Tuesday, August 22, 2006

The UK is not a PLC

There is a good article by James Whyte in The Times today.

It takes apart two ideas. The first is the idea that a nation should be viewed as a commercial company. The second is that it is economically imperative that the government acts to ensure that the British education system produces more scientists.

Of course, there may be other, non-economic reasons for wanting to see more scientists. I can imagine a prosperous economy with no poets, artists or musicians, but it is not one I would like to live in.

But these quotations are spot on:

The idea that trade involves competition between nations stems from the tenacity of an early socialist misconception. Many continue to think of a country as a single, very large, company. The expression “UK plc”, typically used by those who like to think of themselves as economically astute, perfectly encapsulates the error.

Once you think of a nation as a company, other mistakes follow quite naturally. You think of international trade as a competition. You think that we should aim to export more than we import, as if exports were the country’s revenues and imports its costs. And you make the biggest mistake of all. You try to plan the economy. You think that the Government, like managers of a company, should decide how to allocate the nation’s resources.
Those who lobby for state support — be they French farmers, US steel-makers or British scientists — claim to be the backbone of the nation, the foundation of the future or something similarly fabulous. But it is a perverse argument. If what you produce is so valuable, why can you not find willing buyers at the unsubsidised market price?


Bishop Hill said...

There must be a national security argument for wanting lots of good scientists too, I would think.

peter said...

There is a correlation between the number of science and engineering graduates and a country's economic success. The physical defence of the nation was always a good liberal principle, I'd say the economic defence of the nation (without descending into protectionism) should be, too. Science and engineering are disciplines where academic training and deep specialization is required: something the market can do only to a limited extent.

Patrick Wallace said...

But the correlation could be that a thriving economy produces science and engineering graduates. There is always something to be said for importing foreign talent anyway, to avoid intellectual insularity: is it such a problem if we import even more? The question is, at what point does international free trade in trained minds break down as countries perceive a risk either from the loss of their home-grown intellects or some perception that too much power and influence rests with imported ones? Which comes down to the question, what is the economy for, and what how does one define "a successful economy"?