Douglas Carswell

05 APR 2016

Beware the siren song of statism

Port Talbot looks likely to be saved by private investors, yet that hasn't stopped politicians and pundits banging the drum for nationalisation – because it worked so well 40 years ago. But the new statists aren't just selectively recalling the past; they're missing the failed State planning all around us.

Nationalised industry didn't work well in the 1970s. State-owned companies were massively lossmaking and, because they were State-owned, the taxpayer had to pick up the tab.

Today, it looks like the State will be on the hook for the £2 billion shortfall in Tata's employee pension fund. That might well be the best option in the circumstances. But remember, that bail-out won't be created from thin air: it will come out of your pocket.

We don't have to go back to the 1970s, though, to see that nationalisation doesn't work. The evidence is everywhere today.

Let's start with the Tata pension fund: why is there a shortfall in the first place? As Moneyweek's Merryn Somerset Webb observes, it's down to interest rates. Because the Bank of England set the rates so low, pension funds everywhere in Britain are struggling to meet their obligations. Our State-owned central bank has a monopoly over the money supply, and it has catastrophically mismanaged it.

Nationalisation is at the root of the steel crisis too. Why is China dumping millions of tonnes of steel? Because its predominantly State-owned steel industry, governed by central diktats rather than market demand, vastly overproduced.

From the Post Office to Network Rail to RBS, there is nothing in the recent history of State-owned enterprise in Britain that should make us think the next nationalisation will work wonders. But if Britain does embark on a new statist spending spree, be sure that you – the taxpayer – will pay the price.

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