Friday, August 30, 2013

How England Got That Way

England’s coal crisis is far from a mere cold-weather crisis. The record freeze hastened and intensified a collapse that was certain to come. It is, after all, a generally known fact that it is colder in winter than in summer. This news, however, seems to have come to England’s “long-range economic planners” as a stunning surprise. They are reduced to the humiliation of admitting that everything depends on the weather, and that it is “not feasible so far to give any forecast of conditions beyond noon tomorrow.”
But the British coal shortage was already obvious long before winter set in. The October figures of distributed stocks are crucial. In 1944, these amounted to 18,500,000 tons; in 1945 to 13,800,000 tons; in 1946 to only 10,900,000 tons—the lowest for winter stocks on record.

Behind such figures lies the long-range decline of the British coal industry. In 1913 Britain produced  287,000,000 tons of coal; exports (including bunkers) amounted to 94,000,000 tons—55 percent of all world coal exports. In 1929 coal production was 258,000,000 tons; exports 77,000,000. In 1938 production was 227,000,000 tons; exports 46,000,000. In 1945 production was down to 182,000,000 tons and exports to 8,000,000. In other words, exports had fallen to almost one-twelfth of the former level.

Passing over the results of the coal nationalization program, which has been in legal effect since last July and in formal effect since Jan. 1 of this year, the British crisis is sufficiently explained by the tight network of controls and the chaos of government “planning.” It is impossible to know to what extent that present shortage of miners results from the success of the British labor unions in preventing a free wage market. It is not the absolute level of wages in the coal industry that determines the number of workers attracted to it; it is the level compared with that offered in other lines. But if sufficient British labor cannot be attracted to the mines even by a substantial wage premium, then the obvious remedy is to admit Polish or other immigrant miners who would be delighted to take the work. British controls have prevented either solution.

Great Britain still retains general price-fixing. If it had depended upon free prices as its guide, it is wholly improbable that the present crisis would have arisen. The shortage of coal would have reflected itself long ago in a rise of price. This would have raised a brilliant red light for all to see. Consumers would have been forced, without appeals or allocations, to reduce their demands. Higher wages could have been offered to attract more miners. Imports of coal would have started to Britain long before winter set in. (Our own government still severely limits the quantity and grade of coal that can be exported; so it is only fair to point out that our own “planning” might have prevented this remedy even if Britain’s had been ready to accept it.)

No less serious a cause of the present crisis has been the price-fixing of other British goods. This prevents the British from knowing where their real relative shortages and surpluses are, and from automatically correcting them through the price-and-profit system. One reason why the British people have lost the incentive to work is that they cannot buy what they wish even with the money that their government leaves them after taxes. The economic planners do not trust the people. They tell them in the White Paper that if they are permitted to spend their money as they wish, they will buy “too many luxuries” and “not enough food and clothes and coal; too many toys and not enough children’s boots; too many greyhound tracks and not enough houses”; and so on. So the British people are treated as wards of the state. They are permitted to have not what they want but what the economic planners think is good for them.

Unfortunately the British people accept this totalitarian view. They are told, and the great majority of them still believe, that the “austerity” program of the Labor government is essential to the country’s economic salvation. It is true that individual austerity is something that most of them probably cannot escape. But the kind of planned and measured austerity imposed upon them by the government is not only unnecessary, but the most serious obstruction to their national recovery. Why this is so, I hope to explain more fully in a succeeding issue.

1 comment:

  1. There may be some gaming educational solutions in the future that may partly shed light on this subject. Kids/adults who play role playing games understand the free market role of price signaling much better than a minted Phd in the humanities. The true price is alive and well with playing cards, in minecraft, etc. Courses in what Magic The Gathering can teach us about pricing may be the way to attract these smart (many times IT driven) youth to an economics class.

    Ah, if people could see the world for what it is both positively or negatively.


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