To many Americans the idea that politicians in a country that has just fallen back into recession with gross debt equivalent to 90 per cent of output can tell a chief executive he is not fit to run one of the most successful media companies ever built is laughable. Many Europeans, on the other hand, giggle when US presidential hopefuls boast that their business credentials make them a better choice for “running America”.
Of course, the phone-hacking scandal in Britain has become a political circus, and US presidential elections are always thus. But to conclude that Rupert Murdoch is not fit “to exercise stewardship of a major international company”, as a House of Commons committee report did on Tuesday, is an unfortunate choice of words. Yes a newspaper was naughty under his reign. But News Corp has outperformed the S&P 500 by 45 per cent over the past three years and, at above 10 per cent, is generating its highest cash flow returns on invested capital in two decades. Fox cable network, in particular, could not be fitter.
Meanwhile, the silly idea that business experience can help solve America’s unemployment problem or bring its finances under control also misses the mark. Hiring and firing teaches nothing about the causes of and possible solutions to the 5.3m long-term unemployed in the US. And talk about pots and kettles: debt at American non-financial firms relative to assets and book values is near an all time-high. According to National Accounts data, aggregate corporate net debt is currently 80 per cent of gross domestic product.