HS2 and its phases: Cnbrb, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

The default British policy of ‘make do and mend’ has many infamous monuments to its discredit. Think only of the Mother of Parliaments crumbling into the Thames as report after report on its repair is kicked into the long grass, or the water companies whose failure to do their job of preventing raw sewage from polluting our waterways and coastal waters is gross enough to be visible from outer space.

Yet bigger and far more telling of the seriousness of our multiple institutional failings than these is the debacle of High Speed 2 (HS2). Born as Europe’s biggest infrastructure project, once intended to be a vital means of rebalancing the UK’s economy with a high-speed rail line linking London with Birmingham, Manchester, Leeds, and places north, not to mention a showpiece of UK engineering, HS2 now stands as a grotesque laughing stock, exhibit A in the house of horrors of how not to execute an infrastructure project. 

After 10 years construction work, following Rishi Sunak’s 2023 brutal amputation of phase 2, the Y-shaped arms stretching beyond the West Midlands, all that remains of the grand plan is the bloody stump of a fast London-to-Birmingham line, on its own justified neither by economics nor strategic national connectivity. Meanwhile, the cost of this travesty has ballooned in reverse proportion to its shrinking scope. From an original £30bn for the whole network (admittedly a heroic underestimate) the bill for completing what’s left of it has soared to nearly £70bn in today’s money – this on top of the £26bn already spent, which includes £1.7bn on the now ghosted phase 2 north of Birmingham, and £548m on the terminus at Euston, much of it wasted, for which there is no final plan, nor one in sight, which won’t be finished before 2040, and whose ambition has shrunk from being ‘world class’ to ‘serviceable’ and ‘value for money’ (even the latter being a stretch since dependent on private-sector development of the surrounding site). Hardly surprisingly, the truncated scheme is qualified by Parliament’s spending watchdog as ‘very poor value for money’, with costs now forecast to significantly outrun the benefits.

What went wrong? According to Sally Gimson, who chronicles the project’s descent into chaos in her indignant if hastily written Off the Rails: everything. First and foremost was a lack of fixed political purpose. As Gimson shows, the UK Treasury has never viewed railways as anything but a costly nuisance, rather than a strategic asset to be developed. While France, for instance, launched an ambitious electrification programme immediately after WWII and now runs an expanding TGV network, the UK still puffs forlornly behind – as Gimson notes, as Japan inaugurated its bullet train for the Tokyo Olympics in 1964, the UK was still building steam engines in Crewe, and even later putting converted Leyland buses on rails for local services. Beeching’s cuts in 1963, axing 5,000 miles and 2000 stations, were strictly about cost-cutting rather than modernisation – another wasted opportunity. 

True to this tradition, when HS2 was mooted in 2009, it appeared as more an abstract exercise on which politicians imprinted a wide variety of local and personal ambitions – levelling up, showcasing engineering, greenery, regional links, local regeneration – than a transformative, once-in-a-generation national project to the direct or indirect benefit of the entire country. Thus conflicted, it disappeared from view during Brexit and Covid, which dedicated Home Counties naysayers cleverly used behind the scenes to wheedle ever more costly exceptions and modifications from ministers and departments whose attentions were elsewhere.

Political vacillation has been a recurring cause of escalating costs. Others were built in. A key reason why HS2’s costs per kilometer are eight times higher than those of countries like France and Spain lies in spectacular technical overspecification. Failing to learn the lessons of its predecessor High Speed 1 (HS1), which was delivered quickly and without drama using proven French technology, HS2 decided that its trains would be ‘the fastest, quietest, most energy-efficient high-speed trains operating anywhere in the world.’ This was not only demanding technologically; it also dramatically raised construction costs, requiring greater noise damping, stronger viaducts and bridges, and costlier track alignments and cuttings.

Weirdly, the technological overkill seems to have been driven not by technical necessity – there is none – but by finance. While the strategic case revolved around adding capacity to main-line rail links north of Birmingham, currently bursting at the seams, the economic justification depended heavily on traveller time saved, which accounted for more than 70 per cent of the calculated benefits. So, in a perfect Catch-22, to make the economics add up, HS2 needed to break speed records, which made it so hard to build it was unaffordable; but with construction so far advanced it was impossible to stop.

This inauspicious start was compounded by systematic organisational, management and governance flaws. HS2 Ltd, the government-owned project owner, already poorly staffed, had to work out how to do the biggest infrastructure project for decades at the same time as delivering it. At key points senior leadership roles were vacant – at one point the company was without a CEO for a year, partly the result of oversight from the Department for Transport (DfT) that was lackadaisical at best.

The mistakes started early. Although parliamentary approval for Phase 1 of the line was delayed from 2015 to 2017, the original 2026 opening date was inexplicably not reset. To speed up procurement, HS2 awarded high-value contracts before ground conditions were fully surveyed, leading directly to cost increases when engineering work began. Again, the civil engineering work was contracted to four international joint ventures, but lack of an overall engineering ‘guiding mind’ meant that the opportunity to standardise designs for common elements like bridges and stations — lesson No 1 from low-cost constructors Spain and France – was entirely missed. Gold-plated engineering designs from the four JVs to minimise their risk only increased the cost pressures. Not surprisingly, the parliamentary watchdog found that there was ‘not convincing evidence’ that HS2 – or civil servants, or the government – had, or even could have, the project under control.

Among too many other absurdities to mention, the most poignant section of Gimson’s book is a chapter called ‘A Disaster for Crewe’. When it was selected as a crucial hub for the new line in 2016, the Cheshire town, once the proud heart, now a sorry shadow, of the industry that the UK invented 200 years ago, could realistically see itself as a modern logistics hub ideally placed at the centre of a joined-up Britain to reverse half a century of decline. With a  comprehensive overhaul of the ‘old, broken-down junction’ in the offing, the town began planning for new jobs, new homes and even a cultural centre to breathe new life into the run-down community.  

All that evaporated in a puff of smoke with Sunak’s surprise announcment in 2023 – Crewe being just the largest casualty among many smaller ones on the cancelled northern arms of HS2. As well as a callous social and economic tragedy, it is a potent illustration of another unenvied UK speciality which reflects the reverse side of Boris Johnson’s slapdash cakeism: the unerring ability to to get the worst of all worlds. In this case, a hideously expensive and near valueless White Elephant of a rail line between one station that will be far too big outside Birmingham to another that doesn’t yet exist in London, using too many overengineered trains whose capacities can’t be used for what they were designed for, to the point where, scarcely credibly, service on the West Coast main line above Birmingham may actually end up worse than it is now. The Infrastructure and Projects Authority based in the Cabinet Office has one word for HS2, ‘unachievable’ – which effectively ensures that other much-needed UK infrastructure projects, in energy and water, for instance, will be quietly shunted into the already crowded siding labelled ‘make do and mend’, in the hope that they will somehow go away – anything to prevent them actually having to be built.

‘Into the face of the young man who sat on the terrace of the Hotel Magnifique at Cannes there had crept a look of furtive shame, the shifty hangdog look which announces that an Englishman is about to speak French.’ 

Thus P.G. Wodehouse, magnificently summing up everything about the British attitude to foreign languages – unconfident, half-hearted, apologetic and a bit guilty, all of which are reflected in the fretful handwringing that has greeted recent news of the continuing decline of language learning in UK schools and universities. 

Having dropped like a stone since the Labour government jettisoned obligatory language learning in schools in 2004, annual exam candidates now number in the single thousands for French, Spanish and near-extinct German, while more undergraduates study PE than languages spoken by our nearest neighbours. Fewer than half our universities, and none outside the Russell group, boast language departments. Just 20 per cent of Brits say they can speak a foreign language, and only a much smaller proportion can do better than Wodehouse’s rightly nervous hero.

None of this is because the British are congenitally less able to learn languages than others. It’s because they don’t bother to. For which thank the grossly inflated assumptions they hold about the benefits of speaking ‘the language of Shakespeare’. True, enough people speak English that you can make yourself understood in much of the world, but the value of that is wildly overestimated and about to disappear anyway with the AI instant translation apps that are burgeoning on every other smartphone.

The fact is that being Anglophone isn’t a blessing. For Brits, the English language is a kind of cultural resource curse – a one-time advantage that we have failed to notice has long-since decayed into its opposite – a monument to the UK’s sloppy penchant for taking the easy option without thinking through the consequences.

Language is about far more than mechanical translation. The great polymath George Steiner compared it to vision: while with one eye you can see, two gives perspective. The same goes for language – as anyone suddenly struck by their own country’s eccentricities from the vantage point of a sojourn abroad will attest. ‘A different language’, summed up filmmaker Frederico Fellini, ‘is a different vision of life.’

This matters. For the monolingual UK, English becomes a one-way filter that screens out everything else. English is the basis of London’s cosmopolitan appeal, a lingua franca layered over the capital’s brew of 300 other languages – and also, incidentally, an important reason why the country is so attractive to migrants. But under its surface nest enclaves and communities whose culture and habits remain hidden in plain sight behind the linguistic filter. Think of radicalisation or the belated and wholly inadequate institutional response to the grooming gangs phenomenon, for example. Or would we have been quite so obsequious in our embrace of Russian oligarchs, and quicker to acknowledge Russian involvement in the Leave and other political campaigns since, if we had had a little more linguistic intelligence to apply to proceedings?

Again, consider the UK’s much prized ‘special relationship’ with the US. As the last two presidents have demonstrated, the current one most cuttingly, very far from being equal, the transatlantic relationship consists of little more than a shared language and the application of a flattering layer of royal pageantry (‘I am sure we can get along if he doesn’t try to give me too much soft soap,’ was Harry S Truman’s aside about Winston Churchill). 

The shared language, meanwhile, is accompanied by serious downsides. It makes us more susceptible to US economic and management ideas than European ones, and its American weaponisation as a tool of political and cultural imperialism is now unashamed and blatant. Just as bad, the Walter Mitty illusion of a shared language equating to shared destiny has helped to sustain the vacillation between the poles of European and US influence that has dogged UK politics ever since the second world war – and still does. Forever tugged between the two, Britain has never made up its mind whether it is a buccaneering US-style free market (the Brexit or Liz Truss vision) or a European social-market economy, as a result getting the best of neither and often the worst aspects of both; while the idea of relying on the US for security has never looked more naively fanciful.

So we plod on, wilfully unaware of how post Brexit our political and economic choices are still being shaped not by market opportunity but our insular linguistic traditions. Take, for example, our export performance, which faithfully reflects our self-imposed need to sell to foreign markets in English rather than their own language. While for Anglophone markets such as the US, Australia, Ireland and India, the UK exports more than it imports, the reverse is true for Germany, France, Italy and Spain, our European trading partners that together account for nearly three-quarters of UK exports. The telling case is little Denmark – population 6 million, almost all of whom speak English – which accounts for as much UK trading volume as all central and Latin America (population 670 million) put together.

There is a similar lop-sidedness on a personal level. As state funding has shrunk, many British universities have become dangerously dependent on the outsize fees paid by foreign students, two or three times higher than those charged to Brits. But part of the price is paid by home-grown learners, particularly in humanities. As university teachers are quick to testify, foreign students arriving with two or more languages have a built-in advantage over their monolingual UK counterparts. With double the cultural reference and more sophisticated perspectives to draw on, they are simply better equipped to benefit from their UK-provided university education – and the gap often widens during their studies. 

Projecting forward into the world of work, other things being equal, why would an employer, even a British one, not choose a candidate with double the cultural capital and savoir faire over a monoglot Anglophone, even one less caricatural than Wodehouse’s silly asses? It is surely deeply ironic that our cash-strapped higher education sector should be devoting a substantial part of its effort to creating better-qualified foreign graduates for top multinational jobs that are effectively closed to UK nationals because they haven’t been taught a second language.

Commenting on this year’s dire language exam figures, a prominent educationalist described the Blair government’s decision to drop compulsory language learning in 2004 as ‘quite clearly… the worst educational policy of this century.’ Even Wodehouse couldn’t make a joke out of that.

In September the CMA is due to publish a draft action plan for making the market for veterinary services work better. The cost of taking a pet to the vet soared by two-thirds between 2016 and 2023, it has found, nearly double the rate of other consumer services. Clinical advances and new medicines don’t satisfactorily explain the increase, it believes. 

More to the point, perhaps, is that while a decade ago 90 per cent of vet practices were run by local owner-practitioners, now a whopping 60 per cent belong to six large groups. One of them, Swedish-British-owned IVC Evidensia, is the second largest vet services provider in the world.

Yet the most important thing isn’t that vets have gone corporate. It’s that three of the large organisations, including IVC, are owned by private equity (PE). When prices suddenly soar, look for the incentives. In PE these are extreme, and they operate at every level, from the professional treating your sick cat or dog, to, most sharply, PE general partners sitting behind their desks in New York or Mayfair who have never been anywhere near the dispensaries or rural treatment practices that their funds own.

Let’s be clear. PE has zero interest per se in pet – or human – health or welfare, nor that of the communities they serve. What it does care about is industries or sectors that share certain characteristics. They have guaranteed demand, an assured income stream, and are small in scale – qualities that make them particularly susceptible to PE’s blunt instruments of consolidation or ‘rollup’, leverage and debt financing. So yes, PE loves vet practices, funeral services, human care homes and dental surgeries  – with the love felt by killer whales for seals and penguins or crocodiles for small deer or wild pigs. What pets, elderly relatives and people with toothache have in common, and what makes PE lick its chops, is that, in today’s merciless Trumpo-Muskian economic world, they are suckers who deserve to be exploited: as customers they are captive and unprotected, as industries small-scale and charmingly unsophisticated, and as employees and patients unorganised and isolated.

The small scale and local nature are important. First, they allow serial buyers to claim modernisation and scale efficiencies while they are actually laying the foundations for local monopoly, enabling them to raise prices, restrict choice and change payment methods – peddling insurance or subscriptions to smooth revenues, for example. Most acquired vet practices craftily retain their existing identities, so pet owners aren’t aware that they are now dealing with big corporates, while the scarcity of published price lists means that they are often also in the dark on that score. 

Thus does neighbourhood little vet quietly morph into corporate Big Vet. But that’s not all. Hidden in the acquisition process is a potent financial turbocharger in the shape of the dull-sounding ‘multiple arbitrage’. Larger organisations attract relatively higher valuations than smaller ones – they’ll be worth a multiple of say eight to 10 times earnings, rather than three or four. This means that as it grows, the budding cartel grows faster, sometimes dramatically faster, in value than in size. Coupled with leverage, high levels of debt and asset sales – the new owner may charge the acquisition a dividend for the privilege of being taken over; if the latter owns its premises, they may be sold and then leased back – this will work magic for the ‘carry’ of the general partners sitting on top of the fund when it is wound up and the proceeds distributed seven or more years later.

PE titans justify their outsize returns by pointing to gains in economic efficiency procured by their elimination of waste and improvment of firms’ operations. In the 1970s and 1980s this may even have been partly true. But the larger truth is that with the extraordinary growth of the sector, all but a very few of the easily improvable firms have already been done over, while the end of zero interest rates has revealed in all its glory the degree to which PE has depended on the magic of financial engineering and leverage for its returns; now that it really matters, the boasts of bringing operational management expertise to bear are shown to be largely hot air.   

The rollup strategy now being practised for vets, dentists, funeral services and others gave PE a new canvas to paint on: monopoly by stealth, achieved by flying under the radar and focusing on cottage industries rather than large, visible concerns. Once accounting and administration have been centralised and other costs cut to the bone, including professional personnel where possible, the next step is to move into related services – emergencies, diagnostics, pharmacies, insurance, burials – that can be similarly rolled up and billed separately. Anecdotal evidence suggests that as they are brought into the corporate fold, frontline vets too, to their discomfort, are coming under increasing pressure to meet sales and financial targets. One big corporate owner of vet practices is food group Mars (Whiskas, Pedigree, Sheba) – guess why. Any competition between them seems focused on edging prices up, rather than down.

The CMA’s action plan will likely require improved customer information, urge pet-owners to shop around , discourage the abandonment of basic (ie cheap) treatments, and possibly regulate to prevent further ownership concentration in some localities. What it will find harder to do much about is PE’s fundamental indifference to the industries it ‘invests’ in. This means that if push comes to shove – if pet owners, who go to prodigious lengths to pay for their animals’ care, can finally no longer afford to pay up and rates of ‘economic euthanesia’ rise too high – it will simply sell on its companies or flog the assets and move on to another trade to pillage. As one PE-owned US media company coolly announced as it auctioned off its last run-down websites last year, ‘we are working towards a full wind down [from which] we will exit having increased shareholder value.’ Closing down an insufficiently profitable practice or charging an eight-times mark-up on drugs for pets — it all ends up as fuel for the greed of some existing or would-be private equity billionaire.

The CMA goes out of its way to exempt vets themselves, praised for their continuing commitment to care and high professional standards, from criticism. But the financial and accounting margins within which they work are much more tightly drawn than in the past. When some years ago our aged cat had to be put to sleep, the vet, something of a celebrity who ran a practice in a posh part of central London, quietly told us he’d contact us later to settle up. He never did. Have no doubt that in the age of PE-driven Big Vet, such a human gesture not only wouldn’t happen – it might be a sackable offence.

19 June saw the relaunch of Director magazine, the journal of the Institute of Directors – and very good it is too, featuring challenging pieces from the trenchant Margaret Heffernan on AI, John Kay on business myths and Stefan Stern on managing, among others. It also carries my short review of Charles Handy’s last book, The View from Ninety, which is reproduced below.

As it happens, the review appeared on the same day that Paypal informed me that Charles Handy would not be renewing his membership of this website and blog, which made it a bittersweet occasion. The final farewell to one of our age’s most cherished social and business thinkers will take place at 3:00 pm on 1 July at a celebratory service in St James’ Church, Piccadilly, with a chance to meet over coffee in the churchyard afterwards. There may be a few places left on Eventbrite, or it can be followed online.

A murder in broad daylight on a city street usually prokes horror and revulsion. In the case of executive Brian Thompson, shot in New York on 4 December last year, there was some of that. But it was rapidly drowned out by a much louder vibe: the viral fame, and subsequent elevation to vigilante status, of the suspected killer, 26-year-old Luigi Mangione, who even before the trial has become a social media phenomenon, the subject of a stage musical as well as of burgeoning conspiracy theories, and a political football. He has a Wikipedia page, and his supporters have spontaneously raised a fighting fund of more than $1m to pay for his defence in court.

Robin Hood or economic terrorist? The symbolic weight heaped on the slight figure of the suspect is enormous. Mangione, who has pleaded not guilty to murder charges, including murder as a terrorist act, is innocent until proven otherwise. But that hasn’t stopped the case becoming instantly politicised along intransigently ideological lines. Long before the case is due in court, US attorney general Pam Bondi publicly directed prosecutors to demand the death penalty for a political, terrorist crime, something his supporters charge would be a state-sponsored killing in support of the ‘broken, immoral, and murderous healthcare industry that continues to terrorize the American people’, in the worlds of defence counsel.

In an Agatha Christie-type touch, three cartridge cases found near Thompson’s dead body were inscribed with the words ‘delay’, ‘depose’, ‘deny’. These turned out to be part of formulations commonly used by US insurance companies to avoid paying out on medical insurance claims, which they do in around 20 per cent of cases. 

Medical expenses are a constant worry for many Americans and a major cause of personal bankruptcy, for which profit-making insurance companies are often blamed. The largest US medical insurer is UnitedHealthcare, which also happens to be the meanest payer, reportedly refusing 30 per cent of claims – and Thompson was its well-paid CEO. (Mangione was not insured by United.) Observers tracking the twists and turns of the manhunt following the shooting quickly the relationship between the outcome of insurance claims and the company’s profitability and hence also Thompson’s pay. Protest movements sprang up and social media was soon awash with #freeluigi hashtags and anti-healthcare slogans. According to recent polls, most Americans, while not absolving the shooter from blame, believe responsibility for the killing is shared with social inequality, a healthcare system that is rigged against them, and the brutality of US capitalism in general.

In  that context, the murder, although not excusable, should only have been a surprise to anyone blind to American history.

Writing in the FT recently, Martin Wolf identified ‘the real US exceptionalism’ as its unique blend of entrepreneurial vigour and violence. Despite Trump’s complaints, the country is out on its own as an economic powerhouse, boasting not only the world’s biggest and most dynamically innovative companies, but an ever-renewing population of from-scratch unicorns that have no counterpart in the Old World. In terms of real GDP per head, meanwhile, while the US is surpassed by one or two small nations like Switzerland, it still pulling ahead of large advanced economies like Germany, the UK and France, which ought to be catching up.

Yet there is a vicious reverse to the rosy economic picture. Violence, H. Rap Brown famously pointed out in the 1960s, ‘is as American as cherry pie.’ It runs like a dark streak throughout American political history, from the slave plantations and Ku Klux Clan, to repeated political assassinations and the storming of the Capitol in 2021. And it’s there, remorselessly, in today’s statistics. A murder rate at 6.8 per 100,00 people in 2021 that was the 10th highest in the world, six times higher than that of the UK and 30 times that of Japan. The biggest prison population in the world, at 1.8m greater than China’s and four times Russia’s, and the planet’s fifth highest incarceration rate, after only El Salvador, Cuba, Rwanda and Turkmenistan. Civilian gun ownership at a staggering 120 per 100 people, more than double that of Yemen, the next highest, and four times that of neighbouring Canada (which will obviously have to do better if it becomes the US’ 51st state), and, not surprisingly the second highest number of gun deaths, accounting for 16 per cent of the world’s total in 2021.

America’s lopsided expenditure on healthcare – twice as much per head as anywhere else – also has its darker side. Healthcare, hospitals and drugs are three of the top five US industries by value, and healthcare is by far the largest component of US consumer spending on services. Yet health outcomes are dire. Life expectancy is four years lower on average than in peer nations. Infant, maternal (particularly for Black mothers) and avoidable mortality rates are the highest in the G7, while Americans suffer disprortionately from chronic conditions such as obesity, diabetes, and depression. All this reflects waste, excess cost and corruption in the healthcare system, as well as deep-seated wealth and social inequalities in the economy as a whole. Which brings us back to Mangione and the cruelty of American capitalism, which, taking its clue from the President Trump, has been on full display these last few months. 

As the Nobel economist Paul Krugman pointed out on his excellent Substack, Trump takes a brutally zero-sum view of all relationships. There are only deals, and for every one there is a winner and loser. The sole arbiter is power. It behoves winners to flaunt their power and humiliate losers who can’t defend themselves, whose function is to grovel. (This is why Trump detests Zelenskyy, who in the logic of power should have rolled over for Putin, and whose failure to do so thus ‘started the war’.)

Or look at DOGE, the so-called Department of Government Efficiency. DOGE represents the deliberate application of Silicon Valley’s ‘move fast and break things’ mode to the public sector. Behold Elon Musk brandishing a chainsaw and rejoicing at the prospect of chopping up jobs, livelihoods and putting whole agencies to death. But the chainsaw isn’t just symbolic. Condemning Musk for feeding the main conduit for US foreign aid, the US Agency for International Development (USAID), into his woodchipper, Bill Gates commentated: ‘The picture of the world’s richest man killing the world’s poorest children is not a pretty one …I’d love for him to go in and meet the children that have now been infected with HIV because he cut that money’. 

Perhaps because wealth and power are still such a potent part of the American dream, the excesses of the corporate world haven’t so far reaped the hate and violence that has spread through other institutions such as the government, politics, the university, and social media. With the attack on Brian Thompson, another threshold has been crossed. You don’t want it to happen, but those who live by the sword may have to get used to the idea that the blade is two-edged. Looking back, it was always going to be a matter of time before it came back to bite them.

Swamped like everything else by Trump’s black tariffs farce, Tanya O’Carroll’s landmark privacy case against social media giant Meta at the end of March received little follow-up. 

Yet the London human rights worker may have just put the first serious dent in the armour of the social media platforms that have done so much to poison our politics, wreck public discourse and, although much less widely appreciated, enable online grifters and criminal organisations to make off with billions of dollars in what is quite possibly the biggest fraud the world has ever seen.

Although O’Carroll’s case was settled before it could come to court, one thing shines through: Meta has accepted that under current data protection laws it can no longer use the personal data it has collected on O’Carroll to target her with personalised advertising.

Why is this a big deal? 

Personalised advertising and the tracking that enables it – adtech’s ability to record every click we make and website we visit on the internet – are the dark heart of surveillance capitalism: the engine of a digital advertising industry that will rake in an estimated $700bn in 2025 and in a couple of years will likely pass the $1tr mark. (Online now takes two-thirds of all ad spending.) Meanwhile, the lung that supplies the oxygen to feed that dark heart is our new frenemy ‘free speech’, in the form of the fake news, conspiracy theories, alternative facts and radicalisation that flourish like weeds on the internet courtesy of the notorious Section 230 of the 1996 US Communications Decency Act, which shields website owners from responsibility for content supplied by their users by designating them as ‘intermediaries’ rather than the publishers that they really are.

Since its birth in coffee houses centuries ago, old-style print and broadcast advertising unproblematically supported generations of ‘legacy media’ – press, radio, TV. It could equally well pay for a free internet, too. But it was swept aside by the adtech-powered surveillance and targeting business model pioneered, developed and now completely owned by Google, Meta and Amazon, a dominance they have no intention of giving up.

For them, the model is a perpetual-motion cash machine. Trackers hoover up every trace of the digital exhaust we leave behind as we move around the internet, feeding the data into algorithms that ‘learn’ from it what content is most likely to keep us hooked on the site where we can be fed as many of their business customers’ ads as possible. Hey presto! Naturally, the ‘freer’ and more controversial the speech featured on their pages – the more toxic the message – the louder the cash machine rings, simultaneously delivering more juicy personal data for the algorithms to learn from and digging deeper rabbit holes for viewers to fall down. So much for ‘Don’t be evil’.

The ad industry’s bland assertion that ‘precision targeted advertising’ is ‘more effective’ is twaddle of Trumpian proportions. As every poll confirms, people hate targeted ads even more than they do other kinds. Far from making them better, tracking just makes ads creepier and more intrusive. To avoid seeing them, an estimated half of all web users have installed ad blockers on their computers, and when Apple gave them the ability to turn off tracking on their iPhones, 80 per cent of US customers thankfully did so. 

They are right to be mistrustful, even if not nearly as much as they ought to be. Not only do companies such as Oracle and Google boast databases containing as many entries as there are people on the planet, the data in them is broadcast daily all over the internet by the constant information flux that makes up the advertising process. 60 per cent of online advertising is automated or ‘programmatic’, mediated through an auction process called Real Time Bidding (RTB). But whereas in old-style advertising what’s sold is a designated space or spot in a publication or TV or radio schedule, in an RTB auction each lot is a kind of viewer, wherever they might be on the internet. RTB wouldn’t work without tracking, profiling, trading and sharing people’s data, including on race, sexuality, health status and political affiliation, on a  massive scale every day, all without consent or control. According to marketing activist Bob Hoffman, the online activity and location of the average US or European web user are broadcast to thousands of companies hundreds of times a day. Many doubt whether it is actually legal – but even if it is, at least it is now a bit less useful, thanks to O’Carroll’s case.

But the trading of personal data isn’t the limit of adtech’s horrors. Online advertising is a sink of almost unimaginable fraud and waste. It’s impossible to know exactly, but of the $700bn a year spent on web ads, it is generally agreed that around $100bn is fraudulent, making it second only to drugs as a source of criminal profit. This is largely because the mind-numbing complexity of the system makes it trivially easy for a profusion of scammers to insert themselves into the supply chain and help themselves to advertisers’ cash on the ad’s way to the intended website – or not. Many ads are never seen by a living person. Others end up on porn or other clickbait sites, or fake ones created for the purpose. The ease with which even small-time villains can create fake websites, audiences and clicks means that an estimated third of online ad spend simply vanishes into thin air. When Uber switched off two-thirds of its $150m ad budget, its suspicions of fraud were reinforced when its business levels changed not one jor. Data security firm Barracuda Networks reports that more internet traffic is produced by malicious bots than by humans.

Once the most glamorous side of capitalism, its creatives feted like rock stars, advertising is now its seediest. Surveillance marketing is just a decade old. Yet in that time, the power of adtech has turned the industry of advertising from a bit of a joke into a monster from hell that that is a potent threat to our democracy. Would Brexit or Musk or Trump have happened without Facebook, Instagram, Twitter, Google or TikTok? The ramifications for both individuals and nations are hair-raising. In a recent TED talk, journalist Carol Cadwalladr, who did much to uncover the Facebook-Cambridge Analytica scandal around Brexit, notes that when she asked ChatGPT to write an article in the style of Carol Cadwalladr it turned out an ‘creepily plausible’ piece, using LLM learning from her IP and personal data, entirely without her consent or knowledge. She calls this data rape, and the tracking of children, who by the age of 13 will have dossiers containing millions of data points logged against them online, child abuse. This is the infernal machine in whose fuel line O’Carroll has just made a puncture. Small, admittedly, but growing every day as more people take advantage of campaigning organisation Ekō’s web page allowing others to follow her example and demand not to have their personal data used to serve them targeted advertising, as I just have. I urge you to do the same.

If you were told how to run your successful business by a blustering, anti-science, bullying felon who once suggested drinking bleach to cure Covid, and the extent of whose management knowledge appears to have been culled from a TV game show – oh, wait… – what would you do? 

If you’re CEO of a blue-chip US company, having marched your men to the top of the hill, you may well be hastily marching them down again, shredding your commitments to diversity (Accenture, Deloitte, KPMG, Goldman, Meta, Amazon, McDonald’s, American Airlines, Boeing, and much of Hollywood among others), combating climate change (Walmart, BP and a bunch of financial institutions) and the ‘moral crime’ of working from home (Elon Musk – Amazon, Dell, J Morgan Chase, Goldman Sachs, and Tesla and X, obviously), while taking steps to install a more muscular, masculine, even aggressively energetic workplace as you go. KMPG has gone as far as to scrub all mentions of its past DEI programmes from its websites. One (anonymous) top banker celebrated this epochal civilisational advance thus: ‘I feel liberated. We can say “retard” and “pussy” without the fear of getting cancelled . . . it’s a new dawn.”

Sucking up to Trump is the expedient choice. Yes, for companies like consultancies KMPG that depend on government contracts, it’s a money decision too. Yet they might have been better advised to pause and reflect on what it says about the company and its leaders when apparently core values can be tossed overnight as if the company, perish the thought, had never believed any such thing.

Not much that is complimentary, is the answer. The damage is both direct and indirect, affecting both customers and workers, their most important constituencies. When Meta announced its changes, which included cancelling content moderation, Facebook and Instagram users piled in with extravagantly unprintable allegations about chairman ‘Mark Suckerberg’s’ personal habits, causing panic among corporate customers that their ads might end up against a fake nude of the Meta chairman (sorry). Retailer Target, which had traditionally made a point of wooing Black customers, found itself facing demonstrators and boycotts for its retreat. The same at Tesla, where, enjoyably, investors have got in on the act, slashing 20 per cent off its share price (and $140bn of Musk’s net worth) on the news that the company’s January 2025 UK sales were 45 per cent lower than a year earlier. Some analysts suggest there may be further to fall.

These responses are the material manifestation of  a damaging loss of confidence. Indirectly, the long-term costs may be higher. How would employee morale not be affected by their employer backing away from a commitment to fairness at work? How would ambitious young job-seekers not prefer to send their CVs to consultancies that didn’t expunge basic commitments from their websites like a Soviet commissioner erasing non-persons from the photographic record? Unsurprisingly, Gallup is reporting levels of engagement that are plumbing new depths. What employees want from leaders, the pollster reports, is (in order) hope, trust, compassion and stability. Well, with compassion, stability and hope in shrinking supply, trust, which up to now had held up relatively well, takes a triple whammy. Not to defend it, but the level of contempt reserved for company bosses is well illustrated by the extraordinary public show of support for Luigi Mangione, who shot UnitedHealth chief executive Brian Thompson in January (of which more on another occasion).

Evidently even further from CEO minds is any thought of wider managerial responsibilities. They might cast their minds back to the 1930s, a similarly turbulent and threatening period in world history, as management was beginning to take cognizance of itself as a standalone discipline. Surveying the rise of authoritarianism, Peter Drucker noted the salience and importance of institutions to democratic society. As Martin Wolf put it recently in the FT, ‘Civilised societies depend on institutions. The more complex the society, the more vital those institutions. Institutions provide stability, predictability and security.’ Companies, schools, universities, courts and hospitals are all institutions. All need managing and managers, and the effective functioning of society requires that they be managed well.

From this derived Drucker’s conclusion that management held a unique and often forgotten responsibility: to hold society together by keeping the institutions and organisations that make up its weft and warp honest and effective. Absent trust that they will deliver their services – justice, education, health, information and news as well as our daily bread – fairly and efficiently, the collapse of civil society into partisanship, cronyism and authoritarianism, as eloquently described in a recent essay by Nobel economics laureate Daron Acemoglu, is all too credible. America’s collapse, he suggests, will follow Hemingway’s famous line about bankruptcy: ‘It happened gradually, as shared prosperity, high-quality public services and the operation of democratic institutions weakened, and then suddenly, as Americans stopped believing in those institutions.’

How should managers react to these highly politicized times? In one sense, that’s easy: double down on the way you would behave in more ‘normal’ times. Management’s first duty is effectiveness. Whatever politicians froth about, an increasing number of firms have learned that purpose is as necessary as profit; your purpose being what you do, it had better be something you and your employees believe in. Since the case for good jobs is unanswerable on any dimension, fairness, or equity, at work is not an option. (The business case for diversity is hard to prove; but it stands to reason that if your customers, suppliers and investors are diverse, it may be helpful if your decision-makers and salespeople are too – ask Target.) Work should be done where it is most productive, not where it gratifies the boss to exert his power for the sake of it. ‘Hardcore working’ à la Musk is idiotic and dangerous, as is multi-tasking – viz the near disaster of Doge’s teenage nihilists abolishing units responsible for Ebola tracing and prevention and nuclear security before twigging that this might cause, er, issues. As for the planet, although Musk would like it otherwise, we only have one of them to experiment with, and every business needs to do its bit to keep it habitable. No planet, no business. It’s not as if the advance signs of the current scorched-earth policy weren’t already visible. It’s not wokery that is driving insurance firms to abandon large tracts of California, or a hoax that in a decade Mar-a-Lago will be under water, however loudly its owner commands the waters recede.

So all in all, it’s time for managers to stop pretending they are just hired hands at the behest of shareholders or even worse, politicians (not me, guv!), do what they know to be the right thing, and call out those who don’t, as their employees want them to. It’s called leadership. It takes courage, and in return it gives people hope and stability, helping to shore up the institutional trust that holds society together instead of splitting it apart. It’s still not too late, just. But the clouds are gathering. ‘It’s not dark yet’, advised Bob Dylan on his album Time Out of Mind. ‘But it’s getting there.’

After Christmas I started writing a piece about the weaponisation of management in the wake of Trumpism. How the war on woke capitalism was turning management from a rational (sort of) means to a rational end – ie, identifying ‘what works’ and then using it to do things reliably better – to become an ideological end in itself, as big corporations rowed back from their climate-change and diversity commitments in the face of pressure from activists or legal proceedings by anti-woke Republican US states. That’s still the narrative. But in just three weeks it has moved from a national canvas to a global one, becoming a much bigger story: the self-weaponisation of management of the most powerful companies in the world in favour of an authoritarian president of a global superpower with territorial and economic designs on other sovereign countries, and indeed the whole world order. Another way of thinking about it might be ‘siligarchy’ – a  merger of Washington and Silicon Valley, on Washington’s, ie Trump’s, terms.

Just look at that $1tr worth of tech titans, including three of the richest men in the world, sitting in the front seats at Trump’s inauguration, seats seemingly purchased with the $1m that seemed to be the going rate for the tithe each had paid to the new president’s ‘inaugural fund’ (to receive which, as far as I can tell, is its only function). Given that Donald Trump has never been a fan of Big Tech and its perceived crimes against free speech, some rapprochement by the latter was to be expected. But that only partly explains the depth and alacrity of its collective grovel. This has seen, channelling Groucho Marx (‘I have my principles…and if you don’t like those I have others’) press barons Jeff Bezos and Patrick Soon Shiong disowning their liberal newspapers, the Washington Post and LA Times, and spiking their pre-election presidential endorsements; Elon Musk from his lodgings in Mar-a-Largo demanding the overthrow of the ‘tyranny’ of Keir Starmer in the UK and the victory of the far-right AFD in Germany; and Meta chairman Mark Zuckerberg abandoning fact-checking and content moderation at Facebook and Instagram in favour of ‘free speech’ and a pushback against ‘creeping censorship’.

In short, it turns out that the Valley’s tech bros, far from being the libertarians many people took them for, are actually quite willing to make common cause with an authoritarian state, even or in fact especially with an authoritarian state, to advance their own profits and power. 

The ploy is both cynical and transparent. What Big Tech has that Trump needs is weapons of mass information, which they are happy to deploy in return for something that they covet: shelter from increasingly irksome European regulators. Already under scrutiny – Google, Apple, Meta and Uber have all been fined by the EU – the tech platforms now face a further regulatory squeeze under 2022’s Digital Services Act, which the EU is using to investigate them on a series of counts. Regulators can be surprisingly powerful. When X was banned in Brazil last year for failing to comply with court orders, a simmering Musk quietly backed down and paid the fines levied a few months later. It wasn’t a question of free speech but of sovereignty and the rule of law, Brazilian commentators approvingly noted at the time.

But with the advent of Trump 2.0, sovereignty is suddenly in play. In the face of Musk brandishing X as a megaphone to shout down rational politics in the UK and Germany (what price France, with upcoming elections and a surging far-right party, as next in line?), and Facebook and Instagram flooding the world with misinformation, regulation becomes an obvious bargaining chip. Bezos has welcomed Trump’s ‘energy around regulation’, hint, hint. Zuckerberg and J D Vance have protested that regulation is a tariff in disguise. More directly still, in his recent address to Davos Trump himself complained that fines levied by Brussels on tech firms for breaking competition rules were ‘a form of taxation’. ‘We have some very big complaints with the EU,’ he warned.

All this coincides with a strong corporate pushback – backlash is probably a better word – on what can now be fashionably dismissed as ‘woke’ management in general, as companies take advantage of the charged climate to undo some of the concessions made during and since the pandemic. Jettisoning fact-checking and dialing down DEI and ESG programmes saves jobs and money. It also clears the way for a return to the brash ‘move fast and break things’ management style that some male CEOs seem still to pine for. The increasing enforcement of office working is one aspect of this. Another, bang on cue, was Zuck’s lament in his podcast with Joe Rogan that the feminising of corporate culture had led to  a ‘neutered’ workplace in need of more ‘masculine energy’ and ‘aggression’ (that turned out well in the past, didn’t it?).

Zuckerberg also said he favoured a ‘repopulation’ of the ‘cultural elite class’. This presumably means the elevation of anti-censorship warriors like himself, fellow tech bros Marc Andreessen, Musk, Silicon Valley eminence grise Peter Thiel (like Musk, a product of apartheid-period South Africa), David Sacks, Trump’s crypto tsar (ditto), far-right ideologue Stephen Miller (‘the second most dangerous man in America after the president – and unlike the president he knows what he is doing’) and other Ayn Rand-y types like Curtis Yarvin and others even farther out. For a flavour of their thinking, see Thiel’s extraordinary and sinister piece in the FT which sees Trump’s second term as the reverse of an aberration – a signal of the final eclipse of the pre-internet ancien régime (that’s anyone that’s not them) and the  triumph of the ‘new and strange ideas’ that the unfettered, internet will bring. Beneath the disingenuous title, ‘A time for truth and reconciliation’, lies an ill-disguised call for retribution and alternative truth, with an entirely gratuitous reference to Jeffrey Epstein (a bit player in the Qanon conspiracy theory) slyly inserted to insinuate that people like him are among the failings that the old elite should be held accountable for.

In a column on his excellent Substack, Paul Krugman identifies something he calls ‘MAGA brain’: the Trumpian assumption that the only way to get results is through being vindictive, unfeeling and ruthless, with anything softer being interpreted as weak/wokeness that invites bullying. Allied to Trump’s belief in the sole primacy of power and the use of force to take or take down what he has decided he does or doesn’t like (sometimes on personal whim – eg wind farms, Panama), it adds up to mafia capo management – brutal, male, exclusively top down, inevitably corrupting everything it touches.  Under Trump, management is being taken back to the, albeit AI-assisted, Dark Ages.

Read my obituary that was published by The Guardian on 22 December 2024 here.

Three years ago, chancellor Rachel Reeves vowed to end the tax loophole exploited by a handful of private equity executives as they ‘asset strip some of our most valued businesses’. As Labour’s manifesto succinctly explained, ‘Private equity is the only industry where performance-related pay is treated as capital gains. Labour will close this loophole.’

Reeves was right and her description jusrified. But her budget left the loophole unbunged. Instead, she merely raised the charge on ‘carried interest’, as these earnings are called, from 28 to 32 per cent. From 2026, ‘carry’, as it is more usually known, will be brought under the income tax umbrella – but under ‘bespoke rules to reflect [the industry’s] unique characteristics.’ Mayfair breathed a sigh of relief.

Labour’s original plans aimed at the UK’s 3,000 buyout chiefs, who claimed carry of £6.4bn in the two years 2022-23. Taxing it as income would have brought in £500m a year. Under the budget proposals, that shrinks to a mere £140m – one-tenth of the £1.3-£1.5bn savings from cutting the winter fuel allowance. From which it’s hard not to conclude that, just as some companies are too big to fail, some of the rich have become too powerful to tax – never mind how the sums are earned, or how much we need the investments they are supposed to bring to the economy.

Start with the earnings. Carried interest originated in 16th century Italy, where merchants and shipowners levied a charge of 20 per cent against the profits of the cargos they ‘carried’ to pay for transport and the risks of a long-distance sea voyage. It was later used in the oil and gas industry to compensate the financial interest for the risk that the wells of the drillers it was funding refused to gush. Both of these involved real risk: ships could be wrecked or seized by pirates, oil wells might be dry. The only thing private equity shares with either of these is the time it takes for the profits to materialise, measured in years.

 As to risk, for equity privateers it is negligible. For one thing, they already command a hefty annual ‘management fee’ of 2 per cent of assets under management, sometimes more. And the amount of personal capital put up by PE partners is often derisory, or even nil. The only reason for Reeves not taxing carry as income is FOMO – fear of missing out on their taxes or investment.

But if some high earners did depart, how much would it matter? PE’s motive force was always personal greed – ‘I could see it was a gold mine’, exulted Blackstone’s Stephen Schwartzman, now a multibillionaire many times over, when he looked at KKR’s infamous ‘barbarians at the gate’ Nabisco buyout of 1988. But in the early days it could also be argued, and was, that what PE claimed to do – generate superior returns for institutional investors by geeing up managers at indifferently performing companies to do better – contributed to conomic efficiency.  If the price was that some of the targets went bust with their resources redistributed to more efficient actors – hey, that’s just capitalism’s creative destruction for you.

More than $12tr-worth of worldwide PE deals later, that argument looks a lot thinner. For a start, those ‘superior returns’ are disputed. They can’t be proved, because private equity is, as it says on the tin, private (another word would be ‘opaque’, which doesn’t quite have the same ring). That in fact turns out to be its major competitive advantage against investing in public markets, since PE gets to choose the benchmarks it measures its performance against (among many other ways of gaming the figures). While there are still plenty of institutional investors eager to buy, some reputable studies suggest that on current form they would do just as well investing in public stockmarkets – which, as one academic puts it, ‘(to put it mildly) is not what PE investors are paying for.’ For another expert, given the high costs of the initial buyout deal (buyouts are an expensive business), the exorbitant ‘2 & 20’ fees and charges over the lifetime of the fund and ‘the many layers of potential agency conflicts’ involved, it would be  outperformance that was surprising, not the lack of it.

The economic efficiency claim is no stronger. Most of the inviting (ie inefficient) targets have long ago been picked off and ‘improved’. Instead, the massive surge in buyout volumes in the decade after the 2008 crash increasingly consisted of short-term trades in which targets were bought and quickly flipped to another buyout firm to cash in on rising stockmarket valuations – transactions of no benefit except to the fund and requiring little management skill. Even PE insiders admit that those glory days, when zero interest rates meant that anyone with a line of credit could turn a tortoise into a hare almost overnight, are gone, probably for ever. Others privately fret that with IPO exits drying up and investors clamouring for payment, PE houses are concocting ever more complex forms of debt refinancing, with the risk that a default could trigger a private-markets meltdown. A totally unregulated industry, opaque valuations, no settled definitions, conflicts of interest, mounting debt – what could possibly go wrong?

The truth is that private equity is shareholder-value capitalism on steroids, and for that reason alone Labour should be subjecting it to the beadiest scrutiny. PE is a one-trick pony, with debt as its only weapon, at levels that crowd out any other management concern. Interestingly, it is now beginning to admit as much: with debt becoming a two-edged sword, PE chiefs are suddenly wondering how real companies back on planet earth that actually make and sell things work and even prosper. Some are even contemplating shaving off some of the carry for the workforce of their bought-out firms.

But this is all obfuscation – ESG-washing, if you like. For the one area where PE really does generate outsize returns is one that it would rather not boast about, since it is the carry that richly benefits not clients but its own top managers. Analysis by Said Business School’s Ludovic Phalippou shows that between 2006 and 2015, while PE investors were getting returns similar to those yielded by the stockmarket, the funds’ managers were pocketing $230bn of lightly taxed carry. Most of the loot went to ‘a relatively few individuals, mostly founders of large PE firms’ – a finding reflected in Phalippou’s calculation that between 2005 and 2020 the number of PE multibillionaires rose from three to 22. The wealthiest of all, Blackstone’s Schwartzman, was worth $37.4bn in 2021, a pot that is growing by at least $1bn a year. No market can be called efficient that generates such grossly distorted rewards, let alone for so long.

Blackstone’s buyout of Hilton Hotels for $6.8bn in 2007 eventually resulted in a profit of $14bn, $2.6bn of which was paid out as carry for the fund’s top managers. It has been described glowingly in the press as the best such deal ever. Yes, says Phalippou: but for whom?

Over to you, Rachel.