A welcome return to Big Government?

Despite the kerfuffle over the MPs’ expenses scandal, it’s still the economy, stupid. The Guardian sounds the alarm. “Bank of England braced for third wave of financial crisis. Surprise £50bn cash injection is attempt to avert new phase of credit crunch.”
The FT contextualises better.

The boldness of the Bank’s plan shows it is prepared to risk future inflation to prevent deflation today. Deflation would have far more damaging consequences for a highly indebted economy like the UK, bringing spending to a standstill and dramatically lowering living standards.

No more than the Bank of England, the rest of us aren’t deceived into believing that some green shoots sprouting from the banks means propagating growth in the wider economy.

Big Government is back – but with what effect? The Thatcher legacy that demolished the earlier, corporate version has run out. (Though here, I’m treating to you to the alternative version from the Guardian’s big leftie Seumas Milne). Government today may be reverting to the once despised policy of “picking winners.” In recession, the choices are agonising. Should Corus in Teeside be allowed to close? Why give a bridging loan to LDV while pressing ahead with the politically risky part-privatisation of Royal Mail? The FT fails to discern a clear industrial strategy but is still prepared to give Peter Mandelson the benefit of the doubt.

inisters were accused of shifting ground on which companies deserved support. His strategy is being tested to the limit as more businesses demand help to avert closures and limit job losses.

Those of us who are over fifty have been here before.. “The amount of subsidy provided to Harland and Wolff over the last five years was £225.6 million. Provision of £40.5 million has been made in the Main Estimates for 1987–88.”

Even leaving aside the huge hurdles of EU state aid rules and competition policy, we’re right not to hanker after the past. Aren’t we?

  • Comrade Stalin

    I don’t really understand the need for interference with the Royal Mail. The postal system in the UK generally works very well. Privatization worked well for institutions like BT, where it would take six weeks to get a phone installed. But the Royal Mail’s standards are generally pretty good (they have been slipping in recent years though, no doubt due to the recent meddling) and I can perceive no need to “improve” it by introducing competition.

  • Comrade Stalin

    Oh, there’s a treat buried in there. I enjoyed that snippet from Hansard, Brian. What an idiot Teddy Taylor is. I know several different people who worked in the shipyards. A model of efficiency it certainly was not. Show up to work in the morning and contribute as little or as much as you want.

  • Dave

    Comrade, it has nothing to do with whether Royal Mail is efficient or not. The British government are complying with EU directives which mandate that postal monopolies must end by 2010. It was also EU directives that help turn Royal Mail’s £170+ million annual profit into a loss when they forced it to remove the monopoly on its bulk business mailing. So, the British people may protest all they want, but they have already transferred the applicable sovereignty to the EU so their protests are irrelevant to the outcome. The British people no longer determine their own affairs in this regard, but it’s quaint that they still think they do. Incidentally, the disastrous privatisation of the rail network was also the EU’s handiwork.

  • Sneakers O’Toole

    The EU’s directives on railways were used as an excuse for privatisation by the Tories, but they actually just required a change to the way the railways are run.

    Had the government really wanted to comply with the EU’s directives they would have made changes to NI rail too, but they haven’t- and it is still completely state owned.

    I’ve spent a few years working in the rail industry in England, and even now barely a day passes without privatisation cropping up in conversation at some point. Most people’s wages went up when Railtrack took over, but despite this I’ve yet to meet a single person who doesn’t regard privatisation as an absolute catastrophe. The nostalgia for “the good old days” of BR is pretty much universal.