John McDonnell’s claim is that government investment in this and that is a very good idea, very profitable. That’s why the central government should borrow to go buy all the utilities, the broadband, the transport companies and all that.
Before we consider any other issue here – like whether we actually want state control etc – the whole idea does depend upon the idea that government will be investing in sensible things. This being something we can test by going and looking at what government does invest in when it has the chance to borrow to do so:
The Treasury has clamped down on local authority borrowing, amid fears that reckless investments in struggling retail properties could bankrupt councils.
The rate at which local authorities are able to borrow to invest has been hiked by one percentage point, pushing the cost last week to its highest level in four years.
Economists said the move by the Treasury would put “many capital projects” at risk.
The clampdown comes after a spending spree by councils seeking to boost their own income from rents and support local businesses. Local authorities have snapped up one in five shopping centres sold since 2016 as commercial property investors seek to escape the decline of high streets and shopping…
What’s the one bit of the economy falling apart? Bricks and mortar retail. Not because of any cyclical issue that a bit of propping up might aid but because of a deep and profound technological change to online and internet shopping.
So, where’s government investing? In the wrong end of this change. As Intu and the rest approach bankruptcy local councils are borrowing to buy the redundant real estate.
Which does provide us with our test, doesn’t it? The idea of government borrowing to invest is based upon, presupposes that, government is going to be good at investing. It ain’t. End of the idea then.