If the North wants to succeed it needs to place more value on enterprise than it does on government

Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding.

So if we want more start-ups then we need a more entrepreneurial culture. It's not about tax breaks or R&D or STEM education or finance, it's about having a society that values and celebrates enterprise and the ideas that lie behind it. For years I signed up to the 'pull this lever, press that button' approach to economic development and it seems I was wrong - the reason the North of England has fewer start-ups isn't about lack of investment, poor education or too few universities but rather that our social norms are less strongly associated with enterprise than elsewhere.

So what are the features of that enterprising society, the social norms we need? The authors of the article the quote above comes from point to three - gender equality, valuing and rewarding performance, and endorsing status privileges. This is essentially the bourgeois environment that embraces the idea of what Deirdre McCloskey called 'trade-enabled betterment' and something valuable and important.

McCloskey also warned us that government and many among the powerful reject this environment:

“For reasons I do not entirely understand, the clerisy after 1848 turned toward nationalism and socialism, and against liberalism, and came also to delight in an ever-expanding list of pessimisms about the way we live now in our approximately liberal societies, from the lack of temperance among the poor to an excess of carbon dioxide in the atmosphere. Antiliberal utopias believed to offset the pessimisms have been popular among the clerisy. Its pessimistic and utopian books have sold millions. But the twentieth-century experiments of nationalism and socialism, of syndicalism in factories and central planning for investment, of proliferating regulation for imagined but not factually documented imperfections in the market, did not work. And most of the pessimisms about how we live now have proven to be mistaken. It is a puzzle. Perhaps you yourself still believe in nationalism or socialism or proliferating regulation. And perhaps you are in the grip of pessimism about growth or consumerism or the environment or inequality. Please, for the good of the wretched of the earth, reconsider.”

"Capitalism is the problem" - how often do we hear this from people? Not from those who (some claim) are somehow the victims of capitalism but from its beneficiaries. And the North of England has more of these anti-capitalist doomsayers than most places. Such folk are comfortable in their public sector jobs, consultancies and tenured professorships, they are the elite in the North's society and they have convinced themselves that liberal capitalism has visited on society a catalogue of evils.

Not only this but they have created an entire ideology - 'inclusive growth' - to describe their chosen way of bettering the lives of Northerners. This isn't founded on enterprise, risk, innovation and capitalism but rather on the largess of 'anchor institutions' which can, in an act of protectionist self-harm, limit their procurement to the locality they occupy. To add to this, the advocates of this municipal growth model, then demand that the national taxpayer splurge billions on grand schemes, sponsors great fairs and funds elaborate arts projects. Where we might have had entrepreneurship, we get people and businesses clucking round the municipal great and good in the hope of consultancy work, project funding or a few quid to design a website.

To rediscover the enterprising society requires a fundamental shift in the way we view business, risk and choice. Look at the reporting on business, at the way in which the business person (usually the businessman) gets portrayed in drama and at the eternal warnings that businesses are just out to scam you. Consider how were told that it is somehow unfair that someone who created value for consumers should take some small part of that value (which could be millions even billions) for him- or herself. And look at the commonplace portrayal of a free market as dog-eat-dog rather than as a triumph of co-operation, collaboration and mutual benefit. If we want the North to boom we need to change these things, to see that enterprising people, businesses and risk-takers are the real heroes in our society and that they deserve their rewards and the status that reward gets them.

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What are schools for? Nannying fussbucketry it seems!

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You and I (like I guess most people) take the view that schools are there to educate children. And by this we mean things like teach them to read, read write and add up, give them a grasp of geography and history, and generally provide them with the tools to get on in the world. It seems that this now extends to 'healthy-eating' and the suppression of enterprise:

A 15 year old schoolboy has been threatened with suspension making £14,000 selling sweets to pals in the playground.

Budding businessman Tommie Rose, has made a fortune by selling chocolate, crisps and fizzy drinks to pupils at Buile Hill High School, Salford. He buys them in bulk and sells them at competitive prices, even employing two mates to help run his business, paying them £5.50 a day. He says the money will go towards his University tuition fees.

Nobody is hurt by Tommie's initiative - the school decided it wouldn't sell sweets, fizzy drinks or crisps and he stepped into the gap left by this decision. Tommie's fellow pupils get a service, he makes some money and everyone's happy. Except for Tommie's po-faced headteacher:

"We admire this pupil’s entrepreneurship but school is not the place to set-up a black market of fizzy drinks, sweets and chocolates. We have extremely high standards and with our healthy eating policy we don’t allow isotonic drinks, fizzy drinks and large amounts of sweets for the good of our children. Our high standards are set out to pupils and their parents at the start of the school year."

Firstly it's not a 'black market' and secondly when did schools take it upon themselves to acts as dietary policemen? This phrase "for the good of our children" is so typical of the self-serving indulgence of the nannying fussbucket. It's fine if the school wants to stop selling such good itself (although it's clearly missing a trick) but utterly wrong of them to then police the provision made by individual initiative to fill the demand for those products.

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"Prohibition always leads to supply and demand..." Jake Phillips, 15

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As this little unintended social experiment shows:

Acland Burghley School in Camden, North London, recently decided to implement a "water only" policy in a bid to improve health, pupils' concentration and, as a result, their grades.

However, some entrepreneurial kids have resorted to sneaking in the banned substances and selling them on to fellow pupils at "speakeasies", just like under Prohibition in the US, which ran from around 1920-1933. However, instead of alcohol, the desired goods are cola, lemonade, orangeade and energy drinks.

And the enterprising youngster explain why, too:

"...there is business potential now there's a gap in the market. Gangsters sold alcohol in America when that was banned. Prohibition always leads to supply and demand. That means anyone who sneaks it in can make a lot of money."

It's a shame that their teachers weren't so bright as to realise that this would be the exact result of their ban!

Even where it's pointed out the school's boss buries his head still further in the sand:

“Schools are responsible for showing young people that their own behaviour impacts on their health. We are extremely proud to be Camden’s first water-only school."

Seems nannying fussbuckets never learn!

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It never was the money...

At times, at least in the fevered on-line world, it seems that there’s a coalition of the heterodox. At least where talking about the world economy and the ways in which its current ailment might be cured is concerned.  The assorted oddities of economic thinking are as one – old-school Marxists, modern Marxists, believers in the magic money tree, goldbugs and schools of thinking named for places in central Europe. All these folk share two revealed truths (to them at least) – the “orthodox” is wrong and our salvation lies in doing something about “the money”.

The thinking of these disparate adherents to the heterodox goes as follows:

• The current orthodoxy (however described and defined) got us into the mess we’re in
• This orthodoxy doesn’t describe or define the problem where as (insert heterodoxy du jour) does
• Therefore apply our solutions and we will all be happy, smiling and rich

And the solutions are always simple (and we should remember what H L Mencken had to say about simple solutions) and wrapped in an irreducible logical certainty.

I recall a friend at university – Neil he was called – who spoke of the problem with articles written by incredibly clever politicians such as Enoch Powell or Tony Benn. Neil’s thesis was that the writing of these men was logical, clear and convincing but that, when you read the text carefully, it contained – roughly half way through – a piece of breath-taking intellectual legerdemain. And so it is with heterodoxy. The seamless, almost commonsensical argument contains something that causes it all to fall apart. Adherents do not see the illogicality despite having it pointed out to them all the time (mostly by followers of a different illogicality).

I don’t know the answer. But I’m prepared to admit this as an essential starting point.  What I do know is that economics isn’t about money. When you pick up the founding texts of the discipline – the works of Adam Smith, David Ricardo, Vilfredo Pareto, even Karl Marx – the writing isn’t about money but about the ordering (or not) of human activity. For sure, the writers spoke of money but not as an economic driver. The thing driving the economy is the enterprise of men and women the world across not the notes, coins, ones and zeros we use to exchange, to measure and to store the fruit of that enterprise.

It is in the idea that the problem begins and ends with money – less of it, more of it, spent, saved, taxed and squandered – that our crisis lies. But money is just a will ‘o the wisp tempting us away from what makes the economy – enterprise, effort, work, exchange.  And into a mire where money is detached from these things where voices tell us that we can have it without effort – just print some money, the government can provide, the deficit doesn’t matter, enterprise didn’t create our wealth, effort isn’t an aid to success, those who are rich have stolen the government’s money.

The solution isn’t in that mire. My guess is that is lies with us remembering that it’s not the money but the food on the table, the roof to keep the rain out, the means of transport, the great novel, the wonderful music. It’s a pint of ale sat with friends, it’s the cinema and the restaurant. It’s all these things and many many more. It’s not the money. It has never been the money.

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So it isn't all inherited privilege then?

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In a really rather snide article describing various technology "moguls" as 'robber barons, a Guardian hack called Naughton has reminded us that the left's myth-making about wealth and success - that it remains trapped within a self-sustaining elite - is utter nonsense. Naughton (without intending so, I'm sure) destroys this fiction in just one paragraph:

What's striking about this is not just the staggering wealth that these people have managed to squeeze out of what are, after all, just binary digits (ones and zeros), but how recent are the origins of their good fortunes. Mark Zuckerberg, for example, went from zero to $17.5bn in less than eight years. Microsoft – the company that has propelled Gates, Ballmer and Allen into the Forbes pantheon – dates only from 1975. Oracle was founded in 1977. Bloomberg turned a $10m redundancy cheque from Salomon Brothers into his personal money-pump in 1982. Dell started making computers in his university dorm in 1984. Bezos launched Amazon with his own savings in 1995. Brin and Page turned their PhD research into a company called Google in 1998. And Zuckerberg launched Facebook in 2004.

All of those riches. All that success. All the jobs and taxes and investment and philanthropy (plus sadly Mike Bloomberg's ghastly nannying fussbucketry as Mayor of new York) was made possible by these men having ideas, taking risks and winning.

And right now a new generation of Gates', Dells and Zuckerbergs - a new bunch of entrepreneurs - are doing the same. In twenty years from now we'll be talking in the same terms about a load more men and women who have made billions having started with nothing.

The point about free enterprise is that this opportunity - the chance to be a billionaire - is open to everyone. For sure only a few make those millions but the opportunity to do so is there for us all. So next time you hear some left-wing, equality-monger gibbering on about gini co-efficients and whining about how it isn't fair that some folk inherit money while others don't, point them at the paragraph above.

It isn't all inherited privilege is it!
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Free speech, free enterprise, free trade....

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These are the three things that matter most to me - fighting for them is the reason I remain in politics. Little else matters when you get to the crunch - free speech opens the doors of discovery, free enterprise allows us to create wonders from that discovery and free trade allows the riches of that discovery and creation to be shared by all.

These things are also the reason why I'm right-wing rather than left wing. And I'm reminded again just how much the left will always fall back on protection - the route to stagnation, stasis and the promotion of poverty. Here's some chap called Hines in the Guardian:

Progressive protectionism by contrast would instead allow countries to wean themselves off export dependence. It would enable the rebuilding and re-diversification of domestic economies by limiting what goods states let in and what funds they allow to enter or leave the country. Having regained control of their economic future, countries can then set the levels of taxes and agree the regulations needed to fund and facilitate this transition. 

Clearly Mr Hines has never been to North Korea! Yet this proposal - little different from the autarky that thrilled Mussolini, fascinated Franco and led to Pol Pot's murderous 'year zero' - is made seriously by a left-wing commenter in a leading English newspaper.

The left really don't understand this freedom stuff - it's not just that free speech, free enterprise and free trade are morally right, it's that they are better in practice too! And when we limit freedom to speak, to do business or to trade, we make ourselves poorer in spirit as well as poorer in the pocket.

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Defining 'social enterprise' - the next pointless challenge for our lawmakers!

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Our masters, having set about trying to define "sustainable development" and now being urged - by Hazel Blears no less - to set out a legal definition of that tricksy term, "social enterprise":

Former Communities Secretary Hazel Blears MP has called for a legal definition for social enterprises, while minister for civil society Nick Hurd has conceded that such a definition may be required. 

Hazel Blears went on to refer to the "social enterprise sector" - showing just how much momentum there is behind this need for definition.

It seems that Hazel is concerned that wicked and evil capitalists will sneak in by calling themselves "social enterprises" thereby tarnishing the principle that the tern enshrines (or something like that).

I stick firmly to the view that all businesses - indeed every enterprise whether constituted or not - has to be 'social'. What should concern us isn't to try and separate the enterprise sheep from the enterprise goats through some form of legal definition but to focus instead on ethics - on whether the enterprise behaves ethically.

And the core elements of ethical business have nothing to do with the chunterings of "fair trade" - these are essentially political considerations - but concern the way in which the business operates. Does it comply with the law? How well does it treat those who work for it? Does it 'exploit' - through deception or dissembling - its customers, shareholders or investors (and this group would include donors)?

Such matters relate to the moral standing of the business - its managers, its directors and its owners - rather than to the precise legal structure adopted. It is nonsense to suggest that defining an operation as a "social enterprise" suddenly waves a magical wand over its affairs thereby making it a paragon of ethical virtues.

There are some enterprises where the operation of the business delivers a wider social purpose - Remploy, Jamie Oliver's, Fifteen restaurants and Bradford Councils-owned, ISG are examples - but whether these are established as for-profit businesses owned by shareholders, charities or some other legal structure is of no consequence.

The point and purpose of Hazel Blears call is to allow government to create a set of favoured organisations - "social enterprises" - that can be granted preference in bidding for contracts within, for example, the NHS.

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Enterprise and the denormalisation of food..a tale out of school

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If you introduce a strict "healthy food" policy there are consequences. And one is enterprise and initiative:

A schoolboy has been suspended for selling chocolate and crisps to pupils. Tommie Rose, 12, set up a playground business after being inspired by TV shows Dragon’s Den and The Apprentice.

His family say he was making up to £60 a day selling chocolate, crisps, and drink at Oasis Academy in Salford. But the school has a strict healthy-eating policy and teachers say sales between students are banned.

So the school doesn't sell what it - wholly arbitrarily - determines to be "unhealthy" and Tommy fills in the gap. This seems entirely the consequence of this schools offensive and illiberal policies - reinforced by the "only what we sanction" policy:

Principal Patrick Ottley-O’Connor said pupils were encouraged to develop their business skills through activities such as growing vegetables for sale.

He said: "The safe environment where our students, learn and develop skills, including business and enterprise skills, are facilitated by the high standard of behaviour expected within the academy. The private selling of goods is not permitted and any persistent breach of the code of conduct is dealt with firmly, but supportively through parental engagement."

Bringing up children to be good, compliant little conformists. Crushing the spirit of enterprise. British education at its finest!

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Leeds City Region needs enterprise, excitement and initiative - not sure that's what its getting

Yesterday – following their extravagant summit -  I wrote many a fine word about the problems with Leeds City Region LEP. The unrepresentative, public sector majority board, the Leeds-centric nature of the emerging strategy and the manner in which the ‘plan’ merely revisits the failed plans and strategies of the past thirty years. We appear to have learned little in that time and to have grown an exoskeleton of impenetrable regeneration babble to excuse that lack of learning.

But rather than a diatribe about this, I want to comment on how these bodies can be made to work – but only if we ignore the dominant ‘shiny regeneration’ approach to economic development.

If Local Enterprise Partnerships (LEPs) are to work, it won’t be through fine words and setting targets over which the Partnership has absolutely no control.  And it certainly won’t be by staging a few cosy fireside chats with self-selected business audiences or by buttering up some big property developers or retailers in the hope that they’ll wave their magic business wand and create that “dynamic, low carbon economy” everyone seems to want.

The clue – if we need one – lies in the name. In those two words – “local” and “enterprise”. This isn’t about the nonsensical and mythical “competitive advantage” game (that Porter has so much to answer for) or the Jane Jacobs for property developers that the Centre for Cities peddles. Success comes because people – local people succeed. Success comes from having an enterprising, creative and innovative population.

This isn’t about fast trains, enterprise zones or “City Region Strategies”, it’s about stomping around local communities talking to local folk, chatting with the corner shopkeeper, listening to the aspirations of these neighbourhoods. That’s where the growth will come from – not in revisiting the broken windows fallacy but in the enterprise and initiative of ordinary people.

If the LEPs simply become ways to divvy up grants and to farm the development taxes everyone seems so keen on (which are just another drag on economic growth), then they will fail. So a few bits of the ‘city region’ will benefit from this cash injection while the fundamental problem – our lack of enterprise compared to successful places – is simply not addressed.

Here are a few things I think that a LEP should do:

1. Extend the successful community-based enterprise development work done in Bradford across the city-region
2. Create a network of enterprise colleges under the ‘free schools’ model – concentrating this in the poorest communities
3. Establish a business microfinance system – lots of businesses need a little as £500 to get going and the LEP could help support this sort of lending
4. Sponsor and support business networking, local business hubs and enterprise support – working at the local level

The essence of this is that it is focused on people rather than on grand projects, big business or the ever elusive inward investment. If we have successful, exciting people, we will get successful and exciting businesses. And this will attract more excitement, more success and more business. And that growth in “gross value added” we all seek.

But most importantly, it will be fun.

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Enterprise Zones - what a good idea, let's have them everywhere

Now don't get me wrong, I really think that the Leeds City Region Local Enterprise Partnership should choose Bradford City Centre for its Enterprise Zone. However, I would also like to say again that if we believe that lower taxes and relaxed regulation encourages growth and regeneration then we should be applying this everywhere - even in picturesque market towns like Richmond (pictured above).

The government seems set on there only being a few and, as bureaucrats love, has set about a competitive selection process setting place against place, building up political resentment and offering an advantage to one poor place over another poor place.

The Government proposed an open competition for areas who want to bid to host one of the ten remaining Enterprise Zone spots to ensure the best possible applications come forward for these unique growth opportunities.

Local enterprise partnerships, which bring together local businesses and local councils, are expected to nominate specific sites that offer the best opportunity for growth. Applicants will have to show their prospective zone has genuine potential to create the new business and jobs they need, with positive benefits across the wider economic area.

We return again to area-baseds approaches to regeneration - narrowly helpful but politically devisive. What we really need is those benefits - simpler planning rules, lower business rates and investment in super-fast braodband to apply everywhere rather than just to a few chosen places.

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"Everything is within the state, nothing without the state" - today's marcher motto

Back in the 1980s – that age evoked so charmingly by Ed Miliband recently – the word “alternative” was captured and held prisoner by the forces of the left. To be an ‘alternative’ comedian wasn’t to be funny (although some were this doesn’t include Ben Elton) but to be ‘left-wing’, ‘progressive’ and above all else against “The Tories”.

In the end the alternatives weren’t really alternatives at all – there was much talk of “defending”, “fighting”, “mobilising”, “organising” and, of course, “striking” but little of substance as to the alternative being proffered.

Now, we find the same voices crying out, a coalition of the self-interested and the prejudiced descend onto London disrupting the pleasure of tourists, the weekend of locals and the choices of visitors. To achieve what is unclear except that this is a march for the “alternative”.

 For some, such as the Unions the alternative is for ordinary people to pay more taxes and for government to cripple future generations with debt so their members can continue to consume what the nations earns (and remember, dear reader, that public servants – however valued – are solely consumers, they do not produce wealth or income) regardless of the interests of those who are producing that wealth.

For others – the spoiled children of UK Uncut in the forefront – the aim is to disrupt and annoy, to make a petty point and to adopt again that squadrista role of doing what the government refuses to do (not that they will succeed in this, of course) in “maintaining services”.

Behind all this lurks to prejudice, the hatred of business and enterprise. People clutch at a specious belief in the moral superiority of public service and wallow in ugly envy of others fortune. These people – who somehow believe, like Mussolini, that “everything is within the state, nothing is without the state” – are screaming for the good state, be it motherland, fatherland or the nanny, to care for them, coddle them, provide for their every whim and need. And to take the money for it off those “other” people.

This March for the Alternative is the political equivalent of a toddler’s tantrum.

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A parable of enterprise

John is speaking with his mate Jim in the club and Jim mentions in passing a bit of a wheelbarrow crisis he’s facing. It seems Jim needs to get hold of 50 barrows at short notice. Just a passing comment.

Next day John’s driving past Scott’s Yard and he sees a compound full of wheelbarrows. John stops, buys the wheelbarrows for £15 each and rings Jim. “You know those wheelbarrows you wanted?” “Yes,” says Jim. “Well I’ve got 50 you can have for a grand but you’ll have to pick them up from Scott’s Yard.” The deal is done. Scott’s got rid of depreciating stock, Jim’s solved his wheelbarrow crisis and John’s made a tidy profit for the sake of ten minutes chat with Scott and a phone call.

So what you say. Just wheeling and dealing. But let’s look a little closer at the situation. On seeing the wheelbarrows, John has three options – he can ignore them and drive on, he can simply ring Jim and tell him about the barrows or he can see the opportunity, take the risk and make the profit. Be clear that most of us would not take that third option – the most we’d do is tell Jim and maybe get a pint out of him next time we’re together in the club.

People think there’s something grand, swish or complicated about enterprise. There isn’t. Enterprise is what John does and we don’t. It has two elements – spotting the opportunity and taking the risk. If you spot the opportunity but don’t take the risk – you’ll get a grateful pint from Jim. And if you take a risk but have no opportunity you’ll go bust.

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What the hell is a social enterprise anyway?

David Floyd (beanbags and bullsh!t) presents a witty little contribution to the debate about the “social enterprise” badge being promoted by Rise asking what all the fuss is about and why such a badge – the “social enterprise mark” – is needed.

As it happened I had been talking with a colleague about how much I hate the term “social enterprise” oozing as it is with superiority and smugness (although my distaste for this term is dwarfed by my loathing of the term “third sector”). Are all the world’s other enterprises anti-social just because they have the gall and cheek to make a profit?

Now it seems, some organisations that fit a preordained set of requirements can stick a shiny new badge on their headed paper declaring to the world that they have achieve the elevated “social enterprise” status! Well forgive me for not sounding my horn or waving flags to celebrate this new initiative.

We need to drop the wholly artificial distinction between a “social” entrepreneur and the ordinary run-of-the-mill sort of entrepreneur. It always was a nonsense, it belittles the creation of value (or rather places greater emphasis on one type or measure of value) and shoves aside the vital importance of private enterprise in making places work.

Is too much public sector employment strangling Northern cities?

For a long while I’ve felt a little like a lone voice in the wilderness regarding the damage that an over reliance on public sector employment is doing to many of our towns and cities – especially in the North of England. Moving public sector jobs “up north” has been popular with policy-makers wanting to try and fix the decline in traditional manufacturing jobs (so long as it doesn’t include said policy-maker having to relocate from the soft south, of course).

However, the Centre for Cities has now issued a strong challenge to this orthodoxy – arguing in a recent paper, Public Sector Cities: Trouble Ahead that cities are:

“…investing an undue amount of time and resource into competing for a small number of relocating public sector jobs. Promoting private sector growth would be a more sustainable option.”

The paper also reveals just how dependent the economy of some towns is on continuing public sector largess. Eleven towns & cities have more that a third of their work force in the public sector including Liverpool, Oxford and Barnsley. And as the inevitable public spending cuts arrive it will be workers in these places that go ahead of the more proximate Whitehall bureaucrats.

But it’s not just the jobs it’s the squeezing out of enterprise by the dominance of public institutions – nationally there are 415 VAT-registered businesses for every 10,000 people. In Liverpool this figure is just 241, in Barnsley 274 and in Plymouth a measly 233. Since I don’t believe folk in these places are much different from more enterprising places, there has to be cultural and environmental factors leading to this deficit – and the leaden hand of dominant public institutions provides just those factors. Not being enterprising because Dad expects you to go down the pit has been replaced with not creating because there’s an admin job at the DWP.

In truth too much of the North’s economy is made up from public expenditure – by what amounts to a subsidy from the rich South to the poor North. And the result is that the North does not add value – does not earn its share of the nation’s wealth. In 2005/6 public spending and GVA per capita by region related inversely to levels of public spending:

Public Spending % of economy

North East: 61.5; North West: 52.6; Yorkshire:48.9; South East: 33.9; London: 33.4

GVA per capita

North East: 13.5; North West 15.0; Yorkshire 14.9; South East 19.5; London 22.2

In the end places get richer (however you wish to define that idea) because of the enterprise, initiative and creativity of the people who choose to live in that place. Importing soul-less, stifling public sector employers is killing that drive.