Thursday, June 12, 2008

Up A Cul-De-Sac With Big Government

You will be familiar with the idea of an evolutionary cul-de-sac. The idea of a giant lizard that's sprouted so many random appendages it can hardly stand upright. The kind of fat blubbery horror that needs a diet of £600bn pa just to breathe, yet routinely leaves top secret documents on commuter trains. It can never evolve into anything useful.

Last night Tyler attended another excellent session at the Economic Research Council (join today!) on evolutionary economics. The highly entertaining Paul Ormerod whizzed us through some ideas that are now becoming quite familiar:

  • Most things end in failure - 99.99% of all species that have ever existed are extinct; 10% of companies disappear every year
  • There are major parallels between biological and economic systems
  • Randomness plays a major role in determining which companies succeed and which fail
  • Consumer tastes for new products are extraordinarily difficult to predict, and the winner often takes all - especially in the new "creative" industries of the future
  • In determining tipping points, networking plays a key role, and the verdict of early adopters is crucial
  • Old-style planning - as practised by Big Government - is right out: it is the dinosaur of our age

After half-an-hour of Ormerod, Tyler's only question was whether government had any long-term role outside of Law and War?

Ormerod replied that we shouldn't scoff at that - keeping citizens safe from outside threat, and ensuring the rule of law are vital functions. And he also thinks there are still other jobs only government can do - like funding school education for the poor, and insuring people against the risk that they live much longer than anyone ever imagined (ie some of those classic "market failures").

But as for the rest - the huge wobbling public service industries, the hundreds of quangos, the zillions of bureaucrats, and all those other cloud capped towers of Big Government - they are heading only one way: back down into the swampy depths from which they crawled.


Five years ago, we small government zealots were in despair. Not only had Labour established a Big Government hegemony at Westminster, it seemed the right had lost its intellectual stuffing. These new ideas of evolutionary economics are telling us the show is firmly back on the road.

1 comment:

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