Saturday, 28 May 2011

The market as substitute for religion

Throughout my professional life, there has been a lionising of the free market with what appears to be the same disregard for reality as from those who were disappointed by the failure of the Almighty to launch Armageddon last weekend.  And where there isn't a market then we have a merry band of neo-con regulatory economists trying either to create one or (better still) to have a playground of their very own where they can judge what a market "should" look like in the absence of competition.

Britain's railways were a victim of Mr Major's misguided attempt to demonstrate that he had greater political virility than Margaret Thatcher.  He would probably have been better off admitting to his affair with Edwina Currie and leaving policy well alone.

Milord Adonis, the former Transport Secretary, conceded an inquiry into the costs of the railways as part of the Danegeld from the Treasury when he wanted (after 35 years of delay and prevarication by government) to electrify Manchester - Preston - Blackpool.  This was then taken up by the Chinless Petrolhead when the Coalition acceded to power, and produced 400 pages' worth of report a couple of weeks ago. 

If you read through the report, available on the DfT's web-site, then the first thing that the non-specialist reader should ask is: "if the railways cost so much under privatisation then why the f**k doesn't the government get on and renatinalise them?"  The entire premise of the report is that by opening the market and getting the contracts and incentives right then somehow you will free up lots of profits, sack the staff and somehow achieve the holy grail that three Acts of Parliament, countless ministers and regulatory experts have failed to locate while taking massive handouts from the taxpayer.

Bearing in mind that this report was co-sponsored by the Office of Rail Regulation (on whose watch, it must be said, Railtrack went tits-up and the costs of Network Rail have spiralled) it is hardly surprising that the creation of a regulatory illusion and a lawyers' playground is uncritically accepted. 

The salutory lesson is that of the National Health Service, which has been systematically pillaged by government and milked by doctors since the 1980s.  In Scotland, knowing that they would have faced riots and bedlam, the Tories did not marketise to the same extent, and costs are now lower than south of the border.  Where an internal market has been implemented, it appears that the combination of profit margins, confusion and the need to demonstrate that the public sector can offer as much opportunity for snoutage as private business has resulted in an unaccountable free-for-all.

It is dangerous to put forward any viewpoint that the emperor has taken up naturism, and that public services and infrastructure are best managed in the interests of the end-user, without thousands of transactions taking place between booking a GP appointment and being told that you have the Black Death and it will cost too much to treat.  The veneration of the market is a cross between Mariolatry and a cargo cult, the totem of competition or regulatory intervention used as a means of destroying common sense and practicality.  The danger is that the EU has been infected by this and has tried to implement similar reforms across member states' economies without regard to reality or empirical evidence.

The real reason for the market fetish, and pseudo-markets, is that it makes it much more difficult to find anyone to blame for the decline in public entitlements and rising taxes.  If the apparatus is supported by a panoply of regulators and "consumer champions" then the real culprits are always given the benefit of the doubt (which since it's politicians isn't surprising).    The Coalition won't do anything significant to dismantle this folly, so we are doomed to pay over the odds for public services until there is a radical change of government (and Labour certainly won't go down that route on the evidence of their zealotry and myopia in office).

At least we can worship at the church of stupidity a little while longer.

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