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Dear God, this is bad, isn’t it?

The first is that so much capital was invested in them with such lasting benefit, albeit not always that anticipated. Of course the circumstances were different from now when some (such as the Ffestiniog) were built, and we would not wish to replicate the economic conditions of that time today, but that’s not my point. What did happen was that capital was used for profit in ways that delivered considerable long term social gain.

D’ye think he’s even ever heard of railway mania? when a few honest folk and a much larger group of unscrupulous thugs (eerily reminiscent of the dot com era) raised vast sums of capital from the general public, as private investments, to do all of that. The public investment came much later, when all the good projects had already been done.

We put so much attention on the paid economy and yet so often it fails so spectacularly to provide the work people need of to use their talents to best advantage.

As has been pointed out, this from the man who thinks that paying tax is better than private charity. You know, that largely volunteer stuff? And I’m sure I’ve seen him slagging off the RNLI at some point.

And third, it strike me that the agent that has done most to release this talent of late are those publicly funded bodies

I am thinking, for example, of the millions invested by local authorities and others in the Welsh Highland Railway. I am sure there are many who would argue that the state should have no part to play in such activity. I disagree. When there is no private capital now available for such schemes it is the state that needs to develop such projects in partnership with enterprising individuals who can deliver real economic gain for a region but do not have the capital required to do so. This is a totally appropriate use for state capital funding from which very large numbers benefit.

But if there was a benefit that could be captured then private capital would happily invest. If there’s a public benefit that cannot be captured (ie, we’re in public goods territory) then sure, state invest away. But can we have the proof of that public goods problem first please? And according to the real definition?

Gonna be bloody hard with a full scale model railway.

Like when the RNLI stopped taking govt grants because they lost more than a £ in donations for each £ in grants?

22 thoughts on “Dear God, this is bad, isn’t it?”

  1. I’m going to do la Murph the injustice of not reading his output, but Isn’t this to some extent each side remembering their success stories? The railways made money for people back then but, financially at least, how is it working out now? Tycoons lost fortunes on building the London Underground (equally loss-making/breaking even depending on who you believe) but London would not London without it. Should their successors come claiming compensation?

    Tulips had the public losing their money on it as well. More recent examples from Germany are a famous “green electricity” investment fund paying huge fixed interest rates until they went belly up, a large commercial bank retailing shipping funds into the teeth of the second great depression (“profit from the coming upswing in global trade!”), not to mention the Icelandic banks – no one wanted to question how they were paying those above-market interest rates on demand deposits, they were just happy to have the money. Not to mention the countless German public authorities who now find themselves under pressure having profited from Switzerland de facto joining the euro until January this year (or the SNB losing countless billions in delaying the inevitable). Or the Germans who paid for a year’s cheap electricity in advance only to find the company going bust half the way through. Need I mention the Shanghai stock exchange? Off-balance-sheet scams abound and pay good returns for a while, then die taking the cash with them.

    Investing is a hard, and necessarily ruthless business. I don’t see the fact that once a century you hit an open goal with lots of little people’s lots of little money makes any difference to that. If anything, that is itself a killer argument against the state taking lots of little people’s lots of little money and “investing” it. Particularly in a democratic state where we nominally elect our peers (who therefore aren’t any better at making investment decisions than the rest of us).

    It just goes to show that capitalism is a really tough game if you don’t have bags of capital. Only if the state does it, or tells little people to do it, it has to carry the costs. That seems a better argument than “the state shouldn’t do any of it unless it fits into an economic category most people don’t know about and even fewer of those who do know about actually understand”.

  2. Statists love the word “investment” -it concretes over the unpleasant fact that all spending for future gain (however defined) is a speculation-which may fail.
    When individuals fail in their speculation they suffer financial pain, even bankruptcy, But as yet there is no comparable incitement to prudence regarding state “investments” ,

  3. If you set the discount rate at zero everything looks like a good investment. Your expected return, zero, is likely to be realised.

    Of course, the initial investors in Beauvais or Chartres weren’t mugs, but they could hardly expect to worship in the cathedral they founded, given it took three generations to finish the job.

  4. Fans of some of the entertaining denizens on TRUK should head over to the piece on tax havens – the ‘trolls’ are back from their holidays – what an absolute imbecile he is…..

  5. Lawrence from Guernsey

    Your idol needs help – his break evidently hasn’t increase his ability to spot genuine comments!

  6. Strangely enough I was on the Welsh Highland Railway only a few weeks ago, and commented on the fact that it looked like someone had poured some hard cash into it at some point, above and beyond the normal self funded nature of most preserved railways. And yes it is an amazing bit of engineering, and must do a great deal for the tourist trade in the area, so one has to admit that any public funds invested in it will have probably made a good return for the overall economy of the area.

    But its madness to imagine that one can scale up the financing of a preserved railway to an entire economy. One thing is clear about the people who run and manage preserved steam railways – they aren’t doing it for the money. They are doing it for the love of the project, of wanting to see the old railway running again, and preserving something of the heritage of the area for future generations. If Public Body X gives them £1m (or whatever) to spend on the line, they will move heaven and earth to make sure that money isn’t wasted, and makes the maximum impact possible towards achieving their goal.

    Until you can muster similar such enthusiasm and dedication in other areas (the NHS perhaps, or the building of HS2) the idea that a volunteer run steam railway is somehow a model for an entire economy is batshit insanity of the highest order.

  7. Part of what makes the Ffestiniog trains so cute is that it is fenced off from the rest of the Snowdonia national park which is treeless rubbish. 85GBP an acre of taxpayer subsidy to graze sheep on denuded uplands – give me a break.

  8. You missed the best part of that particular Murphy brain fart, Tim:

    “The point is we have moved a long way. Capital no longer takes risk. Real enterprise is all too often found in the voluntary sector. It is the state who has to fund much innovation because business prefers financial speculation. And despite this we are told it is markets that are our salvation and too many people believe that is true. I have to wonder why this belief continues and keep concluding that it is only the power or propaganda that sustains the argument when the evidence suggests that a cooperative model of engagement within the broader economy can deliver so much more for us all.”

    Most of that doesn’t make a lot of sense, but did you get the nugget? Companies like Google, Microsoft, Apple, Intel and Oracle aren’t funding innovation… they’re indulging in “financial speculation”! Ergo, THE STATE MUST INTERVENE!!! Because as we all know, there’s nothing more innovative than a bureaucracy, is there?

    I have a post about this up at my place. Roderick Spode lives!

  9. @Van_Patten

    That tax havens piece is, as usual, drivel.

    Firstly, why is he still being invited on to the BBC?

    “Regulation is still stacking up in favour of large companies hiding away from view in these places, so they can get away, commercially, with lower costs than they could otherwise achieve.”

    I can’t remember, but when did Ritchie finally have the epiphany of tax incidence? I must have missed it. And yet, despite recognising that tax is a cost, he wants to increase the corporation tax rate.

    The regulation that takes place in a tax haven is different from the regulation that might, for example, take place in the UK or Germany

    No shit Sherlock: different countries have different regulations.

    Basically Ritchie wants to get out the gunboats again; he doesn’t like that other countries do things that he doesn’t approve of.

  10. I am wondering what the rail unions think if his dreamy admiration of volunteer run railways. My guess is they wouldn’t give him a grant, his dearest wish.

  11. @GlenDorran

    The mention of Germany is doubly hilarious – for me the inclusion of Japan, Germany and Denmark (They don’t appear to have touched the ultimate two absurdities, New Zealand and Norway yet) on the TJN’s list of ‘secrecy jurisdictions’ devoided the term of any meaningful contribution to the tax debate.

    It brings me to one of the principal problems with Murphy’s vision of the UK – it requires international collaboration, under the auspices of a unionised bureaucracy – a world ‘EU’ (albeit obviously not like the current EU which is a ‘neoliberal conspiracy’) which would end up setting the base rate at around 90%… – tax competition, and indeed tax havens are vital weapons for reducing the inexorable upward trend of state expenditure. additionally his entire screed is based around them being a ‘violation of democratic rights’ – if Greeks who would rather keep their money than see it devalued by 80% due to Grexit, or indeed, for example, Zimbabweans managed to get their money over the border into Zambia during the time of hyperinflation, he would describe that as ‘a denial of democracy’ – ‘Lawrence from Guernsey’, that classic stool pigeon, would accuse me of exaggeration when I see that that kind of contention , an almost mindless adulation of the state as axiomatically ‘a good thing’, as pretty evil – but I see no other way to describe it. The assault on tax havens is, at its core, about the elevation of the state and its rights over any individuals – that’s why Murphy’s monstrous vision must be opposed……

  12. @Van_Patten

    His response to Jamie Whyte’s comment about the tyranny of the majority is equally revealing. It shows that Ritchie really doesn’t care about the rights of the individual. All must bow to the Courageous State.

  13. Holiday, steam trains, volunteers, and beautiful scenery. And the prospect of a good lunch.

    Mr Murphy may be a victim of the Pub Garden Fallacy, which can be described as follows:

    – You find yourself in pub garden in the June sunshine in the English countryside. You’re talking rubbish with friends, while your well turned-out children play happily with others. Towards the end of the second pint you may well conclude that Britain is the most beautiful and best country in the world, and why oh why can’t the whole world be like this?

    – On Monday, stuck on the M25 in the drizzle whilst attempting to earn the next round, you may come to a different conclusion.

  14. @GlenDorran

    He is so ignorant I doubt he has troubled himself to read any political philosophy (be interesting to see if it suffered the same fate in his delusional mind as conventional economics) The logical corollary of his dismissal of White’s argument so blithely is that the likes of Turkmenistan and our old friends in North Korea are merely adhering to ‘the will of the world’s people’ by elevating the state to such heights and taxing gtheir subjects at 90% base. Luckily I do think his star is on the wane – and for those regular visitors here who surf the comments at TRUK the comment in question is still there – anyone guess the troll’s identity? (I’m going to make you earn that biscuit from your master, Lawrence)

  15. The Meissen Bison

    Firstly, why is he still being invited on to the BBC? I think it was probably because the BBC wanted somebody to ‘do a Murphy’ on tax havens and couldn’t think of anyone better to ask.

    Sarky Lawrence congratulated him on the show but lamented the company he was keeping, specifically la Hodge. Sadly his comment didn’t make it into pixel.

  16. “. Of course the circumstances were different from now when some (such as the Ffestiniog) were built, and we would not wish to replicate the economic conditions of that time today”

    Oh no, successful private enterprise (in the shape of Slate Quarrying) paying for infrastructure would never do…

  17. “such as the Ffestiniog”

    I must admit that, I am a bit of a fan of railways and more especially so of narrow gauge lines.

    The Ffestiniog line, is a feat of engineering and a little marvel but as has been pointed out on this thread it was not built for scenic travelling.

    Any greater and lasting social benefits were not foreseen by the investors in this line, profit was their ambition and sole motive.

    The railway fell out of use, thanks to market forces and had to be lovingly restored including having to reroute the line round a reservoir. The restoration, it was all mostly done by a doughty group of volunteers. It remains open because of state subsidy and EU grants – which is UK taxpayers money via a more complicated junction.

    In contrast to, the waste – have a guess say north of £70 billion? The current lot [Tories – well lets say Westminster and the DoT] are proposing to splurge on an unnecessary railway to nowhere in particular, as we can see what few station stops there will be, the choices are bizarre and based on a bloke drawing a straight line – how does that benefit our country?. Moreover, and all because it is part of the le grand projet ie, the EU trans network railway idiocy – why then, should we begrudge Ffestiniog a little help? After all, the EU is all about “Socializing costs” – ain’t it?

    Just from an enthusiasts point of view, it’s a bonny wee line and all.

  18. The Welsh Highland Railway is a line built on the trackbeds of an older Welsh Highland Railway. This line was built (rebuilt/finished) in 1922-23 using government support, It never paid it’s way and went into receivership in 1927. In 1933 it was bought by the Festinog Railway who imagined they could succeed and failed again in 1937.

    The WHR itself was the successor to two different lines. The North Wales Narrow Gauge Railway opened in 1877 and closed to passengers after making losses in 1916. At the southern end there was a horse drawn tramway which transported slates. It went into receivership in 1882. The track of both lines was bought by the Portmadoc, Beddgelert and South Snowdon Railway which failed to open its new lines after running out of money.

    Yeah, we need more lines like this.

  19. @Van_Patten

    “and for those regular visitors here who surf the comments at TRUK the comment in question is still there – anyone guess the troll’s identity?”

    I know the comment in question, but I wonder why as an obviously sophisticated erudite poster you would stoop to reading such a publication and thereby know this?

  20. I do wonder what Murphy thinks about the courageous state building a reservoir over the upper part of his beloved Ffestiniog Railway and then actively fighting to not pay compensation to the heroic volunteers who wanted to build a deviation around it in a historically long court case.

  21. > It remains open because of state subsidy and EU grants – which is UK taxpayers money via a more complicated junction.

    Really? I’m sure it sees some grant and lottery money, but I’m fairly sure that the core income of fares and donations would be sufficient to see it survive.

    I’m not a massive fan of the WHHR as constructed – it’s impressive, and over engineered for what it is (I’m mates with of the section engineers who was in charge of building part of it, so I know quite a bit about it’s spec) but the millions of public monry sunk into it for dubious returns leave one feeling it could have been better spent elsewhere (I’m not yet totally convinced the route is financially viable in the long-term, although time will tell).

    Incidentally, if you want to travel by narrow gauge rail, then imho the place to go is the Talyllyn railway – it retains much more of its eccentric Victorian charm than the ffestinog, and as a bonus the faires are cheaper.

    (By coincidence, this comment was written 5mins walk from a ffestinog rly station – I live a hundred odd miles away, but happen to be visiting my parents who live down there)

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