Monday, November 09, 2009

Shell shoots itself in the foot on Remembrance Day

The real question to ask about Shell’s unbelievably crass decision not to allow the sale of poppies at their petrol stations this year is at what level the call as made. Ignore the statement from Shirley Cinco, at Shell’s “Customer Service Centre” in Manchester, that: “Rather than simply giving to worthy causes, Shell prefers to donate skills, time and knowledge as well as money. It is in the context of this strategy that Shell Retail will not be allowing any further charities, including the poppy appeal, to use its forecourt network to collect monies.” This is corporate speak of the worst kind and misses the real issue by many a mile. That issue is, of course, not about the decision itself but about who took it and about how it is perceived. The British Legion even uses a photograph of poppies projected onto Shell Centre to publicise the value of corporate partnerships!

I have blogged myself on the subject of Remembrance Day and in doing so I was especially mindful of the fact that even to write about this subject is problematic. There is no more important social and cultural phenomenon than Remembrance Day in Britain – an importance that this year is especially significant given the appalling loss of life in Afghanistan. And the Poppy is arguably just about the most powerful brand symbol here – certainly at this time of the year. There is no other charity that reaches the hearts and minds of the British population more than the British Legion and to risk alienating them is frankly absurd. Reasoned argument about Remembrance Day (which I tried to give in my Blog) should be fair enough. But you don’t take decisions that will turn war veterans against you!

The statement by Ms Cinco was not only the wrong thing to say and said at the wrong time but it was a statement made by someone far too low down the Shell in the UK food chain. If it really was necessary to take the decision not to sell poppies at petrol stations then the announcement about this should have been at a time when Remembrance was not so vividly in the public eye. It should have been made by somebody at a very senior level. And it should have been accompanied by something which would have turned a negative into a positive. Ideally it should have been a joint announcement with the Legion itself – indeed if the British Legion could not go along with the decision it should not have been taken. It’s that important.

Managing the brand and reputation of a big corporation like Shell is not easy but there are certain precepts that are inviolable. Most of these are commonsense – something that seems to be sadly missing in this instance. The “benefit” to Shell of not selling poppies in petrol stations must have been tiny – if there was one at all. But the damage to the company’s reputation is now very large indeed. In the coming days it will no doubt emerge how all this happened. If I was advising my old employer I would tell them simply to apologise, say it won’t happen again and make a thumping donation to the British Legion as a gesture of goodwill!

Wednesday, November 04, 2009

Has the new capitalism arrived? Not if David Cameron gets his way!

“The culture in this country has become so overwhelmingly conformist that any alternative to capitalism is considered outlandish.”
Tariq Ali October 2009

Winston Churchill once famously said that “democracy is the worst form of government except all those other forms that have been tried from time to time.” He might have said the same about the primacy of capitalism compared with all other forms of macroeconomic management of nation states. The history of the Twentieth century can be seen unquestionably as the proof of the maxim that free markets, private enterprise and competition advances societies whereas totalitarianism, whether of the right or the left, sets them back. Command economies can of course achieve extraordinary things – the Soviet Union was only just behind the free enterprise United States in the race to the moon and China built huge scale projects, such as the Gezhouba Dam, under Mao Tse-tung’s malignant brand of Communism. But in the twenty-first century almost every country is substantially liberal in its economic model – even those previous temples of communism Russia and China.

But whilst the primacy of the capitalist model should not be doubted the idea that untrammelled capitalism, a society within which virtually everything is left to the market, has surely now lost whatever credibility it ever had. Even in the United States, capitalism’s most extreme example, there has never really been a totally free market for all goods and services. The state has intervened both in providing a safety net for the most disadvantaged in society and by substantial interventionist polices in times of extreme economic trauma – in the 1930s with Roosevelt’s New Deal and most recently as a response to the meltdown of the financial markets.

In his 2008 election campaign Barack Obama never questioned the broad merits of capitalism – not just because it would have been political suicide to do so but because, I am sure, he was like the vast majority of Americans, convinced that America is and must always be a liberal democracy – economically anyway. This has not stopped some on the loony right from recently branding him a socialist. Obama's policies are "one big down payment on a new American socialist experiment." House minority leader John Boehner has said and onetime Presidential candidate Mike Huckabee said "Lenin and Stalin would love this stuff." Conservative commentator Sean Hannity has also derided the President’s agenda as "socialism you can believe in." Perhaps these gentlemen haven’t travelled much or read much history for if they had then they would have seen the failures of doctrinaire socialism around the world and they would also have seen that nothing that Obama proposes bears the slightest resemblance to that socialism!

What President Obama is doing is trying slightly to shift the social/democratic balance in the United States a bit away from the market and a bit in the direction of greater justice and utility for all – especially in his healthcare proposals. By European standards it is pretty unexceptional stuff – the creation of national health services happened just about everywhere in Europe in the second hall of the twentieth century, and they work - not perfectly perhaps but in general they are one of the main pillars on which civilized western societies are built. The same applies to America’s northern neighbour Canada and to many other parts of the rich world. If you look at the world’s thirty richest countries in GDP per capita the United States is the only one without a substantial degree of free healthcare for all.

So the debate about economic systems is not really about polarised beliefs in vastly different alternatives – as was once the case. Tariq Ali’s quote at the head of this article is rather wistful – there is no alternative to capitalism and he knows it. But what he is getting at, and I agree with him, is that whilst the capitalist system is immutable in principle it must be open to change in practice. Some things cannot be left to the market and it is seeking the balance between control and centralised systems on the one hand and freedom and more local solutions on the other that is the challenge for politicians and for those who advise them. A few years ago there was a term for the middle ground suggested in this search for balance – the “Third Way” – and it was particularly trumpeted by Bill Clinton and Tony Blair as being a new form of politics. In reality both of these politicians were no less liberal free marketers and hands off than their nominally more conservative predecessors. The dysfunctional corporate management which led to the collapse of Enron happened on President Clinton’s watch and the underlying causes of Britain’s financial meltdown happened under Prime Minister Blair.

In October 2005 David Cameron made a speech in which he sought to secure the leadership of Britain’s’ Conservative Party. It was a speech full of soundbites and not a little fury. But within it he stippled out his personal philosophy and offered it to his Party, successfully as it turned out, as his mandate to be leader. It is worth quoting a brief extract from this peroration because recent history has shown it to be the absolute opposite of the truth:

“Everyone knows that business needs deregulation to compete with India and China. Who’s standing in the way? The great regulator and controller, Gordon Brown”. And who were Cameron’s heroes? “A new generation of business men and women, who are taking on the world, creating wealth and opportunity for the future”.

This was 2005 remember and Labour had been in power at that time for nine years. Can there be the slightest doubt that the problems in Britain’s financial systems, in banking and in the economy at large were not as Cameron believed attributable to the need for deregulation but in fact to the failure of too little regulation? Far from being a great “Controller” Gordon Brown as Chancellor was in fact far too laisser-faire! And the same applied even more so in the United States – would the collapse of Lehman Brothers and the failures in the mortgage markets have happened had regulation been more effective? Of course not. And many of the “new generation of business men” in the City of London that Cameron so hailed were driven by personal greed to cut corners, take unacceptable risks - and many of them brought their companies to their knees whilst paying themselves ever more obscenely high salaries and bonuses.

David Cameron has not budged much from his simplistic and wrong-headed belief that too much regulation is the cause of Britain’s economic woes. Indeed despite the evidence all around him he persists in trying to convince the electorate that too much government is the cause of all our problems. That Britain and the United States and most of the countries of the rich world have turned the corner with their economies, whilst still fragile, on the mend is attributable not to deregulation but to intervention – on a massive scale. And the Cameron-derided Gordon Brown has been in the forefront of this success story – indeed he led the way and gave others the courage to follow.

But what of the future? Perhaps here we may suggest that the “alterative to capitalism” that Tariq Ali sought has now actually arrived? It comes from two main stimuli – firstly that at last there has to be, whatever David Cameron might say, an acknowledgment that whilst our core model is a capitalist one the checks and balances must be tightened not loosened. The dysfunctionality of an ill-regulated financial sector has been laid bare and lets hope that this time (unlike after Enron and WorldCom) permanent legislative and regulatory action is taken. Secondly, for Britain at least, there is the benefit that being part of the European Union (EU) brings. When things have gone as dramatically wrong at a national level as has happened recently one must surely welcome the fact that the EU will bring not just common standards but international benchmarks and rules that will hopefully mean that such things don’t happen again. And on this subject as well the Eurosceptic Cameron is on the wrong side. In that same 2005 speech he criticised the passing of “…powers to a European Union that nobody trusts” - well these powers didn’t work very well did they Dave – any more than Gordon’s regulations did!

In the United States President Obama has a herculean task ahead of him to try and unravel the errors of the venal Bush administration on the economy. This challenges the free-enterprise worshippers – not least those who run around the capitalist temples in Enron land in Houston and blame Washington for everything! But in Britain the likely electoral swing in 2010 will bring to power a man who is deluded enough to adhere to a set of Thatcherite, Reagonomic and Friedmanesqee economic beliefs that recent times should have seen discarded to history. Fasten your seatbelts – it will be a very rough ride and we might need President Obama’s cavalry to rescue us!