George Osborne will set out plans to cut taxes by extending the austerity programme and creating a permanently smaller State.
The Chancellor will say in a speech in Birmingham that Britain must face up to “hard truths” about the need to make more cuts and reforms to get a stable economy.
Less money being sucked up and being given to the idle is one definition of a smaller state.
Less interference in what people do as business would be another. For example, my recent experiences lead me to the idea that there will never again be people setting up small primary processors. Two men and a dog sized operations looking at new methods of, say, mining, or mineral extraction, or primary chemicals, that sort of thing.
The planning permissions required (and these are imposed from the EU level) just mean that no one can, as a tinkerer, afford to go through those processes. It’s not particularly the costs (£10k perhaps) but the time taken. 10 months minimum to get the permission to set up a processing line.
Now, there used to be a gt out clause. If you’re p[laying with under 100 tonnes a year you can just get on with it. No more: any quantity now comes under the same rules. Imagine: you’re scratching your head as to whether this stuff, processed in this manner, gets you what you want. Or would it be better to do it with that stuff, that way? Or perhaps this third method is better?
You can’t decide purely upon lab work, you’ve got to actually go and build a pilot machine. Process a few tonnes, a few hundred tonnes, see what happens. And for each and every change you have to wait 10 months for permission. No, seriously, if you were to change from using sulphuric acid to nitric, 10 month wait. Change from using the wastes of manganese processing to that of magnesium processing: 10 month wait.
Large companies can do this. Small ones cannot. And new ones simply won’t arise if this is the regime they face.
Let’s have a small state by all means but let’s not measure it purely by the amount of money sloshing around. Let’s measure it by the regulatory burden as well.
Let’s have a small state by all means but let’s not measure it purely by the amount of money sloshing around. Let’s measure it by the regulatory burden as well.
This is a feature, not a bug. The EU has become a closed oligarchy. That is the way that the oligarchs like it. No one can start a new company and hope to thrive in the modern EU. Which is why virtually none of the non-English-speaking EU has seen any new large scale companies since the 1950s. The governments, the unions and the big business groups have stitched it all up together. A French man may have invented the modern personal computer. But only the Americans could produce Microsoft. Or even Wang Computers.
They simply cannot escape their past and their cultures.
@SMFS:
SAP?
Accor?
Capgemini?
LVMH?
Impregilo?
Luxottica?
Mediaset?
Just a selection of companies established after 1950 that are in the _leading_ stock indexes of Frankfurt, Paris, and Milan.
What about ARM?
I just flew back from my new year skiing trip on Easyjet. Pretty sure they were created in the last 60 years, and are of reasonable scale.
Not that I disagree with the essential point, more that (as usual) it is wildly overstated.
Can add Nokia to that, for a start.
But it’d be interesting to look at European new entrants & see how many are in fields with a comparatively light regulatory load.
Watching the progression of fracking in Europe compared with the US also might say something. But the comparison shouldn’t be with the US, which has its own regulatory burden, but the developing world.
Pretty sure George’s definition of a smaller state is very different to what hyperneoliberals would like it to be.
Just like the bonfire of the quangos turned out to be more of a soggy sparkler, and “austerity” turned out to mean greater public spending.
So far as I can tell, Osborne’s “smaller state” just means cutting benefits, including a ludicrous redefinition of everyone under 25 as a child who ought to be living at home. I presume this comes from being a country ruled by infantilised tossers who were ligging at Uni on PPE courses when they should have been out doing something economically productive. There is no adjective intense enough to describe my hatred of the current ruling class.
Well I work for a new company, albeit a very small one. Ironically, pretty much everything we do involves helping much bigger companies cope with that regulatory load. Entirely unsurprisingly I think the regulatory load in this field that keeps me in employment is a good thing.
But it isn’t though, is it? Without the regulatory load, you’d be doing a productive job; that is, in aggregate terms you’d be a benefit rather than a cost.
Broken windows, and all that.
Timmy is talking about primary industry. Of JamesV’s list, only ARM does any manufacturing. And ARM was a university spin-off, so probably Cambridge did the paperwork while the boffins worked unimpeded.
The clue’s in the original name: The European Coal and Steel Community. In other words, a dinosaur zoo with very high fences.
Tim adds: Quite famously ARM doesn’t do any manufacturing at all. Design only…..
I think what I do, researching new drugs and getting them to market is actually productive. Could be more or less productive and that can be influenced by regs. However, the regulatory environment is not a one-sided negative thing. The jumping-through of regulatory hoops has both positive and negative effects. If you compare how it’s done now to how it was done 50, hell, even 15 years ago, the regulatory environment has unquestionably increased the quality of information we have about drugs. Far less ineffective and dangerous snake-oil gets sold.
On the down-side we get fewer products in areas that might make less money – where the regulatory cost turns a marginally profitable product into a not profitable product.
So we essentially have a trade-off – on average better products on the market with better information about them (regulatory environment adds value) against fewer products in marginal, niche indications, or for diseases that mostly poor people get (regulatory environment destroys value).
Even in the latter case the authorities are aware, in practise, of the fact that pharma needs to make money, and demands are tailored to suit.
All this juvenile anti-state nonsense.A right wing extremist (Thatcher) got in a generation ago and undermined the state for us : all we’ve got out of it is low wages and high house prices+ public school twits have over-run all the professions.Privatisations have made everything they touched worse: more expensive and less socially responsive.Time for a swing of the balance the other way: starting with a few New Towns built by Development Corporations. Once people are not paying an inflated price for accommodation (private sector providers are a laughable market failure), they will have more to spend in the shops and a bit of demand will appear in the supply/demand nexus.
( I do not think the freedom for two men to start mining anywhere they like is that laudable.)
Yes, everyone whose income depends on the State tends to justify it as improving society. I made the mistake of working in a state subsidised theatre once, and heard much the same from the luvvies there.
Except the first part of DBC’s complaint seems spot on.
Low wages: check.
High house prices: check.
Professions overrun by overprivileged upper-class twits: check.
Privatised industries an expensive mess: part-check.
Not that I think the state is the solution – in fact the state is largely the problem.
DBC-
The property spiral began well before Thatcher with the unleashing of the banks into the mortgage market (1971 I think, give or take) and I’m surprised that a keen obsever of property values like yourself would not be aware that the “economic cleansing” of indigenous Londners to windswept armpits on the edge of civilisation like the Eastern District of Northampton[1] played a large part in opening up plots with very high potential land values to purchase by the upper middle class in that decade, igniting the disastrous and eternal property boom scam.
[1] Anyone forcing people to live in a place called Buttocks Booth was knowingly and openly taking the piss.
@DBC Reed, the 1970s called, they want their propaganda back (as the yoot has it).
Interested-
He’s from Northampton. I’m not saying it’s a backward kind of place, but the last person who tried using a hands free mobile here was burned at the stake in the market square for “ye summoning of spectral voices by witchcrafte”.
+1 for IanB @11:42. Actually sniggered. Which given that it is the first day back at work …
It is a standard helping of standard BluLabour bullshit:
*We’re gonna have a smaller state
* We’re gonna sort out them immigrants
*We’re gonna sort out that EU
* We’re gonna have more freedom (to obey orders)
In reality they are gonna do fuck all except keep taking as much cash as they can get their thieving hands on.
Looking down JamesV’s list, while LVMH may technically be a “company established after 1950” it hardly counts as a new start-up.
The three main companies that made up the merger were founded in 1743, 1765 and (the newcomer) 1854. At least one of the subsidiaries dates back to the 16th century.
And it was an Irishman (Hennessy) who started off the mergers that ended up as LVMH. Almost makes it British.
The French fracking ban would seem eminently sensible if you were to witness the practices and capability of the company most likely to be carrying it out…
Interested – I don’t think it’s the 70s that DBC is pining for – it is more likely the 50s – the rationing, the lack of consumer choice, the smell of municipal gas plants, the pervasive air pollution
DBC
“starting with a few New Towns built by Development Corporations.”
Seriously ? There was nothing fundamentally wrong with post war Britain that couldn’t have been largely cured by taking every urban planner out and shooting them like a dog.
” For example, my recent experiences lead me to the idea that there will never again be people setting up small primary processors. Two men and a dog sized operations looking at new methods of, say, mining…”
I know nothing about mining or processing, but is it really a problem if “two men and a dog operations” don’t really feature? Aren’t there some things where it just makes sense for big companies to operate? Mining sounds like one of them.
I have no idea. Just wondering.
JamesV – “SAP?
Accor?
Capgemini?
LVMH?
Impregilo?
Luxottica?
Mediaset?”
Louis Vuitton was founded in 1851. LVMH was formed when it merged with Moët Hennessy. Which in turn was formed when Moët et Chandon (1743) merged with Hennessy (1765). Why do you think that comes within a billion miles of proving me wrong?
Matthew L – “What about ARM?”
Well it is in an English speaking country so I don’t see the point. But look at what it did not become. It has got a lock on the mobile phone world. Which is great and proof that some British engineers are still world class. But it did not become Apple. It did not even become Wang. It should have, perhaps. But it didn’t.
Interested – “I just flew back from my new year skiing trip on Easyjet. Pretty sure they were created in the last 60 years, and are of reasonable scale.”
And in an English speaking country.
I don’t think that some counterexamples disprove a general rule anyway. There’s that saying in France- “starting a business is difficult, but not impossible”.
“Large companies can do this. Small ones cannot. And new ones simply won’t arise if this is the regime they face.”
This is why big companies eventually embrace fascism. Autocratic government chokes out competition.
Does SMFS have anything to say about the 5 companies he is pointedly ignoring? Or only something to say about the one which – I freely admit – I got wrong?
On a point of order, does SMFS ever have anything to contribute except an obnoxious insistence that He is Right, even when he isn’t?
@SMFS ‘And in an English speaking country.’
Ah, to be fair I’d skim read both you and Tim and assumed that he was talking about Britain (George Osborne) albeit with I assume a Germany/Portugal/EU personal example. Anyway, I missed that element of your argument.
JamesV – “If you compare how it’s done now to how it was done 50, hell, even 15 years ago, the regulatory environment has unquestionably increased the quality of information we have about drugs. Far less ineffective and dangerous snake-oil gets sold.”
Sure. But a lot less of everything gets sold. You know how many new drugs the FDA approved last year? It was a sixteen year high. 39. In total. One of them was actually for TB which is mildly good news. Thirty nine.
“On the down-side we get fewer products in areas that might make less money – where the regulatory cost turns a marginally profitable product into a not profitable product.”
Not one of those drugs is in an area where they are going to make much money – except perhaps the TB drug. They are all in small little niches. Cancer drugs mainly. Because those people are so sick, they are not going to be able to sue. Even if they live. The regulations are simply preventing drug companies producing new drugs. And the real kicker is that Disney is going to keep the copy right on their vile little rat for the rest of the life of this planet. They have it for 70 years now with no signs of giving it up. If I cured cancer tomorrow, how long would I have rights to that drug?
“So we essentially have a trade-off”
No, we have the death of an industry. We have new drug resistant strains coming along all the time. We have long lasting killers – which are big killers indeed – like malaria. And we do not have pharmacuetical companies working on them. In fact they have been losing money for a decade. They have been forced into mergers and rationalisation. We get great information but the heroic age where people were actually cured and diseases were all but vanquished have long gone.
Richard – sorry, I didn’t notice your comment until just now.
Tim Newman – “The French fracking ban would seem eminently sensible if you were to witness the practices and capability of the company most likely to be carrying it out…”
They want to pump water underground. With some minute amounts of chemicals that are mostly harmless. Of all the things a French company could be doing, I would think that fracking is just about the most harmless I can think of.
Luke – “I know nothing about mining or processing, but is it really a problem if “two men and a dog operations” don’t really feature? Aren’t there some things where it just makes sense for big companies to operate? Mining sounds like one of them.”
Yes and no. Mining is an industry that lends itself to economies of scale. If you need $40 billion to open a new mine, you want a company like Rio Tinto that has been around for a while and has assets a Court of Law can seize. But all big bureaucracies have the same problem – they work to keep the talented down. When a company gets to a certain size, new ideas cannot float up. For that you need small and nimble companies. The smallest and most nimble are two guys and a dog.
If you look at fracking, it was mostly the work of a few small guys everyone else ignored. The big oil giants had their heads elsewhere and so were just not involved.
It is also important sociologically as it is one of the few industries were working class men can become seriously rich. Virtually everything else needs the passport of Higher Education certification and permission from the government.
JamesV-
If you stopped being snippy for a moment, you might realise that the phenomena SMFS is describing are a pretty standard description of liberal economics. Barriers to entry, and all that.
JamesV – “Does SMFS have anything to say about the 5 companies he is pointedly ignoring? Or only something to say about the one which – I freely admit – I got wrong?”
No. I think I am going to assume, with some justification I reckon, that if you can nitpick, so can I.
Especially as it looks a lot like you went through the CAC 40, ignoring every single company that proved my point, to focus on the five that are mild exceptions.
A Frenchman did (arguably) invent the personal computer. Or he came very close to doing so first. The French did come up with an early version of an internet for anyone but missile computers and D&D playing dorks. But the French being the French, they couldn’t do it. They should have but they didn’t. The Micral was especially tragic really.
R2E was absorbed by Groupe Bull in 1978. Although Groupe Bull continued the production of Micral computers, it was not interested in the personal computer market, and Micral computers were mostly confined to highway toll gates (where they remained in service until 1992) and similar niche markets.
@IB
If you can find a graph of house prices going back to 1950 (there is Nationwide one on Net),you will find house prices flat as a pancake until circa 1967 when the madness breaks out .They key is the 1963 abolition of Schedule A of Income tax on owner occupied dwellings which unbelievably (now) taxed house price rises as imputed income, a very weird tax which worked. Domestic rates also taxed houses quite heavily.
If you want a modern example of the merits of high property taxes see the so-called Texas Miracle, hi-jacked by idiot Republican Rick Perry, which results in people flooding into Texas for low house prices and no state Income tax. Not Henry George but American land prices are often so low they don’t need him as much as we do.NB” Progress and Poverty” =commercial progress leads to more money being about ;leads to property prices going up; leads back to Poverty as effective demand is depleted.
@DBC Reed,
I work in telecom, and I know of at least one example where you are 100% wrong.
@ JamesIV, very well but if those regulations are adding value, why make them compulsory?
If you only want regulated drugs, then you can choose that. If you fancy taking a risk because otherwise you might not be here long enough to wait for regulations, why not?
The value of all regulations, god I hate that word, will only be seen if they are optional.
Which they will never be, for obvious reasons.
There are several problems with drugs – mainly that information between seller and buyer is extremely asymmetrical. Sure you can say “caveat emptor” and you should find out about what you are buying before you buy, but a wrong choice can be lethal, very quickly – the remedies of returning faulty goods, or not buying again from the place that sells overpriced, rotting food are not really available. Besides, without the regulations that require pre-marketing clinical testing, even the producer doesn’t actually know what, if anything, their product does.
The essence of the regulation is that if you want to sell a product and claim it has some medical effect, you have to have some evidence to back up that effect.
The difficulty here is that most customers are not in a position to understand the information made available to them about drugs (let alone the reams of information that are kept confidential). So having some experts look at the claims and the evidence presented to support them is probably more efficient than leaving it all up to customers.
Besides, it doesn’t stop the latter happening – plenty of drugs get used for things other than the manufacturer’s claims. For example, an antihistamine might be licensed for allergies, but everyone knows it can also treat hives, or insomnia so it gets used for that as well.
And if you really want to sell some chemical in pill form without a medical claim, and see what punters try to treat with it, be my guest. Don’t forget those product liability issues!
@SMFS, your statement was “Which is why virtually none of the non-English-speaking EU has seen any new large scale companies since the 1950s.”
So one example, let alone 6 companies, among the 3 largest non-English-speaking EU economies, is adequate to negate your statement.
Next trick: SMFS points out that he used the word “virtually”, so “Germany plus Italy plus France” is equivalent to “virtually none of the non-English speaking EU”. You really have taken my advice to read your Schopenhauer to heart, haven’t you!
What was that fallacy or debating tactic we were discussing the other day in which overly precise interpretations of discursive speech are used to derail a substantive argument?
The “continuum fallacy”.
@ DBC Reed
I have actually looked at house prices.
So i can point out that they more than doubled under New Labour in 13 years, a bigger rise than in the previous 1300.
I can also remember that Harold Wilson was in power in 1967 and devalued the pound, shortly after introducing Capital gains tax which applied to nominal (often just notional) gains on sale of almost all assets *except* owner-occupied housing. So there was a flight to invest in housing as the only safe home for your savings.prices.
Commercial property has shot up in price under every Labour government since 1964 (I can’t find data on Attlee, but i suspect it happened then too).
Secondly privatisations have vastly improved nearly every privatised industry that I can think of: as state monopolies they were mostly run for the benefit of their employees not the customer. BT as a state monopoly gave appalling service; British Fail likewise; the municipally-owned water companies poisoned their customers and neglected their infrastructure for nigh-on fifty years; electricity cuts were more common and prices, in real terms, higher because CEGB and the Electricity Council were so inefficient – National Power inherited a workforce where there were three employees for every two jobs, the nationalised British Steel located new plants according to Labour Party internal politics resulting in inefficiency and higher costs which cost British engineering companies thousands of jobs since they could not compete on price when they had to pay too much for steel – how much farther do i need to go.
Your rants are disconnected from truth in the real world.
luke – you could check out aq company called EMED plc…they hbave spent 5-6 years trying to re-open the Rio Tinto zinc mines, now that metal prices make it worthwhile. For the last 5 years, all the money they have raised has been spent in paying off environmental agencies and buying environmental certificates. in an area of Spain with massive unemployment. A mIne that was there for 500 years! that they want to reopen. Tim is talking about processing spoilheaps from mines. even less environmental impact.
Diogenes,
Ta. My problem is that I really know nothing about mines. I know that small law firms are virtually uninsurable because (in general and historically) they are crap. They should be out of business (to my disadvantage). No idea if this is true for small miners.
I agree that Spanish mines have been operating for over 500 years, so it seems silly to stop them. Just suspicious of the concept of Mom and Pop mining companies. Are we being sentimental about small/historic companies?
@L77
Any flight into house investment was facilitated in the 60’s by the Tories abolishing Schedule A and diluting domestic rates.They has been banging on about abolishing Schedule A for years but were seen off by Enoch Powell who defended this tax to the hilt.He also said the unions were innocent as new born lamb lambs of causing inflation.A pity he blotted his copybook (and I’m old fashioned Labour).
The greatest triumph of property values over productive values was in commercial property.Although no asset stripper, Charles Clore realised that the property holdings (shoe shops) were worth more than the profits of shoe factories and bought up the Northampton mass shoemaking firms, sold the shops and leased them back.Presumably he loaded the firms with debt in the Manchester United manner,but I do not know that. Pretty soon the Slater Walker era started which was outright asset stripping (Peter Walker being a Tory Cabinet Minister) .Factories were converted into flats, or if there were grounds , housing estates .All the jobs were destroyed.
I do not have to defend pre-privatisation nationalised industries: you have to defend post privatisation private sector market failure.That is where we are now, thanks to Thatcherite simpletons.
DBC,
Unions have no more capacity to cause inflation than anyone else. It’s a monetary phenomenon. They can change the distribution of prices, but not the aggregate price level (if honestly calculated). Same as businesses or any other private economic actors. The only people who can create inflation are the central bankers. Which is what they do for a living.
Quite.This is the point Powell was making but in 1970 when the whole of the Press and most of the Tory Party was against him .”In the matter of inflation, the unions and their members area as innocent as lambs”.
I should estimate that 80% of the contributors to this blog still believe that the Unions caused inflation and that Thatcher was oh so waliant ( a lot of Thatcherites being very camp) for bringing the unions to heel (and dooming the economy to thirty years of no demand.)
So DBC, whether tories or labour, it is the meddling of politicians that screws things up. Nothing to do with privatisation Then again, you’re old labour, as if it was something to be proud of, so I don’t think you’re equipped to understand much beyond your simpleton’s mind capacity.
@James, I never said you would be forced to buy unregulated anything! If you lack information, or do not understand it, or whatever, the regulated medicines are there, proving the value of regulations. Or not. Or something in between.
My point is that no one has the right to stop you from doing what you wish as an adult, with the usual proviso. All it has done over the last years is infantilise and deresponsibilise the general population which, if it was anywhere as stupid as the regulations imply, would have disappeared long ago. It is just a massive exercise in bureaucracy doing the only thing it knows how to do, which is growing ad infinitum.
@ DBC Reed
Firstly, you are deluded if you expect anyone to believe that Wilson was a Tory. Secondly, if the abolition of Schedule on imputed rent in Spring 1963 had been a trigger for a rise in house prices then the rise would have started before 1967. Thirdly prices are affected by supply and demand and under the Conservatives from 1951-64, more houses were being built that new households were being formed so scarcity was being eliminated and the quality of the housing stock was being improved – prefabs and back-to-backs with outside toilets replaced by modern semi-detached with gardens and bathrooms; Wilson expanded Council House building at the expense of private sector housing as the 1945-9 baby boomers were becoming adults and wanting to buy or rent houses so created a tighter market; prices were not rising in 1964-7 so we saw councils building to Parker-Morris standards and private-sector housebuilders *not* doing so because the cost of these houses was greater than young buyers could afford/get a mortgage for (and land-cost was insignificant, so don’t try blaming that). If the 1963 abolition of Schedule a had been the trigger then people would have paid up for Parker-Morris standards in the private sector.
Your pathetic lies do not stand up to examination by anyone who remembers the 60s and 70s.Just how could Charles Clore make a fortune out of selling stuff to himself and leasing it back? Clore was a property tycoon. All the commercial propertyy firms made their fortunes under Labour governments – there was a “property crash” when the Heath government came in and slowed down the growth in bureaucracy and demand fore more government offices. It is no surprise that the infamous Harry Hyams of “Centre Point” fame was a major donor to the Labour Party.
“.Factories were converted into flats, or if there were grounds , housing estates .All the jobs were destroyed.” – Stupid lies – employment data published under New Labour shows more manufacturing jobs were lost under New Labour in 13 years than in 18 years 1979-97 under the Tories despite eliminating over a million of utter non-jobs like firemen in diesel engines.
@John 77
I am not going to argue with you.You seem to have an issue with me personally and no amount of explanation on my part is going to rectify that.
I suggest you watch Max Keiser on RT tonight (Tuesday) to get some indication of the depth and extent of the housing crisis.
@ DBC Reed
I just have an issue with people who treat as really stupid by telling me things that I already know, or can check in seconds, to be nonsense.
I have actually been looking at UK housing since before Max Keiser was born so I am not sure why I should watch a US stand-up comic on a Russian TV channel on a TV I do not own to learn “some indication” of a problem which is continually news in the UK.
treat me as
@monoi, you are indeed free to buy and sell non-regulated pills containing various chemicals, you just can’t call them medicines or claim or imply they do something medicinal. Go have a look at the vast array of pills and potions on the shelf in your local drugstore.
So this all seems fine with me unless you believe in such an anarchic extreme of a “free” market that there should be no remedy against the selling of products that are misrepresented. Those who can demonstrate their product does what it claims may make the claim, those who cannot may sell it anyway, without the claim.
Most drug companies do indeed chose the regulated route for most of their products, since there is (perhaps surprisingly) more money to be made selling to the evidence-based community than the voodoo community, not to mention that licensing provides some degree of protection for product liability issues, and a certain amount of time-limited market exclusivity.
JamesV – “So one example, let alone 6 companies, among the 3 largest non-English-speaking EU economies, is adequate to negate your statement.”
No it isn’t. It is, as Ian pointed out, over precisely quibbling.
“Next trick: SMFS points out that he used the word “virtually”, so “Germany plus Italy plus France” is equivalent to “virtually none of the non-English speaking EU”. You really have taken my advice to read your Schopenhauer to heart, haven’t you!”
I could do that. But there is no need. Anyone who cannot see the massive difference between America’s creation of companies like Microsoft and Apple, against Europe’s very worrying cosy club of established players is just being an ar$e and not contributing anything meaningful. I can, and fully intend to, go on ignoring them.