Left Outside

One reason the EU doesn’t deserve the Nobel Peace Prize

Unlike some, I think the EU winning the Nobel Peace Prize is a good thing. Europe was the most warlike place on earth for millennia. I have trouble thinking of somewhere more incessantly violent than pre-1945 Europe.

The Americas, Africa and Australia were both too sparsely populated for properly sustained warfare of the European variety. They also didn’t have the technology to produce viable killing machines. South Asia and East Asia, e.g. the Muhgals, Han etc. settled into imperial systems in which a hegemon acted arbitrarily violently, but which was never as dangerous as Europe”s state of war.

Things got a bit peaceful from 1815-1914, but once Europe had run out of non-Europeans to kill they went back for a hundred-year-giant-slaughter-anniversary bash which they ran, with intermission, from for about the next 30 years.

But, suddenly, since 1945, we haven’t really killed each other that much – apart from the Russians, but we’ve always thought they were a bit odd. In my view somebody needed an award, the EU is good enough. Plus, it has at least been pretending that maintaining the peace is what it was trying to do.

However, a couple of days before EU was awarded the prize, they did something which made the world a marginally more warlike place. Europe killed the BAE/EADS merger. BAE is synonymous with the British military-industrial complex, EADS is the same for continental Europe. A merger would have created one of the largest producers of military hardware in the world.

By killing the deal Europe has managed to prevent the management of BAE and EADS from rushing headlong into a pointless merger and stopped them from destroying millions of pounds worth of weaponised wealth.

Mergers have a terrible history. Rather than enabling synergies and economies of scale or scope, mergers often leave everybody worse off than if the firms had remained separate. The juries out on why mergers so often go wrong; it could be managerial hubris; it could be the winner’s curse wherein the winner is the person who bids ever so slightly too high; it could be something more Hayekian, in that people underestimate the complexity of the larger company.

In any case, I thought it was likely a BAE/EADS merger was a value destroying proposition. Both BAE and EADS are tightly linked to their sponsor states. A merged company would have had to answer to the British, the French and the Germans. Can you imagine them getting anything done if you had those three bosses? It would be a recipe for disaster, but disaster in the “killing things” supply chain is a net plus for the world, so I thought it odd to see these two stories come out at about the same time.

Oh, and why would two medium firms merge into a large one if it is such a bad idea? Well, its a bad idea for the owners, but for the management

Filed under: Economics, Politics, , , , , , , ,

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