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"Mock Auction" for MG Rover on Ebay

John Robertson | 15.04.2005 17:16 | Analysis | Globalisation | Birmingham | London | World

If you type "Mock Auction" into ebay you will find an advert for MG Rover under "spares by brand - used". The stunt is to publicise the way government policies are decided by economists, not industrialists, and gives links for viewers to fax their MP during the election.



Mock auction of MG Rover Ltd, Powertrain Ltd and MG Sport & Racing Ltd, employers of 6,000 people and essential customers to a fair proportion of UK manufacturing.

- Is this a joke?
It's an off-the-cuff publicity stunt to promote the cause of UK manufacturing in the election. Serious bidders please contact Price Waterhouse Coopers who are selling the companies. It is also publicity for ebay, so I hope they will allow this add to remain online. I will refuse the winning bid. Yes it is a sour joke that MG Rover is on ebay and it's important to understand why.

- Is it bad taste?
You judge. I think it is rightly wry & bitter but constructive. The situation is cruel & needs different publicity to the current TV news & press. A big employer, exporter, and customer of other manufacturing firms with a high profile, a UK bias and a local research and development team is being sold for scrap. Last time this happenned it went for ten pounds.

- Why did it sell for a tenner five years ago and why is it on ebay now?
Because of voters. In 1979 voters were sick of industrial strife as reported on the news every day. They elected a party with an economic policy imported from Chicago, which said that if you hike-up interst rates you will hike-up exchange rates and manufacturers will have to compete better with cheap imports. Inflation will go down, voters will feel richer (unless they work in manufacturing) and sooner or later the economy will adjust. "It will be like a cold shower", Milton Friedman said, as though the adjustment would be over by Christmas. I was an economics student in the midlands at the time, and what my american teacher was telling me did not match-up with the mass destruction of industry that we could almost see out of the window. I realised that economists are not to be trusted. One of the first casualties of the new policy was the closure of a BL factory that made MG sports cars. I hope that a change in policy will stop MG being one of the final casualties.

- What is the policy now Labour is in power?
Their first act in power was to separate themselves from setting interest rates by appointing a Monetary Policy Committee at the Bank of England, who carried-on pretty much the same policy of setting interest rates to reduce inflation. Politicians decide who sits on the committee and what they are allowed to discuss. Although their line has probably softened a little over the years, they are still trained as economists, even though one of them once worked for Ford and another spent a couple of years at the London Enterprise Agency. In one way the policy has hardened over the past few months: even the american government has got sick of paying over-the-odds for its borrowing in order to put people out of work, and the dollar has fallen against the pound. This is probably one of the reasons why Ford moved their Jaguar production to the US and closed the factory in Coventry. It should be no surprise that Rover has the same problem, although it is a surprise that MPs don't want to drop the interest rate. If you type "Rover" into www.theyworkforyou.com you will see quotes like this: "The Government have put in place a stable macro-economic environment. We also support business investment through research and development tax credits, grants, regional selective assistance and the technology programme. Business investment rose by 5.5 per cent in 2004." - Patricia Hewitt MP, [secretary of state for trade and industry].

- Is she right?
No. The economy is only stable without manufacturing because there are north sea oil exports to pay for all the imports. Some time, North Sea Oil will run out. Unfortunately, manufacturing takes generations to build-up and it won't just appear again when it's needed.

- Isn't it expensive to subsidise lame duck companies?
If it's possible to drop the interest rate, that saves money rather than costing money because the government is a massive borrower. It also saves a lot of money for everyone who is in debt for something like a mortgage.

- Isn't it expensive to risk inflation by letting the exchange rate and interest rate drop? Wouldn't all those people with mortgages start spending money?
There are other ways of reducing costs to business and keeping prices down. For example, if income tax was merged with National Insurance that would save a lot of admin work for companies.

- Are Rover cars any good? Didn't they used to make the Austin Princess?
They seem to sell on Ebay. Rovers start, stop, turn left and right and do all the other things that a car should. My friend has just bought one and it's fine. They show-up on reliability tables as being in the same league as Renault & Fiat. The difference is that Rover can't afford research and development without splitting the cost with a partner (that's what the Shanghai thing was about) so they've gradually been loosing market share.

- Why isn't this an election issue on the telly?
In the 70s, journalists got used to union-bashing and blaming companies for being bad at making things. Now they go back to their old habits when reporting on problems like factory closures.

- What can I do?
use FaxYourMP.com

You can ask your MP whether there can be more industrialists on the Monetary Policy Committee, and a brief to discuss long-term manufacturing as part of their aim, rather than just inflation. You could point out that so much British industry is closing that you are worried that there will be nothing left to export when North Sea Oil runs out over the next few decades. You could say that there are probably some people at MG Rover who would take the job.

John Robertson