April 2008

His misfortune was to follow a man who was reckoned by everyone to know precisely what he was doing at every single moment of every single day. José Mourinho, the handsome Portuguese capable of weakening the most football-phobic of female knees, had elevated the art of coaching to new levels.

A wily media operator, a sharp tactician, the shrewdest of psychologists, Mourinho took credit for Chelsea\’s success in recent years. It was the manager who did it; nothing could have been done without him.

And yet, this season, the club is in with a strong chance of achieving everything with a man written off as second rate. It is a result that would suggest the manager doesn\’t matter that much. Which would rather undermine conventional wisdom.

We live in the era of management. We are fully paid-up members of the cult of the executive. It is a modern-day tenet of faith that everything can be delivered by simple application of management techniques.

This Observer piece really seems to wander a little in its* argument.

Manufacturing is great because well, it\’s manufacturing, innit, so much better than just those services like finance and The City.

And then the praise for the fact that a lot of what we class as manufacturing is actually services, like design and maintenance.

Eh?

* See first comment.

This turned up on EU Referendum earlier in the week of course, now with Christopher Booker (not all that much of a surprise, Richard North is Booker\’s co-author on several books and his researcher at times). The most important part of the story to me is this:

Since these costs will be much the same for her as for a multinational with a turnover of billions, she says: "I do not know how a directive could have been designed like this. The needs of smaller businesses have simply not been allowed for. It is astounding."

The reality seems even worse. It is clear from the impact statement that Brussels knew, when it drafted the directive, that it would put what it calls small and medium enterprises (SMEs) at a significant disadvantage against their big competitors. "SMEs," it admits, "are particularly affected by the directive, while larger companies are more likely to be able to bear the costs of dossier preparation."

One likely upshot of the directive is that many of the 1,000 SMEs in Britain that rely on chemical formulations for their products will be unable to afford the costs (most of them wholly unnecessary – chemicals such as benzalkonium chloride have been exhaustively documented for decades).

Most will be forced out of business. Many useful products will disappear from the market. The cost of developing new, more effective products, in a market where most are low-value and offer only small profit margins, will be so prohibitive that innovation will be stifled.

The only people rejoicing at this example of regulatory overkill are those multinational companies that played a considerable part in drafting the directive.

Yes, we have regulatory capture. The bureaucracy, the real government, asks all sorts of people, in fact anyone with an interest at all, to contribute to their fact finding exercises and calls for opinion. Small businesses of course never respond: who has the time or inclination to wade through millions of pages to find out whether they\’ve decided to screw you this week or next?

Large companies of course have the resources to do so. So it is the views of large companies which prevail in the writing of the rules themselves. Yes, why not, another 20 pages of irrelevant questions: that\’ll stick it to those small companies which are our competitors. Hey, why not make it so complex that there needs to be a whole department in a company to deal with it? Great! That 15 man company down the road can\’t do that now, can they? Damn them for skimming off sales that should rightfully be ours!

You know, if we make it complex enough then they might have to hire specialist outsiders, consultants at £2,000 a day to help them fill in the forms! Excellent, and of course, it\’s all being done for the kiddeeeees!

And thus Marx\’s prediction becomes true, markets slide towards monopoly. But not because of the inevitability of this happening in a market economy, but becuase of the interaction of big government and big business.

Just as an example here, I complained about the restrictions that REACH places upon one of our imports. One Europhile federast said that it was simple, I should simply band together with my competitors to pay the costs of registration and testing of the product.

Erm, I don\’t actually know who all my competitors are for a start. And even if we did, and we combined to get that registration, there is no way that we can stop a new entrant into the market from using that registration without paying for it or contributing to our costs. Given that the cost of the registration is of the order of €100,000 and the whole EU market is worth €500,000 a year, on tight margins, that\’s something of a problem really, don\’t you think?

And this is for a product which is simply two metals mixed together. Lord alone knows what it\’s like for those who supply more complex products.