Over the past couple of days I have carefully avoided commenting on a deep embarrassment with my husband’s family firm, the John Lewis Partnership, operator of department stores and supermarkets mainly in Britain.
Cousin Spedham
A cousin once removed of my father-in-law, the late John Spedham Lewis, son of the founder, gave the store to its employees shortly after the end of World War II. The store since then has been run as a partnership, a model for management to allign its interests with the workers (and in case you were wondering, not with relatives of the founder.) His motives are hard to figure out. But he would be appalled at the latest news.
That does not make the Partnership any less pro-business or anti-Socialist. Its managing director, corresponding to the CEO, Briton Andrew Street, last week announced publicly that in his opinion France “is finished.†Just to make sure that his reasons were clear, he added that France under its Socialist Party government is “scelerotic, hopeless, and downbeat.â€
He went on:“I have never been to a country more ill at ease. Nothing works and worse, nobody cares about it.â€
He then spoke of the Eurostar train between Paris and London. “You get on Eurostar from the squalor pit of Europe, [the] Gare du Nord, and you get off at a modern, forward-looking station†[St. Pancras].
Mr Street believes that the French economy is stalled, with unemployment high, and growth hampered by excessive government intervention and distribution. Too little work is being done thanks to the 35-hour week and the month of annual vacation workers get as a matter of course. Meanwhile the French government has only just decided that next year it will no longer apply a 75% income tax on those earning salaries of more than euros 1 million .
Mr. Street’s public comments, written up by The (London) Times drew a furore in response. For whatever it is worth, my husband’s relative, Spedham Lewis, would never in a million years engaged in political commentary. But his reasons for giving the workers in the stores ownership of it were colored by the fear of socialism, both of the right (fascism) or the left (the Labour Government running Britain when the company shares were given to employees.)
Scelerotic Partnership
Initially, by the way, the Partnership was also sclerotic and nobody cared about it. Until about 18 years ago, shoppers at John Lewis, Peter Jones, and Waitrose, the three main brands of the John Lewis firm, were not able to pay with credit cards. The reason appears to have been that this reduced profits that were to be shared out, if marginally, and because they were not used in 1948 when the outfit started.
More recently, the Partnership pension plan which had funded an on-line grocery delivery chain called Ocado, rather than building on this potential new business, panicked. Ocado was spun off prematurely and required to stand on its own infant feet way to early.
So I think Mr Street may have blamed the government for a natural tendency by human beings, be they French officials running a railroad station to British executives fulfilling a generous mandate from a half century earlier, to fear the unknown.
Of course as members however distant of the clan, we are embarrassed indeed by the uproar, as we lived in Paris for over 15 years and put up with some of the silliness there just as we put up with paying cash when we shopped in the family stores.
*Our new Irish share pick is CRH, formerly Cements Roadstone Holdings, which gives you an idea of its business. It is suffering from the anti-deficit orthodoxy of US and Euroland governments, which have failed to invest in desperately needed infrastructure to help lift economies out of the morass they fill into during the Global Financial Crisis.
A Stock for Keynesians
However irritating François Hollande’s Socialist theology (and his ghastly sex life) he is right about this. Deficit spending is what the world needs, and the way to do it is by repairing the Autobahnen in Germany and the bridges of all our Madison Counties, funding railroads and road on both sides of the Pond. That is what you do to take an economy out of recession efficiently. It is called Keynesiansim in polite society.
CRH is Irish and huge, with a $17 bn market cap. It has 6 business lines, 3 each for the US and Europe for: materials, products, and distribution. The company makes and distributes and sells primary materials: cement, aggegates, concrete, asphalt-bitumen, and lime (used in contruction as well as in agriculture and chemical production.) It does some business with Israel and Turkey, and also India and China which count as part of the Europe side.
