Your country needs you, so carry on shopping it's an odd way to keep growing
CHRISTOPHER FILDES
Be patriotic — rush out to the shops. They are keeping the British economy going: the only industry, or so they claim, where employment and investment are still rising. Their customers rose to the occasion last month, when retail sales were 6 per cent higher than last year's. Other service industries seem to be on their way down, following the lead set by the manufacturing industry, which continues its fall from a cliff. As time goes on, Gordon Brown will come along with his chequebook and take up the slack, but it is an odd sort of economy which depends for its prospects of growth on retail sales and on government spending. It would be an odder economy — indeed, miraculous — which could consume more than it produced, for ever. Ours has been doing that for five years, and we have to ask what will stop it. Perhaps the capital that finances our imports will cease to flow in. Perhaps we ourselves will no longer feel that we have money to spare or to borrow. In times before these we would have been thought patriotic to save, not to spend, and in the United States, Congress is all for issuing War Bonds. The Treasury quietly hates the idea. It just wants the Americans to go on spending.
Yah, boo
'I WENT along to 10 Downing Street to brief Tony Blair on e-commerce ahead of a European Union summit in Lisbon.' This was the founder of boo.com, which tried to sell clothes on the internet, thinking of itself as a virtual Harvey Nichols, only global. Already the National Portrait Gallery was showing a picture of him in its new exhibition. called 'Business Leaders of the 21st Century'. Two months later, with the century less than a year and a half old, boo.com was bust. Of the $140 million that had been sucked into it, nothing remained — nothing, that is, but a book called boo Iwo (Random House, £17.99), which seems to have been written rather as boo.com was run, by a committee of humourless Swedes with intermittent hangovers. What the Swedes knew how to do was to get themselves taken at their own valuation — by Downing Street, for a start — and their approach was to think big. They hired a detachment of Gurkhas as bodyguards. They had offices in five cities and planned for three more. They were asked to make less noise on Concorde. Even their personal assistants had personal assistants.
Bigger fools
THE Swedes at boo.com were told that their finances were in disorder and that their kit did not work, but they brushed this aside: 'I'd banned all talk of failure and delay as defeatist.' So boo to the doubter who asked if they bought their own suits on the internet. They ran boo.com like a multinational on speed. They wondered if they had outgrown J.P. Morgan. They festooned themselves with expensive advisers, some of whom (Morgan included) were mugs enough to take payment in shares. The game would be to bring boo.com to market, when it would soon be worth more than $1 billion and make its backers rich. Can all this have happened last year? It seems more like a tale from a different aeon, but the lessons it teaches are timeless. It shows the power of the Bigger Fool Theory, which teaches you to pay too much for something in the belief that someone will come along and pay more. It illustrates the first law of business, which is that when you run out of money, you're dead. The dot.com bubble was a market in which, as sometimes happens, greed had outrun fear. Parties like that, as the Swedes would confirm, guarantee their own hangovers.
Dynasties on paper
HENRY KESWICK is my idea of a newspaper proprietor — he bought The Spectator when it was in low water and baled or bailed it out, to its lasting benefit — so I like to see him correcting the Financial Times. It should not be so snooty, he says, about companies with ruling dynasties, like Ford, which once again has a Ford at the wheel. If the ETs ruling dynasty of Pearsons and Pearsons-inlaw had not run out of steam, so Mr Keswick
argues, the paper would not have been allowed to waste its substance on riotous dot.coms. As befits the chairman of Jardine Matheson — the 'princely hong' or trading house controlled by the Keswicks for over a century, despite periodic attempts to unseat them — Mr Keswick believes in the gene pool. I am prepared to believe in the family company. It works well in the newspaper business, where the Harmsworth dynasty, now on Lord Rothermere IV, has seen Daily Mail & General Trust run rings around its republican rivals. It makes for short lines of command and for early decisions. It achieves what the inventors of boardroom incentives seem to find so difficult in other companies: that is to say, the management's interest is the same as the owner's. What matters is to keep the gene pool well stocked, as Disraeli explained when he wrote to congratulate Leopold de Rothschild on his engagement: 'My dear Leo, there can never be too many Rothschilds.'
Terminal sclerosis
THERE were rumours as this week began that Stephen Byers would make up his mind about London Airport's fifth terminal. This not very grand project has spent eight years in the hoops of the planning regime and on the minister's desk, which the Prime Minister now says is long enough. No wonder that, as I was saying last week, we have such a bad record at building the grand projets that we think we need. Next month, he told the CBI, will bring the green paper on planning, and radical reform will follow. We must hope so, but will it extend to the European Court of Human Rights, which has assured Heathrow's neighbours that those who buy houses near airports are entitled to an undisturbed night's sleep? Dream on.
Paying Peter
BRITISH Telecom writes to me in red ink, demanding money with menaces. I make a note to look for a cheaper supplier and send off my cheque for £342.95, marking it 'Please pass to Sir Peter Bonfield'. In this way it can go through the accounts without touching the sides. BT's chief executive is retiring early and collecting something like £3 million as he passes Go. Another seven thousand bills like mine and BT and he will be all square.
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