Philippa Kaur

AFTER SEVERAL false starts, office workers are returning to their desks—for good this time, employers hope. As covid-19 restrictions are scaled back, people must again get used to crowds. Financial giants such Wells Fargo have joined Wall Street titans such as JPMorgan Chase and Morgan Stanley in urging people back to the office. The great return is afoot in big tech, too. Meta and Microsoft are asking employees to return by late March. Most big Silicon Valley campuses will be fuller from April. Many bosses share the sentiment of James Gorman, Morgan Stanley’s chief executive: if you can eat out, you can come to the office.For purveyors of remote-working tech, the gradual unwinding of the grand work-from-home experiment is already proving rough. Slack, a corporate-chat app owned by Salesforce, a software giant, projects slowing sales growth to 20% in the next quarter, year on year, down from 50% at the height of the pandemic. In February Zoom reported that growth had slowed globally, with revenues in Europe, the Middle East and Africa down by 9%, compared with a year earlier, and the number of its video-conferencing clients had declined relative to the previous quarter. Its market value has sunk as a result (see chart).The return to the office will be no picnic for employers, either. Most are scrambling to figure out what the future of work will look like. For many, the most pressing question is: how hybrid will that future be? In the short run, almost certainly pretty hybrid. Apple is bringing staff back to the office one day a week to start. By May 23rd, the iPhone-maker will require them to come in three days a week. Citigroup, HSBC and Standard Chartered let their bankers work from home on some days.That seems only natural. Combining office and home toil appeared to do wonders for work-life balance. And on the face of it, the past two years have shown that people can work well from anywhere, says Despina Katsikakis of Cushman & Wakefield, a property consultancy. Productivity, collaboration and focus seem to have held up.The problem, says Ms Katsikakis, is that “all of the other elements are suffering.” In one global survey of more than 600 company leaders and human-resources professionals, for example, more than 80% responded that hybrid set-ups were emotionally exhausting for employees. Many ringing endorsements of it made by bosses and workers in mid-2021 turned into deep reservations just a few months later. As more people return to the office, concerns about hybridisation are likely to become ever more acute. Rather than being the best of both worlds, is hybrid work really a rotten compromise?The hybrid workplace is failing to live up to expectations in a number of ways. For one thing, it is no substitute for the buzz and the chatter of the pre-pandemic office. Many people hanker after the socialising, camaraderie and shared experience, even if getting used to it again may take time. Even small amounts of remote work can have a big impact on the frequency of face-to-face interactions in the office. By one estimate, spending an average of three days each week in the office can limit encounters between any two workers by 64% compared with pre-pandemic norms. The gap widens to 84% in potential interactions for those in the office two days a week.As offices fill up, workers who turn up in person may therefore forge closer bonds with their teams and company leaders than remote ones. Proximity bias—the subconscious tendency to value and reward physical presence—may then disadvantage women, minorities and parents of young children, who are keener on home working than other groups.A related drawback is the decline in casual encounters outside an employee’s inner circle. In the 1970s Thomas Allen, a management scholar, discovered that communication between office workers dropped off exponentially with distance between their desks; those on separate floors or in separate buildings almost never spoke. A study of more than 60,000 employees at Microsoft, a tech giant, in the first half of 2020 showed that virtual workers, too, were less likely to connect with people they were not already close to.Before the pandemic many companies were going to great lengths to overcome the “Allen curve” and engineer serendipity. Google, which credits spontaneous chats for products such as Gmail and Street View, designed its Silicon Valley headquarters to ensure that any one Googler could reach any other by walking no more than two and a half minutes. Bathrooms at the headquarters for Pixar, an animation studio co-founded by Steve Jobs, Apple’s late boss, were located in the central atrium so that people from different teams would cross paths as they heeded nature’s call.Some managers have tried to boost connections in the hybrid world by scheduling more virtual meetings, sending more emails or firing off more instant messages. This, though, leaves workers feeling drained as a result of virtual overload. Video calls leave people feeling tired and uneasy. That, in turn, makes them likelier to avoid social interaction, without quite knowing why, according to researchers at Stanford University. (Possible reasons include excessive eye contact, which human brains associate with either conflict or mating; staring at yourself, which can lead to feelings of insecurity; or the difficulty of interpreting non-verbal cues on screen.) Electronic communication limits physical movement, which impairs cognitive performance. And constant chat notifications are a distraction.Providers of virtual workspaces believe that these shortcomings can be fixed with better technology. Microsoft’s Outlook platform now allows employers to tailor their employees’ scheduling settings by inserting breaks between video calls and, the tech giant claims, helps bosses spot underlings at risk of burnout. It even offers a “virtual commute” for those hybrid workers who struggle to separate work and home life. Users are reminded to wrap up their tasks, prepare for the next day, log their emotions and unwind with Headspace, a meditation app. To make online communication more seamless and less exhausting, Zoom has launched a digital whiteboard, real-time automated translations and desk-phone software.Not all employers are convinced. Some cannot reinstate pre-covid working patterns fast enough. Wall Street is the prime example. Blackstone, a private-equity firm, has asked key staff to return to the office full-time. Jamie Dimon, chief executive of JPMorgan Chase, has argued that remote working kills creativity, hurts new employees and slows down decision-making. Fears that forcing employees back to the office will drive them away may be overblown, bankers say. Mr Gorman has reported that Morgan Stanley received about 500,000 job applications last year despite its strict return-to-work policy.Other companies are dealing with the pitfalls of hybridisation by going even more remote. Dropbox, a cloud-storage firm, is adopting a “virtual first” approach to avoid the problem of remote workers becoming second-class citizens (though it maintains collaborative physical spaces where workers can meet in person). Other technology companies, from Robinhood to Shopify and Spotify, have gone largely virtual for similar reasons.Hybrid work’s flaws notwithstanding, most companies will fall somewhere between those two extremes, hoping to strike a balance between the convenience of remote work and the camaraderie of the office. Some may even succeed. But in trying to win over both sides of the debate, many risk satisfying neither. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Work life in balance” More

MOHAMMAD BARKINDO, secretary-general of the Organisation of the Petroleum Exporting Countries (OPEC), reflected upon the dramatic geopolitical developments of the past few weeks as he addressed a ballroom in Houston this week. Thousands of oil executives have gathered in the world’s petroleum capital for CERAWeek, an energy conference organised annually by S&P Global, a financial-information provider. He observed that the OPEC cartel has seen seven painful boom-and-bust cycles in oil since its founding in 1960, and worried that the Russian crisis may to another such “catastrophe”. His warning came on a monumental day in the history of energy. In retaliation for Vladimir Putin’s bloody and unprovoked attack on Ukraine, on March 8th America imposed a total ban on imports of Russian oil and Britain said it would phase one in over several months. President Joe Biden spoke of targeting the “main artery of Russia’s economy”. No EU country joined the embargo but on the same day the European Commission unveiled its new energy strategy, explicitly designed to slash the EU’s reliance on Russian gas, which accounts for some 40% of its total consumption of the fossil fuel, by two-thirds this year and entirely “well before 2030”. Mr Putin parried with a decree on March 8th threatening to cut off commodity exports, which given Russia’s outsized role in everything from wheat to nickel could up-end world markets. The price of Brent crude, the international benchmark, soared above $130 a barrel. “When this is over, however it ends, the world oil industry will be different,” sums up Daniel Yergin, an energy wiseman and vice-chairman of S&P Global.One short-term consequence may be to rehabilitate big oil, blamed for helping fuel the climate crisis. The prospect of an oil shock has led even Mr Biden’s climate-friendly administration to embrace America’s unloved energy giants. Officials including John Kerry, the president’s climate envoy, were originally expected to dress oilmen down at the Houston jamboree about their lacklustre decarbonising efforts. Instead, they toned down the tut-tutting and quietly encouraged oil CEOs to crank out more crude to offset the loss of unsavoury Russian supply. Mr Barkindo gleefully invoked a recent tweet by Elon Musk, an electric-car billionaire, that “We need to increase oil and gas output immediately.” One oilman in the audience relished the chest-thumping “we told you so” speeches. John Hess, the eponymous boss of an oil firm, argued that “we need a strong oil-and-gas industry right here at home in the energy transition.” Russia used to be seen as a trusted partner. Now, Mr Yergin says, it is seen “not just as unreliable but undesirable as well”. If Russian oil becomes untouchable, oil executives speculated nervously over coffee and cocktails, crude could hit $200 a barrel this year. They were nervous because, setting aside all the on-stage posturing, many oil bosses privately worry that the Russian crisis may sound their industry’s death knell. The EU’s new strategy is already doubling down on greener alternatives. A prolonged period of volatility and high prices that alienates consumers and unnerves investors may give American politicians, too, the nudge they need to accelerate the move away from fossil fuels.Will oil prices keep surging? That depends on several factors, starting with the embargo. America imports only a trifling amount of petroleum products from Russia, a disruption which can easily be managed. Helen Currie, chief economist of ConocoPhillips, an American oil firm, thinks the American ban will not have much impact because American refiners were already finding ways to “optimise around” the loss of those imports. At the conference, Canadian energy firms claimed they could increase output to replace a third of the lost Russian imports “tomorrow”. That might change if America rallies the world around a global embargo. However, such an outcome seems unlikely. The EU is reticent, at least in the short run. China and India, which hate American sanctions and who refuse to condemn Russia’s invasion, will not join. Kenneth Medlock of Rice University points to a recent gas deal between Russia and China to be settled in euros rather than dollars as a sign that the two can work around American sanctions. They may import more Russian Urals crude, not least because it trades at a discount relative to Brent, according to S&P Global, possibly as a result of “self-sanctioning” by some commodities traders worried about the taint of Russian oil. Antoine Halff of Kayrros, a French data-analytics firm, confirms that European, Japanese and South Korean buyers are “not touching Russian crude”. But he hears whispers that some big trading houses might quietly be taking deliveries. Kayrros’s tracking reveals a huge increase in crude oil in transit over the past two weeks, which Mr Halff reckons represents Russian tankers rejected from their original destination looking for new buyers. All told, he thinks, 3m barrels per day (bpd) of Russian crude could be locked out of the market, out of a total of around 4.5m bpd before the war. The obvious place to look for those barrels is OPEC. Mr Barkindo poured cold water on such ideas, stating in Houston that “nobody can replace” the possible loss in Russian output, which he put at perhaps 8m bpd including oil products: “The world does not have that much capacity.” Much of what little slack there is, perhaps 2m bpd-worth, is in Saudi Arabia and the United Arab Emirates. Far from rushing to join America, the leaders of these countries—unhappy with its policy in the Middle East—have reportedly refused even to take Mr Biden’s phone calls. (Mr Barkindo also made it plain that Russia would not be kicked out of the OPEC+ arrangement with non-members over its invasion of Ukraine, noting that the cartel remained neutral even amid war between its members—Iran and Iraq in the 1980s, and Iraq and Kuwait in 1990-91.) If not the Arab sheikhs, what about American shalemen? Frackers can bring oil to market much faster than fellow drillers in the oil sands or offshore. After a collapse a few years ago, American shale output is expected to grow this year by perhaps 750,000 bpd. But even ramping up production further would not be enough to offset lost Russian crude. Scott Sheffield, boss of Pioneer Natural Resources, an American oil firm with big shale holdings, says the industry could increase output by 1.5m bpd within 18 months—but only if there is “a change in the Biden administration philosophy on fossil fuels in this country”. He says it will also require persuading long-suffering investors, who have lost billions in the past betting on profligate shale firms, that higher oil prices justify chasing production growth. And both Mr Sheffield and Vicki Hollub, chief executive of Occidental Petroleum, an American firm, point to supply-chain snags in everything from steel and fracking sand to lorry drivers. That leaves strategic reserves. Last week the International Energy Agency (IEA), a quasi-official body representing energy-consuming countries, announced it would release some 60m barrels of oil held by its members, equivalent to 4% of their total reserves. On March 9th the IEA announced that it stood ready to release more. Although such stockpiles cannot make up for a permanent loss in Russian output, they could make a big difference for a few months, until the crisis cools down or alternative sources of supply kick in. Mr Halff, himself a former IEA insider, points out that the rise in oil prices on news of the initial release of 60m barrels suggests that it was “miserably too small” but that a bigger release of 120m barrels is technically feasible at a rate of 2m bpd or more. Mr Hess argues for an immediate release of 120m barrels this month, another 120m barrels next month and more later if necessary.Oil prices may not, then, explode again in the short term. The price of Brent fell by over 5% on March 9th as the industry digested such considerations. But even if the Russian crisis is resolved fairly soon—a big if—the world may be stuck with a precariously balanced, deeply disjointed and volatile oil market for years to come. Prices could rise again. If they exceed $150 a barrel and stay high, reckons Ms Hollub, it would destroy demand—a prospect that, she says, is generating “a lot of apprehension and a lot of angst”. This fear was palpable in Houston among oil bosses, who prefer both the supply and price of oil to be relatively steady. “I have never seen a more pessimistic group,” reports Bob Dudley, former boss of BP, a British supermajor, who now heads the Oil and Gas Climate Initiative, which unites energy firms apparently concerned about greenhouse-gas emissions. As Jack Fusco, boss of Cheniere, America’s biggest exporter of liquefied natural gas, told the energy grandees this week, “The turbulence has just begun.” ■ More

RUSSIA IS KNOWN for its trapeze artists. Few have mastered the art as well as Vladimir Potanin, Russia’s richest businessman, a stocky 61-year-old with a fortune of about $23bn. Born into the Soviet nomenklatura, he survived the fall of communism and then played a role in designing Boris Yeltsin’s “loans for shares” scheme, through which Russia’s late president hoped to put the country’s assets in private hands. Mr Potanin used this scheme to take ownership of natural resources. He is one of only a few Yeltsin-era oligarchs to have thrived under Vladimir Putin; the two are ice-hockey chums. He retains the biggest stake in Norilsk Nickel, one of the world’s largest nickel and palladium producers, though for years he and fellow moguls squabbled over its ownership. Unlike other Kremlin-linked oligarchs, neither he nor his business is subject to Western sanctions levied after Russia invaded Ukraine. But the war has cost him. His wealth has fallen by about a quarter this year, even as the prices of nickel and palladium have soared.Such is life for tycoons in an increasingly tyrannical world. It is one of the strange features of globalisation that autocracies, such as Russia and China, are breeding grounds for billionaires. For a while, Moscow minted more of them than any other city in the world. Now three Chinese cities, Beijing, Shanghai and Shenzhen, outstrip liberal honeypots like New York. The collapse of the Soviet Union and the opening up of communist China have done as much to spur a new gilded age for the super-rich as all the technological wizardry of Silicon Valley. The early years of freewheeling capitalism in both Russia and China unleashed a shift in wealth—both from genuine enterprise and the transfer of public assets into private hands—perhaps unparalleled in human history.And yet such fortunes can fall as fast as they rise. The same cocktail of opportunism and risk that generates the bonanzas also makes them vulnerable. That is the biggest lesson from the $100bn or so that the Bloomberg Billionaires Index reckons the top 20 Russian firms have lost since the start of the year. But it is not unique to Russia. Tycoons in China, subject to the whim of President Xi Jinping, would have similarly bruising tales to tell were they not, like their Russian counterparts, forced to stay silent. The same is true of Saudi billionaires locked up by Muhammad bin Salman, the kingdom’s crown prince, in late 2017.The original sin of these regimes is the fluid laws—or sheer lawlessness—that existed when market forces were unleashed. In Russia’s case, it started with the privatisations of the mid-1990s in which assets like Norilsk Nickel, based in a former gulag in the Russian Arctic, were auctioned for a song. The first-generation oligarchs wielded influence in the Kremlin until Mr Putin changed tack. Under him, a new wave of tycoons were given lucrative state contracts. The deal was that as long as they stayed out of politics, the Kremlin would keep out of their hair. Mr Putin, though, keeps a heavy cudgel over their heads.In China, Rupert Hoogewerf of the Hurun Report, a publisher of global rich lists, recalls the “five colours” used in the 1990s to describe the provenance of plutocratic wealth: red for the Communist Party, green for the army, blue for customs, white for drugs, black for the black market. After that, says Minxin Pei, the Chinese-American author of “China’s Crony Capitalism”, dirty money turned into easy money. Property developers received land and access from the state. China’s self-made tech tycoons, such as Jack Ma of Alibaba and (unrelated) Pony Ma of Tencent, also took advantage of non-existent regulation and used their own skill to forge a dazzling digital duopoly. When an antitrust blitzkrieg started last year, it may have been economically justified. But it had the hallmarks of a political vendetta, too.To sidestep the autocrats, the plutocrats sometimes try to win the public’s support. That is a dangerous gambit. Mikhail Khodorkovsky, a former oligarch, spent a decade behind bars from 2003, ostensibly for tax fraud. His main crime was daring to contemplate running against Mr Putin for president. Alibaba’s Mr Ma made the mistake of acquiring rock-star status just as Mr Xi’s regime was becoming more paranoid. In its eyes, the tech sector had strayed too far from core Communist Party values. Its fintech aspirations represented a threat to state-owned banks. Most sinful of all, it represented a rival source of power. So Mr Ma was rebuked by the Communist Party and is now rarely seen in public.Another potential escape route is overseas. For years, a global supporters club of lawyers, flacks and other hangers-on have helped Russia’s oligarchs to hide their wealth in offshore tax shelters and fluff up their reputations. While Russian firms flocked to the London Stock Exchange, Chinese ones preferred New York and Hong Kong, often using complex financial structures that enabled them to get around China’s curbs on foreign capital.But geopolitics has made that tougher, too. The West’s response to Russia’s aggression is to shine a spotlight on the oligarchs’ hidden wealth, including yachts, homes and private jets. The sanctions will hurt some of them, but so may a growing aversion to touching anything Russian. China has witnessed the same assault on Huawei, its telecoms-equipment giant. It leaves the plutocrats few alternatives than to cosy up with the rulers back home—whatever the cost.Belle Époque or Apocalypse Now?None of this looks likely to end the gilded age. According to Hurun, its upcoming global rich list will contain 200 more billionaires than a year ago, and reach a new record. Chinese ones are multiplying. Many, though, are ditching ostentation for a new trait: humility. “In China, the very top entrepreneurs are almost never in the public eye,” says Mr Hoogewerf. Mr Potanin’s survival instinct is also to keep his head down. When interviewed by the Financial Times in 2018, he was living in his own country club outside Moscow. Hiding away, he professed. “From everybody.” More

WOMEN IN THE top ranks of business have broken three important records of late. The number of female bosses at the helm of Fortune 500 companies in America reached an all-time high of 41. In 2021 CVS Health, the country’s fourth-biggest firm by revenue, became the largest to be run by a woman. And for the first time, two of America’s largest businesses—Walgreens Boots Alliance, another chain of chemists, and TIAA, a financial-services firm—are run by black women.In America and other well-off places women are making strides in business, according to The Economist’s glass-ceiling index, an annual snapshot of female empowerment. The share of women on corporate boards, for example, is rising in most places (though it has dipped in progressive Sweden since 2019). Some of this is down to mandatory quotas; female boardroom representation surged in the Netherlands and Germany after those countries introduced such rules. But laws aren’t everything. Voluntary targets set by the British government have also boosted the share of women on the boards of FTSE 100 companies, from 12.5% a decade ago to nearly 40%. Investors targeting environmental, social and governance (ESG) factors are increasingly pressing firms to treat male and female employees equally.Still, businesswomen have a long way to go before they catch up with their male counterparts, especially in the upper reaches of corporate hierarchies, and in some respects trail their female colleagues in politics (see chart). Men still occupy more than two in three boardroom seats in America. In South Korea, they hog more than nine in ten. Women still earn less than male colleagues (never mind that girls outperform boys at school across the OECD club of rich countries). In America outcomes are worse for women of colour, who make less than white women and are even more underrepresented in senior roles.More troubling still, more women are dropping off the corporate ladder altogether. Although pandemic-era remote work made it easier for some women to combine work with family chores (still performed mostly by mothers and wives), covid-19 has pushed a disproportionate number of them out of the labour force. Women’s labour-force participation in OECD countries declined from 65% before covid-19 first hit to 63.8% a year later. Stymying female advancement may be yet another insidious consequence of the virus. For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

THE RUSH from Russia was unlike anything in recent memory. Within days of Vladimir Putin’s invasion of Ukraine, American companies from Apple to ExxonMobil suspended their business in Russia or said they would abandon it. Companies with factories and other assets in the country are now mulling ways to fend off possible expropriation. American technology giants are embroiled in a battle over misinformation—Russian authorities blocked access to Facebook on March 4th and said they would jail or fine those spreading “fake” news about the war. A day later Visa and MasterCard said they would suspend all operations in Russia.For companies, the Russia risks are extreme. They also point to a broader phenomenon. American multinational firms find themselves astride a fracturing world. Countries that once used commerce to ease relations with geostrategic competitors increasingly use tariffs and sanctions to undermine perceived adversaries. Politicians from Beijing to Brussels hope industrial policy will protect their economies from external pressure, be it a war, pandemic or geopolitical rivalry. Joe Biden, America’s president, used his state-of-the-union speech on March 1st to extol the merits of protectionism. “Instead of relying on foreign supply chains,” he intoned, “let’s make it in America.”As the rules of global commerce change, America’s biggest companies are changing, too. They are testing ways to minimise their risks and benefit from industrial policy when they can. It is a treacherous endeavour. Since the start of the year share prices of American firms focused on the domestic market have slumped by 5%, according to Goldman Sachs, a bank. American companies dependent on overseas revenue have seen theirs plunge by nearly three times as much. Not long ago multinationals seemed spoiled for choice. The collapse of the Berlin Wall in 1989 heralded the entry of the Soviet bloc into the global trading system. On signing the North American Free Trade Agreement in 1993, Bill Clinton predicted an export boom for American business. China’s entry to the World Trade Organisation in 2001 would, boosters said, help America Inc tap China’s huge market and make the Communist Party less mercantilist. For American companies, the world was not just their oyster but a towering platter of fruits de mer. Overseas markets remain essential to many American companies. In 2020 they supplied 28% of the revenue for companies in the S&P 500 index of America’s biggest firms, according to Goldman Sachs. The technology industry is particularly outward facing, earning 58% of revenue overseas. Companies with higher exposure to foreign markets have outperformed the broader stockmarket over the past half-decade (see first chart). Firms continue to chase opportunities far from home. Last year low interest rates and ample cash inspired American companies to spend $506bn on foreign mergers and acquisitions, more than twice the sum in 2020 or 2019, according to Dealogic, a data firm. In the first nine months of 2021, the latest figures available, net foreign direct investment had already exceeded the annual level in 2020 (see second chart). These new investments may do less to boost the bottom line than in the past. In recent years foreign countries have contributed a declining share of corporate earnings, not just because domestic profits have soared but because foreign ones have stagnated. In the third quarter of 2021 the most recent data available, all American companies (listed and unlisted) earned 18% of their profits abroad, compared with 24% three years earlier (see third chart). Many factors influence a multinational company’s performance abroad, including a country’s recovery from the pandemic and the strength of the dollar. American firms are watching to see if governments advance a global minimum corporate tax—more than 40% of their foreign direct investment is held in tax havens. Most important, perhaps, geopolitical risks can no longer be ignored. Start with Russia. Companies that have announced they will leave now face the difficult task of actually doing so. ExxonMobil has cautioned that it would be unsafe suddenly to abandon the oil project it operates in Russia’s far east. Some bosses fear that Mr Putin will retaliate against Western companies by seizing their assets in Russia. American companies can restructure to hold their Russian business in a foreign jurisdiction, notes David Pinsky of Covington & Burling, a law firm. That may let them challenge any state takeover in international arbitration, rather than put themselves at the mercy of Russian courts. Some Western firms may worry that their exit could hurt ordinary Russians. The suspension of Visa and MasterCard payments has made it harder for those members of Russia’s middle class who want to flee Mr Putin’s regime to pay for tickets out of the country, for example.Companies’ problems in China, a more powerful autocracy, are less acute but more consequential in the long term. China’s economy is roughly ten times the size of Russia’s. Tariffs imposed by Donald Trump during his presidency remain in effect—and ineffective. The Economist estimates that more than $100bn in Chinese-made goods may have dodged American tariffs last year. Mr Biden has been slow to advance a new strategy. He intends to announce a framework for strengthening economic ties with other countries in Asia. However, there is little support in either party for a multilateral trade deal. For now, many companies find themselves playing by China’s rules, both within the country and beyond it. They face state-backed giants that account for 27% of the world’s top 500 companies by revenue, compared with 19% a decade ago. Other countries with a history of economic nationalism are dusting off old ideas. India’s prime minister, Narendra Modi, has echoed Mahatma Gandhi’s calls for self-sufficiency and imposed tariffs to support local manufacturers. Mr Modi’s government is designing an open-source platform for e-commerce, in part to challenge Amazon and Walmart. Mexico’s government, led by Andrés Manuel López Obrador, has bailed out Pemex, the state-owned oil company. Last year an American energy firm, backed by KKR’s private-equity barons, was closed at gunpoint by Mexican authorities. Even many less nationalistic governments are getting back into the business of shoring up industries deemed crucial to national interests. South Korea, the EU and, with bipartisan backing, America itself want to support domestic production of semiconductors. America’s Senate and House of Representatives have each passed a bill aimed at helping America compete. It brims with handouts for research, training and favoured industries (including more than $50bn for chipmaking).The new protectionism includes sticks as well as carrots. The bill passed by the House of Representatives would impose capital controls, authorising the commerce department to block American companies’ investments in China. Europe’s pursuit of “digital sovereignty” seeks to protect citizens’ data, crack down on American tech firms and advance local competitors. Britain attracted one-fifth of American companies’ foreign deals last year, to the dismay of some British politicians. In February Nvidia, an American chip-designer, abandoned a $40bn attempt to buy Arm, a Japanese-owned owned one based in Britain. American trustbusters feared the combined group’s effect on competition; their British counterparts worried about national security.American companies are trying to adjust. To reduce reliance on China, companies are increasingly sourcing products and inputs from Taiwan, Thailand and Vietnam. The share of American imports from other low-cost Asian countries climbed from 12.6% in 2018 to 16.2% in 2020., according to Kearney, a consultancy. Orders of robots and other automated systems in America have surpassed their pre-pandemic peak, suggesting that manufacturers are using automation to lower production costs at home as a tight labour market raises wage costs. Last year General Motors followed Tesla’s example and invested in a lithium project in California, to boost supply of a commodity essential to its electric-car strategy. American carmakers are both responding to and emulating China’s state-backed firms, which have long valued security over mere efficiency.Reconfiguring supply chains is, however, neither straightforward nor cheap. Few countries can match China’s vast pools of skilled workers, notes Stewart Black of INSEAD, a business school, so American companies are loth to abandon it completely. Intel’s boss, Pat Gelsinger, said in January that he was seeking “a duplicity of supply chains available across the globe”. That includes manufacturing in rich countries with higher costs. “You need either redundancy or resiliency built into your systems,” says David Kostin of Goldman Sachs. The alternative is to keep higher inventories, which makes for a less efficient use of working capital.Companies would, of course, happily accept government largesse in exchange for investments. But handouts are not the only thing that determines investment decisions. And politicians are sending mixed signals. Mr Biden has highlighted the need to secure critical minerals, while doing little to help companies obtain them. Mr Gelsinger, a special guest of Mr Biden’s at the state-of-the-union address, looked on awkwardly as the president said Intel would quintuple a planned investment in Ohio, to $100bn, if only Congress would authorise more subsidies. Many European politicians likewise pair industrial ambition with a propensity to argue about it. In February the eu unveiled a plan to subsidise semiconductor manufacturing, but may not come up with the €43bn ($47bn) to do so, since much of the money would have to come from member states and the private sector. They are also making life harder for American firms—though not yet hard enough for the companies to up sticks. To comply with French rules for cloud-computing providers, for example, last year Google said it would form a joint venture with a local company. This year Google agreed to pay French publishers for publishing snippets of news. Amazon and Walmart are so far sticking it out in India’s e-commerce market, despite continued lawsuits, shifting regulations and no profits. China shows just how delicate this balancing act can get. Some companies manage it skilfully. Take Honeywell, an American conglomerate with a sprawling business in China. Honeywell continues to produce and sell avionics to Chinese customers, points out Mr Black, even though aviation is a sector in which China plans to promote domestic champions and become self-reliant. Specialising in complex technology that serves China’s broader goals helps: Honeywell provides navigation systems for the COMAC C919, a narrow-body jetliner that China hopes will compete against the Airbus A320 and the Boeing 737. Other companies, less adroit at the high-wire, become contortionists instead. In Russia most American tech firm have beaten only a partial retreat. To abide by Chinese cyber-security laws, Apple stores and shares iPhone users’ data with a state-backed company. Since 2018 American firms have all but stopped challenging patent infringement in Chinese courts, according to cases tracked by Rouse, a firm specialising in intellectual property. That is not because patent infringement has stopped, reckons Doug Clark of Rouse. Rather, heightened tension may have made American firms wary of retaliation. In China, says Jue Wang of Bain, a consultancy, firms are mapping out ways to respond to geopolitical risks or intensified support for state champions. As the 1990s dream of a single integrated global market shatters, firms in America, and everywhere else, face a brutal adjustment. More

HERE ARE some common characteristics of cults. They have hierarchical structures. They prize charismatic leaders and expect loyalty. They see the world as a hostile place. They have their own jargon, rituals and beliefs. They have a sense of mission. They are stuffed with weirdos. If this sounds a bit familiar, that is because companies share so many of these traits.Some cult-companies are easier to spot than others. Their bosses are more like deities than executives. These leaders have control of the company, and almost certainly founded it. They have name recognition among the masses. They really like rockets and have a brother called Kimbal.But in other cases it can be hard to tell where a company ends and a cult begins. That is true even of employees. So here is a handy guide to help you work out whether you are in a normal workplace or have fallen into the clutches of an even stranger group.Workforce nicknames. It is not enough to be an employee of a company any more. From Googlers and Microsofties to Pinployees and Bainies, workforce nicknames are meant to create a sense of shared identity. If you belong to one of these tribes and use its nickname without dying a little inside, you may be losing your grasp of reality. If you work in the finance team and are known as one of the Apostles of the Thrice-Tabbed Spreadsheet, you already have.Corporate symbols. Uniforms are defensible in some circumstances: firefighters, referees, the pope. And so is some corporate merchandise: an umbrella, a mug, a diary. But it can easily go too far. Warning signs include pulling on a company-branded hoodie at the weekend or ever wearing a lapel pin that proclaims your allegiance to a firm. If your employer’s corporate swag includes an amulet or any kind of hat, that is also somewhat concerning.Surveillance. It is reasonable for executives to want to know what their workers are up to. But it is not reasonable to track their every move. Monitoring software that takes screenshots of employees’ computer screens, reports which apps people are using or squeals on them if a cursor has not moved for a while are tools of mind control, not management.Rituals. Rites are a source of comfort and meaning in settings from sport to religion. The workplace is no exception. Plenty of companies hand out badges and awards to favoured employees. Project managers refer to some meetings as “ceremonies”. IBM used to have its own songbook (“Our reputation sparkles like a gem” was one of the rhymes; “Why the hell do we have this bloody anthem?” was not). Walmart still encourages workers in its supermarkets to bellow a company cheer to start the day. Some of this is merely cringeworthy. But if you are regularly chanting, banging a gong or working with wicker, it becomes sinister.Doctrines. More and more firms espouse a higher purpose, and many write down their guiding principles. Mark Zuckerberg recently updated his company’s “cultural operating system”—which, among other things, urges Metamates (see “Workforce nicknames”) to defy physics and “Live In The Future”. Amazon drums its 16 leadership principles (“Customer Obsession”, “Think Big”, “Are Right, A Lot”, and so on) into employees and job candidates alike. Corporate culture matters, but common sense doesn’t become a belief system just because capital letters are being used. If values are treated like scripture, you are in cult territory.Family. Some companies entreat employees to think of their organisation as a family. The f-word may sound appealing. Who doesn’t want to be accepted for who they are, warts and all? But at best it is untrue: firms ought to pay you for your time and kick you out if you are useless. At worst, it is a red flag. Research conducted in 2019 into the motivations of whistle-blowers found that loyalty to an organisation was associated with people failing to report unethical behaviour. And the defining characteristic of families is that you never leave.If none of the above resonates, rest easy: you are not in a cult. But you are unemployed. If you recognise your own situation in up to three items on this list, you are in an ordinary workplace. If you tick four or five boxes, you should worry but not yet panic; you may just be working in technology or with Americans, and losing your sense of self may be worth it for the stock options. If you recognise yourself in all six items, you need to plan an escape and then write a memoir.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Company or cult?” More

THIS IS A big week for Tesla’s “gigafactory” in Grünheide, near Berlin. According to the German press, the American electric-car maker will get the final green light from local authorities to start operations within days. In one way, it already has. On February 28th Tesla workers elected their first works council, a group of employees that in German law co-decide with managers things like working hours, leave and training.For Elon Musk, Tesla’s anti-union chief executive, this must rankle. He has tried to shield his first German plant from Germany’s strict labour laws by incorporating the business as a Societas Europaea (SE), a public company registered under EU corporate law that is exempt from some “co-determination” rules, such as the requirement for firms with more than 2,000 employees to give workers half the seats on supervisory boards. SEs are not, however, exempt from having a works council.IG Metall, Germany’s mightiest union, which represents auto workers, has been on a collision course with Mr Musk ever since he refused to sign up to collective wage agreements for the industry (the only other firm not included is Volkswagen, which has its own generous wage deal). It has set up an office close to the gigafactory to advise Tesla workers about their rights and listen to their complaints. It has employed a Polish speaker to organise employees that Tesla is hiring across the border in Poland. It hopes that persuading enough Tesla workers to join its ranks would add oomph to its campaign to join the collective wage deal; the union says the company pays senior staff well but that production-line workers get a fifth less than those at BMW and Mercedes-Benz. Most important, it sees the works council as the first step to full co-determination.Mr Musk must see it differently. He may have fast-tracked the election in order to get a more sympathetic council. Tesla has so far hired only around 2,500 mostly senior and skilled workers, out of a workforce that will grow to 12,000 or so. Such employees are likelier to see eye to eye with management. The rest of Deutschland AG will be watching to see if Germany changes Tesla into something less abrasive or if Tesla changes Germany’s labour relations into something less consensual. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “A lesson in business German” More

AS THE TRAGIC human consequences of Russia’s invasion unfold, there is little to celebrate beyond the stoic resistance of outgunned Ukrainian forces and Western unity in facing up to the unprovoked aggressor. One side-effect of the war is a sudden and profound shift in European attitudes to defence spending. Those expectations are behind a surge in the market value of firms that supply the weapons with which war is waged (see chart).The idiosyncratic nature of the defence industry explains why it was having a good year even before Vladimir Putin sent tanks into Russia’s smaller neighbour. Arms makers’ customers are mainly governments. Guaranteed sales translate into predictable revenues. Contracts designed to pass on cost increases shield companies against inflation. The ability to withstand rising prices was a big reason for the sector’s outperformance relative to the stockmarket as a whole in the past few months.McKinsey, a consultancy, notes that defence budgets—and so armsmakers’ revenues—are a function of threats and affordability. The spike in share prices since the attack on Ukraine reflects investors’ belief that the threats will outweigh the costs in governments’ calculations. Germany made the first move, surprising pundits with an about-turn. On February 27th it said it would spend an extra €100bn ($111bn) on defence in 2022, tripling its defence budget for the year. Besides this one-off investment, Germany aims to raise its annual spending from around 1.5% to 2% of GDP by 2024. A slug of the annual increase, equivalent to €18bn or so, will go on weapons.The Russian threat may well encourage other laggards such as Italy, the Netherlands and Spain to meet NATO’s guidelines for all members to spend 2% of GDP on defence. Citigroup, a bank, reckons that spending will now rise more rapidly and that 2% will become a de facto minimum across NATO. Jefferies, another bank, points out that if all NATO members meet the target, their combined defence budgets (excluding America’s giant one) will go up by 25% to a total of around $400bn a year. Outside NATO, Sweden and Finland, both within striking distance of Russia, are likely to ramp up spending, too.Defence spending covers an array of costs such as wages and operational expenses. Kit accounts for between a fifth and a quarter of the total. Jefferies reckons that procurement budgets in NATO (excluding America) could rise by 40-50% as armed forces gear up to face the Russian threat. Because European countries favour domestic arms manufacturers, European firms have seen the sharpest gains in their share prices. That of Rheinmetall, which makes military vehicles, weapons and ammunition, surged by nearly 70% in a matter of days. Hensoldt, a maker of military sensors, more than doubled its market value. Britain’s BAE Systems, Europe’s biggest defence firm, saw its share price rise by a quarter thanks to its large business serving European infantries. Thales of France and Leonardo of Italy made similar advances.For once, America’s military-industrial complex has lagged behind its European equivalent. Lockheed Martin, Raytheon and L3Harris sell equipment around the world, but mostly to America’s government. The Pentagon already accounts for nearly two-fifths of global spending (or nearly half if you exclude countries such as Russia and China, which are not markets for American weapons). American military spending is unlikely to rise as sharply as Europe’s. But the revived threat from Russia will put paid to the idea, floated by some in Washington, to limit it on the margin. Russian revanchism raises the likelihood that Congress will shovel more money to the armed forces in the coming years.Bernstein, a broker, points out that past regional conflicts, such as Russia’s invasion of Georgia in 2008, its annexation of Crimea in 2014, and the first Gulf war in 1990, boosted defence stocks for roughly six months, while the rest of the market wilted in the fog of war. The scale of the threat to Europe and the world, and the possibility of a long confrontation in Ukraine, may mean the boost lasts longer this time. That would perpetuate a secular trend. As Bernstein observes, weapons-makers have “massively outperformed” the S&P 500 index of big American firms for more than 50 years. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Advancing on all fronts” More