Cack-handed policies to chase votes always end in tears just look at the energy market – iNews

Populism is for lazy politicians. It relies on dreaming up some sort of common enemy immigrants, elites, experts, business, the French and claiming that you speak for the people by blaming these groups for societys ills. Populist politicians trumpet easy solutions to the pressing issues of the day, but their ideas are simplistic, not simple, and rarely go to the root of the problem.

Unfortunately, the UK is suffering an entire generation of economically and historically illiterate populists in government and opposition. On the left, the Corbyn years are a surreal cheese-dream of madcap spending plans that might easily have led the UK back to the doorstep of the International Monetary Fund, begging for rescue. The Labour Party still has not found its footing after that sorry episode, with lots of Angela Rayner types trying to keep the hard socialist dream alive.

On the right, the madness of Brexit is wreaking havoc with the economy and international relations, while the red-trousered Spartans who dragged the Conservative Party down this historical cul-de-sac swan about gaslighting the entire population by claiming that this mess is exactly what the 52 per cent voted for. Flailing about for ways to boost his popularity, the Prime Minister has alighted on a big spending, big government, muscularly intervening in the market left, right and centre to appeal to the people.

This is a big topic in itself, worth coming back to another day. Im quite enjoying the manifest horror among the self-same Spartans as they troop through the lobbies voting for an economic programme that would have been considered too lefty even for Red Ed a few years ago.

As much as I dislike them, I do share some common economic ground with the hard nuts. But just some. Socialism (with its various related-isms) and capitalism share the goal of creating prosperity for all. But despite its flaws, only capitalism has consistently delivered. The invisible hand of the market ensures the most efficient allocation of resources possible and this efficiency delivers high living standards. The miraculous mechanism of price underpins it all.

The price of everything, from goods to investment capital, is the point at which supply and demand balance out. If prices rise too high, buyers go on strike and competitors rush in until prices fall back. Go too low and suppliers turn off the taps until scarcity pushes prices higher.

Nave left-wing thinking often imagines that simply setting low prices by law means goods for everyone. It does not. Fixing prices by diktat never works. Ever. Venezualas socialists have finally lifted the price controls on basic consumer goods that delivered empty shelves for years, just as Argentinas Peronists have nailed down the price of 1,432 everyday items by law. Expect the same result there.

But surely that doesnt happen in the UK? Unfortunately it does, and the outcome is the same. Theresa May was the most hapless UK prime minister since the 1970s, so its no surprise the wheels have fallen off her policy to control the price of gas to consumers, designed to win votes and stolen from the Labour Party. Simple. Appealing. Populist. Foolish.

Of course, the wholesale gas market is global, the price set by billions of consumers and millions of businesses the world over. It is entirely indifferent to the hubris of British politicians. So what happens if you force companies to sell gas at a loss? Bankruptcies and loss of competition.

I dont have a lot of sympathy for the shonkier small fry that have gone bust. They knew the rules and most of them cheered the price cap when it came in because they imagined it would undermine the Big Six energy companies.

My point is that ultimately we still all bear the cost. The Government has been forced effectively to nationalise Bulb, as no other supplier wanted six million loss-making customers thank you very much. So whether we fork out as customers or taxpayers, we cant escape the inevitable. Ofgem, slowly, will get around to adjusting the price cap, but the damage has already been done.

I am not a pure free marketeer; I believe in regulated capitalism. Governments must make rules, for example on environmental standards, and then just step back and let the market get on with it. And there should be fierce, immediate and expensive penalties for bad behaviour like dumping sewage into rivers and onto beaches.

But cack-handed interventions to chase votes always end in tears. For the energy market regulating the profit margin on gas, the mark-up, rather than legislating a price, would have avoided this latest debacle and would prevent profiteering. At times of extreme high prices, welfare provides a route to support the vulnerable.

Price controls have broken the energy market. But the economic consequences of other populist policies are mounting too. The immigration clampdown has broken the haulage market, the pork industry, hospitality, seasonal agriculture and much more. The post-Brexit trading arrangements are delivering red tape and shortages, damaging the prospects of our vital financial services industry and splintering the Northern Ireland Protocol. All of this ends up as a cost to us as taxpayers and consumers.

Lamentably, there seems no end in sight to Britains populist convulsions. Instead of wisdom and experience leading public opinion, we have empty slogans in search of workable policy. If Peppa Pig is the apotheosis of Global Britain we are in serious trouble.

See the rest here:

Cack-handed policies to chase votes always end in tears just look at the energy market - iNews