It seems as if almost daily the malign consequences of the New Public Management (NPM) that has informed public sector reform in many countries for the last 30 years are being exposed. In the UK, one recent high profile example is the Francis report into the failings of the Mid-Staffordshire NHS Foundation Trust which can be read as an indictment of the kind of ‘tick box’ procedural managerialism inaugurated by NPM. But NPM, with its proceduralism, audits and managerial controls has increasingly morphed into something else, a more post-bureaucratic understanding of public management. Here, the emphasis is less on procedures and audits and more on freeing inspirational leaders to innovate and enact ‘radical change’.
Of course these things are linked. NPM always had several meanings, including the relentless praise of ‘enterprise’ in public services. Post-bureaucracy is a similarly flexible term, and the two fit together in all sorts of ways, as this article by Leslie Budd of the Open University explains. Still, the post-bureaucratic accent of contemporary public management has a certain distinctiveness in part as a reaction to what was, ironically, the explosion of ‘red tape’ associated with the supposedly anti-bureaucratic NPM.
I talk at length about post-bureaucracy in the book, especially in chapter 4, and a recent case has called to mind one of the points made there. I suggest (p. 86) that the embrace of post-bureaucracy carries with it huge risks because, freed of all those irritating rules and procedures it is just as likely that managers will act with recklessness and little or nothing will curtail them. In fact, I might have gone further, and pointed out that corruption and fraud, as well as recklessness, are made more likely in such situations, as Cambridge economist Ha-Joon Chang argues.
The case that reminded me of this was that of the head teacher of an ‘academy school’ in the UK who has resigned following multiple accusations of financial impropriety, including allegations about the way she employed family members. The allegations are particularly interesting if we consider how Weberian bureaucracy is in part to do with the avoidance of nepotism, of corruption and, indeed, the links between the two. This was a head teacher who had been lionized by successive politicians as the epitome of what the new style public servants should be: dynamic, innovative leaders.
Now the allegations are just that – there have been no criminal proceedings – but they fit into a wider sense of a managerial or leadership cadre in both the private and public sectors which is out of control, treating their organizations as their own individual fiefdoms rather than things for which they have a duty of stewardship. I have myself seen such behaviour, for it is as prevalent in universities as anywhere else.
The danger is that such episodes are seen as a series of individual scandals or, if put together, a sign of some inevitable decline in moral standards and the probity of public life feeding what is beginning to be seen as a crisis of trust in leadership. But they are neither: they are systemically linked by a particular approach, or set of approaches, to the management of organizations. It is in part, at least in origin, a consequence of the new capitalism I discuss in the book, of the neo-liberal revolution that has literally or metaphorically marketised so many areas of economic and social life. But it is more complex than that, and is more linked to the ideas about ‘neo-mercantilism’ I talked about in my post of January 9 2013. For what we have is a new managerial class which has little to do with the ‘market’ in any recognizable sense and is closer to a kind of baronial oligarchy in which there is little organizational constraint on how its members may act. In these circumstances, the only constraints become the extra-organizational ones of the law, at which point they become publically known scandals. But their origin is not some mysterious, and still less inevitable, decline in moral virtue. It lies in the dismantling of organizational controls under the chimerical doctrine of post-bureaucratisation.
Friday, 28 June 2013
Wednesday, 12 June 2013
Our new insecurity
Last week I was interviewed for a new ten-part BBC Radio 4 series about the changing nature of office life (I don’t have a link for this, but the first part will be broadcast on 22nd July at 13.45 GMT+1). One of the questions I was asked was about the famous 1950s book The Organization Man by W.H. Whyte. It was a book which spawned a phrase – ‘organization man’ – and which was a kind of nostalgic lament for a time before corporate hierarchies, a lament for individualism.
But, as I said in the interview, from a present day perspective 1950s organization man is something about which we might now feel nostalgic. The basic deal of the post-war settlement was one of security. In exchange for a perhaps rather stultifying work life, organization man was offered lifetime employment in a company rooted in his community and which provided a pension and a place in the world. It was the workplace equivalent of a Norman Rockwell painting.
The consequences of lost security were born home on me this week by two things, one personal, the other impersonal. Personally, I talked to a friend in Denmark who had lost his management job and feared for what would happen to him and his family now. Yes, that is in Denmark, one of the homelands of the social democratic settlement – but he was scared. Impersonally, I saw the report from the UK Institute of Fiscal Studies which showed how real living standards in the UK have fallen dramatically in the last five years, since the financial crisis.
What is going on in Europe is an extraordinary experiment of a sort that has never occurred before, and work organizations are at its heart. The historic compromise between capital, labour and the state is being eviscerated. The most obvious effects of that are on the unskilled working class, the disabled and the unemployable, with their benefits being drastically cut. But what is now emerging is that what were hitherto the secure middle class are also seeing huge reductions in their economic position and their security. Moreover, the previous expectation that their children would be better off than them is being confounded.
This is the inevitable consequence of globalized neo-liberalism, which ultimately levels down wages and conditions of employment to the lowest possible level. Although in Europe its electoral support was predicated upon the votes of the middle-class, its agenda was always about the interests of a tiny handful of individuals and corporations. There’s nothing new about societies being run for and by small elites, of course. But this is the first time in human history where a settled middle-class, underpinned by a welfare state, is being so drastically damaged (except, perhaps, for the 1920s German inflation – and we know where that led – and, anyway, there was no comparable welfare state). There's an excellent article on this. These are people who vote, who pay taxes, who support mainstream political parties, and who have an expectation that ‘the system’ will take care of them.
The consequences are tragic for individuals, but very interesting for political commentators. Europe in the 20th Century responded to Communism by differentiating the potentially revolutionary working class from the incorporated middle-class. The working class now have nowhere to go, and certainly nowhere revolutionary. The middle-class are being disincorporated – first by corporations, now by the State. The fallout from this will determine how we in Europe live in the coming decades.
It won't be pretty.
But, as I said in the interview, from a present day perspective 1950s organization man is something about which we might now feel nostalgic. The basic deal of the post-war settlement was one of security. In exchange for a perhaps rather stultifying work life, organization man was offered lifetime employment in a company rooted in his community and which provided a pension and a place in the world. It was the workplace equivalent of a Norman Rockwell painting.
The consequences of lost security were born home on me this week by two things, one personal, the other impersonal. Personally, I talked to a friend in Denmark who had lost his management job and feared for what would happen to him and his family now. Yes, that is in Denmark, one of the homelands of the social democratic settlement – but he was scared. Impersonally, I saw the report from the UK Institute of Fiscal Studies which showed how real living standards in the UK have fallen dramatically in the last five years, since the financial crisis.
What is going on in Europe is an extraordinary experiment of a sort that has never occurred before, and work organizations are at its heart. The historic compromise between capital, labour and the state is being eviscerated. The most obvious effects of that are on the unskilled working class, the disabled and the unemployable, with their benefits being drastically cut. But what is now emerging is that what were hitherto the secure middle class are also seeing huge reductions in their economic position and their security. Moreover, the previous expectation that their children would be better off than them is being confounded.
This is the inevitable consequence of globalized neo-liberalism, which ultimately levels down wages and conditions of employment to the lowest possible level. Although in Europe its electoral support was predicated upon the votes of the middle-class, its agenda was always about the interests of a tiny handful of individuals and corporations. There’s nothing new about societies being run for and by small elites, of course. But this is the first time in human history where a settled middle-class, underpinned by a welfare state, is being so drastically damaged (except, perhaps, for the 1920s German inflation – and we know where that led – and, anyway, there was no comparable welfare state). There's an excellent article on this. These are people who vote, who pay taxes, who support mainstream political parties, and who have an expectation that ‘the system’ will take care of them.
The consequences are tragic for individuals, but very interesting for political commentators. Europe in the 20th Century responded to Communism by differentiating the potentially revolutionary working class from the incorporated middle-class. The working class now have nowhere to go, and certainly nowhere revolutionary. The middle-class are being disincorporated – first by corporations, now by the State. The fallout from this will determine how we in Europe live in the coming decades.
It won't be pretty.
Friday, 12 April 2013
Thatcher then and now
As I discuss in the book (pp.108-109), it’s impossible to understand contemporary organizations without knowing something about neo-liberalism and, within the history of neo-liberalism Margaret Thatcher and the UK governments in the 1980s occupy a pivotal place. So it is not surprising that Thatcher’s death this week has provoked a massive debate and attracted attention not just in the UK but around the world.
In the few days since her death, so much has been written about her legacy that it seems almost pointless to say more. The leitmotif of the coverage has been to highlight has she was and still is a ‘divisive’ figure, yet even that statement has proved divisive, with Thatcher’s supporters saying that to describe her in this way is to denigrate her. The Right seems to want to claim Thatcher as a kind of national icon and hero, but for many British people she will never be that, and attempts to pretend otherwise are nakedly ideological.
For me, as for many, Thatcher was a hate-figure in the 1980s and, at the time, I would have imagined that when she died I would be celebrating in the way that some in Britain have. In the event, I don’t feel like doing so and I think this is because it is really Thatcherism which I loathe and that is far from being dead. In retrospect, as with all political phenomena, the role of individuals looks smaller than it did at the time. Thatcher rode a particular tide that developed from the 1970s and which occurred not just in the UK. She may have inflected it in particular ways, she may have symbolised it, but she did not create it and, had she never been born, I suspect that similar things would have happened under someone else’s leadership. That said, even now I feel sickened by the recollection of her description of striking miners and trade unionists in general as “the enemy within”, a term connoting those who sympathised with and collaborated with the Nazis.
What is clear is that in the UK and elsewhere we continue to live with the effects of Thatcherism. The British Left has never recovered from it and continues, at least in the Labour Party, to accept the broad terms of her analysis of the primacy of markets, in particular. The ‘New’ in New Labour meant exactly this, and the New Labour governments of 1997-2010 enthusiastically followed through on her analysis with the wide scale subcontracting of public services to private providers, a process not continuing under the Coalition government.
More broadly, it is now clear that the global financial crisis and consequent economic crisis since 2007 is rooted in the policy decisions of the 1980s and here the Thatcherite deregulation of financial markets was of huge significance not just for the UK but for the world. Whilst the political right is justified in saying that Thatcherism was transformational, what they do not yet recognize is that it failed. It failed in more particular ways, too. Thatcher’s vision of the future was rooted in her ideas about the past, seeking a return to what she called the ‘Victorian Values’ of thrift, hard work and enterprise. It was a highly romanticised and partial view of Victorianism, of course, but the irony is that what she actually created, particularly through financial deregulation, was the opposite. The economy she left was predicated upon massive indebtedness as a credit-fuelled, hedonistic consumer boom ran out of control.
In some basic way, Thatcher failed to understand how capitalist economies actually work, and especially the role of the state within them. Both de-industrialization and industrial renewal requite state management and investment. That could have been achieved in Britain in the 1980s when massive North Sea oil revenues could have been used to manage a transition from the old industries to the new. Instead, they were squandered on tax cuts and paying for the mass unemployment that Thatcherism created. Her belief – still held by current Tories – that the private sector would spontaneously regenerate the economy proved quite illusory. That is not surprising as, outside of the pages of an introductory economics textbook, the state and private capital are symbiotic. Thatcher simply saw the state as parasitic. That, coupled with her messianic hatred of trade unionism, laid waste to large parts of Britain outside the South-East of England.
Beyond its economic legacy, Thatcherism did a pervasive damage to almost all forms of collective solidarity, both as an idea and in terms of institutions. Although part of the ideological narrative of Thatcherism was and is that it rescued a failing country from its 1970s decline, there is actually plenty of evidence that Britain was more prosperous, more cohesive and happier then than now. Moreover, as Ken Loach’s recent film The Spirit of 45 suggests, Thatcherism eviscerated much of the collective solidarity than re-built post-war Britain.
Anyway, it would be possible to write endlessly on this. And that is perhaps the most important point: all of this still matters, because it is about what is happening now, not just or even mainly about what happened then. Next week there will be a huge ceremonial funeral, ostensibly carrying a message that Thatcher was a great national figure who stands above ideology. But the final irony would be to imagine that the funeral of this most ideologically motivated figure is, or could be, anything but ideological. The funeral will be part of the political right’s ongoing attempt to insist that, in one of Thatcher’s most famous phrases, ‘there is no alternative’. She, and they, are wrong.
In the few days since her death, so much has been written about her legacy that it seems almost pointless to say more. The leitmotif of the coverage has been to highlight has she was and still is a ‘divisive’ figure, yet even that statement has proved divisive, with Thatcher’s supporters saying that to describe her in this way is to denigrate her. The Right seems to want to claim Thatcher as a kind of national icon and hero, but for many British people she will never be that, and attempts to pretend otherwise are nakedly ideological.
For me, as for many, Thatcher was a hate-figure in the 1980s and, at the time, I would have imagined that when she died I would be celebrating in the way that some in Britain have. In the event, I don’t feel like doing so and I think this is because it is really Thatcherism which I loathe and that is far from being dead. In retrospect, as with all political phenomena, the role of individuals looks smaller than it did at the time. Thatcher rode a particular tide that developed from the 1970s and which occurred not just in the UK. She may have inflected it in particular ways, she may have symbolised it, but she did not create it and, had she never been born, I suspect that similar things would have happened under someone else’s leadership. That said, even now I feel sickened by the recollection of her description of striking miners and trade unionists in general as “the enemy within”, a term connoting those who sympathised with and collaborated with the Nazis.
What is clear is that in the UK and elsewhere we continue to live with the effects of Thatcherism. The British Left has never recovered from it and continues, at least in the Labour Party, to accept the broad terms of her analysis of the primacy of markets, in particular. The ‘New’ in New Labour meant exactly this, and the New Labour governments of 1997-2010 enthusiastically followed through on her analysis with the wide scale subcontracting of public services to private providers, a process not continuing under the Coalition government.
More broadly, it is now clear that the global financial crisis and consequent economic crisis since 2007 is rooted in the policy decisions of the 1980s and here the Thatcherite deregulation of financial markets was of huge significance not just for the UK but for the world. Whilst the political right is justified in saying that Thatcherism was transformational, what they do not yet recognize is that it failed. It failed in more particular ways, too. Thatcher’s vision of the future was rooted in her ideas about the past, seeking a return to what she called the ‘Victorian Values’ of thrift, hard work and enterprise. It was a highly romanticised and partial view of Victorianism, of course, but the irony is that what she actually created, particularly through financial deregulation, was the opposite. The economy she left was predicated upon massive indebtedness as a credit-fuelled, hedonistic consumer boom ran out of control.
In some basic way, Thatcher failed to understand how capitalist economies actually work, and especially the role of the state within them. Both de-industrialization and industrial renewal requite state management and investment. That could have been achieved in Britain in the 1980s when massive North Sea oil revenues could have been used to manage a transition from the old industries to the new. Instead, they were squandered on tax cuts and paying for the mass unemployment that Thatcherism created. Her belief – still held by current Tories – that the private sector would spontaneously regenerate the economy proved quite illusory. That is not surprising as, outside of the pages of an introductory economics textbook, the state and private capital are symbiotic. Thatcher simply saw the state as parasitic. That, coupled with her messianic hatred of trade unionism, laid waste to large parts of Britain outside the South-East of England.
Beyond its economic legacy, Thatcherism did a pervasive damage to almost all forms of collective solidarity, both as an idea and in terms of institutions. Although part of the ideological narrative of Thatcherism was and is that it rescued a failing country from its 1970s decline, there is actually plenty of evidence that Britain was more prosperous, more cohesive and happier then than now. Moreover, as Ken Loach’s recent film The Spirit of 45 suggests, Thatcherism eviscerated much of the collective solidarity than re-built post-war Britain.
Anyway, it would be possible to write endlessly on this. And that is perhaps the most important point: all of this still matters, because it is about what is happening now, not just or even mainly about what happened then. Next week there will be a huge ceremonial funeral, ostensibly carrying a message that Thatcher was a great national figure who stands above ideology. But the final irony would be to imagine that the funeral of this most ideologically motivated figure is, or could be, anything but ideological. The funeral will be part of the political right’s ongoing attempt to insist that, in one of Thatcher’s most famous phrases, ‘there is no alternative’. She, and they, are wrong.
Thursday, 28 March 2013
Thinking about immigration
A comment on my last post – yay, a comment! thank you! – reminds me that I was going to come back to the issue of immigration. It’s a good time to do so from a UK perspective as David Cameron, the British Prime Minister, has just made a speech promising to ‘get tough’ on immigration. That is of no great interest in itself since it’s timing is mainly motivated by the rise of the anti-immigration, anti-EU UKIP Party, whilst its content is mainly a re-assertion of existing policy (e.g. restrictions on immigrants’ access to benefits) or a response to virtually non-existent problems (e.g. ‘health tourism’). Its wider significance is that, unsurprisingly in a time of what is, in effect, if not in formal definition, a global economic depression anti-immigration sentiment has risen. In the UK this is still relatively benign compared with, say, Greece, where the growth of the neo-fascist Golden Dawn party has seen increasing levels of violence against immigrants.
It’s worth recalling why this topic is relevant to the study of organizations and the answer, of course, is that most migration is connected with movements of labour. It is hardly surprising, then, that the business community is, generally, in favour of immigration either as a way of increasing the pool of labour from which it can choose skilled workers or as a way of depressing wages (although the effects of immigration of wage rates is not clear cut). In this way it leads to schisms in both the traditional right and the traditional left. For the right, it opens up the contradiction between social traditionalism and free-market economics. For the left, the contradiction between internationalism and the protection of national working-class constituencies. Thus, in the UK, the Conservative policy of an immigration cap has been vociferously criticised by the City of London. On the other hand, the previous Labour government policy of not restricting immigration from new East European entrants to the EU became an issue in the last election, symbolised by the ‘bigot gate’ controversy.
In some ways, there is nothing new in all this. Although it is often said by opponents of immigration that it used to be fine but has now become ‘uncontrolled’ and is having adverse consequences for employment, social cohesion, housing, overcrowding and so on, I can recall in the 1970s exactly the same kinds of arguments being made. In other words, in precisely the period that is now seen as a time of immigration not being a problem it was, in fact, constituted as a problem. The lesson, I think, is that – leaving aside the out and out racists – problems of one sort (e.g. lack of housing) are ascribed to something else: immigration. In fact, there is no more reason why population growth by immigration causes any more problems that population growth by indigenous fertility. What would actually be a serious problem for Western countries, given historically declining fertility rates and an ageing population, would be a lack of immigration.
What is bizarre is that a much more obvious source of complaint would be the migration of capital, both in the sense of the globalized ownership of what were hitherto national or even regional companies; and the propensity of such companies to shift production and employment around the globe. For example, in the UK, it has just been announced that Sea and Air Rescue (one of whose employees is no less than Prince William, the heir to the British throne) is to be sub-contracted to a US company. Unlike labour migration, capital migration has had very definite effects upon the employment prospects of Europeans and yet is commonly regarded as a simply ‘natural’ event, rather than an outcome of policy. Any criticism of that policy is derided as protectionism. By contrast, immigration is commonly regarded as the ‘unnatural’ consequence of policy decisions and defence of those decisions is derided as being ‘elitist’, even treasonous.
The failure of mainstream politics is not, then, one of not ‘listening’ to the ‘legitimate concerns’ of the population: it is of failing to spell out the meaning and consequences of the globalization that they champion – the Right through dishonesty, the Left through cowardice. Into the space they have left is inserted a populism which is at best platitudinous and at worst violent.
It’s worth recalling why this topic is relevant to the study of organizations and the answer, of course, is that most migration is connected with movements of labour. It is hardly surprising, then, that the business community is, generally, in favour of immigration either as a way of increasing the pool of labour from which it can choose skilled workers or as a way of depressing wages (although the effects of immigration of wage rates is not clear cut). In this way it leads to schisms in both the traditional right and the traditional left. For the right, it opens up the contradiction between social traditionalism and free-market economics. For the left, the contradiction between internationalism and the protection of national working-class constituencies. Thus, in the UK, the Conservative policy of an immigration cap has been vociferously criticised by the City of London. On the other hand, the previous Labour government policy of not restricting immigration from new East European entrants to the EU became an issue in the last election, symbolised by the ‘bigot gate’ controversy.
In some ways, there is nothing new in all this. Although it is often said by opponents of immigration that it used to be fine but has now become ‘uncontrolled’ and is having adverse consequences for employment, social cohesion, housing, overcrowding and so on, I can recall in the 1970s exactly the same kinds of arguments being made. In other words, in precisely the period that is now seen as a time of immigration not being a problem it was, in fact, constituted as a problem. The lesson, I think, is that – leaving aside the out and out racists – problems of one sort (e.g. lack of housing) are ascribed to something else: immigration. In fact, there is no more reason why population growth by immigration causes any more problems that population growth by indigenous fertility. What would actually be a serious problem for Western countries, given historically declining fertility rates and an ageing population, would be a lack of immigration.
What is bizarre is that a much more obvious source of complaint would be the migration of capital, both in the sense of the globalized ownership of what were hitherto national or even regional companies; and the propensity of such companies to shift production and employment around the globe. For example, in the UK, it has just been announced that Sea and Air Rescue (one of whose employees is no less than Prince William, the heir to the British throne) is to be sub-contracted to a US company. Unlike labour migration, capital migration has had very definite effects upon the employment prospects of Europeans and yet is commonly regarded as a simply ‘natural’ event, rather than an outcome of policy. Any criticism of that policy is derided as protectionism. By contrast, immigration is commonly regarded as the ‘unnatural’ consequence of policy decisions and defence of those decisions is derided as being ‘elitist’, even treasonous.
The failure of mainstream politics is not, then, one of not ‘listening’ to the ‘legitimate concerns’ of the population: it is of failing to spell out the meaning and consequences of the globalization that they champion – the Right through dishonesty, the Left through cowardice. Into the space they have left is inserted a populism which is at best platitudinous and at worst violent.
Monday, 18 February 2013
Talking about immigration
It has become an established meme of the political right that 'we are not allowed to discuss immigration' but of course nothing could be further from the truth. The papers are filled daily with their thoughts on the subject, and in the most unpleasant of terms. Actually, what is virtually undiscussed in not the international mobility of labour but that of capital (as discussed in the book, pp 106-107). Somehow there seems to be the idea that the latter is 'just' inevitable globalization and that it can proceed without any movements of population, which are deemed to be a 'problem'.
I will post in more detail about this soon, but for now I wanted to share a thought-provoking article written by James Koranyi, a brilliant young historian at Durham University, who is an expert on the cultural history of Eastern and South-eastern Europe, in which he discusses the longstanding British historical fascination with and and fear of Romania, in particular (and linking with the horsemeat scandal, discussed in my last post).
To see an example of what he means by the demonization of Romanian and Bulgarian migrants, have a look at this recent piece in the Daily Mail. Look particularly at the pictures, which, frankly, reminded me of the cartoons in Der Sturmer, the Nazi propaganda leaflet.
Also worth reading is this piece in today's Guardian newspaper, looking at contrasting attitudes to Indian and Romanian immigration.
As I say, more to follow - but I was struck by the coincidence of timing of these three pieces, so wanted to share them whilst they are still fresh.
I will post in more detail about this soon, but for now I wanted to share a thought-provoking article written by James Koranyi, a brilliant young historian at Durham University, who is an expert on the cultural history of Eastern and South-eastern Europe, in which he discusses the longstanding British historical fascination with and and fear of Romania, in particular (and linking with the horsemeat scandal, discussed in my last post).
To see an example of what he means by the demonization of Romanian and Bulgarian migrants, have a look at this recent piece in the Daily Mail. Look particularly at the pictures, which, frankly, reminded me of the cartoons in Der Sturmer, the Nazi propaganda leaflet.
Also worth reading is this piece in today's Guardian newspaper, looking at contrasting attitudes to Indian and Romanian immigration.
As I say, more to follow - but I was struck by the coincidence of timing of these three pieces, so wanted to share them whilst they are still fresh.
Monday, 11 February 2013
Beef with efficiency
The current horsemeat in frozen beef meals scandal is an interesting illustration of the issues around what constitutes efficiency which I discuss at several points in the book. The story reflects many different dimensions of this. The way that a hugely complex globalized supply chain has developed reflects one particular, dominant, understanding of organizational efficiency: driving down costs by all means possible. That presents some serious problems even leaving aside the use of horsemeat, such as the unappetising use of mechanically recovered meat products. Thus, even if our microwaveable lasagne only contained beef, we might be rather horrified to see just what that really consisted of, as this selection of charming images allows us to do. But this is what ‘efficient’ use of carcasses means in the dominant understanding. Passing off horsemeat as beef, of course, represents something beyond this ‘normal’ efficiency, because it involves fraud and misrepresentation. But it is only the extension of the same logic. For the suppliers and producers involved it is, precisely, efficient.
To prevent such frauds, and to control the adulteration of foodstuffs in general, requires state regulation, and such regulation is one of the earliest examples of regulation of the free market. This becomes much more complex in extended global supply chains which span national jurisdictions, another of the ways that politics has not caught up with economics as I said in an earlier post about tax avoidance. But it also makes it bizarre that, in the UK, recent years have seen a reduction of food inspectors. Of course this, too, is ‘efficient’ with respect to government budgets, ‘removing the burden of red tape’ from businesses, and ‘getting value for money’ for the taxpayer. In other ways it is grossly inefficient. For a little more paid in tax, the supermarkets and food brands now suffering a catastrophic collapse of confidence in their products - and maze of expensive legal actions - could have had an ‘efficient’ system of inspection.
Then, beyond this, there is you and me, the consumer. Unwilling to spend our time buying ingredients and cooking them, we find it more efficient to buy packaged up meals for the microwave. Worldwide, consumption of ready meals increased by about 10% in volume 2010-2011. And not only do we want it quick, we want it cheap. Efficient? Perhaps not, considering the very high amounts of salt and fat that some of these meals contain. So maybe the time we saved on cooking will turn out to be dwarfed by the time we end up spending in hospital. There will be plenty of time on the cardiac ward to ponder the meaning of efficiency.
To prevent such frauds, and to control the adulteration of foodstuffs in general, requires state regulation, and such regulation is one of the earliest examples of regulation of the free market. This becomes much more complex in extended global supply chains which span national jurisdictions, another of the ways that politics has not caught up with economics as I said in an earlier post about tax avoidance. But it also makes it bizarre that, in the UK, recent years have seen a reduction of food inspectors. Of course this, too, is ‘efficient’ with respect to government budgets, ‘removing the burden of red tape’ from businesses, and ‘getting value for money’ for the taxpayer. In other ways it is grossly inefficient. For a little more paid in tax, the supermarkets and food brands now suffering a catastrophic collapse of confidence in their products - and maze of expensive legal actions - could have had an ‘efficient’ system of inspection.
Then, beyond this, there is you and me, the consumer. Unwilling to spend our time buying ingredients and cooking them, we find it more efficient to buy packaged up meals for the microwave. Worldwide, consumption of ready meals increased by about 10% in volume 2010-2011. And not only do we want it quick, we want it cheap. Efficient? Perhaps not, considering the very high amounts of salt and fat that some of these meals contain. So maybe the time we saved on cooking will turn out to be dwarfed by the time we end up spending in hospital. There will be plenty of time on the cardiac ward to ponder the meaning of efficiency.
Friday, 1 February 2013
A maximum wage?
The Chief Executive of Barclays Bank UK has announced today that he will waive his annual bonus, which could have been worth as much as £2.75M. He will not suffer huge hardship, as his basic salary amounts to £1.1M. What are we supposed to make of this? Should he be applauded for his forbearance? Or should we, as I believe, ask why it might be imagined that he was entitled to this extraodinary sum in the first place? In the book I document the way that the gap between average wages and top pay has grown massively over recent decades, and actually use the example of Barclays Bank (p.116) where the ratio between average pay and top pay grew from 14.5 to 75 between 1979 and 2011.
I don't have any problem with the existence of pay differentials, and I don't have any doubt that the job of CEOs of big companies such as Barclays is a difficult and demanding one. But I don't believe that any job, and any level of skill, is so great as to be worth so much more than someone else's job and skill. There are only so many hours in the day and only so much ability that any one person can have. Let's also clear out of the way two common arguments. It is not the case that these stratospheric payments are a reward for performance because as, again, I document in the book (p.123) executive pay has increased even as share price has fallen. Nor is what is at stake here simply the operation of a free market for talent: these payments are fixed by remuneration committees staffed by a merry-go-round of the same people who receive such exorbitant rewards.
Does anyone actually believe that in the period that senior executive pay has shot so far away from average wages the competence, performance and scarcity of those executives has increased? Was, say, Barclays, so much better run in 2011 than it was in 1979? No. As I said in my previous post on this blog, in a different context, this has been an outbreak of dumb luck not an upsurge of collective talent. Would these companies be so much worse run by someone paid, say, a miserly £500,000? And, in any case, irrespective of what they deserve, how much money does anyone actually need? Meanwhile, some 80% of the world's population subsists on $10 a day or less.
This is not the 'politics of envy' to use a rather hackneyed trope of those who defend such gross inequalities. And, given the relatively small number of people who earn these kinds of sums, it is not that reducing their rewards would enable any great increase in the wealth of others. No, the issue is about the terrible damage done to organizations and to society as a whole by such inequality, which tears apart the social fabric by so polarising life's experiences and chances both now and for generations to come. Actually the politics of envy is more in evidence in the repeated claims that those on welfare are living it up at taxpayers' expense, another socially divisive development. In the book (p.118) I quote official UK government statistics showing that benefit fraud in 2010 totalled £22M. In 2009, the world's top hedge fund manager earned £2.5billion.
In many countries now, including the US and the UK, there is a minimum wage. We need to adopt proposals that have been around for a while now for a maximum wage, too, fixing a maximum ratio between the lowest and the highest paid. Like all radical ideas, such as the debt jubilee, this looks impossible from within the prism of conventional wisdom and of course such proposals are greeted with critical scrutiny as if the arrangements that we actually have have arisen because they were first proposed then scrutinised and then adopted. In any case conventional wisdom has failed. The world we became accustomed to over the last few decades is manifestly broken. It won't be fixed by a few CEOs waiving their bonuses.
I don't have any problem with the existence of pay differentials, and I don't have any doubt that the job of CEOs of big companies such as Barclays is a difficult and demanding one. But I don't believe that any job, and any level of skill, is so great as to be worth so much more than someone else's job and skill. There are only so many hours in the day and only so much ability that any one person can have. Let's also clear out of the way two common arguments. It is not the case that these stratospheric payments are a reward for performance because as, again, I document in the book (p.123) executive pay has increased even as share price has fallen. Nor is what is at stake here simply the operation of a free market for talent: these payments are fixed by remuneration committees staffed by a merry-go-round of the same people who receive such exorbitant rewards.
Does anyone actually believe that in the period that senior executive pay has shot so far away from average wages the competence, performance and scarcity of those executives has increased? Was, say, Barclays, so much better run in 2011 than it was in 1979? No. As I said in my previous post on this blog, in a different context, this has been an outbreak of dumb luck not an upsurge of collective talent. Would these companies be so much worse run by someone paid, say, a miserly £500,000? And, in any case, irrespective of what they deserve, how much money does anyone actually need? Meanwhile, some 80% of the world's population subsists on $10 a day or less.
This is not the 'politics of envy' to use a rather hackneyed trope of those who defend such gross inequalities. And, given the relatively small number of people who earn these kinds of sums, it is not that reducing their rewards would enable any great increase in the wealth of others. No, the issue is about the terrible damage done to organizations and to society as a whole by such inequality, which tears apart the social fabric by so polarising life's experiences and chances both now and for generations to come. Actually the politics of envy is more in evidence in the repeated claims that those on welfare are living it up at taxpayers' expense, another socially divisive development. In the book (p.118) I quote official UK government statistics showing that benefit fraud in 2010 totalled £22M. In 2009, the world's top hedge fund manager earned £2.5billion.
In many countries now, including the US and the UK, there is a minimum wage. We need to adopt proposals that have been around for a while now for a maximum wage, too, fixing a maximum ratio between the lowest and the highest paid. Like all radical ideas, such as the debt jubilee, this looks impossible from within the prism of conventional wisdom and of course such proposals are greeted with critical scrutiny as if the arrangements that we actually have have arisen because they were first proposed then scrutinised and then adopted. In any case conventional wisdom has failed. The world we became accustomed to over the last few decades is manifestly broken. It won't be fixed by a few CEOs waiving their bonuses.
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