Thursday, 25 February 2010

Dear Councillor Dawkins #2…

So I finally got a reply from Councillor Dawkins from the letter I sent a few weeks ago about the seeming contradictions in his public position on the Kraft takeover of Cadbury and the underlying economic policies of his party…

Dear Dr. McKee,  

You are perhaps being a little harsh on me.   I have been making similar points in various speeches over the last few years in public.  Either one can accept that or one can accuse me of being disingenuous. 

I have to disagree with your assertion regarding the Conservative Party. Like most parties we are a broad church with widely held views.  
I have said often is that we are all for free trade. However the free trade of goods does not necessarily have to translate into the free trade of companies. Selling off our priceless manufacturing and exporting companies to foreign companies in no ways makes us a better country.
There are already rules devised by the takeover panel to control the details of hostile takeovers, so it is not a complete free for all. What I have suggested is that we need to reconsider these rules and to determine if they are currently serving the national interest or should they be made harder. For instance instead of 51% of shareholders needing to agree to a hostile takeover it could be 75% needed (that in itself would have scuppered the Kraft takeover as they only managed a 71% agreement).
Another suggestion perhaps is that only shareholders which have held shares for more than 6 months could vote in such circumstances rather than a company falling prey to hedgefunds whose only interest is in making money.  
It may be that we would only  apply these more stringent rules to our exporting manufacturing companies.  It is these companies which have taken generations to build and are vital to this country's wealth building capacity. When they are taken over that wealth producing capacity invariably leeches away from this country.
There is also the issue of a level playing field. We are the most open economy for such takeovers far more so than our foreign competitors.
I seriously doubt that we would have been permitted to buy a company like Cadbury from the Japanese, the Chinese and even the French.
When people mention the Conservative party I always gently remind them that the first company I ever worked for when I left University was Rolls Royce in Derby; a company nationalised in 1971  by a Conservative government in the national interest rather than letting it go bankrupt. The government still has some golden shares in Rolls Royce which prevents it being taken into foreign ownership. Those golden shares have not prevented Rolls Royce becoming perhaps our greatest engineering company and our second largest exporter.
I hope this has been helpful.

Though it was nice that he had a go at defending himself, I had problems with his reply right away.  First off – yes, free-trade under the neo-liberal style of free-market economics promoted by the Tories since Thatcher does have to mean the free-trade of companies too if it is to remain a coherent theory.  And secondly – isn’t his Kraft-beating idea of a 75% majority just a little too convenient and arbitrary to hold any water?  Why not 69% or 70%?  With no sustaining argument behind it, any number higher than the 51% we have in the current system is basically just taken at random, and that the 75% mark proposed just so happens to be enough to thwart the takeover at Cadbury seems a little bit easy to me.

Anyway, I sent off the following reply and we’ll see how this thing goes.

Dear Councillor Dawkins,

Thank you for your reply to my previous email regarding your recent comments about Cadbury. Although I appreciate your efforts at explaining to me the perceived contradictions that I see in your public position on the Cabury takeover and your continuing membership in the pro-free-market Conservative Party, I am afraid that your argument remains unconvincing.

Yes the Conservative Party is a “broad church” – but, like any church, there are still certain sacrosanct parameters at which that broadness ends (or else what would be the difference between parties?) and for the Conservative Party one of the core elements of its unifying philosophy, for at least the last thirty years, is a belief in the free-market system.

Though you may wish to pick and choose which bits and pieces of your party’s policy-guiding economic philosophy you as an individual subscribe to, the fact of the matter is that under the terms of the endorsed philosophy of free-market economics synonymous with the Tories since Thatcher (not specifically free-trade, but of the free-market ideal behind it), the Kraft takeover of Cadbury was a text-book case of legitimate free-market acquisition: an independent and profitable company was given an attractive offer to sell, its board recommended it, and its shareholders accepted it.

Now I, as someone who opposes this rapacious economic ideology that puts the profits of the few over the wellbeing of the many, agree with much of what you publically say: it is a disgrace that thousands of Bournville jobs might now be lost because lining the pockets of Cadbury shareholders was deemed of higher social value than the economic well-being of this community. But it is Conservative economic policy – and the continuation of that misguided policy under Labour – that got us here, and so long as you are affiliated with that party your words can only seem, at best, tainted, and, at worst, like shameless opportunism. As those words are so often also wrapped up in the hollow whiff of an ugly flag-waving nationalism, I sincerely have my doubts – the issue is not, as you seem to suggest, whether a company is British-owned or foreign-owned, but whether we have an economic system in place which secures well-paid British jobs regardless of the nationality of a particular company’s owners, and which ensures all businesses – British or otherwise – are properly taxed and incentivised to invest their successes back into the local community and not just into their own private pockets.

I would be much more likely to take your position seriously, Councillor Dawkins, if you were seen less on the front-pages of the local newspaper holding a Union Jack in your hand and blaming the Labour Party for not signing a letter, and more in the fine-print of that newspaper, presenting an intellectually honest and coherent opposition to the economic policies and practices that have guided your party for decades.

As far as I am aware, neither David Cameron nor George Osborne have publically renounced this historically Conservative position of economic theory, and though it strikes a populist chord to talk about saving British jobs and tightening the rules on hostile takeovers in the aftermath of what happened at Cadbury, as long as the framework for those rules remain an economic philosophy which puts the needs of businesses above the needs of people, the only real change you and your party can offer, despite your public posturing, is a slightly different shade of the same colour.

Yours sincerely,

Dr. Daniel McKee

PS… Whilst I thank you for the wistful nostalgia invoked by reminding me of Edward Heath’s nationalization of Rolls Royce in ’71, may I in turn remind you that it was Mrs Thatcher’s Conservative government which ultimately privatized the company again in 1987, and that Rolls Royce was one of the many companies over the past few years to cut hundreds of British jobs during the economic downturn, despite having an order-book worth over £35bn.

In other news, evidently I am not the only person not buying this for-the-people act

No comments:

Post a Comment