If one wants to understand people’s attitudes to economics, one could do worse that look at reactions to the announcement that UK confectioner Cadburys is to be bought by US counterpart Kraft.
“Cadbury Defends Sell-Out thundered the FT, leading one to wonder whether “Sell out" was a city term or another example of the FT’s flight from market economics. The Daily Express launched a “Crusade " to save the “historic British company". The Guardian spoke of “defeat" and “throwing in the towel".
Meanwhile, Gordon Brown has warned Kraft not to cut jobs at Cadbury....
It is all painfully predictable. The British press are widely hostile to the sale of what is seen as an iconic British brand to a foreign competitor. Economic nationalism abounds: For the socialist press, it was proof that Nothing... has really changed... the deal-makers are back [and] the dominance of the City over the economy remains unchecked.... For the nationalist press, it was “the end of an era". And for the politicians, the economy remains something that can and must respond to the politically-influenced will of powerful men. Plus ca change! Now, it is certainly true that (Toblerone notwithstanding) the Americans make chocolate almost as well as they make beer, and it really would be a tragedy if Kraft destroyed Cadbury’s products and filled our shelves instead with Hershy Bars. However, this is very unlikely. As long as Cadbury chocolate sells, Kraft will keep making it. They will only “strip the assets" if they can make more profit by deploying them elsewhere. As many of these assets are fixed (you can’t move Bourneville!) that would mean selling them on to people who valued them even more – i.e. somebody who was able to use them more productively. Those new owners would surely need workers, and if they were putting the workers to more productive uses, that would mean they would also pay higher wages. It may take a bit of time, but any “rationalisation" will benefit all those concerned (unless, of course, unions and governments conspire to keep wage rates so high that the unemployed cannot find work).
The choice for the country as a whole is even more stark: do we want an open economy or a closed one? Will we respect private property or not? The UK benefits enormously from inward investment (we have among the highest Foreign Direct Investment in the world), which underpins a lot of jobs including much of our remaining manufacturing industry. Britain’s car industry, for example, survives only thanks to FDI. This FDI is dependent to a large extent on foreign investors trusting that they will be able to get their money back. If we close our borders to foreign money, or stop them repatriating their profits, or interfere when owners seek to sell their property as, when and to whom they choose, we will have fewer jobs and be less prosperous.
This is a time of great uncertainty for Cadbury workers and we should be sympathetic. But neither political posturing nor media tub-thumping will help create the new and better jobs that they may, and two and a half million others definitely do, need.