Celebrity Capitalism

I couldn't believe how much credulous publicity the British papers gave to the new media venture berween Simon Cowell and Sir Phillip Green. I suspect nothing will ever emerge from it. Anyway, in my Money Week column I've been having a go at celebrity capitalism...here's a taster.

The business pages are looking more like the television or gossip columns every day. Sir Alex Ferguson is teaming up with Sir David Frost to get into the property business. Simon Cowell gets together with Sir Philip Green to launch an entertainment empire. Sir Alan Sugar, the rough-talking host of The Apprentice, is hired by the Prime Minister Gordon Brown as the government’s enterprise tsar.
At this rate, Cheryl Cole will be drafted in as the woman to re-build Northern Rock, Davina McCall will be lined up to replace Sir Stuart Rose at Marks & Spencer, and Katie Price will be appointed as the next Governor of the Bank of England.
It is all nonsense – and damaging nonsense as well. The problem for the UK economy over the last decade has been too much froth and bling, not too little. The ‘celebritisation’ of British business is the very last thing it needs: a return to the more sober values of working hard, saving more, investing in the future and living within your means are the values that should be promoted.
Still, it is hard to escape the way that celebrities are invading what used to be the sober world of the City and government policy.
Sir Alex Ferguson is, without question, a fine football manager, and Sir David Frost a distinguished television interviewer. The pair now believe they can turn that experience into a £1 billion property company. They have set up aAIM Capital Finance with backing from Middle Eastern investors to buy up real estate assets at bargain prices. There is, however, very little evidence to suggest that the pair genuinely have anything to bring to the table except for some well-known names.
Likewise, it is hard to see how the slightly portly duo of Cowell and Green managed to secure such hyperbolic coverage for their television ambitions. Being rude to warbling teenagers from Wigan hardly makes you the man to challenge the might of the Disney empire. Green is an astute trader of assets, and very skilled at working the debt markets to his advantage, but he isn’t an entrepreneur in the sense of setting up new businesses. Top Shop and BHS had been around for years before he got control of them.
Meanwhile, beyond grabbing himself a few headlines at a difficult time, it is hard to see what Brown thought he was doing by appointing Sugar to his government as Enterprise Tsar. Leaving aside the obvious point that ever since 1917 anyone with the title Tsar has been virtually powerless, it is hard to see how Sugar could be the right man for the job. Back in the 1980s, he was an astute, calculating entrepreneur, with a good eye for a market trend, even if turned out to be better at jumping on bandwagons than creating big, world-beating businesses. But The Apprentice has played to the worst stereotypes of business, portraying a cut-throat world of bullying and opportunism that has very little to do with how successful corporations are actually built.
In reality, the very last thing the British economy needs at the moment is to move even further into the territory occupied by Hello! and Heat magazine.
That isn’t to say that business can’t lean anything from TV and pop personalities. The celebrities who fill up the page of Heat magazine know more than most marketing departments about branding. They know how to position themselves in the media, to create a compelling narrative, and to keep coming up with new products. There is nothing wrong with businesses wanting to keep in touch with the modern world, nor should they ignore what is happening outside their industry.
But the UK has suffered from too much bling, not too little.
The story of the British economy over the last decade has been one of flimsiness and flakiness. Debt was built up to extravagant proportions, among consumers, companies, and perhaps most of all by the public sector. The property market was pushed up to ridiculous heights on mortgages that were far too easy to obtain. Buy-to-let tower blocks were thrown up overnight by get-rich-quick speculators in city centres where there was there were very few affluent young professionals to fill them all. Shopping malls were filled up with ‘fast fashion’ made in the Far East, and paid for on store cards. It was an economy driven by shopping, debt and boasts.
Underneath it all, however, there was very little of any real substance.
One of the striking aspects of the boom of 1997 to 2007 – the longest uninterrupted expansion of the British economy in more than a century, as Gordon Brown kept rather tediously reminding us – was how few genuine entrepreneurs it created. In the 1980s, we saw businesses such as GlaxoSmithKline or AstraZeneca rise to the top of the pharmaceuticals industry. In the 1990s, new companies such as Vodafone rose to global prominence in telecoms. But it is very hard to think of a new British company that has taken the world by storm in the past decade. Instead, the business pages have been dominated by City financiers, by private equity houses, and by corporate bosses on acquisition sprees such as the Royal Bank of Scotland’s Sir Fred Godwin. It has been about trading assets, not creating them.
That needs to change. The next decade is going to be about hard work. The UK needs to pay down vast quantities of debt, both personal, and public. It needs to create new industries to fill the gap left by financial services and construction, and do so against the backdrop of rising taxes and tight credit. It will have to get used to living without the easy wealth created by constantly rising house prices. And it will need to learn how to save more and spend less.
It is going to be a slog. We’ll need to be disciplined, sacrificing, and austere. And a fresh wave of celebrity-driven business launches will have very little to teach us about that.