I am now in my sixth day of working from home and my sixth day of hunting for loo roll. I was scanning the shelves in the supermarket earlier and found myself eyeing up the cabbages, how many leaves can you get out of one of those…?
These are mad, mad times, and it is interesting to see how people are reacting. We’ve all witnessed the footage on social media of people fighting over toilet roll in the shops. And some frankly disgusting shop keepers profiteering like mad by selling hand wash for £25. The selfishness and lack of thought for our fellow human beings is staggering to watch.
Never-Ending March to Ever-Increasing Profits
For a long time now, I have been looking at our crazy world, especially the business world with worry and bemusement. The unceasing march towards ever-increasing profits and the search for more efficient technologies often result in people losing their jobs.
I am a massive believer in the free market and capitalism. It has brought huge benefits to the world, and so many of us at one level are leading lives our great-great-grandparents could only have imagined. To paraphrase Churchill on democracy, it’s the worst of all economic systems except for all the others. It has given us so much, and yet maybe this fork in the road we are entering could be a time to have a proper reset.
Will This Be a Wake-Up Call?
And now so much of business is in serious trouble. Obviously, it hit the travel and aviation industry massively. There is increasing talk about nationalising IAG and Easyjet partly. As Oliver Shah points out in a hard-hitting article in the Sunday Times: maybe this current crisis will finally see governments, regulators and companies come to their senses. Hopefully, they will stop this trend of paying out huge dividends and going in for share buybacks whilst loading their balance sheets with debt.
IAG had paid out EUR4.4bn since 2015, including a EUR1.3bn dividend in late February this year when the crisis was well underway. IAG’s market cap is now circa £4.3bn, and they have £7.6bn in net debt. What sense is there in that when we are now going to have to bail them out? It’s crazy.
All over the business world, we continue to see nonsensical decisions and practices. From the continued share buybacks which only really benefit the senior execs. The continued, mostly US practice of the three-month reporting cycle and its incessant pressure to grow every quarter leads to all the big corporate failures that we have known through history right up to the recent disgrace of firms like Boeing and Wells Fargo.
Trend of Automated Tech Versus Human Livelihoods
Companies like Uber and Amazon are pursuing their automated technologies, leading to less and less unskilled jobs being around. All of this is the corporate equivalent of two people rolling around on the supermarket floor fighting over their Andrex. There’s no thought for anything or anyone else other than profit.
When are we going to see that we need to change? We need capitalism, and of course, capitalism needs profit. But we don’t need ruthless, myopic capitalism. We need to start looking at COMPASSIONATE CAPITALISM. Capitalism that realises that companies must provide jobs. We also need investors and the market to realise that consistently searching for ever-increasing profit is inconsistent with the world’s need to start to preserve its resources.
Investing in the Future with ESG
ESG investing is, of course, gaining traction but let’s be honest, most corporate leaders view their sustainability efforts primarily as a way to enhance their reputations and attract socially aware consumers, employees, and investors.
I use Thameslink railways to get into my office. Their new shiny 12-car trains carry circa 1000 passengers in rush hour. When they proudly launched them without a guard as their previous trains had, they talked about efficiency and of course getting rid of the guards would save them money. This is a perfect example of uncompassionate capitalism. I am sure it is more cost-effective for them, but surely 1000 passengers deserve at least one person walking through the train to provide support, safety and dare I say it, a degree of customer service?
We are in for tough times economically. All the typical elements of our lives that most of us enjoy have been or will be taken away from us. We probably took so many of those things for granted. Playing and watching sport, meeting your friends for a drink, eating out, I know I did, and God am I missing them already.
Reassessing and Reprioritising
I can only hope that this time out for business can lead to a reassessment of what we are doing. Can this shock to the system make us realise that real change is needed in our capitalist system? Will we get to the point when rather than rolling around the supermarket floor fighting over their Andrex, companies can instead hand over a packet and say no, please, you have it?
