Marmite Means Marmite

The Order Order blog is great fun if, like me, you enjoy scurrilous gossip.  It is well written and very well informed about the shenanigans behind British politics.  It is run by a guy called Paul Staines under the name Guido Fawkes.  It is quite a suitable name.  The original Guido was a violent counter revolutionary devoted to overthrowing the Reformation backing English parliament.  The Order Order blog has a rather similar political line basically being anti nearly everything.  It's a good line to take for a satyrical take on things because finding fault and exposing folly is sight more entertaining than proposing solutions and praising virtue.


When Order Order started it was also quite a good position to take.  The Blair government was the establishment so attacking it from the right was logical.  The Coalition and the Cameron governments could also plausibly by characterised as centrist.  This was especially true of the great cause of the disgruntled, the EU.  The EU was the perfect enemy and was routinely mocked by the Order Order crew.

But that all changed this summer.   We now have a distinctly right wing Conservative government and we are leaving the EU.  This leaves our friend Guido in the position of defending a status quo that he has long argued for.  This isn't an easy transition.  It is one that could be done, but it takes work.  Now that the consequences of Brexit are beginning to emerge we can watch and see how he copes.

One of the first big Brexit stories was about, of all things, Marmite.  Marmite is owned by multinational FMCG manufacturer Unilever.  As it happens it is produced and consumed largely in the UK.  It really hasn't caught on abroad.  But it is an unusual member of Unilever's portfolio of products, most of which are traded globally and made wherever it suits the company's needs.  That is the way modern global capitalism works.  There is an economic principle worked out by Ricardo in 1817 called the law of Comparative Advantage which points out that it makes sense to concentrate not on what is profitable, but on that which can be done more efficiently than anyone else.  It might make sense to make Marmite close to the breweries that provide its feedstock, but in general you make the stuff wherever it is cheapest.  So to take another Unilver brand, Dove.  The soap might be made in China, the aerosols in Britain and the shower gel in Poland.

All these things will end up located in the optimum place.  Indeed Patrick Minford, a professor of economics, has followed this to its logical conclusion and suggested that Britain will ultimately deindustrialise altogether and concentrate on providing financial and other services.   His is an extreme view but that is what economists would probably identify as the direction of travel.

So this week  we got a tussle between Unilever and Tesco over who was going to absorb the costs of a falling pound.  With Sterling about 15% down from its value prior to Brexit, Tesco's takings no longer buy as much stock on the world market as they used to.  They can only rebuild their margin by squeezing suppliers or raising prices.  Not unnaturally they prefer the first option. Equally naturally, the suppliers including Unilever will resist.  As part of their battle they delisted a load of Unilever brands from their website, including the iconic savoury spread that you either love or hate.

This was obviously a situation ripe for humour, which Twitter in particular supplied.  However our satirical friend did not join in.  Instead he tried to turn it into a political issue using the usual approach of smearing the enemy.  So Unilever are accused of profiteering - even though even the most superficial analysis of the situation indicated that Unilever were in fact simply trying to adjust their business to a new situation.

It would be possible to come up with some arguments that show that this is in fact a good example of market forces working well to accommodate a changing world.  Yes the price of Marmite will go up in the short run, but in the long run the greater efficiency of the supply chain will work to cancel this out and we'll end up better off.  I am sure there will be an article along those lines in the Telegraph shortly.  Brexit may have been oversold by people who campaigned for it, but that doesn't mean you can't still make a case for it.  But you will be making a status quo case for carrying on in the route we are now taking.  You've got to be defensive.  And you've got to be prepared to own the downside.  That really isn't conducive to a gossipy approach.

Guido's intervention struck me as nasty, spiteful and small minded.   That's fine.  That's why I read him.  But it was also very badly informed and showed a complete lack of understanding of the way the world works.  That is fatal.  If you come across as ignorant you can still be funny, but only unconsciously.   Guido Fawkes is now a stupid supporter of the establishment.  I wonder how that will work for him.