Friday, July 02, 2010

The Cautionary Tale of Albert Nightswerve, the Widget King.

My balneal yeomen, many apologies if you are waiting for Part 43 of “A Couple of Tenors Short”, but those of you who have been following this blog may have realised that I discovered my battered soapbox while I was dry-cleaning my llama. It brought back good memories and I have decided to give it a bit of an airing over my ideas of ethical taxation in business.

I have already drawn your attention to my ideas over how voluntary corporate taxation could be used to encourage the best ethical practice in business. Indeed, I have already entered the idea on the UK Government’s Freedom site here as well as providing a copy on my Blogspot site, here.

Today, I am hoping to convince more people of the benefits of this idea by relating the cautionary tale of Albert Nathaniel Nightswerve, the Widget King. It is in the hope I can persuade more people to go to the Freedom site, comment and give the idea a high score. If I can, who knows, maybe a politician will take notice and I will get the chance to explain the idea in more detail within the corridors of power.

Albert Nightswerve was the second son of Nathaniel Nightswerve, the brewing and embrocation magnate. While away at University, Albert had a wonderful idea about how to produce a better widget. Funded, by his father, he opened Acme Super Widget Ltd in a small allotment shed in deepest Northamptonshire.

The Albert Nightswerve widget wasn’t exactly an overnight success. Albert spent many hours tinkering with his widget. Eventually, the hard work started to pay off and the orders started to trickle in.

The entrepreneurial Albert took the opportunity andmoved his operation to a lock-up garage behind the gas works, a few hundred yards from his allotment.

It was with good reason that Albert became known as the Widget King. Albert was a man of principle and strong character. Despite the various trials and tribulations he faced, he vowed that Acme Super Widget Ltd would operate ethically and responsibly. That his company would not only bring the world the best widget possible, but he would make sure that it did it in a way that stayed true to his high ethical principles.

He vowed that he would treat his employees as people, not as payroll numbers and that he would never lay anybody off who wasn’t prepared to leave. When the company moved to a state of the art factory complex, he made sure that there was a crèche, a medical centre and a social club. The company operated a good pension scheme, offered good salaries and generous paid holiday. Albert wanted to make sure that his employees were rewarded for their efforts and loyalty.

The cost of the new factory was inflated a little by Albert’s insistence that it be energy efficient and that it include a recycling unit that would allow old widgets, even those from other manufacturers, to be recycled and pollution avoided.

In his quest for the perfect widget, Albert invested in research and development, new plant and encouraged innovation.

The suppliers were also in Albert’s mind. All bills were paid promptly, even though this meant having to have a few extra staff in his accounts department. On occasions, he even paid in advance when he knew a good supplier was experiencing cashflow issues.

Acme Super Widget Ltd also made sure that it put something back to the community by making sure that a proportion of profits went to local charities and that staff were encouraged to participate in local schools and voluntary groups, even if this meant giving them a few extra hours paid leave.

As the company grew, Albert was rightly proud of his achievements. On the day that the company became Acme Super Widgets Plc, he took all his staff and suppliers out on a free picnic.

Then along came Joseph T. Bloggs.

Bloggs Corp had been watching the widget market and realised there was a commercial opportunity. They designed their own widget. Taking advantage of EU and government grants and by borrowing from the banks, they set up a factory in a development area to produce it. Employing a slick salesforce supported by a massive advertising campaign they entered the market.

There was little difference in the Widgets so it became a good old corporate set to.

Apart from the salesmen, Bloggs paid the lowest wages it could to its staff. It didn’t give a pension or healthcare. Terms and conditions were determined by the statutory minimum. Wherever they could they used agency staff rather than employees.

Bloggs didn’t bother to recycle old widgets or get involved in community projects. Payments to suppliers were done on their terms, often 50 or 60 days after the invoice date. They renegotiated terms regularly, every time exerting pressure on suppliers to reduce prices or adding fees and penalty clauses.

Faced with all of this, Albert worked even harder and Acme Super Widgets did manage to compete, mainly because Bloggs Corp had to service a large debt.

Yet, when it came to the profit figures, Bloggs Corp were better. They had a bigger profit. Their share price was higher, their shareholders gauging success purely on profit.

Then one day, Joseph T. Bloggs used that share price to his advantage and launched a hostile takeover offering Bloggs Corp stock for Acme Super Widgets stock. He cited his efficient ways of working and promised to introduce his efficient business practices into Acme.

Albert died the day after Bloggs Corp closed his factory. The entire town came to a halt as his funeral cortege moved slowly through packed streets. His passing was mourned by his now unemployed workers. Suppliers came from miles to pay their respects.

The state of the art factory was shipped to Eastern Europe piece by piece to be re-assembled and staffed by even lower paid workers. Eventually Bloggs Corp closed their other UK factory and transferred all production there. The UK based suppliers found they had lost all widget custom as that too moved abroad.

There’s nothing left of the Acme Super Widget factory now. It was sold off for executive housing to repay some of the Bloggs Corp debt.

The UK widget industry, once the best in the world is no more.

The annoying thing is, that it all could have been avoided. Having an innovative ethical based corporate tax system would have meant that Albert’s principles would have been rewarded and his profits and share price improved. His ethical principles would have been rewarded by money off his tax bill. The higher profits would have meant a higher share price, thus avoiding the takeover.

So, my grieving yeomen, listen to this cautionary tale and think hard. I hope I’ve convinced you that ethical taxation that rewards men of principle and vision like Albert Nightswerve, the late and deeply mourned Widget King. Good corporate ethics makes a huge difference to peoples’ lives.

If I have convinced you, then please take time to visit the Freedom site, vote and comment. Who knows, you could be giving Albert a long lasting and fitting memorial.
It is times like these that I wish I still had that scratchy label in my underpants and could get this message out to more people. No longer having the tag of ‘most interesting’ that brings the curious to my ramblings, I rely on you to make mention of this blog in your own and spread the word. Make sure that principled entrepreneurs like Albert are rewarded.
Thank you for your time and your patience.

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