Last week Gordon Brown ditched what limited enthusiasm he had for free markets. Only government intervention will do now, he suggested, preferably by unaccountable global institutions. But what is really the best answer to the failures of the past decade?

It’s a truism that a root-and-branch reformer must admire, even love, the object of his reform if he is to be successful. Anyone who despises the area they are attempting to change will often destroy it. Gordon Brown’s running of the British economy is a classic case in point. Having failed catastrophically to create a lasting Golden Scenario, he now proposes a return to the inadequate socialism of his baby-boomer youth.

While it’s true that market economics has not covered itself with kisses in the last three years, it failed only when pushed beyond the limits of human psychology to cope.

As I have written here before, Up-To-A-Pointism (UTAP) is the answer. It works within levels humans can safely handle. That must now be the criterion of choice for policy-makers.

We know now that ordinary people don’t make rational decisions when acting in economic situations. The old idea that multiple incidents of a choice smooth out variations to a near-rational mean, is only true within limits. That’s where UTAP comes in.

I’ve long been an adherent of what I call, Up-To-A-Pointism. If something works, it only works up to a point. Thereafter it yields diminishing returns, followed by negative consequences.

Government intervention is like that, as are free markets. Both have a limited bandwidth within which they operate well.

Politicians and economists seem largely unaware of this iron rule of nature. They should be. Our future rests on it. It is vital that some attempt is made to determine the limits that constrain every policy decision.

I’ve also come to the conclusion that the overwhelming majority of people are programmed to operate within a rather narrow band of experience — even the high-flyers among us. Once activity breaches the limits of that band, whether above or below, they are like fish without water, humans without oxygen. They rapidly lose all sense of reality.

No-one can really be trusted to behave well in the wider interest when events are excessively good or painfully bad. Unfortunately, we are moving rapidly from the former to the latter condition, where we will be no better served than we were in the wild, expansionary phase.

Whereas in the growth period we could at least fend for ourselves, we are now largely dependent on other people to lift us out of the communal mess. Many of our fellows will be in thrall to people they never intended to imbue with such power over them.

Already, politicians are behaving erratically. Gordon Brown wants to sideline market economics despite its record of success when operated within human-scale limits.

He, and others, are striving to get one-size-fits-all decision-making set up at world and continental level, areas of only the most limited applicability to what happens locally. You only have to look at how unsuccessful Brussels has been at regulating almost all of Western and parts of Eastern Europe. Not to mention the deep resentment of any laws that come from Brussels.

Up-To-A-Pointism applies to globalization too. Decisions deemed undemocratic are not accepted by large swathes of modern populations, more especially if they are seen to fail, as they often do.

It’s easy to force subprime mortgage lending on reluctant financial institutions if they can mash them up into Triple-A securities and dump them around the world like toxic waste. Here again, the limits of psychological adaptation were not appreciated by politically-motivated individuals.

For the future, there is a need to devolve decision-making to levels of clear awareness of those on the receiving end. Only they will know how real people in real situations will react.

This is no time for policy wonks, rocket scientists and Harvard alumni.

Let the people decide for themselves.

John Evans

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