We are where we are because whenever we had a choice to make, we have chosen the alternative that required the least effort at the moment. There is organised, mechanised evil loose in the world. But what has made possible its victories is the lazy, self-indulgent materialism, the amiable, lackadaisical, footless, confused complacency of the free nations of the world.
– Walter Lippmann in a class reunion speech at Harvard in 1940
Why do human beings so often fail to read the signs of the times? Catastrophes loom and people laugh – until it’s too late. World War II could have been averted; the 2008 global financial crisis should never have happened; the immigration time-bombs in Europe and the US weren’t inevitable; the socio-economic tragedies in Zimbabwe and Venezuela were predictable. And so on.
It’s much the same in business. One doesn’t even have to go into infamous cases like Enron, Libor, Purdue, Turing, Google, Facebook, or the cosy but craven relationships of many corporates with barefaced totalitarianism.
In the past 24 hours, I have learned of the disdainful exploitation of contract workers by the producers of a major Hollywood movie. In the past week, I have heard of yet another case of a merger benefitting the managerial class at the expense of the people at the coalface, their families, and their communities. In the past month, I have consulted on yet another case of the stifling of creativity by senior managers, cocooned from the frustrations and disillusionment on the shop floor, and mindful only of their personal agendas.
The signs are there for all to see, but no one is reading them.
The myths of modern management have by now been exposed often enough for even those afflicted by blind faith to have seen glimmers of light. One of these pervasive myths is that business is more competitive than it has ever been. The truth is that business today is characterised more by consolidation than by competition; just think airlines and automobiles, for example. Mergers and acquisitions are where the action is, and since 2008 tens of thousands of deals have been driven through, creating financial windfalls for the few and the economic wilderness for the many.
Another myth has been exploded by the failure of the HR and recruitment industries to make the lot of people in the workplace more fulfilling and the development of their potential more of a reality for the good of the business and the people. Churn and the ridiculous costs that go with it, disengagement and the loss of productivity, and an alarming decline in leadership capability across the board, make nonsense of claims that business is flourishing. The only people who are flourishing are the elites who engineered the financialisation of western economies over the past several decades.
A leader would have seen the danger long ago.
Starting in the 1970s, the financialisation of western economies saw trillions of dollars dredged out of the manufacturing sectors, and once thriving communities were impoverished and abandoned in a spiral of economic devastation and social dysfunction. The callous windfall was transformed into financial instruments and intoxicating new forms of wealth, and as a result of deliberate policy choices, establishment elites enriched themselves at the expense of the middle class.
By the end of the 1980s, the liberal democratic propaganda channels were gushing over the “end of the job”, “many careers instead of just one”, “the knowledge economy”, “innovative restructuring”, “corporate re-engineering”, “strategic megamergers” and the like. These manipulative ploys were quickly seen for what they were, and both blue and white-collar workers became equally cynical.
That’s why corporate life degenerated into the Hobbesian nightmare we have today.
As CEO of General Electric in the 1980s, Jack Welch, still celebrated as a ‘great’ business leader, resolved to increase the company’s stock price through a series of “restructures”. Within six years, 22,000 jobs were lost in Schenectady NY, 13,000 in Louisville, Kentucky, 12,000 in Evendale, Ohio, 8000 in Pittsfield, Massachussetts, and 6,000 in Erie, Pennsylvania. Communities were gutted, families impoverished, and lives destroyed.
With so many carpetbagger CEOs playing the same game, because that is what it was for them, the decay of middle America into a wasteland accelerated. The numbers of the transient unemployed swelled, with desperate men seeking work wherever they could find it, reduced to homelessness, drug abuse, scavenging, and riding freight cars from town to broken downtown. Boarded-up shops, crumbling infrastructure, and unkempt neighbourhoods underscored the societal catastrophe.
In Detroit, once the fourth-largest urban centre in the US, enjoying the highest median income and the top rate of homeownership, the population has declined from around two million in the 1990s to less than 700 000 today. A third of the city is deserted, and it seems only a matter of time before it is repossessed by nature, an event many in our cynical world would no doubt applaud.
We get our word “economy” from the ancient Greek word for “household management”, and our academic discipline, economics, used to be more accurately called “political economy”, or national management, if you like. In a nation, as in a family, the economy is meant to be geared for the good of all, but a globalist elite has no loyalty to the nation or its citizens, but only to its own aggrandisement. And the type of economy found in the West today reflects the policy choices of an oligarchy obsessed with wealth and power.
This Brave New World has been built by liquidating the assets accumulated over many generations by more hard-working, patriotic, and community-conscious citizens, or relocating industries internationally to cash in on cheap labour. Leveraged buy-outs and asset-stripping generated spectacular profits via high-interest junk bonds, and the impoverishment of the middle class funded the financial engineering economy that holds so little hope for some 80 percent of the populace.
Profits in the financial sector in the US grew by 800 percent in the 25 years preceding 2005. Exotic new financial products proliferated, and by 2007 there were some 10 000 hedge funds operating in the money market. Around 50,000 mortgage brokerages, employing more people than the US textile industry, squeezed out savings and loan associations and small banks. Clearly, making stuff was not nearly as lucrative as playing with money.
The globalised political economy is driven by investment bankers, hedge fund managers, private equity firms, property developers, insurance behemoths, the political puppets required to give them a veneer of legitimacy, and the slew of supplementary enterprises that service the money magicians. We should not be surprised that it is characterised by wild promises and panics, scoundrels and scandals, bubbles and bust.