When (Unelected) Corporations Make Public Policy

Legal and General, the financial services giant, made profits of £1.13 billion in 2013, up 10% on the previous year.  L&G are the biggest institutional investor in the UK and (allegedly) have, on average, a 5% stake in every company listed on the UK stock exchange.

This morning on BBC Radio 4, discussion was being had regarding the fact that, since the "credit crunch" of 2008, cautious savers had lost money (in real terms) whilst those with capital to risk on the equity and money markets had made money.  It was stated that this had widened the gap between the "rich" and the "poor".

Agreeing with this analysis was Dr. Nigel Wilson, Chief Executive of Legal and General.  L&G, it seems, are so awash with money to invest that they have approached the Government to invest in essential UK infrastructure.

 

  

A UK Plc wishing to invest its profits into "bricks and mortar" schemes to benefit the people of the UK; on the surface, this is a good thing - right?  

Dr. Wilson went on to say that some infrastructure schemes L&G would support (those outside London) whilst there were those they wouldn't (the High Speed Rail Link, for one).  L&G, whilst having a responsibility to its shareholders, would use "enlightened self-interest" to decide what to invest in.

I'm afraid this rings alarm bells for me.

I believe that there is no such thing as "enlightened" self-interest.  Self-interest is what it says; it is putting your interests first and the interests of others afterwards.  Whilst we expect corporations to act in their own interest when making business decisions, we do not expect to find them exercising that self-interest in the field of public policy.

Clearly, there is infrastructure which a modern, civilised country requires but which may not be profitable to run in terms of pure financials (some things have a value without having a price).  Taking this idea to its logical conclusion, if we allow Corporations to dictate what infrastructure is built and what is not, they we are effectively allowing Corporations to dictate public policy for their own benefit.

For what reason would L&G (or any other corporation) invest in a project?  Profit!

By the way, who elected these corporations to decide what infrastructure the UK should benefit from?  Not me and not you!

And I just bet that, should the enterprise make a loss, the public/taxpayer will bear that loss, whilst any profits will go to the Corporation.  That's a no-risk investment opportunity if ever I saw one. 

This is, I'm afraid, where our political class is taking us.  They are claiming that the country is broke when the truth is that the wealth has been shifted from the hands of the people to hands of banks and corporations.  These same corporations are then being given the power to make public policy.

You can listen to the interview with Dr. Wilson here.