Sometimes modern economics amazes me. Why are air fares so complicated, for example? One-way flights are often more expensive than a return journey. Why is it cheaper for me to fly to Nice than take a peak-rate train to Chippenham in Wiltshire (both 90-minute journeys)?

Yesterday, I bought a loaf of bread in my local grocery store (not one of the big national chains) that had been made in Toronto, Ontario! I didn’t realise this fact until I read the details on the packaging, after having eaten some of it. How on earth can it be cost effective to import this bread from North York (the suburb of Toronto in which it was made)? Surely there must be a closer and cheaper alternative?

Well, it turns out that the bread was made by the Manoucher Food Company, which appears to have been something of a phenomenon in the Canadian Food Industry (see this story in The Toronto Star). The loaf I tried was good, but I’m still amazed that it’s necessary, and economically worthwhile what’s more, to transport this perishable product more than 3,000 miles across the Atlantic Ocean.

Having just checked the receipt, I now see that I paid £2.19 for that loaf. Ouch! I’m not in the habit of checking prices before I buy food, but perhaps I should start? Given the important role bread has played in history (in France the price of bread is still set by the government, thanks in part to the likes of Marie Antoinette), the existence of this expensive, luxurious import is quite telling. What a rich world we now live in, although it’s interesting to note that Manoucher doesn’t export to France yet!

I am currently reading The East End of London by Millicent Rose (1951), which is a very interesting book about the history of London’s East End. In the chapter on the construction of the docks, she writes:

With the building of the docks, the Industrial Revolution came to the East End and transformed it. When work is done upon such a scale as Mayhew describes, the employers (not individuals now but a company) and those whom they employ exist together without either acquaintance or mutual responsibility. The works of Rennie, Alexander, Telford, with all their grandeur, have an oppressive and terrible impersonality that fits the new relation of man to man. Alexander looked back to the glories of Rome, but his creation inaugurated the pitiless anarchy of the nineteenth century.

What a shame that the industrial revolution had this effect on personal relationships. It’s legacy is still a problem today. My wife recently received an incredibly impersonal e-mail from the Chief Executive of the company that has employed her for more than a decade, a man she has met many times and with whom she is on a first name basis. His generic form letter was not addressed to anyone (it just arrived in her inbox without any recipients listed), and asked her to participate in a collective exercise intended to identify the company’s values!

How about uncaring, careless and lazy, for starters? The CEO’s message probably reveals more honest information about the corporate value system than any collective exercise will unearth. It is particularly worrying when you consider that this exercise is almost certainly an initiative of the Human Resources department, which should care more about the employees and how they are treated than any other part of the company. When will they learn that everything the company does is an expression of its values? When will they realise that their values are therefore plain for all to see in everything they do?

Here’s an interesting article from this week’s Economist (Are Sidney Harman and his kind the answer to America Inc’s woes?) about the management style of Sidney Harman, founder of Harman International (i.e. maker of Harman Kardon stereo equipment among other things). It seems the idea of improving business productivity by attending to the workers might be making a come back.

More from that Economist survey:

Some employers handled last year’s job cuts in remarkably insensitive ways. For example, at Cap Gemini, a software firm, employees were informed by voicemail that they had lost their jobs.

This would probably happen more often if more businesses knew how to operate their voicemail systems!

Regular readers of this page (are there any?) will probably realise that “the theory of business” is a recurring theme. That’s partly because I have an MBA, which despite its reputation can be a highly theoretical degree in places, and also because my most recent former employer is the worst managed business I have ever come across. So every time I find new information about how businesses should be run I find it particularly interesting.

For example, this week’s edition of the Economist includes a Survey of Management (subscription required). As the introduction says:

This survey suggests that the core of good management is a set of three old-fashioned virtues that were often forgotten in the bubble years, when anything seemed to go. At a minimum, good managers have to meet the following criteria:

• be honest;
• be frugal;
• be prepared.

As is so often the case with business theory, this statement makes simple common sense, and I can’t help comparing it with my personal experience.

My former employer is incredibly old-fashioned (not surprising for a business founded in 1766), but lost sight of these principles long ago. It is not honest with customers or staff; it is extraordinarily wasteful, which is one reason why it is not very profitable (it actually made a loss in 2001); and it is rarely well prepared, which is why many business decisions are knee-jerk responses to fast moving events.

Had I known this was the case I would never have accepted the job offer, let alone promotion. How do you determine if a prospective employer subscribes to the Economist’s principles before it’s too late?

Just so you know what I mean by “old-fashioned” in the post above, BBC Radio has just announced that the British House of Commons has agreed that female Members of Parliament and staff will be allowed to breast-feed infants (with certain restrictions). My former employer only allowed women to wear trousers in 1998, at which rate breast-feeding should be permitted sometime around the year 2230!

Today’s Financial Times has an interesting article by columnist Peter Martin about the latest research on the cause of poor corporate performance: Don’t blame the industry. The researchers were attempting to determine whether or not an industry’s fundamental economic structure might account for the lion’s share of poor performance. Peter Martin writes about the implications of their research for individual managers and concludes with:

If you are working for a company in a tough industry with a management that does not appear to know what it is doing, consider taking another piece of Warren Buffett’s advice: “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

It’s amazing how dirty the word “socialism” has become. My dictionary defines it as “the belief that the state should own industries on behalf of the people and that everyone should be equal”. But here’s Digby Jones, Director General of the Confederation of British Industry, commenting today on a leaked European Commission draft proposal to extend temporary workers’ rights:

“The flexibility of the labour market…could be under serious threat from this. It’s depressing that Europe decides it’s going to try and bring everyone down to some sort of low common denominator…It’s socialism coming straight out of Brussels,” he said. (For more see Bosses warn against rights for temps.)

Which part of the definition do you think he means? Since the EC proposal does not promote state ownership, he must be referring to the part about equality. The EC is for it; he’s against it.

And yet this month’s edition of the Harvard Business Review contains an article (see They’re Not Employees, They’re People) by the dean of all business gurus, Peter Drucker, which is summarised as follows:

“In this essay, business thinker Peter Drucker examines the changing dynamics of the workforce ? in particular, the need for organizations to take just as much care and responsibility when managing temporary and contract workers as they do with their traditional employees.“

Those seem like opposite points of view to me. So who’s right? Common sense tells me Drucker. So what’s wrong with Digby Jones? He clearly has not read his copy of HBR!