Yesterday, I attended a talk on the theme of our natural resource legacy by economist Paul Collier. He questioned the ethics of depleting resources in order to produce other goods- “our children’s children are unlikely to be impressed when we offer them computer games instead of fish stocks” he mused. He even managed to work in a good natured dig at Goldman, which made me think about another of our legacies: the UK’s economic environment. Now, we all know everyone hates bankers at the moment. Allister Heath reminds us that Osborne will use tonight’s Mansion House address to indulge in a little more “banker-bashing”.Traffic wardens, divorce lawyers and tabloid journalists have never slept so well. Everything that can’t be blamed upon the financial services must be the fault of the credit rating agencies and anything else is BP’s fault. In fact it’s becoming increasingly difficult to find someone who makes money who isn’t despised by the general public. But is all this hatred really such a good idea? Will our children’s children really thank us, and our politicians, for making life so difficult for big business in the UK? Is hammering people with new regulatory hurdles, higher capital gains tax (CGT) and the constant threat of new rules and scrutiny really such a good idea? I rather suspect not and here’s why.
Another esteemed economist, Paul Romer, is promoting a new approach to development: Charter Cities. The idea is for underdeveloped countries to set up new cities with business friendly regulatory environments and low taxation to attract investment and labour. Modeled on the development success stories of Hong Kong and Singapore, the concept is radical, inspirational and might just work. So, considering our resentment for all things financial why don’t we set up a Charter City- City of Bankers – in Canary Wharf? All the fat cats who spend their time smoking Cuban cigars (hand rolled by 5 year olds), buying porches, and generally ruining “our” economy could move there in voluntary exile to enjoy the business friendly environment and the absence of bureaucrats. We, on the other hand, would get to inhabit a London free of corrupt and greedy businessmen and get on with enjoying the finer things in life: eating organic produce and drinking carbon-neutral water.
Of course, the answer is fairly obvious. Really we want, in fact we need, the financial sector and big business to stay. Not only do we appreciate the services, jobs and tax revenues, but we also enjoy the talent, capital and ideas they attract from across the globe that afford us the cosmopolitan quality of life most of us relish. London and the UK became prosperous and successful by embracing business and industry, not by obstructing it.
The typical response to these concerns is that big businesses wont just up and leave- London is London, its where everyone wants to be! Maybe. But maybe not forever. London is the financial capital of the world by design, not default, and we’re not talking about today’s businesses, but tomorrow’s. Established companies may linger, but the new ones will locate wherever they believe they will make the most money. While London remains the place to be, all is well and good, but for those politicians (unfortunately there are many within the Lib Dem ranks) who remain intent upon scoring cheap points at businesses’ expense- be careful what you wish for! One day our children may talk of setting up a Charter City, not in jest, but in an attempt to entice those we currently love to bash to come back.