Sunday 23 January 2011

Mr Redwood confesses that he thinks he can 'run the economy'

This is JR's post recent post to which I am referring.

http://www.johnredwoodsdiary.com/2011/01/21/the-game-of-managing-the-economy/

This is the first paragraph...

A government trying to manage an economy is rather like a child trying to play that game of placing a number of small ball bearings into a series of slots on an enclosed board. The game proceeds by nudging or shaking the board in different directions to try to tempt each ball into one of the slots. If you nudge too hard or in the wrong direction you dislodge some of the balls you have already placed in the right holes. Success depends on administering the right series of shocks in the right directions to complete the task. Too much force will wreck it. Too little will not achieve it. There may be some way of calculating the right forces, but in the real world it comes down to experience and judgement, to trial and error.


Now, there is nothing more terrifying in my world than a politician stating that the government 'manages the economy'. It is the confession of a latent leaning to 'central planning', which all us Austrians know is doomed to failure.

Generally I like Mr R (H-O-ism excepted) and anyone who cannot sing in Welsh cannot possibly be all bad. He runs an outfit called Evercore which does some of what I do in a similar way, so that's good. But this post somewhat riled me, and I was rather caustic in my comments.

A better anaology to my mind than JR's 'nudging the pinballs' is the motor racing 'tank slapper'. This is what happens when you get into a bit of skid and in trying to correct it you over compensate and swerve off in the opposite direction. Then you overcompensate again and again you swerve off, and so on until you spin right round and, bang!, you're in the barriers.

JR's, or any politicians attempts to 'nudge' the economy, always ends in tank slappers, and more often than not, in the crash-barriers too.

14 comments:

marksany said...

He should have a go at Deming's funnel. The Red Bead experiment would be a good thing for the cabinet to do together, too.

Mark Wadsworth said...

Good point.

He could have stopped after 'A government trying to manage the economy' and said 'is doomed to complete failure' and left it at that.

But as you say, he is hardcore H-O-ist and so if nothing else, he sees keeping house prices as high as possible as a core function of government.

gordon-bennett said...

I wonder if JR's problem is that he thinks everyone takes decisions as rationally as he does.

I would have thought that "managing the economy" is a reactive process of clearing up the mess that results from thinking that you can manage the economy.

Anonymous said...

Dear Mr Wadsworth

Perhaps the result that government sees from managing the economy is precisely what it wants.

DP

Mark Wadsworth said...

DP, clearly not, as the central aim of the LibLabCon Party, ever rising house prices and ever more profitable banks went off the rails about three years ago and they haven't worked out yet how to get it back on track. Even by their own standards, they have failed.

James Higham said...

Now, there is nothing more terrifying in my world than a politician stating that the government 'manages the economy'. It is the confession of a latent leaning to 'central planning', which all us Austrians know is doomed to failure.

This is the critical point. I met him at the Tory conference in Manchester and had a short chat. While he came across as a good person, he did have this manner of one who knows how to run things.

Perhaps he can.

Nick Drew said...

he comes across as someone absolutely gagging to be allowed to get his hands back on the tiller!

can hardly contain himself & will probably burst in front of our eyes one day, during a Newsnight interview

fortunately, Team Cameron have identified him as someone the public will not wear. Would that they could see that Gove is also beyond the pale

Scott Wright said...

Haha, just read the comments left on Redwoods blog, me thinks you went a little ape shit! Good on ya.

Robin Smith said...

Well we keep saying others have no idea. But have we yet decided what is the proper function of government and agreed on that? Nope! So WTF?

My view is that the first duty of government is:

To protect the equal natural rights of all people. As soon as it attempts to do more than that it immediately breaks the rule. Simples.

Redwood is a true socialist masquerading as a Tory. He is using government to do exactly the opposite of this principle as MW states. To protect his real constituents in the city who own all the homes through mortgages and inflate all their savings away as interest and inflation. I don't think he realises this yet but he was university educated so there you go.

MW BTW Mr Redwood told me in his office once that "I don't do morals". Is this why you still like him even when he is leading an agenda of social corruption and all the rest.?

Tim Almond said...

The mistake by JR is to assume that there's a "balancing act" about government running the economy, when in reality the balance is way out of line, and probably always has been. We've never had a time where we chose to undersize government to the point where it hurts the economy.

Most of what causes problems in the economy is government itself. Why are we in so much debt? Because government pissed our money away. Why do we have so many graduates who are unemployed and saddled with debt? Because government raised the number of places and convinced people it was good for them. Why do we have so many unemployed? Because the government sets such a high withdrawl rate on tax. Why do we have so much crime? Because government won't deal with little scrotes. Why has fly tipping gone up? Because government set a load of regulations about landfill.

I say that the last Labour government did 4 good things: deregulating the age of homosexuality, deregulated alcohol licensing, the Barker report which proposed more building on the Hallowed Greenbelt and the auction for 3G bandwidth. Three of these count as "government letting go of some of powers it should never have had in the first place".

Bayard said...

Why is it called a "tank slapper"?

Lola said...

bayard. Ah now, at last, a really serious question. Well. It's probably because fuel tanks tended to be at the back and as you attempt to correct each semi-spin you can hear the fuel sloshing about; or perhaps for the same reason the tank end of the car eventually slaps the boonies.

Quite honestly, who gives a shit.We all know what it means.

Pogo said...

I think that it's originally from motorcycle racing, where a "tank slapper" is literally that - the bike kicks throwing the rider to one side and dislodging a hand from the handlebars, said hand generally is seen to give the fuel tank (situated betwixt rider and handlebars) a right good slap. If the rider overcorrects, causing the bike to kick the other way the same happens again, with the other hand.

Usually a precursor to getting "high sided". Ouch!

Lola said...

Pogo - True. It does come from bike racing, I think. But the term is translatable to car racing. There's more on wikipedia, if you are that interested.