Monday, January 19, 2015

Hitchens on British Rail Re-Nationalisation

No, not the late Christopher Hitchens, but his (gasp!) Conservative brother Peter Hitchens, in the video below.

One wonders how many members of the current British Labour party would launch into such a passionate defence of the view that British railways should be nationalised again, with the notable exception of George Galloway.

At one point (towards the end of the video), Hitchens’ Tory opponent says that the railways were built by private enterprise in the 19th century. That is true, but the private-sector construction of them involved remarkable waste in that railway overinvestment and oversupply occurred (Hutchison 1994: 225–226), and there were instances where this oversupply caused economic problems, especially when combined with railway stock becoming a speculative asset in stock market bubbles. When such bubbles burst, this affected the subsequent health of the railway sector and the economy at large.

Yet another problem illustrating the inefficiency of the private sector was that different companies built different railway gauges, and when they met this naturally caused a great deal of inconvenience. This problem was resolved by government regulation in the 1846 Gauge of Railways Act.

Hutchison, Terence Wilmot. 1994. “Hayek, Mises and the Methodological Contradictions of ‘Modern Austrian’ Economics,” in T. W. Hutchison, The Uses and Abuses of Economics: Contentious Essays on History and Method. Routledge, London. 212–240.

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