These dreams took the form of two acronyms and an abstract noun. The acronyms were ESG for environment, social and governance and DEI for diversity, equity and inclusion. The abstract noun was “purpose” — which companies had to pursue ahead of just profit. Publications such as the Harvard Business Review focus obsessively on these subjects. Young academics fixate on them. The Business Roundtable, which represents America’s biggest enterprises, proclaims it a duty to pursue the good of all stakeholders rather than just shareholders.
Business schools may continue to sing from this hymnbook: If you got 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 overwhelmed with, first, surviving, and second, squeezing more productivity out of constrained resources, including the labor force.
The return to basics will be given a further shove by US politics. Republicans, led by Ron DeSantis, Florida’s governor and probably the front-runner for their party’s presidential nomination in 2024, have decided to make an example of “woke corporations” such as Disney. The aim: Companies will pay a political price if they support “progressive” causes rather than focusing on their core business mission.
The US Supreme Court is set to rule in two cases, one involving the University of North Carolina and the other Harvard University, that touch on the legality of using diversity as a rationale for using race in admissions. Court-watchers are almost unanimous in thinking the court will rule against the notion. This will have far-reaching implications for companies because it will remove legal protections for pursuing race-based policies, and thereby provoke a swarm of lawsuits. Shortsighted companies will simply drop diversity-themed hiring policies; farsighted ones will embrace sophisticated methods of discovering talent in underrepresented minorities, regardless of race.
My other bailiwick is British politics. There, we will see a variant of the same theme: a focus on the “hard boring” of government after the extravagant dreams of the past year or so. Boris Johnson’s vision of delivering on Brexit by levelling up the country collapsed partly because of his own disorganization and partly because Brexiteers never decided whether they wanted more of the global market or less. Liz Truss’s even more ambitious dream of reigniting growth collapsed in even more spectacular fashion with the markets in freefall and the Conservative Party in trauma. Rishi Sunak’s job is to deliver competent government.
That mission will be a thankless task for two reasons. The first is that a decade or more of austerity has left Britain’s public services at breaking point. The Sunak administration will be confronted with a rolling succession of crises — heart-attack victims waiting hours for ambulances, hospital corridors crammed full of patients, children poisoned by black mold in council houses, schools unable to provide school dinners and, above all, a mounting toll of strikes — but the prime minister will have no money to deal with them. The Truss disaster means that the markets are no longer willing to give the government the benefit of the doubt. Meanwhile, ingrained inflation means the government can’t give in to pay demands without creating a wage-price spiral.
The government is also faced with a mass refugee crisis that doesn’t have any politically palatable solution. Some 33,029 people were detected arriving in Britain by small boats in January-September 2022, almost double the number in the same nine months in 2021 and a substantial burden on an overstretched public sector. If Britain continues with the status quo, whereby refugees can string out their appeals for months, the court system and refugee centers will collapse under the weight of claims and bodies.
That is manna from heaven for Nigel Farage and other rightwing activists. If the government tries to speed up the court system and export refugees to Rwanda, it risks alienating the liberal middle classes. To add to the sense of institutional crisis, the new king, who is still finding his feet, will be confronted with accusations of racism, emanating from the Duke and Duchess of Sussex (aka Harry and Meghan) and questions about how the then-Prince of Wales funded his charity, of which one of his favorite projects — historic Dumfries House in Scotland — was a beneficiary.
The counterpoint to the shrinking of the Conservative Party’s horizon will be the expansion of the Labour Party’s. Keir Starmer has played a skillful waiting game. Having focused on fixing the party’s internal problems, he is now advocating bold (perhaps too bold) policies that include abolishing the House of Lords and removing the tax-exempt status of private schools. We can expect him to unveil more over the year to do with devolving power from Britain’s bloated central government and invigorating provincial economic clusters. One party’s exhaustion is always another party’s opportunity.
The West Needs Friendshoring, Not Reshoring: Redesigning global supply chains for a dangerous and unpredictable world shouldn’t mean forsaking the power of comparative advantage.
Disney’s Florida Fight Shows Why Corporate Progressivism Can’t Win: The furor facec by Walt Disney Co. in Florida is a warning that capitalism won’t regain its legitimacy by alienating half the country.
America Must Look Harder for Its High-Ability, Low-Income Homegrown Talent: The U.S. can no longer import its way out of its talent problems: To thrive in the knowledge economy, it must do more to discover and nurture its low-income, high-ability students.
Companies That Really Want to Do Some Good Should Unbundle ‘ESG’ and ‘DEI’: Businesspeople should think carefully about the new acronyms that increasingly govern their lives.
Larry Fink Is Wrong: Business Doesn’t Need a ‘Social Purpose’: The U.K.’s Better Business Act and other similar laws will keep companies from doing their basic 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 short reign of Liz Truss suggest the British political system is badly broken.
Trump Republicans and Brexiteers Are in a Race Toward National Disunion: The populist revolution may end up reshaping 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 perpetual in the world of the ruling Conservative Party.
We’re Witnessing the Hollowing Out of the Tory Party: For all its electoral successes since 2010, the UK Conservative Party has been rotting from within. It must be willing to make broader structural reforms.
The Revolutionary Monarchy of Elizabeth II: She defied the bicycle-riding, down-marketing of European royals and transformed the Windsors into a staunchly bourgeois yet mesmerizing dynasty.
Kissinger Knows Why the Global Leadership Deficit Is Getting Worse: One of the world’s most seasoned statesmen argues that the civilizational springs that water great leaders may be drying up.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Adrian Wooldridge is the global business columnist for Bloomberg Opinion. A former writer at the Economist, he is author, most recently, of “The Aristocracy of Talent: How Meritocracy Made the Modern World.”
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