The (im)morality of markets

How "Hedge Fund Hugh" manages to defend the indefensible.

Hugh Hendry, an engagingly straightforward hedge-fund manager, made another appearance on Newsnight last night -- he's been on before, holding his own rather well against Joseph Stiglitz (or "Joe" Stiglitz, as I noted Ken Clarke called him during the recent Any Questions he appeared on with Mehdi).

Hendry was being attacked by Poul Rasmussen, president of the Party of European Socialists and the driving force behind proposals to limit the activities of hedge funds. Rasmussen said that the way Hendry and his ilk had affected the price of government debts -- Greece's in particular -- was not "democratically acceptable", that they were hurting innocent people by their actions and making structural problems worse.

One's natural sympathy was on the side of Rasmussen. It is very hard to see any merit in the kind of international speculation that made George Soros, for instance, so rich -- which is why I have always been bemused that a man whose wealth and prominence derives from the misfortune of others should be treated with such respect.

But Hendry did a very good job of making himself out as the one who was behaving morally. "If Greece reforms its behaviour, then speculation against it will be profitless," he said, quite truthfully. "I'm trying to save us putting more money into this black hole which is Greece's economy."

Newsnight's reporter Justin Rowlatt had asked him earlier in the programme, with some incredulity: "So are you saying you're providing us with a social service?"

Hendry could see this one coming, but replied: "Maybe I'm naive, maybe I'm foolish, but I believe that I'm the guard dog of the capitalist system." Greece had been caught "cheating", he said -- a statement with which I don't think anyone can disagree -- and was now paying the price.

My point is this: to me Hendry, was the far more convincing guest, because his argument was totally consistent. The "morality" he believes to be contained within the market is the one which is now doling out punishment to Greece, and deservedly so, he would say.

I suspect that Rasmussen does not believe that markets are in any way "moral" at all. Indeed, if he thinks that they are by their very nature cruel and immoral, I would agree with him. He probably regards market economies as necessary, but not virtuous.

Why then, however, would he expect people who really do believe in the market to abide by his moral values? If you sup with the devil . . .

You can find the whole report and the exchange that followed on BBC iPlayer, about 20 minutes in. It's well worth a look. Even if you don't agree with him, I think you'd have to admit that the aforementioned devil has a remarkably good advocate in Hendry.

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Sholto Byrnes is a Contributing Editor to the New Statesman
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The 5 things the Tories aren't telling you about their manifesto

Turns out the NHS is something you really have to pay for after all. 

When Theresa May launched the Conservative 2017 manifesto, she borrowed the most popular policies from across the political spectrum. Some anti-immigrant rhetoric? Some strong action on rip-off energy firms? The message is clear - you can have it all if you vote Tory.

But can you? The respected thinktank the Institute for Fiscal Studies has now been through the manifesto with a fine tooth comb, and it turns out there are some things the Tory manifesto just doesn't mention...

1. How budgeting works

They say: "a balanced budget by the middle of the next decade"

What they don't say: The Conservatives don't talk very much about new taxes or spending commitments in the manifesto. But the IFS argues that balancing the budget "would likely require more spending cuts or tax rises even beyond the end of the next parliament."

2. How this isn't the end of austerity

They say: "We will always be guided by what matters to the ordinary, working families of this nation."

What they don't say: The manifesto does not backtrack on existing planned cuts to working-age welfare benefits. According to the IFS, these cuts will "reduce the incomes of the lowest income working age households significantly – and by more than the cuts seen since 2010".

3. Why some policies don't make a difference

They say: "The Triple Lock has worked: it is now time to set pensions on an even course."

What they don't say: The argument behind scrapping the "triple lock" on pensions is that it provides an unneccessarily generous subsidy to pensioners (including superbly wealthy ones) at the expense of the taxpayer.

However, the IFS found that the Conservatives' proposed solution - a "double lock" which rises with earnings or inflation - will cost the taxpayer just as much over the coming Parliament. After all, Brexit has caused a drop in the value of sterling, which is now causing price inflation...

4. That healthcare can't be done cheap

They say: "The next Conservative government will give the NHS the resources it needs."

What they don't say: The £8bn more promised for the NHS over the next five years is a continuation of underinvestment in the NHS. The IFS says: "Conservative plans for NHS spending look very tight indeed and may well be undeliverable."

5. Cutting immigration costs us

They say: "We will therefore establish an immigration policy that allows us to reduce and control the number of people who come to Britain from the European Union, while still allowing us to attract the skilled workers our economy needs." 

What they don't say: The Office for Budget Responsibility has already calculated that lower immigration as a result of the Brexit vote could reduce tax revenues by £6bn a year in four years' time. The IFS calculates that getting net immigration down to the tens of thousands, as the Tories pledge, could double that loss.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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