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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Why Theresa May can't end speculation of an early general election

Both Conservative and Labour MPs regard a contest next year as the solution to their problems. 

One of Theresa May’s first acts as a Conservative leadership candidate was to rule out an early general election. After a tumultuous 2015 contest and the EU referendum, her view was that the country required a period of stability (a view shared by voters). Many newly-elected Tory MPs, fearful of a Brexit-inspired Ukip or Liberal Democrat surge, supported her on this condition.

After entering Downing Street, May reaffirmed her stance. “The Prime Minister could not have been clearer,” a senior source told me. “There won’t be an early election.” Maintaining this pledge is an important part of May’s straight-talking image.

But though No.10 has wisely avoided publicly contemplating an election (unlike Gordon Brown), the question refuses to die. The Conservatives have a majority of just 12 - the smallest of any single-party government since 1974 - and, as David Cameron found, legislative defeats almost inevitably follow. May’s vow to lift the ban on new grammar schools looks to many like an unachievable task. Former education secretary Nicky Morgan and former business minister Anna Soubry are among the Tories leading the charge against the measure (which did not feature in the 2015 Conservative manifesto).  

To this problem, an early election appears to be the solution. The Tories retain a substantial opinion poll lead over Labour, the most divided opposition in recent history. An election victory would give May the mandate for new policies that she presently lacks.

“I don’t believe Theresa May wishes to hold an early election which there is evidence that the country doesn’t want and which, given the current state of the Labour Party, might be seen as opportunistic,” Nigel Lawson told today’s Times“If, however, the government were to find that it couldn’t get its legislation through the House of Commons, then a wholly new situation would arise.”

It is not only Conservatives who are keeping the possibility of an early election alive. Many Labour MPs are pleading for one in the belief that it would end Jeremy Corbyn’s leadership. An early contest would also pre-empt the boundary changes planned in 2018, which are forecast to cost the party 23 seats.

For Corbyn, the possibility of an election is a vital means of disciplining MPs. Allies also hope that the failed revolt against his leadership, which Labour members blame for the party’s unpopularity, would allow him to remain leader even if defeated.

Unlike her predecessors, May faces the obstacle of the Fixed-Term Parliaments Act (under which the next election will be on 7 May 2020). Yet it is not an insurmountable one. The legislation can be suspended with the backing of two-thirds of MPs, or through a vote of no confidence in the government. Alternatively, the act could simply be repealed or amended. Labour and the Liberal Democrats, who have demanded an early election, would struggle to resist May if she called their bluff.

To many, it simply looks like an offer too good to refuse. Which is why, however hard May swats this fly, it will keep coming back. 

George Eaton is political editor of the New Statesman.