Ed the unread

So, one of the big ideas of this Labour leadership is to use regulation and the tax regime to distinguish between the good and bad businesses.  It may initially sound good but the obvious question is, 'How?'

Private Equity companies do not go into their business to take out the capital and then sell off an ailing business - that would be suicidal.  They would make no money ... and so the business model would not work.  To think that the people involved would intend to act in that manner is absurd ... that businesses make wrong decisions is a feature of business.  The management of Southern Cross made foolish and mistaken decisions - they were lauded and praised - but with hindsight proved disastrous for them and their customers.  How to you choose which is good and bad in advance ... if I knew, I would be very rich indeed.  Politicians who think that they can use the regulatory or tax regime to choose in advance are delusional ...

This morning, I listened to Ed Miliband defending his ideas on Today (Radio 4) ... to be honest, he failed completely to answer the question, 'How?'  His idea appeared to be, simplistically, that busineses that invest are good, businesses that merely take money out are bad - but his essential problem is that it sounds like an ignorant argument made by a rather ill informed and inexperienced teenager rather than the proposal of a serious politician.

I suspect that it was cynical too - made to appeal to prejudice and ignorance rather than based on a coherent idea or ideology.  The truth is that the use of capital is what enables people to be employed in businesses and industries around the UK - it also enables investment in ideas out of which the employment of the future will arise.

We now have the most complex tax system that we have had in my adult life - possibly the most complex system anywhere in the world.  Much of that complexity arose from the Labour's obsession with rules and the idea that rules and regulations could improve the lives of people.  They created the complexity and we now live with it and its consequences.  The problem for Labour is that it is the very complexity that is used by the very rich to reduce their tax liability - avoidance.  They are the principal beneficiaries of the complexity brought in by Labour in government over the last 13 years.  It is no coincidence that, while Labour supported those ideas, they received considerable support from the very businesses that Ed Miliband now appears to decry. 

I believe this part of Ed Miliband's speech to be nonsense - almost laughable nonsense.  As a consequence, the speech was absurd.  Cute, populist, but absurd.