These dreams took the form of two acronyms and one abstract noun. ESG for Environment, Social and Governance and DEI for Diversity, Equity and Inclusion were the acronyms. The abstract noun was “objective”—what companies had to pursue beyond just profit. Publications such as the Harvard Business Review focus on these topics. Young academics are infatuated with him. The Business Roundtable, which represents America’s largest enterprises, declares a duty to advance the well-being of all stakeholders, rather than just shareholders.
Business schools can continue to sing this hymn: If you’ve earned tenure by talking about business’s responsibility to society, you have a vested interest in continuing to talk about it for the next 50 years. But it will be increasingly irrelevant to companies that are overwhelmed to, first, survive, and, second, squeeze more productivity out of constrained resources, including the labor force.
A return to fundamentals will be further fueled by American politics. Republicans, led by Ron DeSantis, governor of Florida and the frontrunner for his party’s presidential nomination in 2024, have decided to make an example of “woke corporations” like Disney. Purpose: Companies will pay a political price if they support “progressive” causes instead of focusing on their core business mission.
The US Supreme Court is set to rule on two cases, one involving the University of North Carolina and the other Harvard University, that touch on the legality of using race to measure diversity in admissions. Court watchers are almost unanimous in thinking that the court will rule against this notion. This would have far-reaching implications for companies as it would remove legal protections for pursuing race-based policies, and thus lead to a flurry of lawsuits. Shortsighted companies will readily abandon diversity-themed hiring policies; Visionaries will adopt sophisticated methods of talent discovery among under-represented minorities, regardless of caste.
My other bailout is British politics. There, we’ll see a version of the same theme: a focus on the government’s “hard boring” after the extravagant dreams of the past year. Boris Johnson’s vision of a flat-out Brexit collapsed partly because of his own disorganization and partly because Brexiters never decided whether they wanted more or less of the global market. Liz Truss’s even more ambitious dream of restarting growth collapsed even more spectacularly, with markets in freefall and the Conservative Party in shock. Rishi Sunak’s job is to deliver an efficient government.
That mission would be a thankless task for two reasons. The first is that a decade or more of austerity has left Britain’s public services at the breaking point. The Sunak administration will be faced with a rolling succession of crises – heart attack victims waiting hours for an ambulance, hospital corridors packed with patients, children poisoned by black mold in council homes, school dinners in delivery Unsustainable schools and, above all, an increasing number of attacks – but the prime minister will have no money to deal with them. The Truss disaster means markets are no longer willing to give the government the benefit of the doubt. Meanwhile, built-in inflation means the government can’t keep up with demands without creating a wage-price spiral.
The government is also facing a massive refugee crisis with no amicable solution politically. Some 33,029 people are known to have arrived in the UK by small boats in January-September 2022, nearly double the number in the same nine months in 2021 and a huge burden on the public sector. If Britain continues with the status quo, allowing refugees to drag out their appeals for months, the court system and refugee centers will collapse under the weight of claims and bodies.
He is manna from heaven for Nigel Farage and other right wing activists. If the government tries to speed up the court system and export refugees to Rwanda, it risks alienating the liberal middle class. To add to the sense of institutional crisis, the new king, who is still finding his feet, will face allegations of racism, lashing out at the Duke and Duchess of Sussex (aka Harry and Meghan) and questions about how the then-prince Wales funded his charity, of which one of his favorite projects – the historic Dumfries House in Scotland – was a beneficiary.
The contraction of the Conservative Party’s horizons will be mirrored by the expansion of the Labor Party. Keir Starmer has played an efficient waiting game. After focusing on fixing the party’s internal problems, he is now advocating bold (perhaps too bold) policies including abolishing the House of Lords and removing the tax-exempt status of private schools. We can expect him to make more revelations throughout the year in a bid to wrest power from Britain’s bloated central government and strengthen provincial economic groups. Fatigue of one party is always an opportunity for the other party.
The West needs friendship, not resettlement: Redesigning global supply chains for a dangerous and unpredictable world should not mean sacrificing the power of comparative advantage.
Disney’s Florida Fight Shows Why Corporate Progressivism Can’t Win: The Walt Disney Company’s furore in Florida is a warning that capitalism will not gain legitimacy by isolating half the country.
America must work harder for its high-potential, low-income homegrown talent: America can no longer buy its way out of its talent problems: To thrive in the knowledge economy, it needs its low-income More has to be done to discover and nurture high potential students.
Companies that really want to do good should set aside ‘ESG’ and ‘DEI’: Businesses should think carefully about the new acronyms that increasingly control their lives.
Larry Fink is wrong: business doesn’t need a ‘social purpose’: the UK’s Better Business Act and other similar laws will prevent companies from doing their core job – competing to produce the best services and products at the lowest prices.
The Decline and Fall of the Tory Empire: Two books on the fall of Boris Johnson and the brief reign of Liz Truss show that the British political system is deeply broken.
Trump Republicans and Brexiters on the Race for National Disunion: Populist Revolution Could Change Britain More Dramatically Than America.
Rishi Sunak is a new-and-old-fashioned Tory: Britain’s prime minister is a fascinating combination of the fresh and the enduring in the world of the ruling Conservative Party.
We are watching the Tory Party hollow out: for all its electoral successes since 2010, the UK Conservative Party is rotting from within. It should be prepared to undertake comprehensive structural reforms.
The revolutionary monarchy of Elizabeth II: She rode the bicycle, challenged the down-marketing of European royals, and turned the Windsors into a staunchly bourgeois yet hypnotizing dynasty.
Kissinger knows why the global leadership deficit is getting worse: One of the world’s most experienced statesmen argues that the waters of great leaders from the fountains of civilization are drying up.
This column does not necessarily reflect the views of the Editorial Board or Bloomberg LP and its owners.
Adrian Wooldridge is a global business columnist for Bloomberg Opinion. A former writer at The Economist, he is the author, most recently, “The Aristocracy of Talent: How Meritocracy Made the Modern World.”
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