In response to the remarks of Canon Dr Mark Hocknull (CLICK THIS LINK - Morality of the Markets Forum Paper), Karl McCartney made the following response:
Well many of you probably will not be surprised to hear that I do not believe that we will build a better economy by turning our back on the free market, we’ll do it by making sure that the market is fair as well as free. While of course there is a role for government, for regulation and intervention, the real solution is more enterprise, competition and innovation.
Open markets and free enterprise are the best imaginable force for improving human wealth and happiness. They are the engine of progress, generating the enterprise and innovation that lifts people out of poverty and gives people opportunity. If anything, I, and all Conservatives believe that there should be no limit on an individual’s aspiration, and I further believe that that aim can best be achieved in an open and free market.
The Prime Minister has argued that we should use this crisis of capitalism to improve markets, not undermine them. As well as social responsibility we need to open up markets and ensure more people are engaged in, and with, a genuinely popular capitalism. Capitalism will never be genuinely popular unless there are genuine opportunities for everyone to participate and benefit.
In government we are taking steps to achieve this aim: we are providing new rights for public sector workers to create mutuals and own a stake in their success. And we have announced that these steps will all be brought together and simplified in a new Co-Operatives Bill that will be put before Parliament.
So, in the discussion earlier following Professor David Head’s Lecture we heard a phrase referring to the need for moral markets – we as Conservatives have referred to Responsible Capitalism – but what is ‘Responsible Capitalism’?
There is no doubt that these are difficult times. The economic challenge remains the greatest one for our Government and our Country. We started back in May 2010 dealing with our debts and achieving growth – but it doesn’t end there. We think we should use this crisis of capitalism to improve markets, not undermine them.
We need to reconnect the principles of risk, hard work and success with reward. But that is a world away from what we’ve seen in recent years – where the bonus culture – particularly in the City – has been seen to be out of control and the link between risk, hard work and success with reward has been broken. Excessive bonuses reduce by many times over lending to small businesses. Large rewards for failure when companies are suffering means fewer rewards for customers and shareholders. The Business Secretary has recently set out our detailed plans to tackle rewards for failure including any necessary legislation to follow that will be required as some of you may know.
In these difficult economic times we need to do more than just pay down the deficit. As we recover from this crisis we must build a better economy, one in which a responsible and genuinely popular capitalism works for all of us and spreads wealth, freedom and opportunity across our Country and society.
I now want to spend just a short time as I conclude to be perhaps ‘devil’s advocate’ here in the Chapter House as I would like to take the opportunity to address some of the points, questions and issues raised in the first Q&A with David (Professor David Head) following his lecture. Firstly there are unfortunately some individuals in the City to whom Gordon Gecko is a role model – for them, Like Lord Mandelson – greed is good. But there are individuals, and the 120 plus Guilds and Worshipful Companies that are philanthropic to an amazing degree and long may that continue.
Earlier the Chief Executive of the Cathedral offered some potential reasons for the higher risks taken financially – that we want our pension funds to be the best they can and so for the returns to achieve this pension fund managers have along with other financiers made decisions that vastly increased the risk of the investments they make on our behalf. The reason they had to do this is that Gordon Brown as Chancellor in 1997/98 decided to raid our pensions industry by £8billion pa. Before 1997 our pension provision in this Country was the envy of the world, after Gordon Brown and Tony Blair we are now the laughing stock of the world with regard to pension provision and languish in the company of such 3rd rate pension providing countries as Italy and Greece.
If Northern Rock had been Southern Rock then it would have been allowed to go to the wall – but 2500 jobs in the North East – it was a political decision to prop up the bank to keep those NE electors in work… and hence Banks saw they would be bailed out… but if NR had been allowed to fail, yes people would have lost their jobs, and I know how horrible it is to be made redundant – but no mortgagee would have lost their house because NR wasn’t bailed out– they would have found some other bank or financial institute would have taken over the ‘mortgage book’ and they would have carried on making the same payments for their mortgages.
Finally – capital is global. Tax on bankers’ or financiers’ bonus’s is collected in this Country whilst they are here… if they up-sticks and relocate to operate on a pc screen elsewhere in the world – our Government loses that tax income and hence part of the budget that ‘the State’ as socialists like to call it, can then spend – whether that’s on nurses, Dr’s, defence or other parts of the public sector, It would be diminished. Currently around 47% of the Inland Revenue’s yearly tax take is derived from the financial sector. This pays for nearly half of ‘the state’ and hence those working in the Public Sector and for those workers in the NHS. We shouldn’t shoot the ‘Golden Goose’ and so I am also pleased the Prime Minister David Cameron, and our Chancellor George Osborne have resisted some EU leaders will to spear our City by refusing to allow a financial transaction tax, beloved by our French friends. I agree the FSA has a lot to answer for but I would advise caution in respect of the gentleman who said: ‘Markets without regulation do not function to the benefit of the people.’ And I do agree with his statement, but I feel that: ‘Markets with too much regulation will fail to function’.