Incompetent governments nationalise successful businesses to cover up their mistakes

"I think it's absolutely ridiculous. I'm almost ashamed being here talking about it," said Dr Ben Goldacre, speaking on the BBC in answer to claims that Facebook causes cancer. Dr Goldacre is the writer of Bad Science, a column that challenges bad ideas about scientific research.

I know how he feels, for here we are once more debating state-led proposals to nationalise profitable industries in the name of the "people".

The main role of government is to secure a stable and secure environment for its citizens. That includes honest and impartial judicial systems, consistent rules applied equally to all, and an economic system that is stable and open to everyone according to their means and abilities.

Providing a stable and open economy requires that money – the mechanism by which we exchange goods and services – maintains its value. Such boring and complex things as money supply, interest rates, property rights, patents and contract law all play their part in securing the money in your bank account and your confidence in its continuing trade value.

Where that confidence is betrayed prices rise and goods become unavailable. Owners of businesses who fear that their property will be taken away will stop investing in their businesses' continued maintenance and productivity.

Fear is contagious. Other business owners and investors start to worry and demand higher prices to cover their risk. That is the moment when a country's cost of borrowing rises and, potentially, the value of its currency falls.

Investors and entrepreneurs flee leading to lower production, fewer jobs and – as unavailable goods have to be substituted with imports – higher prices for consumers.

Venezuela started nationalising its oil industry in 2007. Between 2003 and 2010 oil production fell from 3.3 million barrels of crude per day to 2.25 million. Further government incompetence has driven reported inflation to 26%. Hugo Chavez, their president-for-life, promptly accused food retailers of "profiteering" and nationalised them as well. Now many food staples are unavailable.

Egypt owns its oil industry and famously nationalised the Suez Canal in 1956. The cash has been used to subsidise food prices for the poor. The country spends $3 billion a year on subsidising 220 million loaves a day but recent wheat price increases, after Russia banned exports, have resulted in tremendous shortages. Frustrated consumers spend hours in bread queues.

Iran, which is building a nuclear reactor for energy production, already subsidises its citizens' fuel needs. The government owns 80% of the businesses operating in Iran and maintains its grip on power only through subsidising prices. These subsidies cost some $100 billion a year and are bankrupting an increasingly fearful government.

Every country which tries nationalisation discovers that generating increased profits from state ownership is like pursuing a rainbow. The first act of nationalisation increases the costs of borrowing and reduces business confidence for those remaining. As skilled executives are replaced with loyal supporters, efficiency in newly-nationalised businesses drops, production and safety declines and expenses rise.

This results in a further cycle of nationalisation as other industries are accused of undermining the government's plans. Like peanuts, you can't just have one. Soon the government owns everything, produces little and has to import to make up the difference. Massive deficits result as does chronic unemployment and inflation.

It's hard to overstate just how stupid nationalisation is and I'm embarrassed that here we are, just like every year, debating it once more.

I'll leave the last words to President Raul Castro of that workers' paradise, Cuba. The Communist redoubt is suffering from economic collapse and has announced that 1 million state workers will be fired as the state seeks to promote private investment.

"We have to end forever the notion that Cuba is the only country in the world where you can live without working."