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6 March 2012

INTERVENTION IN FREE MARKET BY GOVERNMENT OPPOSED TO INTERVENTION

When you get what you want, you often find you don’t want it after all.

Take the present Tory Government in the United Kingdom.

They are shameless tireless unconditional advocates of the market economy and globalisation.

Now Detroit-based General Motors, which produces the Opel and Vauxhall marques in Europe, has just indicated that it may close its plant at Ellesmere Port in north-west England with the loss of 2,800 jobs.

This seems to be mainly the consequence of a slump in demand and of the fact that the Astra car that Ellesmere Port produces can be produced elsewhere – in Poland, for instance.

Oh dear!

And was the Tory government clapping its hands in glee at the fact that the globalised market economy is working so effectively in Britain, making the country a showcase for free enterprise?

Surprise, surprise, the answer to that question is no.

Quite the contrary.

No sooner was the GM threat made public than Britain’s Business Secretary Vince Cable hopped on a plane, crossed the pond and headed straight for the Big Apple to plead cap in hand with GM chief executive Dan Akerson to withdraw his threat to close the plant down.

But what about the market economy, Mr Cable, the virtues of which you never cease to praise?

You know how you never tire of telling us that government should keep out of the market, that market decisions should be taken by businessmen – people who know what they are talking about – not by politicians.

And there you are, a government minister, actively intervening with a business to try and influence its decisions in a market in which the company in question is itself a past master.

That the market economy is a fine thing, Mr Cable, I am sure you will agree – but not, it appears, when it destroys investment and jobs in your own backyard.

That should happen in other people’s countries, not in ours.

Oh, and there is one other thing, Mr Business Secretary.

You know how you often promote Britain to overseas companies as a place where they can invest freely in the knowledge that they will find it easy to hire and fire workers because of the low standard of our employment protection laws?

You call it “our flexible labour market”.

Well, blow me, but academics are already suggesting that the ease with which workers can be sacked may be one of the reasons why GM is thinking of pulling out of north-west England.

A report in the Guardian newspaper on 2 March 2012 quotes industrial relations expert David Bailey of Coventry University: “It is easier to lay off workers in the UK because of our flexible labour markets, which are good at creating jobs but can also destroy them. We are always going to be vulnerable when foreign-owned multinationals are looking to cut capacity in Europe.”

Some how or other that market ideology you espouse is not looking so persuasive these days, is it, Mr Cable?

And I do hope you are not offering bungs to that nice Mr Akerson – investment incentives, special tax concessions, that sort of thing – so that he keeps his business in Britain.

The European Union’s competition directorate might not be very happy about that, you know. Level playing field and all that.

General Motors is expected to take a decision on the Ellesmere Port plant by the end of this month.

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You might perhaps care to view some of our earlier posts.  For instance:

 1. Why? or How? That is the question (3 Jan 2012)

2. Das Vierte Reich/The Fourth Reich (6 Feb 2012)

3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)

4. Where’s the beef? Ontology and tinned meat (31 Jan 2012)

5. What would Gandhi have said? (30 Jan 2012)

Every so often we shall change this sample of previously published posts.

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