In all but name the government is going to nationalise parts of the steel industry.
Three thoughts. First, it should admit it. But it isn't. It claims it will only take a 25% stake, albeit one linked to hundreds of million so funding which would in any serious analysis indicate control and a desire to, at least in some circumstances, exercise it. This denial of what is really happening is dogmatic. That is deeply unattractive and untruthful. Worse, it is indication of a lack of self confidence and a maybe, even, a lack of competence. Both are more worrying than the dogma. We really do have the cowardly politicians I described in The Courageous State.
Second, the action proves the need for an industrial strategy. Scattering money here and there to all and sundry via tax reliefs has been no substitute for this. Now is the time to prepare a strategy for the future.
And third? It is that there is no one answer as to ideal ownership structures. In the real world we need a mixed economy. Some things (natural monopolies like health and education if the benefit is to be universal) have to be state run. Others, such as coffee shops and a vast array of small businesses need no state involvement at all: the only job of the state is to encourage such enterprises. But in between we need to be fluid. Circumstances dictate change over time and we should be honest about that, what is being done, when and why. Doing so would be the sign of a mature government willing to embrace reality. We are not enjoying such a government now, and to be candid we did not in 2008 either.
Dogma has no role in this. Theory has. But so too has understanding. Right now we're only getting the first. That's the biggest impediment to this deal. If only we could have a government of people willing to embrace the real world that exists rather than the fantasy of dogmatists.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Inverse harlotry
“Power without responsibility – the prerogative of the harlot”
This government believes in responsibility without power. Put up the money, but carefully avoid control over how it is spent. Give the tax break, but take no interest in whether the revenue foregone does anything useful.
That’s disrespectful to harlots, Michael;o)
But it was first applied to the ‘consort ‘, Theodora, of the Eastern Roman emporer, Justinian. So not the ‘common sort’. Does that make a difference, Carol?
I think that this statement above sums you up perfectly Richard (your heterodoxy).
It also sums up what is needed for the future.
Governments of the Left and the Right (under pressure to provide answers by the voting public no doubt) very often set up rigid orthodox approaches to problems and then tend stick to them even when they begin to sink.
So-called centrist Governments (New Labour?) were just right wing liberals using the wooly language of Anthony Giddens to make the withdrawal of state involvement acceptable.
To make these more responsive and sustainable policies, we need to weed out the anti-statists and pro-business extremists from politics in the long run, because there are too many of them in parliament and as a result, the old lies and myths about say state ownership will hinder the right decisions being made.
I hope that your move is going well.
Am I meant to be moving?
Heck!
I’d better get back to it
In addition to the excellent points – re. a courageous state – made by Richard and others here I also found this article from L. Randall Wray stimulating.
http://neweconomicperspectives.org/2016/04/can-bernie-view-non-establishment-economist.html
Natural monopoly means that the minimum efficient scale is so large comapred the market, due to massive fixed costs, that it precludes any further entry.
Post and telecoms used to be, aren’t now because of technological improvement.
The idea that the education is a natural monopoly would mean that no private schools could exist. By definition. We observe private schools (and hospitals) so education (and healthcare) are not natural monopolies.
I beg to differ: post may have changed
Telecoms haven’t. BT remains a monopoly supplier on top of which some franchises operate
Utilities are worse
And as for educatiuon and health, re the latter there is no private A&E, which says all you need to know whilstb oin the former just 7% can afford to pay the roice of private education. You think that a basis for a viable modern society? Please don’t be silly (word used advisedly)
Post remains a natural monopoly: the massive fixed cost in the equation is the universal service obligation, something no putative competitor ever has embraced nor yet ever will.
Agreed
May I say that even people with private healthcare would wish for emergency care to be properly funded, but downgrading and amalgamations have left some areas with no A/E near to where they live. I understand that the USA do have private emergency care, lucky them. Yes a mixed economy, some areas best left to be privately run perhaps. By all accounts it is known that the internal market is much more expensive to run than our regional health authorities were. I would suggest to you that health is something so special that it is worth funding well. There is abuse, I accept and I am speaking with my heart more than my head.
I am sorry to single you out for my favourite subject, the NHS. I want everyone to support the reinstatement bill for the NHS.
Don’t you know how magnificent it is.
There are also reports that the NHS is picking up the bill for failed or botched treatment in the private sector: http://www.mirror.co.uk/news/uk-news/nhs-spends-millions-picking-up-7776286
This shoes that the NHS is a natural monopoly because EVERYONE needs health care and clearly, the Private sector cannot provide it unconditionally so the choice is not a real one.
I’m sick to death of people saying they don’t need the State until they are in trouble whereupon they ‘shit themselves’ and scream ‘I need the State.’
If you have half an hour to do it justice, this article from Canadian philosoppher John McMurtry presents an interesting critique of the profoundly destructive and likely existential threat of “financial capitalism” from the perspective of what he considers “life capitalism”. I will definitely be reading more of his work after this insight.
Even John McDonnell gets a quote with regards to the devastating effects on ordinary people from the privatisation of so many previously nationalised industries.
http://www.globalresearch.ca/beyond-the-empire-of-chaos-building-ecology-into-the-economy-life-capital-value-base-and-measure/5520668
This is not Nationalisation as we know it, Jim.
I`ve always thought that businesses (and all enterprises really) need to be run with some reference to the dunbar number. A `benign` dictatorship can be pretty efficient when dealing with small numbers of people. But when you get to 100+ (or for me 30+, as an unsociable type I have a low dunbar number) then some form of democratic control is called for.
I agree
It would make an interesting rule for when economic democracy should apply in a private organisation, for example where a privately owned organisation reaches say 100 employees (or 30 or some other number relevant to natural human instincts) it must by law become a worker owned co-operative. That would be an interesting challenge for corporate financiers to get their heads around!
The Mondragon Corporation in Spain has also developed from experience a maximum size and organises the vast majority of its co-operatives into units of less than 2000 employees. This has been found to be the maximum size for any one organisation to operate effectively and communicate with its workers, even one run on a democratic and co-operatively owned basis.
Scale is not such a problem for an organisation, ownership and structure is the real issue that needs fully understanding.
The one exception to this was its white goods manufacturer Fagor, which was the main cash cow for the corporation for many years and had grown to over 5000 employees worldwide (sadly many of whom were not co-operative owners but hired hands on wage labour only). Not surprisingly this was the first major casualty the corporation suffered after the financial crisis when it went bankrupt in 2013. While the vast majority of the co-operative workers were re-deployed elsewhere, many of the hired hands were not so lucky.
So there are some real world examples of how to run effectively (or not so effectively) democratically owned and co-operatively operated organisations, even those as large as Mondragon which has some 75,000 employees across the group.
I think a large problem is not the government itself being reticent to take action, it’s the jackals in the media and public that are ready to savage the government for doing so. Sure there is a buzz that it should be nationalised, saved jobs, just like the banks etc. But that’s now – it’s not later when it needs more money or is sold at a loss.
Look how Osbourne is attacked on share sales. He didn’t bail out the banks, but he is crucified for selling some shares at a notional loss. Forget that he makes a profit on some, the ones he makes a loss on are the headline news. Nationalisation is a dirty word then.
We’re in an age where every single action is criticised. We have in the press that the public are outraged that they’ve been tricked into buying a 300ml bottle of something instead of 350ml yet the price is the same – yet these same people have a platform to talk about EU membership, nationalisation, bank regulation etc.
Nationalising the steel industry is yet another attack vector for people to try to chip away at the government. I can understand why they wouldn’t want to take it on or to at least distance themselves from its operation.
“natural monopolies like health and education”
Neither of these are monopolies, much less “natural” monopolies. Why would you lie like this?
I specified my conditions
In which case they can only effectively be monopoly supplied
I did not and do not lie
What power in your relatively few words! Governments comprised of people who embrace the real world – what a novel idea! 😉 Next you will be promoting the idea of politicians operating with integrity! Now that would be a change that would make your home move seem like a ‘walk in the park’.
I didn’t see this level of media interest when all the spinning mills were forced to close due to ‘dumping’ from Turkey, and I certainly didn’t see nationalisation on the cards when all the chip shops were closing due to competition from ‘imported’ McDonalds franchises.
We have no iron ore in the UK any more and we have no coal power plants near the mills. Virgin steel manufacture make no sense whatsoever — particularly in an EU context when there are plenty of steel mills across the EU that are much nearer the source of the ore and power. Saving steel mills in Wales when there are plenty more in Holland and Italy is a bit daft. It’s like saying that english manufacturers have to use steel from an english plant.
Not that you can dye much wool in the UK any more. But then people that worked in that industry were often female, or of Pakistani/Indian descent. So they didn’t matter 😮
To say that your industrial policy is a tad hypocritical is an understatement.
Even more funny is that there excess steel capacity across the world. So somebody is going to lose their jobs somewhere. It’s rather interesting that the whole EU/’international solidarity’ thing goes *right out the window* once job losses are on the cards.
Too tedious to address
If the financial profits and assets from all those now redundant industries had remained held within the local communities which had created them, they would have been re-invested into the new industries more relevant to the local resources and community needs.
The problem with the current form of private financial capitalism is that it is like a plague of leeches sucking the lifeblood from every community which it infects, depositing the proceeds of its vile exploitation into the fat bloated leech headquarters found in every global financial centre and tax haven across the world, until the host community has been sucked dry of its resources and is left for dead.
The leeches then move onto lower cost new pastures and the leeching cycle starts over again in India, China, Brazil, Eastern Europe, etc etc etc.
I really hate leeches!
‘I really hate leeches!’
That is the essence of Finance Capitalism. Marx is being proved right that Finance Capitalism is running short of life blood to suck out of things which is why housing has gone bananas since 1976-there wasn’t much left to suck dry.
Here is another very good explanation of why our economies and the people who live within them are literally being bled dry of the resources that would enable us to flourish, prosper and ultimately survive.
Something has to change, but at the moment all we are getting is more of the same failed financial medicine to try to get out of the debt hole which is just making the hole even deeper.
As every good engineer knows, continually digging an unstable hole will inevitably result in collapse. Most bankers, politicians and supporters of financial capitalism seem not to have grasped this simple concept!
http://michael-hudson.com/2016/04/fix-our-debt-addiction-to-fix-our-economy/
Bob-one argument put forward for maintaining the plant has been quality. Much of the steel coming from China is poor quality. In some companies , money has been lost re-buying after Chinese steel has gone wrong. If the plant produced steel of a certain quality it could prosper. see:http://www.constructionmanagermagazine.com/news/chinese-stee7l-safe-indu2stry-meets-bis-exam5ine/
I think your point about ‘beggar thy neighbour’ economics is a good one but it would take the simultaneous enlightenment of the populous of the planet to coordinate such a transformed inter-relationship of trade to bring of-doesn’t seem very likely in our present ‘dark-age.’