The unacceptable face of modern capitalism. That's a phrase you will have heard a lot recently. It's also one that you are going to hear a lot more in the context of BHS, of our new prime minister's campaign to improve corporate behaviour, and of the financial industry's attempt to have a go at doing something about executive pay (the Investment Association has come up with a few feeble suggestions).
However, you are unlikely to hear it in the context of what I suspect historians will see as the really unacceptable face of modern capitalism the way it is distorted by our institutions. This week RBS sent 1.3 million customers a letter notifying them of a change in their terms and conditions: they can now be charged interest on cash they have on deposit at the bank. That isn't going to happen right now. But it makes it clear that our banks are taking seriously a possibility that was considered totally nuts only a few years ago that the Bank of England could cut rates below zero.
Central bankers think that this type of extreme monetary policy helps ("stimulates") economies. We aren't so sure. As far as we can see it drives wealth inequality. It pushes savers to save more rather than less (if you aren't getting a return on your cash you need to save more cash to end up with the amount you want). It keeps bad companies going under.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
And it prevents good companies from investing as they would normally partly because bad companies are creating oversupply and partly because of the fear of the future it creates: if the Monetary Policy Committee thinks things are so bad it has to resort to this kind of thing, why would anyone feel like taking risks? Look at it like this and it may be that the unacceptable face of modern capitalism turns out to be just as much Mark Carney as it does Philip Green.
The good news is that the UK's efforts to break free from the various capitalism-distorting exploitations that make up the EU seem to be going pretty well. We won't know what the short-term economic impact has been for some time yet. But the long-term outlook looks fine. We have a perfectly respectable new government. Most economists have accepted that Brexit will have a negligible influence on the global economy.
Our stockmarkets have pulled themselves together (the FTSE 250 closed above its level of 22 June on Tuesday). The list of economies keen to make trade deals with us is growing (we don't need these to trade with those economies, of course, but low tariffs are good in themselves).
With all this in mind, MoneyWeek would like to find a less miserable word than Brexit to use to describe what the UK is up to. So far the best suggestion has been "Brenaissance". But we reckon MoneyWeek readers can do better than that. Send your ideas to editor@moneyweek.comand we'll announce the winning entry in two weeks' time. The winner gets the magazine free for a year and there's some (French sorry) wine for the runners-up.
-
Review: Huvafen Fushi – be reborn in the MaldivesTravel You will leave the luxury resort of Huvafen Fushi in the Maldives feeling refreshed and rejuvenated
-
Judicial elections: will Mexico’s bold political experiment come at a cost?Mexico's historic judicial elections attracted little attention, but the implications could be far-reaching
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Everything is getting more expensive – including moneyEditor's letter Investors are about to start feeling rather more pain, says Merryn Somerset Webb – from the rising price of money.
-
We may be heading for recession – and it will be no ordinary recessionEditor's letter Just as the downturn in 2020 was not a typical recession. the next downturn could be very different too, says Merryn Somerset Webb.
-
What companies should be prioritising this decadeEditor's letter In a world beset by uncertainty, companies should be prioritising slack over efficiency, says Merryn Somerset Webb.
-
Inflation could soon start to hurtEditor's letter Inflation is not going away. And with people's wages not keeping up, things are going to start to hurt, says Merryn Somerset Webb.
