A bit of history and background first. The creation of the People's Republic of China in 1949 followed a half century that has seen the end of imperial rule, an infant republic left to the mercy of war lords and organised crime, then civil war, invasion and a further spell of civil war. The new state borrowed much from the old Soviet Union in creating a judicial system whose principal role was to serve as a bulwark against counter-revolution, treason and any other threat to order as perceived by the Communist Party. The various upheavals through the next thirty years did nothing at all to lessen the sense that the legal system was - as much as was the People Liberation Army - a vital component of compelling order with China as seen by the Party and the State - and with no independence from either.
The beginning of the Deng reforms in the late 1970's- and more specifically the need to engage in quite a different way with the outside world brought some change. The development for the first time of a framework of commercial law that would at least go someway to meeting the expectation of foreign investors that the country needed to attract was required.
Specifically foreign businesses wanted some of the same protections they enjoyed at home which allowed some protection from the predatory actions of the state or other individuals and entities. As China rushed from the 1980's 1978 to train lawyers and formulate laws, the focus was on business law as opposed to civil liberties and individual freedoms. There has been a growth in the legal industry (The Center for Strategic and International Studies reports that today there are 120,000 certified lawyers, 12,000 law firms, and 300 law schools, compared with 2000 lawyers and 2 law schools in 1979 - which apparently in a good thing) but the system is still deficient neutrality, capacity, and mandate.
With regard to criminal law however the system harks back to some traditional values that long predate the revolution and which stand in stark contrast to those of Europe and the US. There is for example no presumption of innocence - indeed the reverse holds. There is a conviction rate approaching 99% in criminal trials. The death penalty is a significant feature of the system and China is presumed to have the highest number of judicial executions in the word.
The powers exercised by police and other local officials means that many presumed offenders don't event find their way to the courts but are dealt with summarily in' re-education centres'.
The interest of our Chinese visitors was on the operation of those aspects of our own system that stand in greatest contrast to their own. There was particular interest in the operation of the jury process and a fascination with the idea of random amateurs with no legal experience of training being entrusted with such huge responsibility . In China cases are tried by judges together with assessors who approximate to magistrates. The operation of appeals and processes for miscarriages of justice were also quite novel ideas - initial verdicts are overturned in less than 1% of cases accepted for review in China. The role of victim support facilities here which are totally unheard of or unimagined in China was also a revelation.
But as so often when Chinese visitors open up just a little about the issues that plague their personal and professional lives back home, the dead weight of corruption is not far from the surface - and that was the case again.
When these matters so evidently concern their own people the challenges that China continues to face at home become very evident.
Borealis already owns stakes in High Speed 1, Scotia Gas and Associated British Ports, while the Kuwait Investment Office has investments of over £15bn in 100 UK listed companies, along with a stake in Gatwick airport.
Today Severn Trent rejected the initial approach, stating that "a conditional proposal was tabled by the consortium at only a modest premium to the share price before the announcement of May 14. The board of Severn Trent has reviewed the proposal with its advisers and concluded that it completely fails to recognise the existing and potential value of Severn Trent."
Earlier a report by the Financial Times suggested that a bid could be worth £5.3bn. Severn Trent, recall, was formed following the privatisation of UK water authorities in 1989. It is now one of only three UK water companies still listed on the stock market.
British utilities have been very popular with international investment firms looking for good, steady returns. Water firms in particular are attractive targets as they have big - and captive consumer bases, a guaranteed flow of revenues, and they generate cash.
In 2006, Thames Water was bought by a consortium led by Australian investment group Macquarie and a Chinese sovereign wealth fund. Similarly, Yorkshire Water was bought in 2007 by a consortium including Citigroup and HSBC, along with Singapore sovereign wealth fund GIC.
Although pricing details of the initial approach to Severn Trent was not made public, it is thought to be priced at £22-£23. That would reflect a valuation of over £1bn more than the £4.36bn stock market value the firm had ahead of the takeover news.
In an interview with the Financial Times recently, the chief executive of Ofwat, the industry's regulator, said that steady returns and inflation-busting price rises allowed (for now at least) by the regulator had attracted much private equity, pension fund and foreign sovereign wealth fund investors in recent years.
Indeed the mainstream view here in the UK is that it doesn't really matter who owns our utilities providing they are well regulated. But the possible Severn Trent takeover still raises some interesting questions and challenges for policy makers.
Back in 2010, the Office of Fair Trading (OFT) reported that 40 per cent of infrastructure assets in the energy, water, transport, and communication sectors were already owned by foreign investors - before the most recent wave of activity.
So foreign ownership of UK utility assets is now widespread, most frequently in the form of foreign listed public limited companies, but also through various private ownership vehicles, such as infrastructure funds. According to the OFT, the increasing globalisation of corporate investment activity has much reduced the relevance of nationality when it comes to the ownership of utilities.
This benign view of the impact of foreign ownership is very much in line with the attitude of the utility regulators like OFWAT. Regulators highlight the range of consumer protections they have put in place - price cap regulation, a separation of network and retail functions, the requirement for licence holders to ring-fence core assets and maintain an investment grade credit rating, and the power to put a utility operator into administration so as to maintain service continuity.
So the regulators' view is that what matters is not ownership, but rather regulation. But then again, they would say that, wouldn't they?
In fact, there are two big problems with such a relaxed position. First, the foreign owners involved in major strategic decisions affecting UK infrastructure assets are likely to be face internal competition for capital market resources, in which British interests may lose out.
This was a key driver behind the decision by the French-owned EDF Group to require EDF Energy in London to offload its UK distribution networks for cash so as to pare down debt and support the group's international ambitions in building nuclear power stations.
The second problem, which I raised in relation to the Kraft takeover of Cadbury, arises from the inadequacy of the UK regulatory regime for assessing the effect of foreign takeovers.
Suppose, say, that Gazprom were to launch a takeover of a major utility company in the UK energy sector. The government would have no regulatory leg to stand on as the public interest test for takeovers was removed from the UK's takeover regulation back in 2002. Government powers are now restricted to a very narrow competition assessment and cannot take into account broader public interests such as energy or water security.
In fact, we still need a more robust takeover regulation system. That needs to include a public interest test which ensures that the British government can safeguard the provision of utilities at appropriate quality, and can safeguard the nation's energy (and water) security interests against the potential for political intervention by foreign governments, foreign owned firms or foreign sovereign wealth funds.
Despite what regulators say, ownership matters.
Professor David Bailey works at Coventry University Business School
For example, he has commented that if you are in business and your competitors go bankrupt (he used the expression "fall by the wayside"), it allows those businesses who are efficient to increase their market share.
Many might believe that this is simply commonsense.
Let's face it if you can incubate an idea and make it work in the current economic environment then it should be in good shape when the climate becomes more benign.
However, some have seized on Lord Young's comments as being indicative of a culture in which it becomes acceptable to exploit those who are weakest. He has stated his belief that if "factors of production" become cheaper this will allow a greater return on investment.
As critics point out, business failures result in job losses which bring misery. Additionally they stress that the factors of production which become cheaper will include wages paid to workers which will have a knock-on effect in terms of standards of living.
]]> Until recently the argument posited advocates of austerity was that though there was some pain to be suffered in terms of reduced earnings this was a price worth paying and that unemployment was remaining relatively stable.Besides they asserted, it would be unfair to leave a legacy of debt to future generations. And as they claimed the inevitable reduction in public spending resulting in jobs lost in the provision of public services would be more than offset by new one created in the private sector.
The problem for this argument is that the statistics are showing that there is bad news on two fronts.
Firstly, figures produced by the Office for National Statistics (ONS) show that since 2009, after allowing for inflation, average earnings have fallen by 8.5%. Additionally the ONS also demonstrate that unemployment is now going up.
So, in general terms, we are getting worse off and the prospects for finding alternative work are becoming increasingly bleak.
What is worrying is that the lack of job opportunities are having most effect on the young (defines in this country as being between 16 to 24 years old). Therefore, it is crucial that we focus on the future but in doing so do we only consider only those in the immediate area?
Looking 'after our own' and adhering to the so called 'beggar my neighbour' principle is undoubtedly understandable but can have consequences in that it leads to regional and national differences and may accentuate a sense of disgruntlement in those who feel they are not being treated fairly.
Those who know their history will tell you creating was conditions in which economic deprivation exist among the young is something that can lead to alienation which makes social disorder more likely and, in extreme situations, may even lead to revolution.
So, the fact that it seems some ministers in the cabinet are now practically falling over one another to proclaim their willingness to vote to leave the EU may be seen as part of a belief that our fortunes would be enhanced by being free of interference from across the English Channel and, of course, the need to continue paying for its upkeep.
Boris Johnson's comments in Monday's Telegraph may need to be judged as being typical of his desire to be a main 'player' but he makes good points with respect to the for and against arguments of remaining in the EU. Indeed, he says that what is needed is to look to others, he cites Germany, as examples of how we can all become more efficient and significantly does not he shrink for criticising British management.
Whilst I would suppose that many in this country would feel little sympathy for those European countries where there is high unemployment we should surely not be immune to the long-term effects that high levels of unemployment have upon the next generation.
However, we all have a responsibility to make the world a better place. Isn't that what a previous generation of, largely, young men did during the second-world-war to defeat the Nazi evil under Adolf Hitler.
A report published last week by the International Labour Organisation (ILO), Global Employment Trends for Youth 2013, A generation at Risk makes worrying reading for those who believed that the world is becoming a better place to grow up.
This report states that long-term unemployment is now becoming endemic among young people across the world and that no economy is impervious to the effects that it has.
Though this is occurring across the world the impact of increased joblessness is especially acute in Europe. In Portugal and Spain unemployment among 15-24 year olds (the international definition) is almost 50% and in Greece has reached 64.2% which means that two out of every three young people are out of work.
For those 'lucky' enough to find work they may find have to accept lower wages and a lack of security that means their prospects for advancement are much lower than their parents.
In the UK we may not have reached such appallingly high levels of unemployment among the young but the portents are not auspicious. Increased uncertainty about the future will have a knock-on effect in terms of the ability of the children from backgrounds which are impoverished to believe that they can improve their future prospects through education and training.
So Lord Young's comments may lead some to believe that all we will end up with is as divided a society as Europe may become if the 'EU project' finally unravels and everyone looks after their own needs.
Whatever happens with any potential referendum to leave Europe there is a need to consider how we can develop policies that will not mean that this country becomes very much a disunited kingdom.
It would seem that the much vaunted recovery in the economy is a decidedly London-centric phenomenon leading many commentators to ask what is to be done for regions where decline is the norm?
This lack of activity will mean that the prospects for young people in such regions will be faced with the choice of staying put or moving to London or its economic hinterland; similar to the unemployed in 'hot spots' migrating to the likes of Germany.
London is a city where fortunes can undoubtedly be made. Apparently, according to one analyst there are 4,224 people who have net wealth of $30 million (£19 million) excluding their primary residence; one in 29.
What this means is that the price of real estate become ever more expensive meaning that even those who are relatively well paid cannot afford to live there.
But as Professor Karel Williams, from the Centre for Research and Socio-Economic Change, argues, we are seeing a "two speed" UK which makes migration extremely difficult:
"The ex-industrial working class are marooned by the lack of cheap housing. For somebody who's lost a council job in the north of England to come down to London with a family - how would they live?"
This surely is not good and was exactly the reason why Lord Heseltine was commissioned to write his report No Stone Unturned last year to consider ways to stimulate growth in regions outside the capital city.
What we really need at present is a sense of urgency and leadership which will ensure that the London effect is diminished through policies designed to increase economic activity in every region including, naturally, here in the West Midlands.
As the ILO report recommends there is a crucial role for all stakeholders to contribute through ensuring that the next generation have access to training and education which ensures that they have the requisite skills and expertise to contribute to future economic growth.
Lord Young's comments if they are interpreted as justifying the use of cheap labour, especially the young, and with no concern to their development will do nothing to assist in the building of a more cohesive and less socially divided Britain.
Equally the case for remaining in Europe should be made more persuasively.
After all, the dream of a united states of Europe grew out of the devastation of the second-world- war was caused by economic differences and the hopelessness of long-term youth unemployment.
]]>
When it comes to exporting there is no doubt that the West Midlands region is still reliant on the European and US markets. Having said that, many local companies are leading the way doing great business further afield and this trend needs to gather pace quickly.
Whilst developed economies are still struggling with financial uncertainty and slow recovery, emerging markets are undergoing rapid growth.
These high growth markets are changing the face of international business - it is the growing economies which offer today's, and more importantly tomorrow's opportunities. With so many millions of potential new customers, low-cost communications, and improving infrastructure, these markets are very appealing to firms looking to expand their operations.
But the time for West Midlands companies to act is now. By waiting too long, businesses will allow competitors to build a presence and market share in those areas, making it more expensive to commit resources and more difficult to compete effectively when they finally decide to take the plunge.
At UKTI we know that striking out into new and unfamiliar markets can be daunting, but many more regional companies could and should be taking advantage of the opportunities these markets offer. That is why we are hosting Export Week (13 -17 May) - a week dedicated to high growth markets.
Export Week is designed to help the region's businesses explore those markets and countries which perhaps aren't so obvious and to show how we can help firms reach them. We have put together a programme of events and activities that will inspire firms to think about exporting to Brazil, China, Singapore and the Middle East to name just a few. Events will take place across the region and offer something for both the novice and experienced exporter - from seminars and master-classes, to networking events. We also have events around some of our strongest developed markets in the USA and the Nordic and Baltic countries.
The past year has been challenging for many of the region's companies, but I strongly believe that almost any firm can export its products and services, whether they are a single-owner operation, an SME, a mid-sized business, or a large corporation.
Come and join UKTI at one of our many regional events during 13-17 May, to find out more about these countries and how we can help your business grow by exploiting the opportunities they offer. I encourage you to seize the challenge - aim high and act now.
You can find out more about Export Week events in the West Midlands at www.exportweek.ukti.gov.uk and follow #exportweek
For those not able to get a ticket you can always listen to his back catalogue especially his hugely influential 1972 album The Rise and Fall of Ziggy Stardust and the Spiders from Mars which includes the opening track 'Five Years'.
'Five Years' is a typical Bowie ballad in which there is a suggestion that within this period the earth would be doomed to destruction.
Given that Britain was at that time in a pretty dystopian state with industrial conflict and an existential threat from nuclear war with the Soviet Union there may have been many who would have agreed with the sentiments of 'Five Years'.
It is just over five years since the beginnings of the global financial crisis and, coincidentally, that is the maximum period of an English Parliament. As we know, the impact of the crisis are still very apparent it would seem that we are not yet at the point at which our economy can be considered to have fully recovered.
Last Thursday's local elections provide an early, though I accept, limited snapshot of the way that the main parties will performs and much analysis will be made of the economic policies offered by each of the main parties (which may now include UKIP) for ensuring consistent growth. And they will all be considering development of economic strategies for the five years following the next general election.
The thing is, our current situation does not give allow us to be tremendously optimistic.
]]> Despite recent soundings that things are getting better, particularly from the Institute of Chartered Accountants in England and Wakes together with business advisors Grant Thornton, that confidence is improving and we may see economic growth of 0.6% in the second quarter, this is not exactly staggering.Any growth we do see will be very gradual and, besides, any predictions are made with caution as there is still the strong likelihood that there will be continued economic problems in countries with whom we rely on for exports in the Eurozone.
It therefore very interesting to note that a number of books are considering what the future will really hold and how we should develop policies to deal with the ongoing effects of the global financial crisis. These may give some sense of the five year policies we may be offered by political parties in the campaign for the next general election.
The first of these, When the Money Runs Out by Stephen D. King and to be published at the end of the month by Yale University Press pulls no punches. King believes that we should disabuse ourselves of any belief that what we are currently experiencing is the exception.
Rather, King argues, the economic progress we enjoyed since the second-world-war has come to an end and that austerity is not just likely to become the norm but we are that we could see stagnation reaching crisis proportions.
Anyone who has invested in equities will tell you that returns are not living up to the promised returns. For those who have annuity-based pensions or an endowment mortgage this has resulted in either reduced income or, in extreme cases hardship.
But King's makes the point that as a society we are all relying on rates of growth and interest rates that will provide the basis of a better future for all. As he contends, if consistent economic growth does not return how are we going to pay for the healthcare and social security provision in a country where the average age in rising inexorably?
If we cannot guarantee economic growth we will be faced with the need to either raise taxes or reduce services; precisely the sort of debate that we will hear in the forthcoming general election campaign.
It may be that increasingly we have to get used to a much more divided society or the 'haves' and 'have nots' who can afford the levels of healthcare we now take for granted. This hardly bodes well for a cohesive society based on equality for all.
Another recently published book though sympathetic to King's argument suggests that we should eschew the belief that more will make us happier (or better off) and that we should simply get used to having 'enough'.
In Enough is Enough: Building a Sustainable Economy in a World of Finite Resources published by Routledge in January this year, authors Dan O'Neill and Rob Diertz having consulted over 250 contributors made up of economists, scientists, business leaders and politicians believe that we have been seduced to believe that constant growth is the primary goal of civilised societies.
The argument being posited is that constant growth has made us no happier. Modern society induces us to want to consume more and more and like drug users we do so with little or no regard to the long-term consequences for the finite resources that all things are made of.
Unsurprisingly their message has been is being welcomed by those who committed to the 'green agenda'.
The trouble is with this is that, as we know, much of what we consume is now coming from those countries where there is phenomenal economic growth (such as India and China) and which will have no incentive in agreeing to the policies advocated by O'Neill and Diertz.
Indeed, apart from the Green Party in this or any other country agreeing with O'Neill and Diertz's belief that we should focus on reducing inequality and creating 'meaningful jobs' in sustainable energy rather than increasing growth.
However, the key thesis advanced by O'Neill and Diertz, that we should consider the impact of our actions for future generations has much to recommend it. For those other than global warming deniers, we may be creating circumstances that will result in a far more turbulent environment.
Capitalism, though, has always been largely uninterested in such concerns.
However, two books consider how capitalism might adapt to a changed world.
In The Locust and the Bee by Geoff Mulgan (published by Princeton University Press in March), there is a view that whilst capitalism frequently produces predators (locusts) it can also be very successful in enabling creators to emerge (bees).
In his book Mulgan believes that we should be willing to embrace a new form of capitalism that is committed to creation of new opportunities and in which it serves our need rather than being a dominant force to which we are enslaved.
Mulgan particularly cites healthcare education and the sort of green industries that O'Neill and Diertz believe are crucial to the future as the way in which we should develop economic activity.
In Progressive Capitalism: How To Achieve Economic Growth, Liberty and Social Justice to be published by Biteback later this month Lord David Sainsbury who was a minister in the last Labour government believes that the neoliberalism ushered in by Margaret Thatcher in this country and Ronald Reagan in the US in the 1980s is severely flawed and should be replaced by what he called 'Progressive Capitalism'.
It is instructive to consider the facts to support Lord Sainsbury's view that rampant capitalism is not good for all. For example, in the period 1960 to 1980 the income per capita grew by 3.1%. However, in the twenty years from 1980 to 2000 during which market forces became all important the comparable statistic of income per capita was 2%.
Statistics show that under the neoliberal system so favoured by Thatcher and Reagan those with most access to capital (the rich) used it to get wealthier whilst those without access (the poor) became less well off.
Lord Sainsbury believes capitalism should be more tightly controlled through regulation and, in echoes to that other Lord who has been very active in making economic pronouncements recently (Michael Heseltine), advocates greater support for industry in advancing innovation; especially in regions that have suffered decline in the last thirty years.
Crucial to economic development under progressive capitalism, he asserts, is the importance of an education system that offers opportunity for all and which emphasises vocational and STEM (science, technology, engineering and mathematics) subjects.
Such an interventionist agenda is one hardly likely to find favour among the right wing of the Conservative Party. However, Lord Sainsury's arguments will undoubtedly find favour among coterie of ministers and advisors who will formulate policy for the Labour Party before the next general election.
I would not be surprised if Ed Milliband and his advisors have consulted the latest edition of a book by US Nobel prize-winning economist Paul Krugman End this Depression Now (published by W.W. Norton in February).
Krugman, like that other critic of austerity Joseph Stiglitz, believes that the policies being pursued by governments dealing with the effects of the global financial crisis are making things worse not better. Instead he argues, and based on Keynesian logic, there should be greater investment in using underemployed resources (workers) to enable economies to expand.
And this, I strongly believe, will be the key battleground for the main parties in presenting their economic policies for the five years after the next general election in 2015.
For all our sakes let's hope that such policies are based on enabling this country to be in a much better state in 2020 than it is now; and most certainly, economically speaking, that the predictions in Bowie's song 'Five Years' do not come true.
]]>While the alleged excesses of health and safety regulation still stimulate artificial rage in the press and the saloon bar, the success of this legislation and the commitment of those who implement it in serious working environments here, is, in fact, outstanding. Tragically there were some 171 fatal industrial accidents in the UK in 2011/12 which is the last year for which full figures are available. This translates into some 0.59 per 100,000 employees - a figure materially lower than those for the other mature industrial economies of Europe.
Figures for China are a lot more difficult to get hold of - a fact that probably reflects the fact that there are far higher than the authorities can admit and also that the processes set up to manage safety are partial - where they are not failing or even non-existent. In some official reports industrial and road traffic accidents are not distinguished.
Some Press reports suggest figures for industrial fatalities alone that on a comparable basis are some 10 or more time higher than those here. Statistics for China would also have to take account that economic activity there is skewed in a way that means it contains much more activity where workplace accidents are higher even in the best managed and regulated environment ( for example, mining and construction). Some international operators in overseas markets in these sectors - JCB are prominent in this - are looking to use their own market power and deep sense of corporate responsibility to bear down on these statistics in the construction sector.
Our Chinese guests were I think more than a little intrigued ( as I was myself) to have the full legal powers that are available to the safety inspectorate here set down for them. The striking fact perhaps is that these powers materially exceed those available to the police in the course of investigating more conventional crime. There is for example no ' right of silence' for a witness when being interrogated about an industrial accident; inspectors have an absolute right to have access to premises , to people and to papers and where a criminal prosecution is required it is proceeded with in the name of the individual inspector rather than the Crown.
Our Chinese colleagues this week described a situation where there was no shortage of rules and regulation but where their bewildering range allied to a lack of clear responsibility for implementation was the cause of real problems. This lack of obvious accountability sometimes also seems to provide a means of leaving responsibility when things do go wrong at the most local level - absolving those with supposed strategic oversight.
When it suits its purposes China is of course only too keen to make the point that by most objective criteria it remains a developing a country. Arriving at the shiny new airport; travelling by the world class high speed train and spending time in the glittering City Centres of Shanghai, Beijing and Guangzhou it is easy to lose sight of this. But this is a country which still has a smidgeon less than 50% of its population classes as rural and with fully a third of the workforce engaged in agriculture. Economic growth - and now perhaps the better distribution of that the effects of that growth - have the highest public and political priority
Given this the bedding-in of an industrial culture as imbued as those in the West with a broad consensus reaching from board members, operational managers and workers on industrial safety is still some way off. As in other areas where we take the constraints of regulation for granted ( eg environmental management, building standards) the drive for economic growth can exact a very heavy toll.
For western businesses trading with, or in partnership with, Chinese counterparts these difference in basic thinking can - and may continue to - provide some quite jolting challenges.
Though Best was seen as possessing sublime talent, his showmanship and desire to engage in a hedonistic lifestyle was seen as not right. Football had typically been viewed as a game largely watched by the working class who supported local teams consisting of players who came from the community.
Best, a Belfast lad, though not exceptional in coming from outside the area, was a prototype celebrity footballer; he was sometimes referred to as 'the fifth Beatle'.
As many recognised, British football was changing. Earlier in the decade, January 18th 1961 to be exact, the maximum wage of £20 a week had been abolished. As many have since argued, this was the start of British football - and especially players - losing touch with its fans.
In 1961 the average weekly wage was £17. Though wages earned by footballers steadily increased after the abolition of the maximum wage, Sky TV's decision in 1992 to televise games vastly accelerated the earning power all footballers; particularly those in the Premier League who now typically earn over £35,000 a week.
Football became a game in which ever-increasing amounts of money was invested into securing the best players to ensure an ability to achieve continued success. This means that more and more money needs to be raised in order to pay higher and higher wages.
The consequence has been that now very few teams can effectively compete to win the Premiership.
There is an adage which says that you can make a small fortune in football; provided you start with a large fortune.
]]> Though there has always been a tradition of football teams being owned by local benefactors, often local business men, the allure of glamour has attracted a new breed of owner.Usually the new owners of football clubs in the premiership are extremely wealthy and based overseas. And all-too-often the financing used to buy the clubs is based on equity raised through complex and byzantine arrangements.
Sometimes these owners arrive with dubious histories as is demonstrated by owner of Birmingham City Carson Yeung who has just gone on trial in Hong Kong for alleged money laundering.
These new owners have no connection with the local community and, for tax reasons, many don't reside in this country. Therefore, they have no particular interests or motivation in listening to the concerns of the local fans who have supported their clubs all of their lives.
The primary concern of these owners of football clubs is often in repaying the huge debt they have burdened clubs with by whatever way they can raise money.
Premiership football clubs have become global brands that can be marketed to sponsors who will pay for exposure on televised games. This has resulted in some strange 'Faustian Pacts'.
Players appear in shirts with the names of these sponsors but which have absolutely no sense of connectedness to local fans.
And the latest way of increasing income is to allow the names of grounds to be altered to include a sponsor's name. Liverpool is rumoured to be about to complete a multi-million pound deal which would see world-famous Anfield altered to include the name of Qatari firm Ooredoo.
Ironically, though the amount of money in British football is now staggering (measured in billions), more and more clubs are going bankrupt as clubs have to spend increasing amounts of money to achieve the success that will guarantee them sponsorship from the highest spenders.
For every team in the top flight remaining in the Premiership is seen critical as being relegated to 'The Championship' results in loss of revenue measured in tens of millions of pounds.
But for the elite teams at the top of Premiership securing qualification to the richest club competition in the world is equally paramount.
The UEFA Champions League is a competition open only to teams which finish in the top places of domestic leagues across Europe and the television exposure guarantees tens of millions of pounds.
But not everyone can be successful and, of course, only one team can win.
This year there will be no British interest in the final as all our clubs have already been eliminated.
However, there will definitely be interest from top clubs in either Germany or Spain though, given last week's surprisingly heavy defeats of Barcelona and Madrid in the first leg, it is likely only to be made up of teams from the latter; Bayern Munich and Borussia Dortmund.
And this is what provides us with interesting lessons in terms of the ownership and financing of football clubs in Germany and Spain; particularly with respect to their decision-making and accountability to fans.
FC Barcelona, its most recent performance in the Champions League notwithstanding, is regarded as the benchmark of what being a successful world class football club means.
The city, the capital of Catalonia, has always been fiercely independent; most especially in its resistance against fascist dictator General Franco during the Spanish Civil War.
Supporting FC Barcelona is to be part of its culture the social commitment of the club making the world a better place through reduction of poverty and improving opportunity.
It is a club that celebrates the inclusion of everyone which makes it such a great brand for sponsors who are willing to pay handsomely to be associated with such a virtuous organisation.
Significantly FC Barcelona is operated as a non-profit making collective and is owned and controlled by the 175,000 members who pay an annual membership fee who are able to vote on the election of the club's President every six years.
Ticket prices are much lower than those charged in this country and members have a level of influence which supporters of British clubs can only marvel at. This is achieved through a delegate assembly which is randomly selected and which scrutinises the club's accounts and must agree all major financial decisions.
What has been instrumental to success is that FC Barcelona is absolutely committed to development through cultivation of the youth team. Those with talent are attracted to want to become part of something which is more than simply a 'football team'.
Barcelona's greatest domestic footballing rival is Real Madrid. There is a political dimension to the rivalry which stems from the fact that it is the capital city where Franco was based. However, whilst some argue FC Barcelona is more glamorous - being located on the Mediterranean helps - Real Madrid is, in financial terms, even more successful.
But Real Madrid is like Barcelona in that it too is owned by its supporters who ensure it is operated in the best interests of the club. Its ability to be successful is based on its ability to attract the best players in the world. Even those who are largely uninterested in football know that it was the club David Beckham went to after leaving Manchester United.
Last week's Champions League wins by German teams were something of a shock to the two Spanish clubs that have come to enjoy dominance in what is regarded as the most difficult completion in the world to win.
However, given that the two teams won are also operated in the interests of the fans we should probably not be surprised.
The majority of teams playing in the Bundesliga, including Bayern Munich and Borussia Dortmund, operate on the basis of democracy and important decisions require a majority decision by its members. Like FC Barcelona and Real Madrid they are non-profit organisations.
There is a 50+1 rule which means that even though a wealthy investor can buy a stake in a German football team they cannot own more than 49% of the shares and gain overall control as has been the case in British clubs.
German fans enjoy seeing their teams play on a much more equal footing than has been the case in the English Premier League since the its inception just over twenty years ago. Fans also pay lower prices for tickets to watch their teams.
At least 60% of Bundesliga payers have been developed through the clubs' youth system which means that there is a higher likelihood of seeing indigenous talent. The comparable statistic for the English Premier League is less than 40%.
Given that the German and Spanish national teams have been so successful in recent years in the World and European Cups means that their clubs being largely made up of nationals must be a good thing.
What this would suggest is that there is much to be gained by any organisation which embraces values based upon being consensual and inculcating a culture in which all of the key stakeholders are consulted and encouraged to influence decisions.
As many commentators, most notably Will Hutton, assert, the way in which British football clubs have become either playthings or 'vehicles' for raising finance is typical of the way that many major companies are now operated.
Writing specifically about football in The Observer last January he emphatically made the point that our too much economy activity by investors in this country is based on their desire to gain short-term profits through liberal interpretation of financial rules and regulations.
Hutton also argues that such investors have no particular concern for the long-term needs of customers and most certainly not for the employees. One has only to look at the consequences of over-leveraged deals done by equity investors to see this.
Hutton has consistently argued the point that we more fully understand the way that German companies conduct business.
Rather than allowing buccaneering investors who are 'admired' for their willingness to take risks, the emphasis in German companies is on ensuring continuous development and improvement through attention to detail and expertise in implementing innovation.
Perhaps just how awful things have become was shown by last week's announcement by the Chair of the Commons Public Accounts Committee Margaret Hodge of serious concern that the four big accountancy firms have been engaged in what is considered to be a serious conflict of interest.
The fact that staff from Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers were seconded to assist the government in drawing up of taxation legislation and, on their return, are then allowed to provide advice (for a hefty fee naturally), to companies on how to legally exploit the laws is nothing short of a scandal.
Given that our own government has allowed this to happen it's hardly any wonder overseas investors see British companies as fair game for what Hutton describes as economic 'rent- seekers'.
Such investors are no different to the influx of super-rich owners of British football clubs and over-paid 'journeymen' players who care little for club history or tradition of for the importance of sustainable growth based on commitment of all involved, especially fans.
We should look at the success of German and Spanish football clubs to learn how we can develop a more inclusive culture that will provide the basis for a better economy in the future.
]]>But those LEPs are now suffering from a lack of confidence, confusion and short-termism, the all-party House of Commons Business, Innovation and Skills Select Committee warned last week in a hard hitting report which is well worth a read (you can read it here).
In particular, the funding of LEPs was sharply criticised in the Committee's report, which argues that this undermines efforts to revive the economy.
]]> LEPs have each been offered £500,000 over two years, after the government bizarrely initially failed to allocate any funding at all. But LEPs must first find 'matched funding', usually from very cash-strapped local authorities, and the allocation process to LEPs anyway takes no account of different needs, the report stresses:"Different LEPs face very different investment barriers. This makes a one-size fits all approach to their funding misguided; the minister (Michael Fallon)... failed to convince us otherwise when he appeared before us. In the future, the Government should consider funding allocations on a case by case basis".
The Committee urged ministers to set out funding for LEPs all the way through to 2020, to ensure they can drive "long-term growth". The Committee's Chair, Adrian Bailey, stated that "to do this, they require the confidence to make long-term investments. The current funding commitments fail to provide this".
He is quite right, and this is something I have been banging on about since LEPs were hastily set up back in 2010. It's good to see the Committee taking on board some of our arguments on this (indeed evidence presented by myself along with Gill Bentley at the Birmingham Business School was quoted in several places in the report).
The BIS Committee report also questions why responsibility for LEPS was spread across two different ministries - business and communities - a situation that had led to "confusion". Just one minister should be responsible for them, it states. That's quite right too, and goes back to a 'Yes Minister' style turf war between BIS and DCLG when RDAs were scrapped and LEPs created when the coalition government came in.
Furthermore, MPs questioned whether the government had been too "hands-off" by leaving LEPs largely to their own devices (for example, they were created in a bottom-up way and several - including that here in Birmingham - fail to match functional economic geography which was supposedly a key reason for setting them up in the first place).
The Committee argues that the government should from now on take a more active approach to monitoring LEPs and ensure that value for money is being achieved. That's a key point - if LEPs take on new responsibilities as is envisaged in the Heseltine Report their performance and use of taxpayers' money must democratically accountable. At the moment this is a key weakness.
As Bailey notes, "it is encouraging that LEPs agree they should be held to account. What is not encouraging is the current lack of any actual mechanisms by which to do so. LEPs have a significant impact on their local community; they would be failing if they did not. Despite this, the ability for the local community to scrutinise their performance is patchy.
"If LEPs are to be held accountable for their performance, measureable indicators of that performance are needed. And they are needed in a format easily understood by local communities.
"LEPs receive considerable amounts of public money from central government. Being free to react to local issues does not absolve them of accounting for how it is used. Value for money must be demonstrated.
Overall, key recommendations by the Committee include:
On the latter point, a single LEP for Greater Birmingham and the Black Country would surely make much more sense as one larger, harder-hitting body.
The Chancellor George Osborne recently backed Lord Heseltine's call for LEPs to be able to bid for larger 'single funding pots', and draw down powers from Whitehall. But Osborne has yet to say how much they will receive (probably far less than Heseltine's call for over £80bn a year) - probably somewhere "in the low billions" - and has anyway rowed back from either giving LEPs more control over infrastructure spending, or job and business support schemes, or reviewing LEPs' boundaries and governance structures.
Overall the BIS Committee's report is hard-hitting and spot on. The All-Party Committee has done a very thorough job in examining how LEPs are developing and the barriers to them supporting growth, and makes some important recommendations as to how LEPs can be charged up to deliver growth. The government needs to respond to this well-laid out critique.
Professor David Bailey work at Coventry University Business School
]]>This model, based on the work of Harvard Professors Carmen Reinhart and Kenneth Roghoff (who used to be the Chief Economist at the International Monetary Fund), was believed to demonstrate that once public debt exceeds 90% of GDP any growth slows down dramatically.
For those who wish to impose austerity as the justification for cutting public expenditure Reinhart and Roghoff's research was academic validation. Who could argue with a model that was based on sound logic and valid data.
In their 2009 book This Time It's Different (published by Princeton University Press) drew upon extensive historical research to prove the fallacy of increased borrowing.
]]> In particular Reinhart and Roghoff used two centuries of public-debt data from sixty six countries to demonstrate that up to the point where debt reaches 90% of GDP there is no discernible impact of growth but that after this it shrinks very dramatically.Significantly Reinhart and Roghoff explained in their book that their research showed that over the period 1790 to 2009 the reduction in growth is from an average of 3% to 1.7% but that only post-war data is used the reduction in economic growth is even more dramatic; from 3% to -0.1%.
Their book was seminal and endorsed by many other eminent economists who gushingly wrote in admiration of the basis of Reinhart and Roghoff's thesis that all previous crises were very different and because 'this time it is different' radical action is required to reduce debt in order to save economies from even worse consequences.
In January 2010 at the annual meeting of the American Economic Association Reinhart and Roghoff presented a follow paper titled 'Growth in Time of Debt' which was supposedly based on twenty countries and only on data from after the second world war which re-emphasised the message that excessive public debt causes a decline in growth.
For right wingers in America, this message was seen as a great way to condemn the policies of President Obama. Despite the evidence to the contrary, they argued that his economic policies based on Keynesian investment were completely wrong.
Obama's belief in investment in US manufacturing and infrastructure allied to better education for all children and a more pragmatic immigration system was condemned as socialism (and worse).
However, the fact that there has been almost three years of consecutive growth and job creation resulting in over 6 million vacancies being created would not matter. The critics would point to the academic research carried out by Reinhart and Roghoff as the warning of what was likely to eventually occur.
The trouble is, the work carried out by Reinhart and Roghoff has been found to be incorrect.
As has been widely reported in the last week, two professors at the University of Massachusetts Amherst, Michael Ash and Robert Pollin had set their students the task of reviewing an academic paper and were encouraged to try and use the methodology to attempt to operationalise whatever model they contained.
When Thomas Herndon selected 'Growth in a Time of Debt' he could hardly have imagined that his inability to produce the same results as its authors would lead to it being debunked for having excluded five of the countries with high public debt that Reinhart and Roghoff had claimed to have based their research on; Australia, Austria, Belgium, Canada and Denmark.
Herndon could not replicate the original results and with his tutors Ash and Polllin became frustrated. Sensibly they asked the authors of this paper, Reinhart and Roghoff, to provide the student with the actual spreadsheet that had been used to produce their findings.
As well Herndon discovering the omission of the five countries, Ash and Pollin also found that data for some countries was omitted which skewed the results.
Additionally the way that averaging was carried out placed more emphasis on some countries than others. For instance, in the case of New Zealand one year (1951) was used which had a growth of -8% and given the same weighting as the UK's twenty years of high debt when achieving 2.5% growth.
To be fair, the reworking that has been carried out by Herndon, Ash and Pollin, which they have published as a draft paper, shows that high levels of debt still undermine potential growth but that the relationship is not as strongly correlated as suggested by Reinhart and Roghoff.
Unsurprisingly there has been much opprobrium heaped on economic theory in general and the work of Reinhart and Rogoff in particular: For example, writing in The Guardian last week, Heidi Moore stated that what this shows is that we place too much trust in economic theory and that whilst it is a 'useful science' it is based on 'educated guesses'.
More especially, she contends, it is not only infallible but an 'unreliable policy tool'.
Others have taken the opportunity to voice their concerns; most notably influential thinker Paul Krugman. As he believes, though Reinhart and Rogoff have admitted to mistakes, he thinks that they are blinded by their belief that high debt is the sole cause of reduced growth.
Other economists are now clamouring to proclaim that they either had doubts though few can lay claim to having predicted the collapse of the sub-prime housing market which led to the world financial crisis as did American economist Nouriel Roubini.
Indeed, Krugman describes how he carries out a replication of the Reinhart and Rogoff research for the period 1950-2007 and uses G7 countries. However, even though he finds that there is an 'association between high debt and slow growth' in certain countries the relationship is the other way around:
"Britain didn't seem to suffer much from its high debt in the 1950s. And it's quite clear from the history that both Italy and (especially) Japan ran up high debts as a consequence of their growth slowdowns, not the other way around."
Mike Konczal in his blog criticises the belief that all countries can be compared in a like-for-like basis. He believes that the notion that there is a 'stable relationship between debt and growth across time and places, independent of weak economies, is now behind us.'
Moreover, Konczal asserts , there is a very serious need to reconsider the value of austerity and argues that in many countries, including this one, it was 'oversold' as a way to revive economies and that its 'toxic side effects' have been all-too conveniently ignored.
Krugman like other economists conclude that the stakes are too high and that better analysis and research is required.
There are key lessons to emerge from the rubbishing of Reinhart and Rogoff's research.
It would appear that there is too much expectation on academic economists to be able to prove that there is something definite occurring. In that sense economists are not exceptional in the need to comply with the tenets of scientific endeavour (and method).
There is a need for sense to prevail and that it is incumbent on all researchers to see what is really happening rather than seeing what is convenient or fits the particular thesis.
As some have sensibly pointed out, just because Reinhart and Rogoff's research, which fitted with the current political belief in austerity, and has signally been shown to be based on questionable research, doesn't necessarily mean that research sympathetic to Keynesian perspectives should be regarded as being superior.
Our lives are dominated by economics and there is an understandable desire for academics and experts to present theory (explanation) which will assist in producing economic growth.
As such there is no absolutely definitive answer to the question I pose in the title of this blog.
Perhaps the best that can be said is that all economic theory should be treated with extreme caution.
]]>Figures from the Office for National Statistics (see here) show government borrowing falling from £120.9 billion in 2011-12 to £86.2 billion in 2012-13.
But the latter 2012-13 figure was lowered by £28 billion by the Royal Mail pension transfer, and another £6.4 billion through the cash transferred to the Treasury from the Bank of England's Asset Purchase Facility.
Take out these two artificial factors and borrowing for 2012-13 came in at £120.6 billion. OK, that is just lower than the 2011-12 figure, but only just, at just £300 million less, or 0.3% less.
Either way, deficit reduction has effectively stalled, despite the austerity drive, and it has stalled because the flatlining economy means that tax revenues aren't as high as expected. (And by the way, public sector net debt rose about 7% over the year to £1,185.8bn in 2012-13, or around 75% of GDP).
Of course as with the GDP figures, these initial deficit figures may be revised up or down. In fact from an economic point of view whether the deficit is slightly up or down on 2011-12 is utterly irrelevant - as the Institute for Fiscal Studies rightly noted last week (see here).
"either way the bigger picture is the same: the Government has implemented a combination of tax rises, welfare spending cuts and cuts to spending on public services and brought about a reduction in the deficit between 2009-10 and 2011-12. However, while 2012-13 also saw further austerity measures being implemented, weak economic performance has meant that the deficit was largely unchanged from its 2011-12 level. The same is forecast to be true in the current financial year: the OBR's forecast is that borrowing will fall by just £0.9 billion to £120 billion in 2013-14. This would leave the deficit largely unchanged for three years".
While politically a huge relief for Osborne, the economically reality is that deficit reduction has stalled because of the weak economy. After falling by a quarter in cash terms between 2009-10 and 2011-12, borrowing was the same last year as the year before, and is forecast to be about the same again in 2013-14.
As a number of commentators have noted, the government ran an underlying deficit of around 8% of GDP last year. And remember that the initial efforts by the Office for Budget Responsibility back in 2010 forecast borrowing for 2012-13 of just £89bn. Instead it has come in at £120.6m leaving aside one-off transactions - some £31.6bn higher than initially forecast.
The deficit news came after a dismal few weeks for the Chancellor George Osborne, with another ratings agency downgrading the UK's AAA credit rating (despite the Chancellor having made it the centrepiece of his economic policy), the Chief Economist of the International Monetary Fund urging him to rethink his austerity measures, and figures showing unemployment rising.
On Thursday, initial GDP figures will show whether or not the UK economy has slid back into a 'triple dip' recession or not.
As with the deficit figures, whether it has or not will be politically very significant. But from an economic point of view, the key point is that the economy is anyway flatlining.
Professor David Bailey works at Coventry University Business School
Indeed, the Chinese visitor to Berlin today would feel quickly at home. The process of reconnecting Berlin since the fall of the Wall and reunification over the last twenty years has created broad boulevards and huge open spaces within the City that echo those across China's cities. The concentrations of tower cranes in key locations confirm the fact that that process is continuing and maybe even accelerating. The contemporary Chinese mind set tends to see a city as a process in a continual state of revision.
( Given which it felt good to pick up a group of Chinese visitors at Birmingham Airport recently ( they had flown from China to Frankfurt and then to Birmingham - but I assured them, a direct link into Birmingham may not be too far away). The enabling works for the runway were pointed out. As was in due course the progress at New Street. China only seems to comprehend change - and the change you are delivering now may underpin their confidence that the next wave of change you aspire to, will actually happen.)
Returning to German-Chinese commercial connections, the automotive sector has always been at their core with VW collaborating with SAIC since 1984. Here in the UK, according to the China Britain Business Council, the sector accounts for some 30% of our current exports to China so a German perception on the future on international car markets in China might be of particular interest. Right on schedule with the opening of the Shanghai Auto Show this week, Berliner Zeituing produced an article with the intriguing title ' The train of lemmings'. The piece concentrated on the prospects for the premium brand market and for the SUV segement which is of course the precise area where JLR are making their own push.
The commitment of the German manufacturers to China is massive and increasing. BMW opened a new plant with partners Brilliance last year with a capacity for some 400,000 vehicles - and a focus on a new SUV to the Chinese market. VW announced in Shanghai that they will invest some ten billion euros in China in the next three years with an Audi SUV one of the principal focuses of that spend. Mercedes is beefing up its dealership network with n emphasis on urban centres away from the coastal hotspots which have been poorly served to date.
The reference to lemmings in the headline however underlines the notion that there is risk that is associated with these developments. The headlong rush into China is driven by a market still expected to grow rapidly - and to expand ahead of the national GDP targets even if these are lower than in the last decade or so.
The 'cliff' that the lemmings may be confronted with arises from the increasing desire of the Chinese government to retain spending within the domestic economy. At one level unofficial campaigns have seen German manufacturers accused of using insulation materials that have emitted toxic fumes.
At a more strategic level, the next few years will inevitably see a range of policies being implemented in China which seek to bear down on atmospheric pollution and on the contribution that the internal combustion engine makes to this problem. The smog that blanketed Beijing and Shanghai at the beginning of this year brought promises from the incoming administration to tackle the issue. There have also been public commitments to address the grave disparities of wealth within China - of which the gas-guzzling foreign vehicles driven by the elite are unavoidable evidence shining on every urban freeway.
One future scenario sees the possibility of only allowing hybrid and similar vehicles into the urban centres and of tax and subsidy policies that look to drive consumers to lower emission vehicles. Berlin Zeitung even speculates that a combination of support for local producers and environmental control could even bring the unimagined possibility of price war in the premium car market.
Germany will no doubt hope that its 'plum blossom' strategy will continue to pay off - what however will be the implications for newer entrants ?
But what was most noticeable for me was how the Chancellor's budget measures to stimulate the housing market were already seen to be unravelling, reminiscent of the caravan-pasty tax 'omnishambles' of last year.
And a recent report on the Budget by the influential Commons Treasury Select Committee has come to pretty much the same conclusion, warning that Osborne's measures risk stoking up a housing price bubble and could potentially leave taxpayers exposed to a house price downturn if in the future mortgage lenders get tough on borrowers and repossessions rise.
That report can be read here
The Committee highlights 19 "outstanding questions" and offers "advice" to the government to seek a second opinion from specialists at the Bank of England. The committee's main critique is over the unintended consequences potentially arising from the Help to Buy scheme.
In particular, it notes that the package effectively gives the Treasury "a financial interest in maintaining house prices to limit the losses to the taxpayer" with the effect of making the housing support measures permanent.
George Osborne rejected this criticism, arguing that the measure was "time-limited scheme and I have given the key to its continued operation to the Bank of England financial policy committee. It can turn the key off in the next parliament." But the Treasury Select Committee was unimpressed, arguing that such a decision should rest with politicians.
The Committee went on to point out that "it is by no means clear that a scheme whose primary outcome may be to support house prices will ultimately be in the interests of first-time buyers."
Critically, the Select Committee found no evidence that the package would actually boost the building of new homes, noting that "if the government's priority was housing supply, its housing measures should have concentrated there."
Overall the Committee's report notes "it is a reflection of the need to think schemes through carefully before announcing them." Ouch. Maybe it would have better if Help to Buy had never been announced in the first place.
Leaving the Committee's report aside, 'Help to Buy' policy in fact really appears designed to boost prices, make people feel good, and to boost debt-fuelled spending in the economy. Surely that risks pushing the UK economy back into the same debt-fuelled consumption binge it 'enjoyed' before the credit crunch unfolded? And so much for 'rebalancing' the economy.
Far better would be to boost the construction of social housing through local authorities and housing associations. That, however, would call for more borrowing so as to build. Osborne of course can't do that as he painted himself into a fiscal corner and is unwilling to listen to the growing chorus of voices - the IMF included - urging that his austerity measures should be slowed down.
All in all, 'Help to Buy' seems destined to become a classic case study in how not to do economic policy.
Professor David Bailey works at Coventry University Business School
The trade talks were officially launched in February. According to Commission President Jose Manuel Barroso, "a future deal between the world's two most important economic powers will be a game-changer, giving a strong boost to our economies on both sides of the Atlantic."
However, civil rights groups on both sides of the Atlantic are anxious that any trade deal excludes any provisions related to patents, copyright, trademarks or other forms of IPR. The concern is the balance of power between the global corporates and the individual, not only in areas such as medicine and clean tech but also in the realms of open internet access and a world where it is extremely easy to inadvertently infringe copyright.
This issue has been rumbling on for some time; it was only last summer that the European Parliament refused to ratify the Anti-Counterfeiting Trade Agreement (ACTA), which aimed to clamp down on counterfeiting and copyright infringement.
On the other hand, the US has been keen to ensure sufficient global protection for US intellectual property, and the suspicions are that it will try and use the trade talks to revive aspects of the ACTA treaty.
But if there are concerns on this side of the Atlantic of hidden agendas, the US negotiators will be equally wary of EU machinations in the related area of data protection.
The European Commission has formed the view that the EU's current data protection rules no longer meet the needs of a digital age, and has proposed a major overhaul.
Part of the reform package is a draft EU Regulation, which will apply in both domestic and cross border transfers of data, and will catch US companies dealing in Europe and holding the personal data of EU citizens. The draft Regulation is wide in scope, giving individuals easier access to their own data, the ability to transfer it from one service provider to another, and the right "to be forgotten". These enhanced rights are complemented by much greater enforcement powers.
US tech companies, including the likes of Google and Facebook, have been lobbying fiercely. A key concern is that this package of measures will introduce more red tape and cost; that it fails to maintain the balance between protecting civil liberties on the one hand, and allowing economic growth and innovation on the other, by being too prescriptive as to how businesses should comply to ensure rights of individuals are protected.
These trade talks are clearly going to be tricky, and Angela Merkel has perhaps been persuaded that the Brits and their 'special relationship' might turn out to be useful members of the 'team Europe' negotiation team (not least because the UK has raised its own objections to the draft Data Protection Regulation some of which are shared by Germany).
No surprise, therefore, to see Mr and Mrs Cameron and the kids get the special Schloss treatment last week.
The debate about the change she created will continue and historians will present their considered views about long-term effects.
What is a fact is that she was prime minister in October 1986 when so called 'Big Bang' occurred; the deregulation of the financial markets operating in the City of London.
It is worth stating that Mrs. Thatcher and her government's desire to deregulate the City of London institutions was borne of a belief that they would be able to operate more competitively against other world centres of finance - most especially New York - which enjoyed much greater freedom.
As many commentators have argued in recent days, this very deregulation set in motion the circumstances that led to the financial crisis more commonly known as the 'Credit Crunch'.
]]> Interestingly, Margareta Pagano writing in The Independent over the weekend whilst acknowledging that deregulation certainly occurred under Mrs. Thatcher, the more recent consequences of the ludicrous ambitions of financial institutions should be blamed on politicians who are still with us.Indeed, she explains, she recalls a meeting in 1995 that was attended by Mrs. Thatcher when she was quite explicit in her condemnation of her view that there was too much "lax lending" and that executives were paid "sky-high salaries."
Such criticisms could certainly have been made ten years later and many would contend that even after the problems caused by the financial crisis executive salaries in banks and other financial organisations are still far too high.
However, Pagano makes clear her belief that blaming Mrs. Thatcher for events that occurred years after she left office is 'lazy and wrong'; she uses the analogy of blaming Alexander Fleming who discovered penicillin for all current drug misuse.
Pagano makes clear her belief that deregulation was intended to make capital more available to fund all economic activity including, it would be assumed, industry with good prospects.
As we know, things didn't quite work out like that and, as Pagano states, 'British [financial] firms sold their souls to American banks,' which, she argues, created a culture of greed.
This culture, Pagano believes, once created took hold and despite what some in the Labour Party may argue, was allowed to continue right up to the point when it was realised that the system was doomed to failure in 2007:
"Mr Brown and Ed Balls were as gung-ho as any red-blooded free marketers to gobble up the tax take being laid by the City's golden goose to pernicious effect; corporatism took over from enterprise."
The fact that the recently abolished Financial Standards Authority was entirely supine undoubtedly allowed the ludicrous decisions which created the financial 'meltdown' we saw in 2007.
If Mrs. Thatcher believed that we would all become actively involved in the running of business through increased share ownership this clearly has not happened and society is now more divided in terms of opportunities and, of course, wealth, than when she came to power in 1979.
Looking back won't solve the problems of today.
We need solutions that will mend the problems and ensure that our future is based on a better way of ensuring financial support will get to those businesses that will create the economic growth we so desperately need to get out of the crisis we are in.
Therefore it is interesting to consider the analysis and recommendations contained in two recently published books; How Do We Fix This Mess? which is written by BBC Business Editor Robert Peston with Lawrence Knight and The Bankers' New Clothes which is co-authored by economists Anat Admati and Martin Hellwig.
Both of these books are critical about the way in which banks have behaved in the past.
Significantly both believe that unless we are willing to be much braver about radically altering the way in money is used to fund investment in activities that are genuinely about creating a sustainable economy we will continue to be at risk of another catastrophe.
The messages in Peston's book are probably well known to us; the hubris of bankers who believed that they could create the financial products (derivatives).
As Warren Buffet once famously presciently stated before the crisis of 2007, these products were the weapons of financial mass destruction.
Like drug dealers the bankers mixed good and bad debt so that, I suspect, even many of the bankers were sure what was what. Besides, they were doing well out of the bonus culture that had been commenced by deregulation in 1986.
Why would any insiders say anything that would kill the 'golden goose' that was making them all so wealthy? The unsold property in many European countries is the legacy of the lending fuelled by this toxic finance.
The conclusions of Peston and Knight's book are not surprising; more regulation and better leadership. That in some ways is the 'easy part'.
They believe that as a country we are in for years of hardship and that whatever any party may suggest the good times will not return anytime soon.
Austerity is here to stay.
Admati and Hellwig's book is controversial in that it argues that banks still don't have sufficient capital and that this will result in another financial crisis.
They believe that bankers have been too keen to take the money given to them as part of 'quantitative easing' and hope that we will forget the chaos that their actions wrought on economies throughout the world in the last five years.
Moreover, they believe that banks are too complacent in their view that governments will, using taxpayers' (our) money will bail them out again if there is a crisis.
Instead, Admati and Hellwig contend, the current capital level requirement is too low and that they should hold between 20-30% thus if there is any risk it is with their own money not ours.
They make the point that if a bank cannot raise this level of capital then it is probably not viable and should not be kept afloat by taxpayers.
So the central thesis of both these books as well as many others, most notably, as in the report by the parliamentary commission on banking standards and from Andy Haldane of The Bank of England is that reform is urgently needed through regulation.
The clamour for change is needed but, unsurprisingly, resisted by the bankers.
Fixing banks is, of course, simply the first crucial step to ensuring we achieve economic recovery. The reforms commenced in the 1980s which were heralded to lead to long-term improvement have not achieved the desired aim; productivity is not improving and there is increasing poverty and inequality.
Writing in The Observer at the weekend Will Hutton made the point that despite the fact that the pound has fallen by 20% in real terms over the last five years, exporters are unable to take advantage:
"Britain's trade deficit in goods climbed to 6.9% of GDP in 2012 - the highest since 1948 - and February's numbers were cataclysmically bad. Britain simply does not have enough companies creating goods and even services that the rest of the world wants to buy, despite devaluation."
The latest Quarterly Economic Survey for the Greater Birmingham and Solihull Local Enterprise Partnership for Q1 of 2013 which has recently been published by the Birmingham Chamber of Commerce Group and which is based on a survey of companies employing almost 19,000 workers provides mixed messages.
On the one hand there is a belief among the respondents that things are stabilising domestically. However, as far as confidence in the immediate prospects for growth in export markets there is less optimism.
As the report makes clear whilst exports by manufacturers from the 'wider West Midlands' have shown an a really healthy upward trend since 2009, doubling in value to £6 billion, the survey returns show fewer of them are reporting an increase in overseas sales and advance orders when compared to the previous quarter.
The statement that it is vital to ensure that exports by both manufacturers and service businesses continue to increase is axiomatic in terms of reducing the economic deficit.
There are a couple of things in the report which are especially noteworthy.
Whilst exports from the West Midlands may have been worth some £6 billion, imports were almost £8billion and when we are compared to the picture nationally we 'fall[ing] short'.
The report also identifies the skills gap that exists in the West Midlands. When compared to the rest if the UK we have a smaller proportion of skilled workers; 26% and 31% respectively.
Even though all regions need to improve training and education to increase the number and competence of skilled workers, addressing this deficit in this region is vital.
Some argue that urgent and radical reforms are required in the way we view ownership and funding.
A good example is Conservative George Freeman who argues that there is a need for wider state ownership in order to ensure that we get the services we deserve.
Apparently he is not averse to cooperatives or mutual societies.
Crucially any local activity needs a sympathetic system of finance to support investment in creating the goods and services that are essential to increasing exports.
Being able to develop such a system would require radical change and some really adventurous thinking and intervention.
As such we might see a return of the West Midlands as a manufacturing hub that it used to after the industrial revolution until its decline from the 1970s onwards.
Having heard Lord Heseltine speak on a number of occasions in the last twelve months since he commenced work on his report No Stone Unturned,
I believe that such a renaissance is entirely in line with his vision of how economic growth can be achieved in the regions.
Implementing such reforms guarantees nothing but they might just get us out of the current crisis.
Alternatively we could simply do what we are already doing and continue to 'bump along the bottom' and enjoy dismal economic growth (if at all) and experience increasing inequality.
This, I suggest, is not a terribly impressive strategy for growth.
]]>Let's begin with eating Chinese food. Anyone who has ever dined in China - or eating here with Chinese friends knows too well that ordering a meal turns into a fairly intense debate between waiter and host. Essentially the staff are subject to a viva examination that even in some of our ancient universities would readily earn a doctoral degree.
Why is it all so intense ? I asked one of our party. Well for us food is really important she said. Whereas for you people all it seems to be is fuel.
Second perhaps there is the issue of REAL Chinese food. If you haven't been to China yourself, those acquaintances you may have who have made the long haul there and back will readily and rather more than a little condescendingly let you know that what you have been eating here isn't REAL Chinese food. And the difference ?
Well, when it comes to meat for example we tend to just consume the outsides of animals - the bits nearest the surface as it were. The Chinese by way of a contrast eat all of the way through the beast - and other odd left over bits too. Chicken feet and ducks tongues on one more memorable occasion for me. To be fair we have all come to realisehere that if we are grazing at the value end of the supermarket food chain we are eating - unbeknownst - unusual corners of some more unusual animals. In China these bits feature full frontal - as it were - on the menu.
Chinese people eating Western food here is - if I may mix a further culinary metaphor - quite a different kettle of fish. But before I go there I must relate the visit to a self-styled 'Western' restaurant, which a Chinese colleague treated me to in Beijing a little while ago. A very well done and tender piece of beef was served with a few - not immediately placeable - vegetable adornments. Chinese it wasn't but while wholly palatable its precise geographic provenance was a tad problematic.
Eating 'western' here in Birmingham with my Chinese friends stirred memories of the sketch from the series Goodness Gracious Me from a decade or so ago. The one that featured a bunch of slightly tipsy Indian yuppies dare-deviling each other to go for an 'English' after a night on the razzle and then challenging their waiter to test them with the blandest mix the chef could concoct.
My own experience was like that then twisted through a further ninety degrees of the surreal. The restaurant we choose was one of those serving a range of Italian, Greek. Tex-mex and more. I found myself cataloging the characteristics of risotto, hummus, burrito, moussaka and a range of other delights - just as I have had Chinese dishes explained to me over the years.
Faced with this quite bewildering array of the interesting and unknown my friends responded with an approach that maybe encapsulated the very core of Chinese genius. They ordered an array of different things ( steak and chips, a pasta pomadoro, sesame salmon, nachos) and then proceeded to pick collectively from the range - just as they would have dome with a spread of Chinese food, A rotating centrepiece to the table would have been a bit of a boon but they managed just fine. Somewhere in that meal is a metaphor which will explain why China might well rule the globe within fifty years time. - ie we will take whatever you have to offer and then re-organise it precisely the way that best suits us and with which we are most comfortable.
Returning to our upright English friend from the first paragraph clutching his pint among a crowd of similar chaps there is very good reason why any Englishman (or woman) should drink standing up at least while in China.
It's because he ( or she) risks finding to their grievous cost that after having exchanged the inevitable sequence of toasts, their legs fail to function to the extent that rising from a seated position in simply and embarrassingly impossible for them. No standing on ceremony to be sure. 乾杯 - Gānbē