correlation and socialism

Paul Krugman got the Sveriges Riksbank Prize in Economic Sciences today for explaining how trade works and how we can benefit from it. In London over the last few years, no one needed any explanations of how things worked economically. In the City, self-confident wizards conjured money out of thin air and got incredible returns from shuffling debt back and forth, from lending and back-borrowing billions in a sort of financial ping pong. It was cool stuff, and everyone drove Maseratis.

Things have changed a little. Investment banks have gone bust and plain vanilla banks been nationalized. The economic downturn is upon us and deep recession looms. Maseratis are on sale much like t-shirts made in China used to be. The previously unlimited power of money has been reined in (I almost wrote 'reigned in', fool that I am.), and the free market exposed as the fallacy it's always been. Is this the return of socialism?

You could be excused for believing so this morning when the government that I currently support with pounds of tax money nationalized yet more banks. If I understood the news correctly, I now own a stake in a couple of Scottish banks. As this is more than could be said last time I lived under the sweet sun of socialism, maybe not all is doom and gloom then. In fact, this weekend I was baffled at how things of a kind that normally don't go well at all in this country are going extremely well.

In Shepherd's Bush, a huge shopping and entertainment center is nearing completion. In the exuberance of the planning days back when Charles Ponzi's ideas flew sky-high in the business world, the developer proposed all sorts of amenities to the amazed locals: a new rail link, a refurbished tube station and another one built from scratch, a new library and free ice cream during the grand opening.

I was most interested in the transport links, which initially failed to materialize. The Shepherd's Bush Central line station closed down for six months for the replacement of an escalator, whereas the National Rail station had to delay its opening indefinitely because the platform turned out not to conform to code. It was a few inches too narrow. As the missing inches couldn't be added to the one side without precluding trains from passing, a massive wall had to be shifted on the other. Not a job one finishes in an afternoon.

At the beginning of this year, I was chuckling about the predicted (re-)opening dates. Things just don't get done in time here. However, over the last months, roughly in line with the melt-down of investment banking and credit markets, things fell into place and as of last Sunday, all three stations are up and running.

There's two possible lessons here. Either socialism is a great system, or correlation does not equal causation. Paul Krugman, on the other hand, might argue that it was simply a case of the the right people doing the right job, and everyone benefits.