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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Richmond is a wake-up call for Labour's Brexit strategy

No one made Labour stand in Richmond Park. 

Oh, Labour Party. There was a way through.

No one made you stand in Richmond Park. You could have "struck a blow against the government", you could have shared the Lib Dem success. Instead, you lost both your dignity and your deposit. And to cap it all (Christian Wolmar, take a bow) you self-nominated for a Nobel Prize for Mansplaining.

It’s like the party strategist is locked in the bowels of HQ, endlessly looping in reverse Olivia Newton John’s "Making a Good Thing Better".

And no one can think that today marks the end of the party’s problems on Brexit.

But the thing is: there’s no need to Labour on. You can fix it.

Set the government some tests. Table some amendments: “The government shall negotiate having regard to…”

  • What would be good for our economy (boost investment, trade and jobs).
  • What would enhance fairness (help individuals and communities who have missed out over the last decades).
  • What would deliver sovereignty (magnify our democratic control over our destiny).
  • What would improve finances (what Brexit makes us better off, individually and collectively). 

And say that, if the government does not meet those tests, the Labour party will not support the Article 50 deal. You’ll take some pain today – but no matter, the general election is not for years. And if the tests are well crafted they will be easy to defend.

Then wait for the negotiations to conclude. If in 2019, Boris Johnson returns bearing cake for all, if the tests are achieved, Labour will, and rightly, support the government’s Brexit deal. There will be no second referendum. And MPs in Leave voting constituencies will bear no Brexit penalty at the polls.

But if he returns with thin gruel? If the economy has tanked, if inflation is rising and living standards have slumped, and the deficit has ballooned – what then? The only winners will be door manufacturers. Across the country they will be hard at work replacing those kicked down at constituency offices by voters demanding a fix. Labour will be joined in rejecting the deal from all across the floor: Labour will have shown the way.

Because the party reads the electorate today as wanting Brexit, it concludes it must deliver it. But, even for those who think a politician’s job is to channel the electorate, this thinking discloses an error in logic. The task is not to read the political dynamic of today. It is to position itself for the dynamic when it matters - at the next general election

And by setting some economic tests for a good Brexit, Labour can buy an option on that for free.

An earlier version of this argument appeared on Jolyon Maugham's blog Waiting For Tax.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.