Thursday, 3 September 2015

Businesses need economic change too

I had what was, for me at least, a respectable flurry of hits on Tuesday when I agonised in public about whether the Lib Dems were becoming a pressure group.

If they are doing so, it is partly  for a reason which is peculiar to them - Liberals tend to be blind to the problems of money, just as socialists tend to be blind to the problems of centralised power.  It is also partly for a shared reason: the Left has become terrified of economics, because it used to be regarded - in the peculiarly lame jargon of the day - as a 'shield' issue. In other words, it was a topic they could make no vote-winning contribution about.  All they could do was defend themselves.

As the years went by, their economic muscles atrophied. Then they stopped seeing economics issues at all - so it is hardly surprising that the only way of thinking about economics was the mainstream one, imported from the American thinktanks and spread to the world.

All this is about to change, of course.  Not just because Jeremy Corbyn has exhumed an approach to economics that most people had assumed had long been dead and buried (and may still turn out to be).  But also because, every 40 years, there is a major shift in mainstream thinking.  We are due for ours in about four years time.

What holds us back isn't that the disastrous record of the current way of doing economics, or the pretty disastrous way of doing economics that preceded it, has not been recognised yet. Most thinking people can see that something has to change.

What holds us back is that the mainstream has not yet tiptoed into the debate about what we do instead - how we make economics work for everyone. What the new world is going to look like.

Two graphs sent to me in the past 36 hours make the point for me.  The first (thanks, Rob) shows what has been happening to global income distribution, as we all descend into semi-slavery:



The second (thanks, Isabella) is about where people on a median income can afford to buy a house, and it is from the Guardian (an amazing interactive map, with 2014 on the right, and the red are no-go areas):
Embedded image permalink
Now, even under Corbyn, Labour seems unlikely to join in this debate about what next - either for fear of the new approved hymnsheet or, more traditionally, for fear of frightening the horses by appearing to be 'anti-business'.

This seems to me to be a profound misunderstanding.  As far as I can see, business is as concerned about these trends as everyone else.  How will they be able to operate if the vast majority of the nation can't afford to buy a house or put down roots? How will they be able to sell when their only clients will be the handful of super-rich?

I don't understand where the problem lies. Does criticising the status quo mean being anti-business? Most businesspeople I know are just as critical as I am.

Most are sceptical that welfare or Fabian-style redistribution is the solution, but then so am I...

I can understand why Labour has to feel it must spend energy in public assuring people that they are still committed to the good old business model of the 1950s - but why, with some notable exceptions, do the Lib Dems stay so silent?  And the real question: can they be the political crucible which forges a way forward?

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Tuesday, 1 September 2015

Are the Lib Dems becoming a pressure group?

What distinguishes a political party from a pressure group?

Is it the breadth of their agenda? Not really, look at some of the new campaigning outfits, like the irritating 38 Degrees.

Is it that they are standing for elections? Not really, pressure groups can and do so.

Is it that they have to be registered as a political party? Please don't bore me with legal definitions...

No, what makes a political party a political party is that they aspire to run the country, which means that their programme has to cover all the essentials that a government might need.  They can't, for example, say - oh, we're not very interested in defence. They can't say that they are just going to assume that somehow everything about economics or business is somehow irrelevant to their great cause.

The trouble is that this is precisely what the Left has been doing over the past generation. They have been doing so for different reasons, but that has been the basic underlying problem.

The Labour Party has been ignoring economics for fear that they will be thought too radical if they mention it at all. The Lib Dems have been ignoring economics because, with a handful of noble exceptions, they can't see what it has to do with Liberalism.

Part of Jeremy Corbyn's attraction seems to me that he has disputed the basic underlying Labour agreement: don't mention business, except to praise the banks.

Because the truth is that no potential government is going to be elected if they don;t set out - in some detail - how they are going to build prosperity in the nation.

The idea that somehow you do so by making a handful of people very rich, and letting the wealth trickle down, as long since been revealed as a major delusion - but the political parties of the Left appear to conspire not to mention this.

They talk about shuffling the deckchairs a bit. They talk a great deal about welfare, and these are not unimportant, but that's not the core issue for government. It is about moving prosperity around, not creating it. Nor is it what people want to hear - a credible programme for the economy that underpins the majority of people's lives.

All they are being offered is the following:

  • Business as usual (broken) with Osborne or Blair.
  • A tumbledown mixture of stuff on the welfare state (most of the Labour leadership contenders).
  • A heady mix of stuff about benefits, Europe, youth services and Trident (the Lib Dem conference agenda this month).
It's fine as far as it goes, but none of this provides a way forward for the Left on economics. Labour and Lib Dems alike have preferred, for some reason, to defer to their Conservative rivals on economics and business. It is hardly surprising, in those circumstances, that - when people feel nervous about the future - they should do the same.

Of course I'm going to the Lib Dem conference in Bournemouth. I wouldn't miss it for the world. But don't let's pretend that this is a debate about any kind of programme for government.

Nothing about employment, the banks, business, enterprise. Nothing about economics, currency reform, money management. Nothing about money at all.

So, while we're there, let's try to make sure that the party tiptoes back onto the economic agenda it has virtually abandoned. Because, if I'm going to be a member of a glorified pressure group, there may be more successful ones out there I could give my money to.


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Monday, 31 August 2015

Time for a campaign for Real Bank Holidays

Well, I may not have quite recovered from the end of my summer holidays, but I am at least pleased to be blogging again, which I am starting again for the autumn herewith - and, since it is Bank Holiday Monday, it may be time for a re-think about bank holidays.

I have a personal reason for doing so. The man who invented them, Sir John Lubbock, was my great-great-grandfather, and - partly because of that - I know that he had two motivations for coming up with the idea.

The first was that, as Darwin's next door neighbour, his pupil and his collaborator, he believed that evolution had a political edge. Society was evolving and it was up to politicians, or so he believed, to help the process along. But how could society evolve if people never had time to better themselves?

Other countries had saints days which gave people a bit of time off.  Not so in dour, Scrooge-infested England. It was time to intervene.

The second source of the idea was his profession. He was, like his father before him, a banker. He knew how much the banking system underpinned the rest of the economy. A law requiring businesses to shut down for a few days every year was unlikely to have an effect. But you didn't need to be so controversial. All you needed to do was close the banks.

The first August Bank Holiday therefore went ahead in 1872, and there were extraordinary scenes at the London railway terminals as the crowds overwhelmed the trains available to take them to the seaside.

“The passengers were packed on decks and paddleboxes like herrings in a barrel, and so great was the hunger of the crowd on board one of the vessels that the steward declared himself to be ‘eaten out’ in ten minutes after the vessel left Thames Haven,” said the News of the World:

"Margate Jetty was simply blocked so far as to be impassable, whilst thousands of excursionists who came down by rail wandered along the cliffs. How many may have gone down is impossible to say. The people arrived at Cannon Street and Charing Cross for Ramsgate at 8am and it was 10 o’clock before the surprised but active officials of the South Eastern could accommodate all their customers.”

Nothing was ever quite the same again, though the queues at railway stations have given away to exhausting queues around the M25 as people struggle to get away on a Friday afternoon for their extended weekends. Lovers escape by car. People propose to each other on bank holidays. People ignore the weather in their determination to have fun – and, often, they never forget it.

Now that a new tyranny is emerging which keeps us hard at work, at jobs we despise, because we are so heavily in debt to our landlords or mortgage providers - and especially now the government seems set on overturning the Sunday trading laws which protect small retailers against the privileges of the big ones - maybe we need to go back to the 1870s. And think again.

What would Lubbock do now to give people a bit of time off? Bank holidays don't really work in quite the same way because, these days, banks never sleep.

Once you put it like that, the answer is obvious. The equivalent now is not so much to close the doors of the banks for four days a year - it is to close down online banking during the holiday.

That refers back to the original idea. It would certainly shut down the economy, but it clearly isn't without difficulties. The question is - how would you close the payment system everywhere, except for the transport system? There you have me - I don't know the answer: perhaps it would encourage the use of electronic pre-paid purses for transport on bank holidays. What would you suggest?

Even so, bank holidays have become a key element of English culture - they are English saints days, in a sense, based on the worship of spare time. This isn't quite how I put it in the entry on bank holidays in my new book How to be English, but - now that spare time is an increasingly scarce commodity, except for the ultra-rich and those who retired in the days of final salary pensions - it ought to be an issue again.

Is it time for a Campaign for Real Bank Holidays?

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Thursday, 6 August 2015

The boneheaded conservatism of the BBC

You don't have to be what used to be called 'right wing' to be conservative.

Tony Blair made a speech in 1999 about what he called the "forces of conservatism". It wasn't perhaps clear then, as it is now, that he was part of these same forces himself in his deference to the most powerful player in any situation - political realism, taken to those lengths, is preternaturally conservative.

But the same is also true of his nemesis, Jeremy Corbyn. Harking back to the solutions and institutions of the 1970s - the CEGB, the Ministry of Prices and Consumer Protection, the DHSS - may seem fresh because it is all a long time ago, but it is just as conservative in its own way.

But, I fear, the most conservative of them all is the BBC - in its determination that the only political issue is the size of the state.

I found myself chewing the carpet with frustration over their coverage of the RBS sell-off - pitting a Treasury statement against one from Corbyn himself, and then leaving it lazily at that.

It doesn't seem to occur to the BBC political editors that the issue isn't that at all.  There aren't many of us, except for Corbyn, who want to keep RBS in state ownership forever.  Or even those who believe that every penny of the bail-out should be paid back.  

Why don't they understand that the main objection to George Osborne's plans are its sheer waste? Why do we want to return RBS to its tiny group of dysfunctional and corrosive financial giants - when nothing has been done to solve the basic problem? There are no local lenders capable of nurturing the UK SME sector. Every other European country bar Hungary has this; we don't.

The truth is that the besetting sin of the BBC is not left-wing bias, it is boneheaded conservatism.  See my chapter on the BBC in Eminent Corporations to see what I mean.

It was ever so. Once the General Strike hit them in 1926, the director-general Reith solved the problem as all his successors solved the problem after him, sooner or later. To stay independent, to avoid being ordered about by ministers, there really was only on strategy available – and that was to do what they were told. Preferably before they were told.

The Chancellor of the Exchequer Winston Churchill demanded that the BBC should be subsumed into his propaganda operation. The daily newspapers could not print. Only the BBC remained as an ‘objective’ source of news – but how objective could they be? 

Reith cleverly hitched his wagon to that of the more moderate Prime Minister Stanley Baldwin, and persuaded him to insert a short passage about into his broadcast about “longing and working and praying for peace”.

He also banned Labour speakers and any supporters of the strike from the microphone. With relief, nine days later, Reith was reading the news himself when the rumours emerged that the strike was over and the BBC had not succumbed to direct government control, at least formally.

“We do not believe,” he wrote afterwards, “that any other government … would have allowed the broadcasting authority under its control greater freedom than was enjoyed by the BBC during the crisis.”

Like a medieval church, the BBC’s inner priesthood came to believe that the defence of their independence was their predominant objective. Their right to inform and inspire, as they saw fit, to discharge the sacred duty of providing quality programmes, had to be unsullied by the dull compromises of politics. 

They were right, but this meant tiptoeing around politics. Indeed, it meant tiptoeing round everything. One early script by the poet and BBC employee Louis MacNeice even lost the sentence “Henry VIII had vulgar tastes” on the grounds that people might mishear it as “Edward VIII had vulgar tastes”. 

When in 2009 the BBC clung so much to the letter of their independence that they refused to air a humanitarian appeal for the victims of the war in Gaza, it was part of a long tradition of not quite seeing the wood for the trees.

It was no coincidence, therefore, that the BBC nailed its colours to the fence in the way that they did, and continue to. There would be flurries of exciting new projects and daring innovations and opinions. But otherwise, they would be enthusiastically, passionately, middle of the road. 

In fact, it was a key factor in their success with the public. People knew they would never be surprised, never shocked, never told anything that was too clever for them, never have an issue packaged for them with more than two sides, and they took the BBC to their hearts as a result, as their own beloved, predictable, dull-witted Auntie.

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Wednesday, 5 August 2015

Obscure? No, authenticity, Englishness, Enigma, Liberalism are all connected

Years ago, I was having lunch with my then American publisher who asked me – as American publishers tend to do – what I wanted to do with my life from then on. I said I wanted to write as many books as I possibly could.

I thought he would be pleased by this, but he wasn't. “Why quantity?” he asked. It was a good question.

I mention this because a number of people have mentioned to me over the past week (thank you, Simon!) that they were surprised at the range of subjects I was writing about.  I know they meant well, but it is rather a sensitive subject. The publishers certainly hate it. The bookshops prefer neat categorisations, and there is just a hint, the merest hint, that maybe I am dashing the things off in some way.

The thing is that, as far as I'm concerned, everything I write about is connected. It's just that, often, I'm the only one who can see how. So I thought I would maybe try people's patience with a blog post trying to explain how.

I have had two books published this month, both the result of literally YEARS of work. One is How to be English, which derives from a growing interest in culture, Englishness and class - and my own obsession with teaching my own children about their roots.

I wrote two non-fiction books which fed into this one – Broke (about the struggling middle classes) and Authenticity about the new way we were increasingly searching for a complex and, in some ways, problematic ideal.

With me so far? So how did I also end up publishing Operation Primrose, subtitled, ‘U110, the Bismarck and the Enigma Code'?

The answer is that I first became interested in Alan Turing when I was writing Authenticity, and because I was increasingly interested and critical of the Turing Test when I wrote about the future of organisations in The Human Element, with what I regarded as a healthy scepticism about IT systems in public services.

Turing himself, I think, would have understood this concern, but I'm not sure his true believers do. So I wrote a short biography of Turing which was published early last year.

Writing about Turing took me seamlessly into writing about Enigma, and I've always been passionate about naval history. But Operation Primrose in some ways brings me full circle.

Because once you put the Enigma cryptographers back into context, and realise that Turing, Knox and their colleagues were in hour by hour conflict with Wilhem Tranow and his colleagues at Bletchley's German rivals B-Dienst – and that Tranow succeeded in cracking the British wartime naval code as early as 1935 – you then start wondering about the really big question.

Which is this: why did one side win and one side, despite these huge advantages, lose?  It seems unlikely to have been greater courage, especially given the fatality rate among the U-boat crews. Why did one side’s systems of intelligence and code-breaking win out in the end? Why did democracy trump the so-called efficiency of technocracy?

And the answer it seems to me has lessons for us now – because systems which share knowledge tend to win out over systems which hoard it. Informal systems tend to win out over formal ones. Sceptical ones prepared to tolerate difficult people asking difficult questions tend to win out over systems that tend to blame every setback on traitors.

In the end, the real story of Enigma raises questions about political and organisational structures that are very relevant to today. That's why I wrote the book. See what you think.

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Tuesday, 4 August 2015

The new 'human' megatrend. Not before time.

I was looking back at the introduction I wrote to The Human Element, eventually published in 2011 but inspired by the dysfunctional approach to public services by the Blair-Brown regime (the real New Labour 'virus').

This is what I wrote about the prevailing fear of human error:

"We live in a world which believes two contradictory things at the same time: we must set people free to innovate to make things work, but we must control them tightly to make sure they don’t make a hash of it. We believe both these even though we can see the consequences all around us, and even though in practice they cancel each other out. We believe in people’s skills but we are terrified of their ability to mess up. It’s a perfectly sane position – both thoughts are true – but, in practice, this is a destructive contradiction which simply stops things working as they could. It is the reason for so much frustration....


"Nobody wants to live in a world without processes. We don’t want to make it all up again from moment to moment. But the truth is that it is this very distrust of the human factor by the technocratic systems that run our lives that is the real problem. It is true that humans make mistakes every day, especially when they are tired or unhappy. They don’t fit neatly into the required categories. But they also possess the most extraordinary abilities, and do so from birth. They learn to live, to bring up children, to lead – most of them – generally happy lives where they fall in love and make things happen, and they do so every day.

"Human beings do cause mistakes, but they also deal with human complexity better than any machine. We are in danger of forgetting one of the most important truths about the world: the human element may be a source of error, but it is also the only source of genuine change."


I apologise for such a lengthy quotation. The reason for doing so is the latest cover story of Fortune magazine, which carries the headline 'Humans are underrated'

This turns out to be based on a book with the same title by the most forward-thinking of all Fortune's writers, Geoff Colvin, with the subtitle 'What High Achievers Know That Brilliant Machines Never Will'.

It seems to me that there is something emerging here.  Colvin's book is about business, making the point that actually the skill shortage is not going to be coders - whatever it might seem now - but people with empathy, who can build relationships and make things happen.

My book was about organisations, and especially public services.  There is also Steve Hilton's new book More Human, which says similar - or at least related - things about public policy.  All of us are, in one way or another, standing on the shoulders of Bryan Appleyard.

The point is that machines are now superior to humans for most practical tasks. That is an economic problem and challenge - there will need to be some other way of providing people with the basic necessities. But it also puts the spotlight on those skills which we have downgraded - the human ones.

Colvin ends like this:

"For the past 10 generations in the developed world, and shorter but still substantial periods in many emerging economies, most people have succeeded by learning to do machine work better than machines could do it. Now that era is ending. Machines are increasingly doing such work better than we ever could. We face at least the opportunity to create new and better lives.

"Staking our futures to our profoundest human traits may feel strange and risky. Fear not. When you change perspectives and look inward rather than outward, you’ll find that what you need next has been there all along. It has been there forever. In the deepest possible sense, you’ve already got what it takes. Make of it what you will."

What I find infuriating is that, as the most successful corporations are discovering how this relates to success, our public services - still in the grip of McKinsey-inspired Taylorism - are still peddling the old suspicion. No wonder services have got so expensive.

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Monday, 3 August 2015

It is time to prevent the RBS sale. This is how.

The whisper in the Sunday papers was that George Osborne will start the process of selling off the state owned RBS some time today, with an independent investigation into how it might best be achieved and the best timetable - it is far too big to sell all at once.

Now, this is a more important issue than it might seem at first sight.  The government has an obligation either to get back the money they originally spent bailing it out - or to convert it in such a way that RBS can play a useful role.

Small business lending is still flatlining in the UK, despite the recovery - unlike the rest of Europe - because we lack banking institutions capable of providing the support to SMS, as practically every one of our European competitors do.

This is how the Economist celebrated a new bank in the USA, only the second in the past five years:

"The resultant dearth of bank startups is troubling. Although small banks accounted for just 22% of all bank lending in America in 2014, they held 51% of all small-business loans and 77% of all agricultural loans, according to a study from Harvard University. That is partly because their loan officers can use their personal knowledge of a borrower and the local economy to evaluate credit risk."

I couldn't have put it better myself, yet the UK has virtually no small banking sector to account for half of our small business loans.  The new government can't see the link between the dearth of small banks in the UK and the dearth of middle tier companies.

So if Osborne is determined to sell RBS off, just to go back to the good old pre-2008 dysfunctional gravy train, that's important.  It would mark the reversal of the coalition's attempt to rebalance the economy. It is a destructive slap in the face for beleaguered SMEs. It is an anti-business measure.

It is also a test of the question of whether the new parliament, and the new Lib Dem leadership in particular, is able to act effectively and decisively to make sure that - whatever happens to RBS - it starts to serve the SME sector.

The sell-off is only possible if investors want to buy and, I expect, the more they know, the less they will want to. So here are seven questions I would ask, and quickly:

1. Will the Chancellor publish the advice on whether RBS is viable that he has been receiving from the Treasury - and if not, why not?

2. How will losing £7bn to return RBS to its old dysfunctional state going to do anything to rebalance the economy?

3. Will Osborne wait until the elusive report on RBS' 'vulture' operation, feeding off the small businesses that came to it for help, before off-loading the company?

4. Will he consider, after the first tranche is sold, restructuring RBS along regional lines to provide some kind of diversity in the UK banking market?

5. If he doesn't come clean about the real state of RBS finances, or the future fines, then how can he honestly sell shares - except below their market value?

6. Alternatively, has the Treasury considered Nick Goodway's plan to sell it one third to investors, one third to customers and one third to staff - and if not, why not? A John Lewis approach would also bring a little diversity and real competition to the banking market.

7. Failing those solutions, how does he intend to speed up the glacial progress towards a diverse banking system that is able to support UK business?

It so happens that the official opposition's attention is elsewhere at the moment, and may be permanently, so the opposition is going to have to be led in Parliament by Tim Farron and Caroline Lucas.

In particular, it is an opportunity for the Lib Dems to make the small business agenda their own, as they should have done long ago.

My impression is that people are desperate to see politicians working together on this, and many other urgent issues where Parliament has to be forged into an effective instrument to make things happen - rather than just a backdrop to the posturing of opposition campaigns.

In the meantime, if there is anyone out there in a position to know the real financial state of RBS, I hope you will get in touch with someone in Parliament, or with one of the key journalists associated with the issue, immediately.

I hope then that we might convert RBS into an effective lending institution, supporting the UK economy, not corroding it - before it is too late.

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