In this issue:

  • No surprises from Labour yet
  • More government economic intervention is on the cards
  • Could this actually lead to investment opportunities?

Politicians tend to have a way with words, including how to twist them around to mean what they want.

Take Sir Keir Starmer. He’s promised to make his government the most “pro-business” in Labour’s history.

This supposedly pro-business agenda was laid out in the King’s Speech this past week. It includes things such as:

  • Launching a state energy company
  • Achieving a net-zero electrical grid by 2030
  • Nationalisation of the railways and other public transport

One can debate the merits of such policies but to call them “pro-business” would seem a bit of a stretch.

And politicians not only twist words. Sometimes they leave them out entirely. In this case, “taxpayer-funded” seems to be missing.

What is pro-business about a taxpayer-funded energy company? About a taxpayer-funded rush to net zero? About taxpayer-funded railway nationalisation?

Nothing. Anything tax-funded, it would seem to me, is “pro-government”, not pro-business. The government might redirect some taxation to its cronies business, but only after taking its cut.

Perhaps I’m getting caught up in semantics. What is the difference between a privately-owned and operated water utility dumping raw sewage into our rivers and a taxpayer-funded public utility doing the same? Do the fish and ducks suffer any the less either way?

Three words help to cut through the semantic knots here: choice, responsibility and accountability.

Whenever a government proposes it do something, rather than private business, it is instructive to ask the following three questions:

  • Do I have a choice? (Or can I opt out?)
  • Who is responsible?
  • How are they to be held accountable?

If any of the above aren’t clear, then you have reason to be concerned.

There are good reasons why the public sector has a poor track record of providing consumer goods and services:

  • It restricts competition and choice: it results in “one size fits all”
  • It obfuscates responsibility: it is unclear which part of the Byzantine bureaucracy is to blame for failure
  • It lacks accountability: governments have a poor track record of holding themselves accountable for negligence and misdeeds.

Do we really want the government to take over the energy and transportation industries, if that will lead to a shortage of both? Blackouts anyone? Service cancellations?

As Milton Friedman famously said, “If you put the government in charge of the Sahara Desert, in five years there would be a shortage of sand.”

Well, for investors, this might actually create opportunities. It’s amazing how profitable otherwise ordinary companies can become when the government directs taxpayer funding their way. No doubt there are well-connected energy and transportation companies out there that are going to do very well on the back of these Labour policy initiatives.

Perhaps the government won’t do any worse than the private sector, which is apparently doing a rather good job running our energy and transport infrastructure into the ground. But they certainly won’t turn a profit. As Margaret Thatcher explained, “The problem with socialism is that eventually you run out of other people’s money.”

Which seems to be where we’ve ended up. The UK tax burden is already at an all-time high (outside of wartime). The national debt has soared over the past decade.

This is the legacy of the so-called “Conservative” party, yet another political misnomer if you ask me.

I suppose it’s our own fault to have allowed ourselves to be taken in by years of creeping socialism cloaked in conservative rhetoric. A political wolf in sheep’s clothing as it were.

Perhaps “Labour” is something of a misnomer too. Do higher taxes really make the typical worker better off? Well, fewer than 1/3 of those eligible voted for Labour, so there’s not much evidence British workers would agree.

But hey, that’s democracy for you.

I mentioned above how perhaps, given all the major surprises out there, it’s time to get into the newspaper business. As former editor of the Baltimore Sun and famous American satirist H. L. Mencken once famously wrote, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

Until next time,

John Butler
Investment Director, Fortune & Freedom

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