City & Business: Giving the lie to the spins we live by
Sunday 31 January 1999
We spin ourselves. We collude in the process by which politicians, businessmen, reporters and PR folk lay tracks of self-serving interpretation on top of the truth. We do this because spinning not only advances special interests, but also because it cheers us in dark times. The risk is that we get lost in the hall of media mirrors and fail to see what's what.
Consider the news last week. We learned that the economy grew just above zero in the last quarter of 1998. But before we had time to consider this fact alone, we transmuted it into good news about a "soft landing" as economic activity slows.
"The UK economy will achieve a soft landing, avoiding outright recession despite a projected slowdown in growth this year, the National Institute of Economic and Social Research predicts in a report published today," said the FT on Friday. Who was going to argue with that kind of double authority? Not those buying into the vision of a nation huddled around the hearth in mid-winter, worried only about which new PEP to buy and which consumer durable not to buy to see out the downturn.
Last week also the "world's leaders", gathered at Davos, put a happy face on the depression in Asia. "We must demonstrate that globalisation is not just a code word for an exclusive focus on shareholder value at the expense of any other consideration," Klaus Schwab, president and founder of the World Economic Forum proclaimed.
What to do? Introduce Tony Blair's Third Way to Group of Seven economic policymaking. Restyle "globalisation" as "responsible globality". Chip away at the grossest excesses of globalisation like child labour and ... well, that's it for now.
If this spin on the spin of last week's news strikes you as bad-tempered and ill-informed, consider some other "truths" by which we live at present: there are a lot of imbalances in the world economy, but at least we've tamed inflation, and that's good.
But how has inflation been tamed? By the good moves of Alan Greenspan, Eddie George and other central bankers; no harm there. By the low price of oil and other commodities; not much harm there - at least to those of us not living in Aberdeen. Because of weakening demand from Asia; no harm there - at least in the short run. But also because the rank and file are working harder now for less pay and with less security; there's a lot of harm there. Except for some squishy articles about "downshifting", however, this basic fact of life barely enters the public debate.
More and more of our companies are foreign owned, but it's all right because the economy is global now, big companies are beyond sovereign control anyway, and we are holding our own in attracting these companies to our shores.
This argument - the shorthand for which is "Wimbledonisation" - beguilingly suggests we have the greenest courts for the world's companies, the best umpires and the nicest strawberries and cream. But it is tripe. Two news items from last week prove it. Ford bought Volvo because it needed cars to sell to customers looking for models in between Mondeos and Jaguars. It also needed to extend its control over the world's national auto markets as they merge into one. The deal may be good for Ford. But it is bad for the workers at Dagenham and also the local companies servicing and supplying the Ford Fiesta assembly plant. As David Brierley reports below, Ford may now deploy its scarce capital on building up Volvo, and let Dagenham run down.
The second bit of news proving Wimbledonisation came from Brussels. A sub-committee of the European parliament voted down a British effort to exempt eurobonds from plans to harmonise EU withholding tax. City fathers worry that if withholding tax is imposed on the $3,300bn (pounds 2012bn) London- based eurobond market, the market will simply slope off to Zurich and New York. This fear is heightened by the fact that the banks dominating the London eurobond market are now American and Swiss. They thus could cut costs by bringing their eurobond operations home.
There's a growing gap between rich and poor. This is because of the transition to a global economy. Bosses have to be paid world-level salaries. Uneducated, unskilled workers in Birmingham must compete with Chinese prisoners. But New Labour is tackling this issue. Its Third Way policies will raise workforce skills. Simultaneously Tony & Co are firing the social consciences of business leaders like Lord Sainsbury.
Of all the spins by which we currently live, this is the one to which I personally subscribe. But I worry. Last week David Montgomery was forced out as the chief executive of the Mirror Group. He was, according to Mirror chairman Victor Blank and shareholders like PDFM, blocking a deal that will create shareholder value. He earned his payoff because of the job he did in getting the Mirror Group functioning after the Maxwell debacle.
But this was simply asserted. Maybe a monkey could have run the Mirror Group after Maxwell or, if not a monkey, any businessman with two brain cells to rub together. Maybe Montgomery got his huge payoff because if he had not, it would have sent the wrong signal, jeopardising future payoffs to others in the magic circle.
THIS may all sound too anti-business for a proper business column. I don't think so. At an economic level, the spin covering the plain truth, like a Roald Dahl vine gone mad, creates a gap between official and private versions of the fact. This gap is destabilising. It creates in employees, consumers and executives, as well as investors, a readiness to panic. We collude in a pretence waiting for the event that will undermine the pretence. Everyone, including David Montgomery with his pounds 1.6m safety net, lives ready to run.
At a corporate level spin complicates long-term planning. The news last week that the economy may be heading for a soft landing has some value. It guides businessmen trying to gauge consumer demand and inventory levels. But the nuances of the British business cycle pale in importance to what is happening to the world economy as whole. Gauging what is happening there - and one's own position in that pattern - is crucial for any businessman trying to set strategy.
There is one other consideration. Businessmen hate spin, but they have learned to live with it. They do this by forking out for their own spinmeisters. This creates a vicious circle. The greater the level of corporate spin, the worse economic and business reporting becomes. The worse economic and business reporting becomes, the more businessmen feel the need to protect themselves against the speculation that takes the place of finding out what's really going on.
This costs a lot of money. If PRs were abolished, business would make a material saving. The people who work as PRs - who in my experience are at least as intelligent as those in my own profession - could be more productively deployed.
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