The Week UK - 28.03.2020

(Nandana) #1

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
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