There's Foolish....And Then There's FOOLISH

If I set you all a challenge: see how many clowns you can gather together in the shortest time, you'd probably contact all the circuses in the UK. Beth Granter at Care2 Petitions has shown us an even quicker way; she has gathered together a whopping 20,471 clowns (at the last count - it's undoubtedly more by the time you're reading this) who, despite the fact that City Link is an insolvent business that reeks of loss-making for its investors, wish for it to be nationalised so taxpayers' money can be fuel added to that flame. That's impressive clown-gathering at its best.

The City Link insolvency was due primarily to larger competing forces, but also inefficiency in performance too. Better Capital is a private equity firm that invested quite a few million pounds in City Link, and it proved to be a bad move. Of course, private equity firms are subject to market forces like everyone else - sometimes they make lots of money, other times serious losses. People are happy when the former occurs and unhappy when the latter occurs, but the market is the best determiner of efficiency and inefficiency there is. Bankruptcy is bad for those involved, but a good thing for the country overall, because it's a signal that inefficiency is giving way to other competitors' efficiency  

Better Capital structured the company’s finances to ensure that it would recoup the funds if the firm collapsed - which, of course, is bad for the people now redundant, but is also a security measure that goes on to be profitable for other firms when investments are sound.

Evidently, this was a disastrously misjudged and, as it turns out, calamitous investment. What's making the general public unhappy is that Better Capital bought the business by securing a protected interest loan from creditors, writing the investment value down in the event of liquidation, meaning creditors get paid off before staff because the creditors are the equity-owners. This is the kind of thing that causes dissonance on the economic left, as it's easy to forget all the successes when failures are lamented, particularly when lots of people are now out of work.

However, and here's the telling point - sympathy for people's losses is one thing - out and out foolishness is quite another - and it is about as foolish as it gets to campaign for the nationalisation of an insolvent company that proved to be poorly managed and inefficient against competitors. Making a loss means, quite literally, losing value by being in operation - the very last thing on which one would want public money spent. Why on earth would anyone think that a firm failing to compete against more lucrative/efficient competitors would be any better under State ownership, where inefficiency and profligacy is even rifer?

It's a scary thing that in just a couple of days over 20,000 people came forward as being either so ignorant that they had no qualms about supporting this madness, or so pliable that they signed such a petition without giving it a moment's thought.