Is Hyde Park for sale?
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
So Bundestag members have been suggesting Greece sell an island or two, or maybe even the Acropolis, in order to pay off its mountainous debts?
If I were a Greek taxpayer, or a civil servant whose job was under threat, I would jump at the opportunity. Why should I care? Is the buyer going to carry off his purchase in some kind of gigantic carrier bag?
Or ship it stone-by-stone to his mansion in Beverley Hills, Dubai or Tianjin? No, it would very likely be a matter of no more than translating a few of the signs dotted around the site into an additional language or two – probably an overdue change anyway – and maybe raising the entry prices a notch or two.
The revenue generated of course would belong to the buyer, just as they would if the local cinema were sold to a new owner, foreign or otherwise.
These issues are incendiary, though heaven knows why.
Back in the heyday of former Prime Minister Margaret Thatcher, every privatisation was accompanied by widespread moaning about “selling the family silver”, a piece of black humour which will be lost on readers too young to remember how awful the old nationalised industries actually were, to such an extent it was sometimes hard to believe that anyone would actually want to acquire them.
Nowadays, with few of the old public sector dinosaurs left to sell, the cries go up instead at the prospect of us “losing” old names from the private sector like Cadbury to American predators.
It may be as well to remind ourselves of how unspeakably stupid all this is, because we in the UK and U.S. are shortly going to face the prospect of selling off our crown jewels to the highest bidder (or possibly to the highest acceptable bidder), so we may as well get used to the idea well in advance.
When the Chinese finally give in to years of U.S. pressure and revalue the renminbi, you can bet your devalued bottom dollar they will take the opportunity to buy a few choice U.S. assets, just as the Japanese bought the Rockefeller Center a generation ago, provoking howls of anger on all sides of America’s political and apolitical spectrum.
In the first place, remember that although we Anglo-Saxons already have enormous holdings of overseas assets, we (quite rightly) decry any attempts to stop us acquiring more, especially when the culprits are West European governments, so it is more than a little hypocritical to complain when foreigners come shopping for our most prized assets. Secondly, the tabloid view which tends to predominate in these situations, talks of foreign companies as if they were Vikings plundering our shores.
What they are actually doing is buying assets from willing sellers, often at prices so inflated that they turn out a few short years later to have grossly overpaid (as the Japanese did for the Rockefeller Center) or to have bought a pig-in-a-poke (e.g. Daimler’s nightmare acquisition of Chrysler). Ironically, it is usually the most unwise, most ego-driven bids which generate the most ire.
Essentially, whether the buyer is a dastardly foreign predator or a solid local taxpayer, the outcome is the same: the vendor surrenders the right to a flow of benefits, pecuniary or nonpecuniary, in exchange for a wad of cash-in-hand – and the vendor, if not our Government, is usually a large company owned to some extent at least by our pension funds, our life insurance companies and our unit trusts. The proceeds therefore contribute to our pensions and our life insurance payoffs. What is the problem?
As so often, the it is too unpalatable to face. The truth is that the family silver is headed East because it is following the money. We are simply poorer in relative terms (and maybe even in absolute terms) than we were when we amassed the assets, while the Asians and Gulf Arabs are immeasurably richer.
The newly rich have saved while we consumed, and in the process they have accumulated massive piles of newly printed dollar bills – not out of charity, but on the understanding that they will ultimately be able to spend them, and until we produce sufficient goods and services for them to buy, they will use their wealth to acquire assets, in some cases trophy assets: major brand names and franchises, high-profile real estate and land, maybe even national monuments.
Traditionally, American administrations have pleaded national security in order to block foreign takeovers, and that excuse will be readily to hand when the Chinese or Arabs try to buy “strategic” U.S. assets, if only because in neither case is it easy to imagine genuinely private sector bidders.
But, whether it is the Greeks today or the UK and U.S. in the near future, it makes little difference, because those who bemoan the sales usually have no viable alternative to offer. In the end, we would prefer to sell the family silver than tighten our belts to work off our debts.
Unless of course, like Greece, we could get the Germans to pay your bills…..Memo to German readers: I hope Prime Minister Gordon Brown is at the very top of your Christmas card list. After all, it’s only thanks to his obduracy that the UK isn’t in the Eurozone.
Now bailing out Britain would cost you serious money, whereas rescuing Greece is just Trinkgeld…..