Wednesday, 7 October 2015
Eye-watering sums in merger - great for the shareholders, bad for us
Anthony Hilton - no raving lefty he - the economics editor of the London Evening Standard, had an article in the paper last night about a big new merger that may or may not take place in the brewing industry. When I say big, this is seriously massive, and calls into question all the usual rubbish that lovers of capitalism talk about when they say that the marvellous thing about capitalism is that 'competition' is good for the consumer. In reality, if this merger takes place, when we go into a pub or are buying beer we will be choosing between different offshoots of the same company, under different labels.
That to one side, Hilton is against the merger and amongst the reasons he cites are as follows:
"Apart from the shareholders [who, he explains elsewhere are likely to make a big, big killing if the merger goes through] what characterises this deal is the number of losers - there will be fewer suppliers, fewer employees, less choice for customers and no doubt lots of legitimate new ways for the company to avoid paying taxes.'
Just spend a few seconds on that sentence, please. He is saying that if this merger, worth billions of pounds - it involves, yes, the world's largest brewer - goes ahead, it will result in people being put out of work, more of the same kind of thin watery crap beer, and more tax-dodging ('legitimate' of course - we don't want legal proceedings to take place by not calling it 'legitimate') - which means less revenue to the state to pay for schools, hospitals and welfare.
But this is normal market activity. This is what we have to remember. It's normal. If it's 'normal', that means it's 'right'. That means it's 'nice', that means it's 'good' for us.
But it's not. It's about making some people richer - 'shareholders' i.e. people who happen to have some money and earn money from that money by doing no work, working-people laid off and therefore instantly poorer, crap beer, and less tax.
[The potential merger is between AB InBEv and SABMiller - combined value £180 billion. Lawyers' and accountants' fees to put the merger together, $3billion. (Hilton gives those 2 figures, as I have, in sterling and dollars.)]