Tuesday, February 01, 2005

What Neelie did next

I take it, everyone remembers Neelie Kroes, the Competition Commissar, she who got into trouble over her many positions on various corporate boards. Well, having divested herself from all those positions, she has made her first pronouncement.

We have always argued on this blog that the idea of Neelie being business friendly is rather a joke. Sitting on corporate boards and amassing directorships does not prove you understand business or entrepreneurship.

How right we were. Ms Kroes has announced that state aid has to be directed away from “lame duck” national giants and towards small, dynamic, competitive firms. In fact, state aid should focus “on risk capital, research and innovation and on small- and medium-sized companies”.

Somebody should tell Ms Kroes that a small, dynmaic, entrepreneurial company does not need state aid. That is the definition of a successful business. (Someone should tell British farmers that as well, but that’s another story.)

In fact, putting the straitjacket of state aid and all the accompanying paperwork; redirecting their attention away from productivity and the market towards the management of bureaucracy and financial hand-outs is the surest way of making them less successful and less competitive.

Her main complaint is that rich countries are using state aid to help their own poorer areas and to attract investment there. Otherwise, say these countries, protesting against Ms Kroes’s plans, investment will go towards the new member states, where labour is cheaper.

Of course, some thought could be given to cutting taxes and regulations and thus making labour cheaper here – after all it is not the wages that make life for investors difficult but all the accompanying paraphernalia. But neither Ms Kroes, nor the various ministers have thought of that. All they can talk about is how to redivide the cake of state aid. No wonder Europe is falling behind economically.

By the way, what happened to the new dynamic Commission? It seems to be behaving just like the old, corporatist, redistributionist one.

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