There’s an idea floating around out there that the State invests better than private industry does. That bureaucrats - or, if we prefer, elected politicians, those encapsulations of the will of the demos - will do better than capitalists at planning for and creating the vision of the future through such investments. You know the spiel, diverting societal resources from the chasing of fripperies to that of creating real and lasting societal value.

It’s also true that governments can borrow at lower interest rates than anyone other than Warren Buffett (one secret of his success really is that he’s been able to finance his holdings at lower rates than the US Treasury) therefore profits should be higher.

Well, OK, it’s a theory, like all such theories it should be tested against reality. Which has been done by Croydon council:

How scandal-hit Croydon council went bust with £1.6bn debt

Failure after failure is highlighted by a review that suggests police investigate possible misconduct in public office

Oh.

The thing that most struck us was this:

One of the biggest disasters of her tenure was the establishment of a council-funded developer called Brick by Brick, which was supposed to make profits for the authority by building homes on council-owned sites.

Negrini’s regime ploughed £200 million into the company, and Colm Lacey, her director of development, was appointed chief executive, despite having no experience running a commercial developer, let alone one with a £200 million budget.

In London’s suburbia by far the two largest costs in housebuilding are the land itself and the planning permissions. The land they already owned, the planning permission was something they themselves granted. They were also able to borrow at lower than commercial rates given access to Treasury funding. Yet in a rising property market they still managed to lose money on the deal.

How excellent. We’ve tested a theory and found it wanting. Despite the logic of the initial suppositions it doesn’t work. In fact we’ve tested the model to destruction. Reality differs from the prediction therefore this is a line of thought to be abandoned. To misquote Richard Feynman, in battles between theory and reality it is reality that wins.

So, no, using people good at that kissing of babies in order to get elected to perform that necessary and useful task of investing society’s resources doesn’t work. So, let’s not do that then.

This will, of course, be a disappointment to Professor Mazzucato but it’ll make the rest of us richer.