The Dismal Science, Thatcher and Energy

Mark Twain once quipped that the big problem with society was, “It ain’t so much what we know that gets us into trouble. It’s what we know that just ain’t so”.

Sadly knowing what “ain’t so” has become quite a defensible political position, especially when shared by the electorate. For the sake of this post I will therefore consider two levels of ain’t so merchants.

The first level could be categorised as those that are genuinely misguided or ignorant. The second level, are those that know; what they know ain’t so. Or to paraphrase Rudyard Kipling, the first level are the fools, the second level are the knaves.

In the fools category you could put people who believe in the sanctity of free markets, or argue that immigration causes economic downturns. And in the knaves category, well, er.. You’d have the same people.

The concise idea being, a fool and a knave are not easily parted.

In the field of energy policy we are “fortunate” to have several examples of knaves, foremost of which are undoubtedly the climate change deniers (sometimes called sceptics).

Climate change deniers are to climate science, what homeopaths are to medicine. They are aware of the facts (mostly), they know the holes or exceptions and they seize upon statistical anomalies to jump to the wrong conclusions. Unfortunately and similar to the homeopath analogy they can also seem to be right on occasion.

The politicians taken in by the deniers are the fools in our parable, seduced by falsehoods to suit their political agenda. The knaves in this instance are those for whom the scientific debate was always secondary, a convenient means to a political end.

Deceitful as it may have been to deliberately misrepresent the facts and/or science, it is truly inexcusable to continue the lie after the facts have been proven. A point Brian Cox made in a 2012 speech.

Which brings me neatly onto Thatcherism, Friedman and the privatisation of the UK energy sector.

Under the reign of the late Lady Thatcher, the UK energy market was opened up to competition in line with the scribbling of a defunct economist named Milton Friedman. Lady Thatcher was by no means seduced entirely by Friedman’s school of monetarism, but his philosophies provided a useful crutch against which her then hobbling ideas could lean.

Unlike climate change science, economics is not a fact based science and as such there is no definite answer to the question of whether privatising the UK energy market was or was not the right thing to do. A further point to make is that given the state of the UK at this time it is perhaps all the more defensible to sell off state assets in a bid to balance budgets and deliver other societal goals. The problem I have is that the justification for doing so was all wrong, and continues to be so. And herein hangs the tale.

The true legacy of the Thatcher era lies not in the trap itself perhaps but in the truths that accompanied it. Subsequent governments, bound by the policies of the former, were forced into the same economic justification for their success or failure. This position may not have been wholly untenable were it not for the extreme nature of the underlying economics.

But free market economics is quite absolutist in nature, you either take the red pill and become Adam Smith or swallow the blue pill and embrace communism. As such further insights into the real world were met with; a with us or against us response.