Passing Bull 208 – Decrying decency

 

It is highly entertaining to watch parts of the commentariat – the loudest voices in which call itself ‘the political class’ – decrying expressions of decency in big business – especially BHP and its CEO, Andrew Mackenzie.  Some people think that people in business should steer clear of moral and political issues.  They are just not clear about why this should be so.

We may put to one side the fact that those taking this position have a very shrill ideological commitment to a claimed ‘freedom’ of religious fundamentalists to condemn one in ten of us to Hell, but we can comfortably spot four reasons for them to be very jealous of Andrew Mackenzie.  He is much smarter than them.  He is much better educated than them – primary degree at St Andrews (geology); doctorate at Bristol (organic chemistry); Humboldt Research Fellow in Germany (nuclear science); the publisher of 50 research papers who speaks five languages (according to Wikipedia).  Finally, Mr Mackenzie does not just comment on others, which is the function of his critics – he creates jobs and wealth.  (There are not many of those about.  The BHP website refers to 62,000 employees and contractors.)  And, finally, he has leadership written all over him.

BHP has been outspoken on issues like indigenous recognition and relations with the First Nation generally; same sex marriage; climate change and coal; and diversity.  There are obvious reasons why a company engaged in mining in Australia or the Americas must have and profess strong policies on dealing with indigenous people.  Putting that to one side, there are at least three reasons why a company like BHP might be vocal on some moral and political issues.

One is the appalling failure of government to show anything resembling leadership on issues like same sex marriage and climate change.  Business has no alternative but to seek to fill the vacuum.  (The U S army decided years ago that it could not afford to wait until its Commander in Chief saw sense on climate change.  Insurers are now forcing others to act in the same way.)

Next, many shareholders expect this of their business; some demand it.  To describe such people as ‘activists’, as if you were articulating some truth, merely shifts the arguments down a rung.  In a society that calls itself capitalist, why should not the owners of capital deploy that fact to achieve social or political objectives?  Why should the owners of the business be precluded from expressing views about the position that the business adopts in the community?  As for the employees, is it not fundamental that a business goes better when its employees are happy in their jobs and proud of their work?

Finally, and perhaps as a result of the first two grounds, BHP should adopt the position it does because it is the right thing to do.  BHP has succeeded, and in my view all social groups depend upon those who have succeeded giving back to the community to those coming after them.  It is called noblesse oblige, and it is as essential for a company as it is for a family, a cricket club, a law firm, a small town, a political party, or a nation.  Mr Mackenzie looks to me to be the embodiment of this ideal.

May I relate this to my shareholdings in my super fund?   I hold shares in only eleven companies – four banks, three mining and exploration companies, two safe licensed investment companies, and CSL and Westfarmers.  I expect the businesses that I invest in to take care about their standing in the community generally.  I am broadly familiar with the management of all of those companies and, with one exception, I am content with that management.  The exception is three of the banks.  I am not happy with their management, or their standing in the community generally.  But – I am confident that they will change their ways; and in the meantime I have little option but to stay with them because the smallness of my fund and my reliance on it for income mean that I need to look for a safe yield above 6%.

Two anecdotes will show the value I put on good community relations.  When that dam that BHP had an interest in flooded a village in Brazil, Mr Mackenzie was over there within days and personally assuring villagers that the company would look after them.  It was very, very impressive.  I have acted for many large corporates, including BHP, and I can well imagine those in well-cut suits and under furrowed brows telling him such a course was risky and downright unwise.  This was leadership made visible.

When flying to the Bungle Bungles, I flew over the Rio diamond mine – a vast inverted ziggurat some distance from its lifeline airstrip – and I felt the thrill of ownership.  More importantly, at Broome I was told what a good job Woodside was doing in the local community.  I was also told a story that sounds like it has grown in the retelling.  A Woodside employee was making a pest of himself with a young woman at one of those fly-in, fly-out strips.  A Woodside executive told the miscreant of his lofty standing in the company, and that unless that man apologised to that young woman, he would be on the next plane back to Perth –and probably unemployable in that industry.

As a result of those incidents, I increased my holdings in BHP and Woodside (and, for that matter, Rio).  You may think that is a zany way to invest – well, it is my capital.  BHP is by far my biggest holding and I am very content with it – not least because it and Mr Mackenzie are acting in a way to attract criticism from those whom I least admire.

And when that criticism comes from those publicly associated with the IPA, which was, until recently, less publicly associated with coal and Gina Rinehart, then I know that our capacity for pure bullshit is unlimited.  And that’s also before we recall that those advising BHP how to run their business have never got with a bull’s roar of running any business.  Never mind – they don’t even draw the line at offering gratuitous but quite useless legal advice.

Bloopers

Asked earlier if Johnson’s team had sought any talks with Brussels, a Downing Street spokesman said: ‘What we’ve done is set out our position and say that we are very ready and will be energetic in beginning talking, but we’re also clear-eyed about what needs to happen if we are going to be able to secure a deal which parliament can support.

‘As I say, we are ready to begin talking, but we are clear what the basis for those discussions needs to be.’

The Guardian, 27 July, 2019

One problem with that is that it suggests that this government accepts that any deal must be supported by parliament.