Monday, 16 September 2019
Selling off our sovereignty
Taking back control and re-asserting our sovereignty were impressive and successful themes in the Leave campaign in the referendum on membership of the EU.
Yet on almost a daily basis we giving up, or rather selling, our sovereignty to foreigners. And it is a fair bet that the people who are behind this selling, and profiting from it, are the very people, or their backers, who continue to campaign to "take back control"
Today ownership, and therefore control, of the UK's aerospace giant, Cobhams, has been sold to the American private equity company Advent International for £4bn. Last week a consortium based on Hong Kong tried to buy the London Stock Exchange for an eye-watering £326bn, though for the moment the offer has been turned down. A few weeks ago the York based part of British Steel, TSP, was sold to the French company Systra, and the future of what is left of the once mighty British steel industry lies with Turkey's military pension fund.
There is nothing new here.
As Liberal Democrat peer William Wallace pointed out in an article in the Yorkshire Post last month, the West Coast Main Line and HS2 are to be run by a consortium that incudes Italian state railways, a Chinese company is to provide key components for the 5G network, and many of our bus and railway service and utilities,including water, are now foreign owned.
The process of selling off public utilities started with Margaret Thatcher's government from 1979, justified by the unproven theory that the private sector would run them more efficiently. The additional motive, if not the dominant one, was that the sales provided the government with an income that enabled them to maintain their expenditure while cutting taxes. Former Tory Prime Minister Harold Macmillan described it as "selling off the family silver."
If the initial purchasers were largely British the devotion to deregulated neo-liberal economics meant that there was little to prevent foreigners from becoming the dominant owners.
The system of foreign takeovers of private industries, notably the car industry, has continued largely unhindered.
Any elementary economics text book will tell you that this sale of assets to other economies has one great, albeit short term, advantage and at least four long-term disadvantages.
The short term advantage is that each initial sale produces a one-off credit of foreign currency in our balance of payments. This enables us to finance our imports on our current account, and we have "lived beyond its means" for decades. If I can find the time I shall look up the last year in which we had a genuine surplus on our current balance of external payments.
The four disadvantages are:
1. Profits form the foreign-owned industries and services go to other economies. This means a flow of currency which, instead of remaining to stimulate the British economy, goes to stimulate other economies.
2. Senior management, and high status work such as research and development, tend to be concentrated in the owner economy rather than in the UK.
3, If expansion of the industry is contemplated than the owner economy tends to get preference over the UK.
4. Conversely, if contraction of the industry is necessary, then the UK tends to be the first hit with the consequent loss of jobs.
The last three points tend towards the idea that those in charge of our industries and services are turning Britain into a low skilled, low wage economy.
This trend will be exacerbated if Brexit is accomplished.
Politically and economically the Brexiteers are set to turn us into a fourth-rate country