Yesterday it was announced that there'd be £10 billion of state backed credit for developers. Today we hear of targeted tax breaks for North Sea oil corporations.
The descent into corporatism has begun.
Don't get me wrong. I'm not against new housing development - I recognise we've a chronic shortage of new homes. Nor do I oppose lower taxes - quite the opposite.
What is so wrong is the way government policy awards new credit or tax breaks as a favour to corporations.
Developers will be able to ditch rules on so-called affordable housing targets - if they can prove to a committee of expert officials that they deserve to. Corporations will get North Sea tax breaks conferred on them - after deal making with Treasury officials (So much for tax simplification, eh?).
None of this stuff is about the free market. Its more a case of crony capitalism, dishing out deals and favours. It all favours the big, the well connected. Those who can convince officials - not willing customers - that they deserve the deal.
We've been here before. Back of the 1970s, round about the time the government tested fiscal stimulus to destruction, the Heath government tried corporatism. They tried to use Whitehall fiat to make the economy grow.
The breakthough came when people started to realise that the economy grows when you get Whitehall out the way.
Today we are testing to destruction the idea that monetary stimulus will make us rich. As we do so, corporatist efforts to kick start the economy will grow more desperate.
In so far as ministers are looking at free market alternatives to the status quo at all, they are only thinking in terms of micro economic policy reforms, not yet the macro.
Eventually a free market alternative will emerge. It does not have to be like this.blog comments powered by Disqus
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