Expenses-Gate: the ludicrous paradox of focussing on ‘state’ failure when it is markets that have really failed us.

British politics is currently consumed by a single question – how much did various Members of Parliament spend on bath-plugs and various other expenses items?

Now don’t get me wrong: I think the system of “expenses in lieu of salary”, which is what we have really had for the past decade or so for Members of Parliament, is a farce and one which was bound to lead to disaster – as Dr Tony Wright, the estimable chair of the Public Administration Select Committee, has long pointed out.

But lets get a sense of perspective here and also recognise the paradox.

In the past few months the state – politicians – have saved western, if not global, capitalism, from collapse. The state has extended its reach into the market on an unprecedented scale – especially in controlling the ‘commanding heights’ of the economy – the banks – in a way that only a few Trotskyists would have wet-dreamed possible a couple of years ago.

The irony then is that on both the macro and micro levels we seem to have shifted focus to “state failure”. On the macro level the debate has shifted to the dire straights of the public finances. There are indeed big problems, but these are (a) the result mainly of market failures and (b) not as automatically demanding of massive spending cut-backs as some commentators suggest.

On the micro-level – and it really is very micro – we are focussing on the terribly small peccadilloes of ‘Honourable Members’ of the Westminster Parliament. Some their behaviour is indeed reprehensible – but compared to other western legislatures it really is pretty small beer.

So here we have the most amazing paradox: as we have experienced the biggest market failure in maybe 80 years – which has been prevented from turning into a global catastrophe only by state action – and yet somehow the political debate in the UK seems to have shifted into a focus on ‘state’ failure instead. How totally bizarre is that?

One thought on “Expenses-Gate: the ludicrous paradox of focussing on ‘state’ failure when it is markets that have really failed us.

  1. Yes, it is highly esteemed prejudice that state always fails whereas the market never fails. I think it deserves to be discussed further, and I should like to make the following point:

    Political adoption of the private-no-failure prejudice generally reinforces market failure thereby inducing state-failure (which often even confirms the-state-failure prejudice).

    Example: In DK the mortgage business for small houses, invented 10-years-repayment-free loans which reduced the initial payments on loans. The parliament allowed the companies to issue such loans. What happened: The real estate prices increased to even more crazy levels (which was easily predictable), and this aggravated the problems when the crisis came.

    There are also a lot of examples from hospitalservice, security, fishery, etc.

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