Notes from a Recession

Sad Stuffed ReindeerRecently, I was amused by a news item about what could generously be described as a “Christmas theme park” located on the Dorset / Hampshire border. Called “Lapland New Forest”, its website made some outrageous promises about a “magical” experience, frosted by realistic looking fake snow and augmented by a stunning “tunnel of light”. The price of entry was between £25 and £30 per head.

In reality, it was a muddy field with some unhappy looking animals, stalls that charged £2.50 for a plastic cup of mulled wine, and a cigarette addicted Santa sitting in a large, cheap garden shed. Needless to say, the suckers, pardon me, visitors were disappointed and angry: perhaps the most outrageous element was the two to three hour wait that parents and children had to endure before seeing Santa. Furthermore, once you got there, a picture cost an additional £10.

I doubt I’d ever heard of anything more brazen; however the immediate reaction of the organiser was to blame any problems on a rabble of disgruntled people, and to say that there was nothing untruthful on the website. He later had to backpedal somewhat, and after it was revealed that the owner of the park had been in prison for tax evasion, the “theme park” was closed.

There was an understandable level of outrage about this; parents were particularly upset about their children’s Christmas dreams being shattered. At the same time, I do have to wonder: what did they expect? A lot of modern capitalism is based on fraud, smug, smirking, outrageous fraud, and this is perhaps part of what has led us to the situation we’re presently in.

For example, a long time ago, I worked for an online travel company. Through our website, you could book a flight, and near the end of the process, you could tick a box to indicate you wanted to rent a car as well. The default, quite sensibly, was not to have the box ticked.

The company was not doing particularly well: then as now the profit margin on selling flights was very low. So my boss, the manging director, had an idea: he wanted me to make it so that the box, as a default, was ticked “yes”.

To the best of my ability, I refused. If people wanted to rent a car, they would do so – what he was hoping for was an uptick in sales of car rentals, which could help him cling on to his job. This was not actually going to increase actual sales, rather, it was going to increase accidental sales, all of which would have to be refunded. In other words, it would actually cost the company money, not make it.

I did some digging and found out that this had been attempted before; and the consequences were precisely what I thought they would be. Confronted with the evidence, and the certain knowledge I would have taken it to the CEO, he backed off. My understanding is after the company was sold and he was dismissed that he has been bumping along the bottom of the travel industry, a rare instance in which justice was served.

It might be possible to dismiss this as an isolated incident, however, I’ve seen other examples of this kind of behaviour. Perhaps the most insane boss I ever had, thought he could make thousands, if not hundreds of thousands of pounds, by acquiring domain names. You see, he was (in his own mind) truly clever and had spotted the value of these domain names well before anyone else had: he could stockpile them and make a killing. I warned him that he could not: the domain names, I said, don’t inherently have a value. It is the products and services that are offered by the websites that sit behind domains that have value. He didn’t listen; after all, “get rich quick” schemes had benefitted him before.

Confidences forbid me saying all that I know, but the owner of this company had and has a relationship with a certain African country which in recent years has tried to burnish its reputation as a tourist destination. The nation in question is governed by a military junta, whose leader believes that a herbal paste (and his touch) can cure AIDS, and has threatened any homosexuals with severe reprisals if they dare make themselves known. More recently, the country arrested some European missionaries for sedition on extremely shaky evidence. Because the owner could stomach dealing with such a regime when no one else could, he made his initial fortune. I found out recently that due to bad investments, he has lost much of it, and some of my former staff have lost their jobs as a result.

To be fair, Adam Smith had a beautiful theory: that in the pursuit of self interest, individuals would make decisions that would lead to prosperity. He thought that people would demand quality services and goods and that businesses would provide them. What has happened instead is that businesses try to trick the customer, and the customer tries to cope as best as possible. Corners are cut, fine print is added, plastic trees with fairy lights are called “tunnels of light” and Santa sits in a plywood garden shed. Brokers and investors try to repackage subprime mortgage debt into “instruments” which hide the toxic ingredients contained therein. We had only the appearance of prosperity as a result; the recession hurts so much because we’re discovering the truth behind the facade.

The recourse we have is to the law: if the regulatory framework is stronger, then perhaps businesses will live in fear of trying to cheat anyone. The other pillar should be a strong public sector, in particular in education and health: my work in the education sector has so far been inspiring. Academia, at least insofar as my university is concerned, actually appears to be concerned with achieving the public good: for example, the School of Education is keen on trying to reduce student drop out rates in secondary schools, and is developing techniques to achieve this. Other schools within my university have produced spin out companies which are producing energy from wave power and developing polymers for fuel cells; perhaps the most stressed individual I’ve met since I started in my new role is the gentleman who has to convince venture capitalists to put their money into such ventures. Investing for the long term is not something that causes their eyes to light up, apparently.

But it should. The edifice of modern capitalism has basically collapsed and people are scrambling around and wondering why: maybe, just maybe, it was because there were too many dishonest people doing too many dishonest things. I would hate to think that we need a Hobbesian Leviathan to punish chicanery; at the very least, we need to have a reckoning, and a rebalancing. “People not profits” has been used as a battle cry for so long that it has become a cliche: perhaps we ought to demand honesty, morality and ethics instead. This recession, after all, is a symptom of failing trust: all the remedies that are presently on offer are desperate attempts to go back to the time before trust was broken. But once trust is gone, it can’t be rebuilt without the truth: the sooner the politicians understand that, the better off we will be.

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