The Hypocrisy of Matt Ridley

Here's a bit from a Guardian article by George Monbiot on the writer Matt Ridley who "just happened" to be chairman of a big bank in the UK that failed, the Northern Rock bank:

Matt Ridley used to make his living partly by writing state-bashing columns in the Daily Telegraph. The government, he complained, is "a self-seeking flea on the backs of the more productive people of this world … governments do not run countries, they parasitise them". Taxes, bailouts, regulations, subsidies, intervention of any kind, he argued, are an unwarranted restraint on market freedom.

Then he became chairman of Northern Rock, where he was able to put his free market principles into practice. Under his chairmanship, the bank pursued what the Treasury select committee later described as a "high-risk, reckless business strategy". It was able to do so because the government agency that oversees the banks "systematically failed in its regulatory duty".

On 16 August 2007, Ridley rang an agent of the detested state to explore the possibility of a bailout. The self-seeking fleas agreed to his request, and in September the government opened a support facility for the floundering bank. The taxpayer eventually bailed out Northern Rock to the tune of £27bn.

Funny how a writer gets to try his hand at running a bank. But if you look at Wikipedia it becomes a little clearer, he was boosted into the position by his daddy who just happened to run the bank for 30 years:

Ridley was non-executive chairman of Northern Rock from 2004 to 2007, earning £300,000 a year,[7] having joined the board in 1994. His father had been chairman for from 1987 to 1992 and sat on the board for 30 years.

That £300,000 is a pretty rich salary for a guy whose "contribution" was to help run the bank into the ground! I wish my mistakes paid as well as his.

Here's what Wikipedia says about Ridley's political philosophy:

In a 2006 edition of the on-line magazine Edge published by the Edge foundation, Ridley wrote a response to the question "What's your dangerous idea?" which was entitled "Government is the problem not the solution"[13], in which he describes his attitude to government regulation:

"In every age and at every time there have been people who say we need more regulation, more government. Sometimes, they say we need it to protect exchange from corruption, to set the standards and police the rules, in which case they have a point, though often they exaggerate it...
... The dangerous idea we all need to learn is that the more we limit the growth of government, the better off we will all be."

Back to the Guardian article. Monbiot ponders what lessons Ridley might have learned from having to rely on a government bailout to save his bank...

This, you might think, must have been a salutary experience. You would be wrong. Last week, Ridley published a new book titled The Rational Optimist. He uses it as a platform to attack governments that, among other crimes, "bail out big corporations". He lambasts intervention and state regulation, insisting that markets deliver the greatest possible benefits to society when left to their own devices. Has there ever been a clearer case of the triumph of faith over experience?

Free-market fundamentalists, apparently unaware of Ridley's own experiment in market liberation, are currently filling cyberspace and the mainstream media with gasps of enthusiasm about his thesis. Ridley provides what he claims is a scientific justification for unregulated business. He maintains that rising consumption will keep enriching us for "centuries and millennia" to come, but only if governments don't impede innovation. He dismisses or denies the environmental consequences, laments our risk-aversion, and claims that the market system makes self-interest "thoroughly virtuous". All will be well in the best of all possible worlds, as long as the "parasitic bureaucracy" keeps its nose out of our lives.

His book is elegantly written and cast in the language of evolution, but it's the same old cornutopian nonsense we've heard one hundred times before (cornutopians are people who envisage a utopia of limitless abundance). In this case, however, it has already been spectacularly disproved by the author's experience.

The Rational Optimist is riddled with excruciating errors and distortions. Ridley claims, for instance, that "every country that tried protectionism" after the second world war suffered as a result. He cites South Korea and Taiwan as "countries that went the other way", and experienced miraculous growth. In reality, the governments of both nations subsidised key industries, actively promoted exports, and used tariffs and laws to shut out competing imports. In both countries the state owned all the major commercial banks, allowing it to make decisions about investment (all references are on my website).

Here's Monbiot's closing comment in his article:

It is only from the safety of the regulated economy, in which governments pick up the pieces when business screws up, that people like Ridley can pursue their magical thinking. Had the state he despises not bailed out his bank and rescued its depositors' money, his head would probably be on a pike by now. Instead we see it on our television screens, instructing us to apply his irrational optimism more widely. And no one has yet been rude enough to use the word discredited.

Go read the whole article by Monbiot.