The people that run our
country worry me, but the people that want to run our country (Labour, the Lib
Dems, the Greens) worry me far more. Despite the fact that, apparently, China
has produced more steel in the past two years than the entire UK has since the
19th century (and wow, what a fact that is if it's true!), and the fact that
the British steel industry is losing over £1million a day as a result of the
collapse in steel prices (can they not spot the obvious supply and demand link
between the two facts?), they still want to flirt around with the idea of
nationalising British steel - not because it's the prudent thing to do (even
the most blockheaded politicians must be able to undertake this basic
arithmetic), but because it's popular with UK voters.
I wonder if any of those
calling for nationalisation of costly, failing industries ever gave a thought
to the concomitant losses in other parts of the public sector (health, social
services, defence, police officers on the beat, old age pensions, etc) required
to pay the price. Probably not.
One thing they definitely
don't give a thought to is the notion that when a business or even a whole
industry dies in the free market, it is not only a good thing in the long run,
but a necessary thing too. Not only is a death in the market a sign that others
are providing the good or service more competitively and efficiently, it is
also a necessary departure that makes room for new industries to grow. Imagine
if the companies that produced video tapes hadn't died or moved to newer
technologies, or suppose people were still trying to make a living producing
telephone boxes or designing gramophones - it is easy to see why they wouldn't
be solvent anymore.
When obsolete industries shrink
or discontinue this helps free up new capital for fresh industries. If we had
tried to artificially keep alive the video tape industry, we wouldn’t be
enjoying so quickly the improved movie watching experience of DVDs or On Demand
TV: if we had tried to artificially to keep alive the old telephone industry,
we would have slowed down the growth of the burgeoning mobile phone industry
that has seen so many other auxiliary gadgets included on our hand held devices
too.
It is just as necessary
for a healthy economy to allow providers of extraneous goods and services to
shrink or die as it is new ones to emerge. The former is essential to the
latter, as there always needs to be fresh capital freed up for new and improved
industries. Trying to artificially preserve the British steel industry over
more competitive steel production elsewhere is not very different to trying to artificially
preserve fax machines at the expense of emails - it is only a more immediate
and reactionary example of the same thing.
Alas, it is true that all
this does have a negative short-term effect on the workers in the British steel
industry, and in some cases on local communities, but artificially propping up
an industry that is being outcompeted by a more competitive industry abroad is not
the right thing to do, for all the reasons just explained (By the way, if
you're still having emotional home-grown difficulty with this point, let remind
you of a previous article I wrote for the Adam Smith Institute in which I
explain how artificially
propping up failing British industries also hurts other British industries in
the process).
The reality is, there is a
horrible and harmful co-dependency between the masses of our population - who
are so Anglo-centric that they fail to understand how competition works, and
how stifling competition harms us as well as everyone else - and the pliable
politicians that rely on their vote to survive in their roles. The people that
govern us, and the people in the shadows wanting to govern us, are toxic to our
economy, because they make decisions of popularity, not of prudence, based on
the fact that the majority of the people they govern prefer popular myths over
prudent truths. As George Orwell once famously said: "In times of universal deceit telling the truth is a revolutionary
act", and this nation badly needs a lot more truth injected into the
political mainstream.
