I heard this morning that the British government plans to subsidise the purchase of electric cars, which cost far more than the petrol driven kind. This is simply the latest example of the state’s role in economic and technological development, a role denied by those who call for minimal government interference in the economy. Though this action may be anathema to believers in free-market capitalism, history shows us that it has been the norm in all the major economies. In truth, market forces only play a part, and often a bit part, in technological development. However, market forces play a major part in the West in losing the technological capacity once developed. American companies in particular have been guilty of outsourcing their core competencies on cost grounds, to the extent that the American military is now dependent on foreign producers for important systems.
Allow me to provide a simple case study of the process.
A government decides that it requires the development of X high-tech system. The contract to develop X is given to company A.
Company A approaches research establishment B, which is publicly funded, in part at least. The company and research establishment jointly come up with the answers, and company A produces the required system.
Company A then gains government agreement to the commercial application of the technology, and develops a product based on the technology. That technological capacity has now become a core competency, or part of one, for company A, and a range of products may emerge from it.
Some way down the road, company A decides that domestic production is expensive, and production is outsourced abroad.
A little further down the road, company A decided that continuing research and development associated with these products is better done alongside their production, and that R&D becomes outsourced.
The end of the road approaches.
This has happened in America. It is a process that post-war Japan rejected and became the world’s second biggest economy as a result. Pursue Thatcherite economics if you must, but don’t whinge about the outcome.
Boadicea's Chariot 
Just what we need. An electric Morris Marina for three times the cost of a real car.
I have never been able to understand the short sightedness of these policies.
How to put your technologies into the hands of potential enemies and your own labour force out of work!
Tom, while acknowledging your arguments,I can see some justification in subsidising a home grown industry, especially new technology, but unless these cars are designed and manufactured in the UK, it makes no sense at all to pay Britons to buy foreign products. In principle, I believe in free trade, but I also believe that sometimes you have to break the rules. All countries seem to do it except the UK.
Sipu, free trade is a myth and always has been. By subsiding the purchase of electric cars the British taxpayer is forking out for the technical development of foreign owned companies.
Tom that is because we no longer have a UK car industry. It stayed in the past with outdated ideas, methods and ways, not to mention idiot unions and crap management.
Electric cars sound nice but to power them we need electricity, but as we have no nuclear power stations and are becoming obsessed with wind farms that stop working when it is cold or windy or no wind or….? how the hell are we going to power them?
Bring back the Sinclair C5
Hello, Rick, we could always develop a methane based fuel from bullshit, of which there is no shortage.
Funny you should say that Tom, we were saying similar at work today about all politicians.
Having spent the weekend in Greece with my sister I was watching TV, their politicians make ours seem honest and truthful. They drip with smarmyness and creepyness, I wouldn’t P on them if they were on fire.
As far as they are concerned the crisis in Greece is not their fault but the fault of the people.
But at least they had the snowploughs out within a few hours of the snow fall.
Tom, you”ll have to choose as ever between ‘economic dictatorship’ and ‘capitalism’. Japan, you and Christina go for the former. Good luck.