Economy and state

SIR – Allister Heath’s attack on the Government (Comment, April 19) presupposes that the best economic performance comes in countries where the state plays little role in the economy.

The US and Germany have consistently outperformed the UK economically for a century (leaving aside post-wartime reconstruction). Mr Heath deplores “intervening in takeover battles”. Yet takeover barriers have always been higher in America and Germany.

Unregulated big business tends to oligopoly. As Adam Smith put it: “People of the same trade seldom meet together… but the conversation ends in a conspiracy against the public, or in some contrivance to raise price.”

In America, powerful measures started with the Sherman Act of 1890. In Germany, the restraints are more complex and cultural, but are rooted in a much lower proportion of publicly listed ownership. In contrast, Britain’s takeover regulations, watered down still further by the EU, are toothless.

In America and Germany, strategic infrastructure, such as ports and airports, is publicly owned, as in Switzerland and Singapore, which Mr Heath praises. Crucially, all these countries have been much cannier than us in getting the private sector and public sector to work together. For example, our embassies and trade organisations are improving, against tight resource constraints, but are still behind their US and German peers at helping to win exports. The latter identify and back winners.

In 2008, electorates around the developed world witnessed bankers being bailed out by frightened governments, while their victims went bust, corroding confidence in political and economic structures. This Government is right to seek a more partnered approach with industry, and to move against oligopolistic – and tax-avoiding – tendencies. Sir Julian Brazier

Canterbury, Kent