Life in technology-land, it transpires, is a lot more complicated than Silicon Valley had us believe. The price of ‘free’ is going up each day. And it is not just financial. Every internet upside, it’s becoming clear, has a downside. Thus the drive for frictionless online experience runs up against the online Catch-22, which is that if something is accessible it is not secure, and vice versa. Accessibility and security are incompatible. The threat is fractal, from phishing and other attempted scams that most of us will have experienced at our Mac or PC, to ransomware attacks on organisations (the recent hack involving the NHS and many others around the world was just the biggest so far); and even national level (subverting democracy, as alleged in the US elections and the Brexit vote). A variation on this law is that if you can hack you can get hacked back: to add insult to injury the malware used in the NHS attack was developed – at taxpayers’ expense – by, and then stolen from, the US National Security Agency.

Many observers fear that the next financial meltdown in the works is not the regulators’ inability to model the system they are supposed to regulate, nor the spread of derivatives backed by new types of securitised asset classes, eg student or car-purchase loans (although both of those are serious enough). It’s cyber attacks on big banks. An audience at Davos in 2016 heard that the hacking of even a mid-sized US bank could have systemic consequences globally. The panel agreed that cyber security was a major issue of our time: a management as much a technological problem. In a typically blunt piece in the Evening Standard, Tony Hilton recently pointed out that the threat is made worse by cost-cutting among the biggest companies, which has been the source of much of their apparent financial improvement over the last two decades.

‘In terms of increased operational efficiency the results have been impressive,’ Hilton noted. ‘But too often it comes at the expense of resilience leaving businesses vulnerable to shocks and setbacks. [British business] is fragile to a far greater degree than ever before’. This at a time fraud is becoming much more like a business, complete with professional specialisms and supply chains like any other industry. Criminologists suggest that the current downward trend in violent crime is nothing to do with deterrence, better policing or villains going straight. Rather it is the mirror image of the growth of online fraud: why would anyone take the physical risk of burgling a house when you can break into a bank account from your laptop without leaving the comfort of your own home?

Where technology, or anything else, is underpriced it is likely to be used indiscriminately and for its own sake rather than for its real, harder-to-achieve benefits. Technology can be used to make us smarter or dumber, to augment human intelligence or replace it. Moravec’s paradox says that what’s high-level for humans (go, chess, accountancy) is trivial for computers and vice versa (computers can’t unpack a washing-up machine or iron and fold clothes and put them in a drawer). Moravec in combination with artificially cheap tech tools perversely guarantees that computers will eat the high-level, high-paid jobs and leave humans with with low-level, low-paid ones (Uber gigs, the many varieties of personal care). Too many tech applications are about features, not benefits. Uber destroys more value than it creates, and of what it does create it appropriates by far the lion’s share. Do we need more dating or disappearing photo apps? What is the social question to which driverless cars are the answer?

Now add to this an ad-based, more bluntly surveillance, business model, whose currency is attention. An attention economy militates in favour of not only accessibility with attendant vulnerabilities as outlined above, but also persuasion, seduction, and manipulation of all kinds, whether through greed (betting) sensationalism (fake news), desire (porn) or fear, all designed to make users give up ever more of their personal details as they spend just an extra minute on each site. The costs for individuals are addiction, shortened attention span, solipsism, isolation. ‘The best minds of my generation are thinking about how to make people click ads’, one data guru famously lamented. This is technology that makes us dumber at a meta scale. ‘It’s not just ruining our attention, it’s ruining our minds,’ says Tristan Harris, an ex-Googler who founded a Time Well Spent movement. ‘The attention problem makes it harder to solve every other problem.’

All technology involves interference with ‘nature’ which creates winners and losers. As such it behoves us to use it not just ‘because we can’ but with forethought and a duty of care to people – in conjunction with humans, not against or instead of them. The heading on a post on FTAlphaville recently warned: ‘More technology, more problems. At some point we may have to ask: is it worth it?’

In the aftermath of the great financial crash, Alan Greenspan, chairman of the US Federal Reserve, admitted to a Congress committee: ‘I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms… I discovered a flaw in the model that I perceived as the critical functioning structure that defines how the world works.’

This was a bit like a clergyman confessing that God had failed. Rational self-interest is at the heart of the neo-liberal programme that has dominated economics in the Anglosphere since the 1980s. If you can reliably count on individuals to use objective reason in protecting their own self-interest, queried the fundamentalists, why would you need regulation, social legislation, even government apart from defence and a few other essentials, or anything else very much except a functioning market? In a world of rational self-interest, strivers will get their deserts and so will skivers, to the benefit of an ever more rational, meritocratic society.

As it turns out, it’s a big ‘if’. Given Greenspan’s public recognition of the collapse of the central tenet of his laissez faire manifesto, you might imagine that the lesson had been learned: claims of the self-policing powers of self-interest should be taken with fast-food-industry doses of salt. As Michael Lewis put it so colourfully in his brilliant The Big Short, Howie Huber, the Morgan Stanley bond trader who ran up a loss of $9bn, the largest in Wall Street history, ‘was smart enough to be cynical about his market, but not smart enough to realise how cynical he needed to be’.

But you’d be wrong. If the crash was the explosion of a bubble massively inflated by the non-self-policing self-interest of bankers and real estate vendors, today’s ugly rumblings of xenophobia and populism are the sound-track of the slower-mo disaster that is capitalists in their own self-interest grinding capitalism to bits.

History doesn’t appear to have taught them anything. In previous great technological growth spurts, jobs and wages were at the heart of what worked (most of the time) as a virtuous circle. Investment in new technologies led to higher productivity and wages, feeding demand which fuelled further investment and new employment. Jobs were central to the cycle – effectively a vehicle not only for redistribution, but also social mobility and inclusion.

Yes, it was a system, and like any other system it was easily destabilised (to paraphrase Lewis) by people smart enough to spot the flaws but not smart enough to know that you can’t improve a system by optimising the parts – it’s the interaction of the components that counts, not their sum.

The ideological shifts of the 1970s and 1980s destroyed the previous balance. Full employment was abandoned as the object of economic policy, and ‘flexibility’ (aka deregulation and weakening worker organisations) was installed as the mantra for labour markets. Economists decreed that concentrating on the supply side and leaving the rest to the market would maximise the general welfare. Meanwhile, managers responding to the new emphasis on shareholder value reined in job-creating investment in favour of cost-cutting and distributing the proceeds to shareholders; and these combined with technological advance to launch a wave of global outsourcing and offshoring that activated a very different circle that quickly went vicious.

Its consequence is what we are in the grip of now: jobless growth that is not cyclical but structural. In theory, every element is in place to generate a new ‘Golden Age’ of progress, in the words of development economist Carlota Perez, based on job-creating green growth. The world is awash with capital. Self-evidently there is no shortage of human needs to be filled, and technology is advancing by leaps and bounds. And more than anything in the world – more than family, security and peace, according to Gallup polls – people want to work; they want jobs with regular hours and a pay packet. The world needs 1.9bn more of them, again according to Gallup.

Yet we’re stuck. Business as usual won’t clear the blockage – it’s business as usual that caused it. And as the hype fades the truth is dawning that far from presaging a new and different economy, the internet and Silicon Valley combo is actually just the old one on steroids.

So far from creating a sharing economy, the tech giants are ‘modern monopolists’, in the FT’s words, that leave few crumbs behind for anyone else: just 10 per cent of companies account for 80 per cent of all profits, according to McKinsey. The game of the superstars is value appropriation, not creation – like Hollywood they prefer to recycle old narratives jazzed up with CGI for the times. Viewing people solely as cost, they grudgingly create real jobs only when they can’t use technology to break them up and spit out the bits as gigs. Facebook’s Mark Zuckerberg famously said, ‘we move fast and break things’; he has since distanced himself from the line, but the motto’s mixture of brashness and complacency perfectly sums up the Valley’s careless arrogance.

This isn’t creative destruction à la Joseph Schumpeter, more straight rapaciousness à la Ayn Rand (unsurprisingly, a major titan hero). But as even Greenspan came to realise, extreme self-interest and technology used for its own self are self-defeating. In a job-poor world there is no ‘invisible hand’ that will conjure up demand for products or services when (as must be very close) consumers’ ability to take on new debt finally runs out. When the cost of shareholder (and executive) enrichment is the jobs of the less well off who can no longer afford to buy the products they create, capitalism is a zero-sum game as counterproductive as a shark consuming its own tail. It’s already happening: student-loan-laden millennials, unable to afford either housing or pensions, the assets crucial to upward mobility, are already a drag on the economy on both sides of the Atlantic. Quae non possunt non manent: things that can’t last don’t. When millennials or their children start to break real, rather than virtual, things in earnest, Donald Trump may look like a minor worry.

Read my April 2017 article for Professional Manager here

Unilever CEO Paul Polman put a brave face on it. Announcing a wide-ranging revamp of the Anglo-Dutch consumer goods group six weeks after the aborted $243bn takeover offer from Kraft Heinz, Polman restated the multinational’s commitment to sustainability and a long-term growth model and emphasized that some of the announced measures had already been on the cards. But he admitted that the ‘short-lived and opportunistic’ bid had been energising and raised expectations.

That’s one way of putting it. But the price Unilever is in effect paying for the privilege of maintaining its lonely long-termist stance is high. Shareholder-pleasing initiatives include doubling leverage, spinning off margarine and spreads (one of the group’s founding businesses), bumping up cost cuts by €2bn to 2020, buying back shares to the tune of €5bn and hiking the dividend by 12 per cent. Further down the line, the company is considering streamlining its Anglo-Dutch legal structure, possibly merging the twin headquarters in London and Rotterdam and doing away with one of the London and Amsterdam share listings.

All these measures are shareholder-friendly and fashionable. But whether they advance the long-term interests of the company is less certain. Of course all companies need to use their resources efficiently, and shareholders should be adequately rewarded. But while not a sprinter, Unilever’s historic performance is more than respectable. Financial conservatism is one reason for its long life and sound health, and it’s not clear how doubling leverage will improve those. Likewise, Warren Buffett, a backer of the Kraft Heinz bid, maintains that share buybacks can be a good investment when prices are low – but at £40 Unilever stock is riding high, a fifth up since the aborted bid. Together with the dividend hike, that is an expensive bribe to shareholders with a corresponding reduction in its ability to invest in long-term growth.

Unilever’s reorganisation is a graphic illustration of the strong headwinds faced by well-intentioned public companies that try to row against the tide of short-termism and act in what they believe is their own best interest. It also explains why so many new companies prefer to remain private or follow the Silicon Valley example of going public with voting structures that preserve the founders’ control. Cynical they may be – in Snap’s successful recent IPO investors received shares with no vote at all – but such upstarts have a point. Under financialisation, life as a public company is likely to be nasty, brutish and short. And judging by the stock performance of founder-controlled companies such as Facebook, Google and (so far) Snap, shareholders don’t appear to care much about such disenfranchisement anyway – which rather undermines their claims to have the last word over the company’s activity in the first place.

But there are other pressures, too. On the day that Polman made his announcement, Nestlé’s new chairman Ulf Mark Schneider commented to his shareholders: ‘Many companies are focusing on radical cost-cutting to deliver higher profits in the short term. That approach is not sustainable.’ One of those pressures comes from what one might call ‘new economy’ firms that are taking full, or more than full, advantage of the ability of technology to help them offload the burden of employment costs. By cutting the transaction costs of hiring labour on a temporary basis, technology, in the words of the FT’s excellent Sarah O’Connor, ‘is shifting the borderline between a central core of employees and a periphery of not-quite-employees who can be picked up and put down at will in the open market.’ Disputes over that borderline are currently pitting riders and drivers against Deliveroo and Uber respectively, claiming that their lack of control over their working conditions effectively makes them employees of the firms, with entitlement to sickness and holiday pay and other employment rights, rather than ‘independent contractors’, as the companies counter-claim.

This matters not just for the inequality and the security of individuals. The gig economy is just the current end point in the steady dissolution of the traditional basis of the employment relationship from career to job to temporary job – via downsizing, outsourcing, casualisation and now the platform – until all that is left is the task. And the employment borderline is still drawing inwards towards the centre: a recent Fast Company article describes AI-run ‘flash teams’ that

‘use software platforms to break down complex work that requires collaboration, such as engineering and web design, into modules of specific tasks that the network hands off from freelancer to freelancer, in a virtual assembly line. Once the work is complete, those teams are dissolved, but they can potentially be recombined for other types of work in the future.’

The significance of these developments for old-line companies like Unilever that still provide the full-time, well paid jobs that most people really want, can hardly be overestimated. Under pressure on one side from the capital markets to increase returns, on the other to cut costs from start-ups whose one competitive advantage, when it comes down to it, is undercutting employment rights, they – for which read ‘we’ – may find themselves in a position where the long-term model breaks down. In a recent report, stakeholder analysis by Tomorrow’s Company found that while consumers are benefiting from today’s cost-cutting trends, as workers, suppliers and shareholders we were losing out. This is as sustainable as a shark devouring its own tail.

Coming back to Unilever and its threatened ilk: they won’t be saved by a national interest test to prevent opportunistic and predatory takeovers, which can be fudged with ease and in any case tackles only half the problem, nor even an industrial policy. What’s needed to level the playing field and disqualify unfair competition from corporate tax and employment-rights evaders is a revised and unambiguous statement of a company’s equal responsibilities to its employees and other constituents as well as shareholders. As another terrific FT writer, Izabella Kaminska, pithily remarks: ‘If it looks like an employee, operates like an employee and is controlled like an employee, it most likely is an employee, irrespective of what the contract says’. When doing the right thing undermines it, sustainability itself becomes unsustainable.

The poet Baudelaire was infuriated by the Belgians – particularly their habit of gawping over their shoulder as they walked, blocking the streets as they bumped into each other with clashing walking sticks.

One knows the feeling. It’s the same one you get watching governments not looking where they’re looking, crashing into each other and obstacles they haven’t noticed as they triumphantly reversr previous policies with new ones which are tried for a bit and then abandoned in turn. So nothing is ever definitively learned or discarded, and we are locked in a nightmare acting out a variation of Einstein’s definition of madness, doing the same things over and over at regular intervals and expecting a different result.

Ed Straw calls it ‘zigzag government’, and it reigns in health, education, and much of welfare. The NHS has suffered 30 years of back-and-forth ‘reform’, none of it improving the basics. The latest back-to-the-future wheeze in education is grammar schools:

‘The zigzag nature of policy-making has made it impossible to establish effective solutions. The waste of resources that results from ‘reform’ in perpetuity, and the damage it inflicts on the life chances of the young people caught up in the whirligig of change, are never measured. Running a system in a state of permanent revolution and high anxiety has significant downsides. It may seem extraordinary but Theresa May and the others are content to use children as guinea pigs. Politicians’ ideologies are evidently more important than children’s education’.

The same is true for health:

‘The NHS is now experiencing exactly the same underfunding that occurred in the 1990s as Thatcher’s world concluded. Gordon Brown arrived and restored the funding to functioning levels….. but went too far, such that by the end of his term money was pouring in only to be appropriated by top management for, um, eh, top management. Excess austerity became the new normal once more and the patient is skinned again’.

Despite Tony Blair’s short-lived promise of joined-up government, nothing is joined up with anything else, so there is no notion that meddling with one part of the system will have consequences, often disastrous, for the rest of it. So we currently have green papers on corporate governance and industrial policy but neither makes any reference the other. Just say the word ‘Unilever’ to yourself to realise the absurdity of this. Is it the government’s aim to foster long-termist, inclusive companies or not? Or here’s Vanguard’s John Seddon on the NHS in his latest newsletter:

‘I have been outraged by media exposure misleading us all about the problems in the NHS. The media buy the Whitehall narrative; journalists have no idea what questions to ask. The narrative is ‘demand is rising’ (it is not, but failure demand is); ‘we have a problem with old people ‘bed-blocking’’’ (while there are some, the greater problem with bed utilisation is people who shouldn’t even be there, people who are there longer than necessary and people who keep returning because the system hasn’t solved their problems – and the largest proportion of the latter are not old people).

And I’m astonished to see reports of whole teams of people (experts, thus super-costly) being stood down from operating on patients simply because there is no bed in which to put patients post operation. It is complete madness; what kind of mind would make beds a constraint in a health system?’

Where the major parties do agree (although pretending not to), it’s because they’ve been captured by ideology, not by evidence, to which they adamantly adhere long after its failure is apparent to everyone else. In his book Utopia for Realists, Rutger Bregman denounces attitudes to austerity and poverty that have barely changed since the Poor Laws:

‘In recent decades, our welfare states have come to look increasingly like surveillance states. Using Big Brother tactics, Big Government is forcing us into a Big Society. Lately, developed nations have been doubling down on this sort of “activating” policy for the jobless, which runs the gamut from job applications workshops to picking up trash, and from talk therapy to LinkedIn training. No matter if there are 10 applicants for every job, the problem is consistently attributed not to demand, but to supply… Just as Soviet-era shops employed ‘three clerks to sell a piece of meat”, we’ll force benefit claimants to perform pointless tasks, even if it bankrupts us’.

Ideological commitment means that the government dysfunction is transmitted directly to the corporate and public sectors, and thence to the economy as a whole. Witness the meek all-party prostration before the banks and financial sector, which are now bigger, and as a result the economy more debt-laden and financialised, than before the 2008 crash. And in the same register the craven refusal to do anything about the zombie shareholder-dominated corporate governance that is at the heart of our low-wage, low-productivity, dramatically unequal part-time economy. Note that it was a Labour government that in the 2006 revision of the Companies Act for the first time explicitly entrenched the principle of shareholder value as the guiding principle for directors. Review panellists confirm that they were told by the then DTI that there was no question of altering the shareholder-first mantra.

And we haven’t even mentioned Brexit… Belgium and particularly Brussels have a surreal side which even the unimpressed Baudelaire might have eventually learned to appreciate. In 2010 and 2011 the country managed to go 589 days without an elected government at all, an unchallenged world record. We might not want to go that far. But government ministers should surely subscribe to a political Hippocratic oath, first to do no evil. Until they are certain they should take to heart the advice of another poet, Allen Ginsberg: ‘It’s never too late to do nothing at all.’

Read my March 2017 Management Today review of Utopia for Realists, by Rutger Bregman, here

Like a bubble sluggishly rising through murky waters, corporate governance is climbing the political agenda. Everyone intuits that something is wrong – including Theresa May and Donald Trump – but neither of them has an inkling how wrong. One glaring testimony: May’s unaccountable failure to cross-reference her governance and industrial policy Green Papers, as if there was no link between how companies are run and what they actually do. Another is her treatment of exorbitant pay as a standalone issue rather than as the outward symptom of the dry rot that is consuming the system from within.

The big thing she doesn’t get is that corporate governance isn’t a private matter for companies and directors. As the FT’s Martin Wolf has put it, ‘Almost nothing in economics is more important than thinking through how companies should be managed and for what ends’. This is because growth, productivity and employment – the macroeconomic big three – aren’t destiny, an impersonal economic force imposed on us from outside. All three are the aggregate of ‘what companies actually do’, and what companies do is the result of decisions about how to allocate resources by corporate managers and directors. Managers’ motivations matter. Corporate governance is therefore a macroeconomic, and also political issue.

Take February’s aborted $143bn run at Unilever, the UK’s third largest company, by US group Kraft Heinz. This isn’t a boring accounting exercise, albeit one expressed in stratospheric numbers. It’s capitalism’s clash of civilisations. The outcome of mega-deals like this could set the course of our economies for years to come.

Managerially, philosophically but also in terms of their practical outputs, Unilever and Kraft Heinz are, well, soap and cheese. Anglo-Dutch Unilever (2016 turnover €52.7bn, net profit €5.5bn, 168,000 employees) is avowedly about long-term environmental and social sustainability. CEO Paul Polman has pledged to ensure Unilever survives for another century. On his appointment in 2008 he invited shareholders who didn’t share his long-term aims to place their money elsewhere. Mostly they do: 70 per cent of shareholders have held their stake for upwards of seven years, against the global average of five months.

Polman was ‘appalled’ at the Kraft Heinz approach, and his no-uncertain-terms response was instrumental in provoking the bidders’ sharp retreat. Not surprising. Unilever is one of the last representatives of what economist William Lazonick has termed the ‘retain and reinvest’ school of resource allocation, under which firms keep most of their profits to reinvest in factories and human capital in the long-term interests of all stakeholders. This is precisely why it is attractive to Kraft Heinz, its exact opposite – a fiercely private-equity driven, shareholder-value obsessed serial acquirer that operates on the reverse principle of ‘downsize and distribute’. Instead of reinvesting in the business it distributes profits to shareholders in dividends and stock buybacks to lever up the share price. It doesn’t do innovation; its route to superior margins and returns to shareholders is fierce cost- and particularly job-cutting – all of which makes Unilever, with its lower margins and enormous headcount, a juicy target.

To understand what this might portend, consider Kraft Heinz’s back story. Its creator and the driving force behind it is Brazilian private-equity group 3G Capital. 3G has form, having already done a job on global brewing industry. Starting with a Brazilian brewer in 1989, 3G has steadily consumed its way up the brewing drinks chain, culminating in the 2008 purchase of the world’s No 1 and and in 2016, in a $100bn deal, No 2 brewer to form AB InBev, a classic giant rootless ‘corporate citizen of nowhere’. AB InBev accounts for nearly one-third of all the world’s beer sales, and almost half its profits.

As described by Fortune magazine, 3G Capital’s ‘hard driving’ management philosophy is simple: buy, squeeze, repeat. Growth is not organic – it depends on identifying ever larger acquisitions to wring efficiencies out of. ‘It’s like the shark that has to keep on swimming,’ as one competitor put it. Unfortunately, that means the model eventually peters out when there are no more fat targets to eat or squeeze, or when even today’s feeble regulators say enough. That’s exactly what has happened in brewing. In other words, the model is inherently unsustainable. Which is why, in partnership with Warren Buffett’s Berkshire Hathaway, Kraft Heinz has been set up to repeat the roll-up in Big Food.

It’s hard to overstate the significance of this. Unilever – once described by a previous chairman as a fleet of ships, ‘the ships many different sizes, doing all kinds of different things, all over the place’ – is hardly the Muhammed Ali of multinationals, neither as nimble nor as hard-edged as some rivals. But what it ‘got’ – and was implicit in the retain-and-reinvest model that it still adheres to (albeit fraying at the edges: since the bid Polman has launched an urgent review of the group ‘to accelerate delivery of value to benefit our shareholders’) – was that jobs, far from being a necessary evil to be eliminated as far as possible, were an essential part of what made the model work: a vehicle for the redistribution of wealth and social mobility and thus the wider sustainability that Kraft Heinz and 3G airily ignore in pursuit of their narrow financial interest. In that sense, the latter are free riders on the remaining Unilevers of the world, which do care about their wider responsibility, on which they prey. No wonder Buffett is coming under fire from some quarters for the business methods used by his PE sidekicks, even if he keeps his distance himself.

Have no illusions that Kraft Heinz and 3G Capital have been despatched for good. They’ll be back – their model doesn’t give them a choice. When that happens, the issue they will want to focus on is benefits to shareholders. But behind that lie wider questions about how they do it, and at what cost to jobs, growth and long-term sustainability, and deeper ones about why, ie the motivations of those making the decisions. Those are at the heart of, respectively, industrial policy and corporate governance. A government with sovereignty on its mind should consider if we want to decide such matters ourselves or allow an Orwellian ‘UKH’ combination, or something similar, to do it for us. It may be our last chance.

Read my article in FT Business Education, 29 January 2017. here

Shaking off the doomy prognostications of mainstream economists, stock markets on both sides of the Atlantic have surged since the Brexit vote in June and Donald Trump’s election as US president, hitting high after high. Why?

The conventional reading mentions receding fears of recession in the UK, while in the US after initial caution businessmen are supposedly experiencing a rush of animal spirits at the prospect of tax cuts and infrastructure spending ‘setting off a virtuous circle of economic growth and rising confidence’, in the words of former Treasury secretary Larry Summers.

Dream on. Joining the real world, a more cynical reaction would be that it’s a sigh of jubilant relief as business as usual is restored, with a vengeance. Trump and Theresa May are of course correct to sense that there’s something very wrong with their respective economies – the resulting discontents are what brought them to power. But far from altering current trends or models, their current proposals rev them up.

In the UK, May, echoed by a chorus from the press, evokes an ‘all in it together’ spirit and calls for boardroom restraint to be exercised through the usual suspect, greater control for shareholders.

But shareholders, in cahoots with top management, are already in far too much control. ‘Dividends dwarf pension deficits,’ shouted a recent front-page headline in the FT, above an article reporting that FTSE 100 companies last year paid out five times more in dividends to shareholders than in contributions to pension funds – even though half of them, according to the research quoted, could have cleared their deficits in a single year by reversing the payout ratios. And this, note, understates the grotesque disproportion in stakeholder treatment. It takes no account of share buybacks, which directly affect the share price by reducing the number of shares in circulation.

As usual, what happens in the UK is a pale reflection of goings on across the Atlantic, where combined dividends and buybacks of the largest companies have reached extraordinary proportions. The figures compiled by researcher Bill Lazonick are astounding. Over the 10 years to 2015, firms in the S&P 500 spent 3$3.9tr on stock buybacks, equal to 54 per cent of net income, with another 37 per cent going on dividends. In both 2014 and 2015, according to other research, buybacks and dividends of publicly traded companies actually exceeded net income – in the latter year they reached 115 per cent.

Delving more deeply into the tight link between buybacks and CEO pay, Lazonick made another eye-popping discovery. If the stock-option portion of CEO pay (running at above 80 per cent in the US) is calculated not by value at the time of the grant but by value actually realised on exercising the option, the CEO-to-median-worker rockets from the 300:1 commonly quoted – which is shocking enough – to an astronomical 1000:1.

Hardly surprising that appeals to self-interest on this heroic scale are not often resisted – they are not supposed to be – nor that they decisively mould the decisions on what and what not to invest in. As Lazonick spells out, trillions of dollars that could have been spent on innovation and job creation have instead been diverted into share buybacks for the purpose of manipulating stock prices. ‘As a growing body of research demonstrates, actual realised gain on stock options and stock awards can incentivize executives to do buybacks, price gouge, offshore, lay off workers, do financially driven M&A deals, dodge taxes, engage in false financial reporting, and so on, all for the sake of boosting the company’s stock price’ – a process in which those making the resource-allocation decisions are themselves the prime beneficiaries.

In this context, as Steve Denning has pointed out, even managers of ‘good’ companies, who know the behaviour to be wrong and in the long term self-destructive, have succumbed to the buyback syndrome. Personal temptation, the argument that ‘everyone else is doing it’ and/or the attentions of shareholder ‘activists’ (raiders, to give them their more accurate name) make the pressure almost irresistible. Apple, which in Steve Jobs’ day blithely ignored special claims of shareholders, is a case in point.

In these circumstances – if corporate behaviour is responsible for the economic ills that are spilling over so spectacularly into politics – then as an FT commentator pointed out, ‘there are policy levers to pull. It would be time to stop thinking about corporate governance and executive pay as equity matters and to regard them instead as a macroeconomic problem of the first rank.’

Which, of course, they are. But there is no sign that a UK government under May perceives them this way, still less the incoming administration in the US, where the barbarians and vampire capitalists are not just at the gate but comfortably ensconced around the cabinet table.

So if, as promised in the election campaign, US corporate taxes are reduced and the estimated $2tr of corporate profits stashed abroad are brought back home, expect a round of share buybacks and dividend increases that will make even current levels look puny. As Cisco CEO Chuck Robbins (with around $60bn to repatriate) obligingly made clear, investment in plant and job-creating innovation was the last thing on CEOs’ minds: Cisco, he said, planned to use the money for ‘a combination of dividends, share buybacks and M&A activity’ – that is, on financial engineering to bolster the stock price.

That’s why stock exchanges are jubilating.

Yay, the music’s still playing, boys! Trebles all round!

The algorithms are coming, if not to your place, then to somewhere very near you. It’s happening faster than you, or probably anyone else imagined – and it doesn’t bode well for you or your job. Whatever that is.

Over Christmas, a White House report on automation and artificial intelligence suggested (among other things) that almost all delivery and driving jobs would in due course succumb to automation, with the loss (in the US) of more than 3m jobs. Right on cue, here’s a news item describing how Rio Tinto is already using robotic drills, house-sized autonomous trucks and driverless trains to boost productivity and slash the need for human employees at its Australian mines. The trucks are controlled by operators 750 miles away. The trains, also controlled remotely, will ultimately load and unload themselves. Going driverless is 15 per cent cheaper than using humans. ‘We’re going to continue as aggressively as possible down this path,’ says a company official.

White-collar jobs have so far been more resistant to automation (although software is already making inroads in the media and low-level legal work). But don’t count on it staying that way. One Japanese insurance company is this month replacing 34 claims assessment workers with an artificial intelligence system. This is one of the first (and certainly not the last) commercial applications of IBM’s celebrated Watson, a ‘cognitive technology’ that can make sense of unstructured material whether in text, audio or video form. The Watson-based system will check treatments against insurance contracts and decide payouts on the basis of medical histories, length of hospital stay and other data. The company is paying $1.7m for the system, plus maintenance, and expects to post a return on the investment in two years. Watson’s first and best-known application has been in medicine, but its analytic prowess is now also being brought to bear in finance, legal and retail fields.

We’re sort of used to the idea of couriers and Uber drivers being managed by algorithms. But in ‘When your boss is an algorithm’ the FT’s sharp Sarah O’Connor points to what many have missed: in the gig economy, it’s not the workers who are replaced (although they are engaged in a race to the bottom on pay) – it’s managers who would have done the scheduling and logistics. And as managers, algorithms are remorseless and impartial in a way that hasn’t been seen since the days of scientific management a century ago. ‘For Jeremias Prassl, a law professor at Oxford university, the algorithmic management techniques of Uber and Deliveroo are Taylorism 2.0,’ O’Connor writes. “Algorithms are providing a degree of control and oversight that even the most hardened Taylorists could never have dreamt of,” he says’.

Don’t think it’s just low- and middle-level logistics managers whose jobs are on the line. The world’s largest hedge-fund firm, Bridgewater, is busy trying to enshrine its unorthodox management system in software that would ‘dole out GPS-style directions for how staff members should spend every aspect of their days, down to whether an employee should make a particular phone call’, according to the Wall Street Journal. Bridgewater founder Ray Dalio, who is behind the project, believes that humans are like machines; successful managers, he has written, ‘design a “machine” consisting of the right people doing the right things to get what they want’.

Meanwhile, a Silicon Valley outfit (of course) has developed a ‘virtual management system’ called (of course) iCEO. iCEO automates complex tasks by breaking them down into chunks and assigning the micro-tasks to workers on platforms such as Mechanical Turk, Lyft or Uber. The company admitted at the time of writing that the programme was relatively crude – but that was a year ago, and a year is an eternity in AI and robotics. And although it was still considering what to do with it going forward, it’s not hard to imagine what the powers of iCEO and Watson might be if they could be harnessed together. There’s no doubt about the direction of travel, however. Warns futurist Devin Fidler: ‘It will not be possible to hide in the C-Suite for much longer. The same cost/benefit analyses performed by shareholders against line workers and office managers will soon be applied to executives and their generous salaries’.

Further out (but probably not very much), Fidler notes that corporations are themselves a technology, one that developed in the 18th century to maximize scale and minimize transaction costs. ‘Now that structure is being disrupted by the advent of technologies which can accomplish many (if not most) of the projects we associate with corporations. With traditional organizations no longer necessary to create many things at scale, they are likely to be challenged by a new generation of alternative technologies for getting things done’.

Such as that embodied in Work Market, perhaps. Work Market is a kind of amalgam of work platforms such as Task Rabbit, Uber, eLance and the like, and its boast is that using it large companies can compile and coordinate ‘labour clouds’ of all the skills – full-time workers, contractors, vendors – it needs to get things done just in time. It believes it has built a platform that enables just the kind of radical shift that Fidler envisages – from a world of traditional corporate employment to a one where every worker acts as ‘an enterprise of one’, competing for projects on skills, reputation and ability to generate good outcomes.

To emphasize, this is all happening, and it’s happening fast. Last year more was invested in robotics start-ups than ever before. This is terrible news for jobs and the billions of people who according to Gallup yearn more for good jobs than anything else in the world – more even than peace, security and family. It is true that, as the White House report emphasizes, technology is not destiny. It doesn’t happen in a vacuum, but rather within a framework of policies and institutions that influence the choices of entrepreneurs, workers and investors that together shape technology outcomes. Unfortunately, the paper doesn’t mention the factor that most directly conditions those choices: incentives that directly reward CEOs and others making resource-allocation decisions for cutting costs rather than innovating – that is, for not creating new jobs and for eliminating existing ones. Unless states summon up the courage to disarm these detonators of job destruction, the extraordinary technological revolution now under way could end up triggering another one, of an altogether more violently disruptive kind.