On Tuesday, January 28th, The Independent reported that: “The amount of money the Department for the Environment, Food and Rural Affairs has allocated to maintain England’s rivers fell from £108m in 2010-11 to about £92m in 2012-13, the year in which Mr Paterson took office. The cuts have accelerated under Mr Paterson. The allocation fell to about £70m this year and is scheduled to tumble again, to £60m next year, bringing the total drop in funding under the Coalition to 45 per cent.”

The government’s (at least the Tory part of it) believes that public spending is bad and that the country needs more and more private enterprise. But you  can’t deal with a country drowning under repeated flooding by means of the UK government’s nostrum: “more competition and privatisation”. It is obvious to all that being flooded for weeks, or even months, on end is akin to a war-time situation. What did we do in the last War? – We socialised most of the economy.  It must be deeply troubling to the government that a situation has arisen – and is going to get far worse –- in which collective, public action is the only possible way out of an unprecedented crisis. How mean of the climate to ruin their little boomlet! I imagine they must want us to try feel good in our heads  even as our knees are in water.

I was very pleased to see Will Hutton, in the Observer, making a point I first made in a review of Acemoglu and Robinson’s book Why Nations Fail. The book presents analysis of wealth-making that describes what is happening to our world better than any other I’ve seen, and Hutton agrees.

Ostensibly, the purpose of the book is to demonstrate why some nations have become rich whilst others, despite possessing obviously useful resources, have remained poor.  Its great virtue is that, for all the case studies and figures, the thesis is blindingly simple. Acemoglu and Robinson divine two kinds of society: inclusive and extractive.

In inclusive societies there is no totalitarian power base; no one group has a stranglehold on wealth and innovation; there is the rule of law that protects commercial enterprise against expropriation and restrictive practices.

In extractive societies, a monopolistic group stifles commercial and technical development and retains all of the country’s wealth for a few cronies. There is no recourse to law because it only operates in favour of the ruling group. There are many case examples. Before the Civil War the American South was desperately backward because the economy was run to suit the slave-owning ruling class. There was no industry, hardly any railway lines. This was a recipe for stagnation. Acemoglu and Robinson cite the case of Sierra Leone, in which a railway  originally built by the British was torn up by the ruler (who had originally been democratically elected)  because it would threaten the trading monopoly of his friends.

But the sting in the tail of Acemoglu’s  thesis, as I pointed out in my review, is the Britain is the textbook model of inclusive society. Or used to be. The current economic model of “maximizing shareholder value”, private equity, hedge funds, huge tax avoidance schemes, very low investment in research and development, escalating inequality (exclusiveness), are all prime extractive traits. Britain is throwing away centuries of inclusive enterprise and making the transition to an extractive economy. This is catastrophic because once such as system is in place – see Zimbabwe or Russia or Egypt or countless more  – it is hard to ever escape it. How is it that the virtues of inclusiveness are being forgotten and that it has required an American and a Turkish-Armenian-American  economist  to point it out? Perhaps Will Hutton lending his voice will hasten awareness of the calamity facing us. No argument in the world deserves to be better heard and understood than this.

The closure of Grangemouth petrochemicals plant – assuming this is the end and not another bluff in the company’s game – is deeply shocking. What was once a prime hi-tech facility has been sweated for profit and run into the ground.  So now Scotland won’t be making petrochemicals  any more and the expertise it embodies will be lost forever. What’s the point of Scottish students studying chemistry any more if a facility like Grangemouth  closes down?

We have reached the point in this country where private companies are prepared simply to walk away from providing services and products essential to modern civilisation. National Express walked away from its contract on the London-Edinburgh East Coast mainline. Were there then to be no trains to Scotland? Of course not, the line was temporarily renationalised and has run very well. But what to do when no one wants to run a petrochemicals plant or a petrol refinery because there isn’t enough profit in it? The government will just shrug and pay the import bill.

Ed Miliband’s suggestion of a price freeze on the energy companies was met with cries of Marxism by conservatives. But it is capitalism that is now delivering empty shelves, just as communism used to do. This is not the market as Adam Smith conceived it. His market ensured by the invisible hand that whenever we needed something it was there. Now it increasingly is not there and “the hand” that is responsible is increasingly visible – and horrible to behold too.

A brilliant issue of the Observer today. In rounding up the year they choose to highlight science. An excellent editorial is backed up by a piece by Alice Roberts on the true story of the reindeer – one of the few surviving Ice Age megafauna – and a science quiz. Science is one of the few good news stories on the planet and, given that only science plus wisdom can save us now, that has to be the goodest news of all.