It is hard to think of another organisation that employs anything like the British “cabinet reshuffle”. Most Chief Executives do not enjoy the processes of hiring and firing. They replace people when they must, when they are not up to the job or a casual vacancy occurs or a contract expires. They do not as a rule switch large parts of their management teams around arbitrarily at irregular intervals just for the sake of it.

So last week’s reshuffle was never going to do much to help the millions of small businesses struggling in the UK.  Yet an opportunity was missed to correct a problem: there were no changes where changes might have done some good, at the top of the Treasury and the Board of Trade – or whatever it calls itself this week.

George Osborne, Chancellor of the Exchequer, the British minister of finance, is young and inexperienced. He deserves support for his efforts to prioritise bringing public sector debt under control, but he has little grasp of how things work in practice. His lack of real-world knowledge has been apparent in a number of avoidable errors, such as his inept attempt to remove tax exemption from charitable donations.

Vince Cable, the Secretary of State “for Business” seems to be against business rather than for it. His main interest appears to be punishing the banks for real or imagined offences rather than relieving small businesses of the regulatory burdens and financial costs imposed by the previous government. He is a good example of how the real worth, or lack of worth, of a man is discovered only when he is given real responsibility: as a backbench MP he built a reputation for prescience by predicting the 2008 crash – although that was no more than stating what was obvious to most of the small business sector – but as a minister he has failed to establish a firm grip on a particularly bureaucratic department.

Big business lobbyists like the Confederation of British Industry and the Chambers of Commerce miss the point by going on about infrastructure: the benefits, if any, of grands projets are years down the line. British business needs help and support now. Practical sympathy in the form of tax cuts and serious deregulation would go a long way to encourage business. Apart from anything else, it would be encouraging to believe our government is on our side.

Many entrepreneurs voted Conservative or Liberal in 2010 because they hoped that a new government could not be more anti-business than the previous Labour government. Yet it is difficult to point to anything that the current Liberal-Conservative Coalition has done to help small business. The Coalition parties assume they can still take business votes for granted by relying on the argument that “the other lot are worse”. It is a foolish assumption: as far as business policy is concerned, they all seem as bad as each other. 

Britain’s system of public honours looks increasingly absurd. The recent decision to strip disgraced banker Fred Goodwin of his knighthood only brings it further into disrepute

All nations, even the most egalitarian of republics, have some form of state recognition of outstanding service. The principle is based on sound management practice: it encourages workers if their work is appreciated and it encourages others when such people are held up as role models, and it costs very little. The French Revolution abolished all titles of nobility, and old revolutionaries objected when Napoleon replaced them with the Legion of Honour. The master of psychology replied, “With such baubles are men led.”

Baubles they are. It seems ridiculous that some people get worked up about them. Even more ridiculous is the way that most seem to go not, as they should, to people who make some great sacrifice or who go above and beyond the call of duty, but to people who simply do the jobs they are paid to do – and sometimes paid very well.

In the UK, the volunteer lifeboatman or the tireless charity worker might be thrown a bone in the form of an MBE (Membership of the Order of the British Empire, the lowest ranking honour), but there is no sense of proportion when higher ranking knighthoods are given to super-rich pop-stars or soccer-players simply because they are celebrities, or to bureaucrats who are already very well rewarded from the public purse.

Honours for businessmen as businessmen are equally superfluous. The proper reward for business is the money one earns, no more, no less. If a successful businessman gives a large proportion of his personal earnings to charity, or a lot of his free time to a good cause, he might deserve a separate honour for that, but no one should expect to be honoured for doing no more than enrich himself.

So it was wrong to give to give Sir Fred/Mr Goodwin a knighthood in the first place “for services to banking” – especially since it turned out that his services to banking consisted of leading the Royal Bank of Scotland into bankruptcy.

Yet two wrongs do not make a right. Once granted, an honour should not be revoked except in the most extreme circumstances. Mr Goodwin has been convicted of no criminal offence. He was stripped of his knighthood by a secret committee of bureaucrats, without a hearing, in response to a media campaign that had more than a whiff of a lynch mob about it. Goodwin may not deserve our sympathy but that does not justify the way the decision was made. Friends in high places should not be enough to honour a man nor subsequent unpopularity enough to dishonour him.   

John Richards’s Predictions for 2012

Since our previous predictions have proved fairly accurate, I am going to stick my neck out and give some fairly specific best-guesses for the next year. I must give the health warning that these are only extrapolations of present trends, and do not take account of currently unforeseeable events – which, of course, always occur.

First, the good news: the world as a whole should avoid a full recession in 2012 – emphasise the word should. All the bad news should not be allowed to obscure the fact that global business is growing, albeit slowly. Recovery from 2008 should not be expected to be spectacular, but it ought to continue, so long as everyone keeps their heads.

Alas, the bad news is that they are unlikely to keep them in Europe. The latest scheme to save the euro, FU (Fiscal Union), does not address its underlying problems. I predict the euro will survive, but not in its current form. Sooner or later, its weaker members must leave the single currency, for their own good as much as the euro’s. Yet there will be more time and money wasted before the EU’s leaders are forced to accept this obvious truth.

I can also see no end to the economic stagnation of the United States. Political gridlock will continue until the November elections. President Obama will then be re-elected fairly comfortably – not because he offers any solutions, but because he has more money, because he retains the uncritical support of most of the mainstream media, and because his Republican opponents look more and more like a suicide cult.

The second terms of re-elected Presidents are usually disappointing: it seems unlikely that Obama II will come up with a real vision for America’s economic recovery given that there has been no sign of such a vision so far in Obama I. Mr Obama was elected on a platform of Change; his probable re-election will mean No Change.

However, there is now more to the global economy than the old Western Powers. A sign of the times is that Brazil has just overtaken the UK to become the sixth biggest economy on Earth. This is not a negative reflection on the UK – where the outlook is not too bad so long as the British can keep their distance from the euro debacle – but one more indicator of the massive power shift that is taking place in the world. That may be bad news for the moribund economies of the West, but good news for the rest of the planet, and for those American, British, and European businesses who see what is happening and look for new opportunities where the growth is.

We were told that business was relying on increased consumer spending over Christmas to boost the economy.

So we were told – by commentators with little or no first hand experience of commerce. Those of us who have been in business for more than a year or two know that an extravagant Christmas means an austere New Year – or, sometimes, vice versa. There is never something for nothing in economics. Simply waiting for consumers to spend more ignores the fact that their resources are finite. If they go beyond their limits, there is a price to be paid later – and if business profits from their self-indulgence, it must also pay its share of that price. That is basically why our economy is now so weak: we partied for more than a decade and now the bill has arrived.

More importantly, just hoping that consumers acting stupidly will solve their problems for them distracts businesses from trying to solve those problems.

There are two sides to economics, supply and demand. Most media commentary focuses on the demand side, consumer spending. Politicians are also obsessed with it because everyone is a consumer but only a minority are suppliers – and, in our materialistic democracy, high consumption is equated with happy voters.

Yet many of the problems in the West in particular – especially Europe, Britain, and the United States – are due to a failure to address the supply side. During the party years of high demand, the money kept on flowing – much of it borrowed but no one cared so long as it kept coming. Structural inefficiencies were increasing, but they were tolerated because no one wanted to be the party-pooper.

Now the cheap money is gone and we find ourselves in a far more competitive world, and the West is at a disadvantage. Much of our leadership is short-sighted. Executives are largely untrained and come out of university with unrealistic attitudes. Directors often pay themselves too much relative to their results. Workers in Britain and America in particular are poorly educated. Unions still impose restrictive practices. Government adds to costs, increasing risks and decreasing rewards, through excessive taxation and regulation.

Western businesses need to stop waiting for the next one-off spending spree and knuckle down to the hard, unpleasant, unpopular work of restoring their competitiveness.

Friday is 11/11/11 – for once a date that works in the American date format as well as that used by the wider world, for whom 9/11 technically means the 9^th of November). Childish it might be, but many of us will not be able to resist the temptation of purposefully using the date somewhere, even if just for posterity, perhaps by writing out that increasingly archaic financial instrument, a cheque (or check in the American spelling).

Friday is also the day when veterans are honoured in the United States, and those who died in war are remembered in a number of other countries of “the developed world” – an expression that seems almost as increasingly dated as a cheque – including Britain, France, Canada, Australia, and New Zealand.

So it seems a fitting moment to pause and reflect. Could those who have died for those countries over the last hundred years have predicted the world we have today? Would they have approved of it? Would they be disappointed?

Perhaps if a Canadian or an Australian or a New Zealander from 1911 could have looked forward in time he would have been pleased to see his country today prosperous, dynamic, and fully independent. However, a patriotic American, Briton, or Frenchman of 1911 – or 1941, or 1961, or 1991, or even 2001 – might be quite shocked to see how much his country has declined in power and prestige.

Globalisation is a fact. The world is no longer the exclusive preserve of a handful of major powers run by white men. This is a right and necessary change.

What is neither right nor necessary is the crisis of confidence into which the old major powers have plunged as a result of this desirable development. For some years now, the United States, the United Kingdom, and the European Union have been living on borrowed money and the memories of past glories. Now both are drying up, and the West is drifting, lost and leaderless, in an unfamiliar world.

It is not too late to turn things around. The 1960s and 70s saw a similar loss of confidence and direction. Yet new leaders were found and old values revived, the Cold War was won with remarkably little violence, and the West went on to enjoy a prolonged period of peace and prosperity.

It could happen again, but only if we find leaders who are prepared to admit there are problems and face up to the challenge of making American, British, and European businesses competitive in the truly global economy we now enjoy. The world offers greater opportunities than ever – but only to those who understand that it has changed.

Faced with the disastrous consequences of years of compulsive borrowing, the British government has adopted the twin-track strategy of trying to cut the public sector and hoping the private sector will take up the slack.

Yet the British economy remains very sluggish. Many talk of the need for a “Plan B”. They might be more credible if some of them were not the very people who got us into this mess in the first place, and if their “Plan B” were not the same policies that caused the mess – excessive spending, borrowing, and printing of money.

So the government’s strategy remains the best option, perhaps the only option, on the table. Indeed, it would be nice if they actually implemented it. The economy is weak because they have not done what they say needs to be done. It is not enough simply to wish the private sector to grow. They need to help it, or at least stop hindering it.

Of course, tax cuts would be a good idea, but we need to accept fiscal and political realities. They would generate growth that would pay for them in the longer term, but in the short term the government must pay its bills. That said, a genuine and meaningful cut in the taxes that businesses face befoere they even make a profit - payroll taxes and business rates - is still probably essential. And, that cut needs to be substantial - halving the burden of each at the very least. Tinkering with a 1%  here and 1/2% will not make a difference.

On top of this, for a realistic hope, government needs to listen –actually listen, and then respond – to some of the things business has been saying for years. We may sound like a cracked record when we go on about Britain’s failed education system and excessive regulation, but the consequences are now too obvious to be ignored any longer.

The reform of education will take years – and we will believe it when we see it – but the effects of deregulation could be immediate, if only there was the political will to implement it seriously. The evidence is against there being such a will. The government pays lip service to the need for it, and has abolished a few obscure rules of which most of us have never heard, but whenever the government faces a real choice, it funks.

The current administration failed its first test when it implemented the previous government’s notorious Equality Act. Its most recent failure was its burying the obvious truth, known by the Prime Minister’s own adviser, that excessive maternity and paternity leave entitlement discourages business from generating new employment.

If government wants business to give it growth, put us to the test. Suspend demands for unnecessary paperwork for six months, and, during the same six months, allow business to employ new workers on contracts exempt from statutory impositions like maternity and paternity leave. Such signals of a serious commitment to change would be enough to re-establish Britain as a desirable business venue, and trigger a tsunami of new enterprise, new businesses, new growth, and new employment unparalleled in the West in recent times.

A group of 52 “academics” has written to the Observer newspaper to criticise the British government’s deficit reduction plan.

Those of us blessed with the gift of memory were at once reminded of the letter that was sent to the Times in 1981 from no less than 364 “economists” to criticise the policies of the then Prime Minister, Margaret Thatcher.

Although it is possible to argue that the Thatcher reforms were too rapid or too severe or both, few these days would argue that they were unnecessary. Mrs Thatcher found Britain “the sick man of Europe” and left it with a competitive modern economy. She achieved that in the face of considerable opposition from so-called “experts”, like those who signed the Times letter. How many of those opponents later had the guts to admit they were wrong? What happened to them afterwards? Are any among the signatories of the Observer letter?

The media gave the Times letter a lot of publicity at the time. It would have been useful if they had followed up on the story and pointed out the conclusion that we should not be so trusting of self-styled “experts”. That is in fact a basic lesson, one that has had to be repeated many times, not least in 2008 and its aftermath. The philosopher Santayana was wise to say that those who do not remember the past are doomed to repeat it.

Indeed, we should ask who is the real “expert”? Academic degrees are less important than the judgment and experience necessary to make the right call under pressure.

So it was no surprise that another of the lessons confirmed in 2008 – and in 1981 – is that entrepreneurs tend to be better at reading the situation than most professors. After all, if the professors were that clever, they would probably have gone into business for themselves. Some do, but the proportion of academics who are also successful entrepreneurs is very small.

Yet even those who have been proved to be clueless in practice continue to enjoy comfortable salaries – usually thanks to the poor taxpayer – and the status that encourages the media to take them seriously when they write silly letters to the newspapers.

Of course, this does not mean that the government’s deficit reduction programme is above criticism. Many of us would argue it is still too little too late. As to where the cuts should be made, it is clear that there is a lot of dead wood in our state-funded universities – although that 364 is down to 52 may at least be a sign of progress.

The British Prime Minister, David Cameron, has promised to declare war on the “enemies of enterprise”.

Well, if he is indeed fighting a war – and there is little sign of it – the enemies of enterprise are winning and he is losing.

The bureaucratic burden on small business is increasing rather than decreasing. April 6^th is one of two “red tape days” – the other being in October – when new regulations come into force. According to the respected Financial Times, no less than fifty additional obligations are being imposed on business.

If Mr Cameron is serious about fighting the enemies of enterprise, he should stop employing them. Those who make the lives of entrepreneurs unnecessarily difficult should be told, “You were employed to make the economy fairer and more efficient, but you have done the opposite. You have put a burden on your fellow citizens when you should be relieving them of it. Your services are no longer required. Since you are being dismissed for cause, you should not expect any public honours, or any lump sum or pension beyond the absolute legal minimum”.

These words could and should be applied to a very long list of bureaucrats.

It is, of course, impossible to disagree with David Cameron, the UK’s Prime Minister, when he says that supporting Britain’s entrepreneurs is the only possible strategy for growth.

He has come out to declare war on the ‘enemies of enterprise’ ... but with a classic bit of blame shifting.

Entrepreneurs are currently even more important to their countries than usual. Governments like those of the UK and the USA are now being forced to cut state spending after years of extravagant expenditure and dangerous deficits. They have no choice but to rely on private sector growth to take up the slack, and small and medium-sized enterprises generate most private sector growth.

Britain’s previous government was also full of warm words about entrepreneurs, but it is difficult to recall a single occasion when, given a straight choice between enterprise and ideology, government backed enterprise. OK, they did reduce the rate of capital gains tax but the politics of envy won out and a ridiculous cap was placed on lifetime gains.

Cameron has yet to prove he is any different. Though what he says is obviously true – any economy is only as strong as its entrepreneurs – he has put all the blame on bureaucrats.

Though bureaucrats have been, and remain, the source of much needless grief and forfeit of economic opportunity, the more pressing problems are the regulations governments have given them to enforce and the burdens of tax all businesses face.

After the best part of a year in power, Cameron has done nothing substantial to reduce these problems.

On the contrary, the first time he was offered that choice between enterprise and ideology, he went the same route his immediate predecessors would have gone, when he decided to implement their notorious Equality Act despite vigorous protests of the whole business community.

It was the only real test to date of his seriousness about business – and he failed it.

We are not asking for government handouts or special treatment or gimmicky programmes. All we want is to be allowed to do what government is asking us to do.

Alas, though, the government has tied its own hands. It has made foolish policy announcements in support of tax rates that penalise success and ‘family friendly’ policies that translate into anti-business employee rights legislation. Added to that, it continues to support international treaties its predecessors signed that do little more than make our economy uncompetitive.

Mr Cameron’s words are still welcome, though he has a long way to go if he wants to prove that they are any more than just words. He has told us the forthcoming budget will be the “most pro-growth [Britian] has seen for a generation".

Somehow, we know we’re going to be disappointed.

The British Government’s evacuation of its subjects from Libya was wrong on so many levels.

Some criticised it for being late and disorganised. Others question if it was even necessary, since neither side in the civil conflict is targeting foreign citizens. A third school of thought is that people who choose to work in a place like Libya do so at their own risk.

An additional layer of controversy came with the news that HM’s officials paid “fees for services” to some of their Libyan counterparts which were bribes in all but name in order to expedite matters.

Private businesses operating in places like Libya often have to do the same. The blame for this rests 100% with the officials who demand bribes, and not at all with the businesses who have to pay them. After all, no business owner wants to incur extra costs, but he may have no choice if he wants to stay in business in such places.

This does not stop government officials prosecuting businesses for being the victims of other government officials.

The same British government which has now bribed Libyan officials has in the very recent past effectively solicited a bribe from BAE Systems in return for not prosecuting them for bribery, and been guilty of gross negligence in its failure to stop British businessman Bill Shaw been jailed by the Afghan government on a particularly ridiculous charge of bribery.

The same British government would also probably have been loud in its condemnation of any British business which paid such “fees for services” to Libyan officials to expedite what it needed done, even if that was to protect its own employees.

The same British government would indeed prosecute such a business if it could.

We can be confident that no British official will face prosecution.

One law for us, another law for them ...again.