Mark Steel: How did the share dealers get to be so important?

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The Independent Online

They obviously haven't got a clue. The people in charge of the economy look like those poor lads who work in Dixons or PC World in bright red shirts, who try to appear knowledgeable but have no idea what's going on. So you ask what's the difference between this machine and the other one, and they freeze with panic, then say, "Well, basically, this one offers the option of facilities and options," and you know they're thinking, "Is this a lap-top or a kettle?"

And that's what these ministers sound like on the evening news, as they offer explanations such as, "The good news is we're in a low-inflation ratio of sustainable debt combustion, with fuel injection of up to 6 per cent, so that even if our boom is followed by a bust and then a boom and another bust we're no longer in a cycle of boom and bust."

It's especially confusing for anyone who believed what they were taught at school about how the economy works. Because it's supposed to respond to supply and demand, which makes it puzzling why there are recessions. For example, it must mean that in the 1930s, millions of people thought "Oh I'm sick of wearing shoes. If I didn't have to waste time doing up laces I'd have more time for twirling wooden rattles and clipping young urchins round the ear."

Even more confusing is why the livelihoods of most people on the planet seem to depend on the actions of share dealers. One day the traders spend all day selling instead of buying, and this means we could be on the edge of a global slump. How do they get to be so influential? It's as random as if the world economy depended on the results of the Scottish Second Division, so experts appeared on the news to tell us:

"Certainly we could see a further decline in house prices and another fall in interest rates before the end of the week, but this could quickly be reversed if Cowdenbeath beat Stranraer by two or more goals. And if East Fife were to draw against Arbroath this would strengthen the pound against the dollar and could even lead to an early general election."

Also, if the antics of share dealers are so crucial, why do we bother electing a government? Ministers seem powerless compared to the stock market people, so at election time the parties might as well campaign on the basis that their party would be better than the other party at coming on television and saying, "Well I'm buggered if I know what to do."

Or maybe, instead of unelected dealers gambling with our welfare on the stock exchange, it would be more democratic if the Government gambled with the economy. So the Budget would be full of announcements such as, "After due consideration, and in line with our insistence on fiscal competence, the car industry has been put on greyhound number four in the 6.38 tonight at Wimbledon Stadium."

But the most alarming part of the official response to a looming recession is that ministers and experts talk about it as if it's some sort of spirit. They sound like ancient pagans expressing fear of a bad crop brought by angry gods. And once it descends, all we can do is offer a sacrifice, of a few million jobs and lives ruined and thousands made homeless until the gods are satisfied with our gifts and we can start all over again. But surely recessions aren't inevitable, they're created by human actions.

In a recession, businesses close because the people running them are not driven by the needs of humanity, but by how to secure the greatest profit. So, if the managing director of a pharmaceuticals company announced at his AGM, "Shareholders, we've given away all our medicine to the sick for free. Oh, you should have seen their faces," within seconds there'd be dealers round the world screaming, "Sell, sell, sell."

The defenders of the system claim that profit is a reward for the risk taken by enterprising businessmen, searching for innovative products and services to fill gaps in the market. But that's not how the big money is made. If The Dragon's Den was representative of modern business, you'd have someone saying to the panel, "My idea is to set up a bank, make billions from interest, then if it ballses up we get the taxpayer to fork out. Who's in?"

Maybe the reason it's so hard to explain how this system works is because no one, starting from scratch, would devise it like this. Just as, if a group of people were stranded on a desert island, you'd be suspicious if someone announced, "Instead of picking the bananas I'm going to own the tree, employ someone to pick them and sell them at a profit. Then if profits are low I'll sell the tree to a developer, who can turn it into luxury flats. And then if the banana market picks up again, we can import them from China. But the first thing is to pay me a massive bonus. Or don't you understand economics?"

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