The Apprentice and the Enterprise Myth

This post was written by Jacob on March 23, 2012
Posted Under: Uncategorized

Seven million people watched the first episode of the new series of The Apprentice, which screened this week on the BBC. This means that seven million people should have gained a rather interesting insight into the economy, and the government’s plan for recovery. Unfortunately this doesn’t seem to have happened so I thought I’d spell it out. The government tells us time and again that the route to recovery is through enterprise. By this they mostly seem to mean start-up firms, funded by venture capitalists. You get the idea from the Department of Business, Industry and Skills’ shiny new website “Business In You”. Clearly what the Government want the huge unemployed populace to believe is that the way out of the poverty of unemployment is to become an entrepreneur. What is imagined by enterprise, here, is something akin to a magic hat. And he who possesses the magic hat can pull endless value out of it, regardless of the rest of the economy. The magic hat will solve your poverty so long as you believe in it.

The problem is that believing in it isn’t so easy, and it is here that we turn to The Apprentice. For those who haven’t seen the programme, it involves 16 hard-headed, hard-faced business people, all “the best”, all wearing suits so sharp you could slit your wrists on them (oh how much I wish I could after an hour of this dismal television.) These people are apparently experts in the production of profit. They know everything anyone can know about producing and selling. These hard-faced businessmen and -women are split into two teams and are set tasks in enterprise by Sir Alan Sugar. Whichever team makes the most profit, wins.

Sir Alan Sugar: Business Twat

So in the first episode, the two teams were charged with starting a print business, in which they were given all the machines necessary for printing on to bags and tshirts, and then had to sell their products on the street. The two teams, with ridiculous corporate names Phoenix and Sterling, worked for two days and managed to make profit as follows:

Sterling: £214.80

Phoenix: £616.20

It may be worth getting out a calculator and having a think about what this actually means. Together, 16 highly talented people, with all of the experience in the world, made a total profit of £831. Now, assuming on each day of the two-day task each team member works for 8 hours (this is a generous estimate given that the show clearly shows them working for about 12 hours on the first day), this gives a total man-hours of 256. It is significant that under the conditions of The Apprentice, the contestants aren’t paid, but let’s look at what happens when we convert this profit into wages: each team member, each highly skilled business person, was making a totally huge £3.25 an hour. I am not a businessman, but even I can see that this doesn’t look like a great investment or a good use of one’s time.

£3.25 an hour is just over half of the minimum wage (which currently stands at £6.08 an hour), and converts into a wonderful annual salary of £6760 a year, which is significantly less than the minimum the government believes people need to live on, based on the rates of Jobseekers’ Allowance added to Housing Benefit. And indeed, all of these “highly skilled” business people would be eligible for Working Tax Credits of well over £2000 a year, just to keep them alive. Meanwhile, Sir Alan Sugar was in The Sun last week saying that the government ought to cut the benefits system. How strange that he wants this when he encourages business practices, which, without a benefits system, would lead people to total destitution.

But the story is worse than that: all sorts of help is given to the businesses in The Apprentice: they don’t pay rent on warehouses or on market stalls, they don’t buy any machinery, and liquidity with which they start is interest-free. And also we’ve made the assumption that all profit can become wages. This may, at a stretch be the case if you are running a business alone, but with an investor involved (as the government encourages), wages must be calculated as an added cost and not just as the profit. And in fact even for a one-person business, by the end of the challenge all the free liquidity has been used up, and some profit will be needed to reinvest and buy new stock. Adding in these costs, it becomes obvious that even for the “experts”, entrepreneurship is probably not profitable, and almost certainly will not pay you a wage.

Seven million people watched the programme. Seven million people watched all of these highly qualified people making piss-poor profits. What does it take for seven million people to put two and two together, and realise that the government’s deification of enterprise is a farce. Only enterprise, we are told, will deliver us, and surely we know already that it will deliver us only into poverty.

 

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Reader Comments

Malcolm K Peckham

The basic premise is ridiculous. The t-shirts and mugs would be made in China and shipped to a large warehouse in Milton Keynes or Northampton. The customers would order their designs on the t-shirts and mugs on websites like moonpig.com and send them via post or courier. No form of high street retailing would exist at any stage. China/Warehouse/Customer – no Shop required, no Retail Entrepreneur required.

#1 
Written By Malcolm K Peckham on March 23rd, 2012 @ 1:12 pm
Nick Rowan

Also… any money earned from the ‘public’ is therefore not available to and is therefor taken from existing business. No money is made; it is merely redistributed; i.e.. given to one in detriment of another. Enterprise may create personal profit but it does not necessarily add up to national wealth creation of any kind; in fact it may well do damage to the economy. This is the closed system economics: which I call “The trickle up effect’.

#2 
Written By Nick Rowan on March 23rd, 2012 @ 3:55 pm
david

The most obviously awful thing about this episode has been missed:

the worst products made more profit and therefore won;
the best products made less profit and therefore lost.

Well done, Money, well done.

#3 
Written By david on March 24th, 2012 @ 11:41 am
Simon

I don’t think that’s a fair way of trying to compare this to “real” business. There were a few constraints put in by the programme which meant they were always going to be inefficient:
1.) Except possibly at the selling stage there was never 8 people’s worth of work being done – until manufacturing and selling there could have been 2 people in each team and they wouldn’t have made any less money. As well as man-hours that don’t have to be paid for (though you’d have to count on 6 people per team finding gainful employment elsewhere for half the task) it may have decreased the time required to do a lot of the planning/design – “too many cooks” etc.
2.) It looks like a lot of time was spent manufacturing, they were forced to do this entirely by hand and were mostly unskilled at it. They were also only producing a one day sized batch of products which is going to be a lot less efficient than producing a few weeks’ worth.
3.) The man-hours spent planning and coming up with the product would only need to be be invested once for many days of selling.
4.) In reality any unused stock would roll over to the next day rather than being sold off below cost-price.

#4 
Written By Simon on March 24th, 2012 @ 12:27 pm
Pete

All this show demonstrates is that provided a tv camera is following you around, you can sell anything to members of the public for ludicrous prices. It is an entertainment show, not a serious look at business or enterprise, and the aim is not to set realistic challenges, but to observe and mock the never ending queue of attention seeking, egotistical candidates.

#5 
Written By Pete on April 19th, 2012 @ 11:42 am

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