Thursday, November 22, 2012
Secret Service - Whats Wrong With the New Left
However that is just the window dressing.
What shows the intellectual bankruptcy of the "left" is that his the plan for getting the economy moving, produced out of a hat last night, is something that might credibly be believed.
He announced, after a very brief word with the Prime Minister of India (these foreigners, having no parliamentary system doon't have to discuss it back home) that he had a cunning Plan.
Nationalise the Royal Bank of Scotland (called the Royal Caledonian Bank to show this is fiction) to ensure it lends to small companies and projects the government wants > take the trilions deposited in it and invest it in renewables > sell the resulting cheap renewable technology to India + as a thank you the Indians and the British government will "guarantee the £" against falling.
There is only 1 problem with this.
1 - Nationalising the bank has indeed been suggested by the likes of Cable. Since the state owns about 80% since the bail out it wouldn't be difficult. The reason for not doing so is that under direct state control it would be forced to lend for political not economic reasons, precisely as suggested.
2 - In fact banks are already strongly infuenced by the nods and winks of government about whom they lend to. The American mortgage crash was largely caused because government told them to lend to ethnic minorities without the income to keep paying. They are also influenced by government borrowing an extra £120 bn a year which soaks up so much of the cash available.
All that would happen is that all the customers of a bank so obviously being looted by the politicians would get their money out while it was still possible - leaving the government owning a very expensive empty shell.
5 - The British govenment already guarantees the £ against falling. That is what a national fiat currency is. Though India's economy is bigger than ours it is unlikely that they could stop a run on the £, over the long term and absolutely certain that no remotely responsible government would put up their entire foreign exchange reserves just because some the Sahibs want it. After all Germany isn't doing it for the euro.
But the real lunacy is #3 and it shows how the "left" is totally divorced from the commitment to real industry that it traditionally had & has been taken over by the eco-loons.
3 - Throwing unlimited money at an industry that is inherently inefficient won't make it efficient. You just blow the money. In this world magic doesn't work and wishing or making offerings to the gods doesn't make it happen.
4 - There is no way that "investing" all the RBS money will produce windmills that can provide India with competitive power because they can't do it anywhere else thus no way India would buy them.
The really annoying thing is that, assuming the Indian government was only slightly as supportive as this scenario demands, a working traditional socialist alternative would be not only possible but easy.
We could build a factory mass producing nuclear reactors. That would cost maybe £100-200 billion - far less than we have already stumped up for RBS, let alone the multiple of that the story thinks could be looted from it.
By mass producing them, with a sensible regulatory regime, we could produce them cheaper than anywhere else in the world. The Indians would buy them (as would anybody else working on economic rather than political decisions),
More than that we could design reactors that use thorium rather than uranium. Thorium is 4 times more common than uranium and in particular is far more available in India than even that. India would love to be able to buy such reactors and because Britain still has a very much stronger scientific and engineering base, we could produce them.
India's economy would take off. So would ours. Everybody happy.
Moreover this is exactly what socialism used to stand for - pushing for technological progress and thus creating wealth. But the modern mutation of the "left" is, as the fact that the programme appears even an approxiamation to reality, absolutely opposed to its original core values.
By comparison the "right" is much more open to traditional "left" ideas than the modern pseudo-left is. Here is a discussion on pretty much this subject with Mark Wadsworth who, despite being slightly more morket oriented than I, says such a government scheme would work:
neil craig said...
So if, instead of £5 bn plus £670m for being allowed to apply, a reactor could be built for £2.5 bn (twice the cost of 1.6 Westinghouse AP 1000s) the production cost would go down to 3.2p which is pretty much what France managed for decades.
If putting it in place were to cost less than the reactor itself &/or if investors were as confident it wouldn't be closed down or nationalised without compensation as they are with other infrastructure the cost could drop proportionately further - at least another 3rd. If the reactor cost dropped to $600 mill because it was a larger order and there were economiesw of scale you could take off another 25%.
Actually, purely because the government have scared off the free market this is a case where a national reactor programme, building as many as there is a market for, with major economies of scale, would give a very good return - if we trusted our government to be as competent as the French.
Say 50 Gigawatts at £600 mill + 50% installation = £45 billion where proportionately we are expecting the market to be willing to pay £177 bn/
Mark Wadsworth said...
NC, I agree that the UK government might as well just get on with it and hire somebody in to build nukes for us. And I agree that French cost-levels are something to aim at.
Fortunately the scenario would work just as well, if not better, if done by the free market.