While the Olympians of high politics clash with the Titans of international finance over the mega-million deals necessary to keep Greece in the euro, is anyone actually interested in what happens to Greece?

The top priority for Greece is to build a modern economy. Bailouts and austerity packages of themselves build nothing. While it is true that Greece, like America, Britain, and practically every other Western economy, needs to sort out its public sector debt, that in itself is not enough. Teaching a government to stand on its own two feet is a necessary precondition, but no more than that – a first step.

The important part, and the really hard part, is generating private sector business that adds value to the GDP. Those protesting about cuts in public services ignore the fact that, without viable businesses making money to pay taxes, there can be no public sector services. Fresh injections of German money are not the answer – it is reliance on easy money from eurozone partners that led the Greeks to ignore private sector competitiveness in the first place: there was no need to encourage enterprise when the government could borrow more without negative consequences.

That was never going to last forever. Some day the bills must be paid. Now that day has come, but the Greeks’ neglect of the private sector means they have nothing on which they can fall back.

Greek business is unprepared for reality. It is reported that Greek VAT revenue has fallen by almost 20% since January last year in spite of a 10% increase in rates. Of course, tax revenues in general tend to decline not “in spite of” rate increases but because of them. Faced with a choice between passing the rate increase on to their customers or taking it from their own profit margins – which may have been less than the percentage rate increase even before the recession – many small businesses become unviable. No wonder 60,000 Greek businesses have closed since the summer.

At the same time the Greek government learns to live within its means, it must learn to love Greek business. Certainly it must pay more attention to its needs. Higher taxes are not helpful in this context.

If the government can become more business-friendly, there may actually be hope for Greece, whether inside the euro or out. There is no need for the country to remain on international welfare forever. It has a lot going for it – landscapes and history that attract visitors, an outward-looking view of the world that dates back to Homer and Herodotus, and an outstanding tradition of entrepreneurship. In sectors from catering to shipping, Greek entrepreneurs have flourished all over the world. What will it take to let them flourish in their native land?   

In the middle ages, the legal system was a profitable source of income for the kings and barons who controlled it. Fines paid by the peasantry went straight into the purses of the very people who imposed them. Predictably, the number of pretexts for fining the peasants kept increasing.

It seems that Britain is now reverting to the feudal system, and a committee of MPs agrees. There has been a considerable growth in the number of pretexts for separating us poor serfs from the few groats left to us after the tax man has had his regular cut. The latest example is the aggressive levying of “late payment fees” for overdue paperwork. It might be argued that it is legitimate to discourage undue delay in submitting necessary returns, but the fact that it is being made harder than ever to do all the form-filling in the prescribed manner suggests that is not the real purpose.

Registering tax returns online ought to make the process easier – in theory – but HM Revenue and Customs have succeeded in making it as difficult as a medieval quest.

The first challenge is making sense of a poorly designed website. Then you must register – which inevitably took several attempts. Only when you have registered are you told that you have to wait seven days for an “activation code” – this while on a deadline of the Revenue’s making. Predictably it did not turn up. This initiated the next challenge, a spectacularly unhelpful “help desk”. This took the form of Ordeal By Call Centre – the usual ten minutes of multiple choice on a telephone keypad and queuing before being granted the right to speak to an ignorant apprentice on a temporary contract.

In accordance with the traditional format of quest literature, your knight errant had to go through the Ordeal three times before finding the truth – that the request made ten days before had never been processed.

When the code turned up only a week late, it seemed like a miracle – but several failed attempts to download the required software necessitated a return to the dreaded “help desk”. This time, however, a genuine human being had accidentally been employed. He gave some useful tips on their unusual downloading procedures and admitted cheerfully, “Everyone has to come here sooner or later – you could never work it out on your own.” True.

Finally filling in the long-winded electronic form took two hours – where ticking the boxes on the old paper forms would take only minutes, so long as you had the necessary figures ready.

Alternatively you can always buy commercial software – all for the privilege of helping the Revenue tax us.

Bristol City Council is proposing levying a tax on business car parking spaces in the city.

In return it is promising to allocate the funds to a new rapid transit public transport scheme for the area.

Meanwhile the council also has aspirations to develop a Retail Action Plan for the city, because shoppers are shopping elsewhere and, rather late in the day, the council has woken up to the economic crisis on its doorstep.

As is so typical with large public sector organisations, its initiatives are completely uncoordinated and, in this case, contradictory. The main reason why Bristol’s retail premises have so few shoppers is the years of anti car policies the council has pursued.

The retailers’ problem in Bristol could be wiped out in an instant if the council had the economic acumen and political will to build better road infrastructure and provide copious free parking.

Taxing small businesses for their car parking spaces is abject stupidity.

The council isn’t anti-business per se – in six days time it is running a major Business-to-Business exhibition with the Federation of Small Businesses (of which your contributor happens to be the local branch chairman). And, in principle, the council wants to encourage business but it is still widely infiltrated with the enemies of enterprise.

This latest anti-business measure is abject stupidity. Don’t people in the council realise what an economic recession actually means? How can levying a tax on businesses do anything but drive more of them out of the city, or out of business altogether?

And, who needs this daft rapid transport scheme anyway? It is nothing more than a grandiose infrastructure project that people with more power than sense just love to get carried away with. It is an ego trip for councillors and officials. The voice of reason is undermined when other business organisations lend their support to these flights of fancy, just because the quango-sitters get sucked up with all the group-think and self-importance that goes with sitting on committees.

That’s not to say that nothing should be done about public transport in the city. It is indeed in a dire state, but before people get carried away with these grandiose ego trips they should first fix the simple, basic, cheap things glaring everyone in the face – sensible routing, sensible timetables, realistic fare structures and initiatives to ensure large environmentally unfriendly and noisy vehicles don’t trundle around for miles and miles nearly empty.

The business community is generally behind efforts to reduce government deficits, especially in the US and UK. Yet at the same time, it is often said that deficit reduction alone is not enough. There has to be a strategy for positive business growth.

At first sight, there seems to be a paradox. Deficit reduction means cutting expenditure or raising taxes or both – any of which is bad for growth. However, in the longer term, deficit reduction is essential if growth is not to lead to inflation, which will in turn destroy growth.

In an effort to simplify the whole debate, here are the three main ways by which growth might, in theory, be encouraged – and the obstacles to their delivering that growth.   

1   Maintain high government spending. This can be done only by raising taxes or by continuing to run the current huge deficits. Higher taxes simply reduce growth – even Keynes, the economist usually (mis)quoted by those who favour big state spending, said as much. Running up deficits is itself the problem, not the solution. It cannot go on forever. Apart from anything else, it is inefficient because government spending rarely goes to those sectors with the greatest potential for viable growth. 

2   Cut taxes. This is the most effective way of stimulating growth, because the money released can be targeted at the most productive parts of the economy. In the longer term, intelligent tax cuts will produce growth that will increase government revenue, which will in turn reduce the deficit. The obvious problem with this is that it takes time: in the very short term, tax cuts will actually increase the deficit – unless accompanied by spending cuts which are politically and administratively difficult in a democracy.

3   Cut regulation. This could be done at the same time as either of the other two strategies, or on its own. It is the only strategy that does not increase the deficit in the short term. Indeed, it might reduce it immediately, since fewer rules out to mean fewer bureaucrats to enforce them. The downside is that for deregulation to make much of a difference to growth, it will have to be radical – and so far governments have been very reluctant to give up any of their power over business. We are not holding are breath.  

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.

UK Uncut, the self-styled “anti tax avoidance” protest movement, recently struck at Barclays, whom they accuse of paying only £113 million in corporation tax on profits of £11.6 billion for 2009.

Of course, banks are still pretty unpopular at the moment, but it is only bullies and cowards who attack the private property of those they happen to dislike or with whom they disagree.

So people who vandalise and disrupt the business premises of those who, in their opinion, do not pay enough tax are tapping into exactly the same mentality as the SA brownshirts who painted “Jude” on the shop windows of Jews in the 1930s. They should reflect on how they would like it if those who dislike what they do did the same to them. Happily, only a minority have the nastiness of soul required to take out their personal frustrations out on what others have struggled to build.

That said, the “anti-tax avoidance protestors”, unlike the Nazi stormtroopers, do have a legitimate point ...or at least they are right but for the wrong reasons ...or maybe wrong but for the right reasons...

It cannot be denied that it is both stupid and immoral when the rich pay less tax than the poor. The blame for this, however, lies not with the rich but with the tax system. Governments know that overtaxing the rich is counter-productive, but cutting headline rates for the better off takes more courage than most politicians possess. So they rely instead on a tax code with lots of loopholes, of which only those who can afford expensive advisers – the seriously rich – are aware. An unsustainably high rate of tax is set on the assumption that those loopholes will be used to avoid it.

Tax policy is therefore based on a nod and a wink. Real anti-tax protestors are right to object to that hypocrisy and to campaign for the only honest and effective alternative, a simple flat-rate tax paid by all but the poorest.

Of course, the rabble who vandalise property are not interested in that. They are motivated by petty resentment, not by a determination to put in the work necessary to push for rational improvement.

This is why they prefer the soft target of private business. The root of the problem is, as usual, the politician, not the businessman – who has to operate within the system designed by the politician. Most businessmen do not like the system, but have a right and obligation, like all subjects, to arrange their affairs in the most efficient way it allows.

So attacking business is attacking the victim. However, an attack on private business provokes little response from the police or the courts, but an attack on the real villain – a government office – invites retaliation in the form of anti-terror laws, trigger-happy police marksmen, and long jail sentences, and, like all vandals and bullies, the “anti-tax avoidance protestors” lack the courage of their supposed convictions.

And, to the UK Uncut charge sheet we must add financial illiteracy. Barclays had previously made very substantial losses, which it offset against the 2009 profits in calculating its tax bill. This is not only perfectly legitimate but necessary for business to survive.

The only sustainable profit tax regime is one that is based on an economic cycle. For example, imagine a shipbuilder, who takes five years to build a ship. During production they might report an annual loss, and then declare a profit in year 5 when they complete and deliver the ship. Losses might be £10 million per year for the first four years and then £50 million in year five, making a cumulative profit for the venture of just £10 million (£50m-£40m). If that £50 million is taxed at 25%, the shipbuilder pays £12.5 million in tax – more than its profit on the whole venture.

Clearly, a profits tax that applies to losses is just loopy. But, apparently not too loopy for resentful mob that make up UK Uncut.

The greatest British orchestral composer of the last fifty years was not someone of whom we have never heard, whose state subsidised music is played only by state subsidised musicians in state subsidised venues. He and his music are in fact very well known.

John Barry, who died last month, merits comparison with the great “classical” composers – and was able to combine artistic achievement with huge commercial success.

So why was this outstanding Briton, who was admired all over the world, never given a knighthood by his own country? After all, lots of the obscure state subsidised types were knighted. That is, of course, the point.

Like many of the most talented and successful Britons of his generation, Barry was a tax exile. He was forced to live abroad by British tax rates that were punitive in the most literal sense – they punished achievement.

As a result, instead of receiving a reasonable portion of his considerable earnings at the peak of his career, the British state got nothing from him. Withholding a knighthood was the state’s petty revenge for a situation created by its own short-sightedness.

Eventually, again like many of his contemporaries, he returned to Britain in the 1980s after Margaret Thatcher reduced higher rate tax. It is therefore no surprise that the total paid in taxes by higher rate taxpayers in Britain actually increased as a result of that tax cut.

So Boris Johnson, the Mayor of London, is right to call for similar tax cuts today. He is certainly speaking in the best interests of his own city. London has probably benefitted more than anywhere else from the relatively low tax rates that prevailed from Mrs Thatcher’s time until very recently. Not only did the capital become home to a disproportionate number of the returning exiles; it also attracted a large number of wealthy foreign entrepreneurs. These people have contributed to the local economy, and they have also enhanced London’s social and cultural life. It was after the tax cuts that London regained its Swinging Sixties reputation as one of the most exciting, vibrant, and “happening” places in the world.

Nor is it coincidence that many of the talented people who made the original Swinging London in the Sixties became, like Barry, tax exiles in the Seventies. Those who think them hypocrites for that should ask if the real hypocrites are not those who impose taxes on talent and then wonder where all the talented people have gone.

When it comes to political parties, this blog has a certain instinctive sympathy with the words Shakespeare put into the mouth of a man dying in a pointless faction fight: “A plague on both your houses!”

So we are not being partisan, merely stating an objectively verifiable fact, when we say that much of what is called, rather optimistically, the “business community” does not feel that it has received much sympathy and understanding from the current White House. At the same time, the Obama Administration is frustrated by the slow pace of job generation by the private sector.

These two facts are obviously connected.

However, following his party’s defeat in November’s Congressional elections, the President has expressed a desire to build some bridges. He held a high-profile meeting with 20 selected CEOs, supposedly representing that elusive “business community”. He also agreed with his Republican opponents a compromise on extending Bush-era tax cuts which has now passed the Senate.

So far, so good, but only time will tell if this represents a real change of direction. The CEO meeting was obviously cosmetic, with the President urging the businessmen to invest their surplus money without giving them any new reason to do so. Needless to say, small business was not represented at the meeting.

Meanwhile, with far more fanfare, the same Obama Administration has initiated massive litigation against BP, suing them for just about everything imaginable over the Gulf oil spill. BP certainly ought to be (and is) paying compensation to a lot of people, but endangering a legitimate business by claiming unlimited damages is all about politics, not justice.

The Federal Government is responding to, perhaps even stirring up the same lynch mob mentality we noted in our previous post, on the Madoff case. In doing that, it is also distracting attention from its own culpability in the Gulf disaster. It is particularly hypocritical that the lawsuit blames BP for not using the latest equipment – since when has the Government ever done that?

The message is clear: the Administration is backing business – except when it’s not.

Barack Obama looks at a portrait of James Madison

Two hopeful signs in the last week actually illustrate the political obstacles to sorting out America’s moribund economy.

President Obama negotiated a deal with Republican leaders in Congress to extend Bush-era tax cuts, while a bipartisan commission on deficits set up by the President agreed to support some good ideas.

Tax cuts and deficit reduction would certainly help the economy in their own right, but their real significance would be that they would show that the US government has an agreed and stable policy in which investors and entrepreneurs could have confidence for the next few years.

Alas, that seems unlikely in practice. The price of extending the tax cuts is extending unemployment benefits – a political necessity but one which goes against the other objective, of cutting the deficit. The deficit reduction plan itself looks like a dead letter.

The problem is the way the US Congress works. This is a simplification, but in most other countries, the legislatures simply vote “Yes” or “No” on spending requests put forward by their governments; in the USA, individual legislators, Senators and Congressmen, can put their own spending proposals to the vote. They have every incentive to do so: spending someone else’s money, especially in their own home State or District, buys votes. They also have every incentive to help each other: Senator X will support Senator Y’s spending proposal because he needs Y’s support for his own.

No one has any incentive to be financially responsible. In other developed nations, that responsibility rests clearly with the government, the executive, and the legislature serves only as a check, but in America the legislature takes the initiative – and takes the country in several different directions at once.

This problem is rooted in America’s Constitution. When an idealistic bunch of lawyers, James Madison and Co, drafted the Constitution in the 1780s, the young Republic was a decentralised, mainly agrarian, confederation, with no idea what the future might hold. The main concern was to appear democratic and avoid strong centralised power or anything that resembled monarchy. The world has changed dramatically since then – and strong centralised power has developed by default to cope with it – but the Constitution has not changed to reflect that.

Nor is it likely to change: Americans revere their Constitution – but every businessman knows that you cannot run a major 21^st Century organisation with an 18^th Century management structure.

Britain’s new economic strategy is sound: cut the wealth-consuming public sector and expand the wealth-producing private sector.

This is no more than simple common sense. Yet the UK’s public sector has been expanding for years while the private sector has not been growing as it ought. The laws of mathematics tell us that the inevitable consequence of increased expenditure and insufficient income is debt. It is a shame that it took a recession to force Britain to face that reality and try, at last, to reverse both trends.

The problem is that, in adopting this laudable strategic objective, Britain’s new Coalition government has no idea how to achieve it.

Here is how to do it. Do not try. Just let business get on with it. If the politicians and bureaucrats would leave us alone – and by that we mean take away all their meddling, interfering regulations, rules and compliance burdens – the private sector would not only achieve their objective of taking up the slack of the reduced public sector but would go on to expand far more than their narrow little minds could ever imagine. History proves this.

However, the politicians do not really have faith in this. Unless they are prepared to act on their words, business will not be able to take up the slack. The strategy will then be perceived to be failing, then blamed, then abandoned – without really having been tried.

If they rely on business, they must trust it. They must take us seriously when we say that legislative interference like the “Equality Act” in the UK, the maternity proposals of the EU, and the poorly drafted healthcare reforms in the USA, will prevent us from completing the tasks they have assigned us, to generate income and employment.

They must also understand that no government schemes or spending programmes designed to “help” business can make up for that interference. For President Obama to tout a “Small Business Bill” after approving the pork barrel of the stimulus package and federal healthcare is like shooting a man in the guts and then offering him a Band Aid.

Similarly, the language of the new British government is suspiciously reminiscent of its unlamented predecessor, which thought a few handouts to selected businesses – its friends – could compensate for increased tax and regulation that drove businesses and jobs abroad.

Message from Business to Government: Yes, we can take up your slack for you – but only so long as you do not try to “help” us – just get out of our way.