The Week UK - 28.03.2020

46 CITY

THE WEEK 28 March 2020

Commentators

For more thanacentury,apillarof America’s“outsized”global

influencehasbeenitsreputation for“competence”,saysStephen

M.Walt.That wasreflectedinitsindustrialmight, inthe model

of liberaldemocraticcapitalism itchampioned,andinacontinued

streamoftechnological innovations–fromtheMoon landingsto

the smartphone.This“glowingreputation”, built upover many

decades,haslongbeen onthewane; thecountry’scack-handed

management ofCovid-19couldkillitoffforgood. “Trump’s

handlingof the crisishasbeenanembarrassing debaclefromthe

start”,but also“utterly predictable”. He is“the apotheosis” of the

“greedisgood”mantra thathashollowedoutpublic institutions

and allowedWallStreetfirms“tocratertheeconomy”without

anyretribution. “Absent areversalof thistrend”, USglobal

influencewillcontinue torecedeandthedeferenceonwhich

its leadersoncecounted willfade.“Once Covid-19isover,

Americans are likely to discovertotheir chagrinthatothervoices

(Beijing, anyone?)are receiving morerespectfulattention.”

BlackRockistheworld’slargestassetmanager,withsome$7.4trn

inassetsundermanagementasoftheendoflastyear.Butone

wonderswhereitsinvestmentexpertshavebeeninthepastfew

weeks,saysTomBraithwaite.Ratherthanfocusingonthevirus

crisis,thegiantshareholderhas“providedalittlelightrelief”by

informingexecutiveswhosebusinessesareonfirethatthey’llbe

“judgedin 2020 ”bythefivemeasurescontainedinits“steward-

ship”goals–namelyboardquality,environmentalrisksand

opportunities,corporatestrategyandcapitalallocation,compen-

sation,and humancapitalmanagement.“Nothey won’t.They

willbejudgedonwhethertheycansurvive.” Issuing such

demandsduringthiscrisisisfranklybizarre. “Millions may lose

theirjobs”,butthegovernancepolicearestillpumpingoutpress

releases. Tobe fair,someofBlackRock’smeasures docount–

evenin acrisis.“Questionable”capitalallocationatBoeing,for

instance,hasseenit requestbillionsin taxpayer support;other

firmsarebeing“criticisedfor managingtheir humansoutof the

door”. For now, though, survival is the only “metric that matters”.

TransportSecretaryGrantShapps’sdecisionto“temporarily

suspendnormalfranchiseagreements”isjustwhatthedoctor

orderedforheavilyloss-makingrailoperatorslikeFirstGroup,

saysAlistairOsborne.Fromtheirpointofview,the“financial

alchemyofCovid-19”hassavedtheindustryfromhittingthe

buffers.True,thenewrulesinitiallyapplyforonlysixmonths,

buttheyarrivejustintimeforboardswhich“ludicrously”over-

bidforfranchises.“Wildlyoptimisticbids,runawayrevenuerisk,

NetworkRailscrew-upsandthinlycapitalisedoperatorshave

longbeenaprizemixforfinancialderailments”,andthoughfull

nationalisationstilllooksan“impossiblejob”,itmustbe“game

over”forthecurrentsystem.Thevirusgottherebeforethefinal

reportfromKeithWilliams,whoiscurrentlyreviewingthe

railways.Buthehadalreadydeclaredthesystem“broken”.

Managementcontractsthatleavemostofthefarerevenuerisk

withtheGovernmentarelongoverdue.“Itshouldn’thavetaken

Covid-19toshuntthefranchisingfiascointothesidings.”

As Britain’srestaurants scramble toreinvent themselves in the

wakeofthe coronavirus, “thesector is deliveringamasterclass

in adaptability”, says Tony Naylor. Bars and restaurantshave

morphedinto takeaways, bottleshopsanddelicatessens. Someare

selling hampersandmeal-kits;others offering cookerycourses. In

London,the Cheese Barisdelivering“the ultimate inmiddle-class

outreach: self-isolation survival kits of cheese andwine”. Others

arepushing meal vouchers, for laterredemption, andpay-now-

drink-later bartabs;anything, inshort,to stay afloat.Financially,

these movesare just “sticking plasters”. Indeed,the real money is

being madeby thenewbreed of deliverycompanies, like JustEat

and Deliveroo,whose heftyfees andcommissionrates (typically

25%-35%) areeatingintomargins. “This problem predatesthe

pandemic.” Whiledisruptors boastofan“excitingnew market”,

restaurateursgrumblethatthey builtitfirst. Bearthatin mind

when thecrisis is over–delete yourapps andvisitarestaurant, or

orderatakeaway on site. The people deserving your cash are those

“battling to savethisindustry”–not thenew layerofmiddlemen.

TimMartin

TheWetherspoonboss,

rarelyfarfromcontroversy,

lobbiedhardtokeepthe

chain’spubsopen,claiming

closureswere“overthe

top”.Havinglostthatfight,

he’snowfacingaccusations

ofabandonmentfrom

employees,saidColinDrury

inTheIndependent.Ina

“ramblingvideo”sentto

all40,000staff“amiduncer-

taintyovertheirfutures”,

Martinacknowledgedthat

thestatewillpickup80%of

theirwages,butnonetheless

suggestedtheygoandwork

atTesco.“Allourtradehas

nowgonetosupermarkets,”

hesaid.Somemightcallthe

movepragmatic.Butsince

otherclosedchains,suchas

Costa,willcontinuepaying

fullwages,staffwonderwhy

Wetherspoon,whichturned

over£1.8bnlastyear,

couldn’tfollowsuit.Martin

atleasthadthegraceto

wishthem“goodluck”.

ChoHyun-ah

The“nut-rageheiress”is

backwithavengeance,said

TheTimes.ChoHyun-ah,

daughteroftheheadof

KoreanAir,famouslythrew

atantrumononeofits

planesin2015,because

“she was served macadamia

nuts inabag”, not on a

plate; she was jailed after

orderingataxiing plane back

to its gate to eject the purser.

But now, following her

father’s death, she is fighting

her brother for control of the

family’s business empire and

–withthe heft of the Korean

activist investment fund

KCGI behind her–hopingto

grab the chair of the troubled

Hanjin conglomerate. The

matter is due to be settled

at an investors’ meeting

next week. Fiery tempers

run in the family: in 2018,

Cho’s younger sister was

investigated by police “for

allegedly throwing water in

the face of an executive”.

How Covid-19

“saved” the

rail industry

AlistairOsborne

TheTimes

BlackRock

seems to have

lost the plot

TomBraithwaite

FinancialTimes

The death

of American

competence

StephenM.Walt

ForeignPolicy

In praise of

our inventive

restaurants

Tony Naylor

The Guardian

City profiles