Why are our politicians so ignorant of the real world?

As much as I want to get rid of the Bullingdon Club bullies in Downing Street, I have major doubts about Ed Miliband. He keeps quiet when he should be shouting from the rooftops and announces the most stupid policies which are ill thought out. Is he really surrounded by idiots and unable to judge their ideas on merit?

Take the latest example to dictate energy prices, ostensibly to make sure the benefits of a fall in oil prices are passed on. Doh! It is not the function of government to set the prices that a business charges its customers. Where are we going here, should business apply to the government to change their prices?

I didn’t appreciate it at the time but I was one of the first business students in the UK to study marketing in the 1970’s. How we laughed at business models where price was based on cost plus a gross profit margin. Price is what the customer is willing to pay. A business then judges whether it can meet that price and make a profit.

So how do you control excessive profits resulting from a failure of the competitive marketplace to function in the public interest. Governments have a number of mechanisms, they can introduce a one off windfall corporation tax (the threat should do), they can improve competition using the model that was intended when the energy companies were privatised and which the government at the time failed to fully implement. 

They can force separation of energy supplier from energy producer, as intended on privatisation. This should be done by forcing energy companies to float off parts of their business. This is what governments do, they set the market conditions under which businesses operate.  They do not stand apart at a distance from the business dictating prices. Stupid stupid boy.

I’ve been reading Al Gore lately and I am stunned by his eloquence. He almost writes in prose.  He puts it far better than I can, and incidentally makes British politicians look rather badly educated.

“The idea of making truly meaningful collective decisions in democracy that are aimed at steering the global machinery we have set in motion is naive, even silly, according to those who have long since placed their faith in the future not in human hands, but in the invisible hand of the marketplace. As more power to make decisions about the future flows from political systems to markets, and as more powerful technologies magnify the strength of the invisible hand, the muscles of self governance have atrophied.”

Wow – beautiful writing. He goes on,

“In the United States, many have cheered the withering of self governance and have celebrated the notion that we should no longer even try to control our own destiny through democratic decision making. Some have recommended, only in half jest, that government should be diminished to the point where it can be drowned in the bathtub. They have enlisted politicians in the efforts to paralyze the ability of government to serve any interests other than those of the global machine, recruited a fifth column in the fourth estate, and hired legions of lobbyists to block any collective decisions about the future that serve the public interest. The even seem to sincerely believe, as many have often written, that there is no such thing as the public interest”

Well Ed Miliband, you need to start exercising those muscles of self governance. 

Footnote - David Cameron urges firms to use windfalls from cheaper oil to fund pay rises. Argh! Keep politics out of business decisions but ensure that markets function for the public good. In this case Britain has gone too far in restricting trade unions. Redress that balance of power and let workers negotiate pay rises. David Cameron is even more stupid than Ed Miliband.