidedly against taking rates below zero into negative territory, and his reluctance to reduce the rate last time suggests an appreciation for the fact that such measures can in themselves send a signal that the economy is suffering enough to be in need of that support.

This casts doubt over what action will be taken this time, but given the pressure and the predictions coming out it’s hard to see what other options are open at this point. A decision to hold the rate a second time may be taken as a signal of strength and could provide an economic boost, but sadly many are looking to the central bank for interventionist support rather than signs of confidence in the economy at this stage.

Assuming the rate is cut to 0.25% this time, that opens the bigger question of what steps are taken further down the line. A token cut of an already insignificant interest rate is unlikely to provide the stimulus required, even alongside potential quantitative easing and other measures. The next destination is seen to be zero and then negative territory, and that’s a prospect that sends entirely the wrong signal about Britain’s economic health.

That really gets to the core issue. We are only a little over a month into this post-Brexit economy. The financial industry is still in shock from the event and the wider economy needs time to adapt to the new situation. Furthermore, there is ongoing uncertainty about how Britain’s exit will even take place.

At that time, calls for serious stimulus, over-reaction to data in the immediate aftermath of the event and predictions about future measures of even greater severity only serve to increase the uncertainty and worsen the situation. It becomes a self-fulfilling cycle where proposed measures effectively create the need for themselves.

In the short term, an interest rate cut may help Britain’s economic health, but in the long run it adds to the impression of a declining economy in need of help.

It may seem crazy, but perhaps it would be better to let the shock happen, endure the worst of it and have a little confidence in the ability of the country and markets to recover in their own time. The short term crisis may be worse, but the long term impact could be quite different. It’s hard to know when such a hands-off approach never gets tested.

As always, traders will have a chance to benefit from tomorrow’s decision whatever the outcome, although it will certainly be an interesting day for the many in presumptive short positions if Carney does pull another surprise stunt and keep the interest rate where it is.

A CEO Pay Cap Would Cap The Welfare Of All

The share of national income going to top CEOs is going up and up. Government intervention to restrict this commits twin errors of assuming that rising pay at the top is an unwarranted endemic and assuming that intervention seeking to constrain pay at the top will necessarily improve the labour market opportunities of those at the bottom. Neither of these assumptions holds true. Governments trying to restrain CEO pay will hamper economic growth whilst simultaneously doing much damage to the living standards of those at the bottom of the earnings distribution.

A recent Institute of Economic Affairs publication by Ryan Bourne and Professor Len Shackleton reviewed a series of damaging changes proposed by those across the political spectrum. This included Jeremy Corbyn’s plan to “institutionalise fairness” by setting a maximum pay ratio between CEOs and the lowest paid worker and a proposal from the High Pay Centre that publicly listed firms in the United Kingdom should be forced to publish data on the ratio of CEO pay to median earnings. It concluded that concern over inequality at the top end of the pay distribution would be better dealt with by “a fundamental simplification of income tax to eliminate exemptions, loopholes and tax shelters” which would also work to affect other high–earning individuals such as private equity investors, business owners and celebrities.

Before exploring the potential harm that the proposed regulations could inflict, it is first interesting to challenge the idea that rising CEO pay necessitates regulation at all. Many politicians argue that extreme income inequality at the top is a symptom of some terrible corrosion of societal morals, holding back growth and damaging the life chances of those at the bottom. These claims are simply unfounded. The OECD found no evidence that “those with high incomes pulling away from the rest of the population harms growth”.

Conversely, rising CEO pay is actually associated with increasing firm value. When former Prudential Chief Executive Tidjane Thiam announced his move to Credit Suisse, the total value of their shares rose by £2 billion. The high pay earned by Thiam was clearly deemed worth it by shareholders. Increasing pay at the top is a reflection of an increase in the (perceived) value added. It has not caused those at the bottom to get any poorer. Why should the government intervene?

Attempts to regulate or cap CEO pay could seriously damage economic growth. Switzerland dodged a bullet by voting overwhelmingly against a reform that would see CEO pay capped to twelve times that of the lowest paid worker in the firm. Jeremy Corbyn’s proposal that the UK should adopt similar regulation is a plan to shoot oneself in the foot. There are three obvious ways that businesses can reduce the pay ratio between their cheapest worker and CEO: slashing CEO pay, grossly augmenting the pay of the lowest–paid, and cutting low–paid workers altogether. None benefit the economy.

FTSE–100 CEOs are currently paid almost two hundred times the pay of the average worker. To bring this ratio down via a reduction in CEO pay down to any so–called “sensible” level would require extreme cuts. Since few countries have regulations requiring the publication or capping of such a ratio, in an increasingly globalised market CEOs would simply jump ship.

Top CEOs bring much value to their organisations – such a loss of talent could seriously harm companies. Many businesses would be forced to either relocate to regain access to top executives or shut down altogether. Both responses damage economic growth and result in unemployment, particularly amongst immobile lower–paid employees.

Since a slashing of CEO pay appears unviable, firms might instead reduce their ratio by increasing the pay of the employees at the bottom of the pay scale. Since labour expenses often account for a large portion of business costs, this would be hugely damaging to a business’s profits. Furthermore, for competitive companies with large numbers of employees, the extent of wage augmentation needed would simply be unfeasible. Increasing the wages of those at the bottom of the wage ladder would lead to increases right up it to ensure some extent of differential pay based on value. This would be extremely expensive.

To add to this, a cap on the ratio would severely restrict the size of these value–based differentials, crushing incentives for workers to add to their human capital or encouraging higher–value workers to move abroad where regulations would less stringent, enabling them to earn fairer wages. Regardless, in the long–run, workers cannot be paid significantly above the value they add to a business. If firms are forced to pay some workers more than their value it is likely that other workers will pay the price: unemployment.

It would clearly be difficult for businesses to artificially manipulate their ratios by cutting CEO pay or increasing the wages of the lowest–paid workers. This means that many companies would likely be forced to take the uncomfortable step of making workers redundant. There is already a huge shift towards the mechanisation of work; the laws and requirements proposed above would unnecessarily and inefficiently speed up this process. Low–paid jobs would be outsourced or removed altogether. This would increase unemployment, with the bulk of displaced workers being the less–educated. Such a policy would not help the low–paid or the well–paid. It would help noone.

Bourne and Shackleton conclude that a war against high CEO pay would both be unsuccessful and highly detrimental, causing “collateral damage” across the economy. Basic populist rhetoric on the topic skates over many of the important issues and so should not form the foundations for effective policy design. They state that the government should not extend requirements on firms to publish data on executive pay. If, despite the overwhelming evidence suggesting otherwise, high pay is felt to be a problem, “it should be dealt with through simplifying the tax system and eliminating loopholes” not through rules and regulation which leave everybody worse off.

The Price of Brexit: The Martyrdom of Business?

With Brexit now only a matter of months away, and nothing agreed, either with the EU or within the British cabinet, the martyrdom of our business to the cause of an ideologically driven Brexit appears as real a possibility as ever. It seems that there are some in Government, and millions across the country hell-bent on Brexit at any cost; a cost which I fear they can neither fathom nor understand. Recent studies which showed most Brexit voters would rather a hard-border in Ireland than remaining in the customs union are the epitome of the Brexit farce, and the inability of so many to realise the effects of such actions. They would have us create the biggest security hole anywhere in the world at a time when international terrorism is highly dangerous: and if ever radicals in Ireland needed fuel for action then this would be it…

But as the title suggests, the sinking of our economy seems to be the last concern to most in Government, with no positive noises and even less progressive action. Lets just take a second to review what business has been saying in the past week.

Jaguar Land Rover, which employs near 40’000 people in the UK as of yesterday questions the logic of a hard Brexit, calculating that it would lose in the region of £1.2bn per year to trade tariffs; the inevitable result of a destructive Brexit. The company even questioned whether remaining in the UK would be profitable should this eventuality occur? Similarly, Airbus which employs around 11’000 people in the UK has raised concerns about Brexit and the risk it may be forced to withdraw funding should a poor or no deal be the result of thus far fruitless negotiations. In this instance however, Jeremy Hunt, who clearly knows a lot about running a large organisation, which must be why the NHS is doing so well at the moment (in his mind at least, if not to the rest of the population), declared Airbus’s concerns “completely inappropriate”… as if he expects everyone to just say nothing and wait for the end. Funny really, it was okay for businesses who backed Brexit to speak, and its okay for those still brave or stupid enough to invest in Britain to do likewise, but anyone who fears the real and present dangers of this calamity must be silent: how’s that for democracy?!

And lets not forget the comments recently from the Society of Motor Manufacturers and Traders (SMMT). They have warned that the current Brexit process is “death by a thousand cuts” for an industry which relies on frictionless trade. Recent figures show that investment from companies represented within the SMMT has been halved from the first half of 2017.

The director of the CBI summed up the current situation best, when she said “facts ignored today mean jobs lost tomorrow”. Worryingly, we live in a world where facts are just what politicians say they are, when the people chose to believe them. No longer are experts, business and those with years of experience listened to, but cast off as “traitors” to the cause. What we need, as Stephen Martin argued, is “less antagonism and more pragmatism”: we should be so lucky. As long as it suits individuals like Boris to sabotage the governments position on Brexit, we will continue down the slippery slope to disaster.

For me, much of the government’s position can be summed up in one short phrase: “F*** business” in the words of our eloquent Boris… which is ironically what he and the government will end up doing if they don’t get their act together pretty damn quick! The complacency is galling, as is the complete disregard ministers seem to have for the thousands of workers and their families whose futures are threatened by their ideological squabbles.

So many in this country are so eager to sacrifice their children’s futures, the economy and business to the blood stained alter of Moloch. It genuinely terrifies me. But then, every country ends up with the government it deserves, and I truly believe that we have just that, populated by pompous self-opinionated toffs who think they know more about business that business.

Should Spread Betting be Considered Gambling?

In the UK, profits from spread betting are not subject to tax like those from other forms of investment and trading are. This is because British law treats spread betting as a form of gambling.

Whether or not spread betting truly qualifies as gambling is, however, subject to a lot of debate.

Spread betting is a form of highly leveraged trading where the positions traders take are typically far larger than the actual sizes of their accounts. This obviously makes it extremely risky, although that risk can be mitigated to some extent with the use of stop losses and sensible risk limitation strategies like limiting risk per trade to 1% of one’s account size.

The high-risk nature of spread betting, combined with its unfortunate name, contributes to its image as a gambling-like activity.

But true gambling is quite a different thing. A casino game, for instance, will have a form of inbuilt house advantage, exemplified most obviously by the zero on a roulette wheel. Roulette is a game of pure chance; whether you hit red or white is out of your control, and the zero makes sure that the house has a small probabilistic advantage per throw that, over time, virtually guarantees them profitability over a long series of games.

The spread in a spread bet can be seen like that, but in reality it functions more like a commission in a direct investment. Unlike the casino, a lot of spread betting brokers (namely direct access brokerages) aren’t betting against traders, but simply facilitate exchange and extract a portion of it for their profits. Sadly some brokers are literally taking the opposite position and hoping the trader loses, and that behavior isn’t helping the image of legitimate spread betting as a form of trade. Others hedge clients’ trades as a way of profiting in either eventuality.

Gambling can also refer to betting on a binary outcome, such as betting on a horse or any kind of news event. In these situations the thing being bet on is out of the gambler’s control; they may have some knowledge giving them a better chance, but fundamentally they’re gambling on the outcome.

There are certainly some leveraged products offered by brokers that do seem to qualify as gambling in this kind of way. Chief among these are binaries. Binary products reduce a trade to a simple yes/no dichotomy, such as “will the FTSE 100 close above or below this level today?”

The kind of complex technical analysis that is used in regular spread betting goes out the window with binaries. The ‘trader’ is simply making a bet on the outcome, buying or selling at a price determined by the broker’s changing assessment of the likely outcome, much like the odds offered by betting firms.

But spread betting is a far more complex activity. Whilst a lot of trading essentially boils down to “will the price go up or down?”, there is a wealth of technical and fundamental analysis that goes into this. Provided risk remains within margin trades are effectively open-ended, they can be managed, added to and closed at different levels at any time.

The leverage is the key thing that sets spread betting apart from conventional trading. A large market move is going to wipe out a trader’s account far faster in leveraged spread betting than it ever could in direct investment.

Yet other leveraged derivative products aren’t legally classed as gambling. CFD trading, for instance, provides much the same functionality, a lot of the same risk, but does not come with the tax advantage. This is a legal distinction between trading a derivative product verses ‘betting’ per point on a price movement.

Likewise, a lot of countries will charge capital gains tax on spread betting profits. After all, in a long position the profit is made from selling something that has appreciated since its purchase. If that is gambling, then so is any investment.

Short selling is technically more challenging to define, but ultimately trades are still being made. Unlike a binary bet, it’s not a stake on an outcome so much as a trade in the hope of value change. So ultimately the classification of spread betting, and indeed calling it by that name, seems misrepresentative.

That can be very off-putting to a lot of prospective traders, who may miss out by writing off as gambling something that is really just another form of trading. However the risk factor is very much there, and the statement that perhaps spread betting isn’t gambling is not a denial of the massive risk involved. There’s massive risk involved in virtually any attempt to generate large profits.

Ultimately that is the lesson here; generating large profits is always going to be risky. Gambling, in the casino sense, is literally set up to ensure ultimate loss. Trading is not. The probability is still overwhelmingly against the novice trader, but it is a skill that can be learnt and people do consistently profit from it.

It would be idiotic to ignore the huge inherent risk in spread betting, but to label it as gambling is to associate it with something entirely different.

Public-Sector Pay: Who is saying what and why?

Suddenly in recent weeks, the issue of public sector pay has arisen again and has produced conflicting messages from the Cabinet and leading MP’s. But who is saying what, why and if anything what difference does or will this rekindled-debate make?

The two people whose opinions on this issue and most others matter most appear to remain, this time, relatively united. Both Theresa May and Philip Hammond appear to continue to support the cap on public sector pay and de facto austerity, despite previous suggestion they intended to slacken-off in both areas. Indeed, May made the case for austerity quite clearly when replying to questions from Jeremy Corbyn on the 5th July. Hammond, for his part has been explicit, recently stating that the government ‘must hold our nerve’. In the same speech, he also attempted to blame the continuing squeeze upon public sector pay on Brexit, arguing the damage done to the pound is harming the potential for any change in policy on the part of the government. Of course, all Hammond is doing is utilising Brexit to provide a new excuse for austerity economics, using it along with the age-old arguments surrounding ‘economic prudence’ to legitimise the ideologically motivated subjugation of public sector pay. If one needs any proof of his real beliefs, the recent leaking of comments made by the Chancellor that public sector workers were ‘overpaid’ is surly enough. Indeed, both May and Hammond have been covering for the damage done by the Coalition government, which according to a report by The Office of Manpower Economics was and still is the most important factor in holding down public sector pay.

Mr Irrelevance himself, aka David Cameron has piped-up in support of May’s stance in what I can only call a shocking attack upon those whom we all rely on. Cameron accused those within the Conservative party who opposed both austerity and the pay-cap of being ‘selfish’. His comments have been interpreted in some quarters as being a thinly-veiled attack on public sector workers themselves, and this accusation that in some way they can be considered ‘selfish’ for wanting a pay-rise has touched many a raw nerve, and its not hard to see why. With inflation sitting well above the Bank of England target of 2% at 3% and public sector pay capped at 1%, to accuse the nurses, teachers, police officers and others of selfishness is, by many accounts including my own the height of insolence and disrespect, particularly coming from a man whose political selfishness cost this nation her long-term prosperity and sunk thousands of young people’s futures into the mire.

Summery: Support continuing restraint on grounds of ‘economic prudence’

Boris Johnson is the leading cabinet member who, through indirect ‘sources’, has spoken out in some sense against continuing restraint. It has, in a way been his intervention that has shown not only the divide within government circles but also the true nature of the political ideology governing pay restraint. It was Johnson who through his spokesperson suggested that pay increases for the public sector over and above 1% could be achieved without doing damage to the public finances. Of course, while all support for a slackening of pay restraint is welcome it raises troubling questions. Why now is it possible to change public sector pay policy? Why not 1, 2 or even 3 years ago? Surly the situation is just as precarious now what with Brexit and the falling pound? Don’t mistake Johnson’s outburst for a sudden re-discovery of a moral compass on his part; he lacks one as do his cabinet colleagues. Johnson in particular however has much to gain from his stance; primarily the leadership of the Conservative Party and likely the stewardship of Great Britain. I personally have very little doubt that his recent ‘comments’ are inspired not by any reassessment of the economic situation but by his own personal ambition and need to distance himself from the now desperately unpopular duo of May and Hammond in preparation for the coming leadership battle.

Others who have spoken out on the same side as Johnson have made almost identical arguments to our esteemed Foreign Secretary. Their reasoning? Well, I have a sneaking suspicion that is might have something to do with the events of the 8th-9th of June this year, when the complacent Tories received a violent wake-up call from the people. It was only after this event that the subject arose, and again I would suggest that it has a lot to do with the fear among many Conservative backbenchers that public dissatisfaction with austerity could cost them dearly both as a party and as individuals in their own constituencies.

Summery: Opposition to continuing restraint inspired by both fears of the future and designs over the party leadership by certain individuals

But what does it all mean? In the immediate future, nothing. The government will not change tack on pay restraint under its current leadership, which in all reality still represent the ideology of the previous ministry. Until this is gone, or the public provide another major shock to the system, the pay restraint will continue. In the slightly more distant future, it demonstrates that the battle lines of the next Conservative leadership contest are already being drawn. Johnson clearly intends to fight on what might be called an ‘economically populist’ front and is already manoeuvring himself thus. More generally, it displayed the division in the party which are almost certainly deeper under the surface.

If it proves anything, it is this: Austerity economics are clearly an ideological choice not a necessity. Only in the eyes and mind of an individual or party which fails to fundamentally understand the nature of people’s reliance on the economic system supporting their livelihoods and families is it in any way essential. Only to those who see opponents of restraining pay 2% below inflation as ‘selfish’ is it a necessary step. Ultimately though, only time will tell if the government can ‘hold its nerve’

EMPLOYEE GRIEVANCE PROCEDURE: NEEDS TO BE LEGALLY BINDING?

There has been a huge commotion in parliament over the last few days. Particularly involving
certain MPs and their overzealous acts of sexual conduct towards women, some of those
working in parliament themselves. This then calls for some sort of solution to fix the issue (or
at least reduce the risk). Theresa May as the PM comes under intense scrutiny for the need
to address the issue. To which she proposed that the code of conduct in parliament should
have some “legal standing” and a contractually binding grievance procedure for all MPs set in
place.

There were allegations made regarding the Tory party, including some senior ministers who Mrs. May
was working closely with in parliament. There were also allegations made towards MPs
from the Labour party. Did May know what was happening? If she did that’s a worrying concern
for the young female professionals, who have been reported to have been victims of these
alleged groping and propositioning incidents. But even then, many leaders lose sight of the
issues on their own team as I’m sure they would expect their team players to uphold the same
values as they do. Well, that clearly wasn’t the case and May is in a huge frenzy to have a
reshuffle of her cabinet.

We’ve been told government officials keep a “black book” of allegations against MPs hidden
away. So that leaves us to question, how long does the list track back from? And why has it
taken this long for these allegations to come into the public consciousness?

What was of shock to me regarding the scandal is that there is a “WhatsApp sex pest group”
that women who include parliamentary researchers, secretaries and aides are all a part of.
Who claim that politicians on both sides of the house have pestered them and given them
lewd nicknames. The code names for some of these MPs in parliament who committed the
acts were described as “Lift Lunger”, “Happy hands” and “Taxi Tickler”. All involved in groping
women in enclosed environments and even in public, which reveals the lack of awareness or
care these perpetrators had for the actions they were partaking in.

The recent allegations have come into fruition in the light of the recent global social media
campaign called #MeToo launched by Alyssa Milano, an American actress at the forefront of
it, who too was a victim of sexual assault. The campaign encourages all women to confront
the men they know, whether their brothers, friends or work colleagues about their attitudes
and behaviours. Thousands of women have come forward sharing their stories since the social
media hashtag was created. No doubt this had huge influence regarding the women in the
political sector to share their own stories, despite huge risk to their careers within parliament.
I say that as MPs hold immense power and as the young employee with a lack of voice
compared to their older counterparts, particularly when female, societies attitudes can be off
putting in believing their reports.

Alyssa Milano, the actress who started the #Metoo
campaign on Twitter

Echoing what Theresa May has proposed in her comments concerning the MPs in the scandal.
The current grievance procedures in government we have regarding employees and their
employer are not legally binding. It’s expected that the employer follows the necessary
guidelines to tackle the problems that may arise through complaints from the employee in the
work environment. But we know this is not always the case and it’s pretty difficult as a young
professional who are the most vulnerable in the workplace, due to their lesser status and lack
of experience. Combining that with being a female in the workplace, it’s an even tougher task
to share your grievances towards your employer, especially one who holds immense powers
in parliament. For a lot of women, they do not bother reporting incidents or if they do, it is not
taken as seriously.

Theresa May’s views on the grievance procedures should be the agenda needed to create
some legalities around the topic. Implementing some sort of policy around the instances of
sexual conduct towards employees and making it legally binding needs to be a course of
action in parliament. It’s a sad shame knowing what it is morally right and wrong cannot be
the indication we need to take complaints of sexual conduct in the workplace more seriously.
It seems when employers are threatened by legal action, they may tend to take matters as an
urgent need for attention rather than sweeping cases under the rug like many in parliament
have been doing to protect the most powerful and senior members of staff. Well this needs a
complete reform and female employees in this case need to know that their issues will be dealt
with accordingly and the relevant persons will not go unpunished. I think it will also be a wakeup
call for those who commit these revolting acts, that there will be repercussions for their
actions. Hopefully, it will also allow them to get the help they need for their habits.

Campaigns such as #Metoo are giving women and (men) the opportunity to voice their stories
more bravely than in the past and help others in the process to share theirs. Building a
community of victims to overpower the perpetrators who inflicted any sort of harassment or
assault towards them. Theresa May, now needs to enforce laws that are contractually binding,
that involve the issue of grievance in parliament and the workplace. That may be just one way
of tackling this ever troubling problem.

Economics Round-Up Summer 2017

With parliament almost ready to return to Westminster after its summer brake, and many things having changed, or not as the case may be over the course of the last few months, now seems like an opportune time to round-up some important economic developments of the summer.

The Bank of England keeps the breaks on 

The BoE has continued its cautious attitude over the summer, keeping interest rates on hold with the prediction that it could be another 12 months before the next rate rise. Governor Mark Carney has more than once hinted that he may support a rise sooner than this, but a survey of economists carried out recently by the BBC found that most did not expect a rise until 2019 believing the Monetary Policy Committee would be reluctant to raise rates during the height of Brexit negotiations.

The Pound has been a major consideration in the BoE’s decision making; this summer has seen some important developments. Since the vote to leave the EU in 2016 the pound has fallen about 15% against the euro. Over the summer, it has continued to slide and is predicted to fall an estimated 10% further against the euro by March 2018. Some economists have predicted particularly dire results for the pound next year, suggesting it could fall as low as $1.25 to the pound and just 96 euro cents to the pound by the final quarter of 2018.

Meanwhile, the Confederation of British Industry has continued its rather pessimistic view of the UK economy. It stated in June that it expected growth to be ‘steady but subdued’ falling to 1.4% in 2018, down from 1.6% in 2017. Economists have also remained rather gloomy over inflation. Their predictions range from it peaking at 2.9% in October this year subsequently falling back in 2018 to it peaking at 3.2% in spring 2018.

The Cost of Living, Wages and Unemployment

The basic cost of living has continued to creep ever upwards over the summer. It has increased by roughly 3% since January 2016 and what it will do over the next few months is uncertain, but with the ongoing Brexit negotiations and the growing uncertainty it is almost certain to rise further. Average annual earning for those in full-time employment have however not kept up with the rise in the cost of living. They sit somewhere between £26,000 and £27,000 depending on where you look: compare this to the average annual earnings in December 2015, £27,500 and the problem for many becomes obvious.

Bearing this in mind, unemployment has continued to slowly fall over the summer. Government statistics put it at roughly 4.5%, a low not seen since the record figure of 3.4% in 1973. Of course, such statistics hide the struggles of the so-called ‘working poor’ whose wages are stagnating behind inflation. Use of food-banks and other charitable aid has risen over the summer too, showing that the figures are not all they are cracked up to be. Of course, they are a mirage anyway. In reality, low unemployment and thus high employment should lead to increasing wages driving inflation. Instead, inflation has taken off and wages have stagnated. This is because unemployment is not actually as low as the government would have use believe. It all comes down to the definition of ‘unemployment’, which counts stay-at-home parents, university students, the temporarily ill of disabled etc. as not being part of the ‘workforce’. In essence, the official statistics hide the fact that there is a huge chunk of the population who are ‘inactive’ workers. It fails to account for the fact that every university student over 18 will require employment upon graduation, that many parents with new-borns will look to return to work. As one statistical analyst told me, ‘official unemployment statistics are a lie; a lie which has only survived as long as it has because it suits the political parties’. With this in mind, if we include these ‘inactive’ workers, the unemployment rate becomes more like 21%… shocking isn’t it?

The British Gas Rip-off

British Gas has again, like so many other energy suppliers spat in the face of its loyal customers by declaring over the summer that it would increase electricity prices by 12.5% on the 15th September this year. Considering the issues surrounding wages and the costs of living, this is less than helpful for many thousands of people. Indeed, it has been the increase in electricity and gas prices both over the past few years and again this year which has largely driven the increase in the cost of living along with housing rents.

Former Liberal Democrat Leader Tim Farron attacked British Gas over the summer stating they they were ‘clearly treating these people like cash cows… as things stand, there will be a lot of people in fuel poverty this winter shivering in homes they cannot afford to heat or even light’. For once, he couldn’t be more right.

The actions of British Gas have brought the Conservative Party’s pledge of an energy price cap back into focus, as they desperately try and sweep it under the carpet. It has shown us, as if we didn’t know already that the energy companies have a total disregard for the people they sell what are, in my opinion, basic modern necessities to. Their actions in August are the reason so many will feel the cold this winter and why the nationalisation lobby is becoming louder.

Brexit: The Continuing Saga……

What has happened here then? Very little. We are virtually no closer to knowing what the world will look like after Brexit as the UK government continues to behave like a petulant child demanding all the sweets and refusing to eat its greens. I presume David Davis has used this summer wisely. While he has clearly gotten nowhere in terms of talks with the EU, I hope he has taken the opportunity to have his head examined in the hope of finding an adult brain. He and others seem to enjoy trading childish insults with the EU while the clock on Brexit and indeed the UK’s economic prosperity ticks towards zero-hour.

The position papers were an own-goal. They admitted repeatedly that the EU single market was economically beneficial to the UK as well as admitting that the UK was unlikely to fully ‘escape’ the jurisdiction of the European Court System.

Of all Davis’s and indeed the government’s beliefs about Brexit, the most idiotic which has surfaced over the summer is their continuing claim that Britain will not have to pay a ‘divorce’ settlement and that upon leaving the EU in 2019, the UK could stop paying into the EU’s coffers. They seem to think that they can just walk away from their commitments. This is the adult world for goodness sake! You can’t just walk away from years’ worth of deals and commitments because you want to. That’s not how it works. All I can say is the sooner the negotiators on our side accept this the better; or I really do fear for our economic future…

Overall, this summer has been far from bright. We are no closer to knowing our future destination, people are still struggling and the predictions show this is likely to continue. A sad state of affairs indeed but, and I say this in full knowledge that I will probably be harangued by the Brexit brigade, we as a nation brought this upon ourselves, ‘as you sow, so shall you reap’.

The Bogeyman Fallacy of Evil ‘Unregulated’ Banks: How Free Banking Could Bring Transparency, Stability, and Choice

There is a phantom menace that Marxists hold dear. Indeed, in the times of milk and honey following the overthrow the bloated bourgeoisie and the ascension of Comrade Corbyn, ‘unregulated’ banks will take their place as the sworn enemy of the workers in the songs and legends of the bards. Even now, the myth builds. Bankers, let loose by a free market, milk the people of their hard-earned money whilst the Tories in parliament watch with idle glee. Lily Allen, hero of the working classes and mother of the revolution, even mentioned it on twitter the other day. She wondered aloud why it was that Britain could ‘afford unregulated banks’, whist it couldn’t afford to throw more money at the NHS and pay teachers the piles of money they deserve for their selfless and heroic service.

https://twitter.com/lilyallen/status/833284090853982209

Lily Allen, as is often the case, is dead wrong. Firstly, she seems to have confused public and private spending; since an unregulated banking system, i.e. a system free from government intervention, would be privately run and not cost anything from government coffers. Secondly, the banking industry is probably one of the most regulated industries in the UK, and has been for decades. The simple truth is that banking is far from a free market. Marxists like Allen are so dogmatic in their committed assertion that free-markets are bad, that even evidently unfree markets like banking must be a free market. Why else would it be so bad?

If only Lily Allen had bucked her long and colourful history of being wrong and was correct in her accusation. We have intervention in the banking market to thank for many of the problems we attribute to the industry. Let’s take the banking crash in 2008 as an example. Whilst many people like to think that the collapse was an inevitable symptom of capitalism; a by-product of greedy free markets, it was in fact a result of state intervention in markets that should be free. Big banks love regulations, which is probably why they spend so much time lobbying for them in Westminster and Brussels. They can afford crack legal teams to navigate bureaucracy and locate loopholes to exploit, whilst their smaller competitors cannot. Regulation passed by American and European governments in the lead up to 2008 pushed out small firms, distorting the market in favour of large firms, fostering a proxy oligopoly. Big banks – we’re looking at you Lehman Brothers – had become ‘too big to fail’. They represented so much of the market that if they were to collapse, they would bring most of the economy down with them. It is therefore unsurprising that when they did collapse following the bursting of the housing bubble, that governments chose to pump loser firms with taxpayer money to keep the economy afloat; creating hordes of zombie banks dependent on corporate welfare. They knew then, and they certainly know now post-bail out, that they don’t need to be responsible. The government will pick up the pieces, save the losers, and happily sponsor a disparity of competition and a dearth of fairness in the market. Talk about laughing all the way to the bank.

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Government presence in the banking industry doesn’t stop at bailouts and legislation; it is part of the banking industry’s very fabric in the UK. The Bank of England holds a monopoly on currency. It also possesses the authority to set interest rates, basically dictating the price at which banks can lend or borrow money. Whilst this is hardly unorthodox – almost the entire world runs on this system – it is by no means unregulated. If Lily Allen was indeed correct in stating that our banks are unregulated, we’d all be living in a free banking society, not one with a central bank.

Free Banking hasn’t had a presence for some time now but when it did, such as in Scotland until 1844 or British Canada until 1914, the results were positive. So why did central banking replace free banking? Most central banks were formed by governments with one idea in mind. They wanted an institution that would lend them masses of money, on agreeable terms, with few questions asked. Governments sought also, as they always do, to expand control over the economy. What better way to do this than to grant a dictatorial monopoly on determining interest rates to a central bank? Now the government can attempt to slow or speed spending if they so wish. As well as that they can print more money, which is basically government sanctioned counterfeiting, to reduce the value of money; eroding savings and wages whilst falsely inflating prices. With that in mind regulation and intervention sounds rather sinister, doesn’t it? This is cronyism, not capitalism.

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Why then, do so many people lament the idea of unregulated banks? Deregulation has become a bogeyman to villainise free markets, perpetuated by those with a fallacious understanding of the economy. When the government regulates banking and currency, it merely expands its control over the individuals it is sworn to serve. But how could free banking, a system where there is no central banks and very little regulation, work?

Historically in free banking economies, basic money was determined in either gold or silver standards. Minting gold or silver coin was normally monopolised by the government, in an effort to keep the value of these coins steady and provide an official base for free floating competitive currencies. Banks would then distribute banknotes and allowed people to open accounts denominated in whatever standard, normally gold or silver, had been determined by the government. Banks endeavoured to make their currency widely accepted by other banks in order to attract customers. Banks were forced here to accept all forms of currency, striking mutual deals with their competitors to accept each other’s notes and give customers a reason to bank with them. Private notes stayed more or less at the same value as their competitors. Retailers had no problem accepting different notes, just like they don’t have a problem today with accepting various checks and credit cards from differing banks. Notes in free banking economies proved to be more reliable than central banking societies. Unlike government backed issuers, free banks can’t purposely devalue their currency and get away with it, it’s a breach of contract. They can’t take on risky procedures like dishing out more than they have in their reserves or making questionable investments, because risky banks would prove unpopular with consumers, who can easily look elsewhere. In a free banking system, competition and choice places power in the demand side of the market, empowering consumers and gives consumers true sovereignty over banks.

Free banking is transparent, stable, and maximises consumer power. Which is presumably why governments would rather opt for a central bank. No matter how often Marxists like Lily Allen insularly reassure themselves that capitalism is bad, that the poison touch of government is good, and attribute all wrongdoings to free markets, there is a simple fact that remains. The freer the markets, the freer the people. Banking and currency is no exception. In fact, it’s a sterling example.