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This nonsense about uncertainty 14 September 2014

Posted by cooperatoby in Uncategorized.
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IMG_1714 In de War, Warmoesstraat crVoltaire: Le doute n’est pas un état bien agréable, mais l’assurance est un état ridicule. [letter to Friedrich Wilhelm I of Prussia, 1770]

I’ve been irritated recently by the chorus of business leaders (seemingly organised by the ‘No’ campaign) who have opined that a Scottish vote for independence on Thursday will be bad for the economy because it will create “uncertainty”. It seems to be taken as axiomatic that business dislikes uncertainty. This is at most a half-truth.

Business opportunities only come about through uncertainty. Someone with both information and imagination spots a need which they can satisfy and for which people are willing to pay. It’s a gap in the market. It’s otherwise known as risk. The entire justification for profit-making is that it involves risk. Financiers demand a “risk premium”. Risk-taking is seen as that grand thing, an entrepreneurial mindset, and tolerance of ambiguity is a political and diplomatic necessity.
Business can’t have it both ways. Either they are not taking risks – in which case the justification for taking profits disappears – or they are taking risks, in which case a bit more uncertainty is a good thing as it opens up entrepreneurial opportunities.
What these business leaders are saying is that they like the cards stacked in their own favour, just like they have always been. They don’t want the apple cart to be upset. They only want to deal with uncertainties that they have already analysed and assessed. They don’t want the bother of having to adjust their spreadsheets, set up new lobbying operations, do new market research or pay attention to new voices of citizen and consumer representation.
Uncertainty shouldn’t induce paralysis, but a search for new paths – the much praised activity of innovation. If people are poorer, that is a market opportunity, as discounters like Aldi have correctly deduced. The media industry thrives on uncertainty – without it there would be no demand for newspapers or television current affairs programmes. Uncertainty is the consultancy industry’s bread and butter. There is enormous growth in online information services that feed on uncertainty by advising us how to avoid bad weather or traffic jams. This market exists because we humans are quite risk-averse ourselves – we all want to know that is likely to happen next. And we all love a good thriller – the hero of Breaking Bad is even nicknamed Heisenberg, presumably after the inventor of the Uncertainty Principle.
So this outbreak of uncertainty-mongering must be code for something else, some other underlying fear. By voicing their fear of uncertainty, business leaders are unmasking their true nature as conservative rent-seekers, seeking to preserve their privileges – and this is hypocritical because their public stance is that they are agile and responsive to changing market demands. In principle, they should welcome change, as it opens up opportunities for innovators to make the system more efficient in meeting consumer needs.
The veiled threat is that business people will refuse to invest unless they can be sure of a predictable return. So what they are saying is that they are not entrepreneurs, just managers. They are not in business to take risks – only to preserve profits.
What’s fascinating and heartening about the Scottish referendum debate is that it has finally let out the pent-up anger at the way the City of London establishment has messed up. Their complaints about uncertainty are not only hypocritical, they are discredited. Anyway, an independent Scotland will be full of entrepreneurial opportunities.

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Comments»

1. katalin - 19 September 2014

thanks for this irritated view about business uncertainty and risk management in highly volatile political settings 🙂 Now that the City keeps Scotland in its policy remit, uncertainty remains as where to go next to save profits outside the euro zone… I had thought that the Scottish independence could be the triggering element to fully re-assess the European project, but now we are left in an deeper turmoil with even greater uncertainties…

2. cooperatoby - 14 September 2014

Labour is afraid that Scottish secession will deprive them of power in England (and I guess a bit hurt at Scots’ ingratitude), but it could lead to real power for English regions and Wales too, and many of them would be naturally Labour.

3. Stefan Lewicki - 14 September 2014

Totally agree! And it’s these ‘big guns’ that have been told to start firing because the establishment is finally frit that the Scots may actually upset the comfortable UK applecart. It is up to the Scottish electorate to make their decision – though that electorate is somewhat skewed. I’m starting to feel it would be no bad thing for the UK to be seriously shaken up and perhaps even have a chance of moving forward into the 19th or even 20th century.

Though I find Salmond a devious creature, the antics of the Westminster politicians are both amusing and hypocritical.

Well, we will see on Friday, no doubt.


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