Thursday 8 May 2014

Cable sits carefully on the fence.

On Monday the Guardian headlined its article on the attempted take-over of AstraZeneca by Pfizer as: "Coalition rift over £69bn offer fro UK drugs company."

I find it sad that even the so-called responsible press describe  reasonable differences between the coalition partners  in the language of strife. Even single parties are, in the classic phrase, "coalitions of opinion" so it is reasonable to expect that when two or more parties form the government the differences of opinions will be wider. 

Grow up, Guardian, and report our democracy as working as R A Butler correctly described it: "Government by discussion."  There is every expectation that any differences of opinion can and should be resolved by "quiet calm deliberation"  as Gilbert and Sullivan put it in the Gondoliers.

Whilst both David Cameron and George Osborne  seem keen on the deal Vince Cable has expressed caution, trying to keep an "open mind" but not ruling out the possibility of using his statutory veto, though acknowledging this would be serious step.

Cable's  is a sensible approach because:

  •  it would be unwise tactics to be too openly opposed to both the prime minister and the chancellor of the exchequer
  • overseas investment in our motor industry is seen as a great success
  • Britain itself has not in the past been all that shy of establishing or taking over enterprises in other economies, and may wish to continue doing so.
Osborne in particular may be tempted by the idea of an influx of £69 billion worth* of foreign currency into our balance of payments accounts, which are in a parlous state.  However, if he looks at any standard A-level text book he will see that  the downside is a future negative flow of profits interest and dividends to the foreign owners.

In addition it is a commonplace in the textbooks that foreign ownership generally means that high grade management functions, and high grade research, tend to be concentrated  the foreign economy, and any downsizing in the event of a recession tends to take place first in operations in the non-host economies.

I am no expert on the pharmaceutical industry, but it doesn't not seem to me that there are any scientific advantages to the proposed take-over, or synergy from a joint operation.  Rather this will result in an increase in monopoly power in an already oligopolistic industry, and a reduction in the competition that is supposed to be such a stimulus to enterprise in a capitalist system.

It is hard to avoid the conclusion  that the main motive in the take-over is to take advantage of the UK's disgracefully low profits taxes  (21%, soon to be 20%, compared to 35 to 40% in the US),  and, given Pfizer's recent closure of its factory in Kent, and the experience of  Kraft's broken promises after their take-over of Cad bury, any promises regarding the maintenance of research , development and employment, particularly high-grade employment, in the UK, are probably not worth tuppence.

So the argument for rejecting the offer seems to be overwhelming.  We desperately need a major "plus" from Liberal Democrat participation in government.  Let's hope this is it.

I have long believed that the pharmacy industry takes the rest of us for a ride, claiming  that it needs high profit margins in order to finance research, and then spending most time and money on research on minor "Western" problems such as erectile dysfunction and fripperies such as creams to remove the hairs on ladies' legs,  with not much on world killers such as malaria,  typhoid, cholera and diarrhoea. I believe there is a strong case for nationalising the lot of them, or at least setting up a government owned and funded rival which will become the preferred provider for the NHS.  That could be something for our next manifesto.

* If the deal goes through some of the purchase will be in shares rather than money, so the whole £69bn may not show up in the accounts.


  1. Stuart Archer9 May 2014 at 08:08

    What exactly can Cable and Cameron, Osborne and Alexander do? They surely cannot veto the takeover?

    1. Clever QCs would probably charge you several thousands of pounds for answering that one, Stuart. Both UK and EU laws are relevant. There is a UK Enterprise Act which allows the Secretary of State to intervene to protect the national interest. This mainly relates to the arms industry but also certain other areas. An EU law gives our government permission to "protect legitimate interests." This latter could be interpreted to cover our scientific research base and possibly employment.

      However, with a government dominated by Tories ( 305MPs to Liberal Democrat's 57) who see it as beneficial for Britain to be "open for business" (beneficial for whom is arguable) Cable probably has a tough fight on his hands.

  2. This is my first time i visit here. I found so many interesting stuff in your blog especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here keep up the good work Fence Builders Minneapolis

  3. Excellent and very exciting site. Love to watch. Keep Rocking. DetroitFence company

  4. We at Sterling Heights Fence Company have helped our customers with their fencing needs for the past 25 years. As of now, we are rated as one of the best Michigan fence company. Our quality work made us the best and we are striving to retain that position in the coming years. Just visit Fence installation Sterling Heights

  5. We at Grand Rapids Fence Company understand that fence installation is very important when it comes to enhancing privacy and security of private property. Just visit Grand Rapids fence

  6. We at Grand Rapids Fence Company understand that fence installation is very important when it comes to enhancing privacy and security of private property. Just visit Grand Rapids fence

  7. New web site is looking good. Thanks for the great effort. dumpster rental Leander tx

  8. This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free. roll-off dumpsters San Marcos, TX

  9. I think that thanks for the valuabe information and insights you have so provided here. roll-off dumpsters San Marcos, TX

  10. This particular papers fabulous, and My spouse and i enjoy each of the perform that you have placed into this. I’m sure that you will be making a really useful place. I has been additionally pleased. Good perform! georgetown Dumpsters

  11. It proved to be Very helpful to me and I am sure to all the commentators here! georgetown Dumpsters

  12. I have bookmarked your blog, the articles are way better than other similar blogs.. thanks for a great blog!
    Seo Agency Newyork

  13. home audio installation
    The greatest benefit of an entire home sound framework is that you can play music in each of your rooms simultaneously. At the point when we introduce speakers, we cautiously select explicit spots to guarantee that the sound is uniformly conveyed. At the point when you return home from a hard day at work, you can turn on the music and move from the family room to the room without thinking twice. Engaging loved ones with an entire home sound framework is likewise a breathtaking idea.It ought to never be excessively hard to utilize innovation. Our controls are clear enough that you won't sit around sorting out some way to play a particular collection or radio broadcast. With a cell phone, for example, a cell phone or tablet, a touch screen, or a savvy remote, you'll have the option to get to all of your music sources and each area in your home home audio installation

  14. Eliminate sunspot spots, freckles, and other skin discolorations. This super-light summer cream absorbs quickly without leaving a greasy feeling, yet it doesn't contain any harmful chemicals. At the same time, it reduces the appearance of dark spots on your skin by improving its pigment and lightening your complexion by inhibiting melanin production dr rashel fade spots night cream