Botzarelli’s Second Law

This morning’s Guardian has an article by George Monbiot bemoaning how horrible businesses like Management Consultants and Banks entice impressionable graduates into highly paid but unproductive jobs. If only universities could protect their students and have them go into more laudable careers.

This reminded me of my experiences in 20 or so years of working in the public and private sectors and for a wide range of clients and the relationship between how nice an employer or client was and what their underlying activity was. Which leads me to Botzarelli’s Second Law (yay – I knew there’d be more than one, you cry!):

“The nicer and more worthy the product, the more likely the organisation providing it is not a very nice place to work. The more apparently evil the product, the harder the organisation will try to make working for it pleasant.”

Where the work of the organisation is obviously wonderful and of great social value, it will often be seen to be reward enough in itself. Persuading people to work for it won’t be hard. Persuading people to stick with it even if the organisation, its processes and its managers are dysfunctional is still possible because, well, just think of the children! Or the kittens! Or whatever. That doesn’t mean that all charities and other benevolent organisations will always be dreadful employers – in many, the loveliness of the purpose will be reflected in the loveliness of the people who have devoted their lives to carrying it out in the face of whatever challenges life may throw at them. But, it is striking that a significant number of organisations devoted to doing good can be fiefdoms of dreadful narcissists who will use the undoubted saintliness of the purpose to excuse their own appalling treatment of others in its pursuit. It is perhaps also why, regardless of whoever is in government, teachers emit a constant low whine.

The flip side of this is that where an organisation does something unpleasant, somewhat disreputable or at least not very obviously morally superior, if successful, it will often work hard to do so in a way which is kind to its employees. One of the nicest clients I ever worked with was a tobacco company – everyone there seemed very happy, they had a cheap canteen with a Michelin starred chef, incredible art collection, great benefits and salary so most of the people stayed for years (more than 10 years later I noticed on LinkedIn that the guys I worked with are still there) and, (this was in the days before the smoking ban) such high tech offices that even though smoking was encouraged, there was little or no smell to upset the non-smokers. Perhaps this would also explain why it isn’t implausible in James Bond movies for the super villains to have large armies of goons and administrators – they probably provide excellent life insurance and creche facilities.

It is no surprise that Management Consultants and their ilk, destined as they are for the B Ark, work very hard to entice students to join them and perhaps to overcome idealism/naivete about corporate life. It is also no surprise that organisations like the Police have worked very hard in recent years to make themselves more appealing places to work, even though most would agree that law enforcement is very important, many would also be suspicious about the Police.

Of course, there are also some organisations which combine evil purposes with being evil to their people. Botzarelli’s Second Law is about correlation rather than unavoidable causation.

People, even students, are generally able to weigh up what they really want. Finding the idea of getting paid well to travel and opine on businesses to be more attractive than sitting in a creaky office churning out policy reports on Hedgehog protection measures ahead of a fund-raising drive isn’t necessarily a bad personal choice or even bad for the world. And it isn’t so bad if idealistic, decent people go into things like banking. In fact, it is a good thing – just think how much worse the last few years might have been if there were even fewer decent people working in banking than there actually were! If more decent people went into such careers there would be less chance of bad things like the LIBOR scandal happening.  Conscience is best deployed in environments where it can be tested – it is easy to be good doing good.

Bank Bashing Competition

Raaah, aren’t the bankers evil? Crashing the economy and all that. Then giving themselves massive bonuses. Pure evil. Something must be done. It is time for a reckoning. Hard to disagree and so a nice easy run for Ed Miliband in his recent speech. The weird thing is that the speech actually committed a Labour government to doing things which were already happening, doing things it didn’t have the power to do without primary legislation, and doing things which might lead to answers it didn’t like.

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A Fraud’s a Fraud, isn’t it?

Much has been and will be written about the revelations that traders at Barclays Bank made misleading reports of the bank’s borrowing rates when contributing to the setting of LIBOR rates over a period of years. Both the US and UK authorities have imposed fines in the hundreds of millions of dollars on the bank – large but not in the context of the bank’s own profits (around £5bn) or the size of the global interbank lending markets (which might be in the region of $300 trillion). Emails seen by the regulators and published after the fining decisions look depressingly and suspiciously “chummy” with traders seeking to have the figures massaged for enough personal or business gain to make them offer bottles of expensive champagne in return for such favours. From a lay perspective, the endemic dishonesty of the bankers involved seems to speak for itself.

So, unsurprisingly, there have been calls (from commentators all the way up to Ed Miliband, the leader of the opposition) for criminal prosecutions of everyone involved as well as for leading bankers, like the CEO of Barclays, Bob Diamond, to resign, be sacked, repay all their bonuses, be put in jail, and placed in stocks outside the Bank of England. Or all of those things. Landing a hit on Diamond is particularly sweet for many because Barclays had infuriatingly managed to hold the nearest to the high ground available to any bank during the financial crisis by not having had to receive a direct bail out from the government.

But, accepting that there was clearly something wrong and criminally wrong about the behaviour of Barclays traders (and potentially those in the 19 other banks which are still being investigated and which were not as co-operative as Barclays in putting their hands up to what had happened), what crimes may have been committed and how might they be prosecuted in the UK?

There are three main options, first, as offences under the Fraud Act 2006, second as common law conspiracy to defraud and third, as instances of the cartel offence under the Enterprise Act 2002. Although the cartel offence is not an immediately obvious one to apply here, for practical reasons it may offer the most effective approach to take.

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