Government cannot buck the market

WE WHINGE and rage at the government when things go wrong in this country, but the fact is that Gordon Brown and his team is as powerless as the rest of us when major economic storms hit the country.

WE WHINGE and rage at the government when things go wrong in this country, but the fact is that Gordon Brown and his team is as powerless as the rest of us when major economic storms hit the country.

The “credit crunch” has been one of the major talking points this year - and the fact is that people are now feeling much less certain about their jobs, salaries, and lives in general than they were 12 months ago.

It is tempting to blame the government - but the fact is that ministers can only tinker with the economy. How they react to the credit crunch is important, but there is nothing they can do to prevent it hitting people in the first place.

A perfect example of this impotence came this week as BP and Shell posted massive first-quarter profits of more than £7 billion between them.


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That is an unimaginable amount of money - and it is galling to know that their profits have come not because they are particularly well run. It is simply because demand for their product has increased around the world and this has pushed up the price.

There were calls in some quarters for a windfall tax to be imposed on these companies - but that is not really an option because it would simply drive them out of the country.

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Why, they would argue, should they pay a windfall tax when there is no such threat facing their American competitors Exxon (Esso), Texaco and Gulf?

And of course many of their shareholders are actually British pension funds, and the boost to the profits and dividends will ultimately find its way into the pockets of pensioners today and into the future.

But when all the excuses are put to one side, this was a phenomenal profit that was reported by the oil companies - and effectively the government is unable to do anything about it.

That has been the case since the Thatcher/Reagan revolution of the 1980s which changed the way governments operate around the world.

Whatever you think of their policies on a range of issues, the governments of Britain and America during the 1980s completely changed the way economies are run around the world.

The old central-planning style of economic management has been disappearing, even former Iron Curtain states have adopted “free market” economics.

The Labour Party accepted these changes - when Tony Blair became Prime Minister “New Labour” accepted the new Thatcherite economic orthodoxy.

That says effectively that governments cannot buck the system. They can provide a hand on the tiller to make the economic troughs and peaks more bearable.

But they cannot defy the laws of economics - and if large multinationals want to make massive profits then they will.

Because ultimately if they can't hang on to their profits in this country they will be able to in America, in Germany, in China . . . or even in a tax haven like the Cayman Islands!

IT was the end of an era in my house the other day as I watched the last-ever episode of the West Wing - the finest television drama ever to come out of the USA.

What has struck me watching the last two series in the months since Christmas is the astonishing parallels with the current US presidential election.

In the series a maverick, ageing, centrist Republican walks away with his party's nomination while the Democratic candidates are snapping at each other's heels.

The final decision on who should be the candidate does not emerge until the convention when it comes down to who can get the most support from “super-delegates.”

In the end the younger candidate wins - but has to overcome the hurdle of coming from a minority racial group.

Does this sound familiar at all?

I understand the scriptwriters developing the character of Matt Santos four years ago met and used Barak Obama as something of a template.

Could it be that truth will imitate fiction later this year - in which case Mr Obama could well end up as the most powerful person on the planet by this time next year.

I'M beginning to wonder if the Liberal Democrats who were supporting Chris Huhne in the leadership election got it right when they described the front-runner and eventual winner as “Calamity Clegg.”

He may be young and attractive, but he's managing to come across as a real political plonker.

After stupidly admitting to 30 “notches on his bedpost” he then claims he can't remember whether he joined the university Conservative Association when a student at Oxford.

There is no shame for politicians to belong to one party when a youngster and then to make their way with another - Cecil Parkinson, Northern Ireland Secretary Sean Woodward, and even Winston Churchill have all changed parties at some time in their careers.

But to claim he “cannot remember” if he was a young Tory at university is frankly unbelievable.

I was at university a decade before Mr Clegg and I can remember every club and society I was a member of.

If he really cannot remember then he has a serious memory problem. If he can remember but is scared to tell the rest of the world, then that does look pretty pathetic.

Either way, it is hardly guaranteed to inspire confidence in his leadership.

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