When Big Business meets Big Government...

Lazy BBC-types sometimes talk about whether a particular politician or political party is "pro-business".  What this means is not always clear.

Being "pro-business" is not necessarily the same as favouring free market enterprise.  Indeed, some big businesses are distinctly hostile to open competition.

I wonder if the biggest obstacles to free market competition today come not from bolshie trade unionists, or socialists firebrands, but from the corporate boardroom.

Corporatism - the alliance of big business with big government - is "pro-business" in the sense that it suits certain businessmen.  However, it is very often the antithesis of free market.

Here are some examples of what happens when big business and big government team up:

1. Household utility bills go up to fund some of the de facto subsidies that have paid for the massive increase in wind turbines.
2. EU regulation is introduced in a way that creates barriers to entry in certain markets – thereby suiting the interests of some established players.
3. Defence contracts see squillions of public money transferred onto the balance sheets of certain suppliers – yet somehow our armed forces don't get the kit they need.

The Conservatives must be staunchly pro-business – yet in the best sense of the term. We must favour enterprise and open markets. We must not favour grubby, lobby-for-favours, corporatism.

Comments

[John W]

I criticize much of the privatisation of the formerly nationalised services on these grounds. Essentially moving from a heinously inefficient government monopoly, to a heinously inefficient and profiteering corporate monopoly.

It's what happens when ideological rhetoric blinds pragmatic action.

[Derek W. Buxton]

JohnW,
You obviously do not remember the time when BT ruled the roost with no competition. Six months to get a telephone, if you were lucky, and then it was the standard, ie only, model available. After privatisation getting a 'phone was easy and installation times dropped dramatically. It fails when large companies talk to each other and the government, then the consumer suffers. Regulation is also a brake on innovation and competition

[snegchui]

The privatization of BT was a consumer success, but the verdict on the other big utilities is mixed to downright bad. The mantra of competition-good, monopoly-bad worked at BT because it was in a market that could be made competitive, but has led to the manufacture of artificial competitors in water and rail which work as franchises (local monopolies) and have a different business model, and then gas and electricity which act as rent collectors on top of a national monopoly which is a different business model again. Distinguishing between these models and then applying a consumer friendly solution to each different model would be far better than introducing one-size-fits-all competition.
The main difference to me is how much control over all its core inputs the businesses have, and the less it has the less likely raw competition will work, and the more likely cartels will emerge.
On the main point of the article, Govt money is always seen as loose money, ie nobody ever seems to count it, and how you deal with that seems to be one of life's perennial conundrums. Big spending makes most people feel big, not just the Saturday afternoon splurge-shopper. Once this binge-tendency is acknowledged, perhaps it can be addressed and we can all stop having boom-bust hangovers.

[Alexander King]

Douglas Carswell makes a typically astute point. The US faced the same issues in the 19th century with the "robber barons" and came down hard on them. Apart from anything else, it undermines the public's faith in capitalism, something we can ill afford.

[Ceidwadwyr]

The oligopoly in the grocery market needs breaking so suppliers get get a fair price for their goods. But I realize this is unlikely to happen when one considers how much the big 4 bung, sorry, donate to all the parties.

[SimonC]

There is a lot of wisdon in this argument and nowhere is it better illustrated than in New Labour's use of private contractors in the health service and other areas of public service. Markets work becuase consumer choice determines supplier behaviour - the business looks to its customers. When the customer is a Whitehall office there is no chance of the market behaving as it should.

[Graeme Archer]

What snegchui said at 1500. If we can have genuine competition, great. Otherwise treat the CBI like any other lobby group. Remember Disraeli? We don't want power to govern for a faction.