Beyond phantom growth? Is the new normal pounding on the door? – Insurance for Pets

Here are two extremely interesting texts. First of all, a text by Bert Wagendorp about the book ‘Phantom growth’ in de Volkskrant of 9 June 2020. The second text is a summary of the recommendations of no fewer than five authors in the FD of 23 May 20. Two short texts, one with an action agenda for an actual post corona transformation.

Dutch citizens have been sewn in a grotesque way by successive governments

Author Bert Wagendorp

A « historically deep recession » is imminent. I already had such a dark brown suspicion and yes. According to the economists of RaboResearch, with a GDP contraction of 6 percent, it will even become the deepest dip in a hundred years. Those of De Nederlandsche Bank also see it darkly and the CPB is not optimistic either. Elsewhere it is expected to heat up even faster, but that is little comfort.

According to the current paradigm (growth is good, shrinkage is bad), the situation is therefore bad. But perhaps we should ask ourselves whether it is right that we have made GDP the measure of all things.

Not entirely coincidentally I just got Phantom growth from former Volkskrantjournalist Sander Heijne and Hendrik Noten read, an absolute must. Heijne and Noten are not economists, but they have delved deep into the phenomenon of growth and explain in clear language what is wrong with it. This: most citizens do not notice any economic growth at all. For them it is phantom growth.

I have been wondering for years how it is possible that in an increasingly rich country like the Netherlands we are confronted with austerity and cost increases. Why care, culture, education and other sectors in the public domain were rigorously stripped down and cut back after the previous recession.

Heijne and Noten’s answer is shocking. In the past forty years, since Lubber’s Wassenaar Agreement of 1982, austerity has been systematically passed on to citizens and public expenditure. Successive governments consistently put economic growth and the interests of big business above prosperity and well-being of the population.

The result was that the money « sloshed against the plinths » at the large companies, that the inequality and the quality of life decreased sharply. That CEOs and shareholders filled their pockets, but that citizens barely noticed the spectacular growth figures and saw the quality of public facilities deteriorate. That market forces became an ideology and that we « have to work ever harder for less and less », that young people were deprived of the prospect of a permanent job and a house. That economic growth led to social contraction.

Warning: reading Phantom growth infuriates you. Dutch citizens have been sewn in a grotesque way by successive governments. Suddenly you understand how revolutions arise.

The question now is how we will soon deal with the shrinkage and growing public debt. In The Hague they are undoubtedly already looking at the Ministry of Finance where savings can be made and which costs can be increased. And how business can be spared.

Mark Rutte is an excellent manager of virus outbreaks, but not a man who likes to think about a different economic structure than the existing one. Even if everything indicates that we can no longer continue on the current road and it is an excellent time to change course. His now-proclaimed saint New Zealand colleague Jacinda Ardern does: « Economic growth that leads to poor social outcomes is not a success. It is a failure. « She wants to get rid of the holy belief in growth rates and base her policy on indexes that focus on the well-being of the population.

Sounds obvious, but it is not.

Now a selection from the message in the FD of May 23, 20

Socially responsible management and supervision, that is the new normal.

The authors Jaap Winter, Steven Hijink, Matthijs de Jongh, Gerard van Solinge and Vino Timmerman, are professors of corporate law

The duties of directors and supervisors must be amended by law. Directors must operate their company as a « responsible company ». Supervisory directors must supervise this. Anchoring in the law, instead of the often elusive CSR promises, provides guidance to test the actions of directors and supervisory directors, before and afterwards, by the shareholders and by the judge.

The corona crisis sheds new light on the role of the company in society. Once again, the state takes over entrepreneurial risks. Thus, the crisis exposes our need for a new normal. The old normal is no longer sufficient.

Statutory task assignment

The pursuit of profitable continuity must be embedded in a broad responsibility in society.

This means that the duty of care colors open standards, such as proper performance of duties and basic principles of good entrepreneurship, against which the actions of directors and supervisory directors are judged by the courts.

Many companies have already expressed their vision of corporate social responsibility in a mission. The Corporate Governance Code also prescribes this. Those missions are very diverse and without obligation. The duty of care means that the so-called responsible corporate citizenship is no longer without obligation.

Purpose

The second proposal is to offer the possibility to lay down the concrete interpretation of the duty of care for one’s own company in the articles of association, following the example of the French Loi Pacte (2019). Such a purpose guides decision-making for the core activities of the company.
« Directors must account for themselves, which can be tested by the AGM and the judge. »

So it should not be just words. Because the duty of care applies even without a formulated purpose. The accountability can be reviewed by the shareholders’ meeting or the judge. This prevents « purpose washing ».

We do not have to accept the social uprooting of companies. A new social contract is needed between company and society. This requires a different sense of responsibility among directors and supervisory directors.

So much for the 2 columns.

Significant but not a run yet. Public opinion, a free press, alert politicians and corporate executives who go along with the new normal are prerequisites.
I am not at ease yet. For example, I would have liked to supplement the measures in the FD with the idea of ​​Piketty to recruit half of the supervisory directors from the employees. I think the relationships within the company are very important. In ManagementSite, for example, we pay a lot of attention to the influence of professionals, the human dimension, the Rhineland model, morality & decency, self-organization and smarter organizational forms. In addition, there are also organizations in the public sector. Decent management, abuses in the implementation, competent supervision … all things where better organization and management is a factor of great importance.

I was most touched by Wagendorp with his text about Phantom growth. The skew growth between the public domain and the business community must be tackled. The economists let that run its course. Drivers dropped their ears. Very good to bring that up! The bookkeeping mentality and the waving with « the housekeeping book » have long haunted me. Since Keynes, for nearly a century, we have known that a different logic is needed for the administration of states. Except for the economists who are in charge in NL. The household booklet must be correct. So cut back. Bah.

Willem Mastenbroek, editor-in-chief ManagementSite.

Note: See also our pages on Sustainable business, Innovative organization, The human dimension and Self-organization & self-managing teams.