Farage made a good point last week

Nigel Farage: not a “career politician”

I found myself rather enjoying the recent euro debate between Nigel Farage and Nick Clegg. I’d have thought that more of the same could help stem apathy among the voting public.

Of course, apathy isn’t limited to politics. We see this apathy among vast swathes of shareholders too. Few investors go to the AGM, or vote on key issues. Nobody really wants to rock the boat, and that means the management does whatever the heck they want.

In many ways, apathy is born of investor/voter disillusionment with the guys on top. It was a point I thought Farage made well. Distancing himself from the political elite, he berated what he calls the “career politicians”. These are the ones that have never done a proper day’s work in the real world.

Irrespective of political stripes, they look after each other and ensure there’s always “jobs for the boys” – be it on quangos, committees, or heck – even in Brussels. They’ve always got one eye on their career path, with the other trailing the needs of the electorate.

My kingdom for an MP’s pension

In business, you’ve got the career managers – nobody’s expected to be a real entrepreneur in these circles. And you’ll notice how the top brass establish a club too. They all sit on each other’s boards of directors, with supposedly independent director roles. These same people sit on the remuneration committees too. And that’s why they continually vote for pay rises, often irrespective of performance.

At least we can count on the government to keep things in check. In 2009, the Independent Parliament Standards Authority was set up to monitor and regulate MPs’ salaries. At the time, MPs were paid a basic sum of £64,766 – that’s now set to jump to £75,000 in 2015. That’s progress… right? And according to the Association of British Insurers, the average person’s life savings wouldn’t even buy one year’s worth of an MP’s pension. Hmm… nice work if you can get it!

When it comes to business, the “them and us” issue is described as the principal and agent problem. The problem being, management and ownership of the business is split – shareholders own the business, the managers manage it. They go forth with our chequebook and do as they please. Studies suggest things like corporate mergers and acquisitions are rarely positive for shareholders. So why do they do it?

Well, if you’re a manager, you want a bigger organisation to manage. More kudos, and most importantly, a step up the ladder on the remuneration scales your ‘independent’ mates use to assess salaries.


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Don’t give the management free rein

Whatever you may think of Farage’s politics, one thing’s for sure; he’s come along and shaken up the political environment. The political elite have had to look more realistically at the real issues that concern voters. And that has to be a good thing.

I think the next area ready for a shakeup is the way MPs interact with the voting public. Clegg in particular needs to work on his delivery. In last week’s debate, he railed against Farage’s ideas, suggesting they were “pub discussion”.

What a put-down! It’s as if he thinks the public have no right to a voice, be it down the pub, or anywhere else.

When answering a question about the impact of immigration on public services, Clegg bungled a response: “that’s the problem when you’ve got people!” A Freudian slip, or worse?

The fact of the matter is, we’d all do well to get more involved in politics, and specifically, the politics of the businesses we own.

On a personal level, I try to get along to as many AGMs as I can. It’s an excellent place to eyeball the directors. This is especially important when you’re dealing with small businesses.

Decent company directors enjoy a bit of a debate, and tend to come across as open and willing to listen. It’s a jolly good sign! Poor boards do not welcome debate, and tend toward rhetoric instead (The Co-op Group?).

It’s time to take a more active role in our businesses. Don’t just leave it for the management to do whatever they like. Make sure you’re set up to receive your voting rights if your shares are held in a nominee account with your broker. And use them to vote! Go along to AGMs and get involved.

Your business needs you!

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21 Responses

  1. 09/04/2014, And wrote

    I think we should have more direct democracy in the UK. I’d like to see it operating using the internet – I call it Interactive Democracy. Please Google to find the blog.

  2. 09/04/2014, Boris MacDonut wrote

    Clegg is a ludicruously out of politician ,but Farage is an utter joke. It reduces your credibility Bengt , to even suggest he made a good point.

  3. 09/04/2014, 4caster wrote

    I did not think Clegg opposed Farage very effectively. It should have been easy to demolish Farage’s “little england” philosophy. I am not enamoured of the top-heavy bureaucracy of the EU, but I thoroughly applaud the principle of free movement of goods, capital and labour, and the fact that the EU together with NATO has helped to keep the peace of most of Europe since World War 2.
    I am saddened by the tendency of politicians, when an election is approaching, to align themselves with low-IQ protectionist xenophobes, and to make immigrants feel unwanted. It is easy to identify the jobs that immigrants take, because they are visible. But the jobs that immigrants create, through spending the money they earn and paying the taxes they pay, are widely spread across the whole economy, and are therefore unidentifiable and invisible. They claim less in benefits than a similar number of British-born people, and not only because they tend to be younger, but they also claim less in every age range. Like most nationalists everywhere, Farage is a narrow-minded rabble-rouser.

    • 10/04/2014, sodit wrote

      At the very start of the debate Mr. Farage stated quite clearly, “Were not anti European, we want to trade with Europe, co-operate with Europe, get on well with our next door neighbours”. Then in answer to the very first question, Mr. Farage said, “I don’t want to be isolated, Nick, far from it. I want us to trade with Europe, and co-operate with Europe”…

      … and yet people still suggest that he and his supporters are somehow “little Englanders”. Why don’t they look at the reality? It is in plain sight.

      No, the European project has not kept peace in Europe, NATO has kept the peace in Europe since 1949.

  4. 09/04/2014, 4caster wrote

    You write: “We see this apathy among vast swathes of shareholders too. Few investors go to the AGM, or vote on key issues.”
    I am an investor, and would dearly love to vote on company issues. But I cannot do so because, like most investments, mine are held through nominees: in my case, mainly in an ISA. Pension funds, investment trusts and unit trusts are just as bad in this respect. The nominees who vote on my behalf have a different agenda from mine; they are on the same gravy train as the CEOs and directors, whose salaries and bonuses they will not undermine.
    So lets have real company democracy, so that the votes are devolved to the beneficial owners of the companies, you and me. Unfortunately, general elections will not be won on a platform of corporate reform.

  5. 09/04/2014, S.Doran wrote

    Farage is absolutely right on MPs’ salaries – if anything they should be reduced considering a large amount of law-making now emanates from outside Westminster. Check out VotewinnerUK.com for a comparison of MPs’ salaries and those of non-exec directors of quoted companies

  6. 10/04/2014, John Brown wrote

    It would seem a risk to lose the free-trade benefits of being in the EU. But the sort of rhetoric that Nick Clegg spouts is unlikely to convince many. We need to see a balance-sheet made up showing how many foreign manufacturers based in the UK, do actually need to sell into Europe. Tata motors presumably sell world-wide. Now if we saved the £15Bn pounds predicted by leaving Europe, we could give a lot of grants to the likes of Tata to produce more mass-market cars, rather than luxury vehicles. Our balance of payments could be improved.

    Regarding EU immigrants, we need to know exactly why they seem to find the UK more attractive than other countries. I suspect that it is because our benefit system tops up their low wages, and gives them support with the cost of housing. That gives them excess cash that they send back home, where it is worth 5 times more in goods than it is here. We have a very good short-term safety net with our job-seekers allowances, and that makes a punt on the UK a very low risk for an EU immigrant. But we don’t really know, since the government seems not to be collecting the statistics. If we paid benefits in the form of food stamps, to be cashed only upon presentation of identity including a photograph, then perhaps the UK would look less attractive.

    By the time that Mr. Cameron starts to renegotiate our terms of membership, there are likely to be a lot more minority-party representatives in Europe, who will all be responding to the demands of their people to have their jobs protected.
    Maybe renegotiation is feasible, even given the attitude of the French President.

  7. 10/04/2014, sodit wrote

    Mr. Clegg’s performance was apallingly vacuous. Remarkably, he made no attempt whatsoever to address why the UK should continue to engage in political union. He simply did not go there. Instead he announced that leaving the EU would leave the UK “isolated” without providing any justification for that statement, and then banged on about the evils of being isolated, as if it were a fact that we would be. In doing so, he used scare tactics, repeating the phrase “dangerous fantasy” four times. Was he trying to convince himself, or was he trying to implant an idea in the public’s subconscious mind?

    Although the formation of the EEC was a response to a world of high tariff barriers, which with the advent of globalisation have since been dismantled, thereby making the EU a solution to yesterday’s problems, Mr. Clegg asserted that Mr. Farage and his followers wanted “to turn the clock back” – a phrase he repeated 8 times. In this was he cynically trying to hide the fact that it is his side of the argument that is living in the past?

    He also engaged in ad hominems designed to put Mr. Farage in a bad light, such as accusing him of having Mr. Putin as a hero, and also of Mrs. Thatcher (you may not consider that a slur, but many of the viewers of the debate might).

    Did I notice all this while the debate was in progress? No, I didn’t. Mr. Clegg’s gesticulations and passion obscured the vacuity of his content. So I suspect that few others did. Certainly the political commentators on the Daily Telegraph website all thought that Mr. Clegg had won. I discovered this by subsequently reading a transcription of the debate. When stripped of the theatricals, it provides a much starker description of the two debaters’ cases.

    You can access the transcription here:
    http://www.filedropper.com/faragecleggdebatetext

  8. 10/04/2014, osprey wrote

    thankyou bengt… a succinct article, as usual… i agree with you that live political debates are a decent pitch against voter apathy… and your extrapolation of the importance of voter power in the context of shareholders is also accurate… however, surely the reality is that (excluding professionals such as yourself) the vast majority of investors are far too busy with their own lives to apportion time and/or resource to any meaningful interaction with the guardians of their investments. close, independent scrutiny (if that’s the right word) is of course highly desirable – though i suspect a radically new regime will be required if ever such is to become effective.

  9. 10/04/2014, thaealternativenewsatten wrote

    Clegg did himself no favours during the debate. Credit to Farage for taking on the establishment. He’s had the courage to overcome opposition(remember Edinburgh) and although I have reservations about his views on immigration (I have clients from abroad which has helped me financially) you have to applaud his bottle so to speak.

  10. 10/04/2014, r wrote

    Several posters above have criticized Mr. Farage but are missing a point. The most important thing he is committed to do is get us out of the corrupt EU. For that alone, he is worth my vote. We will not lose trading arrangements with the EU because we are a net importer. We voted to join the EEC in 1974 which was an organisation for free trade. I applaud that. For nearly 20 years, the auditors of the EU have been unable to sign off the accounts because of “lost” money.

    I don’t agree with his views on immigration, on abandoning HS2 and on allowing smoking in public places. However, he will not get a majority in the post-2015 parliament so these things will not happen but he may get enough votes to force the issue with the EU.

    Cameron promises to have a referendum in 2017 IF he gets a majority – some chance. So, we can assume there will be no referendum unless we have some UKIP influence in parliament.

    Comments above about his personality are irrelevant. The important things is the decisions that his party will influence if some are elected.

    r.

  11. 10/04/2014, Phil.R wrote

    As per usual the content of Nigel’s speech is interpreted away as harking back to an England that no longer exists, and anti immigration. Perhaps if our (we know what’s Best for you) Politicians actually carried out what they promised rather than serving themselves then we might not be here debating in or out of Europe. UKIP DO WANT to trade with our EU partners! if you recall the vote in the seventies going into Europe was for a European Common Market, not political union, not a Euro superstate, Trade! It’s no wonder the Brits have had enough of career politicians and are flocking to the peoples army. And how the establishment are howling! which to me means UKIP are on the right track, the old boys network can see the wheels on the gravy train coming off. As for the British worker the EU experiment with the free movement of people which bosses and bankers are so beloved of (Mass unrestricted immigration) has been a disaster as they have seen their terms and conditions at work decimated as the bosses now have access to millions of cheap Eastern European workers that they can pay minimum wage ( and less if they can get away with it) leading to where we are now – where we virtually have to plead for an even inflation pay rise. Yet all we see is the banksters / bosses paying themselves ever more money and bonuses whilst pleading poverty and then going out and buying a bigger car. I am not a capitalist – or a communist far from it, i am for what is right and fair, and although i dont agree with all UKIP policies, i will vote for them as eventually the EU will unravel as it is not sustainable whilst it threatens and intimidates any country who dares to challenge it’s latest bout of madness.

  12. 10/04/2014, JR wrote

    i) I am not Anti Europe – I am anti E.U. because I do not think running a huge complex set of different economies, with different histories and peoples by a centralised bureaucracy is anything but a disaster. Apart from fraud, there is huge waste viz for example the £100s of Millions worth of Fish “Discards” through a system of draconian fines on British Fishermen if they landed “Over Quota” fish. The Eu was modelled on the USSR – the main Architect being Alterio Spinelli, a lifelong Italian Communist – much revered in the EU – see Google – and read the Bruges group’s booklet describing him as ” the godfather of the European Union” – also via google.
    ii) Why are those against us being a colony of the European empire called “Little Englanders”? Surely it is the Europhiles who want “always to keep hold of Nurse, for fear of getting something Worse” who are the Little Englanders!. Well, the creation of the Euro as a sort of Financial “Iron Curtain” to “lock the Nations of Europe into an irreversible Union” as Herr Kohl put it, has been a disaster for the southern European Nations, from whom the Centralised Elite now are trying to recover their long wasted loans – so driving poverty! The 3 leading western Economies are deep in the Financial mire, being kept going by “Money printing”, though the EU is not doing it quite so openly – just piling up debt for the poorer Nations.
    Europe should be a “Commonwealth of Nations” not a dictatorial, undemocratic Empire.
    JR

  13. 10/04/2014, agitator wrote

    I fully agree with the EU concept, but the only way to save it from disintegration and disaster is for the UK to leave. The EU is trying to achieve in 20 years what should take at least 200.

    As regards Company ownership, as mentioned the disenfranchisement of shareholders by holding shares in ISAs, pensions etc, need solving. AA change in the 2006 Companies Act also allowed Boards of Directors to perpetuate themselves with the abolition of the requirement to go to shareholders for the nomination of Directors.

  14. 10/04/2014, Burntfinger wrote

    It’s all very well to criticise investors for not attending shareholder meetings, but notices of such meetings for any shares held by one’s brokers in nominee names go to the broker and are never seen by the shareholder. Is there any way to have the annual accounts of all the nominee held shares in a portfolio sent to the real beneficial owner?

  15. 10/04/2014, Michael G wrote

    I used to be rather keen on Europe and EU membership, having spent many holidays and attending business meetings there. But I started counting the number of foreign lorries coming to Britain and comparing the number of British lorries going to Europe. Don’t tell me our lorries are carrying European goods. For four years I worked for a British manufacturing company in the midlands, part of a group. Then the group was purchased by a German company. The first edict? All manufacturing in Britain shall cease immediately and manufactured parts sourced in Germany. The company was closed and everyone from managing director to floor sweeper made redundant. Before I vote yes to the EU I would like to know our balance of trade with the EU and how much British manufacturing closed down by non-British EU countries. Mike

  16. 10/04/2014, Alec wrote

    The real problem is that we have far too many politician, particularly the “career type” who have never had a proper job in their lives and, therefore, no appreciation of what it’s like to earn a living. What on earth do we need 650 odd in Parliament and then another lot in Scotland and more in Wales without even mentioning the grotesque amount and gravy train in Brussels. There should be an immediate reduction of 50% of these unproductive politicians and nobody would even miss them.We voted in 1974 to join the common market not the mess it is today.

  17. 13/04/2014, Responsibility wrote

    Contrary to his claims, Farage IS NOW A CAREER POLITICIAN and one of the worst kind IMHO – taking salary and expenses for alleged representation of his British electorate in the EU, yet, I understand, not taking part in representing his constituents, nor any part of and for GB?
    How much EU money has Farage managed to divert towards GB infrastructure projects, as other MEPs have done – ZERO, I understand.
    Why vote for someone taking money under such false pretences. I think those GB voters who vote for UKIP have been seriously misled. Thank you for reading.

  18. 24/04/2014, Boris MacDonut wrote

    Farge and Salmond needs to look at Dick Cole and Loveday Jenkin in Mebyon Kernow. An historic day for Cornwall and the Cornish diaspora of 2.5million from California and Mexico to Australia. Now a minority nationality. This is the way we are going. If Scotland gets independence watch Shetland seek its own freedom from Scotland …..along with the oil.

  19. 24/04/2014, Warun Boofit wrote

    I must belong to the aroused rabble because I will vote for Farage, I dislike him but not as much as I dislike the rest so he gets my vote. If he is fiddling his expenses thats surely what all politicians do, I dont like it but thats another argument. I always wanted to attend an AGM but its better that I dont as I would probably get myself arrested or at the very least thrown out, the best I can manage is to vote against the re election of every director and against any resolutions they make not that its ever made a difference. I would fire the bod of nearly every company I hold shares in as it would save a lot of money and make no difference to the prospects or in some cases improve them. Other than that I am quite optomistic at the moment, the economy is looking up.

  20. 26/04/2014, Realist wrote

    UKIP are in the unfortunate situation of being smeared by both Labour and the Tories, because they know that UKIP are tapping into the highly disillusioned public and taking votes away from them.
    None of the politicians are whiter than white and UKIP are no worse than the others.

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