Thursday, January 12, 2012
Brum
Following my remarks on 4th December last and yesterday's announcement, I was interested to see the coverage in the Guardian of the announcement that we are indeed to spend billions and billions on a giant white elephant stretched out between London and Birmingham. The editorial was mildly for, while Simon Jenkins was unmildly against. He put it all down to collusion between show-offs in government, big business and big consultants to build big show-off projects. Which, in this case, as well as making pots of money for the Polish and Irish grunts on the ground, will make pots of money for big business and big consultants. While the government takes on the risk and borrows the money from big business on advice from big consultants. Big wins every which way.
I have been coming at the same problem from a slightly different angle. So once upon a time there was a chap called Keynes who thought that, when big business (didn't have big consultants in his day) lost its nerve, it would be a good idea if government stepped in to prime the pump of the business cycle. Big, long term infrastructure projects involving lots of hard labour were the thing, projects where the low cost of credit to blue chip governments would give them a relative advantage. So in the US, during the great depression, they built pots of dams to generate pots of cheap power. Dams which would generate income for years to come, dams having quite a good life span, better than the average power station. As it turned out, the dams were not a complete test of the Keynes thought as the second world war came along and wiped out the depression otherwise.
Another variant on the Keynes thought is that governments borrow money which they use to fund employment. Just hire lots of people to dig holes and then fill them up again. The holes might be useless in themselves, but lots of ordinary working people who might otherwise be becoming benefit junkies are taught the habits of work and money is fed back into the pockets of those same ordinary working people from where it can be used to stimulate demand. I dare say there are economists who can demonstrate with mathematical models that this is all OK, but if one is a bit nervous about spending lots of money on something as null as holes in the ground, one can always dress it up a bit by hosting the Olympics, building an aircraft carrier or building a very big tent. A tent which should hold its place in the Guinness Book of Records for many a year - see http://www.guinnessworldrecords.com where, oddly, searching for tent produces the entirely wrong tent. Maybe Alastair Campbell was too busy in Iraq that day to give any time to the Guinness people.
One might argue that a fancy railway between London and Birmingham is better than a big tent, although one might also argue that it does a lot more damage to the environment. Either way it is a bit poor that the great and the good can't come up with something a bit more convincing.
There is also the catch that our government, amongst others, is not so blue chip these days.
I have been coming at the same problem from a slightly different angle. So once upon a time there was a chap called Keynes who thought that, when big business (didn't have big consultants in his day) lost its nerve, it would be a good idea if government stepped in to prime the pump of the business cycle. Big, long term infrastructure projects involving lots of hard labour were the thing, projects where the low cost of credit to blue chip governments would give them a relative advantage. So in the US, during the great depression, they built pots of dams to generate pots of cheap power. Dams which would generate income for years to come, dams having quite a good life span, better than the average power station. As it turned out, the dams were not a complete test of the Keynes thought as the second world war came along and wiped out the depression otherwise.
Another variant on the Keynes thought is that governments borrow money which they use to fund employment. Just hire lots of people to dig holes and then fill them up again. The holes might be useless in themselves, but lots of ordinary working people who might otherwise be becoming benefit junkies are taught the habits of work and money is fed back into the pockets of those same ordinary working people from where it can be used to stimulate demand. I dare say there are economists who can demonstrate with mathematical models that this is all OK, but if one is a bit nervous about spending lots of money on something as null as holes in the ground, one can always dress it up a bit by hosting the Olympics, building an aircraft carrier or building a very big tent. A tent which should hold its place in the Guinness Book of Records for many a year - see http://www.guinnessworldrecords.com where, oddly, searching for tent produces the entirely wrong tent. Maybe Alastair Campbell was too busy in Iraq that day to give any time to the Guinness people.
One might argue that a fancy railway between London and Birmingham is better than a big tent, although one might also argue that it does a lot more damage to the environment. Either way it is a bit poor that the great and the good can't come up with something a bit more convincing.
There is also the catch that our government, amongst others, is not so blue chip these days.
# posted by Jim @ 4:02 AM 
