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When the left hand doesn’t know what the right hand is doing

Rejoice! Ed Milliband will announce at the Labour party conference today that

Labour would impose a legal duty on any financial services firm that manages savings to maximise the saver’s returns.

At last Labour are to drop all that guff about “stakeholders” and “corporate responsibility”, although to make it compulsory to pursue profits at the cost of all else is rather repressive.

But what a turnaround, eh? Can it really be happening?

No. It’s all a mistake. They just haven’t noticed yet. Tim Worstall has cruel fun pointing out that Mr Miliband does not appear to have worked out that his proposal would make ethical investment illegal.

Worstall concludes

If those proposing the reform of the financial markets know so little about the financial markets that they can make this sort of mistake: well, what value their plans for reform of the financial markets?

7 comments to When the left hand doesn’t know what the right hand is doing

  • Lee Moore

    Interestingly, such a requirement would also seem to oblige the financial services firm to maximise its use of tax avoidance arrangements on behalf of the saver. I wonder if this is intended.

    En passant there would seem to be a minor difficulty in phrasing the requirement in terms of return rather than expected return, and in omitting mention of risk.

  • CaptDMO

    So..theworkers party is taking a cut of anything gained by folks saving assets for their own
    future? Aaaaand doing WHAT with it exactly?
    Headquarters renovation?

    Wait, I’ve heard of this before.
    Is there an exorbitant expatiation tax on savings as well?

  • Paul Marks

    How about freedom of contract – freedom of association (and nonassociation).

    Let private individuals, clubs, associations, companies (and so on) decide how they how they are going to do things.

    Without “Big Bang” stuyle Conservative Party government intervention (“we do not like the rules of your private club – so we are going scrap them and impose our rules instead” that was “deregulation”????) or Labour party intervention?

    No too radical – the buyers and sellers of financial products can not be left to evolve their own rules (rather than box ticking government rules – whilst ripping everyone off) after all freedom has not existed since ancient times.

    If one considers 1986 ancient times.

  • Laird

    This is the inevitable result of permitting politicians to regulate activities about which they have absolutely no knowledge (which, of course, means everything, since there is no greater collection of people having less practical knowledge about anything meaningful than politicians).

  • xj

    Oh, it gets even better: the proposal outlaws “Islamic finance.” One of the key components of “Islamic” investing is that the fund manager has to calculate what percentage of the companies’ profits derives from lending money at interest, and give the equivalent sum of money to a mosque or other Islamic charity. Shariah law forbids profiting from usury, you see. And clearly, any fund that does this will generate lower returns than an otherwise identical fund that doesn’t fork over a chunk of its earnings to al Masjid al Saddam Hussein or wherever.

    P. J. O’Rourke was right: the Law of Unintended Consequences is one piece of legislation that always gets passed.

  • That’s fine, we can always pass more laws to mitigate the unintentional consequences of the laws we just passed!
    I can’t see what the problem is ;0)

  • pete

    Mr Milliband has not made a mistake.

    Like everyone else he knows perfectly well that ‘green’ finances are not real finances and are made up of guesses, hopes and downright lies.

    Just as greens can argue that windpower pays its way and eco-policies create jobs, it will be made perfectly possible for ‘ethical’ investments to claim to maximise returns on investment, probably by assigning huge monetary values to vague or imaginary eco-benefits.