The government would like to discourage ‘bubbles’ caused by overheating, but to encourage others where they are the green shoots of the future. How can they do so?
It was undoubtedly confidence in the future that drove much of the investment that led to the booms of the 1900s – in property, mining, transport and energy. And perhaps it is the volatility of to-day’s markets that has sapped confidence and inhibits investment to-day.
Recent lack of confidence in the growth of the economy as a whole has undoubtedly hampered the development of new technologies, including those with more obvious futures, as it has investment and innovation in the UK.
Global interdependency, short-termism and news mania may account for some of this volatility, but if sentiment, fashion and beliefs can carry more weight than facts and figures, whose role is it to manage them; and how should they do it?
There is nothing traders like Warren Buffet appreciate more than volatility, and the trading of assets has become big business, as has that of their derivatives (and disproportionately so). Markets, they say, are driven by sentiment, but housing and construction ‘bubbles’ have almost overwhelmed entire economies, with the result that bubbles of all kind – as inappropriate sentiments – have become of major concern to governments.
Values and preferences have become more influential in the economy. The Thatcher era removed swathes of the economy from state control and enhanced competition, leaving the UK a more competitive economy than many others in the world. In turn this has made it more subject to the vagaries of markets, elevating fashion and taste to new heights of interest, and with them advertising’s power.
If sentiment, values and beliefs have become more important determinants of our lives, how is government reacting to this change?
While government policies have been about traditional issues, such as equality and fairness, freedom, economic growth, and the location of government power, news management and public relations have become of increasing importance.
We continue to value free speech and the dispersal of power; and to depend upon Private Eye to lead the pack in provoking our distrust of power and influence. While propaganda remains a dirty word, government has given birth to what is called the Nudge Unit; and a new breed of mandarin, called the Regulator, has quietly gained power.
It is no surprise that Obama and Cameron pay increasingly close attention to news management, nor that there are more lobbyists in Washington than ever before. Nor is all the money that has gone into campaigns for such projects as the public understanding of science a surprising consequence.
If managing news is important, can we expect the government to continue to allow its messages to be presented by the privately owned and profit-motivated media, pedaling outrage, speculation and disaster, when it could operate its own internet-based news source – along the lines of the Huffington Post?