The perigrination in the catacombs

John Maynard Keynes talked about life without the means of exchange as "a perigrination in the catacombs with a guttering candle".  Now that the European banks are stuffing their money into their reserves and governments are committed to spending as little as possible, that perigrination seems worryingly closer.

This is what we can do:

http://neweconomics.org/blog/2011/12/21/how-to-avoid-the-peregrination-in-the-catacombs

The extra costs of the big IT systems

My book The Human Element came out last month and it has been fascinating how people have responded – I got a Facebook message last week from a doctor in New Hampshire explaining how the fake efficiency being peddled by managers at her local hospital was adding to costs.

Then sometimes I run slap bang against new evidence myself. Because I hadn’t until last week used the new NHS Choose and Book appointment system.

The first I knew that I was using it was a letter asking me why I hadn’t called them up to book my appointment with a consultant. I hadn’t in fact received the original letter from my doctors, but didn’t know that at the time.

I called their appointments line. They couldn’t talk to me because I didn’t have a password.

Now I’ve recently been refusing to accept passwords. I have vast numbers of them already for every public and private agency I deal with. It means I have to keep them in a notebook.

Far from making my identity more secure, it is actually making it less so – like the phenomenon of people putting their daily password on a post-it note on their office computers.

So I said I wasn’t accepting any more passwords. Long conversation with the manager who eventually put the phone down on me. Stand off. They said I had to get back to my GP. My GP’s receptionist said I had to go back to the appointments line.
I felt excitingly embattled, but my resolve crumbled when I got my GP on the phone. I don’t want to make her life any more difficult, after all, so I meekly accepted my password.

It is (surely you’re not going to publish your password? I am, really, it’s no use to me) ‘estate tomato’.

The magic words finally got me through the appointment system phone line. They gave me another number to call, which got me through to King’s College Hospital. There a very nice lady said they would send me an appointment date in the old way.

I asked why that required a password like estate tomato and four phone calls. She said that, in practice, the new Choose and Book appointment system – imposed at vast expense by one of the ubiquitous IT consultancies – was so useless that they had opted out.

Why was it so useless? Because as students of the systems thinker John Seddon will know, these centralised IT solutions can’t deal with diversity. They are inflexible and therefore lock in costs.

Was there really a problem of people not being able to prove their identity under the old system? People stealing each other’s hospital appointments? I don’t believe so, yet the IT consultants have clearly made out that there was.

Maybe you need extra safeguards if you have a huge national system. It is another way that big scale solutions lock in costs.
So here we are, another way in which the legacy of New Labour still infects Whitehall. A more expensive system which works less well than it did before because it rules out informal solutions – very urgent appointments, anything which requires face to face judgement.
Inflexible solutions means higher costs. No wonder the deficit is rising.

What can we do? Well, we can refuse to accept any more passwords, but – I have to admit – I failed on this score at the first hurdle. I’ll do better next time.

The perils of payment by results

Payment by results, much beloved of the coalition - good idea in principle.  The trouble is that Whitehall has not really grasped what went wrong with their targets regime and therefore don't understand the perils of their new payment by results regime, as I discovered during a seminar in a Whitehall department last year.

The real problem is that payment by results will inevitably end up with targets again, as I explained in the new edition of Local Economy journal:

http://lec.sagepub.com/content/26/8/627.full.pdf+html

Why Clegg was right to choose Popper

Imagine yourself in the coffee houses of 18th century Edinburgh, in the elegance of the New Town when it really was new, the civilization of those paved streets, and the intellectual excitement of the Scottish Enlightenment.

It was there that the philosopher David Hume first cast doubt on scientific method, peering at ideas about what causes what and finding there was nothing there. All you can do, he said, is say that events tend to happen together.

Yet, if we can see nothing causing things under the philosophical microscope, that hands the scientists a big logical problem. It doesn’t matter how many times they do an experiment, or watch the sun rising bang on time, it doesn’t mean these events are any more likely to happen tomorrow.


Two centuries after Hume was writing in Edinburgh, the Viennese philosopher Karl Popper, a refugee from the Nazis, came up with an interim answer. But, more importantly, he also applied it to politics and organizations. You may not be able to prove what you believe about the world, no matter how often an observation or experiment takes place, but you can disprove it.

Popper used the example of swans. It doesn’t matter how many white swans you see, it still doesn’t prove that all swans are white. But if you see a black swan, then you know they are not.

Popper was writing during the Second World War, his home city was in the hands of totalitarians, and he quickly found himself applying this insight to politics too. In doing so, he produced one of the classic 20th century statements of philosophical liberalism, The Open Society and its Enemies (published in 1945).

He said societies, governments, bureaucracies and companies work best when the beliefs and maxims of those at the top can be challenged and disproved by those below. This has huge implications, not just for effective societies, but for effective organizations too.

Popper was flying in the face of the accepted opinions of the chattering classes at the time. They may not have liked the totalitarian regimes of Hitler or Stalin, but people widely believed the rhetoric that they were somehow more efficient than the corrupt and timid democracies.

Popper explained why they were not and why Hitler would lose. Anybody who has read Antony Beevor’s classic account of the Battle of Stalingrad, and the hideous slaughter and inefficiencies brought about by two centralized dictators who had to take every decision personally, can see immediately that Popper was right. Real progress required ‘setting free the critical powers of man’, he said.

The possibility of this challenge – in what he called ‘open societies’ – is the one guarantee of good and effective government or management. Those human beings at the front line, those most affected by policy, will always know better about their own lives or their own work than those at the top.

Open societies can change and develop; closed societies can’t. Hierarchical, centralized systems, by their very nature, prevent that critical challenge from below.

Why this rant about Popper?  Because he is the critical Liberal philosopher of the twentieth century.  I kept saying so during the process that produced the Liberal Democrat philosophy document It's about freedom, but still failed even to get him a name check.

But also because he is the central figure of Nick Clegg's important speech today on the open society to Demos (though again Popper only gets one name check).  The speech is vague about Popper, vague about precisely why Popper said open societies work and closed ones grind to a halt, but it chooses exactly the correct philosopher - exactly the right underpinning to make Liberalism distinct now.

It is also, as it happens, the philosophical justification for Liberal-style localism - it is about "setting free the critical powers of man".

The critical importance of geographical place

It hardly matters what kind of policy meeting it is, it's always the same when you talk about community.  Someone will pipe up and talk about the shift to virtual communities, or communities of interest.

Which is true, of course - but only up to a point.  Localism is impossible without real geographical communities.  So are most solutions to social problems.  So are most public services.  But at last politicians are beginning to remember the importance of place, and among them is Nick Clegg:

http://www.neweconomics.org/blog/2011/12/15/the-vital-importance-of-place-for-re-growing-economies

Money: why the UK political classes are deaf to the problem

Why is Merkozy so jealous of the City of London? Isn’t it obvious? It’s because:

1. It is so focussed on short-term fluctuations that it corrodes the value of businesses that think ahead (a nasty continental habit).

2. It allows a handful of none-too-bright traders to spend £70,000 on an office Christmas lunch, using profits won from betting against their fellow countrymen (that’s competition, right?)

3. It completely ignores the financial needs of the businesses of the future (why should we want hundreds of tiny banks investing in every community like the French and Germans – that’s socialism, isn’t it).

4. It sucks talent and investment from the productive economy (that’s the modern way).

5. Every generation or so, it requires bailing out, using most of the tax revenues generated from their activities (that is the unfortunate consequence of buccaneering Anglo-Saxon risk taking).

Yes, it is dysfunctional. Yes, it is corrosive. Yes, it does immense harm to real, productive business all over the country – and pays £53 billion into the exchequer so that its leading members are allowed to carry on getting repulsively rich. But at least it’s British. It must therefore be the Envy of the World.

All of which explains a little about why Sarkozy and Merkel and their colleagues are jealous of Britain’s financial sector. The answer is: they’re not – but they would prefer not to let the City of London corrode their economies like it corrodes ours.

But (seriously now) there is a pattern here which needs articulating.

The criticism which the new economics levels at the City of London, and the rest of our supremely dysfunctional financial service sector, is not understood by the political classes – not even really heard.

We are not arguing that the City is privileged (though it is). Nor are we just arguing that it isn’t fit for purpose (though it clearly isn’t). We are saying that it is actively corroding the UK economy.

Why do the chattering classes not grasp this, and thereby see David Cameron’s ‘veto’ a little more clearly?

The answer, I think, is that they assume the arguments about the City are traditional UK political arguments – that they derive from class envy – and they therefore discount them.

It is precisely the same with two other crucial arguments about the economic future of the nation.

We are not complaining that the concentration of economic power in a handful of mega banks because of class envy – we are saying they are actively failing the UK economy.

We are not complaining that clone town mega-retailers dominate too many regional economies because of class envy – we are saying that they are actively dismantling local economies.

The mainstream media, including the BBC, are so stuck in the traditional UK political groove – the game the political classes play with each other – that they don’t hear the argument.

Nor do they hear the real debate about the City, because they assume it is a familiar move in a familiar game: Britain versus the continent, the UK versus Brussels, England versus Rome.

Somehow we have to break through this political complacency. If we want a thriving economy, somebody is going to have to tackle the City so that it does what it says on the tin – providing finance to new business and innovation.

Someone is going to have to tackle the banking oligopoly so that we can have the benefits of an effective local banking infrastructure that they enjoy across most of the continent.

Someone is going to have to tackle the huge privileges given to supermarkets so that we can have thriving local economies.

The bottom line is this: why should Britain have a more dysfunctional economic infrastructure than those on the continent? Why do we allow it?

Cameron wields veto to defend Fred the Shred and a dysfunctional City

It is a depressing thought that David Cameron has ridden into battle in Brussels in defence – of all things – of the conglomeration of short-termism, bonuses and economic corrosion represented by the City of London.

One of the few benefits to the UK economy of the euro crisis might have been that the European Commission would have stirred themselves into some kind of financial reform.

We have lived too long with a dysfunctional City, sucking up capital and talent that might have been used productively.

Sadly, we are going to carry on doing so.

Cameron was stirred into sacrificing the euro rescue on the altar of the City by a brilliantly timed, but mistaken, report by the think-tank Open Europe.

Earlier this week, their report Repatriating EU Social Policy warned in mildly hysterical terms that the City of London was in danger from EU regulations in the pipeline.

It made a series of debatable assumptions and knitted them together into a nationalistic panic, which deserves more critical scrutiny than it is currently getting.

The report made front page news, especially in London, where – as usual – they wheeled out City of London MP Mark Field to harrumph like Colonel Blimp in a Turkish bath.

The trouble with its two major assumptions is that neither is correct:

Assumption #1: That the City of London, as presently constituted, plays a crucial and important role in the UK economy.

Assumption #2: That the current EU proposals on financial reform are designed to stifle Britain’s financial sector.

Yes, the City pays £53 billion in taxes, which is certainly important, and would be a sign of UK economic success if this came from the City playing a useful role nurturing and supporting the real economy – but, as it currently stands, it signally fails to do so.

The tragedy is that the City has become a huge engine designed for its own self-aggrandizement, vacuuming up the talent and resources out of the UK’s economy in order to make its key figures immensely rich.

It is allowed to continue this largely useless work of enriching itself purely by paying large sums to the exchequer. Any threat to its privileges, and everyone looks at their tax revenues and leaves them alone.

Or vetoes European treaties.

As a result, we are stuck in the UK with an ineffective engine of economic development, when other EU nations – the ones Open Europe believes are so jealous of us – have effective engines.

As a result, our enterprises and entrepreneurs are starved of the credit they need, our communities are abandoned when they most need financial infrastructure, and our best and brightest dedicate themselves to a life of corrosive speculation rather than long-term investment.

The rhetoric around the Open Europe report also implies that this is somehow based on pique and jealousy on the part of the nations of the eurozone.

In fact, France and Germany and many of the others, already have a thriving and stable local banking network that is able and prepared to invest in their entrepreneurs. We have a dysfunctional, highly centralised oligopoly which is neither.

So when the EU bring forward proposals to break up the cosy monopoly of big accounting firms, or to tax speculative financial transactions – both ideas that would enormously benefit the real economy, not just in the eurozone but here in the UK – we should support them vigorously.

Not to do so will tragically entrench a dysfunctional UK economy and a City dedicated to speculation rather than real investment.

History will look back at Cameron wielding his veto as a huge opportunity missed.  The bottom line is this: Britain's interests lie in financial reform.

Partnership banking: how to make our banks fit for purpose

It really is extraordinary how long this debate is becoming.  We have a highly centralised, dysfunctional banking system.  Most of our trading partners also have an effective decentralised local banking system as well, fuelling their economy.  We don't. 

It isn't really rocket science, yet there is David Cameron weighing into Europe to defend what our corrosive City institutions which - apart from paying a humungous amount of tax - don't do the job they are required to do.  Worse, they suck imagination, energy and investment away from productive local economies.

But maybe the answer lies in something a bit like the Bank of North Dakota:

http://www.neweconomics.org/blog/2011/12/08/making-banks-fit-for-purpose

The lamps are going out all over Europe - if we let them

Yes, a new European treaty that will enforce effective fiscal union may save the euro - and save our economies for a while.  Certainly the alternative is a frightening prospect.  But the consequences of tightening the euro screw in the euro zone may also be terrifying and far-reaching, because - although a common European currency is a civilised and importat idea - a single currency was always a flawed concept:

http://www.neweconomics.org/blog/2011/12/07/the-lamps-are-going-out-all-over-europe-if-we-let-them

Whe we need to build homes - and give them away

Is it possible that Mrs Thatcher was half right about housing?  Whether she was or not, the current price of homes condemns both partners in many couples to 25 years of indentured servitude, cut off from their families, working at jobs they despise.  The time has come to build new homes and then give them away:

http://www.neweconomics.org/blog/2011/11/21/why-we-need-to-build-homes-again-and-give-them-away

Are there better kinds of efficiency?

And while we are about it - on the 200th anniversary of the start of the Luddite campaign - was there anything we might learn from the Luddites before we consign them to another century of oblivion?  Fro example: the critical importance of real human beings in our public service systems.

That is what I said at the recent RSA debate with Halima Khan and John Seddon, and this is the audio of the debate:

http://www.neweconomics.org/blog/2011/11/18/audio-is-there-a-better-kind-of-efficiency

Buy the Human Element...

What to do in the case of economic armageddon

Policy-makers have ben talking about economic armageddon.  That is strong stuff.  Of course, we don't need to worry because David Cameron has asked the Treasury - the high priests of There Is No Alternative - to look at contingency plans.

Luckily, I had some time on my hands so I've given them a little help:

http://www.neweconomics.org/blog/2011/11/14/how-to-prepare-for-economic-armageddon

The missing explanation for public service failure

Because New Labour 'reform', in practice, meant excising the human element, imposing sclerotic and centralised IT systems and driving out the most effective people from front line positions:

http://www.libdemvoice.org/david-boyle-writes-the-missing-explanation-of-public-service-failure-25847.html#comment-187949

Can Europe survive a Napoleonic euro?

I'm one of those Liberals who was sceptical about the euro from the start.  Not because I was sceptical about Europe - quite the reverse: it seemed to derive and encourage Europe's darker side.

I even said so in a speech to the Lib Dem conference in 2000.  I can't find that now, but just over nine years ago, I gave the New Economics Foundation's Alternative Mansion House Speech at the Old Bank of England pub in Fleet Street, warning that the euro was like the disastrous 1925 return to the Gold Standard – an illusion that currencies were based on real, objective values.

We at nef warned then, and in our pamphlet that same year, that the euro could lead to fascism in the outlying areas of Europe.

This is what I said in 2002:

Let me say quickly that I'm a convinced European. I am not a Europhobe, still less a xenophobe. But there is still a fundamental problem at the heart of the euro, and any currency based on the idea that money's the same everywhere, like gold. And it's this: single currencies tend to favour the rich and impoverish the poor.

They do so because changing the value of your currency, and varying your interest rate, is the way that disadvantaged places can make their goods more affordable. When you prevent them from doing that, you trap whole cities and regions - the poorest people in the poorest places - without being able to trade their way out.

Now of course the USA has one currency. So does Britain. But if we're honest about it, we know that hasn't been satisfactory either - because central banks set their interest rates to favour their capital cities. Eddie George admitted as much on the Today programme just before Christmas.

Look at the great gulfs between rich and poor in the USA. Look at the plight of cities like Detroit or states like West Virginia. And over here, look at the way interest rates are set to suit the City of London, while the manufacturing regions of the north struggle as best they can.

Across a continent, the effects are so much worse. That's why Ireland's economy has been overheating, while east Germany's is languishing in poverty. That's the danger of the euro as presently arranged, and don't underestimate it. It means success for the cities that are already successful. It means a real struggle for the great reviving cities like Newcastle and Sheffield. It means a potent recruiting ground for Jean-Marie Le Pen.

Different cities, different communities, value different aspects of life. And single currencies are not the universal measuring rods they claim to be.

So common currencies, yes – that is the logic of European integration. But single currencies are Napoleonic projects which inevitably require iron control if they are not to spiral out of control, as this one is doing.

The real question, now that the euro is being re-organised, is this: can a civilised and peaceful Europe survive that kind of Napoleonic control where the rich countries are so favoured by the currency?

Read more...

How the campaign is growing against defunct economics

Something is going on out there.  The death knell of our current narrow and useless version of economics seems to be tolling - when economics students walk out of their lectures in Harvard, you know something is up.

http://www.neweconomics.org/blog/2011/11/07/how-the-campaign-against-defunct-economics-is-growing

Why the protesters are going to win - in the end

Because neither Labour nor Conservatives now represent the middle classes, and - although the middle classes may not identify with the Occupy protests - they do feel furious, not just with the banks but with our extractive financial system. 

Labour and Conservatives - and let's face it - much of the Lib Dems remain trapped in the old paradigm, that somehow wealth must trickle down, when it quite patently trickles up.  No political force is prepared to take on the financial system and hammer out ways of making it humane and effective.

But what the middle classes want, they tend to get:

http://www.neweconomics.org/blog/2011/11/02/why-the-protesters-are-going-to-win

Why the St Paul's protest is significant

The vote on Any Questions on Friday night, broadcast from Newcastle, suggested that at least half the chattering classes are in favour of the protests in so many cities now against the disastrous financial status quo – including the one next to St Paul’s Cathedral in London.

I certainly am, despite the pompous dismissal of them by both the Labour and Lib Dem representatives on the Any Questions panel (sorry, Jeremy, but you were).

That doesn’t mean that I am somehow against the Church of England or the cathedral authorities, who – sticking to the terrible advice they have been given – have now given the go-ahead for eviction.

So we felt that the best way we could demonstrate this was by visiting the camp and also going to choral eucharist in the cathedral. I don’t suppose anyone on either side understood the significance of my family, and my two small boys, being present in the cathedral, but there we are.  It felt good at the time.

Seen side by side, there is no doubt that St Paul’s wins the battle for beauty. The tent city outside, though it is scrupulously well-organised, clean and litter-free, is not beautiful. Nor did I get much encouragement from the deadly discussion on political correctness from the camp’s ‘assembly’ on the steps.

But I did get to hear the excellent sermon, suggesting – in a distinctively Anglican way – that the real question is not what Jesus would have done, but what is he doing now? I don’t know the answer that that, of course, but suspect that he will be providing challenges from unexpected directions and people that will jolt us out of our complacency.

That is why I believe the camp represents an important challenge. Not just the one at St Paul’s, but the one in Denver which was pepper-sprayed by police over the weekend, not to mention the protests in Syria which this movement is part of – confronting the tyranny of finance over life.  The Arab Spring was always about economics at least as much as it was about democracy.

Also on the steps of St Paul’s, I ran into one of the great names of the new economics, who I won’t quote by name because I haven’t asked him. But he set me thinking about what Gandhi would have done, and suggested it would have been to encourage camps everywhere outside churches.

This is not to confront the churches. The churches are not the enemy. But it would be to challenge them to show the leadership they should be showing, understanding the urgency and overwhelming nature of the issue. It is a challenge to the churches, like Luther’s 95 Theses, to take their rightful place in the lead of the campaign against usury.

Will they rise to the occasion?  On present evidence, probably not.  But this is just the beginning.

At last, Carey speaks a little sense

There are always one or two people in public life who are a kind of touchstone.  They only have to open their mouths and you find you disagree with them.  Michael Howard, for example, and don't let's forget Polly Toynbee.

Former archbishop George Carey was another.  But, would you believe it, he has said something which I emphatically agree with, in his article about the St Paul's protest, and the moment when the cathedral gave sanctuary to the protesters.  He wrote:

"For countless others, though, not least in the churches, this was a hopeful sign that peaceful protests could indeed take place at a time when so many civil liberties have been eroded. Furthermore, it demonstrated that the Church is willing to play a sympathetic role in the lives of young people who are drawn to a movement calling for economic justice.

"However, after their initial welcome to Occupy, the cathedral authorities then seemed to lose their nerve. In daily-changing news reports, the story see-sawed between a public debate about the merits or otherwise of the protest, the drama of internal disputes at St Paul’s over lost income from tourists, and the ill-defined health, safety and fire concerns that caused it to close its doors to worshippers.

"One moment the church was reclaiming a valuable role in hosting public protest and scrutiny, the next it was looking in turns like the temple which Jesus cleansed, or the officious risk-averse ’elf ’n safety bureaucracy of urban legend. How could the dean and chapter at St Paul’s have let themselves get into such a position?"

Good question.  Sadly, Carey gets almost as muddled as the cathedral authorities as the article continues, talking about 'anarchist protesters threatening the right to worship'.  For goodness sake, how does he work that one out?

But I absolutely share Lord Carey's frustration with the church over this issue, and especially when it comes to the Bishop of London's intervention, claiming that the protests are a 'distraction' from the cathedral's own role in building a dialogue with the bankers and financial world.

It is fine, and right, that the Church of England should have a dialogue with the financial world.  But if this is the only tone of voice they are prepared to use against the tyranny of finance over life - the most important and urgent threat to civilisation - then they are not living up to their role of the body of Christ in the world.

Worse, Dr Chartres implies somehow that the church is some kind if ineffable BBC, endlessly balanced and unbiassed on every issue, however desperate.  As Churchill once said to the BBC: how can you be unbiassed between the fireman and the fire?

Why we need to rediscover the human element in public services

And if we don't, we can expect them to get much less effective and much more expensive.  It's time to call a halt to inappropriate systems, huge centralisation by IT and the marginalisation of the ability to make relationships with clients.  It also means smaller-scale institutions:

http://comment.rsablogs.org.uk/2011/10/25/rediscovering-human-element/

St Paul's: where would Jesus pitch his tent?

Where would Jesus pitch his tent in the stand-off outside St Paul's Cathedral, I wonder?  Well, I know one thing - he is unlikely to have prioritised health and safety:

http://www.neweconomics.org/blog/2011/10/25/st-pauls-where-would-jesus-stand

St Paul's and the moment to decide

"Mony, mony, get money still –
Let virtue follow if it will.”

That was what William Blake said he heard when he listened to the sound of London.

When you listen to the City of London now, with its subsidised banks and their lights blazing all night – the very centre of the global financial engine – you wonder whether there are any other noises at all. Certainly any spiritual noises.

The mosque in Whitechapel, just outside the City, has nearly 25,000 worshippers on its books; many of them attend four times a day. Compare that to the echoing dusty, baroque churches of the City – a symbol of the spiritual bankruptcy that goes hand in hand with the power of finance.

I am not at outsider in this. I am a baptised and practising member of the Church of England, so when the cathedral authorities at St Paul’s invited the protests to stay, it did seem for a moment as if the church had woken from its long moral doze.

It seemed to be sole recognition that the church was aware of the critical importance of these issues, not just for spirituality, but for the future of civilisation – which would be in doubt in the event of a full financial crash.

It was a recognition of a historic moment of decision – that the church understood that the financial world is vacuuming up the wealth, not just from London but from around the world. A belated acknowledgement that our financial institutions are actively impoverishing the globe.

Now they have closed the cathedral.  The Blitz closed it, and now apparently its that modern catch-all 'health and safety'.  None of the other surrounding businesses have closed, but the cathedral has - which strikes me as just a little pathetic.  The moment of decision has arrived and they close the cathedral.

So while the cathedral authorities are right that St Paul’s is bigger than the protesters, that is only the case if the church rises to the occasion. It is not the case if they continue, ostrich-like, to ignore what has been happening in the tyranny of finance over life.

I understand the inconvenience.  I understand that, from an administrative point of view, it is awkward having tents within sight of their tea rooms - just as they did in medieval times at the gatherings at St Paul's Cross - but once to every man and nation/comes the moment to decide.  This is theirs.

The Great Tom bell

Every so often, you run across an amazing and forgotten story that you know has to be preserved.  I just did.  So let me tell again the strange story of John Hatfield, the sentry at Windsor Castle.
I'm not sure what year this was, except that it was during the reign of William and Mary and Hatfield was born in 1668.  It was almost certainly sometime around 1690, when he was court-martialled for falling asleep on sentry duty on the terrace of the castle.

At his trial, he vehemently denied it, and to prove he had been awake at midnight - when he was accused of being asleep - he said he had heard something very strange.  Far across the countryside of the Thames Valley, he had heard the Great Tom - the bell in the tower opposite Westminster Hall - chiming thirteen times.

Needless to say, this story did not go down well with the court.  In fact, as far as they were concerned, it tended to prove his guilt.  He was condemned to death.

Before the hanging could be carried out, over the next few days, the news of his claims reached Westminster.  Several people swore that, on the night in question, they had also heard the Great Tom stirke thirteen.  It was a peculiarity of the mechanism caused by the lifting piece holding on too long.  It seemed highly unlilely that Hatfield could have heard it as far away as Windsor, but the fact that he did proved his innocence.  William III pardoned him.

I don't know what happened to him later - it would be good to find out - but he died at his home in Glasshouse Yard, Aldersgate, on 18 June 1770, well into the reign of George III, at the age of 102.

The Great Tom was an ancient thirteenth century bell, which used to be known as Edward, until the Reformation.  Inscribed on the side were the words, in Latin:

'King Edward III made and named me

So that by the grace of St Edward the hours may be marked'


The bell tower was demolished in 1698 and the bell sold to St Paul's Cathedral.  On the way there, it fell off its wagon at Temple Bar and cracked, was left in a shed in the cathedral for some years and was eventually recast in 1709 - in Whitechapel, the bell foundry which still exists - and hung in the bell tower of St Paul's where it sounds the hour.

It is also used to toll for the deaths of members of the royal family, the Bishop of London, the cathedral's dean or the Lord Mayor - but only if he dies in office - but that, as Rudyard Kipling might say, is another story.

Actually, we know why things work or not

Why don’t organisations and systems work? Well, they do, of course – and our own experience confirms why they work and why they don’t.

We know perfectly well that any human systems that work have as my friend Pat Brown put it, “a personality behind them”. We have seen the efforts of individuals in schools and hospitals transforming the lives of those around them.

We know from our personal experience that if you employ imaginative and effective people, especially on the frontline, and give them the freedom to innovate, they will succeed. If you don’t, they will fail.

We know that, but for some reason when we rise up in the policy world something happens – maybe the cacophony of IT consultancies at our door – and we forget it. As a result, for the past generation, we have been engaged in a process that removes the human element from our public services.

Of course human beings are fallible. But they are also the only real source of success and the only source of genuine change. Removing them is increasingly expensive and wasteful, because our institutions are that much less effective.

That is the idea behind my new book The Human Element: Ten New Rules to kickstart our failing organisations.

It suggests that services and organisations are failing because conventional ‘efficiency’ destroys that human contact and human relationships that make things work. It suggests it is one reason why – far from slaying Beveridge’s Five Giants – they come back to life again every generation and have to be slain all over again.

I first realised this years ago at a conference on extended schools. The first speaker was an amazing headteacher, Debbie Morrison, then the head of Mitchell High School in Stoke on Trent, who is the first story in the book.

She told the dramatic story about how the school had been turned around, and also her first day in post.

There had been a commotion outside her office and her secretary warned her not to go outside. One angry parent had recently hit another member of staff around the head with a pair of muddy shorts.

Three years on, another angry parent was head of their anti-social behaviour unit. Her friends had also taken responsible roles around the school.

Debbie Morrison is one of those people who has a genius at making relationships with people and making things happen.

After she sat down, the next speaker at the conference was the civil servant charged with rolling out extended schools across one of the regions.

It was clear within a minute or so that he would fail – and for precisely the same reason that Debbie Morrison succeeded.  He thought in terms of systems, KPIs, targets and guidelines. But he missed the one crucial ingredient that made the difference between success and failure. The human element, in other words.

The Human Element is the result. I think it’s the most important book I’ve written, and covers everything I’ve been thinking since Authenticity was published in 2003, and draws some conclusions about what that means for the kind of organisations we need to run our lives.

"David Boyle is a modern sage and this book is a business and organisation classic setting out the core of his insight and wisdom. You will feel better just reading it. You will do better by acting on it."

Ed Mayo, Secretary General, Co-operatives UK

Find out more    Buy the book

Why we need Matt Taibbi's rule on bank lobbying

Rolling Stone's outspoken financial commentator Matt Taibbi has proposed a rule that forbids banks that have accepted public money to bail them out from employing lobbyists.

This is why we need the rule as soon as possible:

http://www.neweconomics.org/blog/2011/10/17/the-taibbi-rule-on-bank-lobbying-we-want-it-now

Why is NHS care so inhumane if you're old?

I had to share James Naughtie’s astonishment at the responses of the Sandwell NHS Trust chair this morning.  As if somehow more training and new systems were really an adequate response to the appalling news about care of older people in the NHS.

It really is extraordinary that the care is now so bad in a fifth of all UK hospitals that they are breaking the law – not feeding patients, not helping them go to the loo, and a range of other abuses.

We need some kind of working explanation for the complete disappearance of the public service ethos. Geriatric care has never been good, and there have been very dark corners even recently, but this ubiquitous disdain bordering on cruelty needs some explanation.

Baroness Neuberger’s excellent book Not Dead Yet provides a fascinating insight into why some institutions feel human and some don’t, and – at least in the NHS – it doesn’t have anything to do with money.

In her book about older people, she described with horror how her uncle was neglected in three of the four hospitals in which he lived his final weeks. She explained that the one exception was also the hospital which was most cash-strapped:

“When my uncle eventually died, in the hospital which really understood and respected his needs and treated him like a human being, there were volunteers everywhere. In contrast, there was barely a volunteer to be seen in the hospital which treated him like an object, although it was very well staffed. At a time when public services are becoming more technocratic, where the crucial relationships at the heart of their objective are increasingly discounted, volunteers can and do make all the difference.”

What she suggests is that volunteers are the antidote to this disdain. In wards where older patients might otherwise be mistreated or ignored, she says, “the mere presence of older volunteers are the eyes and ears that we need.” Human beings provide that kind of alchemy, however target-driven the institution is around them.

It isn’t quite clear why this is. Is it because the presence of outsiders is a reminder to staff of what is important and how to behave? Is it because it stops them getting too inward-looking, or prevents that brutal contempt for customers that – as we have seen – can emerge in organisations, public and private?

I don’t know. But there is a new frontier opening up in this debate about how human beings make things work, which suggests that it is not just about having other people there. The volunteers have an effect because they are working alongside staff. It is because the boundaries are blurring between the world inside the organisation and the world outside.

I don’t know whether it would work the same way if the volunteers were just there observing, but I suspect that would just cause resentment. No, this is because they are equals. It isn’t just because outsiders are watching staff at work, it is because they are sharing the work that it is so humanising. It works because this is co-production.
That is one way out, but don’t let’s pretend that it is really such a mystery why such modern institutions, targeted and standardised to within an inch of their lives, have become so inhumane.

It is because the past ten years of centralised targets, standards and auditing has sucked the human element out of these and other institutions. They have been treated like assembly lines and now that is what they have become.

If we are going to rescue our public services, we are going to have to inject the human element back in again.  Find out how in my new book!

Is there a new kind of efficiency?

The disastrous NHS IT project , the great symbol of the pursuit of illusory efficiency (in this case at the cost of £12 billion) began with a meeting in 10 Downing Street in 2002 between Tony Blair, Bill Gates and associated hangers on.

As early as 2004, seven years ago, the systems thinker John Seddon predicted that it would fail.

He now predicts the same for the IT systems being designed at vast expense to deliver the Universal Credit.  And for the same reason: these huge IT systems which are supposed to deliver services efficiently are too inflexible. They assume that public services are conveyor belts of standardised people.

Consequently, they rack up the costs because so many cases do not fit the protocols and they bounce around between front and back office, hugely inflating the time and costs involved in dealing with them – or, more usually, failing to deal with them.

This is a prime example of the way that services are becoming far more expensive than they need to be by removing the human ability to deal with complexity and make relationships, the subject of my new book The Human Element.
But we are debating this and related issues at the Royal Society of Arts at 1pm on 3 November in an event called ‘Is there a better kind of efficiency’.
I will be speaking, and nef’s Anna Coote will be in the chair. John Seddon will be there too, and Nesta’s Halima Khan to relate all this to co-production. Hope to see you there!

Safeguarding? I don't think so

My children's primary school is absolutely brilliant, so I won't name it here - or draw any conclusions about the school from this.  But a phone call after lunch has reminded me quite how counter-productive Labour's safeguarding regime became.

My youngest had been stung: was he allergic to stings?  Probably not, we said, but could they put some ointment on it?

No, apparently, they can't do things like that.  I wonder if they would have been able to do anything if he HAD been allergic to stings.

Would it have made him feel a bit better?  Yes.  Were we as parents OK about him being 'treated'?  Definitely.  Was there sting ointment on the premises?  I assume so in a well stocked school medical room.  But, no - they couldn't do it.

I am, as it happens, right behind the coalition's determination to rid ourselves of the corrosive health and safety regulations that get in the way of humane care of children.  This looks like a prime candidate for examination - but I don't agree with David Cameron's approach that this is purely an issue of public sector regulation.

That may be the source of this kind of silliness, but it is just as likely to have come from insane and intrusive insurance conditions from the private sector.  So I hope when the coalition finally acts on this, they also have insurance companies in their sights.

Time for green quantitative easing

Isn't it time we stopped wasting money on quantitative easing, funnelled so inefficiently through the banks - and started taking direct action to put the money where it will be effective: creating a new green, enterprise economy and tackling the climate crisis at the same time:

http://www.newstatesman.com/blogs/the-staggers/2011/10/quantitative-easing-money

Wangari Maathai, one of the new economics greats

The Kenyan environmentalism Wangari Maathai, who died last week, was not just one of the great pioneers of the new economics - which puts people and planet first - she also started out as a candidate for the Kenyan Liberal Party.

http://www.neweconomics.org/blog/2011/10/06/wangari-maathai-one-of-the-new-economics-greats

Last week, historic for the new economics

I think we will look back on the last week of September 2011 as the moment when the new economics shifted into a different gear - when the idea of an economics that works for people (not the other way around) finally went mainstream:

http://www.neweconomics.org/blog/2011/10/04/september-2011-the-month-when-the-new-economics-went-mainstream

Community politics is not nearly enough

Why the debate at the party conference in Birmingham did not go nearly far enough.  We need to do more than simply re-commit to community politics - we need to completely re-invent it:

http://www.libdemvoice.org/opinion-only-two-cheers-for-community-politics-25422.html

Why we need green quantitative easing

Compare the speed with which Roosevelt rolled out the New Deal in 1933 with the terrifyingly slow nature of decision-making during our own crisis - when what we really need is green quantitative easing.  Or was that what Vince Cable meant in his deft and opaque speech last week?

http://www.neweconomics.org/blog/2011/09/26/roll-on-green-quantitative-easing-and-quickly

The feral elite and The Thing

The Compass campaign to identify a 'feral elite', that parallels the feral underclass, has some remarkable parallels with the campaign nearly two centuries ago by the great radical William Cobbett.  This is how I put it on the new economics blog:

http://www.neweconomics.org/blog/2011/09/23/time-to-resurrect-cobbetts-campaign-against-the-thing

The great policy gap: local economics

There is a bizarre moment in the half-forgotten Lindsay Anderson film Britannia Hospital, where the Queen arrives to open the new hospital wing wheeled in on a trolley, to avoid the demonstrators outside.

I was reminded of this going to hear Nick Clegg’s speech on the economy at the LSE, where the security was so tight and labyrinthine that only the demonstrators knew where he was actually speaking.

Nick could be heard in his microphone, as he was being slipped in through the back door, asking: “Has the lecture theatre been booked?”

It was a good speech, well-delivered, and what he said was important – infrastructure, green investment, devolving money-raising powers (though I’m not sure that transport infrastructure inevitably brings growth, since it is likely to undermine local business as much as it opens opportunities for more distant business).

But there was nothing in the speech about those elements that might actually have some chance of reviving the struggling economies of many of our cities – enterprise, small business, local lending.

This reflects the gap in Treasury thinking and it is a serious problem. The establishment has no idea how to revive local economies, and increasing money flows there, and local government looks hopelessly and pathetically to the Treasury to do it for them.

The problem is that, although infrastructure projects and trade negotiations may help in the long term, we all know they will have little or no impact when and where it is needed.

Lib Dems have had so little to say on economics since the death of Keynes in 1947, and now it really matters. Time we got our act together.

Why public services fail

Kenneth Clarke's intervention in the debate about the riots was a breath of fresh air.  If 83 per cent of those arrested had already been through the criminal justice system at least once - then the system is not doing its job properly.

What interests me is how much this same argument could be applied to other public services.  It may be ridiculous to expect that people who have been through the NHS once should not remain ill, or that so many interventions are required with problem families.  Yet that is what Beveridge expected when he set out the terms of the new welfare state in 1942.  He expected it to get cheaper because it was so effective.

In fact, of course, Beveridge's Five Giants have to be slain again and again, every generation at at increasing expense.  The political establishment needs to start asking why this is.  So far they have been too afraid to, but those of us who support public services need to start asking why the are not more effective.  And, yes, I've got some ideas (see my new book published next month!)

In the meantime, we may not embrace the cuts.  But we should not unthinkingly defend all public services exactly as they are, because there may just be more effective (and therefore cheaper) ways of doing the same job.

Are the cuts heading in that direction.  No they're not.  But this admission about the manifest failings of the crimial justice system is an opportunity where we might just begin the debate.

Why politicians don't get the riots

Nick Clegg asked today why an 11-year-old would feel so alienated from their community that they could trash it.  He is asking the right questions, but he is one of the few politicians to do so

But the politicians have returned to Westminster yesterday, and the new political language which does not have ‘aspire to own tat’ at the heart of it has certainly not arrived yet.  In fact, much of the political positioning on the riots has been deeply depressing.

No, it is not about people who are so poor they are hungry – you can’t eat flat-screen TVs.

No, it is not about leniency – Britain relies more on prison for young people than most other countries in Europe (and why are we sending those convicted to prison?  To become real criminals?).

No, it isn’t about the cuts – the symbols of state authority were largely ignored compared to the lure of the superstores.

No, it isn’t about ‘broken Britain’ – the response of communities around the country, acting together to protect their high streets and to clean up the mess, is a sign that Britain is not broken. So is the shocked tones with which Le Monde announced that there were no water cannon on mainland Britain.

No, it isn’t about immigration. In fact, the Harvard sociologist Robert Sampson suggests that Latino immigration to the USA, with their strong sense of family and community, is one of the reasons crime is falling in the USA.

Why is it that the political Left rejects the idea that disorder is partly about the breakdown of family life? On the other hand, why is it that the political Right can’t see that family breakdown has been driven by high house prices, shift work and job insecurity?

Why is it that those who talk about the ‘culture of entitlement’ don’t see that this applies equally well to our banking elite, and their greedy record of extraction, as Compass suggested today?

The truth is that both Left and Right have a great deal to answer for creating this culture of entitlement, from the feral underclass to the feral elite – for abandoning their moral vision for society and replacing it with retailing.

Both have been responsible in the UK for the corrosion of community and family life by the wrong kind of economics.

We have to pretend for a while that foul fair and fair is foul, said John Maynard Keynes. It maybe that the riots mark the last gasp of this pretence – because foul is not useful after all if it leads to moral, spiritual and mental decay.

This is no time for glib solutions to what is a moral crisis as much as a practical one. But part of the solution is going to have to be rebuilding local relationships by reforming our public services.

We need services that are human scale and capable of reaching out into their surrounding communities and rebuilding reciprocal links. That is the co-production agenda.

It is the antidote to the factory schools and hospitals, and the inhuman technocratic institutions into whose tender mercies we now fling those communities which have bred the rioters and which have in turn been torn apart by them.

It isn’t just glitzy and inhuman materialism which has created the riot generation, it is inflexible and inhuman services.

Unfortunately, our political elite sees neither of these problems very clearly. It is up to us to articulate them in such a way that they do.

Let them yearn for tat

I live in a relatively peaceful suburb of south London, in the heart of a huge allotment, secure in the knowledge that – if there is rioting – it will not come near here.

So it was a genuine shock, as I walked through the park to the station this morning, to find clothes hangers and plastic bags and the other detritus of looting, and then an abandoned car rammed into the side of the local mobile phone shop.

It made me all the more aware that we don’t understand what is happening, still less do we have a coherent narrative of the riots.

The idea that the violent disorder was primarily about anger with the police went out of the window when the mobs began burning and looting people’s homes. No doubt somebody will suggest that this is about alienation in the face of the spending cuts – as if the mob would resist burning down libraries or children’s centres along with anything else.

No, but the official explanation – “sheer criminality” – while it is certainly true, does not seem quite adequate.

Two things strike me.

One is the faint folk memory of the Gordon Riots in 1780, when racist anti-Catholic mobs went on an orgy of burning and looting across London, culminating in the release of prisoners from Newgate and the destruction of the gaol.

It includes the picture of members of the mob drinking themselves to death in a burning distillery, brought alive so dramatically by Charles Dickens in his novel Barnaby Rudge.

Two centuries on, and we still have not progressed beyond sheer greed and appetite of the mobs at work over the last few nights, the fear of which lies at the heart of the motivation of so many British governments.

Second, the focus on shops gives these events a completely different atmosphere to the inner city riots a generation ago. These are not riots of rage, they are riots of greed. They are also perhaps a symptom of the way that retailing has been allowed to dominate economic policy for the past two decades or more.

But it is worse than that. We have developed a political dialogue which is no less terrified of the mob than it was in the 1780s, but has shifted from Marie Antoninette’s famous dictum about cake to the more modern ‘let them yearn for tat’.

We have a political system divided between ‘let them work for tat’ (the right) and ‘let them buy tat’ (the left). The result is a deep and valueless materialism that allows hundreds of young people across London to go on violent and thieving rampages simply because they can get away with it.

We have a school system dedicated to encouraging people to work for still more expensive tat. We have houses filled with tat. We have conversations dominated by tat and a culture that encourages us to yearn still more strongly for it – and little else.

There is a sense in which those terrifying television pictures of burning pictures are a vision of the spiritual and mental poverty that our materialist economics threatens to spread everywhere. It is the internal contradiction that, in the end, makes it impossible.

This is the issue which will dominate the century ahead, it seems to me. But our political debate is now so impoverished that we barely have the political language to stitch together an alternative.

I hope we try. I for one hereby dedicate myself to finding that new language.

Planning ahead for the next crash

“Future students of history will be shocked and angered by the fact that in 1945 the same monetary system that had driven the world to despair and disaster [in the Great Depression], and had almost destroyed the civilisation it was supposed to stand for, was revived on a much wider scope.”

So wrote the Conservative French economist Jacques Rueff in 1964. The collapse of the old system in 1929 led to the Great Depression and the Second World War, so these are not unimportant questions.

There is also more than a whiff of 1931 about the current situation. The markets have realised that they have not, after all, recovered their confidence from the crash two years before. The banks are withdrawing money from circulation to pay for new reserve requirements. The leading economies in the world are involved in major cuts. Eight decades later, here we are again.

The real problem is not so much generating confidence in the system. It is that nobody in their right mind would have much confidence in it right now, as the great edifice totters under the weight of dollar and euro debt.

We are, in short, at a uniquely dangerous moment. And because of the interconnectedness of the system, it is in some ways far more dangerous than 1931. We have fewer human systems to fall back on to provide us with the basic requirements of life. The technocratic systems we rely on will rapidly unravel without the fuel of money.

But it is not hopeless. In the event that the system malfunctions disastrously, as well it might, we need our leaders to accept two fundamental measures.

1. If the system collapses, the central banks of the world must – by agreement that must be negotiated now – create the money they need to pay off the ruinous debt and reset the system. We need to accept, in other words, that the old system is dead rather than waiting hopelessly and disastrously for its revival. Human life, in the end, trumps the integrity of the banking system.

2. That implies the second part. Once the system is reset, then the world’s leaders must gather once more in Bretton Woods, as they did in 1945, and this time re-organise the system in such a way that people and planet and their legitimate needs come first. We need a financial system fit for purpose, as they say, and fit for the needs of a different kind of world.

The real Murdoch scandal

I'm beginning to think we need to get the hacking scandal into some perspective.

I certainly don't want to diminish the seriousness of hacking into people's private phones and messages, especially when they have been bereaved in the most tragic circumstances.  These are clearly against the law, which is perhaps why they are getting the attention worldwide they are currently getting.

But in the whole gamut of journalistic excess - taking photos of ailing stars on their deathbeds, or a dying Princess Diana - they are not unique.  They also seem to be overshadowing some very serious allegations indeed and I don't quite understand why this is.

The Observer reported on Sunday that some very explicit threats were made to individuals in the government, or connected to it, about what the Murdoch papers would do to them if their bid for the BSkyB bid was not supported.  That is a corruption scandal that really justifies the current humbling of the Murdoch empire, if it is true.

But is it?  Who are the executives, still unnamed, who made the threats?  Why is this not being pursued?  Is it because of fears that it would lead to the destruction of the remaining Murdoch newspapers in the UK?  If so, are we not still in thrall to Murdoch, but in a different way?

Why Murdoch's agony points to the future of business

You cannot seek to bribe nor twist,
Thank God, the British journalist;
But seeing what the man will do
Unbribed, there’s no occasion to.

Humbert Wolfe's rhyme suggests that the News International Hacking Scandal – let’s call it by its proper name – is not a new phenomenon, but an extreme version of British journalistic excess.

What has been less commented on is that the serious inability of News International to get to grips with the problem or the scandal is also a very old pattern. It is about the sclerosis of narrow hierarchies.

News International is a classic narrow hierarchy. Its chairman is the son of its founder. It rules by fear, by its fearsome influence over public life, just as its rules its staff. It is not the kind of organisation where people find it easy to ‘speak truth to power’.

Ever since the liberal philosopher Karl Popper’s two volume sequence, The Open Society and Its Enemies, we have known that ‘open societies’ – where people find it easy to challenge from below – are more effective, less wasteful, more imaginative and faster moving than ‘closed societies’.

It is the classic argument for localism in government, just as it is the classic argument for flat hierarchies in business. It explains that leaders tend to be insulated from the truth they need to know in narrow hierarchies. That is why News International is in crisis.

It is also a harbinger of the future. This lesson is a slow one to learn for our lumbering organisations, public and private, but it is the organisations that are owned or controlled by those who work there which will in the end sweep aside the old hierarchies with their mega-salaries and bonuses. Because they move faster and see things clearer.

Goodbye to John Sweet

I am very grateful, as I so often am, to Jonathan Calder's blog.  This time for the sad news that Sergeant John Sweet has died at the age of 95:
http://liberalengland.blogspot.com/2011_07_03_archive.html

John Sweet, as fans of Powell and Pressburger films will know, was the American army sergeant who played the role of Bob Johnson in their wartime classic The Canterbury Tale.  Like Jonathan, it is one of my favourite films.  It manages to combine an amazing Chaucerian simplicity with a sense of such depth and feeling that I am never absolutely sure what the film is trying to tell me.  I only know that it is about England and it makes me feel good.

Sweet was spotted at an amateur dramatic performance, roped into doing the film while he worked at SHAEF headquarters on the D-Day plans, but never acted again after he went back to America.  It is an absolutely beautiful film and I thoroughly recommend it.

Corporate vandalism and the News of the World

Watching the news last night left more than a nasty taste in the mouth (well, it often does, actually).  This morning I knew what it was - the closure of something 168 years old, in this case the newspaper the News of the World.

What looked like an act of sacrifice by News International is a rather cynical ploy to speed up what they were intending to do anyway, which is to shed the staff of one newspaper and run a seven day a week operation from the Sun.  Achieved now at a stroke.

But what really bothered me was closing an institution of that age.  If it was a building that dated back to the 1840s, there would be an outcry if it was demolished at a stroke (well, yes, that does happen).  But because it is an institution, and great men are supposed to be able to shut and merge and generally gut the institutions they control, nobody complains - beyond the lost jobs.  Governments do it all the time - lost hospitals, libraries, courts, all of them small tragedies and impoverishing.

But institutions are important.  They are part of what makes life civilised.  When the sociologist Robert Putnam hailed the Emilia-Romagna area of Italy as one that has unprecedented social capital, part of the reason - he said - was institutions that dated back to the twelfth century.

When institutions go wrong, they need to be cleansed, cleared out and reformed.  They need to be cut down to size and forced to be effective - because they matter.  They should not be just discarded.  Yes, the News of the World has clearly become corrupted, but to destroy anything that has lasted so long is an act of vandalism.  Don't obliterate, reform.

Why the Ratio matters so much

The bad news: chief executive pay in the FTSE 100 increased by 55 per cent last year alone, accelerating the creation of an inflationary class of ubermensch, with huge consequences for social cohesion.

The good news: a more effective, imaginative and flexible corporate form – the mutual – increased by 25 per cent in the UK economy last year.

Both these facts are relevant to The Ratio, the new report by myself and Andrew Simms, which suggests forcing companies – and especially those bidding for public service contracts – to reveal the ratio between their bottom and top pay levels.

We may not be able to legislate to drag the ratio back down to 1:20, which John Pierpoint Morgan said was the maximum reasonable level. But we can make sure the crucial ratio is published on the front of annual reports, were they might motivate shareholder activists who can do something about it.

But it is also time to be more positive about this. For too long, campaigns against corporate greed and ever-widening pay ratios have tended to be defensive and negative. They have been campaigns against rather than campaigns for equity, or anything else.

This needs to change partly because having a compressed pay ratio is not just a good thing ethically. Nor is it just a better way of motivating staff and providing greater equity in society, with all the economic benefits that will bring.

It is also a sign that a company is sensitively, fairly and imaginatively run, that its management and board understands the role that all their staff can play, and that collaboration inside and outside the company is as important to their success as competition.

It is a sign of a company that is more flexible, faster moving, more imaginative and more successful.

It is our contention that a more effective corporate form is emerging based on these ideas. Many of these will be co-operatives, but some will simply have a more co-operative spirit that understands the need to include staff and use their resources more effectively.

In time, these companies will push aside the kind of corporate dinosaurs that minimise the pay of their lowest and maximise the pay of their highest echelons, a sign of fatal inflexibility and short-term thinking.

They will do so because these companies will earn more money, waste less on leadership fantasies and will be more successful.

But this is not yet widely understood, either in the corporate or policy world, and there needs to be a campaign to speed the process along. The faster this process takes place, the more successful and imaginative UK business is going to be.

To get there we need to encourage shareholders to use their power to encourage more equitable pay structures, to vote down unacceptable remuneration packages and to use their power to remove, where necessary, the chairs of remuneration committees.

The transparent ratio and the Charter of Responsible Pay which we suggest in our report are both means towards this objective.

They need to take place within the context of a wider debate about corporate behaviour that emphasises the benefits and inevitability of change, rather than simply complaining about the injustice of the current situation.

Blair and Cameron Liberals? They just talked liberal

Julian Astle, Centre for Reform’s intellectual-about-town, has launched a hugely important debate in the Guardian. It is a critical question for all of us in liberal politics.  But I don’t think he’s got it right.


He suggests that, for most of the period between 1997 and today, Britain has been governed by liberals – which is why the coalition agreement was so easy to hammer out.

There are certainly elements of truth about this thesis, rather as Ian Bradley’s 1985 book The Strange Rebirth of Liberal Britain argued that Mrs Thatcher was a liberal too. Liberalism is the prevailing philosophy of the age – it would be strange if there wasn’t some overlap here.

But it is a slightly short-sighted view, in the sense that the outlines and the vision is blurred and fuzzy.

There is no doubt that ambitions like choice and competition, which drive Blair and Cameron (I am assuming that Julian's brief hiatus without liberal leadership refers to Gordon Brown), are both liberal in their objectives. Cameron’s Big Society is a liberal idea.

Cameron’s basic philosophies are not clear yet, but I share Julian’s suspicion that some version of liberalism beats somewhere in his heart, even if it is actually Liberal Unionism.

But I know the argument refers above all to the public service reform agenda, and – since we are theoretically about to get a glimpse of the Public Service Reform White Paper – let me set out why I think Julian is wrong, at least as far as the Blair years are concerned.

Because despite the liberal rhetoric, what we actually got – and what looks as if we will be offered again – is something fundamentally illiberal, because it is:

1. Centralised: the Blair years gave us huge public service institutions that were beyond any kind of local control and increasingly unresponsive. The ‘choice’ rhetoric about schools transformed parents into pathetic supplicants to the schools. Of course, you might say that this was Brown’s creation not Blair’s, but a quick glance at Michael Barber’s books reveals that Blair was behind the disastrous and wasteful targets regime. Liberals are localists.

2. Outdated: in practice, public services were handed over to the McKinsey conception of efficiency. As a result, we have – not liberal services – but increasingly impersonal ones, huge and hugely expensive call centre silos, competition from great lumbering corporate monoliths which leached the service ethos out of the system. Liberals put thrift and effectiveness ahead of narrow ‘efficiency’.

3. Inhuman: despite the rhetoric about personalisation and choice, our services are now less personal, more bureaucratic, less responsive and less human than they were a generation before, and the white paper looks set to offer more of the same. Liberals are above all believers in human scale.

Yes, Cameron and Blair use the language of liberalism. Cameron’s record remains ahead of him, but generally since 1997 we have had liberalism without the radicalism, liberalism without the people power, and – especially important this is going to be – liberalism without the humanity.

Whiggery, yes. A kind of old-fashioned social democracy, yes. But Liberalism, no – not even liberalism. How can anyone who deferred to power as much as Blair did, who failed to confront the issues that faced us – from Bush to the banks – possibly be described as a Liberal?

The genius of the bank share giveaway

Is it just me, or have the Lib Dems had a better week?  There is a sure-footedness about the party that suddenly seems to be more apparent, culminating in Nick Clegg's proposal that the government should distribute shares in the failed banks to every member of the public.

Now, there has been some predictable moaning about this idea.  It is true that it may get in the way of a radical division of the failed banks into their constituent parts, but there is no logical reason why that should be inevitable.  The City is sceptical of course.  But there have been other comments that it is too reminiscent of the big Thatcherite privatisations which ended with everyone selling off their stake as soon as possible for a quick profit.

I don't think that is true.  There are three major advantages about the plan that I can see.

First, it bypasses the City and their exorbitant fees, which they would normally earn in a privatisation.  That is almost enough reason to be in favour in itself.

Second, unlike the BT privatisation, people will not be able to sell their shares off quickly, because their value will need to reach a floor price to cover what the government paid out for the banks in the first place.  That might be some considerable time.

Third, these shares will be available to everyone and not just a wealthy minority.  The combination of the time lag and the large numbers of people who will suddenly have ownership rights over the banks could - though it will not necessarily - provide for popular democratic movements to use those votes to rein in excessive pay and other risky behaviour.

The Thatcherite privatisations involved a minority who did not exercise their ownership rights.  This plan will involve a majority and the possibility of popular control.

Longing for authenticity

I’ve just been on the Radio 3 programme Night Waves – there was also a fascinating interview with Margaret Drabble and feature on the revitalised Watts Gallery; I’m going to listen more often. But my task was to play the sceptic about the idea that anonymous online relationships and blogs somehow more allow for more authenticity.

I was invited because of my book Authenticity, which is eight years old now but still relevent (well, I would believe that).
And I was also happy to do it, because this debate is part of the cultural zeitgeist at the moment – yet it is ever so important to retain some distinction between virtual and real. Otherwise the powerful corporate world will try to fob us (or at least the poorer among us) with virtual teachers and doctors, claiming that there is really no difference.

One of my fellow contributors said to me afterwards that, even in the online world in the mid-1980s, they had resorted to ‘burger nights’ where everyone got together in the flesh, so to speak.

“In a virtual world, people will long for reality even more,” said the philosopher Robert Nozick, and he was right. Thank goodness.

Why the NHS reforms are not radical enough

I know I should feel excited, even vindicated, that the Lib Dems have exerted their influence to make the NHS proposals a little less terrifying.  And I do - don't get me wrong - I do.  But I am afraid that the result looks far too like the status quo, when the NHS desperately needs a little radicalism if it is going to survive.

This is what I wrote on the New Economics Foundation's blog.

Localism and the machines of loving grace

The first documentary by Adam Curtis (All Watched Over by Machines of Loving Grace) a couple of weeks ago was fascinating and timely. It went from the novelist Ayn Rand, via Alan Greenspan, to the doctrine that everything can reach a self-correcting ideal if it is just left alone, watched over by “machines of loving grace”.

The trouble is that the whole idea is being misinterpreted (see Rachel Sylvester’s column today in the Times, behind a paywall) as somehow the philosophy of localism. Not Liberal localism, it isn’t.

The hands-off approach described by Rachel Sylvester and Adam Curtis is more like Woodstock meets Milton Friedman. In practice, it is precisely what New Labour believed in all areas of life and tried to organise, the loving machines watched over in turn by McKinsey consultants and provided by a range of IT consultants, hard men who did well out of the New Labour years.

Lib Dem localism does not mean laissez-faire. It doesn’t mean doing nothing. It means doing a great deal, but doing it locally where it is more likely to work. It doesn’t mean hands off; it means a great deal of work.

The question is then, what is the role of the centre? Because Whitehall and Westminster without enough to do soon get into a panic and feel they need some levers to pull, as they are doing now. The answer is that the role of the centre is to inspire, to catalyse, to lead, to regulate what can destroy local life.

This is precisely the opposite of their current skills. Westminster and Whitehall have few leadership skills and a great deal of regulatory ones, which they inevitably bring to bear on the wrong things – light touch regulation for the big banks; great rafts of rules for people who want to run a local barbecue.

So don’t think that localism means doing nothing. Quite the reverse. It means shaping the world, but in a more effective way than has been done so far.

Time to wake up about nuclear

Here I am in a French hotel room, watching BBC World – it gets just a little exhausting after a while – and who should come on but the Lib Dem Euro-MP Chris Davies.

I have a great deal of admiration for Chris, who usually gets it right. But not this time, and in the unlikely event that he reads this, I wonder if I might ask him to think again.

The worst moment in the combative discussion was when he laughed theatrically at the German Green spokesman who claimed that 60,000 people had died as a direct result of the Chernobyl accident. “Green nonsense,” he said.

Now I joined the Liberal Party in 1979 because it its brave stance against the development of nuclear energy. It is far from clear to me whether that figure of 60,000 – which did not come from the Greens – is accurate or not. It certainly is no subject for such mirth.

Nor is it clear to me that nuclear energy, a capital-intensive and extremely inefficient, centralised solution, will actually reduce greenhouse emissions, since the business of extracting uranium, building the infrastructure and looking after the waste on a permanent basis are all highly carbon-intensive.

And the party remains anti-nuclear, no matter what compromises Chris Davies or Chris Huhne have made. These things are important because, as I have argued elsewhere, the revival of nuclear energy in the UK has the potential to be a far greater threat to the long-term credibility of the Lib Dems than student fees. And I desperately want us to be on the right side when battle is joined.

The decision by Italy and German to phase out nuclear is a wake-up call for us, and here I do agree with Chris. If the Germans mean it, and pour investment and imagination into creating a low carbon economy, how can we be against it?

But then of course, they will be that much further along the road towards a green economy – and deriving the huge efficiencies that will come from kicking the fossil fuel addiction, without pouring money into the nuclear black hole – decades before we do.

It is time we woke up instead of being cynical for the pleasure and edification of the producers of BBC World.

Towards a new kind of efficiency

For most of this year, the publication of the Treasury’s Public Service Reform white paper has been horribly imminent. David Cameron even gave a speech raising the curtain on it. But nothing happened. It is still imminent.


Of course we know that, behind the scenes, there are struggles to shift the emphasis from mass privatisation to gentle mutualisation. It is far from clear yet whether the Treasury realise that the tools you need for one – big, industrial strength, shared commissioning – is very different from what you need for the other. We shall see.

But the real problem is that the coalition are only half way through a revolution in service thinking. They have got rid of targets, chucked out the Audit Commission, yet commissioning units get bigger and bigger, the disastrous shared back office systems continue to grow, and McKinsey consultants are still at large in the corridors of Whitehall.. The result? Sclerosis.

Will the white paper address this? It doesn’t seem very hopeful, really. But I spent this last week as a 'collaborator' of a pop-up think-tank based in an old Subway shop in Exmouth Market.  The result is my own advice for the government.  Because it seems to me that there is one way (well, four ways, actually) they can both increase the effectiveness and lower the cost of public services in the long term:

1. Make services more flexible
2. Build services which also reduce demand
3. Co-produce services to reach out and rebuild community.
4. Make services human scale

How are they going to do that? Well, you will have to read the POPse report The New Efficiency: Four ways forward to find out:  http://popse.wordpress.com/2011/05/13/the-new-efficiency/

Mea culpa!

Is the collapse in the Lib Dem vote all my fault?

Here is the case for:

http://www.libdemvoice.org/opinion-its-all-my-fault-24124.html

Goodbye, HSBC

One thing I have managed to achieve in the last few months is to get shot of my personal bank account with HSBC.  I have had once since I was fifteen, when I shook hands with the bank manager in Maida Vale (the branch has been closed for years) and was then very proud of it.

When the closed their branch in Crystal Palace a few years ago I vowed I would leave, but it has taken me rather a long time to 'move my money', as the Huffington Post urged so successfully last year.  I feel rather good about having done so.

And one reason or this is that I worked out my own share of their bonus pot this year.  They have about 95m customers worldwide and paid out bonuses this spring to their staff worth £1.2 billion.  That means each of us customers have individually contributed about £12.60 (including about 5p for the chief executive's bonus).  Where else does the money come but from their customers?

I don't feel this is my money well spent.  It certainly hasn't improved their service to domestic customers, who are now expected to interact via robots in their increasingly rare branch network.  The bonuses are inflationary and raise London house prices, making us all worse off.  I feel relieved not to be encouraging that kind of economic corrosion.

Now for my Barclays business account...

Thoughts on extra-judicial killing

I can't exactly mourn Osama bin Laden, or even really regret his passing.  It may be that this was one of those occasions where extra-judicial killing can be justified.  I only know that, if so, it is one of few occasions.  What disturbs me is the reaction to his death.

The ghoulish crowds on the streets of Manhattan reminded me of the crowds that Charles Dickens described, with revulsion, who struggled to get closer in a public hanging.  That doesn't mean you have sympathy with the criminal.  This is an issue of taste not justice.

But the idea of Barack Obama being in at the death virtually, watching the proceedings through a camera strapped to the head of one of the soldiers, gave me a particular nightmare.  It reminded me of something, and I have now remembered what it was - it was the way that Adolf Hitler demanded to see the deaths of the July 20 plotters who had tried to assassinate him in 1944.

Again, I am not complaining about the outcome, simply the lapse in civilised values.  The sight of civilised people marching through one of the most modern cities of the world, baying in delight at the execution of a human being at home sends a shiver down the spine.  And it should do.

Where on earth have you been?

Regular readers of this blog, if there are any, may have discerned a slight slackening of effort on my part over the past few months. No posts since February.

This is of course shocking, and my only excuse is ill-health. I have been suffering from flu which turned into turbo-charged eczema, no doubt thanks to the stresses of the coalition (yes, I know, I flatter myself).

Still, I am feeling better now and really must put in a bit of effort. The reason I feel better is two weeks in the extraordinary village of Avène in the Haut-Languedoc region of France. There is not much happening economically speaking in the area, except for the cosmetics factory of Avène and the thermal spa with an international reputation for curing eczema.  But what an amazing and effective place it is.

The French have a tradition of spa cures which we have lost in the UK, but there are people suffering from skin disorders there – and specialist doctors – from all over the world. Yet Brits are a rarity; where you do see them, it is usually children suffering from shocking eczema who have had to fight their way out of the British NHS.

I put this brutally because, for all its benefits, the NHS tends to retain a blindness about chronic health problems, preferring to maintain people in ill-health for the rest of their lives, rather than actively seeking out some more permanent solution.

This is partly because permanent solutions often require social networks, and – with the exceptions of the thriving time banks in surgeries – the NHS regards this as beyond them. It can also be because of professional disdain for foreign or bizarre treatments like Avène, despite the weight of research and proven results they have managed to garner over the years.

I heard distant rumours of wars while I was there, political battles over the future of the NHS, which made little or no mention of the urgent problems that the current NHS model faces. And I thought: why are Lib Dems being so defensive, clinging to the old, rather than carving out their own practical and humane solutions for the future?

This is not to suggest that the Lib Dems are wrong to demand changes and safeguards in the plan for GP commissioning.  It is that no political party with ambition should forfeit the right to a positive vision of the future, and I can't help feeling that - for all the re-statements of 'principles' and the bleeding obvious - there is still no equivalent Liberal vision for healthcare.

It tolls for thee

Listening live to President Obama’s press spokesman in the early stages of the Egyptian uprising, you might easily have believed – especially as he kept emphasising it – that the right of Egyptians to access social networking sites was the fundamental human right that the United States wanted to defend in the current crisis.

As our own administration shifted the language about Mubarak’s – from ‘government’ to ‘regime’ – there is was discernable nervousness about articulating precisely want they want the Egyptians to do, and what this whole crisis was about.

They used words like ‘democracy’ and ‘freedom’, as if they – the self-appointed representatives of such concepts – are secure in their conviction that no demonstrators are camped in the squares of their own capitals.

This peculiarity goes to the heart of what is happening across the region and on our TV news channels.  And it also implies a challenge for us.  The abuses that lie behind the turmoil in the Middle East are not quite as alien to us as we think.

The uprising is certainly about human rights, but nobody could listen to the occasional explanation by those taking part – from Tunisia to Jordan –without realising that it is just as much about economic rights.

They talk about queuing for bread and about asking for more than subsistence wages.  They talk about the vast wealth of the dynasties in power. 

Of course President Mubarak was right that people have more cars and televisions these days, as if that was somehow a sign of human fulfilment.  But what they also have, right across the region, is ever more flagrant examples of hideous wealth alongside hideous poverty.

We can’t pretend that the uprisings in the Middle East are about a narrow, polite kind of democracy where people vote, freely and secretly every few years, and then go back to their toil.  It is about a broader idea of democracy, where everybody can provide for themselves, have a stake in the nation, and where a few do not have the economic muscle to tyrannise the rest.

That kind of democracy is not the kind where the West has a good track record.  We may not have the kind of obscene extremes of wealth and poverty you might find in Dubai or Cairo.  But we have bankers pushing up the price of homes with their £1 million bonuses.  We have individual hedge fund managers with enough economic muscle to manipulate the entire coffee harvest of the world.

It is, after all, our homegrown traders who are speculating in the price of grain and other staples, and pushing the prices ever higher.

These are intolerable inequalities, and they make a mockery of economic democracy.  Generations that comes after us will be staggered that we were blind to them, just as we are staggered that reasonable people accepted the slave trade.  Every generation has its own hideous abuse, and these are ours.

The uprisings in the Middle East are calling for freedoms that we aspire to as well.  So Barack Obama and David Cameron: never send to know for whom the bell tolls; it tolls for thee.