Thursday, 15 July 2010

Whyte: Economic vandals

A superb article from Jamie Whyte over at The Cobden Centre:

Shortly after taking power, our new coalition government decided to withdraw the previous government’s pre-election promise of a £80 million loan to Sheffield Forgemasters, a steelmaking company. On Newsnight, David Miliband called the decision “economic vandalism”. Paul Kenny, the general secretary of the CMB union, told The Times the same thing.

They have got things exactly the wrong way around. Making the loan would have been economic vandalism. To see why, consider my current predicament.

I have an idea for a business that I believe would provide its customers with a valuable service and employ five or six people. Alas, I need about £1 million to set it up, which I do not have. I plan to approach potential investors. If they choose not to invest, will they have committed economic vandalism? Obviously not. They have not damaged my property, nor done me any other wrong.

Suppose now that, frustrated by what I take to be their short-sighted refusal to fund my business, I get my computer wizard friend, Big Jim, to hack into their bank accounts and transfer £1 million to mine. Big Jim and I are surely the economic vandals here. Without consent, we have plundered other people’s property.

We have probably harmed society too. Those investors believed there were better uses for their money than investing in my business. My confiscation of their money benefits society only if I am right and the investors are wrong – only, that is, if there really is no more valuable alternative use of their money than investing in my business. But I am almost certainly wrong about this because, unlike the investors, I do not know what their alternatives are.

I thoroughly recommend the whole article.

Whyte concludes:
The new government defends itself from the accusation of vandalism on the ground that they have cancelled only 12 of 200 such bungs. They are as confused as their critics. They have committed 188 acts of economic vandalism.

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