Whilst it’s been brewing for some time (in some sense since the last election), as we enter the official election year it seems the political onslaught has already begun.  The good(?) news is we already have an election date, the bad news is it’s 8 months away. That “this doesn’t mark the start of the election campaign”, is certainly true as it had already begun, we now know how long it really will be.  So for the next 8 months we’ll be hearing from both sides of politics how much better they are than those opposite and how important their version of government is during these (insert preferred negative adjective here) times.
Now I appreciate political commentary or opinion should normally be avoided as you risk upsetting half the population, but some things really need to be said and besides, given recent opinion polls, it’s probably only a quarter who might even care…..

My biggest bugbear with this forthcoming election campaign will be the claim of “best economic managers”.  I have no doubt this will be a major part of each party’s election campaign so I thought I’d get in first with a bit of truth.

Governments do not manage economies.

Sure every almost government since the dawn of time has claimed to but none have and none ever will because they simply can’t.  More importantly that’s not their job so any attempt to do so simply results in distortions and distractions from their real role.

A government claiming responsibility for “economic growth” is like Shakespeare’s second grade teacher trying to take credit for Romeo and Juliet.  “After all I taught him to spell, put words into sentences….”

This not to say government doesn’t have its place, of course it does and it’s important, but it’s as the referee, not as a player.  Referees are vital, they make sure the players are playing the right game, which allows the players play their hardest without descending into chaos, but referees aren’t supposed to influence the outcome.  It’s not their job to pick winners or over punish those who push the boundaries, they are simply there to ensure the integrity of the game.  The best sign of a good referee is invisibility.  They should be seen only when absolutely necessary, allowing the game to flow because it’s the players that get the results, who win or lose and are judged accordingly.  No player should have his fate determined by a refs call.

The truth is when it comes to the economy, the players are businesses, we are the supporters and the government is simply the referee. All economic growth comes from businesses with small businesses the most important contributor.  Small business is where the bulk of the “creative destruction” occurs and is the breeding ground for big business.  Small business employs the most, services the most and has the biggest direct influence and impact not just on the economy in general but on our daily lives.

Governments can help or hinder business but they cannot create nor maintain businesses no matter how much they may claim and despite frequent attempts to do so.  Government attempts to exert control or influence over business ends in disaster or at the very least a significant waste of resources.  The government may control the rules but as every sports fan knows, the referee can’t control how the game is played as the players will always adapt.  Changing the rules will ultimately change the way the game is played but you can’t control how, as the players will always look for new ways to win that best suit them.

I certainly not telling anyone how to vote, that’s entirely your decision and the more independently you do so the better the system works, just keep in mind what you’re actually voting for.  If you think you’re electing a player, you’ll be disappointed, it’s up to you to play your game, no one can play it for you.  It may be tempting to pick a referee that will help you win, but you may want to think what this does to the game.  A tough game you can keep playing is always better than one easy win.

Matt Battye

Matt Battye

CEO, Financial Adviser

Analysing what can seem to be like complex issues, Matt is effective in using analogies to better explain scenarios and truths to the rest of us. This is what Matt enjoys – educating clients on the truths and debunking the commonly held (wrong) view.

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