Friday, January 04, 2013

German economic success

Independent journalist Owen Jones, in an article on LabourList tells us that the government should be "looking to examples like Germany, which avoided the “let the market decide, Government doesn’t pick winners or losers” approach of New Labour and the Tories. As a consequence, Germany avoided the wholesale trashing of manufacturing we experienced in this country".

Owen Jones is mistaken in his analysis of German economic success. 

German economic success is not due to the German government "picking winners", but is because the German system does not favour mergers and acquisitions.  This means that many more small and medium businesses in Germany are family enterprises, and these tend to have a long timescale on investment (literally for future generations) rather than the quick-profit short term economic culture that has arisen in the United Kingdom.  If you are interested in who created the framework that has allowed mergers and acquisitions (including hostile takeovers) in the United Kingdom you need to look at the policies introduced by Tony Benn when Minister of Technology in the 1960s when he was instrumental in the setting up of the Industrial Reorganisation Corporation (IRC) which was "given the role of promoting or assisting the reorganisation of industry, based on the assumption that British firms were often too small".

Therefore far from Margaret Thatcher being responsible for the asset stripping of British industry this had begun in the 1960s and 1970s using the policy framework initiated by Tony Benn.

Family companies that had taken many decades to build up were destroyed by the Labour government's stupidity.

But of course it is easier to blame the wicked Tories for everything instead of acknowledging the profound economic illiteracy that exists at the heart of the Labour Party.

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