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Game is up for U.S. hegemony

Peter Preston

American business chiefs are so greedy because globalisation means that the game is up for them.

IT WAS the man who went (rather than man who said he'll be going) who touched a nerve on September 7. At close of play in the afternoon, while he cleared out his desk, Blackberries right around the building started buzzing. So when Tom Freston trooped sadly out of the company that had been his life for a quarter of century, the 2,500 employees of MTV Networks were there in the atrium at 1515 Broadway and spilling out into Times Square, cheering, crying, expressing human emotions you can't find anywhere on a balance sheet. And as a stunned, grateful, sacked Mr. Freston walked away into sunset, maybe a little more of America's future walked with him.

Any real future, after all, is long-term, the natural rhythm of a long, creative life. But just look instead at the Freston experience. He became CEO of Viacom, a giant among media giants, only eight months ago. Sumner Redstone, Viacom's executive chairman, gave him Paramount Pictures and DreamWorks and much else to run: $17 billion-plus in annual revenues, 38,000 employees. It looked like the summit of a brilliant career. But then Viacom's share price started to dip way below $40 — seven or eight lost dollars' worth of pain, especially for Mr. Redstone, who owns 40 million of the shares himself.

In July, the board was covertly sounded out. Come September 7, the CEO appointed in January with due panoply was out, too. And he wasn't alone. The Ford motor company ditched Bill Ford, its CEO for the past five years, on the very same day.

Who's next? The analysts at Business Week (and beyond) instantly compile more hit lists. When Wall Street looks around it sees Richard Parsons at Time-Warner (CEO since 2003) and a grey stock market performance. It asks why Kevin Rollins, CEO at Dell since 2004, hasn't stormed up the Dow Jones index. It purses lips over Arun Sarin's three years at Vodafone and begins to forecast 57 varieties of doom for William Johnson at Heinz.

In short, if all mankind is mortal, then chief executives of big U.S. companies are more mortal than most. Their average time in the job now is just four years. You go up with the pretty fair certainty that you'll go bump overnight within a single presidential term. You are as frail as your company's quarterly earnings.

That matters. Indeed, when you talk to people who watch the American economy for a living, it matters hugely. There's an ominous slither from slowdown to recession under way already. If it gets worse, then the world will feel it, too.

What's going wrong? Oh, soaring energy prices and terrorism and all that stuff, to be sure. But what's really wrong is that the new world — with China and India in the van — is beginning to make the entrepreneurial ways of the old new world seem very old hat.

Where are America's risk-takers, staking fresh pots? They've gone fishing. They know that their time in the sun is finite. Why shorten it by doing something that may not work? Better do as little as possible. Better concentrate on getting your personal terms, conditions and pension pots organised. That's not the way that China's long-term version of state-supervised capitalism works.

It's not the way that India's surge, full of hope and vigour, has been engineered either. It's a torpor that begins to afflict the American dream (and thus little British versions of the same sleepy sickness).

The standard charge against corporate greed begins and ends with greed itself.

Redstone acolytes soon turned the cheers for Mr. Freston into gall. See, they said, he was just too popular! His workers loved him because he was too darned nice, and therefore too darned soft.

It's a bizarre thesis eight months on. Bang go another three dollars off Viacom shares. See? Even the markets begin to know when the game is up. —

© Guardian Newspapers Limited 2006

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