In Oliver Stone’s movie Wall Street, capturing the reckless 1980s’ spirit of making money with money in a booming stock market and through financial innovation and worse, at a time when American manufacturing was being badgered by imports from Europe and Japan, the working-class father Carl Fox has a question for his get-rich-quick son Bud.
“Stop going for the easy buck,” the father warns, “and start producing something with your life. Create, instead of living off the buying and selling of others.”
Young Bud has little time for such fatherly admonition. “What I see is a jealous old machinist who can’t stand the fact that his son has become more successful than he has!” Not to be cowed down by his son’s youthful arrogance, father Carl replies: “What you see is a guy who never measured a man’s success by the size of his wallet!”
“That’s because you never had the guts to go out into the world and stake your own claim!” retorts Bud. After a long pause, the father speaks in a tone of wounded regret: “Boy, if that’s the way you feel, I must have done a really lousy job as a father.”
Last week two highly regarded business leaders put pen to paper to warn the scions of Indian business families that far too many of them were busy merely managing money rather than making something with that money.
Uday Kotak, the banker, was the first to speak his mind. Warning that, what John Maynard Keynes called, the “animal spirits of enterprise” were not visible in the next generation of business persons. Kotak is concerned that well-educated young people born, so to speak, with a gold spoon in their mouth, seemed content managing their financial inheritance rather than producing something with it.
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“I would love to see this generation be hungry for success and build operational businesses,” Kotak wrote, worrying about a tendency among younger members of business families to “take the easy way” of managing family offices and investments. Few are into building world-class businesses.
Even as Kotak’s remarks created a buzz in board rooms, Harsh Goenka of the RPG Group launched yet another missile. Stop criticising N.R. Narayana Murthy of Infosys and S.N. Subrahmanyam of L&T for suggesting that Indians should work longer hours and start doing at least half the work they still do, admonished Goenka.
These young millionaires and billionaires driving fancy cars and holidaying in exotic places “would never survive even a week of (their) gruelling schedule… Instead of rolling up their sleeves and sweating it out in the trenches of business and industry, they are busy trading, speculating and running family offices.”
Goenka reminded the brats how an earlier generation of business families expected their children to begin work at the bottom of the manufacturing pyramid, managing people, managing supplies, creating products and selling them. Not just go out for a working lunch with an investment manager to look at spreadsheets and then flying off for the weekend to some hot spot or watering hole.
The Kotak-Goenka put down should draw attention to a larger malaise that is not just confined to the wealthy young. Even middle-class young people who secure a degree in engineering have, for several generations now, gone on to seek a degree in management or finance and sat at desks managing money rather than work on the shop floor managing production.
The ingrained caste and class divisions of our society at large also defined success in business. Dirtying hands on the shop floor was not the route to managerial success. When Japan’s Suzuki arrived in India and made managers in air-conditioned offices wear the same grey outfits that foremen on the shop floor wore, eyebrows were raised among the hoi polloi.
These social attitudes have had an impact on the larger story of Indian manufacturing. When desk jobs in front of computer screens in the services industry began offering better remuneration than factory-based jobs in manufacturing, the whiz kids from IITs and IIMs and the foreign-returned ones fuelled the services sector boom, once again leaving manufacturing bereft of adequate talent.
To manage manufacturing, the manager has to live close to the factory. That is why industrial centres came up like Bokaro in the public sector and Jamshedpur in the private sector. Governmental incentives for locating manufacturing centres in backward districts meant that many industries came up far away from the major metros. An earlier generation of business persons and managers learnt to live between city and the distant factory.
The urban-based services and financial sectors quite understandably attracted the better qualified because these jobs are also city and metro based. Who wants to be in Aurangabad if one can be in Mumbai? Even industrial activity began moving closer to urban centres, adding to the problem of urban pollution. Taken together, the incentive to dirty one’s hands and get into the making of things has been outweighed by the far more seductive incentives of making money sitting at a desk, if not reclining on a sofa.
A mix of cultural attitudes, the gap between the quality of life in metros as opposed to industrial locations and the gaps in remuneration for different types of managerial work – production, marketing and finance – have all combined to make manufacturing a last option for gainful employment. No wonder India lags in manufacturing.
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On top of this, the ease of travel between India and financial centres like Singapore and Dubai, not to mention London and Zurich, has also seduced the wealthy away from managing home-based production to offshore management of funds. Indeed, after the Securities and Exchange Board of India (Sebi) permitted online board meetings and with improved connectivity Indian CEOs find they can run their businesses at home living overseas.
The social and cultural gap between manager and worker has been reinforced by the ability of executives to now manage factory and finance sitting comfortably in more hospitable locations. In the past, it was executives in multinational corporations that ran their overseas business from their home country, today even Indian business persons are able to run their India business from overseas. And, if it’s only about managing money, then who needs anything more than a laptop and a mobile phone.
Sanjaya Baru is an author, a former newspaper editor and adviser to Prime Minister Manmohan Singh.
This article was originally published in Deccan Chronicle. It has been lightly edited for style.
