Over in the UK a So-Called "Liberal" Proposes a Government-Backed "Business Bank"

The junior members of the British coalition government, the Liberal Democrats, are in the middle of their conference. The event offers party leadership the chance to try and hold the party together in tenuous partnership with the Tories and to put forward their own “liberal” policy proposals.

One of the Liberal Democrats’ favorite leaders is Business Secretary Vince Cable, a man who has not done a good job in hiding his dissatisfaction with the coalition government. In his conference speech he put forward his latest proposal, a £1 billion “Business Bank.” The goal of this government-backed bank is to increase the amount of lending to small businesses.

Speaking at the conference Cable said:

We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy. Today I can announce we will have one. I am working with the chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private sector contribution.

Cable did not hesitate to lay into the supposed inefficiencies of markets. From BBC coverage of the speech:

Mr Cable argued that markets "fail" and governments "can sensibly intervene and support enterprise".

He called for a "will to fight the British curse of short-termism - both in the corporate world and government".

Of course, such government backed plans are not the right way to get businesses the credit they need. As Eamonn Butler explains over at the London-based Adam Smith Institute, such plans pass on costs to taxpayers and distorts the market:

There are three reasons why businesses are not borrowing. First, having found themselves overstretched when the crisis hit, they are now doing the right thing and – unlike Mr Cable's government – reducing their debt. The existence of a state business bank is not going to change that.

Second, times remain very uncertain and many firms cannot see many good projects to invest in, so are not actively seeking finance. A state business bank is not going to change that either – though a growth policy of major cuts in regulation and business taxes might. 

Third, some SMEs that would like to borrow cannot get credit because the government has told their banks not to take so many risks – and SMEs are inherently risky enterprises. A business bank would simply pass these risks to the taxpayer. And taxpayers have already paid enough.

It is a shame that the business secretary seems to trust government schemes as a means to prosperity over market forces, though it shouldn’t come as a surprise given the history of the coalition government and its feeble "austerity" program. 

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  • ||

    This very same thing happened in an episode of "The Thick of It"

  • Franklin Harris||

    Well, in fairness to those two reptilian Lib Dems, the economist with the ridiculous bank idea was cute.

  • Lost_In_Translation||

    So a mini-Federal Reserve?

  • Almanian's Evil Twin||

    It is a shame that the business secretary seems to trust government schemes as a means to prosperity over market forces, though it shouldn’t come as a surprise given the history of the coalition government and its feeble "austerity" program.

    Did some editing for you. Welcome.

  • OldMexican||

    "We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy."


    Something like having a creepy man with candy to expand love among the children...

  • Bill||

    I like your ideas. Where can I subscribe to your magazine?

  • OldMexican||

    In his conference speech he [Business Secretary Vince Cable] put forward his latest proposal, a £1 billion "Business Bank." The goal of this government-backed bank is to increase the amount of lending to small businesses.


    Correction: Increase the amount of lending to small businesses with the best political connections.

  • Fist of Etiquette||

    Doesn't Britain have teachers unions to throw tax dollars at? Or an auto industry?

  • RightNut||

    The sad thing is you don't have to look very hard to find examples of why a government "business bank" is a bad idea. Maybe the Brits should try and google "Solyndra", or "LightSquared", or "Beacon Power" ect.

  • John||

    http://ggsidedocs.blogspot.com.....obama.html

    Andrew Sullivan you sad sick little man.

  • Hugh Akston||

    Unrequited love is so...creepy.

  • John||

    If the Secret Service doesn't have Sullivan on some kind of watch list, they are not doing their jobs.

  • Hugh Akston||

    Sullivan doesn't want to hurt Obama. But if he can't have him, no one can.

  • ||

    "I would kill myself for you. I would kill you for myself."

  • ||

    I had no idea Sullivan had gone this insane. I knew he was crackers, but...holy shit.

  • John||

    You didn't notice when he spent an entire year speculating about Sarah Palin's vagina? Palin pretty much put him over the edge. He went from being a hack to being mentally ill.

  • ||

    Check out how majestic he looks. Can't imagine why they're not using that pic of him at the diner eating spuds and looking like the wookie just stood him up.

  • Hugh Akston||

    I don't understand why Sullivan hasn't been appointed official White House Hagiographer.

  • John||

    How much you want to bet he writes an Obama biography at some point in the future? It will be the Plan 9 from Outer Space of Presidential bios. Epic train wreck.

  • VG Zaytsev||

    John, your problem is that you just don't hear Obama's music.

    http://newsbusters.org/blogs/b.....blem-obama

  • ||

    Why can't these people get it through their thick skulls that it's not high interest rates (how can they go lower?) or lack of liquidity that's stopping businesses from borrowing and expanding, it's uncertainty about tax and regulatory policy?

  • ||

    Get it through their heads? They know that perfectly well. That is the plan.

  • Bill||

    Because to them those are just "republican" "talking points". Therefore can be dismissed as if they never existed and one never has to compare reality to theory to see if there's a fit.

  • Felix||

    You must understand that over here in the UK, anything with the word 'liberal' in it automatically means social democrat / socialist.

  • John||

    This is the most epically stupid and offensive thing I have seen in a long time

    From best of the web today

    OK, one more, this time from NPR, which notes that American Muslims haven't been rioting or even protesting over the silly YouTube trailer:

    Why the subdued response in the U.S.?

    Jonathan Brown, an assistant professor of Islamic studies at Georgetown University, offers one theory. He thinks some American Muslims are too scared to protest.

    "In a post 9/11 world, they're absolutely frightened to stick their heads out in any way, shape or form," he says. "They are still apologizing for attacks they didn't do."

  • Heroic Mulatto||

  • Heroic Mulatto||

    And if you like that, you'll love this.

  • Ted S.||

  • Killazontherun||

    Jonathan Brown, an assistant professor of Islamic studies at Georgetown University, offers one theory. He thinks some American Muslims are too scared to protest.

    "In a post 9/11 world, they're absolutely frightened to stick their heads out in any way, shape or form," he says. "They are still apologizing for attacks they didn't do."

    The academy is where you go if you want to avoid empirical reality. Name me a population where a significant number of people go around carrying signs and loot the streets? Where would that be normal, or even sustainable as a life style choice? There, you have your answer, college students and community activist. The numbers are only significant where there exist subsidy because protests are an absolutely unproductive activity.

    Has it ever occurred to these people that the majority of American Muslims are here because they don't want to be over there? Like most other religious people, they are pragmatic about its application. Ignoring the crap that doesn't translate into acceptable behavior or belief in the twenty first century and keeping the parts that help firm bonds of family solidarity. Is that really so hard to get?

    Or, does entertaining a fantasy where you believe American Muslims don't protest very much, but Europeans cities are infested with protest, because the Muslims here have been scared into silence helps you deal with the cognitive dissonance it takes to be an anti-American leftist asshole on a day to day basis?

  • Sevo||

    Jonathan Brown [...] says "They are still apologizing for attacks they didn't do."

    Haven't seen it, and apologies not required.
    How about 'I don't support this nonsense'? That's all, just a comment from 'moderate' Muslims that the excesses of the whackos aren't acceptable.
    Haven't seen that, either.

  • VG Zaytsev||

    Name me a population where a significant number of people go around carrying signs and loot the streets? Where would that be normal, or even sustainable as a life style choice?

    Gaza.

  • Killazontherun||

    sustainable -- as in, not relying on subsidy.

  • ||

    "...the business secretary seems to trust government schemes as a means to prosperity..."

    Uh...prosperity is not his goal at all Matthew. Just imagine the iron grip government would have over businesses if it were the lender. You can tell a bank you are broke, take bankruptcy and suffer the consequences. Try that on a government loan.

  • Trespassers W||

    If you try that on a government loan, you might get another loan; obviously the first one wasn't big enough.

  • wef||

    A wise man once said of monetary cranks:

    The masses are misled by the assertions of the pseudo-experts that cheap money can make them prosperous at no expense whatever.

    The monetary crank suggests a method for making everybody prosperous by monetary measures. His plans are illusory. However, they are the consistent application of a monetary ideology entirely approved by contemporary public opinion and espoused by the policies of almost all governments. The objections raised against these ideological errors by the economists are not taken into account by the governments, political parties, and the press.

  • Sevo||

    "We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers,[...]
    Mr Cable argued that markets "fail" and governments "can sensibly intervene and support enterprise"."

    When a government moves rapidly, it moves stupidly.
    The stupidity is somewhat diminished given enough time for a member of that government to point out the excesses of the rapid response.
    A claim that governments "can sensibly intervene and support enterprise" needs support; evidence says otherwise.

  • Bill||

    You don't understand how it works. You don't have to prove it's true or even believe it's true. You just say the words and then stop thinking and hope/pretend it's true.

    Now repeat after me: "governments can sensibly intervene and support enterprise"

    Don't you feel better?

  • ||

    Canada already has this: It's called the Business Development of Canada (BDC).

    They charge something like 8.99%. I considered them but a private bank gave me a loan. But it wasn't a start-up loan like I needed but an RCL and loan hovering around a combined 6%.

  • Alien Invader||

    The event offers party leadership the chance to try and hold the party together in tenuous...

    Remember, multi-party systems are way better than what we have going over here. The results, the outcomes, all that, it's just vastly superior. Why, look at any western European country for proof.

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