Can big business survive this populist backlash?

EDITOR'S BLOG: Trump and Brexit won't kill off free enterprise but uncertainty is bad for everyone.

by Matthew Gwyther
Last Updated: 22 Sep 2016

If you want a bit of cheering up on this Wednesday afternoon I’d steer well clear of Umair Haque’s blog, the title of which this week is The Beginning of the End of the World - Now and Tomorrow. Unlike today’s sky, Umair is not in a sunny mood. 

‘The beginning of the end of the world,’ he writes, ‘Means that yesterday’s model of prosperity – let’s call it capitalist liberal democracy – has reached its limits. It is like an aging machine that shudders and backfires more violently and regularly, because it is broken. And yet, we are unsure, as a world, where to go next.’

With the possible exception of Jeremy Corbyn marching towards his socialist elysium, most want to stay with a market system. (Including even most Venezuelans, I’d imagine.) But this weariness and loss of faith in capitalism Western style is growing more widespread. Growth has lost its mojo big time especially in Europe. There just isn’t enough of it to keep enough chins up and wallets full.

We are constantly being told, and Umair reminds us, that ‘This is the first generation in modern history that’s going to suffer worse living standards than their parents.’ He paints a picture of hoards of servile Deliveroo pedallers ‘Worked to the grave to make a dwindling number of dynasties wealthy, largely by serving them hand and foot, not really enhancing human life.’

And unacceptable practice in business is at the root of it. There’s an excellent essay about the current unpopularity and mistrust of business in this week’s Economist special report. Its central thesis is that a smallish group of Leviathan Sized companies now dominate the global economy, amassing massive cash piles made possible by the liberalisation of the global economy from 1980 onwards. They are unassailable, a law to themselves when it comes to paying any tax. Playing by their own rules which are agreed after huge sums spent on intense lobbying. They acquire and devour promising, potentially threatening, minnows and their mantra is that of Peter Thiel, the billionaire co-founder of Paypal and first investor in Facebook - ‘competition is for losers.’ In many cases they are far more powerful than the countries in which they operate - as Mark Zuckerberg's pledge this morning to spend $3bn eradicating all of the world's diseases by the end of this century demonstrates.  

It makes the point that each era reacts to the excesses of the previous one and that a prolonged pro-business period that began under Reagan in the 80s, when deregulation and wild animal spirits led to a free for all, is now coming to an end. Most of the figures that measure faith or trust in big business are down on both sides of the Atlantic. The Pew Research Centre says that the share of Americans who hold ‘very’ or ‘mostly’ favourable opinions of corporations has fallen from 73% in 1999 to 40% today.

Take a runaway success like Apple, the world’s largest listed company by market capitalisation (and rumoured to be mulling a bid for the carmaker McLaren), and this withering response to the launch of the new Iphone from The Guardian : ‘Apple is elegant shorthand for a redundant economic system...its marketing chief, Phil Schiller, explained why this model came without a earphone socket: "It really comes down to one word: courage. The courage to move on, do something new, that betters all of us." Such patchouli-scented Californian dipshittery was lapped up by the 7,000-strong crowd and lightly mocked by the press.’ The piece goes on to pillory Apple for poor working practices in its Chinese factories, addressing which might take a bit more courage than making a new phone with one less hole in it.

It’s odd that Donald Trump, supposedly one of America’s most successful businessmen - not even his wife believes this line - is offering business little succour. Business doesn’t vote - its downtrodden serfs do. He certainly wants to clamp down on migration and wants to see an end to free trade. But he knows how bitter US blue-collar workers are with their hangups about foreigners and stagnant living standards.

Business is pretty wary of Trump and what the wildly unpredictable, shoot from-the hip maverick might have in store for them if he takes power. But very few are willing to express opposition in public for fear of retribution - and he is a highly vindictive individual - were he to reach the Oval office. Populist anti-business measures might curry a lot of favour with the cheesed off. He won’t even make any jobs by ‘Building That Wall!’ because it’ll all be done by Mexican labour.

Technology companies are afraid that Mr. Trump might attack them over their approach to privacy, as he did with Apple. Wall Street worries he might seek to break up its banks. Health care companies are nervous that he might attack them over pricing. (The latest scandal here following price-gouging with EpiPens is Novum which last week raised the price of a 60 g tube of acne cream called Aloquin by 128% to $9,561.) Multinationals are worried about trade.

Likewise over here Theresa May’s first moves have been decidedly anti-business in tone. She wants workers on boards and new white collar crime legislation. Yesterday she opened fire on private medicine via moon-lighting NHS consultants. There is clearly political capital to be had in knocking commerce while telling companies via her right hand man Dr Liam Fox that they are spending too much time on the golf course and not getting out into the world and trying harder to seize opportunity.

Most UK businesses were anxious about the prospects of Brexit before the vote and are positively fearful now as the prospect of heading for the door the Hard way becomes more likely. For every wildly optimistic Tim Martin of Wetherspoons there is a very green around the gills manager running Nissan’s A1 quality plant in Sunderland.

Brexit is about withdrawal of co-operation. Going it on our own in the world because you find your fellow community-members intolerable and impossible to live with. Just when our problems require a combined global solution - nations coming together behind a Big Idea - things are growing more fractured, and tetchily nationalistic.

Having an optimistic outlook, my normal response to this apocalyptic thinking is that there is usually something around the corner. The shuddering and backfiring machine has had a good run and will re-find some vim and direction as it always does. The new digital world means it's easier to start a business than ever and faced with a lack of security at work plus an acceptance that graduation- to- gold watch jobs are a thing of the past young people willing to take a leap. And, do you know, most of the people one comes across struggling to make their businesses thrive are not venal. They tend to know the right thing when they see it. But in the meantime uncertainty is the game and nobody likes that.

Image source: Gage Skidmore/Flickr


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