(Good God, is this what doing science does to one's grammar?)

As another non-economist, I can only nod and agree wholeheartedly, both with Andy and, erm, Dickie. Unfortunately short-sightedness and greed seems to be part of human nature, and that is no less present in most governments than it is in the big financiers of the free market so an exhaustive solution to the problem simply does not exist. That is where I would hesitate to term Communism and Socialism as one at the same – to my mind, Socialism at least acknowledges the need for pragmatism.

I will conclude my comment by echoing Dickie's sentiments on “physics applied to finance but not like a sell out” – love it!

Just on the transport thing, I'm going on anecdotal evidence (which admittedly is no evidence at all, really) that the transport in the rest of country sucks a heck of a lot worse. The buses around Birmingham cost £1.50, and they're infrequent, filthy and vandalised. And there's no night service. I doubt they will ever find any reason to improve because it's a private monopoly – one of the textbook instances where a government's knee-jerk impulse to privatise was not a good one, I would say.

Thatcher is culpable in that her deregulation of the market was what caused the explosion in the financial services sector, and started this whole ball rolling. It's the “greed is good” culture as much as anything.

I wasn't making an exhaustive list of socially useful jobs – people who keep the floors and toilets clean are really equally important – I was more making the point that bankers are paid disproportionally to their social worth. It's a tired cliché that a lot of the best and brightest from places like Imperial are creamed off by the huge salaries available in finance, but it's a true and unfortunate one.

Anyways, like I said, I'm a fairly poor economist

The sad thing is that when a bank does badly, it's everyone else that pays the price (either directly through poorer rates as they try to recoup some loss, or through taxes being spent on propping up banks).

The problem with most organisations is that they're scarily short-sighted. I hate to pick on the banks again (he lies), but the bonus culture there is a good example. They get bonuses for making a deal, and they get that bonus immediately. So if it turns out in 5 years to be a bad thing, why should they care? They've already got their Ferrari/second house/whatever; no-one's gonna take that away from them. Examples of it working the opposite way are the BBC and London Transport, as you said. I'm of the opinion that privatising the infrastructure in this country was a complete clusterfuck – all of it seems to have gone down the tubes since privatisation.

“The bank wants to sell a lot of mortgages, so they offer the salesperson a commission on each mortgage sold… he’ll shift as many dodgy mortgages as he can”
Seen this sorta thing happen first hand. Not necessarily “dodgy” mortgages, because it's not down to the salesperson whether Mr & Mrs Redneck get their money. They've got to pass the bank's assessment (although those assessments were clearly far too lax, otherwise the banks wouldn't be in half the mess they are in now). But I bet there's lots of people who are sold debt they don't want or need, just because the salesperson wanted to hit their target. Banks are fuckers, anyone who says otherwise is desperately naive.

“physics applied to finance but not like a sell out”
lol

Free Market Capitalism has two key components allowing private ownership of assets, and allowing market forces (the collective action of market participants) to determine allocation of resource (be it capital assets, such as machinery, labour, etc.), with the idea that the profit motive of market participants promotes efficiency by rewarding success. It's also import that failure is punished in a truly Free Market.

Where you have private ownership, but no free market you get Fascism or Corporatism, where the owners see the profits, but are protected by the state from losses. This leads to the problem of Moral Hazard, wherein increasingly and excessively risky behaviour is rewarded, that is there is an assymmetric payoff.

The UK has a very mixed economy in that we have a combination of free markets, but many areas are socialist, such as the NHS.

Arguing that certain professions are more socially useful such as nurses, doctors, teachers and scientists is purely a matter of opinion, particularly when you consider the example of workers who produce medicines in a factory, or the engineers who designed the machinery or even the managers who manage those workers, or the other administrative staff, or those who produced the raw materials, or those who perform services for those people, or those who grow their food.

In our society we have complex interdependencies between each other. The problem with centrally planned economies is that they usually have problems with over and under production in different areas and massive inefficiency. Also, a centrally planned economy offers little incentive to participants for improvements in efficiency. Centrally planned economies, or perverted capitalist economies such as our own have the significant problem that special interests can and will campaign or lobby for their own welfare at the expense of others.

I think blaming Thatcher for the current situation about as logical as blaming Churchill or Scargill. None of them have been active in politics over the low interest bubble formation which has led to a genuine misallocation of capital. The massive liquidity in the system has distorted markets by making it exceptionally cheap to borrow, thus creating inflation of the money supply with no corresponding increase in actual wealth. This is the true cause of the housing bubble, and it's borne out by the correct assertion by Austrian economists that those who have first access to the money supply (the banks, the bankers, those involved in finance, etc.) were able to price others out of the market for capital goods, such as housing.

I find it hilarious that you assert that transport in the capital is vastly improved. The price increases for tube fares are consistently above inflation. A larger proportion of people's income in the capital is spent on transport with no significant improvement in amenity. The tube is in my experience vastly more expensive and at least as crowded as it was historically. I'd love to find a hard source for prices and measures of services, such as congestion, delays, closures etc. I'm not sure what makes London any better a city than say Brighton or Manchester myself.

There are genuine situations where individuals acting to seek the best possible situation can lead to inefficiencies however, such as those studied by Nash, lest you think I idolise markets. I'm not a follower of Ayn Rand, or of Thatcher. I am an Austrian Economist. I support solid asset-backed currencies rather than fiat currencies that allow governments to slowly rob the citizens and transfer liabilities between generations by spending money that they do not have; each generation should balance their incomes (production) with their expenditure (consumption). This policy would also have the beneficent side effect of disincentivize war by forcing governments to issue unpopular taxes to pay for the ruinous cost of these incredibly unproductive enterprises. Money-as-debt (which is all fiat money is) seeks to enslave us all to debt, instead of building everyone up to enjoy both the free gifts of nature and the products of human labour.