We live in a very regulated world. Modern governments are very powerful, both in laying down detailed controls over business and in commanding huge spending power. We have just seen how this interplay works with vaccines. As government will be the main buyer of the products they have considerable say over the development and production. Whilst the ideas and production emerges from the private sector, government was involved in setting the challenge, offering seedcorn money and advance contracts. There are many other areas where this model has to be used to get breakthroughs given government importance. Energy today is dominated by government rules and controls, with government organising markets for competing businesses to win contracts to a government specification. It needs to get better at what it specifies and how much power it conjures for our use. Defence is of course dominated by government procurement. Railways now are effectively nationalised.
It is important that we do not allow all this to become an argument for more things to be carried out by fully nationalised industries under government direction of innovation, cost structures and production. The UK tried that for some 30 years after the war and fell further and further behind in coal mining, steel production, car production, shipbuilding and other affected areas. The joy of not for profit became the woes of heavily loss making businesses in need of perpetual taxpayer subsidy, arguing over what to close next and who to sack. The well meant five integrated plant investment in steel struggled from the first and spent years of recriminations over which of the works to shut. The coal industry was a major source of industrial tension over how long to keep open high cost mines. We witnessed a bitter retreat from shipyards around the UK. A nationalised industry often hit customers with high prices and sacked many employees at the same time as it wrestled with poor productivity, poor innovation and better overseas competition. The nationalised telephone system backed an out of date mechanical switching system as the USA leapt ahead with new electronic technologies.
We need to make the case again for competition, choice and profits. Competition drives innovation. Monopoly encourages sloth , resting with what the monopolist already has. Allowing consumers choice keeps companies honest. Above all profits are essential to pay for research and development, to make new investments in products and production, and to help pay for new jobs and growth. Profits made by our larger companies are shared with millions of UK citizens through dividends paid to pension funds and insurance companies that look after people’s savings. The government needs to work with the private sector and liberate it more. We need to ask ourselves why the USA has been so much better than the UK/EU at powering the digital revolution and developing most of the great success stories of the digital age in the free world.