Tuesday, November 04, 2008
Unsavvy bankers
When I went into my bank today to pay some bills I came across a couple of small cards headed “Be a savvy saver”. One advised people to “keep your tyres pumped up” and the other said “make lunch at home”.
It is ironic that such unsavvy institutions as British banks are giving such advice to consumers. Perhaps it points to a novel explanation for the huge problems facing the financial sector. Maybe top executives were spending too much of their valuable time making sandwiches and not enough minding their own businesses?
It is ironic that such unsavvy institutions as British banks are giving such advice to consumers. Perhaps it points to a novel explanation for the huge problems facing the financial sector. Maybe top executives were spending too much of their valuable time making sandwiches and not enough minding their own businesses?
Labels: corporations, ethics, finance
Tuesday, May 06, 2008
Globalisation and anti-globalisation
A column by Lawrence Summers, a former US treasury secretary, in today’s Financial Times shows how far the mainstream has gone in taking on “anti-globalisation” arguments. Tackling inequality and raising labour standards are integral to the conventional wisdom:
“The domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity. The international component must focus on the interests of working people in all countries, in addition to the current emphasis on the priorities of global corporations.”
Yet, as I have argued elsewhere, this sentiment is not about raising the living standards of ordinary people. On the contrary, it is essentially a demand for greater social regulation to protect society against the alleged disintegrative effects of inequality. It can also be a form of protectionism against developing countries.
Dani Rodrik of Harvard also recognises the mainstream character of anti-globalisation thinking in his blog. He says that much of the Summers column could “have been written by, say, Robert Kuttner or Tom Palley”. He later complains about a student who pigenholes him as an anti-globaliser. The student’s retort was "[Joseph] Stiglitz doesn't think he is an anti-globalizer either."
“The domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity. The international component must focus on the interests of working people in all countries, in addition to the current emphasis on the priorities of global corporations.”
Yet, as I have argued elsewhere, this sentiment is not about raising the living standards of ordinary people. On the contrary, it is essentially a demand for greater social regulation to protect society against the alleged disintegrative effects of inequality. It can also be a form of protectionism against developing countries.
Dani Rodrik of Harvard also recognises the mainstream character of anti-globalisation thinking in his blog. He says that much of the Summers column could “have been written by, say, Robert Kuttner or Tom Palley”. He later complains about a student who pigenholes him as an anti-globaliser. The student’s retort was "[Joseph] Stiglitz doesn't think he is an anti-globalizer either."
Labels: corporations, globalisation, inequality
Sunday, November 04, 2007
On Krugman and Reich
It is frustrating that two recent key books in the growth sceptic genre are not yet available in Britain. From what I can gather Paul Krugman’s The Conscience of a Liberal focuses more on politics than economics. Krugman, a New York Times columnist and professor of economics at Princeton, apparently blames fundamentalist Republicanism for widening inequality in American society. It is hard to be sure but I strongly suspect he somehow links inequality to economic growth. I hope to receive the book soon. In the meantime there is a useful review in the New York Sun and a piece in the New York Review of Books.
Robert Reich, a professor of public policy at the University of California at Berkeley and former Clinton labor secretary, is more clearly a growth sceptic. In a Q&A on Supercapitalism, his new book, he argues that contemporary capitalism has a dynamic side but then refers to the familiar growth sceptic litany:
“Inequality hasn’t been this wide in 80 years. Jobs are far less stable, and the median wage is below where it was in 1980, adjusted for inflation. Main Streets are disappearing. And our planet’s environment is endangered.”
To him the solution is to put curbs on corporations. For him it appears corporations are the force that gives capitalism both its dynamic and destructive side:
“We have to end the corporate arm’s race. That means strict limits on corporate lobbying, on corporate spending for public relations intended to influence legislation, on legislators and public officials turning to lobbying when they leave office, and on corporate money otherwise flowing in politics.”
In reality the problem is not that capitalism is too dynamic. On the contrary, it is not dynamic enough. Rather than putting curbs on corporations the emphasis should be on promoting even more growth.
The first chapter of Supercapitalism is available on the New York Times website. More information can also be found on Reich’s website.
Robert Reich, a professor of public policy at the University of California at Berkeley and former Clinton labor secretary, is more clearly a growth sceptic. In a Q&A on Supercapitalism, his new book, he argues that contemporary capitalism has a dynamic side but then refers to the familiar growth sceptic litany:
“Inequality hasn’t been this wide in 80 years. Jobs are far less stable, and the median wage is below where it was in 1980, adjusted for inflation. Main Streets are disappearing. And our planet’s environment is endangered.”
To him the solution is to put curbs on corporations. For him it appears corporations are the force that gives capitalism both its dynamic and destructive side:
“We have to end the corporate arm’s race. That means strict limits on corporate lobbying, on corporate spending for public relations intended to influence legislation, on legislators and public officials turning to lobbying when they leave office, and on corporate money otherwise flowing in politics.”
In reality the problem is not that capitalism is too dynamic. On the contrary, it is not dynamic enough. Rather than putting curbs on corporations the emphasis should be on promoting even more growth.
The first chapter of Supercapitalism is available on the New York Times website. More information can also be found on Reich’s website.
Labels: America, book, corporations, corruption, inequality
Thursday, May 03, 2007
Sport gets into sustainabbable
Sports are getting into sustainability according to the latest issue of Marketing Week (3 May). It quotes the organisers of the London 2012 Olympics as saying they will deliver a “sustainable games”. Apparently this involves, among other things, ensuring that 60% of the venues are existing structures. Given the poverty of the infrastructure in East London this limitation is disappointing.
Even Formula One racing is going green. The article quotes Alistair Watkins, Honda Formula 1 marketing director, as saying “Being green is our primary marketing concept for 2007.” Its cars will have an image of the earth rather than sponsorship logos. There is more on this at myearthdream.com.
Evidently the football World Cup in Germany last year was carbon neutral and more big sports events are likely to follow in the future.
Even Formula One racing is going green. The article quotes Alistair Watkins, Honda Formula 1 marketing director, as saying “Being green is our primary marketing concept for 2007.” Its cars will have an image of the earth rather than sponsorship logos. There is more on this at myearthdream.com.
Evidently the football World Cup in Germany last year was carbon neutral and more big sports events are likely to follow in the future.
Labels: corporations, environment, sustainability
Tuesday, February 27, 2007
Comment on European and Asian firms
Yesterday Fund Strategy published a cover story by me on the euro-zone and a related comment. They were, strictly speaking, more about economics generally rather than growth scepticism but I thought they might be of interest. The cover story is too long to post here (and there is no direct link) but I have pasted the comment below:
Many large European companies seem to be pinning their hopes for the future on outsourcing production to Asia. While this might work as a short-term financial strategy, it will not alter the shifting power balance between the two continents.
As Daniel Ben-Ami discusses in this week's cover story many European firms are transforming themselves into "platform companies". This means they are retaining control of such functions as marketing and design, while outsourcing the production of their products. Ikea and H&M are prime examples of European platform companies.
The phenomenon has also been noticed by those discussing Asia. Will Hutton, one of Britain's best-known economic commentators, has written a book that makes much of the fact that hardly any leading global brands are Chinese. He argues that China's strength is frequently exaggerated because commentators fail to grasp that it often acts as a sub-contractor for Western firms.
It is true that Western companies can benefit from outsourcing their production to Asia. No doubt they are bolstered by the restructuring involved in shedding their own workforces and relocating elsewhere. It also means they have fewer assets tied up in fixed capital. Lower volatility and higher share prices can be a result of this process.
But if Western companies believe Asian firms will be content to just assemble products for others they are deluding themselves. Once Asian companies have honed their production skills, they are likely to start developing their design and marketing abilities. This may take time but it is hard to see how the process can be thwarted.
The process will in some ways be analogous to Britain's relative decline. In the Victorian era Britain was the world's leading power, but in the 20th century it was supplanted by America. This did not mean Britain disappeared but it is not the power it once was. In absolute terms, Britain is far wealthier than in the 19th century, but relative to other powers it has fallen behind.
In a similar way, the shift today is towards Asia. Firms from the East will no doubt become leaders in technology and marketing rather than assemblers of Western goods. European firms will continue to operate - many may thrive, but fewer of them will be the world leaders they are now. The continent of the future looks set to be Asia rather than Europe.
Many large European companies seem to be pinning their hopes for the future on outsourcing production to Asia. While this might work as a short-term financial strategy, it will not alter the shifting power balance between the two continents.
As Daniel Ben-Ami discusses in this week's cover story many European firms are transforming themselves into "platform companies". This means they are retaining control of such functions as marketing and design, while outsourcing the production of their products. Ikea and H&M are prime examples of European platform companies.
The phenomenon has also been noticed by those discussing Asia. Will Hutton, one of Britain's best-known economic commentators, has written a book that makes much of the fact that hardly any leading global brands are Chinese. He argues that China's strength is frequently exaggerated because commentators fail to grasp that it often acts as a sub-contractor for Western firms.
It is true that Western companies can benefit from outsourcing their production to Asia. No doubt they are bolstered by the restructuring involved in shedding their own workforces and relocating elsewhere. It also means they have fewer assets tied up in fixed capital. Lower volatility and higher share prices can be a result of this process.
But if Western companies believe Asian firms will be content to just assemble products for others they are deluding themselves. Once Asian companies have honed their production skills, they are likely to start developing their design and marketing abilities. This may take time but it is hard to see how the process can be thwarted.
The process will in some ways be analogous to Britain's relative decline. In the Victorian era Britain was the world's leading power, but in the 20th century it was supplanted by America. This did not mean Britain disappeared but it is not the power it once was. In absolute terms, Britain is far wealthier than in the 19th century, but relative to other powers it has fallen behind.
In a similar way, the shift today is towards Asia. Firms from the East will no doubt become leaders in technology and marketing rather than assemblers of Western goods. European firms will continue to operate - many may thrive, but fewer of them will be the world leaders they are now. The continent of the future looks set to be Asia rather than Europe.
Labels: Asia, china, corporations, economics, Europe, Fund Strategy
Thursday, January 11, 2007
Climate change at Exxon
Another sign of the shift in the climate change debate towards a “pro-mitigation” consensus (see dispatch of 15 August 2006). Exxon, often reviled by environmentalists, has subtly shifted its position according to todays’s Wall Street Journal Europe (subscription required to read articles):
“The changes in Exxon's words and actions are nuanced. The oil giant continues to note uncertainties in climate science. It continues to oppose the Kyoto Protocol, the international global-warming treaty that limits emissions from industrialized countries that have ratified it. It also stresses that any future carbon policy should include developing countries, where emissions are rising fastest.
“Still, the company's subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.
“Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.”
“The changes in Exxon's words and actions are nuanced. The oil giant continues to note uncertainties in climate science. It continues to oppose the Kyoto Protocol, the international global-warming treaty that limits emissions from industrialized countries that have ratified it. It also stresses that any future carbon policy should include developing countries, where emissions are rising fastest.
“Still, the company's subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.
“Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.”
Labels: climate, corporations, energy, environment, television
Wednesday, September 20, 2006
How not to argue on climate change
I hesitate to write too much on climate change because it could easily become a full-time preoccupation. But given it is increasingly used as the ultimate argument against affluence it is difficult to avoid devoting time to it.
George Monbiot’s new book on climate change, serialised in three parts in the Guardian, provides a model of how not to conduct the debate. Yesterday there was an article on 'the denial industry' which focused on ExxonMobil. He made a similar film for the BBC Newsnight programme which was broadcast this evening. The main point of both was that ExxonMobil is financing “climate change deniers” – including the Competitive Enterprise Institute, the Cato Institute, the Heritage Foundation, the Hudson Institute, the Frontiers of Freedom Institute, the Reason Foundation and the Independent Institute – to misrepresent the truth on climate change in order to protect its profits.
There are two reasons why this argument is flawed. First, the fact that anyone receives finance from a particular source, even one with a vested interest, does not prove that an argument is wrong. I could be paid by the Devil Inc to produce this website but that does not invalidate my arguments (as it happens I am entirely self-financed). Second, it is misleading to talk to climate change “denial”. Only a lunatic would deny that the climate is changing and most specialists seem to accept that humans have played a role in warming. What needs to be debated is the character of the change (a scientific question) and how best to respond to it (a political question).
Monbiot cites a website with the sole aim of exposing Exxon . He has also set up a new website of his own , along with Mark Lynas and Joss Garman, to argue solely on climate change. There is also a speaking tour on the book.
George Monbiot’s new book on climate change, serialised in three parts in the Guardian, provides a model of how not to conduct the debate. Yesterday there was an article on 'the denial industry' which focused on ExxonMobil. He made a similar film for the BBC Newsnight programme which was broadcast this evening. The main point of both was that ExxonMobil is financing “climate change deniers” – including the Competitive Enterprise Institute, the Cato Institute, the Heritage Foundation, the Hudson Institute, the Frontiers of Freedom Institute, the Reason Foundation and the Independent Institute – to misrepresent the truth on climate change in order to protect its profits.
There are two reasons why this argument is flawed. First, the fact that anyone receives finance from a particular source, even one with a vested interest, does not prove that an argument is wrong. I could be paid by the Devil Inc to produce this website but that does not invalidate my arguments (as it happens I am entirely self-financed). Second, it is misleading to talk to climate change “denial”. Only a lunatic would deny that the climate is changing and most specialists seem to accept that humans have played a role in warming. What needs to be debated is the character of the change (a scientific question) and how best to respond to it (a political question).
Monbiot cites a website with the sole aim of exposing Exxon . He has also set up a new website of his own , along with Mark Lynas and Joss Garman, to argue solely on climate change. There is also a speaking tour on the book.
Labels: book, climate, corporations, environment, film, television
Monday, August 28, 2006
Campaign against Coke spreads to Britain
I discover today that the campaign against Coca-Cola and Pepsi-Cola has spread to Britain and America. A report in the Independent on 19 August said Sussex University was the first campus in the country to ban all Coca-Cola products from its students’ union:
There is meant to be a campaign group called UK Students Against Coca-Cola but I cannot find a website for it.
“The decision to withdraw Coca-Cola from the university comes at a time when its products have already been banned in schools, as concerns rise about rates of obesity among children. Universities in the US have also banned Coca-Cola and a quarter of states in India have outlawed products following concerns that they contain 27 times the permitted levels of pesticides.
“Campaigners also claim that bottling plants in India have depleted local water tables and deprived farmers of their livelihoods. In Colombia and other South American states, the company has been accused of ignoring anti-union abuses at its factories.”
There is meant to be a campaign group called UK Students Against Coca-Cola but I cannot find a website for it.
Labels: consumption, corporations, india
Friday, August 25, 2006
Sin Tracker: shopping at superstores
Monitoring the alleged sins of modern life
An excellent piece by Sean Collins on Spiked on the "sin" of shopping at Wal-Mart. Evidently America's Democratic Party, divided on many issues, is united on hatred of the giant superstore. Two union-backed campaigning groups are spearheading the campaigning against the shopping giant (branded as Asda in Britain).
Collins warns that:
Collins goes on to examine the broader significance attached to shopping nowadays: you are what you buy. He also explains how the middle class has a convenient get-out clause:
An excellent piece by Sean Collins on Spiked on the "sin" of shopping at Wal-Mart. Evidently America's Democratic Party, divided on many issues, is united on hatred of the giant superstore. Two union-backed campaigning groups are spearheading the campaigning against the shopping giant (branded as Asda in Britain).
Collins warns that:
“the anti-Wal-Mart crusade is a faux populism - as fake as the knock-offs Wal-Mart sells. It shares with other campaigns against politically incorrect retailers - such as McDonald’s and Starbucks - a disdain for mass marketers and, most importantly, the masses who shop with them. But what's different, and potentially confusing, about the anti-Wal-Mart movement is that it is snobbery masquerading as a populist campaign for higher pay levels.”
Collins goes on to examine the broader significance attached to shopping nowadays: you are what you buy. He also explains how the middle class has a convenient get-out clause:
”Wal-Mart finds itself at the sharp end of a wider attack on mass consumption patterns. Personal shopping decisions have now become invested with greater significance, as they are now considered as indicative of one's identity (as opposed to, say, political or religious views). Items associated with the masses are considered taboo today: SUVs, McMansions, fast food. Such criticisms are the means by which to blame those who mindlessly buy offensive things. At the same time, the elite are able to buy their way out of this, through alternative, eco-friendly, ethical spending.”
Labels: America, consumption, corporations, sin tracker, spiked
Friday, August 11, 2006
Indian campaign against Cola
I read in today’s Financial Times (see below) that many Indian states are banning drinks from Coca-Cola and Pepsico. Allegedly there are unsafe levels of pesticide residue in their soft drinks. I am not in a position to make a definitive judgement but I am suspicious about this campaign. I suspect the fears are probably exaggerated and in any case a better campaign would be for India to improve its awful system of water supply (for more on this read the World Bank’s latest development policy review on India).
--------------------
Indian states join Coke and Pepsi ban
By Jo Johnson in New Delhi
A quarter of India's 28 states have announced partial or total bans on Coca-Cola and PepsiCo in the wake of fresh concerns over pesticide levels in soft drinks.
More bans are expected in the coming days in a political backlash against the US companies that has the potential to disrupt flows of US and other foreign investment to India.
--------------------
Indian states join Coke and Pepsi ban
By Jo Johnson in New Delhi
A quarter of India's 28 states have announced partial or total bans on Coca-Cola and PepsiCo in the wake of fresh concerns over pesticide levels in soft drinks.
More bans are expected in the coming days in a political backlash against the US companies that has the potential to disrupt flows of US and other foreign investment to India.
Labels: corporations, india
Sunday, August 06, 2006
Materialist messiah
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This picture probably cannot be seen that clearly but it is from the window of the Halcyon Gallery on London's New Bond Street. It depicts a Christ-like figure, drawn in the style of Caravaggio, with credit cards sticking out of his hair and Calvin Klein underpants. He also has "Coca Cola" written on his stomach. Presumably it is meant to symbolise the contemporary worship of material goods.
Labels: consumption, corporations
Wednesday, August 02, 2006
An inconvenient fact
An awkward statistic for those who believe America has a free market economy. Evidently Enron – often seen as the epitome of free market capitalism – built its fortune on $7bn of government subsidies. At least according to a review in today’s Wall Street Journal Europe (Jacob Laskin “The welfare state corporate America’s in”). This article is in turn a review of The Big Ripoff by Timothy P Carney (published by Wiley).
Labels: America, book, corporations, economics
