Sunday, June 20, 2010

Matt Ridley's Rational Optimist is telling the rich what they want to hear | George Monbiot | Comment is free |

A couple of weeks ago, I wrote a column for the Guardian exploring the contrast between Matt Ridley's assertions in his new book The Rational Optimist and his own experience. In the book, Ridley attacks the "parasitic bureaucracy", which stifles free enterprise and excoriates governments for, among other sins, bailing out big corporations. If only the market is left to its own devices, he insists, and not stymied by regulations, the outcome will be wonderful for everybody.

What Ridley glosses over is that before he wrote this book he had an opportunity to put his theories into practice. As chairman of Northern Rock, he was responsible, according to parliament's Treasury select committee, for a "high-risk, reckless business strategy". Northern Rock was able to pursue this strategy as a result of a "substantial failure of regulation" by the state. The wonderful outcome of this experiment was the first run on a British bank since 1878, and a £27bn government bail-out.

But it's not just Ridley who doesn't mention the inconvenient disjunction between theory and practice: hardly anyone does. His book has now been reviewed dozens of times, and almost all the reviewers have either been unaware of his demonstration of what happens when his philosophy is applied or too polite to mention it. The reason, as far as I can see, is that Ridley is telling people – especially rich, powerful people – what they want to hear.