I have never understood the fetish about manufacturing. I mean, Rover makes a car in the midlands. Fine. But if you want to buy the car in Glasgow, say, then you need someone to transport it, which means a services sector. And then you want to buy it, and you probably don't have several thousands pounds in cash on you, so you need a bank, which again means a services sector.
The point is that the product that interests you is not a car sitting on a lot hundreds of miles from you that can only be purchased for cash on the nail. It is a car available for delivery in Glasgow in exchange for a bank draft. And that requires services every bit as much as it needs manufacturing.
Raak] Unless the government steps in and does something, like nationalise it. Governments used to do that here, and they still do on the continent and elsewhere. When exactly did it get written that the market has the absolute power to screw us all over?
[Irouleguy] I.e. subsidise it with other people's money. When exactly did it get written that every incompetently run business has the absolute power to put a trowel into my pocket?
(Raak) When the railways were privatised, amongst other instances. The Government subsidy to Train Operators and Rolling Stock Leasing companies is huge, and vastly more than was available to BR. Large amounts of public money disappear into private profit. So the true answer to your question is; "when the current political dogma has to be satisfied". There's a lot of it about, worldwide, and always has been.
Littlewoods is shedding 3000 jobs and closing most of its 'Index' stores. Will there be a march on parliament and hundreds of millions of pounds in government aid?
Raak] What Rosie said, plus the Common Agricultural Policy (which puts your money and mine into the pockets of the royal family!), the Export Credit Guarantee Department (which ensured that when arms manufacturers flogged stuff to Saddam Hussain and he didn't pay up that you and I paid for it), the 'guarantees' given to PFI contractors....
(Irouléguy) I was going to mention all that, so I'm glad you did. Also, many countries practise protectionism. A typical example (the legally-enforceable Buy American policy of many US institutions) cost me my job in 1998.
Also it doesn't help that the average CEO's salary has risen to a truely incomprehensible sum. Oh, your company is out of money? Mayhaps it's because you were paying yourself thirty million dollars a year for a job consisting largely of assigning yourself more stock options. Fortunately you'll never feel the sting of unemployment because you write yourself off as a personal corporation for tax purposes and you don't need one of those silly retirement accounts because you have more money than King Solomon. Sadly four thousand people have lost their honest, hard-working jobs, but if they're that honest and hard-working I'm sure they'll land on their feet.
... On a separate note, I want to see someone jump twenty motorcycles with a full size bus.
hello everyone, since university work is building up and building up at an alarming rate, I don't really have time to keep playing MC, sadly. I hope to be back in the summer, but for now I'll say goodnight and hope you all have a LOT of fun in Rugby. (crossposted)
[Rosie, Irouléguy] But your examples really just support Raak's point. Raak says "we shouldn't subsidise companies that make stuff that no-one wants to buy". Your response seems to be "we should, because, look, here are lots of other ridiculous cases where the government subsidises companies that make stuff that no-one wants to buy". Raak would respond (I guess) "Absolutely. Scrap the CAP and export guarantees and all of those other stupid policies as well". In other words, in rebutting Raak's rhetorical point ("when exactly did it get written...") you end up buttressing his substantive point.
Which raises the question: is having people out of work "bad" for the wider economy? (It's obviously "bad" for those people who aren't being paid, but the economy doesn't care about people so that's an irrelevant concern). If the answer is "yes", is it right for a government to find ways to get people into employment?
There is a simple (simplistic?) argument that goes that it's cheaper and better for the economy to have a person producing 1000 units of value to the economy and paying them 1500 units to do so if the alternative is to pay them 1000 units to do nothing. This means government intervention and subsidy, because although it's good for the economy it's bad for any individual employer. I know there are all sorts of arguments about market distortion, structural inefficiencies, impact on long-term competitiveness etc. (I'm sure CdM can come up with plenty of them). And yet it seems to me there's still a fundamental truth in there which those arguments don't eliminate - especially if aid and subsidy is carefully aimed and time-restricted. Having said that, Rover was dead in the water 5 years ago and the 6000 working there have had 5 years more work and pay out of it than they had any right to expect. It is not a suitable recipient for further aid in its present form or on its present site. All the government can do is help to manage the transition to other jobs for the people concerned.
[rab] Every day out of work for someone who is able to work is a day's labour lost forever. Labour is the most perishable commodity there is. The fewer people who work, the less stuff is created. So yes, having people out of work makes us all poorer. Of course, I'm taking the view that the more stuff we have (including intangibles such as art and clean streets) the better; someone who takes the opposite view, that the less stuff we have the better, like some extreme environmentalists, would presumably want to see unemployment rise as high as possible, and will be celebrating that a manufacturer of evil machines has finally gone out of business.
[Darren] Assuming you meant me, yes, there are unproductive jobs, such as, according to the stories, a lot of the management jobs at Rover. Paying people a fat salary to do nothing does nobody any good, including the people paid the fat salary.
CdM] You're right in that I wasn't defending the practices I listed (and I'm pretty sure Rosie wasn't either). The point we were making was that it's a conscious political choice for the government to let Rover go to the wall, and that this is a bad thing. I'd echo most of INJ's and Raak's answers to rab, as well. I think it is the government's responsibility to do something about employment.
There's a really lovely argument in Peter Singer's The President of Good and Evil against the "it's my money" position re: tax (and by extension re: interventionist economic policy), which I'm now going to have to dig out and mention. There we go, the book was useful for something after all.
[Irouléguy] By that reasoning, pretty much everything is a conscious political choice. Your local newsagent closes down? Conscious political choice -- the government could have paid them two million pounds to stay open. You chose to go onto the internet today? Conscious political choice! -- the government could have bribed you not to.
If you want to make an argument for why the government should intervene in this particular case (and a good argument has to be one that also explains when the government should not intervene), then that's fair enough and I would be interested to hear it. I have to say I think Raak's summary is the appropriate one here, though: Rover were making something that people didn't want to buy. The End.
(On the other hand I disagree with Raak on the 'it's my money' argument, but I think that is a whole different debate.)
CdM] I don't think the first point follows at all. The closure will cost something like 5,000 jobs at Longbridge, plus up to 15,000 in suppliers - that's up to 20,000 wage packets taken out of the local economy, which will then have a further knock-on effect across the West Midlands. Any government would have to take a position on an economic event of that magnitude. The tens of thousands of people whose lives are blighted is why the government should intervene - and I don't see why a coherent case for that depends on saying that if it were a different set of people the government shouldn't. Obviously I don't think every failed small business is a case for government intervention, but I think that's something of a straw person.
As for Rover making something that no-one wanted to buy, again some exaggeration: Rover couldn't sell enough of what it produced to persuade the people with the money to invest in it, which is a rather different matter. And then there's the little matter of the £500 million hole in Rover's finances (allegedly). Taking the money and running comes to mind.
I actually think this Government is being quite brave in letting Rover die. 30 years of government subsidies of BL et al has failed to produce a company that comes close to making a profit, let alone a decent product. Whilst I fully accept Irouéleguy's argument is pertinent, that volume of investment would shirley be better placed in other sectors where there was a chance of making it work? And to do this in the run in to a general election is, perhaps, unprecedented. And before the accusations fly, I do not (and have only once) vote(d) Labour.
[Irouléguy] Something like 300,000 businesses close down in the UK each year (the vast majority of them small businesses). Even if those companies are all single-person enterprises, that's 300,000 jobs, plus I don't know how many suppliers, not to mention further knock-on effects across the entire country. Any government would have to take a position on an economic event of that magnitude. The hundreds of thousands of people whose lives are blighted is why the government should intervene.
I don't think small business failure is a straw person at all. Tell me why Rover should be bailed out, as opposed to 5,000 randomly selected small businesses.
Please accept my humblest apologies for the cross posting. The new Rugby event games have now been posted here - or if the link doesn’t work – in the Orange Pilg Game.
The sleepover event, entitled That Went Off Very Well, looks as if we have a record number of players – but more are always welcome. Kind regards, James the dog.
I used to have a P6. It were lovely. I know it isn't "mass production" but we are still (we = uk) making world class cars to wit, the TVRs of Blackpool, and from Kensington, the humble BRISTOL. Check out the "FIGHTER".
I must say I'm entirely with CdM on this one. And not just because I don't like cars, either. Last time I got made redundant, the government didn't step in with a cash injection to my company so it could keep me on. But it did provide benefits until I found a new job. I'd have thought that the task of the government in cases like this is to try to help people back into work - which this government has done admirably with its various schemes - rather than artificially subsidise a company that clearly isn't going anywhere. If you think that it should do that, then at what point do you call it a day? Would Rover still exist in 50 years' time as a bizarre, quaint hangover from the past, pointlessly making useless things, a kind of manufacturing Sisyphus, paid for by the government simply because it's a grand old institution, like the monarchy? I'd say that if there is a point at which you just can't do any more, and surely there is, then that point has been reached.
Hi all! Sorry about the AVMA débacle. I really rather thought there'd be internet in ONE of the hostels I was staying in. But alas, twas not to be. Looks like it's going at a rollocking pace since I left though so I shan't intefere :)
I googled Peter Singer -- see, e.g. here. He's a hard-line utilitarian, who believes that defective newborn babies should be killed, and that meat-eating is wrong. Is his argument for taxes that the government will use our money more wisely than we will?
[Raak] Sorry, I haven't looked it up yet and I can't remember all the details of the argument off the top of my head. I'll try and find it and post it for critical review here, as I found it pretty persuasive I must admit. (BTW, aren't you a hardline utilitarian too? The Rover argument hints that you are.)
Mm. On second thought, maybe it doesn't. I think the gist of the Singer argument on tax is that we all subsist within superstructures of wealth, and that "your" money wouldn't buy you anything without those superstructures, and those superstructures have costs that you don't generally pay directly, but you can, sort of, in a way, if you will, pay them indirectly via tax. But as I say, I don't remember the detail and may have that wrong.
[Projoy] I've always thought of Raak as more of a libertarian. But I would be interested to know how he describes himself. As for "whose money is it anyway", variants of that kind of argument certainly predate Singer. Broadly speaking I take the view that our ability to transact is only secured by governments that protect property rights, enforce contracts, jail muggers (unless they are managing large corporations, of course), that kind of thing. The social contract that we agree to is that, in return for these guarantees, we accept that governments have the right to tax us. And once that right is established, there are then good public policy arguments for various kinds of taxing and spending by government. That's pretty loosely articulated, but then it is very late here in Singapore. :-)
