Book Review - Bad Company: the Cult of the CEO by Gideon Haigh

 Bad Company: the Cult of the CEO by Gideon Haigh

Melbourne: Black Inc, 2003               ISBN 1863953558

Gideon Haigh, that doyen of cricket writing, is a working journalist who started out writing about business, with quite a few books about that subject to his name. Bad Company, originally written as the tenth Quarterly Essay, is a look at the rise and rise of the CEO as the new hero of the business world. Written in 2003, it is an interesting history and at the same time a historical snapshot of how corporations dealt with the problem of running themselves.

Written in the aftermath of the Enron and HIH disasters, Haigh looks successively at the development of the concept of the CEO, the (relatively recent) rise in importance of the position in the corporate and business world, and how we as a society got into the position where the remuneration for these people has reached stratospheric heights. He also suggests some ideas for remediation.

Haigh reminds us that the idea of a salaried manager for a company came out of the expansion of the American railway network, where companies soon became far too big to be successfully run and managed by their owners, who often were numberless shareholders in any case. He then takes us through Rockerfeller and Ford, the latter of whom famously didn't believe in management at all. Alfred Sloan of GM was probably the first CEO of the kind that we would recognise today, although he was famously reclusive and certainly didn't like appearing in the public eye.

Ironically, government intervention to curtail the power of conglomerates, and to curtail the pay packets of CEOs, have lead to some perverse outcomes. As the power of conglomerates was crushed, the power of the single corporation rose. As the ability to pay CEOs high direct salaries was curtailed, this led to the allocation of stock options in lieu of direct money. The theory was that as the CEOs now had a stake in the success of the corporation they would manage more effectively. In fact, options encourage CEOs to chase quick wins at the expense of longer term strategy. Haigh suggests that re-designing such options to focus on dividends may ease some of these unintended outcomes.

And what of the CEOs themselves? Far from being geniuses or superstars, they are quite ordinary, although with a capacity to work long hours. There are lots of studies that suggest that CEOs have very little influence on the success (or failure) of corporations. In fact Haigh suggests it is the people in the lower ranks of the organizations that often contribute to the culture that will determine success.

As someone who intermittently follows the business news in my local paper, I think that perhaps the investing populace has caught up with Haigh's thesis that a "rockstar" CEO is not a requirement for business success, even though Boardrooms still often don't do their jobs properly (Haigh makes a fascinating suggestion that the best boardmembers may well be retired middle-managers, who have a mix of real experience in the company and the industry as well).

This is not a bad read - a quick primer in how we got to where we were in the early 2000s, and how that time echoes into today.

Cheers for now, from

A View Over the Bell

Book Review - Hauling the loads by Malcolm Kennedy

Hauling the loads : a history of Australia's working horses and bullocks by Malcolm J. Kennedy

Melbourne: Melbourne University Press, 1992                   ISBN 0522844553

It's not often in one's life that a book is personally recommended by a great historian, so when Geoffrey Blainey mentioned this book as a good follow-up to my reading of  The bicycle and the bush, naturally I set to and read it.

While perhaps not the definitive story of animal-powered transport in Australia, Hauling the loads is a comprehensive account of a huge part of Australia's history that has now disappeared. And while we may think that this is a story of long ago, Kennedy points out that as recently as 1931 there were over twenty thousand horses working in metropolitan Sydney and the motor car didn't fully replace the horse until after World War Two.

In a series of well-researched chapters Kennedy explains not only the development of bullock and horse-drawn transport, but also stock breeding, road and railway development and the horse export industry. As with the history of all forms of transport, necessity and cost drove the development of Australia's early choices in types of animal and material used. In the initial phase of the history of the colony, the bullock was preferred to the horse for transporting loads. Their were two chief reasons for this choice: firstly, bullocks were initially more plentiful than horses, and were cheaper to purchase and maintain in good condition; and secondly they were easier to feed and water while on the road, as their needs were less.

Hence it was the bullockys and their teams which hauled the loads for much of the early pioneering treks into the interior which began Australia's pastoral history. Of course those early settlers had saddle horses, and when it came time to till the soil, the farmers rapidly organised holdings of working horses, for their greater ability in load hauling and farm work.

The rapid increase in horse numbers from the seven that arrived with the First Fleet, - New South Wales' stock increased from 10,000 in 1829 to 251,000 in 1850 - along with the push to extend railways into the interior of Australia led to the demise of the bullock dray as a major form of transport: instead of journeys of hundreds of miles to major cities, short journeys to railheads favoured the horses quicker pace and greater load-hauling ability once water and fodder weren't such a problem. Animal-powered transport actually became more widespread after the introduction of railways, as more produce went to and came from the railheads.

Most of the horses in Australia were 'home grown'. Kennedy states that " from 1788 to 1930 over 5200 horses were imported [to Australia]". When this is put against other figures he quotes - of the peak horse population in New South Wales alone (661,800 in 1920) and the more than half-million beasts exported (mostly to India as military remounts) to 1931 - the size of the breeding operation comes into focus. Kennedy spends some pages describing the efforts to produce horses that could stand the work on Australian farms and roads, from the hardy Walers as saddle horses, to refinements of draught breeds such as the Shire, Suffolk Punch and Clydesdale.

Kennedy spends a briefer amount of ink on the social cache that owing a fine horse gave people, especially in the cities, where it was an expensive task to purchase (one year's average salary) and keep (about another average salary) a horse in stables. The requirements for feed were huge; in 1851 42% of cultivation in Victoria was given over to hay-growing for fodder. Waste-disposal was another big problem: 25,000 horses in Melbourne produced 80,000 tons of manure and 50 million gallons of urine per year.

While we in the twenty-first century think romantically of the horse-drawn era and of bullockys cracking their whips in an Australian arcadia, Kennedy reminds us that most of the time was spent in hard work: freeing bogged drays, finding feed and water, rounding up teams every morning, looking after exports on ships during storms, working the logistics of keeping transport going by having enough animals in the right condition in the right place at the right time. Not to mention the back-breaking labour of the animals themselves.

Hauling the loads is an important work dealing with a very important part of Australia's history. There is much that could still be done in this area, as in many ways Kennedy has merely scratched the surface of a huge topic, albeit with much fine and deep research. The book comes with useful apparatus, including a good select bibliography to extend one's reading.

This book is a fascinating and useful insight into our early history, and well worth reading on that basis. Recommended.

Cheers for now, from
A View Over the Bell

Book Review - Confessions of a failed Finance Minister by Peter Walsh

Confessions of a failed Finance Minister by Peter Walsh

Sydney: Random House Australia, 1995                                 ISBN 0091829992


The recent death of Peter Walsh at the age of 80 drew me back to this book, which I read with interest when it first came out. While some parts of the book have dated a little, the strength of the book - Walsh's clear-eyed view of how to best serve the working men and women of Australia - is even stronger now than when it was written.

Walsh's book is not a political memoir in the usual sense, but more a description of how politics can corrupt good policy. Walsh was one of the few clear-eyed members of the Labor government of the 80s and 90s: he, unlike many other politicians, fully understands that for governments to achieve anything, they need to make the best use of the money that they coerce from the public. This involves a rational look at all options, and ensuring that the scarce funding goes to the best place to do the best thing.

As a reader might guess from the title, Walsh feels that the government he was part of - most importantly as Finance Minister - while doing some good things, mostly squibbed their chance.

In some ways the best way to describe the tone of this book is to quote from it - it helps that Walsh is eminently readable. Some examples follow -

"It is easy to understand the politics behind grandfathering [re: instituting means testing of pensions]....but its moral justification is suspect to say the least. It says that existing beneficiaries of anomalies and rorts can continue to receive them, but no new entrants will be permitted. It is certainly discriminatory, but does not attract the attention of 'anti-discrimination' activists and their hangers on."

Regarding the Bureau of Agricultural Economics claim that that a 10 percent sales tax on wine would reduce sales by 14 percent - "Even if retail prices increased by 10 per cent - which they wouldn't - demand elasticities of 1.4 per cent are only found where there is a close substitute. There is no close substitute for cask or flagon wine. At the upper restaurant end of the market, anyone who can afford to eat in a restaurant in the first place will not be deterred from buying a $15 bottle, or a second bottle, because the price had gone up by 75 cents."

Regarding uranium sales, a vexed issue for the Labor party throughout the 80s and 90s - "But because the French tested weapons in the South Pacific and supplied nuclear technology, the ban on sales [of uranium] to France was retained. (They were also primarily responsible for the EEC Common Agricultural Policy, and half of them were on Hitler's side during the War.)"

When dealing with the Department of Foreign Affairs' objection to the Finance Department's proposal to sell surplus land in Tokyo - "The Japanese Government would be deeply offended. The site contained an ancient well, almost a Japanese sacred site. (The answer to that was if the well was so important, and since Japan had the world's biggest current account surplus and we had about the world's biggest deficit, the Japanese Government could buy it.)"

On former education minister Susan Ryan - "Susan carried throughout her political career much of the Whtlam-era baggage, including a naive affinity to China. Following her visit to China in 1976, she told me we could learn a great deal from China, to which I replied 'Cut it out, Susan, if you and I were in China we would both be in concentration camps'." [and Walsh claims to have liked Ryan!]

When the government was declining, and Walsh was getting sick of the slippage he addressed a Labor lawyers conference "that the Budget was being 'oversold' (all Keating's Budgets were), that the new Parliament House was a scandalous waste of money, that the country was still in economic jeopardy, that expectations must be scaled down; and told the bleeding hearts that Labor's child care policies which delivered subsidies of up to $100 a week to some, regardless of how high their household income was, while the vast majority of women with pre-school age kids who plucked chooks at Inghams for less than $300 a week got nothing, were a disgrace."

He continues on in this vein - he describes Hawke as vain and too engrossed in being a statesman, Keating as someone not as smart as he thought he was, and many other ministers as wilfully ignorant or beholden to vested interests to the detriment of good government. Hawke famously said "My friend Peter always was a Cassandra", and Walsh points out that Hawke's ignorance of Greek mythology led him to inadvertently hit the nail on the head - Walsh knew what was going to happen, but nobody believed him (he at least was able to use that line to his own advantage - for many years writing a column named the Cassandra Column for the Australian Financial Review).

Walsh was always focussed on how the government could most effectively assist working people without feathering the beds of the middle classes. He abhorred tariffs, industry assistance and non means-tested handouts.

What is most depressing about reading this book in 2015 is not the grubby politics that occurred during Walsh's time, but that when one looks around the current political arena there are no Walsh's on any side of politics to cut through the spin and ensure that a government does what it should.

I wonder if we'll see his type again.

For anyone interested in Australian political history, and those who want to think about what it is to have good government, this book is well worth reading.


Cheers for now, from
A View Over the Bell

Book Review - The economic development of Australia by AGL Shaw

The economic development of Australia by A.G.L. Shaw

London : Longmans, 1960 (4th edition)

We don't seem to get books like this anymore. The short broad-sweep history, written for the mythical "intelligent general reader" seems to be something that is being produced less and less these days. This book, if allowances are made for the date it was published (1st edition in 1944), is a useful introduction into how European Australia managed to create wealth.

I write European Australia as there is no mention of Aboriginal Australians in this text, apart from short asides mentioning their depredation of early settler's stock (Shaw writes that escaped convicts and feral animals were more of a problem than native Australians). I guess this is to be expected in a work initially written before the end of World War II, but an investigation into the economics, in a broad sense, of Aboriginal Australia would make for fascinating reading - if such a book exists I'm not aware of it.

Given it's short (approx. 200 pages) length, this book of necessity deals with the broad outlines of Australia's development since the landing of the white man. With chapter headings such as "Beginnings, Development, Transition, Squatting, Gold, Land Capital, Labour, Crisis, etc. etc. you can get the idea that each major theme in the development of Australia is covered.

Shaw seems remarkably even-handed in his descriptions of the big battles in Australia's development, between Selector and Squatter, Miner and Capitalist, Factory Owner and Union Member. And his history is the story of these battles, and the efforts of the Colonial Administrations and later Parliaments to develop the country into something more than a prison at the bottom of the world.

What comes through in this book is not only the pioneering efforts of the early settlers, but the fact that economically almost the whole country relied on government expenditure to survive, and the failure of governments to manage expenditure in a sustainable way, which led to the many booms and busts that occurred across the country. In fact it was only after WWII that governments got a hold on their borrowings to any substantial degree. The other major factor in development was the weather, with prolonged drought causing catastrophe, and good seasons bringing joy, but also over-exuberance that brought it's own dangers of bubbles, which burst later on.

As always with these types of books, their most valuable gift to the reader is to guide them to further reading, and this one is no different - Shaw skims over the ground, and the reader can decide where he might stop to dig deeper - Shaw helps by providing at the end of each chapter a list of further reading, although given the age of this book, some of these suggestions may now be superseded by later works.

There are also in such books interesting and pithy bits of information that stay with you, and statements about the past that ring true about today's events - I'll leave you, dear reader, with two - first some interesting information -

"If Australia received help from the U.S.A. under the 'lend-lease' agreements [in WWII], to the value of over 300,000,000stg., in return it provided 'reciprocal supplies' worth even more, including food, transport, equipment, stores, maintenance services and construction works, and was the one allied country to show a credit balance on the deal. (My emphasis).

And something about the Depression, that makes sobering reading in today's environment -

"Why had the depression occurred? Fundamentally, as forty years earlier [in the 1890s], because of the catastrophic fall in the prices of Australia's products, particularly of wool and wheat. This burden was increased by over-borrowing in the past and by the cessation of borrowing at the moment. Australia needed loans for her development; it was true that borrowing was necessary. But much of the borrowed money was spent foolishly and wasted; so that interest became a burden, where the loan money had not been spent on reproductive assets."

If you are after a quick over-view of the development of agriculture, mining and industry in Australia, this book is virtually given away second-hand, is a quick, easy read, and leads you to further study if you require it.

Cheers for now, from
A View Over the Bell