Place matters

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I was troubled to read this comment in the FT this morning:

Globalisation and free trade have brought many advantages. But that sense that companies are part of the communities they were born in is, sadly, gone for good.

This comes from a piece by Michael Skapinker discussing corporate inversions, and much else. His point was that the relationship between a business and a place has been broken: what matters now is profit and if relocation is needed to deliver that then he argues that relocate they will.

That may be true for the moment. I am not so sure it is true for good. There are a number of reasons for thinking that.

The first is that in practice some businesses are inextricably tied to a place. They are small. They serve a community. They need a particular skill or resource. They are located near their owners. The reasons are numerous, but this happens to be true of most of the world's businesses. It is a tiny minority who are footloose. We need to remember that.

Second, the ethic of globalisation is remarkably new. At a push you can make it a bit over a century old. Thirty years is more realistic. Ancient ties, such as those between humans and places, are not easily changed in such time periods.

Third, this break between companies and places is not permanent. Onshoring is already an observable trend.

Fourth, much of the supposedly mobile company is in fact the impact of mobile capital or its just a charade. Take Shire plc as an example. It supposedly left the UK for Ireland. Now it's being taken over and is becoming part of a Jersey company tax resident in the UK. Throughout that six plus year episode their centre of operations has been in Basingstoke. The contact addresses on their website are in the UK. Nothing really changed. Senior management just played some games.

Fifth, people realise place does matter. We have known it for a long time. St Benedict taught it. We have allegiances to 'home' that are hard to break (why else would I support Ipswich Town?). For most of us family and friends really matter. We simply don't want to move. And businesses that do not understand and reflect that will all too often in the end fail to win our business. There will be exceptions of course. But I think place matters in a way few big businesses really understand but which real people do.

Sixth, sustainability will demand change.

I could go on. But my point is place matters. The business who ignores that, and the partnership it has with the community that hosts its activity, will eventually pay the price for it. We're seeing that in the reaction to corporate tax planning. We don't like those who free-ride our communities. And the business that ignores that will eventually do so at its peril.