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What we can learn from the Olympics – the benefits of state intervention

After an unexpectedly brilliant Olympics – 29 golds and 65 medals, unprecedented for more than a century since 1908 – pleading questions are being asked whether it will bring about a transformation of Britain. It will not. It has certainly provided an enormous morale boost for the national psyche and made a naturally self-deprecating and iconoclastic Britain recover its self-esteem and sense of capacity to punch above its weight: the UK was third in the world in number of golds behind US and China, but relative to population the UK outsripped them by far. That is certainly something to be proud about. But there are deeper lessons to be learnt from these Olympic games which should have an even more penetrating impact.

Why did we do so well? Clearly it reflected the extraordinary determination, skill, endurance and relentless ambition of our athletes who excelled beyond our imagination. But there were other factors equally important behind the success. These include a long-term vision backed by substantial public investment (£9.3bn), meticulous planning, the public harnessing of a huge number of different organisations behind a single combined united effort, and a wholehearted will to win supported by the public organisation and resources to drive it through. The only exclusively ‘market’ contribution to the Games – G4S – was a colossal failure and huge embarrassment.

There are lessons here that go far wider than sporting genius. For a start, for a government that believes that everything possible should be transferred to the private sector because it is always more efficient and that the public sector should fade into the background because it is hopelessly incaqpable of organising a huge project well. The Games have just demonstrated the exact opposite. More specifically that lessons should be applied to the economy too.

Osborne made it the centrepiece of his economic policy in 2010 that a bloated public sector had crowded out a hamstrung private sector which, given its head, would surge forward and close the deficit within 5 years. That was then. Reality has turned out again to be the reverse. The private sector cannot surge forward on its own until there is sufficient aggregate demand in the economy to justify investment and the public sector has a vital role to play in turning around the recession which it cannot play if it is being squeezed back to a level of operational ineffectiveness. It isn’t individual entrepreneurship and drive alone, nor is it public planning and resources alone either. It is both together operating to fullest effect with complementary roles. It stares the government in the face. How about applying even a scintilla of Olympics wisdom to an area where it could have a thousandfold impact greater than the Games which has so absorbed the nation for the last 16 days?

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