GOVERNMENT ECONOMIC INTERVENTION: DOES IT EVER WORK?

On both sides of the Atlantic, the combination of naive civil servants and crooked business is a witches’ brew like no other.

Quite a few of you will already have noticed that car sales plummeted this month, now that the cash-for-bangers scheme end has had time to filter through. Some commentators have noted that the fall was ‘less than many expected’, but it wasn’t really. And anyway, the rise and fall thing wasn’t the only problem with the scheme. As the UK has no car industry, there was no way the country could benefit from it; and most people bought new, tiny cars with diesel engines.

All the scheme did was, in the end, keep a few ailing forecourt dealerships going through their death agonies for a little longer. And we must all ask ourselves from here on, is delaying death enough of a reason for government to get involved?

The US has a tragic example of this at the moment, and it’s called the Obama Home Relief Program. Not only has it involved a great deal of good Federal money being thrown at hopelessly bad personal debt, it has of course also saved the banks a lot of foreclosure proceedings….until such time as the poor wretches defaulted – at which point they cut off the oxygen supply.

Wherever I go in the world, the story’s always the same: those who can do, and those who can’t work for the Government. This produces two inevitable results whenever they step outside of that narrow role and into a commercial world about which they have no sane perspective at all.

First, they imagine they can save everyone from themselves, without reference to the cost.
And second, they have this quaint idea that most corporates are as wide-eyed and potato-headed as they are.

In the States, there are one or two exceptions to this rule about people working in the government sector. They involve the Big Deal offices like the SEC, the Treasury, and Defence. These places are crammed with bankers, former CEOs and arms dealers. But here in the UK, the COI, the Department for Business, the Treasury – and in everything else from Defence to Health- every last man-jack of the buggers is either a failed private sector gonk, or a career civil servant.

Both here and in America, when it comes to bailing out a bank, nothing is too much trouble, and no amount of silly money too much. But when it comes to bailing out the mortgagees whose money did the bank-bailing in the first place, everything is a problem….we mustn’t encourage failure and dishonesty, ooooh no: that bit’s reserved for us, the Masters of the Universe.

Put together innocent government employees with an admin background, and bankers with an absence of ethics, and you have the Obama Home Relief programme: the Government extends a naively incompetent hand, and the bankers pretend they’re on the same team. Equally, you have the Ministry for Business, Innovation and Skills, the cash for bangers scheme, Job Centres, Tax Credits and every other daft idea that every Humphrey, Peter and Gordon has about how to make things better.

3 thoughts on “GOVERNMENT ECONOMIC INTERVENTION: DOES IT EVER WORK?

  1. John, here's something just breaking out in the US, Affordable Advantage. Remind you of the good old sub-prime days.The government's new $1000 down housing program. Here's a extract:Now, qualified homebuyers in the three states pioneering Affordable Advantage do not need to put down the 3.5 percent minimum down payment required by the Federal Housing Agency, or much of a down payment at all. They can get 100 percent financing — a loan as big as the purchase price of the house — for a 30-year, fixed-rate mortgage — a vanilla mortgage. The deal includes a program to help homebuyers if they become unemployed, lowered fees and there is no requirement that the homebuyer purchase mortgage insurance.How long before this crap is securitised? Will the bailout banks now please step forward? Thats if they bother or are able to rate these loans. Ah, just like the old days.http://www.businessinsider.com/1000-down-payment-2010-8#comment-4c5b06427f8b9a4457950100#ixzz0vl7aPyBT

  2. "GOVERNMENT ECONOMIC INTERVENTION: DOES IT EVER WORK?"A cycnical view is that it depends on how you define "does it ever work".Gordon Brown would argue all the way to his utopian socialist superstate that employing hundreds of thousands of extra govt jobsworths in make-work jobs to enforce/administrate endless new laws/regs *did* work because it kept them employed and off the streets at the expense of "the rich", who he hated so much. If you disagreed with him, he may have thrown a tanty and thumped you.But in reality it only exposes his crackpot view that having a job – any job – is the highest priority for his faithful followers. He was so dumb that he couldn't understand the huge difference between these people being employed in a productive capacity to add value/wealth -vs- working in a govt wealth consuming capacity. Sanity confirms that his view is seriously flawed and cannot prevail in the medium/long term.It must be time for socialism to reinvent itself…How many times will that be?David Milipede is proposing a "Mansion Tax" to attack Tory home owners living in Kensington/Chelsea (home to 24% of the nation's homes valued at £2+ million). According to him the new tax revenues would be spent on reversing the Tory welfare cuts. Fantasy lives on.

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