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.
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I grew up in Northern Ireland in the 1950s and 1960s. At that time there were generous grants to international companies to set up a factory in Northern Ireland. But at the first whisper of cold air, the international company closed the Northern Ireland factory and retreated to its home. It struck me at the time how much better the money could have been used to develop local businesses that had an incentive to stay and keep going.
Agreed!
Um, the modern idea of place may be only a temporary thing. In the ancient past for hunter gatherers, you moved on when you had stripped out the food resources. Also, looking at the mass migrations of the past, place is less important than extended family. The Census Returns of the past suggest that for many place was secondary to work and opportunity. Our kind of nationalism etc. is really quite recent in many ways.
Ideas of place are, though, many, many centuries old
I am not sure I agree on this occassion
the former history teacher in me has just escaped. In times after the hunter gatherer times we had the slavery of the Roman Empire, then feudalism where most people were tied, by law, to the area. Then feudalism died-as late as 1861 in Russia. In Britain there were tremendous movements off the land with the enclosures and to new industrial areas like south wales, Yorkshire, Lancs and coal fields to name a few. However, they did create new and vibrant communities. As did, of course, those who emigrated.
In the USA there was more of a tradition of moving on as the frontier expanded and railroads spanned the continent. Much of the economic thinking of the last thirty years is American in origin and may reflect the American experience. I think Richard is essentially right but you are not incorrect in pointing out the recent of formal national bonds in much of the world including Europe. Most of Eastern Europe’s boundaries date from 1918 or even 1945.
I remember my late colleague saying that the idea of business which puts a social objective above shareholder returns was at first considered heresy. Today there are several variations on the theme.
http://www.p-ced.com/1/node/112
Right now there is an interesting heresy case in New England, involving the sacking of a chief executive who put customers and employees before shareholders.
http://robertreich.org/post/94260751620
The story is not altogether simple, with a background of family feuding and financial shenanigans.
http://www.theguardian.com/money/2014/aug/14/market-basket-arthur-millions-investing-protests
http://www.theguardian.com/world/2014/jul/25/market-basket-family-feud-grocery-massachusetts
Nevertheless, it is instructive to see the extraordinary effects on loyalty and behaviour when a chief executive breaks ranks and stops working purely for shareholders.
Families are worst when it comes to business ownership
I have seen it
I think you will find that societies in pre history were a lot more mobile than now.
And in terms of centuries easily outstrip modern local living. The Loyalty was not to Place, but to extended family, friends, and tribe , so your link is better expressed
in those terms rather than geographical place.
Do you really think pre history is that relevant?
Personally I think most of our culture is rather more recent than that
After the neolithic revolution, circa 10,000-8,000 BC, and the development of crop farming, first villages, then towns and cities began to appear, beginning with Jericho (9,000 BC) and Çatal Hüyük in S. Anatolia from 7,500 BC. Nomadic pastoralism became less and less important from this time, as did hunter-gathering. The great cities of the Indus Valley Civilisation, such as Mohenjo-Daro, and those of the Fertile Crescent and Ancient Egypt, which came later, the latter strengthened by the invention, in Sumer, in S. Mesopotamia, circa 3,500 BC, of cuneiform script, followed by the invention of hieroglyphics in Egypt, circa 3,400 BC.
I would think all this would tend to emphasise Richard’s point about the importance and significance of place.
I’m sorry, my penultimate sentence above is an anacoluthon – inexcusable! I hope I may be forgiven. Nevertheless, I hope my point is made. Those great ancient cities – Ur, Babylon, Nineveh, Memphis, Thebes – were the centres of early civilisation, and the pattern for our own civilisation, which is very much a settled one, and centred around cities.
Detroit, is, of course an egregious example of corporations deserting communities and a population of nearly 2 million being reduced to 700,000. Despite all then infrastructure and support that these corporations got (not to mention education and training back up) they cleared off when profits could be made elsewhere on a bigger scale. It will take a long time for that City to recover.
In Germany, these corporations would have had to do an impact study of their move on the local communities.
The phenomenon of globalisation, which Tony Blair preached as a good and wonderful thing, is by no means new. Indeed, as people have been reflecting, given the 100th Anniversary of the Outbreak of WW1, global society prior to WW1 was very much ‘globalised’: there was free movement of goods and services across national borders with very low tariffs and nothing to speak of in the way of non-tariff barriers; free movement of capital; and fairly free movement of labour, too. If wages and other costs were too high in one country, a firm could relocate to another one without much bother. The same applies now.
What also applies now is that we have a situation of geopolitical instability, where there are only 11 countries out of 193 full UN member states and 2 UN observer states that are currently at peace, all the rest being involved in at least one conflict, if not _more_ than one. Coincidence? I doubt it.
I assume you accept the proposition that the ties between a person and the place where they are born must be entirely voluntary for the individual. The state does not own a person born within its boundaries.
Humans have moved throughout history. In many cases, the move has been a solution to poverty and oppression.
And the physical barriers to moving (transport etc.) have dropped over the past 50 years.
I saw something on TV recently saying that the kids of today (with social media etc.) are much less concerned by national boundaries than our generation. This is in line with what I see from my 16 year old son and his friends. So this appears a trend for the future.
I regard it as a good thing.
I see no such trend amongst my sons and their friends or those a little older
And why should there be?
I agree with Richard- the internet gives the impression of not recognising national boundaries but in reality we have witnessed the rise of the most petty-minded sorts of nationalism including vile racism and xenophobia springing up in Europe with WW2 still in living memory. All this based on a wrong analysis of the roots of austerity with Governments loathe to enlighten populaces of the real causes.
‘Ancient ties, such as those between humans and places, are not easily changed in such time periods.’
Leaving aside both the mobility of firms (and the neolithic) for a moment, if you look, you will see that the ties between people and place are exactly what corporate power is trying to break.
With those ties, there are inherent rights by virtue of being of the place. In public and also political discourse, part of the time these rights are taken for granted, inherent to such a degree they are not articulated, and at other times completely ignored/denied, usually in the context of business discourse.
What do those rights mean? That as a person connected to a place you can demand and expect that the representatives charged with governing the place act for you. To whom does a place belong?
When you lose those rights, or they are subverted, especially if you are e.g. unemployed and without worker power, you have no rights, and are just something to be moved around by business.
So it’s clear why big business is trying to break that connection.
Agreed- witness Detroit and Apple farming out Ipad manufacture to save $4 on each.
Business enjoy the free ride of using Government financed infrastructure and then siddle off having syphoned off the wealth of the community and not even leaving the local populace a life-jacket of any sort.
Detroit have farmed out iPad manufacture? When were iPad’s manufactured in Detroit?
Apple only save $4 per unit by manufacturing in China, instead of where?
The saving over the USA has been well documented as far as I am aware
Detroit is, I suspect, symbolic