Commenting on Prime Minister David Cameron’s speech on ‘popular capitalism’, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“The Prime Minister’s call for a more moral capitalism is not unwelcome – nobody wants to see a less moral capitalism. However, the fact that there was little substance in the speech demonstrates how little governments can do in this field.
“Nevertheless, it is a matter of concern that the Prime Minister believes that further regulation and higher levels of capital for banks will promote his vision of ethical capitalism. The reality is that the extensive regulation of the financial sector has encouraged a box-ticking mentality that has crowded out ethics and judgment. Furthermore, higher capital requirements for banks will simply strengthen the hands of incumbents and reduce competition in the industry.
“Similarly, new rules surrounding shareholder powers on high pay are likely to have the same effect as all other attempts to impose more rules and regulations on companies – more companies will go private.