Philip Whiteley's Blog

September 18, 2017

Exposing the ignorance of our politicians

Filed under: Uncategorized — felipewh @ 8:49 am

My blog today is a review of Bob Garratt’s latest book Stop The Rot.

This book is a masterpiece. It ought to be – as they say – required reading for all senior leaders in business and politics. Bob forensically examines the short-termism, lack of accountability, corruption, greed, weak governance and incompetence that brought about the economic and social problems we are experiencing.

Reprising some themes from his earlier work, he points out that the directors are ultimately responsible for the success of the organization, balanced by duties of care and to avoid the temptations of corruption. These are customs frequently honoured in the breach, with many of the lapses a result of sheer ignorance. There is only one Board, in the UK system, only one class of director, they have defined duties, and unlimited personal liability. They also, he points out devastatingly, typically have no training. A depressingly common response to poor induction and lapses by Boards is to create yet more supervisory structures and regulations on top, resulting in a bureaucratic mess. And we wonder why we have banking and other corporate collapses, misallocations of capital and recurring economic crises.

Much of the focus is on Britain, but there are critiques of the executive-led corporate model of the US, strengths and weaknesses of continental Europe, and some interesting reforms in South Africa.

A fascinating contribution is his astonishing expose of how woolly the notion of ‘ownership’ of organizations is, in both the public and private sector. An anomaly of British law is that shareholders of listed companies are not directly owners of the firm. In the public sphere, he has never received a satisfactory answer to the question: ‘Who owns an NHS Trust?’

Quite correctly, he urges ownership matters to be clarified, and shareholder voting rights to be limited to genuine owners, not short-termist speculators using shares as ‘gambling chips’.

This is a quite brilliant book, but with disturbing implications. The colossal gulf between the sober, intelligent critique offered in these pages, combined with wise and practical policy proposals for better governance, responsible ownership and long-term economic management on the one hand; compared with the belligerent ignorance of our political leaders on the other, is alarming. As I say, it should be required reading; it will be a struggle to make it so but, well, you have to try.

  • Stop the Rot: Reframing Governance for Directors and Politicians, by Bob Garratt, is published by Greenleaf Publishing, available from Amazon and other stores.

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