In their 1974 election manifesto, the Tories made their attitude to free markets very clear. Arguing against outright nationalisation, the manifesto said “the desired results can be achieved just as effectively and far more cheaply through taxation and regulation”. Since then it has been made plain that if you want genuinely free markets you can forget the Tories.
Today, the march to corporatism, in which government is the senior partner in any major industry, is rife. In this partnership, big business often promotes state regulations to keep pesky little competitors out and thus enjoy a cosy monopoly. The current bare-faced collusion between government and the banking industry is a case in point, with bankers agreeing to several ridiculous conditions including committing £1billion for “regional growth”, £200 million for a “Big Society Bank” and the same for gross new lending to business – at a currently laughable interest rate. Another case in point is trade, with Britain’s biggest companies now having to work with individual ministers to “manage trade”.
The railway industry is a perfect example of the 1974 manifesto at work, with government granting licenses, owning all the track, dictating consumer prices, and now spending a fortune on a very dodgy new railway between London and Birmingham.
Reverting to banking, the rot began with the Bank of England. [Continue reading]