The Market State

Last year, corporate executives spent a lot of time talking about the problem of headwinds in a difficult economy.  They never talk about tailwinds in a good economy but that’s another story.  What they have talked about this year is “uncertainty” by which they apparently mean excessive government regulation brought on by the global fiscal crisis. A McKinsey white paper published earlier this year suggests that companies would be better off preparing for much more activist national governments and the challenges they will present than whining about uncertainty.  The authors of the study suggest that the challenge for sovereign states in dealing with slower economic growth while still providing affordable safety nets will entangle the private and public sectors in the future in ways that are unthinkable in today’s developed economies.

While there are clearly financial and operational implications of this shift, there are also reputational dangers and opportunities.  If McKinsey’s predictions are correct, the term corporate social responsibility may take on entirely new meanings.  U.S. companies have long bemoaned the emergence in the 1950s of employer-supported health benefits.  If the market state is truly the wave of the future, they may have seen nothing yet.

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