Andy J wrote:Tom I think you are way off the mark with your original post,
...You think its good to put a few hundred thousand people out of work, shake out the dead wood? are you a banker by any chance Tom?
No, worse than that, I'm in IT... working with software which (among other things) runs 'Kanban' and 'Just-in-Time' logistics for car makers like Daimler-Benz.
Yes, a modern factory like Nissan Sunderland is an amazing thing; there are obvious economies of scale which make car plants huge. The 'inefficient bloat' was nothing to do with cars in particular: the point was that the argument Cath attributed to the government (a big failure harms the local economy) means that any plant of any kind that employs enough people becomes untouchable.
Yes, if people lose their jobs then many of them will claim benefits, which add to the tax burden. So I guess you are saying it would be better to spend (some of) that money propping up a factory so the jobs aren't lost. I completely disagree. Propping up the factory harms other people in a way that paying benefits does not:
You support say BMW/Mini in Cowley. Now, other local firms which weren't as shortsighted as BMW and would like to expand suffer because:
* Rents are artificially high because BMW is still there occupying prime industrial land
* Skilled labour is artificially expensive because BMW still has thousands of skilled machinists who would otherwise be looking for a job
* Steel and everything else BMW uses is artificially expensive because they are still buying it and keeping the price up.
So if you're a local specialist machinemaker, finely balanced between profit and loss on tight credit, subsidy for the big boys is the last thing you need. It's a marginal effect for one firm, but multiply that by the thousands of firms which compete with car-makers for premises, raw materials and labour and it could be far more jobs at stake than the car firms themselves provide.
You start by bailing out one car plant; then everyone else clamours for help. In a few years, you have the country divided into the 'ins' and the 'outs': those with cushy subsidies and those who struggle to compete without them. Everyone pays for the Ins, even the Outs and those with no job. On past form the subsidy will go to the politically well-connected not the most deserving, so it'll all be nice and matey. The overall tax burden of supporting all the inefficient industries makes it harder and harder for anyone to run a business competitively so overall, employment suffers.
On the other hand, government can and should help everyone eg. by trying to free up access to credit, cut VAT etc. But that applies to anyone in work, not the chosen few.
Andy, I never said "its good to put a few hundred thousand people out of work" and I'm not saying it now. Recessions cost jobs - which is bad. Employment subsidies like you suggest cost *even more jobs* in the medium term, and are unfair (favouring politically well-connected industries). You may be willing to back the big boys against the rest of us, but I'm not.
