April 20, 2005

Government opportunism – MG Rover & Index

In an earlier post entitled MG Rover's downfall, I asked why there was no government agency to bail out all firms with a marginal change of survival. In such cases, government assistance could ‘obviously’ save jobs and increase everyone’s well being according to some.

Dr Madsen Pirie of the Adam Smith Institute makes a similar point when talking about the recently announced closure of several Index stores nationwide.

Government, which leapt in with £150m of taxpayer money to help those who lost MG Rover jobs has not yet come forward with any cash for the Index employees. On a pro-rata basis the sum might be about £85.7m.

View his post here.

It’s opportunism on the part of politicians, pure and simple.

- 4 comments by 1 or more people Not publicly viewable

  1. That arguement I heard on the radio is this:

    MG Rover is a key employer in an industry with a lot of smaller suppliers relying on them for their business. If MG Rover goes away, the chances are that the employees won't go back into the motor industry because there just aren't enough jobs. However, Index is not such a key player in the overall retail industry. Chances are that they will be able to find equivilant jobs.

    Now, I'm not sure of the details, but that does sound like it makes sense to me.

    20 Apr 2005, 23:30

  2. Fair enough, but there's little reason to hold jobs in the motor industry in such high esteem. It's a shame people have been left unemployed, but they will find new opportunities with time. The transition won't be pleasant, but supporting the production of unwanted goods isn't the best use of public funds.

    21 Apr 2005, 00:02

  3. supporting the production of unwanted goods isn't the best use of public funds

    … Which is why the government cash is to help with retraining and developing new business for the suppliers, rather than just propping the thing up.

    21 Apr 2005, 00:28

  4. True. I wasn't saying the funds were being ploughed into MG Rover directly. Read my initial post and you'll see that I support the government's reaction to the situation.

    21 Apr 2005, 00:39

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