Financial Times 05Mar2020

8 ★ FINANCIAL TIMES Thursday5 March 2020

Hohn has total support

from Standard Chartered

Further to your report “TCI threatens

banks over coal funding” (March 2):

we wholly support the perspectives of

SirChristopher Hohn nda Graeme

Sweeney n the urgency of climateo

action — that’s why we changed our

approach over the past four years,

including our decision to stop financing

for coal mines (2016), coal-fired power

plants (2018) and to support only

clients that transition to generating less

than 10 per cent of earnings from

thermal coal by 2030.

We’d be happy to speak with Sir

Christopher to see how we can advance

our shared agenda which goes way

beyond coal. We are developing a

transition plan for all sectors of the

economy to meet our collective

commitments under the Paris

Agreement.

José Viñals

Group Chairman,

Standard Chartered

Compromise with EU

would put US deal at risk

Gideon Rachman’s somewhat

optimistic view that the UK-EU

negotiations will lead to an uneasy but

workable compromise does not take

account of a US-UK, deal which would

probably put such an outcome in

jeopardy (“Brexit solved with the

sword of Damocles”, March 3). Would

the EU tolerate a US tariff-free

arrangement with the UK if genetically

modified food and chlorinated chicken

were allowed into Britain? I doubt it. If

Mr Rachman’s compromise is to be

realised, then a serious UK-US deal

must be off the table.

Chris Haskins

House of Lords, UK

Stand firm — don’t let the

oil majors off the hook

Nick Butler (“Look beyond European

oil majors’ steps to net zero”, FT.com

March 2) is wrong to suggest that

campaigners should “rethink their

strategies” in light of public

commitments made by several oil

majors to go net zero by 2050. Until

those such as BP and Shell put forward

plausible plans for achieving their

goals, institutional investors, NGOs and

cultural institutions must continue to

take a firm line. Rather than begin

leaving fossil fuels in the ground as

many climate scientists are urging,

these companies are instead talking up

techno-fixes such as carbon capture,

which remain unproven at scale and

unlikely to remove the significant

emissions they would still be

producing.

Mr Butler also praises BP and

Equinor’s “focus on the development of

new low-carbon technologies”, but in

reality their investments in this area

remain tokenistic and for years have

lingered at about 2 per cent of their

overall capital spending.

Financial and cultural divestment

campaigns have clearly pushed these

companies to rethink their rhetoric. If

societal pressure hasbrought us to this

point, it is by sustaining it that tangible

actions which genuinely align with the

Paris climate goals might be achieved

— not by letting these oil majors off the

hook.

Dr Chris Garrard

Co-director,

Culture Unstained,

London SW2, UK

More heat than light in

the private prisons debate

It is clear the role of private contractors

in US corrections and immigration has

become a political hot potato for some

investors and politicians in recent

years (“Investors pressed on private

jail holdings”, FTfm, March 2), but the

debate to date has generated far more

heat than light.

While anger over President Donald

Trump’s immigration policies,

particularly the detention of

unaccompanied minors crossing the

border, has sparked activists’ ire, the

major contractors under fire today —

CoreCivic, the GEO Group and MTC —

never housed these migrant children.

All but one of the groups operating

those government-contracted shelters

for kids were non-profits, not the

private sector. Today, only8 per cent fo

incarcerated people are cared for in

contractor-operated facilities at the

state and federal levels in the US. One

would be hard-pressed to know that

important fact from listening to critics.

And as top US presidential

contenders target contractors, their

records in office tell a more complex

story. For instance, while Joe Biden was

vice-president, the Obama

administrationworked with CoreCivic

and GEO o build immigration-t

processing facilities and address the

last surge of migrants from Central

America. Meanwhile, Senator Bernie

Sanders has voted in favour of

legislation that funded the private

sector’s role in corrections. For two

decades, his ome state of Vermonth ash

addressed its prison overcrowding

problem by contracting with the

private sector to house hundreds of

inmates out-of-state.

Facts matter, particularly as they

relate to questions of public policy and

investing. We welcome the debate on

these important issues, but it must be

one based on the facts.

Alexandra Wilkes

National Spokesman,

Day 1 Alliance,

Washington, DC, US

Returning to high top tax

rates is not advisable

Megan Greene of Harvard Kennedy

School is, one hopes, right on one

point, in expressing some scepticism

about how far the American public is

really obsessed about income

inequality as a primary problem (“US

election may turn on voters’ view of

inequality”, March 3). As her op-ed

implicitly concedes, whatever small

changes may have occurred within

recent decades, you have to throw a

time comparison back over nearly half

a lifetime to show a dramatic rise in the

share of US personal income going to

the top 1 per cent. That takes you to

before the last serious permanent

reform of US personal tax in 1986,

which included the ending of

confiscatory top marginal rates. Very

much the same is true of the UK, and

for the same reason.

Major changes in top tax rates affect

income distribution before as well as

after tax, since they make a difference

to the amounts earned and declared by

the top income groups. Returning to

stupendously high top rates would no

doubt reduce recorded inequality

within the relevant country. It would

not, however, be a clever thing to do;

and it is very unlikely that it would

produce a sustainable increase in tax

revenues after the behavioural effects

had come through.

Andy Thompson

Worcester Park, Surrey, UK

Relieving the gloom

How clever of Julius to squeeze spying,

a terrorist, dirty bombs, six forms of

pollution and a fatal pandemic into the

March 4crossword. It’s good to see the

FT retain its sense of humour when

we’ve all seen better days, even if it is

just a drop in the ocean.

Sim Preston

Tokyo, Japan

As I stopped for lunch at a Turkish

lokanta n Ankara a few weeks ago, Ii

was pleasantly surprised to bump into

an official from a nearby government

ministry. It was a busy week on his

beat so I asked if he ever ate at his

desk, hunched over his computer and

scattering crumbs over the keyboard.

He and the colleague alongside him

wrinkled their noses. “Not unless we

absolutely have to.”

Turkey is a hard-working nation,

toiling for longer hours on average

than any EU country. But people here

are serious about lunch. Banks close

for up to an hour. Office phones go

unanswered. It is not quite provincial

France, where some shops still close

for two hours in the middle of the day.

But the idea of wolfing down a

sandwich in five minutes, London-

style, is anathema — especially to the

older generation.

Many large Turkish businesses have

their own restaurants providing lunch

to employees. But for me, the epitome

of Turkish lunch culture is theesnaf

lokantasi the type of traditional—

“tradesman’s restaurant” where I

bumped into the official.

Lokantas the name comes from the(

Italianlocanda) serve up homestyle

food in a friendly but also quaintly

formal environment. Even in more

workaday places with plastic tables,

food is always brought by a waiter.

Some still don’t take credit cards.

Most close in the afternoon when their

dishes, cooked daily, run out.

The culinary focus is on the kind of

soups and stews found in Turkish

homes that are little known outside a

country best-known for its kebabs.

As a pescatarian, I rely onlokantas

as a reliable source of sustenance both

in big cities and in small Anatolian

towns. My favourite dishes are the

hearty stews made of spinach, okra,

chickpeas or beans. (Although I

operate a “don’t ask, don’t tell” policy

on the use of meat stock.)

Almost as important as what’s on

the menu is the ethos, with a strong

emphasis on hospitality, sociability

and trust. Riza Erdegirmenci, a

businessman turned photographer

who produced a lossy book of imagesg

of 30lokantas cross Turkey, lovesa

that customers are expected to share

tables and chat to strangers.

“Around the table you can have a

lawyer, a farmer, a bank manager or a

bureaucrat,” he tells me over lunch at

Istanbul’s Yanyali Fehmi Lokantasi,

an upmarketlokanta here thew

waiters wear black waistcoats and

bow ties. Everyone is treated equally,

he says, and the staff will never hurry

you along. “They never ask: ‘would

you like anything else?’ or ‘Should I

bring the bill?’”

On his travels, he found that many

lokantas ave a system for helpingh

those who cannot afford to buy their

own meal. Some allow customers to

buy an empty plate that will be put on

display as a sign to a hungry passer-by.

Others give out free bowls of soup.

Tuba Satana, a food writer and

consultant who knows the daily

menus of her regular haunts by heart,

likes the reliance on honesty.

“You go to the cashier when you’re

finished and you say what you ate and

drank,” she says. “It’s a very trusting

relationship.” Many places let their

regular customers keep a tab which

they pay when they get paid each

month.

Yet the fear amonglokanta ie-d

hards is thatthis great Turkish

lunchtime tradition is under threat.

Fast food outlets and delivery services

are becoming ever more popular

among younger generations, as well as

those on a tight budget.

Mostlokantas ry to keep pricest

affordable, but owners say that even

loyal clientele have had to tighten

their belts after a 2018 currency crisis

that caused a spike in inflation and

unemployment. And while Turkey’s

economy is dominated by small and

medium size businesses, the rise of

largeshopping malls as contributedh

to a decline in the tradesmen and

small shopkeepers who form the

backbone of the customer base.

Lutfi Cebi, of Turkey’s Federation of

Lokantas and Patisseries, saysthe

sector is experiencing “reluctance”

among young people. He wants the

country’s older generations to take

youngsters on trips totraditional

lokantas o help them realise whatt

they are missing.

But mylokanta-loving government

official, who was singing the praises of

our venue, is only in his thirties. So

perhaps Mr Cebi shouldn’t despair too

much just yet.

[email protected]

Ditch the kebab.

There’s still time

for a proper

Turkish lunch

Ankara

Notebook

by Laura Pitel

It is time for the Financial Times to

turn away from the obsession with

money as a marker of human wellbeing

that is implicit in Andrew Jack’s report

“University degree boosts income by

£100,000” (February 29).

Universities were not set up to make

people rich. They were set up to

improve life. To keep inculcating our

school students with the idea that they

should focus on how to maximise their

income is a mistake for them and for

the social good. I hear this mistake put

into words and questions every time I

give an Open Day lecture to high school

students. As I write this, moreover, our

major global problems are rising world

temperatures and the threat from an

international virus. It is probable that

both were fostered by the pursuit of

money.

You say that economics and medical

degrees earn the biggest financial

return. For the record, UK data from

the wellbeing team at the Office for

National Statistics, which collects the

really important information on our

society, reveal that, for example,

florists, playworkers, pilots and fitness

instructors all have substantially

higher life satisfaction than

economists.

Andrew J Oswald

Professor of Economics and Behavioural

Science,

University of Warwick, UK

Universities weren’t set up to make people rich

Letters

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In November 1999, Fortune magazine
named General Electric’s chief execu-
tive Jack Welch “manager of the cen-
tury”. It might as well have been 1899
forallthathaschangedsince.
The mixed reaction toWelch’s death
this week, aged 84, reflects not only
GE’s recent struggles but a shift in the
landscape of corporate America and
shareholdercapitalismmorebroadly.
Many of the ruthless principles by
which Welch ran GE have fallen
sharply out of favour. The industrial
group itself has had tofight to shed ish
poisonous bequest of an unmanagea-
blylargeexposuretofinancialservices.
Admiration for Welch was founded
on his reputation as purveyor of a mus-
cular managerial approach that shook
upthecompanyandpreparedittotake
advantage of globalisation, digitisation
andthebuoyanteconomyofthe1990s.
A scrappy radical among internal
candidates for the top job in 1981,
Welch had the vision and determina-
tion to speed up GE’s sleepy metabo-
lism. He set a goal for its varied divi-
sions to be number one or number two
in their sector. This he backed with a
commitment to bright ideas, ending
“not-invented-here syndrome” that
shunned innovations developed out-
sidethegroup.Hesetouttohirepeople
“smarter than I am” and shaped them
in leadership programmes he champi-
oned. His drive and high profile
ensured all corners of the organisation
received and understood his message.
Revenues at GE grew fivefold and
earnings 10-fold during Welch’s job-
cutting 20-year tenure. But the uncan-
nilysmoothgrowthinprofit,whilewel-
comed by Wall Street, owed more to
clever accounting than precision budg-
eting. At the time of his retirement in
2001, there was no greater advocate of
financial value as the overriding target
for publicly listed companies. Even he
later described shareholder value as

“the dumbest idea in the world”,

though. In this he prefigured last year’s

redefinition of the purpose of the cor-

porationbytheBusinessRoundtable ot

accommodateotherstakeholders.

Unfettered and largely unchal-

lenged, in his later years at GE Welch

became the epitome of the imperial

CEO. His last “swing for the fences” — a

takeover of rival Honeywell for which

he delayed his departure — was scup-

pered by EU antitrust authorities. The

Enron scandal brought an early reck-

oning for CEO excess. Welch had to

renounce the rich retirement perks

shareholders had granted him, after

they came under scrutiny during an

acriddivorcefromhissecondwife.

His most ruthless management tech-

niques —“stack ranking” f staff, witho

the bottom 10 per cent moved on every

year, agladiatorial contest etweenb

potential successors — now look far

frombestpractice.

When the financial crisis hit, his ill-

judged and poorly understood finan-

cialbetscamebacktohaunthissucces-

sor, Jeff Immelt, undermining the

HousethatJackBuilt.

In a cycle that seems to repeat with

every overhyped corporate success,

Welch was lauded by business media

and mimicked by managers every-

where, for good and ill. His job-cutting

and offshoring initiatives contributed

to the simmering distrust of big busi-

ness that has boiled over in recent

yearsintopopulardiscontent.

Welch was an emblematic figure of

late20thcenturybusiness,amanofhis

time who channelled his animal spirits

into a sweeping corporate transforma-

tion.Thiscentury,though,hasexposed

the dangerous flaws in unabashed

shareholder-centric, debt-fuelled

expansion. Today’s chief executives

can learn from Welch’s example. But it

is now mainly a cautionary tale, rather

thananobjectlesson.

What to adopt from the late GE chief’s approach — and what to reject

Welch’s mixed legacy is

a sign of changing times

Joe Biden has staged a comeback of
Lazarene proportions. Two weeks ago,
hiscampaignfortheDemocraticnomi-
nation looked dead. Bernie Sanders
wastheclearfrontrunner;runningsec-
ondinthepolls—beforehisdiredebate
performance in Nevada — wasMichael
Bloomberg. Mr Biden’s ratings were
falling; he had won not a single pri-
mary. HisSuper Tuesday victory n 10i
states has transformed the Democratic
primaries into a two-horse race in
which Mr Biden is now favourite. The
questionnowiswhetherhecanconvert
that momentum into a clean win over
MrSanders.
The ex-vice president triumphed not
just in the six southern states where he
was favoured. He took Maine and Mas-
sachusetts — home state of Elizabeth
Warren and Mr Sanders’ backyard —
plus Minnesota and, in the biggest
upset, Texas. Even though he lost dele-
gate-rich California, he now leads his
nearestrivalondelegates.
The launch pad was Mr Biden’s
breakthroughinSouthCarolina nSat-o
urday,helpedbyblackvoterswhowere
under-represented in previous prima-
ries. Days earlier, he had received the
backing of Jim Clyburn, the former
civil rights activist from South Carolina
and highest-ranking African American
in Congress. His comeback was super-
charged by the decision of his centrist
rivals Pete Buttigieg and Amy Klobu-
chartowithdrawandendorsehim.The
hand of Barack Obama, said to have
persuaded Mr Buttigieg to concede,
gavehimadiscreetfurtherpush.
Mr Bloomberg is to be commended
for doing the sameon Wednesday. As
the former vice-president’s campaign
soared, the ex-New York mayor’s
crashed. His vast levels ofcampaign
spending ecured him victory on Tues-s
day only in American Samoa. The bil-
lionaire tycoon’s endorsement might
not help Mr Biden; it may even harm

him among left-leaning Democrats he

needs to win over. But Mr Bloomberg’s

dollars, and his digital platform if he

shares it, could give the centrist candi-

dateanadvantageoverDonaldTrump.

Analysis of Mr Biden’s support sug-

gestshehasmanagedtoreassemblethe

Democratic coalition of black and His-

panic voters, the elderly and the work-

ing classes. It is largely the same vote

MrObamasecured—minustheyoung,

whoareoverwhelminglypro-Sanders.

The extent to which Mr Biden can

woo the more radical youth vote will

decide not only if he can win the Demo-

cratic nomination, but the presidency

itself. Even if he can secure the former,

the risk is that, as with Hillary Clinton

in 2016, some of Mr Sanders’ ardent

young fan base will withhold their sup-

port. Much may hang on Mr Biden’s

choiceofrunningmate.

He will not be helped by renewed

attacks from the Trump circle ver theo

activities of his son Hunter Biden in

Ukraine. Those who believe the largely

false narrative being woven around the

ex-vice president would probably not

vote for him anyway. But the drip-drip

of poisonous tweets will provide a diffi-

cult backdrop. Mr Biden may be

assisted, though, by the president’s

fumbling response to coronavirus.

Indeed, the epidemic may lay bare Mr

Trump’s mismanagement of US dis-

ease prevention mechanisms, and the

gapingdeficienciesinitshealthcare.

The emergence of a single centrist

challenger is good for the Democrats,

and potentially for America. Mr Biden

still faces a battle royal with Bernie

Sanders. A sometimes rambling 77-

year-old, he is a far from perfect candi-

date. But his support for US democracy

and institutions alone, and for Amer-

ica’s international leadership role,

would make him a considerable

advance on the current inhabitant of

theWhiteHouse.

Biden’s stunning campaign revival has propelled him into the lead

A two-horse race to the

Democratic nomination

Make the most spiritual

of greetings universal

Your Madrid correspondent writes that

there seems to be a push for the

traditional greeting with kisses be

curtailed (“Faithful in Spain face

pressure to stop kissing”, March 3).

Perhaps the world could now adopt the

“namaste”, the most elegant, respectful

and spiritual, not to mention ultra-

hygienic, greeting that exists.

Sunil Damodar

Jersey City, NJ, US

Legislate now against

corrupt short selling

Governments must regulate to stop the

corrupt practice of short selling off the

back of the coronavirus emergency.

Short selling is exacerbating market

volatility and causing some stocks to

plummet. Sure, there will be winners

and losers in any global downturn, but

it is important that investors, not

hedgers, get to choose them based on

their risk exposures (like supply chain

disruption, a downturn in demand,

poor management and so on) and

resilience (good management, solid

finances, customer growth potential).

At times like this it’s key that the

spending of public money by

governments to stabilise their

economies has a fair chance of success

and that pensions are not being

gambled away.

Dr Alyson Warhurst

Bath, Somerset, UK

Central bankers show

signs of madness

Central bankers’ response to

coronavirus brings to mind Albert

Einstein’s observation that “insanity is

doing the same thing over and over

again and expecting different results”.

During a period retrospectively termed

“the Great Moderation”, the Fed cut

lending rates to counter every sharp

fall in equity prices. The market’s

subsequent expectation of that

“Greenspan put” arguably contributed

to the depth of the ensuing global

financial crisis.

G R Steele

Reader Emeritus of Economics,

Lancaster University Management

School, UK

We need our leaders to be

fit, well and functioning

It’s all very well UK prime minister

Boris Johnson announcing that he will

ignore medical advice and continue to

shake hands with everyone, including

those suspected of having coronavirus.

He adds that “washing your hands is

the crucial thing”. It’s not. Preventing

contamination and infection is the

crucial thing at every opportunity, as

that leads to containment.

By continuing to shake hands, he

puts at risk himself, his own family,

and also members of the cabinet at a

time when we need our leaders to be

well, cogent and functioning.

Lee Callaghan

London N22, UK

A silver lining?

Is it possible that, as a result of all the

research occasioned by the threat of a

no-deal Brexit, UK plc is a little better

prepared for the supply chain risk from

the coronavirus outbreak?

Tim Gordon

London N1, UK

MARCH 5 2020 Section:Features Time: 3/20204/ - 18:48 User:dana.prince Page Name:LEADER USA, Part,Page,Edition:USA , 8, 1