Realist, not conformist analysis of the latest financial, business and political news

That Ministry Of Defence Housing Deal Proves It’s Impossible To Plan The Economy

Various statist types, plus the public accounts committee, are complaining that the Ministry of Defence’s housing deal was a disaster. Costing billions and billion in fact. Which, with hindsight, it does appear to have done. But there’s the problem – it’s with hindsight. And it is this very problem which tells us why it’s difficult – difficult to impossible in fact – to plan an economy successfully.

Taxpayers could face losses of more than £5bn because of a “disastrous” decision to sell off military homes during a housing boom, a report by parliament’s spending watchdog indicates.

The public accounts committee believes that the previous estimated loss of up to £4.2bn after selling and leasing back 55,000 family homes for the military will rise when a new rental deal is renegotiated in three years.

In a report released on Friday, MPs said which was approved by John Major’s Conservative government in 1996, was “appalling”.

So, they sold off the housing, it has risen in value since then, that proves it was a bad deal? So, given that the gold price has risen since Gordon Brown sold that off, that was a bad deal as well then, was it? Actually, while the details of how Brown did it were pretty silly, the market price at the time is the market price at the time. The merits or not of the decision at that time therefore must be taken on those market prices at that time. Hindsight isn’t the way to judge these things that is.

The larger point here though is more important. So, government is this all knowing, all seeing, entity which can plan, in detail, what should be produced, by whom, where, at what price. That’s what we need to be true if we are to have an interventionist government which tries to plan the economy.

Government is so ill equipped to judge the future that it sold €6 billion’s worth of property off for £1.6 billion – that’s what we need to be true for that £4.5 billion loss, no? This is not a world in which we can trust government to plan our economy, is it?

And which government exists in reality? Well, the complaint is that second. And the people complaining are largely those who insist that we should act as if we’ve government of the first type. No, they don’t note the discord in that logic either. Governments aren’t very good at economic decisions therefore governments must make more economic decisions for us all. If you can manage to believe that you too can join the Labour Party.

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5 years ago

Private persons, including corporations, dispose of their assets to try to maximize their own equity. Governments may do so as well, but will also take action because they are lobbied to do so, including action that benefits a vested interest though disadvantaging the common wealth, and will also take action in order to suck up to powerful committee chairmen who seem to be in favor of the action for reasons unrelated to its wisdom. And, yes, no one can tell whether there will be an even better deal if we wait until tomorrow. No one in government measures valor by… Read more »

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