Cost + Profit = Price

powerstationSo Ed Milliband, the leader of the UK’s Labour Party, has some brilliant ideas to make ordinary working people better off. He wants companies to pay workers more. He wants energy companies to cut prices to consumers. And he wants them to invest more too.

These are all admirable objectives, although hardly original. They are in fact what everybody wants, although Ed thinks he thought of them first.

The problem is that his policies are designed to achieve the exact opposite in the long run. He wants to pass laws to freeze energy prices, make firms pay higher wages, and insist on greater investment too.

Any first year economics student could tell Ed that if labour costs rise, so must prices. And that if profits are squeezed, investment will plummet. You’d think that someone would have a quick word with Ed and point this out. But the trouble is, as soon as you parade stupid ideas in front of the electorate, there’s a rapid race to the stoopidest. So now we have the laughable spectacle of the Conservative Prime Minister telling the Energy Secretary to phone up the big energy companies and ask them if they wouldn’t mind, perhaps thinking about lowering their prices, please.

costprofitprice

There’s an alternative solution that’s harder to understand and less vote-winning. Deregulate the labour market and remove red tape to encourage higher employment and increased pay. Deregulate the energy market to bring in greater competition, more innovation and lower prices. Stop making profit a dirty word, so that the best companies can succeed and invest in their future. Told you it’s not a vote winner.

The situation reminds me of a Futurama episode where the US President proposes a novel solution to global warming – to make lots of ice cubes and drop them into the ocean. Like Ed Milliband, the President obviously never learnt about adding and subtracting. The difference is that one is a fictional satirical character and the other is the leader of the UK’s second most popular political party.

conservationofenergy

It’s possibly asking too much of our politicians for them to be scientifically and technologically literate, but we can surely hope for economic literacy? On reflection, perhaps economic and scientific literacy are closely correlated. That could explain a lot about modern politics.

Advertisements

5 responses to “Cost + Profit = Price

  1. The reason a politician is a politician and not a scientist is obvious…..they are hopeless at maths!…lol. Common sense is also lacking in most of our political leaders unfortunately. I have a brother inlaw who i have nicknamed Stupid much to his delight…not…but find the name sums him up perfectly. Anyway, Stupid is the dumbest man in the Universe and because opposites attract he has ended up related to me and is now a mate of mine. When people ask why i call him Stupid i tell them it’s actually a compliment and while he may seem like your everyday mild mannered moron, he is in fact a superhero called Stuperman! I then explain to them that being the best at something is a super power in it’s own right, his superpowers are the powers of idiocracy and blind luck. And that no supervillian can defeat him because they cannot predict what stupid thing he will do next as each time anyone thinks he can’t do anything dumber he finds a new level of stupidity. Stuperman is constantly a surprise to one and all on this front and thru that and the power of blind luck he is always sucessful and victorious! But like all the great superheroes he has a weakness, and just like Superman has Kryptonite as his weakness, Stuperman has logic as his. Because if it makes sense, it fucks him!….lol. Maybe Steve the politicians of Britain and the rest of the world are also superheroes and we blind to it? Maybe unbeknown to us mere mortals the minister for Energy is really “Ineptman”! And the prime minster is “Beauracraticman” posing as a mild mannered leader of a political party? Maybe these super beings are right in all their strange decisions and we just can’t fathom their logic because we are just mere mortals unlike them.

  2. Not me old buddy….i don’t fall into the idiot catergory…..i have always been this smart….and have never voted and never will. I don’t partake in dumb societies, i only was born into one and one mistake is enough for me!…

    • Actually opting out of the voting process is not smart. Anyone who feels that our politicians are not as they should be (ie dump, corrupt, or worse) would do well to clarify their grievances and start lobbying. Write letters, take an active interest people. We all live here and our ancestors fought for democracy.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s