This morning's Wall Street Journal has a front page article (subscription required) by Marcus Walker on takeovers in Germany:
"The hardball methods of American and British buyout firms are intensifying an angry German backlash against free-market capitalism. At the core of the fight is an urgent question: What is the best remedy for the deep funk in Europe's largest economy?"
The rising angst is due to the buyouts taking place among Germany's mid-size firms, known as Mittelstand, traditionally family-owned businesses and employers of 70% of the country's workforce. Many of these family firms are selling out to interests from the US and UK. As stated in my post concerning "Anglo-Saxon" capitalism (the WSJ article uses the term, "American-style capitalism"), managements in the US, UK, Canada, Ireland, Australia and New Zealand tend to emphasize the maximization of profits. This often means restructuring a newly bought firm. Doing what is necessary to boost efficiency and slash costs -- including laying off employees.
Many Germans don't like this trend. In fact, the WSJ article reports:
"But increasingly, ordinary Germans blame the economic problems on business owners and managers pursuing profit at the expense of the German dream of a more humane capitalism."
Humane capitalism? What's so humane about an economic model with chronic double-digit unemployment? If I was Larry Kudlow, I'd no doubt bring up economist Joseph Schumpeter's "Creative Destruction" -- the fact that capitalism is by definition always changing and can never be stationary. I'm not in his league, so I'll just say that the toothpaste is out of the globalism tube and it ain't getting put back in.
You'll remember that 3i Group PLC is a major player in buyouts of small-to-medium sized firms across the European continent. I don't know offhand how involved they are in Germany, and the WSJ article doesn't mention them by name. But we can rest assured they're taking full advantage of the continent's economic integration.
So our German friends, and those across the continent, need to get in the game. Yes, it can be messy. I've been let go from a job before as have many people I know and care about. It's no fun. Yet in the end, free-market capitalism is the best game in town. And you gotta play ball in this world. Hard or otherwise.