Rupert Goodwins' Diary

Monday 15/8/2005I am mystified by economics. Take eBay, which may be boosting the UK economy by a hidden £5 billion.

Monday 15/8/2005

I am mystified by economics. Take eBay, which may be boosting the UK economy by a hidden £5 billion. The reason is that it has sent us into our attics to liberate £3k per household of otherwise forgotten assets and is thus the mechanism of a new wave of prosperity.

Colour me naïve, but how does this help? If the £3k so raised was then ploughed into buying goods and services from normal retail channels, then there might be an argument - but it's not. Anyone who sells on eBay buys on eBay: we won't actually contribute to the UK economy, but we'll all have enormous sets of china dogs or the complete works of Barbara Cartland. What if we all promptly take the things we've bought on eBay and stick them back up for auction? Does the economy grow even faster?

While buying second-hand stuff is great environmentally it does take up money that could otherwise be used for all those value-added goods and services that are supposedly at the heart of making the money world go around. It's not as if there's vast amounts of extra tax being raised by all this money sloshing around either - which is what governments usually mean when they talk with love-struck eyes about economy growth.

However, while auctions may not be that good at directly generating value, they are notoriously good at setting it. This is where Gordon Brown should be looking most closely at the eBay phenomenon: deciding whether or not public services are value for money is shaping up to be the biggest point of contention just as soon as the Conservatives feel better. What better way to ensure efficiency than to replace all that complex, hidden, unaccountable and incomprehensible civil service spending on contracts and resource shuffling with

Health? Put those hip operations up there - wld suit lady, 65-70, w/gammy leg. Education? Teachers and classes can vie for each other. Defence? "L@@K! ORIGINAL REGIMENT! Some wear, works well. Buyer to take responsibility for shipping from Iraq". Or perhaps in reverse: "4 Sale - income tax from £35k salary. Looking for car-friendly transport policy, abolition of student loans and free kittens".

You still looking for a big idea, oh Liberal Democrats? Get Charlie to send me a crate of Laphroaig, and it's all yours.