Chapter 1
Something is Wrong - And It's Everybody's Business

"As I grow older I pay less attention to what people say. I just watch what they do."

-Andrew Carnegie

What's the Problem?

One of the most important institutions in modern society is facing a shattering crisis.

In fact, the relationship between Business that is creating wealth and generating taxation, employment, products, services and innovations; government that is managing, regulating, seeking social progress, setting the rules under which everyone operates and has a mandate to lead, and society - all of us - is broken. That hurts everyone and it's something that should concern us all. Yet while the connection between politics, government and society is often reported and analysed, the crucial relationship between Business and society is much less understood.

We think we know about Business and, for the most part, we don't much like what we think we know. One of the biggest things that Business does is ultimately operate as the sole generator of taxation revenue for the country. When a Business makes money there are only three things it can do with the profit: reward the shareholders who took the risk by way of dividend or capital gain on sale, and the shareholder will pay tax on it. Or keep the profit in the Business, and pay tax on it. Or pay employees - who'll pay tax on it! That tax goes in part to pay the wages of people in the public sector - who'll pay tax on it! If it wasn't for the wealth created by Businesses across the land, large and small, there would be no tax, there would be no public sector. It's the same with pensions. No Business, no public-sector pensions because of the tax revenue that pays for them. No Business, no private-sector pensions because of the salaries and wages that pay for them.

This lack of understanding and misrepresentation has some serious consequences. The few headline-grabbing, self-fulfilling prophecies endorse our prejudice and allow us to assume that the Business of wealth creation is an entirely selfish activity carried out by untrustworthy rogues, and that anyway Business is just where the money lies; cash is king and nothing else matters. As a result, we are quick to penalise Businesses and executives, and slow to give them any benefit or support.

Business faces a range of difficult problems - many of its own making, some that are not - and it is time that these were addressed. Fundamentally, Business has to recognise that it has a vital role to play in society and it needs to start fulfilling that role better. This book is about Business: what it means, why it matters and, more significantly, the challenges it currently faces and the solutions that it needs to adopt if it is to succeed for the benefit of us all.

A business that makes nothing but money is a poor business.

Henry Ford

We are concerned about a "democratic deficit" - the need for people's views to be reflected by the politicians that serve them - yet we seem unconcerned about (or perhaps we are simply happy to accept) a "Business deficit". If Business continues to detach from society, then both Business and society will, in many ways, be much, much poorer.

Fixing Business matters hugely. This book is written from a UK perspective but the points it makes will resonate wherever you live in the world and many of the examples cited are international. The role of Business in our society and lives is truly global, more than ever before in human history. Gary Clyde Hufbauer of the Peterson Institute for International Economics highlights the fact that virtually all of the "losers" of the 20th century rejected international economic links, either explicitly (in the case of the old Soviet Union) or implicitly (most of Africa). Whereas the "winners" of the 20th century embraced the international economy, for example: Japan, Korea, Taiwan, Spain and Ireland. In virtually all of these cases, the economic development and trade driven by Business contributed to stabilising entire societies, many of whom had previously endured turbulent times. Finally, those countries that have grown and prospered the most in the 21st century have accelerated their embracing of the global economy; Chile, Vietnam, Mexico, China and India spring to mind.

This point will be especially relevant, in 2017 and 2018, in the UK. As we discuss later in this book, it underpins the opportunity provided to the UK by Brexit, the country's departure from the European Union. The UK wants, among other things, more direct control of its trade and the opportunity to complete trade deals with other parts of the world. Other current members of the European Union may aspire to this too. Clearly Business and trade matter, and they are exerting a remarkable influence on political developments.

The most significant challenges and much of the mistrust facing Business are universal - just look at the rise in recent years of anti-globalisation protests - and the opportunities and remedies that Business leaders need to adopt are largely universal too (although the context may vary). This point about globalisation is complex but it does also serve to highlight the complexity of Business. Business is predominantly a force for good and so too is globalisation. And where there are problems with Business (and globalisation) they need addressing and resolving, not ignoring, pretending they don't exist or rejecting everything that they have to offer. It is, in part, fear of the effects of globalisation, whether perceived or real, that created the energy that powered Donald Trump to the White House. Millions across the developed world feel, rightly or wrongly (as if there can be an objective "right" or "wrong" about this) that globalisation works for the few not the many. Business had better face up to that reality or the consequences will be dire.

One other vital point is worth highlighting: Business and commerce are not alien or inherently unusual activities, they naturally spring from the human condition. We make things, we provide services, we trade, we compete and we work to improve things, not despite the fact that we are humankind, but because of it. Creating wealth through Business has always been with us and, like it or not, it always will be. The key, therefore, is to make sure that it works better than ever before - and why wouldn't we? There are few engines of progress and change as potentially beneficial as Business. This means that Business is here to stay; it is inevitable and a crucial part of who we are and what we do. That may be an uncomfortable truth for some people; one of the biggest drivers for people is the desire to do well. Many of the greatest innovations and successes in human history have been driven by commerce and Business: from the discovery of the New World in the 15th century to the dramatic improvements in healthcare achieved in the 20th and 21st centuries.

Consider these few facts: the global population at the start of the Christian era has been estimated at around 150 million people. It reached its first billion people in 1804, and by 1900 was 1.6 billion. Between 1900 and 2000 the global population nearly quadrupled, from 1.6 billion to 6.1 billion, and between 2000 and 2011 it increased by a further 900 million to 7 billion people. In other words, there was a bigger net increase in global population in the first 12 years of the 21st century (900 million) than the entire growth in global population between AD1 and the year 1804 (850 million).

The extent of the changes in global population that have taken place during our lifetime is astounding. This point is highlighted by the 20th century, which was particularly remarkable. During the last 100 or so years there has been the highest annual population growth rate (2% in 1969) and the shortest time for the global population to double, which it did between the administrations of US presidents Kennedy and Clinton. This was combined with unprecedented declines in mortality, changes in healthcare, education and incomes, significant international migration and increased urbanisation, resulting in the emergence of mega-cities. According to the United Nations, in 2007 the global urban population exceeded the global rural population for the first time in human history.

The post-second world war era has seen enormous strides in the improvement of standards of living across the globe. Global average real incomes per head rose 460% between 1950 and 2015. Over the same period, the proportion of the world's population in extreme poverty fell from 72% to 10%. The global average life expectancy at birth was 48 in 1950; by 2015 it had risen to 71. These are some encouraging statistics which often get lost in the din of the doomsayers.

Business is one force, but a significant one, among several that are constantly shaping our world. From the opportunities in the cities to the internet that creates feelings of awareness, aspiration, envy or resentment, Business has been the driver for the greatest economic migration of peoples the world has ever seen.

What Has Business Ever Done for us?

So, what precisely are the main benefits of Business? Why are we so certain that it is worth...