Mr Cameron really doesn’t understand what’s going on. When he talks of rebalancing the economy he appears not to have the faintest idea what has unbalanced it. He doesn’t understand the crucial difference between real markets and financial markets. Demand for real things is essentially finite – when you’ve had enough, you’ve had enough; demand for high yielding financial “products” is essentially infinite. An investment, such as a ‘carbon credit’ which would yield ‘up to 398% return’ (see: http://www.gordonpearson.co.uk/06/pity-the-poor-banker/), would attract anyone. Would you invest in a widget maker earning 10% a year at some risk, when you could be earning up to 398% risk free? Consequently, despite the sub-prime fiasco of 2008, money is still leaving the real economy to be bet on financial “products” which are high on promise, but low on substance. That’s the rebalancing that’s actually going on, with Mr Cameron’s approval.
The only rebalancing towards manufacturing and the job creating real economy results from the ingenuity and efforts of practical people achieving results on the ground, through co-operative rather than exploitative means (The Road to Co-operation is due out Gower in April). This achievement is despite Mr Cameron and his friends.
Mr Cameron doesn’t seem to understand that bankers earn huge profits by pulling money out of the real economy and betting it on carbon credits and the like. And he doesn’t understand that by his blind support of the City, even against our interests in the EU, he is removing risk from the carbon credit type of financial “product”. When the bubble bursts as it’s bound to do, Mr Cameron will bail out the banks again – as he’s bound to do. And the people will have to pay again – no one else can.
Mr Cameron doesn’t understand what the financial “products” like carbon credits really are. Such “products” are made deliberately incomprehensible, so that there can be no assessment of their fundamental value. Their sole attraction is that their price may be expected to rise (or fall) and so provide an opportunity for a quick profit. No doubt Mr Cameron understands that it is important that the contents are made clear for products such as jars of marmalade. But he doesn’t seem to understand, despite the sub-prime lesson, how much more important it is for products such as carbon credits.
Mr Cameron doesn’t understand that bankers, company executives and the like, pay themselves such unjustified amounts, simply because they can, and that real shareholders are powerless to stop them. Most shareholdings that are not owned by other corporates, are controlled by professional fund managers whose interest is in achieving financial success for their fund so as to progress up the fund managers league table. This involves them in computerised, ultra-fast trading systems and essentially short term if not automated decision making. Non-corporate shareholders are unlikely even to know the composition of their share portfolio, let alone participate in any decisions as to the remuneration of the top management of companies which are, for the time being, in their portfolio. The City has pretended, with its UK Stewardship Code of Practice (see http://www.gordonpearson.co.uk/12/codes-of-corporate-governance-practice/) to strengthen the role of those controlling shares, if not owning them, so they might exercise responsibility. But those controlling the shares directly benefit from continually rising executive remuneration. Mr Cameron doesn’t understand that the reality has nothing to do with corporate success or failure, nor that shareholders can have no role in reining it in.
Mr Cameron’s recent sound-bite clearly shows he doesn’t understand the management of hospital wards. He doesn’t understand that his childlike requirement that ‘matrons’ conduct hourly ward inspections will require monitoring, recording and reporting, most probably by people who were previously doing useful work. Mr Cameron’s earlier sound-bite on the big society also clearly demonstrated his lack of understanding in that area (see http://www.gordonpearson.co.uk/22/big-society-public-services-%e2%80%93-the-next-fiasco/). And unfortunately, Mr Cameron’s willingness to micro-manage and interfere, despite non-understanding, is an example followed enthusiastically by his cabinet colleagues, notably in health and education.
But, with Stephen Hawking, we must remember that, however difficult life may seem, we must never give up. One day, Mr Cameron might understand. He might even read The Road to Co-operation!