The big business bogeyman

It might come as a surprise to anyone who hasn’t done so, to learn that people who run major companies are not always the equivalent of Darth Vader or Ebenezer Scrooge.

Not all CEOs of major corporations, not even most of them, hatch plots to rob their employees of wages and entitlements, develop strategies to wreck the environment, or devise clever ways to rip off their customers.

But you’d be excused for thinking so. Big business has become the latest bete noir; a convenient scapegoat for all that is bad about capitalism, or corporatism, or fossil fuels, or the two-speed economy, or the tax system… and on it goes.

Tim Dunlop described another dimension to the evil empire today, in an otherwise excellent piece on the importance of civic engagement. According to Tim, big business has a secret agenda to create bigger government through increased regulation. I love a good rant, so here it is in full:

Look at how business people, despite their rhetoric, behave in the real world. They are no more interested in small government than they are in competition.

Do big players like Harvey Norman and David Jones welcome competition from the internet as the lifeblood of the free enterprise system they claim to love and then redouble their efforts to provide their customers with a better deal when it challenges their business model?

Don’t make me laugh.

What they actually do is demand government regulate the internet, or adjust the tax system, or change labour laws in order to neutralise the competition and maintain the status quo.

(And speaking of labour laws, that sacred text of small-government types, WorkChoices, while marketed as labour force deregulation was nothing of the sort. It was 1,000-odd pages of exactly that: regulation.)

Banks around the world didn’t just cop the market collapse associated with the global financial crisis as an example of the beauty of capitalism-as-it-actually-works. They sought to ameliorate the fallout of market forces they allegedly champion by lobbying governments to redirect public funds to their private losses, and they did it without so much as a blush.

Or look at how that champion of the free market Gina Rinehart responded to a labour shortage at her mines. She didn’t use the forces of the market to attract more workers by offering better wages and conditions. She did a deal with government to bring in guest workers from poorer nations overseas.

Rinehart’s freedom was enhanced, not by getting rid of government interference, but directing it to work in her favour.

And what of that other mining magnate and scourge of big government, Clive Palmer? Palmer so hates government that he is trying to get elected to it. He doesn’t want to abolish government or even shrink it; he wants to run it.

So here we have the thousands of big businesses in Australia tarred with the same brush as DJs, Harvey Norman, the banks, Gina Rinehart and Clive Palmer. All of them are somehow manipulating the government to increase regulation and change laws to crush their competitors and enslave their employees.

Well, yeah, nah, that’s just not how it is the real world. Sure, there are some bad eggs amongst them but for the main part the people who run big businesses are good people like you and me, just trying to do their jobs as best they can.

Whether we like it or not, that job primarily is to provide the best return possible to shareholders. And remember, those shareholders include pretty much anyone with an Australian superannuation scheme – yep, that’s people like you and me.

Short-sighted business people look no further than this requirement – and the bad eggs amongst them are no-doubt focussed on profits at any cost. But canny business people know they have to do more than look after their shareholders if they want the company to be viable over the longer term.

These are the CEOs (and Boards) who invest time and money in their workforce, knowing that loyalty pays dividends in reduced employee turnover, as well as better quality assurance, OHS performance and company reputation.

The same head honchos know their company must be a good corporate citizen if it is going to be allowed to continue operating. This means meeting the community’s expectations as well as that of the government.

And it is at this point that I partly agree with Tim Dunlop’s contention that businesses can lobby government for more regulation. Some advocate regulation, not necessarily to crush competitors but to bring them into line with the standards of behaviour that are expected by the community. This is because a business sector, or an industry, will nearly always be judged by its miscreants poorest performers.

Which ironically is just what Tim Dunlop did in his piece today.

So in closing, let me say, yes I’m a conservative, yes I’ve worked for big business, yes I used to be a lobbyist. But this post is from me as an informed citizen, saying “Why do we beat up on big businesses when they create jobs and help keep our economy strong? Why do we tar them all with the same brush? And, isn’t this the same sort of intellectual laziness that we want to stop in the mainstream media?”

Postscript: Here is an excellent rejoinder to my post from @theMickMorris The Big Union Bogeyman

Who’s the demon?

At the risk of being called naïve or an apologist, I feel compelled to challenge the demonisation of big business.

While it is something that has been troubling me for a while, my concerns have become crystalised by the anti-mining mutterings of my esteemed colleagues on Twitter.

In recent days, the more we non-economists hear about the misnamed Resource Super Profit Tax, the more sensible it seems.  But it has taken serious journalists such as Peter Martin and George Megalogenis to take the time to translate this arcane but practical arrangement into plain English.

We should not have been subjected to the shrill objections and counter-claims of the mining industry and Government.  Any government worth its salt on the issues management front could have turned this resource and risk sharing arrangement into a good news story by bringing the mining industry into the tent and getting them on side before the RSPT announcement was made.

Is this me being naïve?  Or did the Government want the mining industry to be seen to be taking a hit swiftly after it dodged an earlier bullet with the abandonment of the Carbon Pollution Reduction Scheme?

Did the Government consciously demonise the mining industry in an attempt to regain a few brownie points from the electorate?

Perhaps the answer can be found in the title for the new scheme.  The moniker given to the Resource Super Profit Tax smacks of the same hyperbole applied to the Carbon Pollution Reduction Scheme.   The RSPT is no more a real tax than CO2 is real pollution.  But these labels provide a mechanism for the government to simultaneously suggest there is a serious problem and that it is addressing this problem with a new acronym, I mean, program.

Aside from this, is the demonisation of the Australian mining industry justified?

Yes there have been sins in the past.  And there are still some out-riders who think they can still get away with it dodgy practices.  But it is no more logical to burden all miners with the sins of the few, than it is to do the same with teachers, car drivers, or internet users.

Mining companies work on 20 and 30 year timeframes.  They understand better than most of us the bounty and the limitations of the earth.  Even so, it took them a while to realise that the natural environment is not limitless in its capacity to rebound from the stresses of mineral extraction.  It took them even longer to understand how their operations impact on people and societies.  But they did come to understand these factors and they took action to change.

Around 10 years ago, led by Australian mining company CEOs, the global industry took the unprecedented step of commissioning an international NGO called the International Institute for Environment and Development (www.iied.org) to run the world’s biggest community attitudes survey.  The survey was to find out what communities, governments, environmentalists and other activists in both the developing and developed worlds thought about the mining industry and what they wanted to change about how the industry went about its business.

Some mining companies walked away from this process because they found it too confronting.  To my knowledge, none of those companies operate or have a presence in Australia.  Some NGOs walked away too because they thought it was a greenwashing exercise.  But after two years of the community talking and the mining industry listening, some real outcomes emerged.  Perhaps these were less ambitious than some would have liked.  But they were a start.  A new mining entity was established at the global level to continue the discussion with NGOs and to deliver the undertakings.

My point is that mining companies know better than most that they have to be “good corporate citizens” in order to keep their social license to operate.

It is these companies who have built roads and communities alongside their operations in rural and remote Australia.  They have built infrastructure for water and electricity generation.  They have education and employment programs for their local people.  They have invested in these communities with their shareholders’ funds because governments would not.  And as a result they have a relationship with their communities that politicians and other companies could only ever dream of.

While some critics of mining are prepared to acknowledge this investment, they call it the resource curse – communities and economies made dependent on mining revenue that are left stranded when the operation ceases.  This may well occur if a mine is closed before its time due to emergency or insolvency.  But most major operations include the cost of withdrawal from the community in their initial project costings.  This withdrawal includes building capacity within the community to ensure that it can continue to thrive once the mining project has concluded.  If you want a real example of that strategy, then look no further than the thriving ex-mining town of Newcastle.

I’ll have other things to say about the anti-corporate, anti-capitalist bandwagon.  But for today, I’ll finish by saying this: when a politician points at someone and says they are bad and need to be dealt with, first ask yourself why the politician wants you to believe him …….