Another triumph of Mazzonomics
It is, of course, imperative that society is driven forward by mission oriented, cross cutting, technological solution providing plans of only the sort that government can provide. Otherwise, how can anything happen? Obviously!
A venture backed by British taxpayers that is attempting to compete with Elon Musk’s Starlink has been plunged into turmoil after a €873m (£728m) loss triggered a collapse in its share price.
Eutelsat, a Paris-listed satellite business which includes the British state as a key shareholder, has turned to the French government for support as it hunts for fresh funding. It is grappling with delays to its technology and intense competition from Mr Musk’s space business.
Shares in the company plunged by more than 19pc on Friday after Eutelsat reported steep losses, including a €535m impairment.
The British state owns around 10pc of Eutelsat following a merger with OneWeb, a UK satellite company rescued under Boris Johnson’s government in 2020.
The UK invested £400m to save the company from bankruptcy four years ago but the taxpayer stake is now worth €65m (£54m) after Eutelsat’s shares collapsed to just €1.40. At one stage, Eutelsat valued OneWeb at more than €3.4bn. Now, the combined companies are worth just €650m.
As ever, the mistake being made in this return to the White Hot Heat of Technology Through Government days is that we don’t care, not in the slightest, who owns or profits from the new technologies. The benefits from being able to use the new technologies so far outweigh any profits from providing them that the ownership part is an irrelevance.
At the extreme this is the public good argument. Obviously. What matters is that the thing exists, not who provides it. For a true public good is near impossible to profit from producing. Moving one step over, the Schumpeterian profits from technological and entrepreneurial innovation accrue, well 97% of them, to us as consumers. We can mutter about people gaining wealth from their provision but the correct view is that hot and cold running Ferraris is the necessary incentive for them to make us so rich.
As seems to be happening so often when Mazzonomics is put to that reality test it’s free market capitalism for the win again. Perhaps, umm, we should take note of that in our policy decisions?
Tim Worstall