Should Brexit Income-Loss Insurance be Provided by the Government or the Private Sector?

29 07 2016

A few days ago, a curious advert appeared in my Facebook feed: it was for Brexit-related income protection insurance. In effect, an insurance company was offered me the chance to insure against the possibility that Brexit might cost me my job. The product has been rushed to market in the month since the referendum result by a firm hoping to capitalize on the widespread sense of uncertainty that now pervades many sectors of the British economy. Many people genuinely fear that Brexit could cost them their jobs.

I’m not convinced that this product offers value for money, as I suspect the clever lawyers for the insurance company could concoct plausible arguments to allow the firm to get out of paying out to people who have lost job. One would need to read the insurance contract, and the relevant UK case law, to see what sort of evidence the policyholder would need to produce to prove a casual linkage between Brexit and loss of income. (The company could always argue that the policyholder’s employer went out of business for reasons unrelated to Brexit).

 

The being said, the fact this policy is being offered at all says something about the political economy of Brexit negotiations. This insurance product is being offered because many people assume that they will not be able to claim back lost income from the government in the event of Brexit-induced job losses.  Effectively, the politicians responsible for Brexit have externalized many of the costs associated with Brexit. Ironically, some of the members of the current cabinet are strong believers in the “polluters should pay principle”. I agree that this is a good principle, because it forces firms to internalize the costs of dumping waste in the river. Maybe the same principle should be applied to Brexit job losses.  If the current government is indeed confident that Brexit would be a clear net benefit to the UK economy and job gains would outweigh any job losses, they should put their money where their mouth is and place a bet on this belief by offering cover the costs that any individual or company suffers as a result of Brexit.

Let’s apply a public-choice lens here: the politicians who are tasked with negotiating some sort of compromise with the EU are wealthy individuals who are going to remain wealthy regardless of whether they take a hardline stance that worsens the impact of Brexit on UK wage earners. Indeed, the politics of the Conservative party may actually incentivize these politicians to adopt positions that end up costing lots of little people their jobs. The UK Treasury would, of course, lose a great deal of money in the event of a job-destroying outcome to the Brexit negotiations (e.g., less tax revenue, more benefits claimed), but many of the costs associated with Brexit would be borne by private individuals, not central government. The externalization of these costs thus enables the policymakers to indulge in the luxury of grandstanding in negotiations with Brussels.

Since 1962, US trade liberalization agreement have been accompanied by the provision of structural adjustment funds to compensate the losers from such agreements. For instance, steel workers how can show that they lost jobs due to a trade deal that reduced tariffs on steel can claim back money from the government under the TAA scheme. Since trade liberalization is, on the whole, good for the economy, this arrangement is win-win.  The wisdom of such structural adjustment programmes can be debated, but there is a clear precedent we can follow here. Given that Brexit is a massive trade deliberalization move, it makes sense for the UK government to be forced to cover all of the costs of Brexiting. Ideally, the compensation paid to the minister responsible for Brexit policy should be connected to the size of the Brexit compensation payouts so that they are personally incentivized to negotiate an arrangement that results in as few job losses as possible. However, I suspect that it is too much to hope for.





Call for expressions of interest for Assistant Professor Position in International Business/Strategy -University of Liverpool Management School

26 07 2016

Interested in being my colleague? If so read below:

Call for expressions of interest for Assistant Professor Position in International Business/Strategy -University of Liverpool Management School

The University of Liverpool Management School (ULMS) invites expressions of interest for a position as Lecturer (equivalent to a tenure-track Assistant Professor) in International Business and/or Strategy beginning in January 2017. Interested applicants can find detailed information here: Position in IB or Strategy at ULMS. The position will be advertised formally in the autumn of 2016.

If you are interested in exploring this opportunity, members of our Group will meet with promising candidates at various conferences over the summer, including the AOM meeting in Anaheim. Please contact my colleague Dr. Giulia Solinas (gsolinas@liverpool.ac.uk) with a current CV, so that she can schedule a meeting in Anaheim or elsewhere.

 

 





Call for Co-Panelists: Historical Perspectives on De-Globalisation and MNE Strategy

25 07 2016

The 44th Academy of International Business (UK&Ireland Chapter) conference will be held 6-8 April 2017 at Henley Business School, University of Reading. The conference should attract a range of top-notch scholars of International Business. The central theme of this year’s conference is deglobalization. I’m interested in putting together a panel of business historians that would grapple with the issue of deglobalization and its impact on firm strategy. I believe that looking at previous episodes of deglobalization can help firms to think about their strategies in light of the accumulating evidence (see here, here, here, and here) that we may be entering a deglobalization phase in world economic history.  I’m not entirely convinced by the now fashionable deglobalization narrative, but I will certainly admit that there are many data points to support it.

Anyone who would be interested in being on such a panel should contact me. We would need to submit our panel proposal and paper by 9 December at the very latest.

The theme for the conference is Contemporary Issues in International Business: Are we seeing the tail-end of globalization?
As we enter 2017, we are faced with growing uncertainty and sociology-economic challenges that suggest we may be seeing the tail-end of globalization: Zero growth, the panama papers, an immigration push-back, Brexit, Donald Trump, a new debt crisis, social unrest, even a possible recession. We contend that globalization is not an unstoppable force, and there are costs of maintaining globalization’s momentum. Society is inertial in accepting the new realities that come with globalization: less control over the ‘domestic’ economy, widespread use of international transfer pricing, the free movement of people, growing inequality. Our debate panelists will discuss what this means for international business from various perspectives.

 

The full CFP is here.

If you are interested in being on this panel, please contact me.

 





The Rise of Multiculturalism in Canada and Australia: What About Business?

20 07 2016

jatindermann

My friend and sometimes co-author Jatinder Mann has just published his fantastic new book comparing the development of multiculturalism in Canada and Australia in the twentieth centuries. (Actually he starts his narrative in the 1890s). The Search for a New National Identity: the Rise of Multiculturalism in Canada and Australia  (Interdisciplinary Studies in Diasporas) was released on 15 July by Peter Lang publishers.

Here is the book blurb:

This book explores the profound social, cultural, and political changes that affected the way in which Canadians and Australians defined themselves as a “people” from the late nineteenth century to the 1970s. Taking as its central theme the way each country responded to the introduction of new migrants, the book asks a key historical question: why and how did multiculturalism replace Britishness as the defining idea of community for English-speaking Canada and Australia, and what does this say about their respective experiences of nationalism in the twentieth century? The book begins from a simple premise – namely, that the path towards the adoption of multiculturalism as the orthodox way of defining national community in English-speaking Canada and Australia in the latter half of the twentieth century was both uncertain and unsteady. It followed a period in which both nations had looked first and foremost to Britain to define their national self-image. In both nations, however, following the breakdown of their more formal and institutional ties to the ‘mother-country’ in the post-war period there was a crisis of national meaning, and policy makers and politicians moved quickly to fill the void with a new idea of the nation, one that was the very antithesis to the White, monolithic idea of Britishness. This book will be useful for both history and politics courses in Australia and Canada, as well as internationally.

This book is an important piece of scholarship and one that will doubtless be read not just in Canada and Australia but also in those industrialised countries that have some different experiences in managing diversity. Canadian multiculturalism is indeed a role model for many other countries, as it is nation that has developed its economy through the successful integration of waves of immigration. The Canadian and Australian experiments with multiculturalism have been brilliant successes in economic terms and are discussed around the world.

 

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Monument to Multiculturalism in Toronto’s Financial District

I do not mean to critique Jatinder’s great book in any way, but it seems to me that one element in missing, or at least, under-developed in it: the role of business in promoting the emergence in these societies of  multiculturalism. There are passing references to business here and there in the book, but no sustained treatment of the issue. It seems to me that one could write a narrative history of multiculturalism in both Canada and Australia that foregrounds the role of business in lobbying for a more open immigration policy and in the practical integration of arrivals. If I were writing this history, I might open it with a discussion of Brian Mulroney’s speech on the economic benefits of multiculturalism, which delivered at a 1986 conference called “Multiculturalism Means Business.”I would also note that this slogan “Multiculturalism Means Business” was shamelessly plagiarised by the Multicultural and Ethnic Affairs Commission of  the State of Western Australia, which organized a suspiciously similar conference in August 1988.

It seems to me that a business historian could use the histories of these two countries to produce some research with real global impact.

 

 

 

 

 

 

 





Nostalgia and Brexit

19 07 2016

 

1960s_british_telephone2c_museum_of_liverpool

Three professors of strategy at EDHEC in France (Ludovic Cailluet, Emmanuel Métais and Philippe Véry), have published an interesting paper on one of the motives for Brexit, namely nostalgia for the economic golden age that allegedly existed before the UK joined the Common Market in 1973. There is something to be said for this argument, as I do think that there is a tendency among some older people to romanticize their youth.

Management academics are increasingly interested in the usage of the past and social memory and their research speaks to this theme.

You can download the document that contains their report here.

 





Tim Harford on Brexit and the Power of Wishful Thinking

19 07 2016

Tim Harford has published a truly excellent reflective and self-critical post on the power of wishful thinking. The post uses the results of the Brexit referendum, which were clearly not foreseen by the prediction markets, to illustrate some broader points about how think about futures.  The post will doubtless interest many people who enjoyed reading the recent book Superforecasters. In the post, Harford mentions that he worked with Vince Cable in the famous scenario planning development at Shell.

P.S. In a great piece of visual humour, the Harvard economist Greg Mankiw published this photograph to symbolize the results of Brexit on his blog.

 

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Camille Causse’s Archives Blog

18 07 2016

800px-bhv_vue_de_l27hotel_de_ville

Camille Causse, an archivist in Paris, has a blog that should interest many business historians. Her most recent post is about the 160th anniversary of Bazar de l’Hôtel de Ville (BHV), a grand Paris department store that is commemorating its history with a special exhibit on the fifth floor (see image below).

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As Ms. Causse notes, the extent to which firms preserve their historical records varies considerably. For instance, while the archive of les Galeries Lafayette has been well preserved, other Paris department stores have thrown out old document. In 2014, the employees of BHV made a pleasant and surprising discovery: the found a cache of old documents stuffed into a space under the store’s famous rotunda. If put end to end, these documents would run for 250 metres. The company is now organizing and cataloging these archives so that it has a better sense of its own history.

Ms. Causse’s personal website is here. You can also follow her on Twitter.

 








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