The Transport Committee met today for an evidence session on low carbon vehicles. It illustrated that crony capitalism is now not merely entrenched and passed over, but borne out of the good intentions of a global regulatory elite.
In the first session, we learned that “consumer demand is lagging policy”, which I translated as “people don’t want to buy these expensive vehicles” (I’ll link to the transcript later). We learned that electric vehicles are expensive and impractical: £30,000 for a subsidised car with a £15,000 battery and a short range. Of course the electricity comes mostly from carbon sources, although in the end we were asked to believe that combustion-kinetic energy-electricity-transmission-charging-discharging-kinetic energy is a more efficient process than combustion-kinetic energy. Perhaps.
In the second session, the motor industry welcomed the regulations that have created this new industry segment for them, calling for stability. Considerable effort went into avoiding my point that this particular set of product lines exist in the industry because of the global rules, not people’s free choices. The government were to be congratulated for creating jobs and so on. (But wouldn’t the jobs have been created somewhere else?)
Finally, the Minister, Norman Baker, explained how satisfied he is with the Government’s progress. He used the example of CD adoption to explain slow uptake of new technologies.
Superficially, all seems well. However, it is undoubtedly the case that considerable economic activity has been created by international government regulation to produce products which are more expensive and less useful than people want. I don’t doubt the industry like it: the rules push economic activity towards them, providing direct subsidy and underwriting the commercial risks of developing new technologies. Of course they want, as they said, stability of these rules across the world: their research and development risks have been socialised, which is good for the bottom line.
Whereas CDs were introduced as a technological innovation by private entrepreneurs with the risks carried by private investors, the same cannot be said of low carbon vehicles. Vehicle manufacturers are being guided by international government, not by the need to satisfy their consumers, consumers who are being taxed to subsidise the products most of them cannot afford to buy. And incidentally, when one witness, an engineer, quoted figures to illustrate the relatively poor cost-effectiveness of electric cars compared to conventional cars, he used the pump price of petrol: I pointed out that if he deducted the tax on fuel, the figures would be about three times as bad.
This way of organising ourselves may now be the norm, but it is not capitalism or liberalism. It’s true that the means of production are privately owned, but their use is being directed by state power not people’s choices. Whether private ownership has any meaning is doubtful in such an environment of rules, taxes and subsidies.
This may be called corporatism, crony capitalism or perhaps “socialism of the German pattern” (that of the 1930s) but what it is not is social cooperation based on choice and voluntary exchange, ie capitalism. Unfortunately, this system goes by that name and too few spot what it really is.
We seem to welcome this despotism and waste of resources in the name of a half-hearted commitment to what is supposed to be an existential threat to mankind. Given the miserable state of the world economy and the rising cost of living for normal people, society needs some clear thinking about how to allocate scarce resources to best meet the needs of humanity. Socialism, economic planning, has failed for a hundred years: in the midst of our present failing interventionism, why not try freedom?