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Friday, 28 October 2011

Straws in the Wind

The situation in the Eurozone is no different from last week, but the mood has become much lighter following the latest agreement on support for the weaker countries.

Now a Eurozone official is in China, asking for a contribution to the support fund. The Chinese government will agree, with published conditions and a hidden agenda. China has a highly intelligent population, with a huge output of graduates in science and technology; but China remains keen to buy western intellectual property - especially when this can be done at knock-down prices. So we can expect the covert agreement to include the concession that European governments will be less resistant to Chinese takeovers of old brands and new technologies. How this pans out will be a wonderful indicator of China's  plans for the introduction of a wider range of consumer goods in their home market.

Dim politicians talk of Britain's need for more 'manufacturing' and more exports of manufactures; but in reality - as the Chinese well know - it is not the process of manufacturing that adds 'value' to the raw materials but the amount that can be added to the material cost of production as the premium that is charged for access to the brand and the patented technology that is embedded in it. Prices for branded, patented goods and services in very many cases owe far more to the intellectual property than to the the quality of the components and the process by which they are assembled.

 China will quickly recover more than they risk from this deal with Europe, in the form of intellectual property ownership that they will be enabled to acquire. Since the appointment of Thatcher as Prime Minister, Britain has sold off intellectual property to foreign firms on a massive scale to make a small contribution to the current balance of payments of the year. That immeasurable loss can only be compensated by hard work over many years, and by austerity in living standards to make the necessary funds available for investment in the new technologies that Britain has continued to invent: and has largely sold off in its infant stages over the past thirty years.

And it is going to be very hard to compel people to accept austerity when they hear that employeees' average salary rise in the past year was 2.5%, while Chief Executives' 'compensation' has increased by 45% [on million-pound-plus packages]. Any simple sense of fairness must be repelled by such data.

 If they were capable of profound thought and clear communication skills, the Saint Paul's 'protesters' would have pointed to the inequality of incomes across the whole of society rather than keeping to the well-worn attacks on bankers and the stock exchange. But they clearly have no such capabilities. They should be moved on pronto.

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