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| Version 2 | Version 3 |
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| Let’s hope Labour is a threat – to the wealthy few | Let’s hope Labour is a threat – to the wealthy few |
| (1 day later) | |
| Letters | |
| Tue 28 Nov 2017 19.09 GMT | |
| Last modified on Tue 28 Nov 2017 22.00 GMT | |
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| The claim by Morgan Stanley should be put into context (Corbyn government more serious threat than Brexit, claims Morgan Stanley, 28 November). According to the Bank of England chief economist, Andrew Haldane, UK firms risk “eating themselves” as they financialise at an accelerating rate. The neoliberal dogma of “maximising shareholder value” has enabled public companies to direct formerly reinvested earnings into ever increasing dividend payouts and share buybacks to further hike share prices. EU-funded research by Kotnik et al shows UK executive pay averages at 60% stock-based, encouraging an unholy coalition between managers and asset holders whose looting now runs counter to the long-term interests of these firms, which depend on investment in training, research and improved productivity. EU-funded research by Sakinc shows that by 2016 the UK companies in the S&P 350 averaged combined share payout and buyback expenditure of 150% of their annual earnings – an unsustainable trend. | The claim by Morgan Stanley should be put into context (Corbyn government more serious threat than Brexit, claims Morgan Stanley, 28 November). According to the Bank of England chief economist, Andrew Haldane, UK firms risk “eating themselves” as they financialise at an accelerating rate. The neoliberal dogma of “maximising shareholder value” has enabled public companies to direct formerly reinvested earnings into ever increasing dividend payouts and share buybacks to further hike share prices. EU-funded research by Kotnik et al shows UK executive pay averages at 60% stock-based, encouraging an unholy coalition between managers and asset holders whose looting now runs counter to the long-term interests of these firms, which depend on investment in training, research and improved productivity. EU-funded research by Sakinc shows that by 2016 the UK companies in the S&P 350 averaged combined share payout and buyback expenditure of 150% of their annual earnings – an unsustainable trend. |
| No doubt Morgan Stanley and other major equity holders will be dismayed if Labour acts to save UK companies from themselves through corporate governance regulations and tax rules less based on a fantasy of the neoclassical firm than those of the Conservatives. The rest of us can rationally hope they will. As for Labour’s threat to outsourcing: public service oligopolies like Serco operate in such intrinsically non-competitive environments that they bear more of a family resemblance to enterprises under Soviet planning than the innovative firms of Morgan Stanley’s disingenuous rhetoric.Dr Abby InnesEuropean Institute, London School of Economics | No doubt Morgan Stanley and other major equity holders will be dismayed if Labour acts to save UK companies from themselves through corporate governance regulations and tax rules less based on a fantasy of the neoclassical firm than those of the Conservatives. The rest of us can rationally hope they will. As for Labour’s threat to outsourcing: public service oligopolies like Serco operate in such intrinsically non-competitive environments that they bear more of a family resemblance to enterprises under Soviet planning than the innovative firms of Morgan Stanley’s disingenuous rhetoric.Dr Abby InnesEuropean Institute, London School of Economics |
| • I have to agree with Morgan Stanley that “for much of the past 30 years and more, a change of government ultimately had a relatively limited impact on the UK equity market”. This lack of an alternative was one of the reasons I stopped voting Labour. If, as the investment bank forecasts, a Corbyn-led government might endorse “nationalisation of key industries, higher taxes and a shift in spending priorities towards low-income households”, I would certainly vote Labour again. For me the worry, to quote their report again, is that “the Labour party could ultimately moderate some of its more radical policy ideas”. | • I have to agree with Morgan Stanley that “for much of the past 30 years and more, a change of government ultimately had a relatively limited impact on the UK equity market”. This lack of an alternative was one of the reasons I stopped voting Labour. If, as the investment bank forecasts, a Corbyn-led government might endorse “nationalisation of key industries, higher taxes and a shift in spending priorities towards low-income households”, I would certainly vote Labour again. For me the worry, to quote their report again, is that “the Labour party could ultimately moderate some of its more radical policy ideas”. |
| I hope Labour does remain committed to building a society that works for the many, not the few.Declan O’NeillOldham | I hope Labour does remain committed to building a society that works for the many, not the few.Declan O’NeillOldham |
| • So the investment bank Morgan Stanley see the election of a Labour government as a threat to the valuation of UK companies because of “a shift in spending priorities towards low-income households”. Bring it on has to be the response, not only in challenging the hegemony of the banking sector and those responsible for the 2008 crash with the consequent suffering by those low-income households as victims of the Conservative policy of austerity. The church has a policy of bias to the poor, which in the present context should evidence support for a Labour government, whatever the threats that are posed by bankers of the ilk of Morgan Stanley.Canon David JenningsCanon theologian, Leicester Cathedral | • So the investment bank Morgan Stanley see the election of a Labour government as a threat to the valuation of UK companies because of “a shift in spending priorities towards low-income households”. Bring it on has to be the response, not only in challenging the hegemony of the banking sector and those responsible for the 2008 crash with the consequent suffering by those low-income households as victims of the Conservative policy of austerity. The church has a policy of bias to the poor, which in the present context should evidence support for a Labour government, whatever the threats that are posed by bankers of the ilk of Morgan Stanley.Canon David JenningsCanon theologian, Leicester Cathedral |
| • John McDonnell is right to decry the advocates of austerity (Borrowing to invest is not burning money, 27 November) who criticise public borrowing as in some way less efficient and less desirable than private borrowing. Such critics should explain: how do you buy a house without a mortgage? How do you buy consumer durables without a personal loan or hire purchase? Or, if you want a historical analogy, how do you win a war without “Lend-Lease”? | • John McDonnell is right to decry the advocates of austerity (Borrowing to invest is not burning money, 27 November) who criticise public borrowing as in some way less efficient and less desirable than private borrowing. Such critics should explain: how do you buy a house without a mortgage? How do you buy consumer durables without a personal loan or hire purchase? Or, if you want a historical analogy, how do you win a war without “Lend-Lease”? |
| The view that only the private sector can generate “good” borrowing is ridiculous but heavily ingrained in public discourse, despite the experience of the financial crash of 2007-08. | The view that only the private sector can generate “good” borrowing is ridiculous but heavily ingrained in public discourse, despite the experience of the financial crash of 2007-08. |
| One way to rectify this and to make “borrowing for a purpose” clear to the public would be to present two budgets; a current account budget (required to balance itself over the economic cycle) and a capital account budget (required to finance and pay off its liabilities over the economic life of its assets). This would avoid the financial nonsense of George Osborne’s aim of balancing the public sector budget overall, via his misguided addiction to austerity. | One way to rectify this and to make “borrowing for a purpose” clear to the public would be to present two budgets; a current account budget (required to balance itself over the economic cycle) and a capital account budget (required to finance and pay off its liabilities over the economic life of its assets). This would avoid the financial nonsense of George Osborne’s aim of balancing the public sector budget overall, via his misguided addiction to austerity. |
| Capital account budgets always have deficits – that’s why they exist. Current account budgets have to balance to maintain the solvency of any business. Public investment provides the motor for increased growth and productivity in the whole economy, public and private, to provide the surplus required to finance capital budgets and to provide growing living standards and more generous social support for those in need.Philip RobinsAddingham, West Yorkshire | Capital account budgets always have deficits – that’s why they exist. Current account budgets have to balance to maintain the solvency of any business. Public investment provides the motor for increased growth and productivity in the whole economy, public and private, to provide the surplus required to finance capital budgets and to provide growing living standards and more generous social support for those in need.Philip RobinsAddingham, West Yorkshire |
| • To his statement, “the right creates a narrative that investment costs society rather than benefits it”, John McDonnell could have added that the right also tries to promulgate the idea that taxation impoverishes individuals instead of benefiting us with services and facilities that we could not otherwise pay for or gain access to on a one-to-one level.Michael MillerSheffield | • To his statement, “the right creates a narrative that investment costs society rather than benefits it”, John McDonnell could have added that the right also tries to promulgate the idea that taxation impoverishes individuals instead of benefiting us with services and facilities that we could not otherwise pay for or gain access to on a one-to-one level.Michael MillerSheffield |
| • Join the debate – email guardian.letters@theguardian.com | • Join the debate – email guardian.letters@theguardian.com |
| • Read more Guardian letters – click here to visit gu.com/letters | • Read more Guardian letters – click here to visit gu.com/letters |
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