BUNHILL: Learning that laissez-faire is for losers

Click to follow
The Independent Online
The times they sure are a- changing. How many of you hanker after the glorious days of the traditional British nationalised industry? Well, if the latest piece of economic research carries any weight with the great and the good at the Treasury, then the latest Seventies revival may have less to do with flares and platforms than with beer and sandwiches.

Among the latest missives to arrive at Bunhill Towers by privatised mail coach is a press release from Harrington Comm- unications on behalf of strategy consultants, PIMS Associates. Forgive me for a moment if I quote (normal service will be resumed shortly): "...doubters believe that monopolies derive their profits from over-pricing and lower output, thereby generating higher rates of return.

"The research into real businesses in the PIMS database proves the opposite is true: high- shares businesses derive economies of scale in working capital, manufacturing, marketing, R&D and other cost components. These enable high profitability without raising prices, and this is perpetuated by on-going customer satisfaction."

Obvious, isn't it?

In other words the free market gurus of the Adam Smith Institute et al can go take a running jump. The anti-trust laws as interpreted by the Monopolies and Mergers Commission are a blight on us all. Laissez-faire is for losers and what we really need in order to feel cosy about our companies again is the return of British Rail, Post Office Telecommunications and British Gas to the public fold. Economists, eh? Little tinkers - what will they come up with next?

WHATEVER they come up with, it's satisfying to know that somebody has come up with something on them - specifically an Internet site devoted to jokes about economists (to be found at: http://netec.mcc.ac. uk/JokEc.html). Here's one...

An experienced economist and a not-so-experienced economist are walking along the road when they come across some dog mess. Says the experienced economist to his colleague: "If you eat it I'll give you pounds 20,000." The not so experienced economist crunches his numbers and figures out that he's better off eating it, does so, and collects his pounds 20,000.

A little further down the road they come across another little doggie present. Says the not so experienced economist: "Now if you eat that I'll give you pounds 20,000." After evaluating the proposal the experienced economist does the deed and gets the money.

Further on yet, the not so experienced economist is looking perplexed. "Look, we both have the same amount of money we had before, but we both ate s-. I don't see us being better off."

"Ah," says the older and wiser economist, "that may be true, but you overlook the fact that we've just been involved in pounds 40,000 of trade."

Wacker's world

THAT'S enough economists for the time being. Let's talk about futurists. Welcome to the wonderful world of Watts Wacker.

Mr Wacker works for the highly-respected Californian (natch) research consultancy SRI. Readers of our daily sister paper may be familiar with his name after reading earlier this week a discussion of his latest work, The 500 Year Delta, by my colleague Roger Trapp.

Among Mr Wacker's ideas about the ways that commerce and culture will be formed in the future is the notion of homophyly - meaning the way that, according to the Financial Times, "...objects, when in close proximity to each other [tend] to assume the characteristics of each other - in much the way that long-term dog owners are supposed to take on a resemblance to their pet". (I intend to be nothing less than complimentary in noting that, in a recent photograph, Mr Wacker himself bears more than a passing resemblance to Keith Flint, singer with "rave" group The Prodigy, he of the twin-pronged hairdo and extensive nose furniture.) The similarity of the shops that fill our shopping malls and the globalisation of cultural icons - eg EuroDisney - are examples of homophyly in action.

Mr Wacker also advises companies that they should consider formulating 500-year business plans - wise advice no doubt if they intend to continue homophylysing the high street. But what would the corporate landscape look like now had futurists of Mr Wacker's calibre been around in previous centuries? Our newspaper industry, rather than being populated by the likes of News International, Mirror Group and Hollinger would be the site of circulation wars between Caxton Corp and the Gutenberg Group Inc; Mrs Miggin's Pie Shops would be in court over leaflets claiming that they were selling less than nutritious fare and were responsible for the destruction a vast tracts of rain forest; and the playboy offspring of the head of Medici Worldwide Holdings would be entertaining a royal divorcee on his Mediterranean-anchored yacht.

PS: HOW many conservative economists does it take to change a light bulb? None. There is no need to change the light bulb. All the conditions for illumination are in place.