Free markets....now

Andy Burnham, the UK’s new Prime Minister, is travelling the country examining the cost of living crisis. He might save his time, stay at home and just make sure that the free market economy is actually a free market economy.

My view is that capitalism is fine, just so long as it is regulated and controlled, on the simple grounds that if it is not there is every incentive for capitalists to defraud, steal, con, mislead, poison and destroy for profits.

The water industry in the UK is a perfect example, a nationally vital infrastructure has been pimped to foreign financiers who have ripped every penny they could from the companies they own, and the industry regulator did nothing.

Banks are another example, always lobbying for less regulation, and getting it, when we know from bitter experience what happens when they are not controlled properly.

But on a lower level firms also do what they wish and customers do what they must.

For instance I recently got a large refund for a cancelled holiday paid into my credit card account and wanted to move it back to my bank account.

But I am now told it will take 10 working days to make a bank transfer.

When I worked at an international American bank in the 1970s we moved billions on the same day, and now the banking apps on my mobile phone move money between accounts so quickly that the money has arrived before I can log off one bank’s app and onto the other one.

This is therefore nothing more than a successful attempt to earn interest on my money for a fortnight or more. Given the billions credit card companies must handle every day around the world, this is a huge sum of money, money which is not theirs, but their customers.

Now card companies are not alone, other banks and financial institutions obviously do this and probably more, car rental companies play similar tricks, energy companies seem to hold onto huge positive balances of clients money and so the list goes on.

The answer is simple, make banks and firms repay money by bank transfer within one working day. Make it the law of the land and ignore the whinges and lobbying of the banks and other firms.

Capitalism is based on the idea of a perfect market, with perfect competition and perfect knowledge and everywhere the market is painfully imperfect and rigged for the powerful against the weak.

It is not just delayed repayments, it is dodgy claims companies advertising that they can get your money back, when you can do it for free. It is companies that pay to be top of your search results, it is insurance companies that hike bills annually for no reason and hope you won’t notice. It is media and phone packages so complicated no one understands them and so can’t leave, it is outrageous vet and dental prices, many times what you would pay on the continent. It is a lack of competition and skills shortages, which firms have no incentive to address, that hike prices.

All that and much more.

Any politician wanting to handle the cost of living crisis should stop worrying about how much government money they can use to subsidise bills or cut taxes.

They could all achieve much more by just making the market work for the many and not the few.

The savings would be massive and the voters grateful.

Jonty’s Jotting

From Jonty Bloom Media Ltd

Economics, trade and Brexit, not necessarily in that order but the dog always comes first.