Magazine article Management Today

STATE OF THE UNION: Regulators Are in. So Are New Corporate Paragons: Procter & Gamble's AG Lafley Is So Unassuming He's Been Dubbed an Un-CEO

Magazine article Management Today

STATE OF THE UNION: Regulators Are in. So Are New Corporate Paragons: Procter & Gamble's AG Lafley Is So Unassuming He's Been Dubbed an Un-CEO

Article excerpt

We live in dismal times. The US stock market has suffered its worst quarter since 1987. Hopes for a quick rebound have evaporated. Deflation is a real risk, and the Federal Reserve has already shot most of its monetary stimulus. The accounting firms quietly de-fang proposed regulation. Respected businesspeople, fearing for their reputations, refuse to serve on boards.

Young dot.com professionals are back in entry-level jobs, or living with their parents - who realise that their 401k pension funds will not support an easy retirement.

Enough? The catalogue of disaster is familiar and, fortunately, it is misleading. US business is in a painful mess and the economy may well suffer prolonged stagnation, but the US economic system is demonstrating yet again its strength and adaptability. So here is the good news.

First, the downturn - most acute in technology and investment banking - may actually benefit traditional US industries. Investment banking bonuses and profits contributed to the cost of capital for their industrial customers.

And the profits of technology companies were predicated on their ability to charge over the odds for server computers and enterprise software.

CIOs are cutting their costs, by slowing down development, using cheap open-source Linux systems, and negotiating brutal discounts on software packages.

Second, US economic growth has been supported, above all, by an increase in the number of hours worked. The main driver has been the growing participation of women in the workforce, but in the 1990s there was a remorseless rise in the hours worked in industries such as technology and professions such as law and, enticed by stock options, many young professionals put their lives on hold. For those still in work, balance is returning.

Moreover, the received wisdom of the 1990s was that US business was inviolable, protected by politicians relying on corporate donations. Rubbish. US politicians care about votes more than money. With American voters still smarting from their stock market losses, there are more votes in taking on corporate corruption than can be bought by business contributions.

Take Eliot Spitzer, attorney general for New York, who is building a campaign for the Governor on the back of tough financial market reform; the front cover of Fortune, dubbed him The Enforcer: even the greatest fundraisers can't buy name recognition like that. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.