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In our age of crisis, the state has been reawakened, breaking the taboos of the past few decades. But it’s still an uphill climb. Over the past 40 years, there was broad political agreement that markets were not to be meddled with, and that the power of the state had to be reined in. Economists such as Milton Friedman argued that the overbearing nature of the Keynesian state had suffocated the entrepreneurial spirit, making workers lazy and entitled. Much of this situation, they claimed, was the result of intrusive government interfering with the smooth running of the free market.
Then, in the Eighties, Right-wing politicians such as Margaret Thatcher and Ronald Reagan adopted this philosophy, taking aim at the “nanny state” that had supposedly led to the proliferation of “welfare queens”. They were followed by Third Way politicians like Bill Clinton and Tony Blair, who were convinced that the “era of big government is over” and the state’s power had to be reduced. Besides demolishing much of the welfare state, European state-owned enterprises that accounted for a significant chunk of national economies were also targeted. Companies such as British Gas, British Telecom, British Steel, and the railway sector were all privatised. But the aim of these policies was not merely a drive for efficiency; they were also designed to break the power of trade unions, while trying to turn Britain into a “shareholder society”.
Until a decade ago there was overwhelming support for this reining in of the power of the state, and in particular the privatisation of state-owned enterprises. But after the wave of repeated crises we have suffered since 2008, the public mood has changed considerably. According to YouGov, around 60% of British citizens now want to nationalise a UK rail sector infamous for its extortionate fares, and a similar number want to nationalise the energy sector. But it’s not only a matter of changing attitudes but also of political necessity. The current energy crisis is already forcing governments around Europe to consider bringing some energy companies under public ownership.
The Russian invasion of Ukraine has led to a severe rise in the price of oil and gas, with gas prices already increased by 52% by April 2022, and further hikes likely in the autumn. Now politicians are under heavy pressure to find rapid solutions that the market could not provide. Among the measures are releases of strategic reserves to increase supply by importing liquified natural gas from the US, striking gas deals with alternative suppliers from Algeria to Azerbaijan, and fast-tracking new Liquid Natural Gas (LNG) plants.
Governments were also forced to provide subsidies to families and companies to help with rising energy costs. In Britain, part of this was eventually covered through a windfall tax on corporate profits (totalling £5 billion): a common-sense policy given the profiteering going on in the energy sector. But even this intervention was met with disapproval by economists still convinced that the market should take its course, even if it destroys millions of jobs in the process. In preparation for the winter other measures are currently under discussion, including an EU-wide price cap.
Some governments have also been offering free or low-cost public transport to help address rising energy costs. In Germany, the government has launched a nine-euro-a-month ticket to travel across the entire country on local or regional trains during the summer. The initiative has been immensely successful, with train trips increasing by 50% and may even be continued as a “Klimaticket” to fight against carbon emissions. A similar scheme has been adopted by the Spanish government, with 100% discounts on multi-trip ticket journeys on local and regional services from September to December. These measures are all good palliatives, but the war in Ukraine has unearthed systemic fragilities in our economy and highlighted how free-market extremism has put countries’ economic and geopolitical security at risk, while slowing post-carbon transition.
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SubscribeThe way in which the net zero agenda is being pursued, will result in the decline of western democracies. I believe that the more the state does for you, the more they will take from you.
No, that belief is not supported by even a cursory look at the evidence. My ex lives in Sweden. The state does a lot for her, and take nothing but taxes. But the state in Brazil does nothing for people living in the Amazon, but it still takes their property and their lives.
Anyone with a “belief” that “nationalisation is best” is an ideologue and an extremist. Equally, anyone with a belief that “the free market is best” is also an ideologue and an extremist.
The boring, middle-of-the-road reality is that a mixed economy is best. The state is good at some things (haven’t noticed even the most ardent Tory advocating that the army or navy should be privatised, or that all roads should be privatised and tolled); terrible at other things (I don’t want to buy a car made by the government). And conversely.
The hard right and the hard right have one thing in common – tendency to elevate their policies to quasi-dogma, and an inability to think outside their herd bubble.
We need a bit of nationalisation and to accept that there is a role for the state. We also need plenty of private enterprise and to accept that they too have an important role. Problems start when, through ideological rigidity, societies start requiring state or private actors to do that which they are manifestly rubbish at. Such as governments making cars or refrigerators; or private companies (who exist primarily to make shareholders rich) being forced to carry out altruistic roles, such as PSO (public service obligations) duties – e.g., trying to force rail companies to service sparsely-populated routes.
Moderation and pragmatism are key; not screeching ideologues on statist or free market high horses hurling insults at each other.
Great comment!
Nationalisation doesn’t work and it inevitably is used as a tool by politicians when they interfere in the markets
We need a market based economy not a state based economy which always ends in tears for working people
This could easily be solved almost immediately by stopping the shifting of money from the poor to the rich by scrapping all so called green/net zero subsidies and taxes.
How felling, shredding/chipping and then shipping the contents of Latvia’s – until recently virgin forest to the UK in highly polluting vessels – to produce half the energy that could be extracted from locally hewn coalfields is the product if a particularly warped imagination – WEF UN Davis etc.
To give one easy to understand example.
I agree. The above article is peppered with comments and points that make it clear that this futile pursuit is the source of virtually all of our economic problems.
Amen. These situations are manufactured into “crises” for one purpose only, which is to create a reason to nationalize everything in its path. When the author calls Ronald Reagan “right wing”, and blames the war in Ukraine for high energy prices, it is quite telling where he is going here.
I offer history as evidence of what happens when the State takes over industry. It usually increases the cost multifold and the service level declines. We Yanks usually point to the postal service or the motor vehicle department as prime example. Thank God we don’t have nationalized health care yet.
Sweden is a vast resource rich country with a low population. It has hydroelectricity, timber, and minerals. Sweden could do net zero (whatever that means). It is one of the freest capitalist countries but has high taxes to pay for welfare and other state services. Without its wealth creation using natural resources, Sweden could not afford its welfare state provision. The UK is resource poor with a high population. It has gas and could frack more. Without fossil fuels, the UK economy would decline and we would all be poor. The UK cannot presently afford its welfare state provisions and lives on borrowed money which has no prospect of being repaid – other than in debased money. Nationalisation results in inefficient activities that produce wealth at low levels, if at all. Wealth is the added value provided by labour using the earth’s natural resources, which includes human resources. Net zero policies make wealth creation almost impossible by imposing constraints that benefit no one, unless one believes the nebulous concept that lower CO2 in the atmosphere will enable us to survive longer, but with a lower living standard and the denial of our present living standards to the poorer countries of the world. How can the middle east populations survive without oil and gas exports given they import nearly all their food and goods from elsewhere in the world? How can we maintain out living standards without importing goods from the countries spewing out greenhouse gases and polluting the planet? Navel gazing at what the UK is doing while ignoring what China is doing is a self indulgence that doesn’t address reality.
Nationalisation is based on socialist ideology: a failed ideology. The “green” agenda requires the control that only a socialist/neo-Marxist government would exercise to deny citizens the rights to chose what they buy in the way of goods, energy and services. Its logical conclusion is that we all live in a giant prison where we do what we’re told and have access only what the State allows us to have. Dismantling capitalism is the green agenda – they have wrapped the plan as saving the planet – a piece of propaganda with enough half truths to hide the unpalatable future of shared poverty for all. Freedoms will go for the “greater good” as decided by those wearing the same rose tinted spectacles that Robespierre, Lenin, Stalin, Mao and Pol Pot wore before they butchered people who complained.
Well said. All these comparisons to Sweden is nauseating. Completely different in most regards. If someone is so enthralled with Sweden, they should simply move there, if they can, as their immigration laws have toughened recently, to crack down on the abusers of their largesse.
ghastly, dull and tedious place
The Green crusade and it’s ‘ net zero ‘ fixation,so beloved by latch – on politicians will bring us all back to Pol Pot’s year zero. Look on further than the WHO’s Mitchie appointment for confirmation that public ‘ health ‘ is the least of their concerns. They demand ownership of your thought processes….and they too will butcher those who resist them.
thank you frank for this sane, and nuanced, response
Either, or a mix, can work. The devil is in the details of what is enacted and how it is administered
useless article – it shows zero recollection of the time when, for example, telecom services were state owned – just try getting a telephone line installed. it took months. Only after BT was privatized and competition introduced did service levels improve. Same in other utilities. Can you imagine the drag on the economy/dynamism if this still prevailed?
Agreed! I’m a fan of essential infrastructure being nationalized, but the unfortunate reality is our current government would make a dogs dinner out of it. The use of Public Private Partnerships (PPP’s) might offer a solution in some cases. Used extensively overseas and to great success in places like Hong Kong for their MTR.
We live in world where everything has to be polarized. The answer is always somewhere in the middle: them vs us mentality has/is destroying entire nations.
I have to say this article has left me speechless … the paucity of thought is breathtaking … it is only 30 years since the USSR and its ‘state’ industries totally collapsed leaving millions in relative poverty
Big State spirals downwards into deeper and deeper corruption … it simply does not work … totalitarianism becomes inevitable
You do realise it’s possible to sit in the middle of the extremes don’t you? You don’t have to choose between only communism or Ayn Rand capitalism, in fact most countries a mixture of the two.
The fact is that the current setup simply isn’t working for an increasing percentage of the population, with productivity and wages stagnant, home ownership rates at record lows, privatised utilities expensive and poorly maintained and inequality sitting at record levels. With all that going on would it not be sensible to shift the pendulum back the other way slightly?
Those in favour of the current neoliberal economy suffer the same delusions as the communists that came before, in that despite the evidence their system of choice is failing, they believe if they simple double down and deregulate and privatise even further then utopia is just around the corner. It’s not that the system isn’t working, it’s simply that it hasn’t been done “properly”
We are in the middle of the extremes right now in Europe – with a pretty huge state sector, NHS or equivalent, elaborate welfare schemes, state funded universities, etc.
Taking efficiently run train companies back to the 70s, nationalising power as a way of subverting market forces etc and further expanding the bloated role of government takes is to the extreme. Despite all the scare stories about “privatising NHS” etc, the great risk facing us today is too much government, not too little.
Europe has extreme right parties engendered by decades of coalitions and the Proportional Representation voting system.
Europe is still basically a socialist construct with the extreme left and extreme right waiting in the wings for the next euro crisis
Witness the current crisis in Italy
I wonder if Reuters will run an article with the headline
“If Germany fails the EU fails.’
they ran one a few months back with Italy instead of Germany in the headline. Since then Draghi got shoehorned in to save Italy (or was it the Euro?) and he resigned last week, meanwhile …
I hear the ECB are working on devices to limit “Fragmentation of the Eurozone” – ie they are thinking the same thoughts as Reuters all those months ago.
Meanwhile in the US
“The Environmental Protection Agency (EPA) lacks the authority to ban fracking, but is considering regulating America’s most productive and cost effective oil field into irrelevance. The Permian Basin in Texas and New Mexico accounts for 40% of America’s oil production and 15% of its natural gas production. Undeterred by the Supreme Court’s recent rebuke of its industry-remaking regulations, the EPA is contemplating using ozone standards to force Texas and New Mexico to curb oil drilling, potentially jeopardizing 25% of America’s gasoline supply. ”
Source:-
https://bonnerprivateresearch.substack.com/p/the-sun-has-riz
FInally China is still committing suicide with Lockdowns and now they appear to have a banking crisis. Either I’m a real-life Truman and am being manipulated by everything I read for a soap opera, or this world has never been on the verge of such an economic mess, and it ain’t Capitalism that’s the issue.
But that isn’t borne out of any reality is it. I don’t think anybody unfortunate enough to have to use the UKs privatised public transport would describe it as anything other than a shambles, especially compared to many European countries. In NZ since the utilities were privatised much of it is now much more expensive and is falling into disrepair. In certain industries such as healthcare, education, emergency services or when monopolies occur such as public transport routes and utilities and infrastructure leaving it to the market simply leads to cost cutting and price gouging.
This isn’t to say I want to nationalise everything, in fact I believe 90% of the economy is best left in private hands, however there are simply certain sectors that aren’t suited to it
With regard to transport, poor people who commute the least distances end up paying for rich people’s transport services to be subsidised. Your argument would be more suited to energy and water provision, as basic essential services. But I’d still disagree, as the market, adequately regulated, provides the best mechanisms for innovation and service standards.
“The fact is that the current setup simply isn’t working for an increasing percentage of the population, with productivity and wages stagnant, home ownership rates at record lows, privatised utilities expensive and poorly maintained and inequality sitting at record levels. With all that going on would it not be sensible to shift the pendulum back the other way slightly?”
Yes – but not the way you mean. Since before 2008, States have grown both in cost and power at the expense of the private citizen. The fact that the system is increasingly failing people is a consequence of this, not what’s left of the free market. So yes, the pendulum needs to shift the other way, but the “other way” in this context is back towards a smaller state and a bigger free market.
You do realise don’t you that you cannot be a little bit pregnant? You either have a free society or you do not. There is no ‘middle way’.
Your second paragraph implicitly blames the free market but that just shows your ignorance. All those things you cite are precipitated by utterly failed governments and bureaucrats and a tsunami of bad money.
In a completely free state there would be no consumer protection, no legal standards, no anti-trust, no banking regulations….
And even if we limit ourselves to state operated services and infrastructure, there is a middle ground. Lots of it.
This assertion is not true. And in any case no one is asking for “no consumer protection, no legal standards, no anti-trust, no banking regulations….“.
In fact, if anyone wants “no consumer protection, no legal standards, no anti-trust, no banking regulations….“, then I suggest countries like China and Russia will be rather more to their liking.
The key thing we need to have is rule of law and protection of private property. Which we have generally managed to do fairly well in the UK. With occasional interruptions like Gordon Brown’s nationalisation of Network Rail (or whatever it was called then) without shareholder compensation (“because shareholders and profits and dividends are ‘bad'”).
A completely free state doesn’t mean the abandonment of laws, for heaven’s sake. A freely elected legislature should always exist, but they should only exist for what their constitution allows. Today, legislatures’ get involved in so many areas it shouldn’t be involved in, such as how many warning stickers should appear on a ladder. Have you seen a ladder recently? It’s utterly absurd.
You can’t be a little bit dead either, but that’s not really relevant when we’re talking about economic models for society. Personally I wouldn’t want the fire brigade to refuse to go to a burning house before the occupants have handed over their credit card details, so a publicly funded service is best. Likewise for education if it was left to the market most schools in poor areas would close as parents couldn’t afford to send their kids.
The mixed economy hasn’t worked … the client state gets remorselessly larger, taxes increase on working people to pay for it.
The end of the road is nigh … its back to the small state and multi providers for our services not the big state monopolies and the near monopolies of many of the big Corps.
You are ignoring history if you believe a middle ground is even possible. How many of us would willingly let our entire life savings and life styles be controlled by the State voluntarily? Very few. It only way it works is by totalitarianism.
Likewise how many of us would keep our money in the banks if there were no laws or police and courts to ensure it wasn’t simply stolen?
Is the BHS pension scandal a good example of leaving everything to private interests?
There’s get a lot of space between Big state and Small state. Right sized state anybody?
The Small State is the only way to go … we must embrace a market economy and stop taxing working people to subsidise State Industries and Zombie Companies.
Planned economies simply don’t work … they take money from the wages of working people to subsidise the public sector.
The Norwegian state owned oil industry has generated a wealth fund of $1 trillion for the country, whereas the UKs privatised model has created a few jobs in Aberdeen.
Also the only thing keeping zombie companies alive was the endless supply of cheap credit from privately owned banks, not government policy.
Have you seen the difference in population between UK and Norway? We used the wealth generated to fund the welfare state, Norway bought shares in Capitalist companies.
Britains welfare state is much less generous than most of our European peers you do realise?
Well that rather depends on the competence and integrity of the state in question, which varies from country to country. A big state in the UK will always be a disaster, because the British state is devoid or all competence or integrity. But a big state Denmark might be, and indeed is, quite successful.
The mixed economy isn’t Soviet totalitarianism. We’ve tried the mixed economy post war, and the neo liberal economy after that. The former was empirically better.
No. By most standards the UK tried a thoroughly socialised economy post war and it barely worked.
“Barely worked” is an exageration, it was a total disaster and the UK was the “Sick man of Europe”
The free market did not defeat communism- the mixed economy did. As described above.
Yes, let’s give the state more power. Because the way it used its power and authority during the pandemic was entirely legitimitate and to be applauded. Certainly no overreach, dishonesty, corporate capture or utter national failure to be seen there, anywhere in the world.
An article straight out of the Guardian. I am so relieved I at least know what is going on – life must be even more frustrating and confusing for these types who think an electric car and UBI will make it all better.
Yes, inflation due to “profiteering gas companies” gave it away for me!
He didn’t say they caused the inflation, in fact he was clear on what caused that. He did say they were taxed.
The issue is that the state is not always concerned with the long-term security of the nation. And many green policies have an ugly, purely power-grabbing underside (the Dutch farmer protests over nitrogen come to mind). And while nationalization may be the future, the possibility that governments go overboard and lunge for more control is not negligible.
‘And while nationalization may be the future, the possibility that governments go overboard and lunge for more control is not negligible.’
Not only is this possibility not negligible, it is vast and inevitable. Thus we are trapped between the shocking incompetence of the state and mocking greed of the corporate sector.
A headline in another newspaper ” Average pay for partners at a law firm has risen by more than 19 per cent over the past year to an average of nearly £2.5 million” beggars belief when so called junior barristers out on strike are screaming for a pay rise.
“Thus we are trapped between the shocking incompetence of the state and mocking greed of the corporate sector.” Brilliantly succinctly put.
I fundamentally agree, but this is merely saying we are always trapped into dealing with human nature.
Both of the failings you rightly despair of are aspects of human nature – over many thousands of years. It is why I find that ideology – of any kind – is a trap and a delusion. All we can do is weave our way between the ever-present Scyllas and Charibdyses with solutions which work at the times and in the situations we find ourselves in.
So… While I find myself concerned a little that Paolo is a sociologist – with all the ideological baggage that entails – I think he may have a point. I am concerned that he misses the lessons Thatcher taught us that the nationalised model has problems with managements being unable to be held responsible for results and governments subject to the whims of democratic elections being unable to prevent nationalised industries being captured by their employees (the NHS is a current, classic example). He mentions neither of these serious negatives.
The pendulum swings. Perhaps unfettered neo-globalism needs reining in, perhaps not. But there’s a risk that people who were born after the nationalisations cannot know what that society was like, and buy into the idea that unfettered government intervention is *necessarily* a good thing.
Now I cannot say if Paolo Gerbaudo has an axe to grind. I observe that he was born in 1979 and his academic background is academic and sociology based. I wonder if his opinions are fully informed.
The neo liberal era has been a disaster. The period from 1945-1970 or so saw the greatest improvements in living standards in the west in its history. Thems the facts.
The neo liberal era has been a disaster.
No. “In the West” is a very narrow, Eurocentric viewpoint. The succeeding period – from 1970 to the present day – has seen the greatest improvements in living standards in history for between 70 and 80% of the world’s population.
Doubt me? Almost all of China’s orders of magnitude expansion of prosperity took place after 1970. That’s more people than the entire “West”. And similar improvements have taken place in Latin America, Africa and India since 1970. Almost all due to neo liberal policies.
Hans Rosling, Factfulness.
The neo liberal era has been magnificent for humanity!
Thems the facts. Sorry.
China have indeed lifted many out of poverty with its vast economic growth. The only issue is that their economy is almost entirely led by the State, so it somewhat disproves your theory
I can clear that up for you (about his opinions): they aren’t.
Something tells me these writers work entirely in the private sector and have never seen the enormous waste and inertia in the public sector.
Yes, and the biggest elephant in the room (if you’re British) being the NHS, where i worked for over three decades. I’m not suggesting privatisation and will uphold the principle of “free at the point of need” with my last breath, but structural changes are long overdue. Woe betide any political party that seeks to introduce serious reform (i don’t count tinkering around the edges or the disaster that was PFI).
It’s the rampant managerialism that needs to change. As a perfect example of how to stifle an industry or service, look no further. The public also have a huge role to play too though; first in not using services for anything other than actual health problems (as opposed to social/psychological issues – and i don’t mean psychiatric illness) and secondly in taking more responsibility for maintaining their own health and fitness.
The latter highlights the extent to which populations have been encouraged to rely upon the nanny state, a concomitant of socialist ideals which result in harm rather than public benefit. This cuts across all aspects of state interventionism.
Amen to all that.
Started working in the NHS nearly 2 years ago for first time and don’t disagree with what you say. However much of the funding which has been channelled into the bloated NHS should have been channelled into the things which prevent people using the NHS (for the wrong reasons), cutback in all other areas have resulted in severe social problems which then impact on either the Police or emergency health services- as they always do. I am amazed that this is not more discussed sensibly in our society.
The NHS budget divided by the population is about £2500 per person
For a family of 4 £10000. In the rest of the world you get very good private healthcare for that money. If you are all fit and healthy in the family your would have 3 to 6 grand left over for a holiday or better food, gym membership etc etc
My mother in law last week fell and completely smashed her arm and shoulder so much so that the arm ended up behind her back with the shoulder joint in pieces. Despite massive pain she had to wait 10 hours for an ambulance. Friends and neighbours seeing the huge injuries were too scared to move her. When my wife told me I thought I hadn’t heard correctly. She was in a big town, not miles in the countryside.
Utterly appalling.
In the nicest possible way, I must disagree on “free at the point of service”. To my mind that principle goes against so much of what we know about human nature that I find nothing in its favour. A modest fee for most consumers has been adopted almost everywhere else in the Western world because “free” always leads to overuse for trivialities and devaluing of what is being offered. The result is the visible UK situation – rationing by queueing. The longest waiting lists in the Western world.
The public also have a huge role to play too though; first in not using services for anything other than actual health problems (as opposed to social/psychological issues – and i don’t mean psychiatric illness) and secondly in taking more responsibility for maintaining their own health and fitness.
Your comments implicitly acknowledge my point. Everyone else has discovered the simplest way to ensure the public “play their role” is to charge most consumers a small fee at the point of service. A wonderfully effective and simple device.
Whilst i do have some sympathy for that perspective, in reality the cost of collecting fees and chasing unpaid fees, especially by inefficient management, would result in bureaucratic madness and potential further costs overall. If someone is ill or in pain, do we wait until they’ve paid before accepting them into the service for treatment? (Yes, i realise they may have to wait anyway!) But the practicalities mitigate against the collection of modest fees at the point of service.
It seems to work just fine in France and many other countries without the problems you imagine (I’ve used the French system). Perhaps we should take a closer look. These are clearly “solved problems” elsewhere so there is absolutely no reason they cannot be solved here. It seems to only be the will that is lacking here.
Free at the point of use seems to be a rally cry for the Nigerian woman who came to Britain to give birth to quads.The cost? Over £500,000 for her stay and recuperation.Astoundingly the hierarchy in the NHS believe we should not bill these people. And they don’t seem to understand the financial crisis the NHS is in.
I’m not going to pretend the NHS is in need of urgent reform, however the US taxpayer spends much more per capita on their system than Britain does, and receive no universal coverage of healthcare and are reliant on private health insurance. I know these two are the opposite ends of the spectrum but for all it’s faults I’d have the British model over the American.
Even the French and German part privatised models receive much higher taxpayer spending (around 20% and 30% in terms of % of GDP respectively) so a straight comparison isn’t always easy
On the contrary: something tells me these writers work entirely in the public sector and are unaware of the enormous waste and intertia around them because this is all they have ever known.
I’ve worked in large public sector and private industry roles, and can assure that waste and inertia aren’t confined to just the public sector. The large private sector companies are also hideously inefficient, I’ve found the correlation to be the bigger the company the less efficient it is
I would in general agree with you Billy Bob. There is a particular disease of large organisations I one day hope to come up with the definitive name for.
But the critical difference is that the public sector doen’t really do small organisations (or start-ups) – and is therefore more exposed to the problem and suffers more.
In the private sector large, inefficient organisations eventually – and rightly – die to be replaced by newer, better competitors. In the public sector I simply don’t see this happening.
A further problem in the public sector is that it is much harder to get fired for incompetence (not least due to greater unionisation, which invariably acts to protect the incompetent from rightful dismissal – example: defence of drunken train drivers). So – lilke a chemical equilibirium – the incompetent will tend to accumulate in public sector organisations. Until the public sector get the backbone to set higher standards, this can only continue.
I am not saying there is anything inherently less efficient about the public sector. But the way it is currently consituted and managed (scarcely the right word in many cases) makes it so in practice far too often.
I would be delighted to see the public sector up its game. For example, to get decent IT skills back in house and stop incompetently outsourcing IT projects.
“In Britain, part of this was eventually covered through a windfall tax on corporate profits (totalling £5 billion): a common-sense policy given the profiteering going on in the energy sector.”
It’s not profiteering-requiring-state-intervention unless you are also going to agree that the previous two years in which the collective pandemic response destroyed energy companies’ profits is also something requiring the equivalent, namely a windfall-tax-break system that reimburses companies whose business models were confiscated by executive fiat.
Of course, no government can actually afford to wreck an economy and then bail out the economy – where would it get the money, given that it is tax revenues that provide the wealth for such bailouts in the first place? I make the point solely to emphasise that demonising the private sector for trying to recover losses that only happened in the first place due to political stupidity is not acceptable in this debate.
Exactly.
And yet John, the Tories did tax the corporates, generally to applause. I don’t really accept that businesses gave the right to price gouge because they had hard times in the past.
There is no such thing as price gouging. The effect of high prices through reduced supply is to force more efficient use of what is being supplied – unless, of course, we’re talking about the sort of high prices that emerge from State-protected monopolies or oligopolies, which we aren’t.
And you may choose not to “accept” my argument, but we’re talking about a situation in which governments have spent two decades interfering with energy markets and following strategically inept energy policy, have introduced instability to the energy grid through technologically clueless renewables subsidies, have thrown energy companies to the wolves in shutting down their business model in the pandemic, and have negligently omitted to deal with moronic activist forces that have successfully partly shut down new oil and gas exploration and wholly stopped fracking.
To the apparent amazement of those in power, all these things combined have resulted in a situation where we face both a national and global supply crunch in the face of which our multi-trillion dollar investment in renewables has been completely useless. And the answer to the problem, from the same bunch of Liberal-Establishment cretins who put us in this mess, is to drop a windfall tax upon the one sector of the energy market that still actually bloody works?
You have got to be kidding me.
An excellent comment John, thank you.
PD.
Yes there is gouging John. It’s when companies overcharge and make undue profits from customers, generally this is a monopoly practice and is what we are seeing. I notice that the poor electricity companies are the victims here of “government regulation” but the story since thatcher is deregulation, often without regard to the externalities. The shortage in energy this year is in the fossil fuel part of the equation (ie gas), and without wind the U.K. would be in a worse position.
Certainly they should never have the right to price gouge. But if the “hard times in the past” were caused solely by government fiat for the good of the community as a whole, surely they should get government compensation. Otherwise, their only course is to price gouge.
Precisely. The very definition of “Government” is simply stated as a the means, whereby, money is taken from one group and redistributed to another. “Government” doesn’t generate a red cent on it’s own.
The virtue of the capitalist system is to incentivise producers of better cheaper things or services to drive out of business the producers of worse more expensive things or services. It is competition that fuels the virtues of capitalism.
Where competition is distorted or there is a monopoly service the virtues of capitalism cease to operate. So in theory there is no great advantage in operating a railway system which is a sort of local monopoly by private contractors than by the state unless some sort of competition can be introduced. Again having separate gas firms has not worked in practice since the different firms are not in a position to introduce a different service or product and reduced prices are often only available by taking excessive market risk that blows up the company if they get it wrong.
The problem with state control is the usual problem that things are run for the convenience of the politicians or producers rather than the customers so innovations are discouraged. Institutional capture degrades the service.
Railway competition was fierce on trunk routes before natyionalisation.
Local rail, i.e. commuter services competes with buses, cars, etc. And it also competes with landlords. If fares go up rents go down and vice versa.
The rest of this article suffers from borderline delusional attitudes towards the respective roles of markets and states. The phrase “free-market extremism” is telling for instance: when has any form of this extremism ever been contemplated in European and UK economic policy? Answer: never. The example used, namely the Ukraine war, is silly in this context not merely by ascribing such problems to imagined free market extremism, but more absurdly imagining that they would not have existed under State-driven energy policy. It was for instance Statist ideology that forced Germany to shut its nuclear power stations after Fukushima in 2011 and it was an entirely political project that led Germany to radically increase its strategic reliance upon Russian energy. It takes an olympian degree of clueless chutzpah to smear free markets with the consequences of such political short-sightedness.
Unsurprisingly the author makes no attempt to show how, exactly, Statist solutions to these strategic problems would actually work. I suspect that this is the same reason as always in such arguments: the person advancing the argument sees Statism as inherently virtuous and therefore has a blind spot where he ought to be seeing an unanswered burden of proof. So sorry, but I don’t buy a word of it. The fundamentals that make markets the most efficient means of allocating resources have not changed, and in addition to offer a view that there needs to be a rebalancing in favour of the State after a decade in which States have already been growing unaffordably and consequently producing ballooning national debts leads to a level of self-parody which I’m surprised actually made it past Unherd’s editor, quite frankly.
“Manchin, who is bankrolled by oil lobbies, insists that public investment would contribute to inflation, despite the fact that much of it is directed towards creating alternative streams of energy supply that may help reduce prices.”
No, they won’t help reduce prices. At least, they will not help reduce the actual cost of energy – none of the state interventions in the energy markets in recent years have achieved this, because they have all been designed to subsidise inefficient, unreliable and expensive forms of energy generation. That is why, after thirty years and trillions of dollars spent globally on trying to make renewables commercially viable, developing nations with no redistributive mechanism in their energy policies still don’t use renewables. The same applies in the West and other advanced nations, but the difference is that renewables are used and subsidised by fossil fuel energy use. At no point yet have renewables been used to actually reduce the real resource cost of energy generation. The only viable energy technology capable of this in principle is nuclear power, but for a host of embarrassingly stupid reasons that infest the Green movement, nuclear power is disliked at the policy level.
One small quibble. I saw my first subsidised (by a university I believe) wind turbine in 1979, so I would date the subsidies back by at least 43 years.
What a load of piffle. The big swing factor is Net Zero – without which Putin would have had much less leverage in his endeavours. The political misdirection and the sheer waste involved in going carbon free is already out weighing the cost of the truly required activities to clean our planet of totally avoidable pollution.
I hope Putin has calculated the carbon footprint of his war with the Ukraine. He doesn’t want the eco warriors that infest our highways fighting him, does he? Where is Greta Thunberg? Does she aim to encourage her followers to clog the Russian highways to Ukraine and demonstrate against the ecological pollution and CO2 generated by the war?
Good point. Why aren’t Extinction Rebellion shackling themselves to Russian tanks?
Speaking of which I have heard nothing from the Stop the War Coalition.
Perhaps they have redefined it as something else
I thought they were protesting against “NATO interference”.
You mean the special anti-Nazi operation.
Yes – they’ve accepted that nice Mr Putin’s definition of his actions. What else do sputniks/useful idiots do?
Somehow I don’t think any tank driver would be charged with assault were they to nudge a protestor as the woman who nudged the Insulate road blocker was. They would be lucky to avoid the gulag or being run over.
Make disruptive protest easy and pretty risk free and you get plenty of virtue signalling protestors. Make it difficult and dangerous and the number of protesters greatly diminishes.
Because they are funded by China, see Unherd
https://unherd.com/2021/12/does-the-ccp-control-extinction-rebellion/
and the anti-fracking Greens by Russia.
https://www.theguardian.com/environment/2014/jun/19/russia-secretly-working-with-environmentalists-to-oppose-fracking
it doesn’t take the state to build a LNG plant – indeed the state can’t.
If energy supply is out of form it because of the green energy suicide policies of government.
This is a crisis government created !
Its is deeply dishonest to suggest otherwise.
Oil companies can act at speed – when they aren’t being sued in courts due to brain dead legislation passed by narcistic virtue signal art graduate politicians.
I am not an ideologue, but, gosh, isn’t this sort of stuff infantile nonsense? Of course the record of having the state run every major industry has been such an obvious success, hasn’t it? Why didn’t Khrushchev wipe the floor with the West, as he so threatened, if this it all it took? Why didn’t the nationalisations of the 1970s make the UK one of the richest countries in Europe? And China didn’t become vastly richer by becoming more socialist but by embracing capitalism (though the state is still politically unchallenged). And we don’t actually live in this parody vision of small ‘night watchmen’ states either. We arguably need a smaller but much better managed state, and in that respect Singapore, Taiwan and other East Asian countries may show a much better way forward.
And then there is the silly demonisation of people who don’t take at face value that expanding government spending by trillions of dollars is the right way to go, such as Senator Manchin – ‘…. creating alternative streams of energy supply that may help reduce prices’ … but almost certainly won’t, because the non-fossil fuel energy sources are much less reliable, portable and storable, which is precisely WHY we use fossil fuels (still accounting for 80+% of the world’s energy).
What a load of drivel. The reason we have problems with the railways, energy and the NHS is because of government interference in all of them. Socialism is the way to poverty and that is where we are now heading.
A woefully flawed analysis. For example the 2008 financial crisis was markets finally working and passing an accurate judgement on failed government and bureaucratic interventions and the rise of ‘bad money’. It was the bond market working to stop the rot. And what did government do? Set out to destroy the bond market.
Agree 100%. But no politician will ever admit it – no matter where they are on the political spectrum.
No politician. Nor Central Banker (and that is rhyming slang). Nor financial bureaucrat. Once they admit it they are toast and turkeys don’t help with making the stuffing.
Not a surprise that this is an Italian Sociologists view.
I know what an Italian is. But I still can’t understand what a ‘sociologist’ is or what he/she/it does.
It is almost incredible. German government entirely destroyed the country energy infrastructure, most of the West European governments made their countries entirely dependent on Russian gas. Add to it the idiotic idea that people in poorer countries will stop improving their lives, that requires steady increase of energy consumption, because we will tell them it is bad for the planet. Phasing out carbon fuels before we have new abundant source of energy is a catastrophic lunacy that will destroy us. All of this is governments doing.
And what is the solution of this “a sociologist and political theorist “? Nationalization of energy infrastructure.
The solution to stop the government created energy suicide is.. more government.
The only question is are those “theorists” just cognitively impaired or they have an agenda?
When there is a simply titanic decision to be made you can guarantee that Germany will make the wrong one! To wit :-
Tampering with the Schlieffen Plan 1914.
Failing to stop after Brest- Litovsk, March 1918.
Tampering (yet again) with Operation Barbarossa, July 1941, and so it goes on. (thank God, it must be said)
We have not had anything remotely approaching real capitalism since 1913.
Ho! Excellent post. I bet very few people know why 1913 is a significant date.
Creation of the monstrosity known as the Federal Reserve?
Thank you Allison – if anyone can be bothered to check it out they will certainly learn something.
Kosher Nostra?
Thank you Paul Warburg, saviour of the British Empire, three years later in 1916.
The opening of the Völkerschlachtdenkmal, arguably the greatest Art Nouveau building in the World.
Sounds like a recipe for disaster. We need to escape globalist technocratic policies, not encourage them. Energy prices were already well up before Putin/Ukraine and the cause was years of policy that discouraged or prohibited fossil fuel exploration and development. The climate crisis is a scam, again sponsored by globalists as a way of establishing an international power structure as the foundation for totalitarian world government.
This is just dumb, dumb, dumb. Surprised it got published on UnHerd.
The problem is not market failure, it’s government anti-competition and regulatory capture. The bigger the state the more incentive to capture it by private sector actors.
It’s important for this side of the story to be told on Unherd as it clearly delineates the arguments. The more the left is seen for what they are, the easier it is to defend us against it.
Not a surprising offering from a “sociologist and political theorist”. Dude should get an actual job and then get back to us.
This was such a disappointing article. The free market has limitations and there are known pitfalls in relying solely on market forces. But central planning and government control over the economy has its own pitfalls and dangers – the scale of which cannot be overestimated given the history of the twentieth century. These one sided and simplistic “government good, free market bad” pieces contribute nothing to the discussion.
Some fundamental misconceptions – the two most glaring ones:
I believe the primary idea of not using Russian energy is to not be dependent on a pariah state.
Had Russia not invaded Ukraine then it is probable that Europe would not be at loggerheads with Russia.
Any which way, there is no doubt that Russia is now using gas as a weapon in an economic war.
Are you suggesting that Europe should give up and give in?
Europe should have stood on its hind legs when it would still have made a difference. The Minsk Accords were the pathway towards peace, agreed by Russia, and made binding on everyone by the UN Security Council. But neither France not Germany had the balls to stand up to the US and UK undermining the accords, and domestically, even though Zelenskiy was elected by a landslide on a platform to implement the Minsk Accords, the US and the UK abetted the Nazi fringe in Ukraine to torpedo the Minsk Accords instead of strengthening Zelenskiy in the face of his antidemocratic detractors.
Now we have the mess.
The ironic twist – if Ukraine wants to join the EU, and if the EU is serious about its principles, Ukraine will STILL have to implement the spirit of the Minsk Accords.
I can’t agree with this. Non-market driven state intervention is incredibly risky both to the stability of society and economically. This is especially true for supranational interventions which bring systematic risk as there is no ‘Control’ case to compare with. For societal resilience we must return to independent nation states with a diversity of approaches to managing the economy so that failing approaches can be weeded out. Dependence on Russian oil and gas and destroyal of dutch agriculture are crazy consequences of supra national interventions. The EU should not have a monopoly of power – the European states must be allowed to compete by allowing them to have autonomy to succeed or fail and learn from each others mistakes. Europe will have highest risk of failing if supranational technocrats get too much control
Exactly. It is (a mild form of) nationalism we need, not nationalisation.
Presenting classic communist doctrines that have been proved to impoverish everyone besides bureaucracies as new necessities is absurd. More spending from the state brings inflation. The author appears to ignore the historically proven inefficiencies of nationalized businesses. Is anyone seeing a deja Vue in this absurd rhetoric?
I live near Switzerland. Their national Rail Company and National Post Service, complete with Post busses, seem to work very well.
As yes. Switzerland and Sweden. The two perfect examples that are completely different and don’t matter. Try to buy a house and seek citizenship in Switzerland and let us know how that works out for you.
What does Switzerlands immigration laws have to do with its public services?
Likewise is limiting the purchase of housing just to citizens (rather than a UK style capitalist free for all) really such a bad thing?
Breathtakingly uninformed.
And this passes as journalism in today’s world.
Whoa, Nellie! … Government creates crises. So, we need more government to resolve those same crises.
That is a classic pitch. Disheartening.
“Manchin, who is bankrolled by oil lobbies”
Or is it his actual constituents in WV that rely on fossil fuel energy production for their livelihoods pressuring him?
Perhaps Manchin recognized that Biden’s (Obama’s) BBB plan was a little short on actual infrastructure spending but filled with myriad progressive/ Democrat agenda items aimed at fundamentally transforming America
Go figure? A politician who represents the interests of those who elected him. That sure sounds like Democracy in action, to me.
Well, the writer is certainly getting “owned” in the comments section. Not the best thought through un-joined-up thinking piece……
“Well, the writer is certainly getting “owned” in the comments section.”
He’s getting a proper arse-kicking isn’t he? Richly deserved though.
When the state makes investments, in effect, one organisation has to make the right choice, usually through the mechanism of 5 year plans or other such operations. In the light of how politics works, does anyone really think this is likely to be even close to optimal? In the market economy, there are thousands of choices made and competing organisations are incentivised to provide the most desirable solutions. Don’t believe the argument? Look at the results. Look at the Soviet Union. Look at the USA or Western Europe. It is amazing that anyone would even write an article of this nature.
The author isn’t asking for the state to become heavily involved in the free market, simply key industries or when monopolies occur
Please tell me this article is intended as a joke, an April Fool published on the wrong date.
It seems to have no sense of history, of economics, of understanding of what we have been through in the last 70 years, most of all that what we have learned in the revealed knowledge that the state is not the solution, it is the problem.
Is this writer serious? If so he needs a crash course in modern political history and a total immersion year in the economics department of the University of Chicago.
Look at the average airport. It’s a complex business with refuelling,ATC, baggage handling,maintenance, security,passenger handling. Has anyone noticed where the queues are? Yes,at Border Control,the only part the Government is responsible for. Why on earth would we choose Government to run anything?
Brilliant comment.
To be fair, there are also queues at “security” checks. But those are also essentially a government-dictated activity. I’ve always suspected there is a massive amount of waste and inefficiency in some of these “checks”.
Of course that has nothing to do with plane loads of people having to go through the same place as they leave the plane. Are you suggesting privatising the border would lead to shorter queues getting off the plane?
There is so much wrong with article it is difficult to know where to begin
I would say that the author is masquerading as a sociologist and political theorist but the article seems to be par for the course for sociologists and political theorists
So I think I will have to leave it as masquerading as an academic with pretentions to be an intellectual despite an absence of any discernable intellectual capability
“The Russian invasion of Ukraine has led to a severe rise in the price of oil and gas, with gas prices already increased by 52% by April 2022”
Just wondering:
Did the 25% of our energy bills that constitutes the Green Levy (designed to prop up hopeless green energy initiatives that cannot attract private investors) also rise by 52%?
Perhaps if we cut out the ridiculous green tax we wouldn’t be in these straits.
On a more general point, your suggested solution is to massively ramp up government spending?
Are you aware of how much debt we are currently in??
It would be helpful if the author quantified this “austerity”. Did government spending decrease as a percentage of GDP or some other measure?
“In the US, even though Biden’s $1 billion Infrastructure Bill was passed, it still barely makes up for decades of public disinvestment”
I think it was a trillion, not a billion! It is exactly this rather collectivist, bolshevik approach proposed by the author that has already done for Europe.
It must have been a Freudian slip.
All this depends on whether you think Europe has much of a future. I do not think so. The Eurasian land mass is moving it’s centre of trade and power east. The Caspian Sea area is where the new trade routes and soon the pipelines will go. That sea will be denied to the West and will become the domain of the nations led by China rising to wealth and power and probably laughing at our obsessions and weakness. The West produces nothing the rest of the Global South and the world needs . It is resource poor as the current days show all too clearly. Then it hardly matters what economic system we adopt if the only way is down.
Net Zero is a Western obsession. For the first time the West is deliberately turning it’s back on technological sense and adopting machines and techniques that are stepping back to a another age. The latest internal combustion engine is so far superior to current battery technology as to be not even worth comparing. Yet we buy electric cars because we believe in them and want to ‘save the world’ not because they are better or more efficient. The same with the windmills and solar. Funny thing is that nuclear power stations use steam to generate electricity and steam was what drove and created our industrial society. Not that the young even understand this anymore.
If we, as looks likely decline, into irrelevance and gentile poverty then the next step is we fall prey to a new imperial project from the East. What goes around comes around.
Eurabia is the inevitable future of statist people that were too afraid of their own legacy of freedom and never dared to live free while hanging on to self-defeating political maternalism while blaming the boogeyman of so-called neoliberalism, that never was…
Dear Mr Gerbaudo, I suggest you discard the Marxist upbringing and read more widely. You will otherwise find yourself manning some romantic barrier erected alongside a guillotine; or you might go further and see merit in Lenin, Stalin, Pol Pot, Mao and all the other deluded followers of Left Fascism.
But it will be different this time! They promise.
Macron might be at once the perfect embodiment of French arrogance with WEFite villainy, but credit must be given to the only Western leader embracing Nuclear power.
56 Nuclear reactors and counting, compared to the UK’s pathetic 13.
He didn’t though. That was all put in place well before Macron. Essentially from the 1970s onwards.
But before you get too excited about French nuclear power, check out the mess they’re in at present – just google “Flamanville”. This is their “next generation” reactor. It’s on the Cotentin peninsular, south of Cherbourg. At least 15 years behind schedule and massively over budget. Still not commissioned. This is the model we’re buying for Hinckley Point. Frankly, we should just design and build our own from scratch. This one reason EDF has such massive debts and needs a state bailout (one does wonder if this meets EU state aid rules – but it’s France, so those won’t ever apply).
To be fair to France, it has the same bunch of Green nut-jobs trying to destroy nuclear power as do the rest of us, the difference is that they have a bigger hill to climb because of France’s far-sighted decision to bet the farm on nuclear in the 60s and 70s. You are quite right that Macron had nothing to do with the original good decision and almost certainly formed part of the Liberal establishment that has been undermining nuclear power ever since, but it would appear that even Emmanuel isn’t so stupid that he can’t grasp now, following Putin’s invasion of Ukraine and the resulting European energy crisis, that France’s energy future can only be saved by its nuclear legacy.
All this is true, but Macron and previous French leaders did not try to shut down existing nuclear power stations unlike Merkel.
So yes execution of nuclear policy is lacking but the policy itself is sound.
And nationalising EDF
The more governments meddle in the markets, distort the markets, the more dysfunction & inefficiency. It’s that simple. Areas like ‘defense’ are non-market items which should be overseen by the government. There’s even a market. solution for ‘education’.
I believe certain vital industries ought to be run by the state but not the British state as it is currently constituted. I believe in the nation state, and the primary imperative directing every British policy decision should be: is it in the interests of Britain and the British people? If the answer to that question is no, or if policy primarily benefits plutocrats then it should not be made law.
The Heritage Site | Adam McDermont | Substack
The author of this awful article pretends that his ideas are a way forward to a better life, whereas, in fact, if implemented they would be steps on the road back to serfdom. (reference intended).
Going “green” will inevitably lead to harsh austerity one way or another. Printing money and using it to buy businesses, or worse, handing it out to people to subsidize consumption, will exacerbate inflation and is not a way to prevent austerity. That, or trying to raise taxes to pay for these expensive boondoggles will lead to recession or depression. Austerity is not necessarily an act of commission by “heartless” governments that don’t understand Southern European culture. It can be the result of drifting along into increased statism.
I don’t think this is a surprising turn of events.
We already know that not every part of human existence or society is suited to be run on market principles. especially when the central principle of the market is still profit for shareholders.
And yet someone still needs to run these collective necessities.
The insistence that what is really critical infrastructure which will usually involve effective monopolies is best done on a market basis was never likely to be a satisfying solution. Is nationalization the answer? Well if some believe that, and I’m not contradicting them, they maybe need to propose some other options.
“We already know that not every part of human existence or society is suited to be run on market principles. especially when the central principle of the market is still profit for shareholders.”
Only the profit motive has ever resulted in services possessing a continuous and reliable incentive to reduce costs. It is really quite absurd to describe the profit motive as something that puts the interests of shareholders at odds with the interests of consumers: they do not oppose, they align, and it is the profit motive that makes them align.
As for there being certain types of services that are best run by the State, that is uncontroversial and very obviously correct. The problem is, though, that the proponents of nationalisation don’t want to have that debate because in most countries, the UK especially, they have already successfully gained control of many industries that should quite certainly be market-provided. Health and education are two prime examples and no, I’m not about to argue for wholesale privatisation of both, but merely to point out that in both cases, they are two systems not one. Healthcare is both an insurance system and an operational healthcare service provider: the fact that the State runs both permits the most outrageous level of inefficiency to go unchallenged. The same goes for education: it both provides educational services but also takes the parental choice about schooling away from families.
Both these systems could be reformed on market lines without removing the essential redistributive aspect to their existence, but of course the people who support nationalisation would never agree to it because if they welcomed any sort of accountability, they wouldn’t support nationalisation in the first place.
It should be remembered that a lot of European privatisation policy has been driven by an EU desire for cross-ownership of utilities and infrastructure.
The idea was that if these were owned by trans-national companies – the sectors no longer sliced up along national boundaries – then it would be impossible for ‘nationalist’ governments to pull them back in.
Private companies have spread their wings throughout Europe, and beyond. Taking them back into government control leaves a headache…governments controlling industry in other countries.
The logical solution would be for the EU to ‘supra-nationalise’ them. Brussels would be keen, but are EU citizens ready for this next turn of the screw in the EU’s ‘ever tighter integration?’
Hard to manage a careful analysis of the problems without mentioning sanctions of Russia. And, it’s impossible to expect increased efficiencies as a result of government management. They won’t exist, of course, but added deficits from poor management and political downpricing of products will simply be born by taxpayers or the virtual printing press.
What is a “sociologist and political theorist” doing making prognostications about economics and energy? We want only “experts” prognosticating here!
Free market? Please. Western governments spend 40-50 percent of GDP on gubmint spending. That means that 40-50 percent of the economy is decided by force. Some free market, Paolo, amico mio.
Nationalization? Yeah, of course the politicians want to do it. That way all the failures get hidden in the big belly of government and we never know the real cost of the mistakes and the buying of privilege.
Clean energy? Well, the chap across the street has a fusion power startup called Helion Energy. If it works, I’m all in. But I have a feeling that the biggest entertainment draw in the next few years will be all-night bonfires at the electric bus depot.
Humanity is maybe entering a new cycle typical of the inception of societal collapse and the eventual disappearance of civilisation as we know it due to causes yet to be comprehended other than via red flags such as over-population, pollution on a global scale, climate change, State and political manipulation, war, solar changes etc. The reason(s) are still unknown until it happens. History has a tendency to repeat itself – e.g. The Indus civilization disappeared approximately 3,000 years ago for reasons unknown. One theory suggests that it fell victim to climate change that resulted in drought and famine.
Over population is a myth, outside Africa.
And Ireland.
“Over the past 40 years, there was broad political agreement that markets were not to be meddled with, and that the power of the state had to be reined in”. This may be true but in practise for most of that period, markets have been meddled with more than at any time since the 1920s. Interest rates are at heart of how markets regulate themselves and, by meddling with interest rates, we have had the worst of all worlds; markets shorn of all natural regulation and governments that do very little to compensate because they (like the author) seem to be blissfully unaware that suppressed interest rates mean markets operate against the interests of society. Whether you believe in big government or small you need well regulated markets with the incentives in the right place. We have neither at the moment.
Don’t forget that breaking up nationalized industries was largely aimed at curbing the power of the unions which had brought the UK to its knees during the second half of the 1970s.
Any renationalisation must be accompanied by a contract of employment where notice of withdrawal of labour would be subjected to arbitration and possible dismissal if the findings of the arbitration were ignored. This would create a balance between the public and private sectors..
I agree the unions had become a law unto themselves and needed their wings clipped, however I believe the vast sell off of state owned infrastructure was a mistake. Nobody can pretend the privatised public transport is anything but an expensive shambles for instance
The assumption here is that decarbonization is required. While it is nice as a long term goal, it is NOT required, certainly not at the price of civilization.
Perhaps Europe could try raising its Nat Gas production back to what it was 20 years ago, from where it has dropped almost in half. Until then, I will strenuously oppose any export of OUR gas from the US. The Net Zero crew is already trying to destroy our civilization here as you have already done over there.
I can’t add much more than I’ve read in the comments section already. I would add though, that the much heralded green transition requires innovation. Public companies do not do innovation well. If you think governments can solve climate change with nationalisation you’re in dreamland.
This article is like watching a marksmanship contest, where the above marksmen is shooting at the wrong target.
Virtually everything he puts forward as an argument against free market capitalism, I see as caused by the Government interference, Crony Capitalism and the Greens with their insane Net Zero.
The current crisis in gas started before Putin, it began when Brazilian and Portuguese Hydro power plants couldn’t deliver due to a drought – both countries went for LNG to replace them – increasing demand.
Next Europe’s windmills failed for almost a year to produce the predicted output – the EU used gas from its reserves to replace it, so increasing demand.
Then thanks to lockdown and drops in demand for gas then, major works were undertaken in many companies that weren’t all complete by the end of 2021. So limiting production.
Finally up pops Uncle Joe Biden and hinders the US frackers from gearing up again, so limiting production. Nothing there execept maybe over-running maintenance that can be laid at Capitalism’s door.
As an aside, how Germany can place any faith in the US Democrats replacing Putin’s gas is beyond belief.
The crisis we have I believe prompted Putin to go for broke now. He couldn’t afford Ukraine to be offered NATO or EU membership and he took advantage of an existing situation. He didn’t create it. He has made it worse but even so the economic disaster coming has simply arrived earlier due to Putin.
It would have arrived anyway because 2008 can kicking QE/Low interest rates, with Net Zero insanity were always an explosive mixture.
Many normal as opposed to MMT economists warned that all that saved it was China and its exporting deflation into the global economy. IF ever inflation returned, the whole thing would explode.
Given no one, including the naysayer financial reports I read could see what an inflationary event would be, the people I read said ‘it would be a Black Swan event’.
Ironically it was China’s black swan – lockdowns. Now we are stuffed any way. BUT we should NEVER take any of the steps claimed as the way forward by this writer, truly I’ve never seen so many wrong conclusions in one article.
Shareholders for a start are not a homogenous bunch. The very group that in the early days of Capitalism would have controlled the CEO’s is now sidelined by the Masters of the Stock Market – investment funds.
Usually full to the brim of pension money. They overwhelm the small shareholders and how often is a ‘you scratch my back I’ll scratch yours’ between execs played out? I don’t know.
BUT I do know a few things.
a) The Charity sector, with NO shareholders is basically a Corporate world, its bosses on mega salaries compared to say their ‘Chuggers’ – Anyone any idea what goes on with Oxfam & donations and the sex scandals now their ‘exec’ moved it to Africa?
I stopped donating to CAFOD when they hired one of Labour’s hatchet men. What did they want him for?
Then re Oil Companies, the very situation this man claims to want is effectively in existence when Government can at a whim introduce ‘windfall taxes’. Then any Corporate is a piggy bank for the Executive. Profits Nationalised and Losses Privatised!
See BP and Shell, last year they created history with the largest corporate losses on record in London. Losses 3 times the ‘record profit’ Sunak taxed. Then not content with that, the ‘sanctioning’ of Russia meant BP and Shell disposed of profitable fossil assets in Russia at reputedly $25 Bn discounts, again more than their record profits!
This is madness.
b) When Gordon Brown’s favourite Banker fell from grace and Gordon claimed to have save the world in the HoC by introducing QE/Low interest rates & bailouts. I was a small shareholder in Lloyds and HBOS. HBOS was rumoured to be in trouble and their then CEO launched a £4Bn rights issue ‘as a precaution’ – I almost fell for it, but there was just too much smoke and mirrors when reading around, so I declined to take up my shares. Not long the smoke cleared and the CEO was either completely incompetent or worse for HBOS was a wreck. (I don’t think he was even investigated!)
Gordon rounded up Lloyds bosses and offered to waive the law (wow, that’s great ,when you need a law, your PM can ‘waive it’) so that Lloyds could take over HBOS.
I voted against as both an HBOS shareholder AND a Lloyds shareholder BUT the big boys just overwhelmed the small shareholders (I know of no small shareholder who voted for that move, there may have been some, I just never met them)
I voted no because I accepted HBOS was dead and my investment in them gone, and I didn’t want Lloyds dying of contagion. My Lloyds shares bought at over £2 & £3 a time are now worth 45p as of today – a decade on.
I never sold so I never crystallised my losses. BUT had the shareholder structure been split into two ‘colleges’ – the funds and the individual shareholders – maybe with a limit on on the holding so ‘small’ not individual, AND both had to agree to any proposal, Lloyds may have been saved and HBOS died as it should have done. That may also have cut short the careers of the incompetents running HBOS.
Now introduce those 2 electoral colleges and I’d be interested to see how many CEO’s got away with ‘share buybacks’ and their massive bonus and salary increases.
Capitalism worked, we just haven’t got it right now.
What this article proposes is Soviet Union Mk 2. Though to be fair, the current Crony Capitalism of the West is probably about to collapse around our ears and it isn’t that much better. But I’d rather that and see what companies survive the crash. (Hopefully I’m invested in them!) than let Nationalisation wreck the country permanently.
Paolo Gerbaudo wrote, “So while state interventionism is coming back, its return is far from complete.”
State intervention can be successful only if the government wants to build an industry that does not exist domestically but that exists in other countries. For example, Tokyo successfully built an electronics industry by intervening in the market.
Other instances of economic intervention produce inferior results and must be avoided. Specifically, nationalisation must be avoided.
In the United States, most Americans are unaware of economic principles and wrongly believe that legislation like the CHIPS Act of 2022 will boost the GDP above the level without the CHIPS Act.
American economic ignorance will increasingly worsen into the future. Hispanics now control the political system in California, and the Californian illiteracy rate is the highest rate in the nation. “In fact, 23.1 percent of Californians over age 15 cannot read this sentence.” (See the reference.)
By 2040, the United States will cease being a Western nation due to open borders, and Hispanic culture sill dominate.
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No mention of the ‘entitlement culture’ endemic in Europe.Nationalisation will not solve it.Just look at all the union strikes happening.
When Tebbit said ‘ people should get on the bikes to find work’ the political classes sneered.Much of Western Europe’s decline has been halted by migrants who will leave their homelands for work but it is only a bandage unless robots can take over the hard graft.
How dare those working class people expect their wages to keep pace with inflation! They should accept their pay cut with good grace
Do we have a civil service capable of addressing the nation’s problems even if they had the necessary funds?
“It would mean rethinking our entire economic model, finally accepting that some sectors are best run by state-owned companies, and devising fruitful ways in which state and market can collaborate.”
This is not only obviously the way to go but builds on already existing state-market interdependencies that ideological blinders have, to an astonishing degree, succeeded in disguising (one measure of the disguise’s enduring success can be seen in the number of knee-jerk, “No! No! Not the meddling state!” responses here). I invite readers to consider carefully these perceptive, counter-narrative observations made by Mariana Mazzucato back in 2014:
https://www.youtube.com/watch?v=LHt0Erp040Y
The collapse of all socialist states was preceded by nationalization and one-party rule.
Another deluded Marxist from Italy.
Employed by, what was the name?
Scuola Subnormale Inferiore
I made a comment and then decided that Frank McCusker (below) said it much better than I did….
The EU was arguably a flawed emotionally and ideologically conceived utopia dream from its inception, based on Hitler’s post war plans had he won WW11.
Had it remained a trade and financially based entity, it may well have worked, bar two fatal flaws:
1. The Euro cannot be a ” single” currency” at the same time as individual nation states Euro denominated bond borrowings have different/ seperate price/ yield matrices…. that is manifestly NOT a single currency.
2. Obsession with racism in every corner of our lives does not eliminate the fact that EU states have NO common culture, lifestyle, and or preferences. Germans have nothing in common with Italians, and northern Italians, for that matter have nothing in common with Sicilians, not unlike Ulstermen and, for example, thise from Co. Cork.
Had trade and finance deals been set to benefit all EU states, in their dealings with Non EU states then fine… but they were not, not least for Germany and the rest.
Finally, Britains adversarial and ” non code” legal system, and its domestic bank/ borrowing low regulatory systems, and its equity rather than bond based savings/ pension systems were never going to fit and work.
Britain should be an ultra low tax low regulation neo Swiss/ Liechtenstein tax haven equipped with full banking secrecy, and watch the billions roll in.
Some of us do NOT want any transition to post carbon- the air that we breathe is superb, thank you.
An ideal target for nationalisation must be the British railway system, currently ‘on strike’…..yet again.
Frankly it is a national disgrace and should be nationalised forthwith, then stripped back to its core of about 1,600 miles as outlined by Sir Richard Serpell in his 1982 report ( Plan A.)
This would provide a manageable railway, with a tiny compliant workforce, at little cost to the Public Purse. For far too long ‘many’ minuscule communities have demanded a rail link at the expense of the many. Scotland, Wales and Cornwall being prime examples.
Surely this comment is made in jest.
Minuscule communities? Really? You mean those not subsidised to the same degree as London? Those where petrol and public transport costs are higher than those in London and the south east? And where transport services are either non-existent or very few and far between, not every few minutes? I take it you don’t live in Scotland, Wales or Cornwall. ..
Yes the first thing to, ‘level up’ is transport infrastructure across the UK!
I do like a bit of irony
You seem to have missed the fact that the British railway system is ALREADY nationalised. Railtrack is in public hands, as are some of the train operating companies. It’s already more nationalised than not.
Your name must be Jack. As in, “I’m alright….”