Interesting what you think about on first waking, isn’t it?

But there are no discussions: this is just what I thought about when I woke up this morning

At my age bowel evacuations are high on the list of early morning thoughts.

An industrial strategy means picking winners and losers. It does not mean throwing money at business and hoping some if it will stick. It means quite positively choosing the sectors, and on occasion, the specific activities that a government thinks will best suit the nation’s purpose.

It also means that innovation is directed. Whilst pure research can rarely be directed innovation can be because it develops existing ideas and improves their usefulness. Innovation tends to be much more expensive than research.

Appears the same is true for Ritchie.

First it demands an end to low tax for all business strategies in the vague hope that these might stimulate some growth. There is no proven evidence that such an approach works to achieve anything other than growth in corporate tax piles, a rise in inequality and tax avoidance as people incorporate in the small business sector.

Instead an industrial strategy requires direct investment, targeted loans and, when appropriate, subsidies. Whatever Brexit agreement we reach these should be possible: other EU countries manage them. But, and it’s an important but, ministers had better be ready for some failures because they will happen. In that case making sure the investment portfolio has some diversification without losing focus would be wise.

But, and I repeat the point, low tax is not an industrial strategy.

Yes, very much the same.

46 thoughts on “Interesting what you think about on first waking, isn’t it?”

  1. It appears Tim you’re not the only one thinking of bowels in the morning.

    “growth in corporate tax piles”

    This rare Murphy condition was, until now, not known to me, even though I do suffer haemorrhoids myself too from time to time.

  2. “It also means that innovation is directed. Whilst pure research can rarely be directed innovation can be because it develops existing ideas and improves their usefulness. Innovation tends to be much more expensive than research.”

    Right you lot, go out and innovate.
    Words fail me.

  3. I think his first thought in the morning is: “How can I seem clever today? I know, I’ll postulate an idea I’ve just pulled out of my arse using big words and long sentences and post it on my blog. My acolytes will comment and agree with me. Anything else is neo-liberal sophistry”

  4. Quoted without comment from Wikipedia:
    “An inherent aspect of fascist economies was economic dirigisme, meaning an economy where the government exerts strong directive influence over investment, as opposed to having a merely regulatory role.”

  5. Furthermore from the same article:
    “Feldman and Mason argue that fascism is distinguished by an absence of coherent economic ideology and an absence of serious economic thinking. They state that the decisions taken by fascist leaders cannot be explained within a logical economic framework.”
    Well, if the boot fits…

  6. . . . the nation’s purpose.

    That right there – that’s simply insane.

    You’re a nation of 60 million people broken up into at least 4 major cultural blocks who’s hate and contempt for each other is only exceeding by their hate and contempt for the French. A nation where you can drive 25 miles in a random direction and find the people there, even though they technically speak the same language as you, are completely incomprehensible.

    How could such an assemblage possibly have a unitary purpose, let alone one that is discoverable by politicians?

    And if it doesn’t. then where does that leave our vaunted ‘Top Men’ and their plans?

  7. The Meissen Bison

    Murphy suffers chronically from mental constipation so his waking moments are devoted to the definitive and unarguable passing of the same joyless turd.

    A sort of fecal, fiscal Sisyphus.

  8. Murphy is always banging on about his business experience but companies house lists his history of directorship as just being TJN and a few of his own companies most of which never traded.

  9. ” It means quite positively choosing the sectors, and on occasion, the specific activities that a government thinks will best suit the nation’s purpose.”

    The Nation’s Purpose. What is that? Does he expand on it? It is interesting to see certain phrases and concepts used which expose who completely differently he views the world. It’s quite exhillerating, like looking over the edge of a deep pit in the ground.

    If he gets upset at being labelled a fascist I would advise he avoids phrases like this. It does tend to sound a bit Mussollini-ish.

  10. I mean just Wow – TIm, if anything I think you are being quite generous in limiting your critique to the first of his many random musings…

    ‘Second, the policy has to be sustainable. Call it green if you like. But if this strategy does not reflect the need to keep resources in the ground and carbon out of the atmosphere then it will be going nowhere. We do not need to subsidise the failures of the past.’

    Is he aware most ‘innovations’ need a degree of stability in the power supply (at the very least) in order to be viable? obviously Murphy (as always) pays close attention to the state of existing infrastructure – I think even with existing power sources, the Climate Change act commitments will mean power outages as soon as the next five years – his policy, such as it is, would merely accelerate that timeline.

    ‘As importantly, the fees based approach to student funding has to go. We are stifling the chances of young people who go to university with these fees and burdening them with debt so high that few will be willing to take any risk to innovate in the future’

    So in order to fund more research and innovation we reduce the possibility for the institutions undertaking it to raise fees on students? This commitment on top of his prior ones to nationalise the housing stock, nationalise the FTSE 250 and have the state take over all private enterprises above a certain number of employees. How much People’s QE does he think is feasible before the destruction of the currency – his published commitments already approach 450Times the government’s budget for the Fiscal Year….

    In short, if this piece is a bowel movement, he urgently needs to seek medical attention, as I doubt he has managed to keep it all in the bowl….

  11. I remember “picking winners” and directed innovation – that was Wilson’s, and particularly Tony Wedgwood Benn’s, strategy. Destroyed the British motorcycle industry, bankrupted Rolls-Royce, killed off our world-leading peaceful nuclear energy programme and put the Hovercraft into use as a cross-channel ferry instead of a beach/mud/marsh vehicle.
    So Murphy wants to return to the late 1970s?

  12. I caught the title of this post out of the corner of my eye, and what I thought it said was:

    “Interesting what you think about while wanking, isn’t it?”

    I imagine it still would have worked with that, being about Ritchie.

  13. John77, I rather liked the cross-channel hovercraft; because it just drove straight up the beach and opened the ramp, the road-to-road time was incredibly quick.

  14. Ah, I see Ritchie is preparing to claim that he was the one who gave Lester Thurow the idea for his Third Way economic policies. And no doubt he did.

    Man’s a genius, he is…

  15. Isn’t the main problem of ‘picking winners’ that the State tends not to want any losers? I mean there’s probably no great harm in throwing money at a myriad of mad ideas and seeing what works and what doesn’t, the problem arises when the pet project du jour starts to go tits up. Then its always a case of ‘If we had another £10m (£100m, £10bn whatever) this would be a world beater’, and (the crucial bit) there’s jobs involved – which politician wants to see the factory/office in his constituency that the State has funded close down and put voters out of work? Hence its not the throwing money at ideas thats necessarily wrong, its the not knowing when to stop that causes the policy to fail. If one could agree in advance that the initial State investment was limited by law to that sum and no more could be forthcoming regardless of the consequences, then there might be a some merit to the idea. But that principle wouldn’t last 5 minutes in the real world of pork barrel politics. Couple of nice aircraft carriers anyone?

  16. VP

    “In short, if this piece is a bowel movement, he urgently needs to seek medical attention, as I doubt he has managed to keep it all in the bowl….”

    That had me hooting

  17. Please don’t compare Ritchie to Mussolini, I’d far rather Mussolini was in charge. Apart from the odd ill-conceived invasion of Abyssinia and Yugoslavia, and ill-advisedly kowtowing to Adolf, he didn’t do a bad job really given whre Italy was when he started.

  18. Richard says:

    John77, I rather liked the cross-channel hovercraft; because it just drove straight up the beach and opened the ramp, the road-to-road time was incredibly quick.

    Exactly that. Before the Channel Tunnel, I used it several times a month through a number of years.

    With minimal check in / similar crossing times etc (in good weather), it was barely slower, if at all – motorway to motorway – than the current Channel Tunnel; though less comfortable during the crossing, obviously.

    A small difference in time being the difference in exit location.

  19. The only ‘winners’ in State-directed investment decisions are the unions and the company management.

  20. @ Richard & PF
    I agree that the cross-channel hovercraft had advantages but it’s almost like using a Hawker Harrier to replace a “cherry-picker” or a tower crane.

  21. John

    Sure, I understand – but before the Channel Tunnel, it did have real value (I presume it wasn’t subsidised?) as easily the quickest way to get on to the continent with your car.

    People happily paid more (than the ferry price) for the time saved, and it presumably made a profit from the service it provided?

  22. Every morning, each and everyone must ask themselves one question: “How can I serve the National Purpose today?”

  23. Jim said:
    “Isn’t the main problem of ‘picking winners’ that the State tends not to want any losers? ”

    Isn’t the main problem that you tax actual winners (i.e. profitable businesses) to subsidise those that politicians think should be winners, so you take money away from your successful businesses to subsidise some lame ducks.

    Plus of course it’s a political process. Rather than allowing a broad market to allocate capital, you’re using a few politicians and civil servants, with all the possibilities for unchecked incompetence and corruption that invites.

  24. Bloke in North Dorset

    Jim beat me to it. I’ll just add that winners also tend to be picked from marginal constituencies, making the losers less likely to be shut down.

  25. Richard – if you’re going to tax winners to subsidise the people you think ought to be winners, then what you probably ought to do is assume that those with a track record of winning are going to win again in the future.

    So you should take a great chunk of the profits from people who have them – say 50% of PBT, if we’re going to back this to the hilt. Then you encourage who’ve done well this year to be winners gain next year, by saying that you’ll double their money – say, every pound of profit after tax this year gets you a pound of subsidy for next year.

    Job done – squeezes the rich, and encourages the real wealth creators.

    I’ve checked the maths and it works perfectly 🙂

  26. @ PF
    I strongly suspect that it was subsidised as it was a JV between British Rail and SNCF after HMG failed to interest any private sector company in the concept.

  27. If you want to understand how government will decide who are winners, remember Corbyn saying he would build Trident submarines but they wouldn’t carry any warheads. That’s the level of decision making you’ll end up getting.

  28. @ Rob
    Or successive governments supporting the loss-making steelworks in Nye Bevan’s/Michael Foot’s constituency, the Triumph factory in Halewood when Wilson was a MP for Liverpool, the aircraft-carrier contract for workers in Gordon Brown’s consituency, or …
    There were thousands of decision to suit Labour MPs, not just those in marginal constituencies. I don’t believe the Conservatives were snow-white but they had fewer reasons to be corrupt.

  29. John77

    Who could forget the great success enjoyed by British Leyland? Wasn’t Benn one of the guiding forces behind the merger of Leyland and BMH?

  30. @PF, July 20, 2016 at 2:57 pm
    “John

    Sure, I understand – but before the Channel Tunnel, it did have real value (I presume it wasn’t subsidised?) as easily the quickest way to get on to the continent with your car.

    People happily paid more (than the ferry price) for the time saved, and it presumably made a profit from the service it provided?”

    @john77, July 20, 2016 at 4:32 pm
    “I strongly suspect that it was subsidised as it was a JV between British Rail and SNCF after HMG failed to interest any private sector company in the concept.”

    Once BR was privatised no subsidies. However it was still loss-making and relied on Duty Free sales to break-even/profit.

    Service was made uneconomic when intra EU journeys Duty Free sales prohibited by EU (iirc except for EU commissioners)

  31. Bloke in Costa Rica

    This bit’s a corker: “But if this strategy does not reflect the need to keep resources in the ground”

    What the fuck good are they doing there? I mean, it’s arguable that until geologists came along and assayed things there was no copper in the Congo. The ore was there for hundreds of millions of years but just as well might have not been. Given that wealth creation is the transformation of assets from low value to high value, this statement demonstrates, if further evidence were needed, that Murphy has no idea at all how any of his ridiculous shite has anything to do with the real world.

  32. @ Diogenes
    Yes, the sale of buses to Cuba made Leyland, briefly, a star. Then things went pear-shaped

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