This article by Jamie Whyte explains why it is such a bad idea for the state to interpose itself between willing producers and consumers, but also why the structure of politics makes it impossible for politicians not do exactly that. As Whyte says Alas, there is no prospect of an end to this waste, even if politicians understood it. When invisible costs are incurred for the sake of visible benefits, a politician will never consider them too great..
Terry Arthur, the author of an IEA estimate of the magnitude of this deadweight cost puts it at two-thirds of the value of tax collected, or, well over half a trillion pounds by my calculations. It seems astonishing that the bulk of those commenting on this article seem to think that this is a price well worth paying to avoid the cash nexus. This is typical of the responses:Human life has many "irrational" qualities that you ignore at your peril. Wives don't "pay" husbands to remain loyal fathers, Children don't "pay" parents to cook their meals for them. Friends don't "pay" each other for their company. Surely given the recent calamities it is clear that the gross simplification and standardization that has been brought into the understanding of human society needs to be radically changed, and that the "science" of economics needs to redefine what it can and cannot do. Then again, asking for humility and depth from a economists is like asking for an apology from a banker: a little futile..
So far so familiar. What is deeply depressing are the comments on Whyte's article. Even though this is the Times, not the Guardian or even the Morning Star the authors of the comments seem to believe that what is right and appropriate in a family environment (providing for other family members without the promise or receipt of payment) can be scaled up to work at the level of the state. Hayek called this "The Fatal Conceit". Sadly it appears to be as widespread and strongly held as ever.
