A Privatisation Problem
Its been a while since I posted and the truth is it’s because I’ve been looking on in horror at the way our coalition government have set about ripping the spirit out of a country that I have lived in for most of my life. I have been simply unable to find words that dont make me sound like a parody of myself.
Its not enough to stand on the sidelines, pointing and jeering at the idiots in charge anymore. That has become frustrating and pointless. Time to take stock and to act.
The things that make life worth living are many and various, but I’d put people and community pretty close to the top of the list. David Cameron when he came to power talked a lot about something he called the “Big Society”, a vision of compassionate conservatism, a future where society would look after its own, where the benefits of the free market would trickle down to underwrite the costs of keeping things like libraries and schools open and available for all. The vision was that once constraints were removed, the free market would provide for all. Instead, the Big Society has turned out to be a dystopia, a dysfunctional money grabbing power hungry system that discounts society, community, responsibility and personal development in favour of greed, cynicism, non-accountability and blatant dishonesty. Or as the governor of the Bank of England described it: “Fraud”.
There are reasons for this and to my mind, principle amongst those reasons is the concept of “shareholder value”. Good old fashioned capitalism was built upon the belief that you make money by providing something that has a value to society. The free market suggests that value will find it’s own level, subject to market forces. That sounds very convincing, but it hasn’t turned out that way. The fatal flaw in the capitalist ideal is the concept of “shareholder value” its the one thing that drives, remorselessly, a company to make profit, year on year, to grow and grow and grow. Because growth is what drives share prices, which drives profit potential, which is the only known measure of shareholder value. Of course this is nonsense, a child of three could see that this is a pyramid scheme – the logical endpoint is that there can only be one company and that company will have consumed all the others.
The concept of “Growth” is insiduous and perverse. Perverse because it kills innovation, the very thing that provides real value; insiduous because it seems so very attractive. The lifecycle of most companies goes something like this. Somebody invents something, a service or a thing that has a value and can therefore be sold. They start a small company. Before long they realise that in order to meet demand, they have to borrow money to get over what we will call cashflow difficulties. Basically this is what happens when you have to pay your suppliers quicker than your customers are paying you. There is a cost associated with this borrowing and that cost is usually passed on to the customers. If you can keep all the balls in the air at this point then things may go quite well. There will come a point though when you will be advised that by selling shares in your company, you will raise a huge sum of money which will allow you to get to the second stage. The one that kills innovation.
The second stage is all about balancing the books. You are a public company now and your shareholders effectively call the shots. all of your efforts are now directed at cost saving. You might acquire one of your suppliers because that will cut cost out of your bottom line. Standardisation creeps in. Quality is sacrificed for expedience and you decide that this year, perhaps you won’t have a pay rise for your loyal and hard working staff, because that would take value away from the shareholders. If your product and your sanity survive this trip through the looking glass, you may survive this period and move up to level 3. Increase Profit.
The third stage is all about driving more profit. You have a choice. Having squeezed all the margins on your existing product, you can either invent another one or artificially massage the figures by cutting more cost. Since you have been a good and conscientious employer, your workers will have had pay increases and by now they may be beginning to look expendable. After all, you’ve taken most of the complexity out of the manufacturing process, you are more interested in driving profit than innovation, some of these guys are beginning to look expensive. Only the employment laws wont just let you sack them. So you come up with another wheeze. You make the workforce compete against one another and you award the entire bonus pool to the top performers. What could be more logical, the shareholders will love it! Except for the small fact that you’ve done the equivalent of something many of us have dreamed of doing but never dared – driving along a motorway at 70 mph and suddenly slamming the gearbox into reverse. The effect on the company’s internal culture is the same as the effect upon the gearbox of that car. Components that were smoothly meshed together go into competition and finally fracture, spilling oil and shrapnel all over the motorway. This is usually the end of the company in any recognisable form.
This only makes sense in a culture that values profit above all else, and even then it makes very little sense. You have saved very little money and set the workforce against one another. Lasting success is built upon innovation and cooperation in old style capitalism. In the new style we see that success is built upon bean counting – exploitation and greed. We see the results of this in the news most days now. Take G4S the company that have screwed up the security contract for the Olympics – £58m of public money is being paid to this company as a “management” fee. The army and police drafted in to make up the shortfall for this outfits inability to meet their contractual obligations will be paid from the public purse. THe CEO who is widely expected to stand down after the Olymics is set to receive a £20m severance fee. These are big figures. A large part of their problem has been that the people they have employed to work on the project don’t turn up to work. I wonder why? But here’s a clue. To those people who are guaranteed a bonus of £1 for every hour they complete, the prospect of the blundering permatanned oaf at the top taking home £20m must be beyond offensive.
G4S are but one example. We’ve had News International phone tapping, Barclays rigging the LIBOR and HSBC allegedly laundering billions of dollars of drug money in the news just this week. Its making the government’s position on privatisation look like a death wish. I’ve come across a concept called “people per hour” – its about sourcing creatives from the internet. Sounds like a good idea right? Only it indicates just how commoditised our lives have become. And this is part of the whole capitalist vision. We like the idea that we can source say a graphic designer from the web to do the delivery part of our graphic design job. It makes sense in a cost cutting kind of a way. But think of the graphic designer. How does he/she grow the skills they need to progress. How do they make up the shortfall in their income? What differentiates them from a battery chicken? Whatever happened to career progression?
The time has come to act. We need an alternative and we need it fast. I’m too old to be fighting in the streets and its never solved anything anyway, for my part I have made a simple pledge; if I discover unethical dealings on the part of my mortgage provider, my bank or any of my service providers I will move to an ethical provider before they can blink. Its the least I can do. They wont miss me, but they might miss a thousand of me. Its the least you can do.