Amid fall-out of the past 18 months or so, since September 2008, the fall of Lehman Brothers and the re-thinking of regulation and of capitalism that is – or rather, should be – taking place, many commentators are commenting on the unexpected nature of the unfolding crisis.
A few commentators, however, have consistently warned that excessive short-termism, and manipulation of financial information rather than sound governance of institutions, was creating risk of a scale that was almost certain to imperil the global economy.
Some people, in other words, saw it coming. But instead of acknowledging their contribution and listening to their advice, senior executives, politicians and editors are too terrified of losing face. The profile of these commentators has, if anything, actually declined. One of them, Simon Caulkin of The Observer, even lost his job – just as The Observer seems intent upon driving itself into bankruptcy alongside Lehman Brothers – in its case, through dumbing down and thoughtless cost-cutting.
Another couple of individuals worthy of recognition are Don Young and Pat Scott. In 2002, they published Having Their Cake, which warned of the growing crisis of excessive risk and greed. It was based on their own experience of investor pressure distorting and undermining the governance of organisations.
Young and Scott had been top managers in several companies, including Thorn EMI and Redland plc. Pat Scott had been director of Treasury and Tax and Don Young director of Organisation and Human Resources.
In their own words: ‘“Having Their Cake” was stimulated by [our] direct experience of the growing dominance of the financial markets on the strategies of those companies and the degradation of corporate strategy into City-pleasing stories and numbers. We also observed the emergence of a close symbiotic relationship between top managers and the City as managers learned how to use investor pressures to enhance their wealth, particularly through share option and Long Term Incentive Plans.
‘Our experience, research for the book and subsequent investigations revealed a mainly hidden skein of relationships that amount to a collusive “system” of interests which have come to dominate the industrial agendas - to the benefit of powerful insiders in the system and the disadvantage of all other stakeholders.’
Most chilling of all, though, Don Young and Pat Scott warn on their website that politicians, executives and investors have simply not absorbed their lesson, and are busy repeating the colossal errors of the past ten years.
There is an excellent array of comment and news at:
http://www.havingtheircake.com