I Didn’t Start The Fire
Do you think we should avoid politics when talking about business?
The view that we should was expressed to me in a couple of conversations this week. I disagree. I think it is naive to think you can avoid politics and it unhelpful. It’s a denial of reality because politics pervades everything we do, not just in business but in life.
There is merit in avoiding party politics because that drives the ‘taking of sides’ and division and closes down debate. However, I don’t think it’s too hard to figure out which parties I am likely to support because they align with my beliefs, and I am OK with that. If you tried to avoid that sort of association, you’d end up standing for nothing (in which case, you’ll stand for anything).
But politics shapes the business environment we operate in. That’s why large multi-nationals spend so much on lobbying, they want to shape it to their advantage. The markets we operate in are created and policed by governments, and are determined by the politics of the governments (whatever ‘free marketeers’ may claim, there are no free markets, everything is regulated to a degree and that’s a good thing for society. The irony is that ‘free market’ governments often impose more control and regulation to tighten their control).
We wouldn’t think we could talk about business without discussing economics but, in doing so, we also bring in politics. It’s one of the great confidence tricks of the late 20th Century that ‘Political Economics’ had the politics taken out of its title and was presented as a science, somehow separate from and more more rational than politics. The late stage capitalist system we see today is presented to us as an inevitability, the outcome of the invisible hand of the market. In fact, it is an intensely political creation that embodies a worldview, the apotheosis of which is Peter Thiel’s contention that democracy and capitalism are not compatible.
So no, I don’t think we should avoid politics when discussing business. It’s fundamental to how business operates. To ignore it is to render the discussion meaningless and I think that’s dangerous.
I offer as evidence as recent statement by Jamie Dimon, CEO of Chase Bank. “I wish we had the spirit that we were all here to work together, but it seems we just got nastier somehow.” He presents this as a neutral statement, a plea for harmony.
Not political? You have to ask the question why things have got nastier, why people no longer feel we are ‘all here to work together’. Maybe it’s because Dimon and the rest of the ‘Masters of the Universe’ have stomped all over everything, promoting the interests of capital and shareholders to the detriment of everyone else, all for their own considerable gain. Maybe it’s because they have pushed and supported an economic and political system that has seen accelerating rates of inequality and historically large gaps between the ‘haves’ (of which he is very much one) and the ‘have nots’.
This is gaslighting, it’s a political sleight of hand. And it’s more than ‘just business’.
Money For Nothing
In the spirit-sapping, mind-crushing festival of nonsense that is the Conservative Leadership Election here in the UK, new levels of gruesomeness are being exposed each day. Whoever wins, if they do half of what they’ve promised in this campaign, UK business is in for a rocky ride.
This week’s ‘bombshell’ is the leaking of a recording of Liz Truss blaming the low levels of UK productivity on the ‘lack of graft’ by UK workers. This is an extension of the statement in a book she co-authored (she refers to it in the recording) that contained the statement “British workers are the worst idlers in the world’’. I think it’s fair to say that she did not ‘mis-speak’ and she was not taken ‘out of context’, this is what she believes.
Of course, it’s odious and contemptuous of much of the electorate she hopes to be asking to vote for her in the next couple of years. It’s also profoundly wrong and doesn’t stand up to a moment’s analysis.
Quite by chance, I recently gave a talk to the ‘Work Pirates’ community and I was asked to frame it around the issue of productivity. So I did a quick google search and what I found was a recent report (and speech) on the very topic by the Governor of the Bank of England. This is what I learnt.
The productivity gap between the UK and our close competitors is real, it’s about 10% and it’s getting worse. The saying goes that ‘what the British workers does by Friday, the French worker has done by Thursday lunchtime’. However, the problem is not evenly distributed.
The top echelon of companies, the ones who compete globally, are just as productive as their rivals. Indeed, the UK has a handful of world-leading companies (well, until we allow them all to get bought up in highly-leveraged buyouts by foreign companies). However, the majority of UK businesses are way behind and falling further and further.
So how come some companies are doing well but most are struggling? Is it just that the top ones skim off the talent and the rest are left with the ‘idlers’?
Well, if that’s the case, why do UK workers have the longest hours in Europe? That’s not what you’d expect from ‘idlers’ is it?
Productivity levels are the result of a number of factors, of which the attitudes of workers are but one. Here’s some others:
Business Investment (as share of GDP - UK lowest in G7)
Research and Development (UK 1.7% p.a. vs OECD average of 3.1% p.a.)
Training and skills development (massively cutback due to ‘austerity’)
Management practices (I’m not even going there - we’d be here for weeks)
To quote Larry Elliott in The Guardian today “Britain’s economic model is based on an abundance of cheap labour and underinvestment in up to date capital equipment and product innovation”
Put simply, the pursuit of short-term profits has meant employing more labour rather than increasing productivity through investment.
Conservative governments have enabled this by deregulating the labour market, reducing union power and reducing tax on business profits. This is a manifestation of their political philosophy and their neoliberal dogma.
Now tell me how you have discussion about business WITHOUT talking about politics?
And to finish the original point here, it’s not the workers that are at fault but the management and the owners. The productivity shortfall is not due to idle workers, it is due to the failure of the government’s own economic policy and its underlying ideology. But then, I wouldn’t expect Truss to say that, she’d be biting the hand that feeds her.
Lazy Bones
There are many other examples of how politics is impacting business, often in negative ways. BREXIT, a solely political project with no economic or social merit, is an obvious one, inflicting a 4% reduction in GDP and significant drop in trade, as well as additional costs and friction in the process of actually doing business in the UK. The Russian invasion of Ukraine is another obvious one, having global and strategic impacts on countries, populations and business.
But let’s step back from the geopolitical stage and look at something nearer to home, the exhortation to ‘return to the office’ (or, as it is sometimes more insultingly framed, ‘return to work’). I’ve written in earlier editions of this missive about the calls from government and ‘leading’ commentators urging us back into city centre office ‘for the sake of Pret’ or ‘to save the individual coffee shops’ or some such fatuous reason.
The haunted pencil that is Jacob Rees-Mogg is still insisting civil servants get back to their desks, even though there aren’t enough desks for them all to get back to. We all know the real reason is that property owners, who are co-incidentally big backers of the Conservative party, are fearful of a collapse in commercial property values and the loss of their easy revenue streams if workers stay away from offices.
Here’s the thing, though. These guys are big believers in ‘the market’, right? And surely, the changes we are seeing in the property market are just the effects of new work patterns. And those new work patterns are being adopted because COVID showed they lead to improved productivity, reduced costs, happier workforces and more profitability. That’s all supposed to be good, isn’t it?
And as organisations reduce their office space, city centre property prices will fall. That will draw new buyers into the market and free up resources that can be used by new businesses, and so that a host of new opportunities will emerge. (Shumpeter’s creative destruction).
So all this turmoil and change is just the operation of the market. It’s capitalism renewing itself in response to a changed environment.
You’d think they’d all be utterly delighted, doing cartwheels down the empty streets of the City of London at this explosion of entrepreneurial energy and possibility and the operation of red-clawed, full-throated capitalism on their very doorstep.
Yet they seem somewhat resistant. They want to drag us back, to keep us locked in the past as if preserved in aspic. How strange.
Of course, they’d have to make some changes. They’d have to change their business models, innovate a bit, adjust their investments, take a few risks. Maybe that’s the issue. It’s a problem with their attitude. They’re just far too idle.
Feelin’ Good
My final word on this (for this week, anyway). A standard tool in strategic management is a PEST analysis. You’ll never guess what the P stands for.
But yeah, you steer clear of politics and just stick to business. Good luck with that.
And with that, I’m off for another week of R&R, so the next missive will be in September.
Missing you already. 😎🍹⛱