Introducing the new Heseltine economy

Pretty much the same as the old Heseltine economy actually.

This is fun though:

In recommendations that are likely to surprise some of his Conservative colleagues, Lord Heseltine says that regulation, particularly from Europe, is not a major problem for British business.

“I reject the premise that regulation in itself hinders growth. Good, well-designed regulation can stop the abuse of market power and improve the way markets work to the benefit of business, employees and consumers.”

There certainly is some subset of regulation that can do that, yes.

However, Lord Heseltine believes that such complaints are unfounded. “If you want to talk about bureaucracy, you should start looking at the bureaucracy that exists. There is enormous bureaucracy today,” he said. “If you want to build a house or build a road or build a school or whatever it is, there are immense checks and form filling and regulations, much of which could disappear under my proposals.”

But it appears that that\’s not the subset of regulation that we actually have.

But I can tell you what the problem is with the general theory that Heseltine is working under. It\’s an adaptation of something from Chris Dillow (pbuh). Heseltine was indeed a successful magazine publisher. And his company (Haymarket?) was, as are all such companies, an example of central planning. For that\’s what companies are in the main, little islands of central planning in the greater sea of chaos that is the economy. Which is the problem that we have with successful businessmen telling us how to run the economy.

They know, absolutely, that planning works. For they\’ve done it. But there\’s two problems with this. Firstly, what works at the micro scale does not at the macro. If this were true then macroeconomics would be very different indeed from what it is. The second is that there is survivorship bias here. We only get to hear from the people whose planning was successful: disregarding all those who planned but failed, knocked off course by that general chaos. Something which does in fact happen to the majority of business enterprises: for all their planning.

Which leaves us in an interesting position. We\’ve the teenage trots on one side, who are adamant that planning should work in theory. And these businessmen on the other, who know that it works in practice. But both are wrong at the level of the entire economy, albeit for different reasons. Or perhaps not so different reasons: sure, you can plan within an organisation but an economy just isn\’t an organisation of a size or level of complexity that can be planned.

4 thoughts on “Introducing the new Heseltine economy”

  1. Another problem her is that those running large organisations are generally unaware of how dysfunctional those organisations actually are. Everywhere I have ever worked, it has been necessary at times to break the rules, to get your job done.

    The higher you are in the organisation, the less likely anyone is going to tell you that the system sucks. However, when the bosses finally start to see the truth, they try to fix it.

    In a company, most people have a vested interest in success, and will work toward that end. So both workers and bosses overcome the deficiencies of their planning and control processes.

    In the economy at large, this no longer happens, and the penalties for ignoring rules include going to jail.

  2. “Everywhere I have ever worked, it has been necessary at times to break the rules, to get your job done.”


    In a corporation, sticking to the rules is generally considered a good thing (assuming the rule is a good one and it works) as everyone is supposed to be working towards the same goal, but in an economy there is competition, and there may be much mileage from breaking to rules to attain a competitive advantage, the more the rules impact your profitability, the more likely they’ll be broken, and the more effort you’ll have to make to ensure they are enforced, ultimately to the degradation of the economy.

  3. “In a corporation, sticking to the rules is generally considered a good thing ”

    Isn’t ‘work to rule’ a time-honored method of pressuring a company by labor unions who don’t want a strike?

  4. Half true. All corporations, even big ones, eventually get into trouble. (Perhaps with the exception of DuPont.)

    And when they do they junk their plans. Or go bust.

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