Will Spin save us, or kill us?

The UK economy contracted 2.4% in the first quarter of 2009, a decline not exceeded in 51 years, according to the latest official data.

The decline was more severe than the earlier estimate of a 1.9% fall, and worse than analyst expectations.  The Office for National Statistics (ONS) blamed the sharp revision primarily on weaker output in the construction and manufacturing sectors and highlighted the dire state of economy.  New data on the service sector also showed the sharpest quarterly decline in output on record, and whilst the UK consumer has often been said to be surprisingly resilient in this recession, today we learned that consumer spending in the first quarter suffered the sharpest fall in decades.

Are they telling us something we don't know, I don't think so ... has anything significant actually changed, I don't think so ... hence it will continue to get much worse, ... but will Spin 'help us', or 'kill us' (e.g. delay addressing the real problems and causing an even bigger crisis in a year or two?)  .... take a look around, and have a guess, noting house asset price inflation is mainly about 'spinning' a feeling of confidence so people will go borrow/spend again ...

"I predict a riot" - says David Cameron now

So Frank Field is not alone, and neither is Robert Zoellick of the World Bank either.  David Cameron has said it now too, referring to 'riots on the streets" as well ... but does he care, is he right, or is he just wanting to exercise his own brand of Poweromics too? 

Take a look at Nick Robinson's blog, and see what you think ...

Spin, spin and more spin ...

Stephanie Flanders raised the issue of the Government wishing to avoid detailing its budgets and plans for the future ... with Lord Mandelson and Gordon Brown both reluctant to do this ... could it be that they hope to 'spin' the "Conservatives=10% cuts" line all the way up to the next election, to strike sufficient fear into voters, whilst being very careful to make sure they do not give the opposition any ammunition to fire back at them? Take a look at just a few of the comments posted on her blog below ... 

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Post 31 (leanomist):

Many good points raised:- let's see if some of them are listened to and/or dealt with ... (e.g. the ones repeated below) 

no 2. At 3:25pm on 29 Jun 2009, PortcullisGate wrote:

"As a father of three I now see the situation as desperate. If Brown is allowed to continue his scorched earth policy their futures are ruined ... The economy is not being run for economic reasons it is being shaped for political survival. Our futures are just collateral damage in a game of fool the electorate ... You Peston, Robinson need to start asking some difficult questions or you are not fulfilling your remit"

no 13. At 4:42pm on 29 Jun 2009, John_from_Hendon wrote:

"What will growth be based upon - answer a housing bubble (unsustainable)!!!! - partly in response to #1 above ... So far there has been NO improved (tightened) regulation of the banks or financial sector ... There is NO visible, let alone viable, strategy to get from where we are today to any form of genuine recovery."

no 14. At 4:47pm on 29 Jun 2009, ExcellenceFirst wrote:

"Mandelson can give whatever reasons he likes for why the Spending Review figures will not be published next spring, but we ALL know that the ONLY reason being considered is that it is seen not to be in Labour's party interests to do so..."

no 15. At 4:47pm on 29 Jun 2009, John_from_Hendon wrote:

"I am afraid all politicians are guilty of arrogance - we pay them to 'know' when there is nothing but uncertainty! It is our faith in this that is simplistic - we get what we elect!"

no 26. At 7:58pm on 29 Jun 2009, newsjock wrote:

"This government is completely discredited regarding any sort of financial competency. For Labour to say that government spending will continue to expand is either dishonest or shear lunacy. In either case the perpetator should be locked up. Gordon's political legacy is a near bankrupt Britain."

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Mandy and Brown are clearly doing all they can not to give any ammunition (ie the truth) to us (or to the opposition) and are hoping desperately that continually 'spinning' their 'Conservatives = 10% cuts' line all the way up to the next election will generate sufficient fear* amongst voters to still give them a fighting chance of getting into 'Power' again ... Meanwhile nothing will be admitted/done to improve the situation (or the 'future' of our nation), which will impact all of us for generations to come (as they look after themselves)*. No ideas. No morals. Shame on them, and anyone who knows but lets them (e.g. the BBC).

David Clift, a Future 500 Leader

* Creating fear is a common strategy used by people who apply Poweromics*. 

** Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed). Take a look at http://poweromics.blogspot.com for more info/examples.

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As traditional 'power' changes, what can we expect ?

Power is set to change radically in the next decade - as the balance of 'Power' moves rapidly from the West to the East ... and as it also changes from power in the hands of the 'few' to the 'many' (i.e. 'people power' - powered by the internet).  We have often focused on the latter in this blog, but the former is also continuing apace too ... for instance take a look at a couple of topical examples below:

1. Eastern economies like China are still growing apace and some conspiracy theorists believe the West are trying hard to push national carbon emission reduction targets onto them to slow the pace of their development/growth. Developing countries such as China have predictably responded by saying they want per capita targets (nb the US emits over 4x more carbon per capita than China*), as well as allowances made for the carbon generated to create products that other countries consume (ie export relief), which they argue are the only fair ways to set emission targets & avoid 'trade barriers / wars' ... which are naturally creating debate (though I think China have a robust argument) ... 

2. The shift in power is also occurring with respect to economics and financial strength too. The US has previously been a major beneficiary of the fact that the US economy has been the largest in the world, and US dollar has been the key global currency for some time.  This has meant that resource rich nations with wealth and trade surpluses (such as Middle East and China) have often invested in the US economy and the dollar. But with the demise of the US economy, and the US dollar, China (and other investors) have been hit badly and it's now saying it wants a 'world' currency that countries can invest in instead of the US dollar (nb it has not suggested the Yuan**), which would result in a further demise of the dollar (and the US economy) ... which will ensure a lively future too ...

Troubled times have certainly not passed, it fact it could be argued that they are only just beginning ... (e.g. Russia already agrees with China in a number of these areas and other wealthy resource rich countries could well support such approaches in the future too) ... yet many people are still blissfully unaware of what's going on, or not prepared to take responsibility for doing something about it*** ... and it's still not clear when they will. 'People Power' is here, but most 'people just haven't realised it yet'. 

Perhaps when economies collapse further, unrest starts to grow and/or more conflicts break out, more people will start to ask questions and take responsibility... e.g. when it really starts to impact on them personally (ie they, or their loved ones, are badly affected by it, by perhaps losing their jobs or get caught up in some of the conflicts) ...

* China makes a lot of products consumed by the west, which if taken into account, increases all these figures further too.

** Question: Would the US have done the same thing if they were in China's position?

*** Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.

Talking it up ... or dealing with reality?

'Leaders' (e.g. within Government) are trying desperately hard to build up confidence in the economy again by people 'talking things up' ... rather than 'dealing to reality' ...

There has been talk about the 'green shoots' of recovery, particularly in relation to property prices ... but as highlighted previously, this is still focusing on the wrong things ... 

Until 'leaders' start to 'lead', stop applying Poweromics & Ignoromics, and take responsibility for adding value & changing things for the better, the real problems will continue to get worse, not better ... and this will predictably lead to a mixture of unrest, war and death - the 'systems' diagrams showing this are already contained in my book (chapter 8, P215 - 227) ... as well as key intervention strategies for avoiding it ...

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Comment 15 (leanomist)

A key point that will not go away (for generations) .... 

"With household debt, corporate debt and public-sector debt at record levels in the UK (equivalent in aggregate to 400% or so of GDP)" ....

.... yet people were taken in by the concept of "Prudence" ... the most successful example of 'spin' and the biggest con in history ... and here's another one ...

"But there's a proud history, lots of backbone and a talented squad" ... and "the lesson has been learned (presumably)" .... 

... talented squad? learning from mistakes? ... 'presumably' is the key word here as I've not seen them ... people just try and get better at "spin" (eg Mandy) and at "deflecting blame" (eg. it's due to a world crisis, and nothing to do with us!) ... rather than taking responsibility, admitting/recognising mistakes and changing things for the better ... and how many of the 'leaders' still in power failed to spot the crisis (and in fact tried hard to 'spin' the opposite) ... and yet now want us to believe their predictions for the future (e.g. Government, Politicians, CBI, Economists ...)

I'm afraid innovation, jobs and exports are the things we need to look at, not house prices or football, and many more enterprises, and nations, will go 'bust' due to a lethal combination of Poweromics* & Ignoromics** ... and more unrest, conflicts and deaths*** will inevitably occur unless things change radically and quickly ... which they currently are not ... now history does tell us this ... and the plan is ...?

... to adopt more 'spin' and 'celebrity', talk up the green shoots of recovery, deflect people's attention away from the problems and hope that their memories are short ... the problem is that these 'real problems' are not going away ... they are just getting worse ...

David Clift. A Future 500 Leader

* Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed.

** Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.

***http://books.google.co.uk/books?id=-8xAIgkewOUC&printsec=frontcover (chapter 8)

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Raising it with the Prime Minister III

Here in the UK we desperately need to improve public services and to reduce stress, improve well-being, increase capability and create a successful & sustainable future ... traditional thinking/approaches have failed completely, and many 'leaders' (including the PM) are failing to 'lead' or improve the situation too ...

John Seddon has, for as long as I can remember, been a huge outspoken advocate of change, and has been successfully applying alternative ways of thinking [based on Dr. W. Edwards Deming's pioneering work] which have pushed the boundaries of Lean and Systems Thinking ... [NB John has been doing a lot of great work in the Public Services sector too]. John does not suffer fools gladly, and stands up for what is right, rather than what's counted ... [or popular at the time]! Ever since I've known John he has strongly condemned the use of targets and 'command & control' management practices, which this present Government have unfortunately introduced in droves over the last 10 years  ... but are now slowly being unpicked (e.g. see one of my previous posts)!  

I have often made reference to John's work (e.g. in my book!) and a number of people have signed a petition asking for John Seddon to be appointed as a Public Services Tzar - a role we desperately need, and one which would serve to bring 'fresh thinking' into Government & Public Services too ... I've signed it, and you can click here to sign it today too !

You can also sign the "People Democracy" and "Ask the PM to resign" petitions there too!

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We the undersigned petition the Prime Minister to appoint John Seddon 'Public Services Tzar'

Submitted by Charlotte Pell – Deadline to sign up by: 8 June 2010

Category: Government, politics and public administration

More details:

The public sector is in crisis. We've had enough of the paperwork. We know targets are a problem. The bureaucracy is stopping us from doing our jobs. John Seddon understands why the system isn't working and he knows how to fix it. Support the expert to show the Government a better way.

'We want more Power' ... but do they deserve it?

The Bank of England wants more 'Power' ... but does it deserve it? They have failed to 'lead' and act on our behalf, so why should we give their current 'leaders' more 'authority' and 'power'?

The Government are responsible for setting the wrong targets / goals, removing asset prices (e.g. housing) from the inflation target, and allowing lax regulation of financial services to prevail ... the FSA are responsible for failing to regulate in a proper & responsible manner ... and the Bank of England are responsible for being ignorant to the economic risks and/or choosing to do nothing about them ... 

They are all quite predictably being very careful not to start a blame game - and why? ... because they are ALL to blame ! The Government and the treasury are ultimately responsible, yet there has been no change there, nor in the FSA ... or the Bank of England ...  

Personally I find it hard to believe these groups suffer completely from Ignoromics (and if true they should be fired for this anyway). I do however believe they apply a huge amount of Poweromics and operate with a great deal of collusion. David Blanchflower, arguably one of the better and more challenging members of the Monetary Policy Committee (MPC), is leaving and being replaced by Dr Adam Posen, an American Stephanie Flanders (BBC's Economics Editor) recalls from her days whilst studying economics at Havard (can you see even more of the cosy 'club' here?) ... I think the idea was for us to be re-assured by this, but given the comments made on her blogs it's turned out to be very different ...

... and the solutions proposed are not around changing a member of the crew ... but changing the 'leaders' and the 'system'. Take a look at one of the early comments, and my comments below as well (nb there are many more on her blog too):

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Comment 5 (John_from_Hendon)

MMG - Mervyn and his minions MUST Go.

The whole idea of the MPC and the Governor have some from of understanding and will do the right thing in setting interest rates is proven to be wrong and what is worse it is a dangerous falsehood.

We need a new system - not new bodies!

The fact that the Bank 'knew' (and I have it in writing, under both Eddie George and Mervyn King) that their interest rate policy was designed to create a credit bubble as it deliberately and wantonly ignored asset price inflation means that the system must be changed.

They got interest rate policy catastrophically wrong for at least the whole of the last decade. The also knew that they had done so at the time. They are lilly livered cowards who take the Governments shilling and pretend that they are some from of independent experts and are setting interest rates to the best of their ability and skill. (OK, they may be doing their best - but it is totally inadequate!)

Fire the lot and start again. This time the Bank MUST take into account asset price inflation and imported deflation when setting rates - if they do not - the recession will last decades from one bubble to the bust in shorter and more violent cycles and more of the country destroyed each time. Critical to avoiding this - they must restore SOUND MONEY.

Interest rates must value money at some reasonable positive level sufficient to restrain asset price inflation. Asset price inflation is the cause of the banking difficulties along with too low interest rates that created it. So rates up to 4 - 6 percent PDQ.

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Comment 7 (leanomist)

Did Adam Posen predict the problem well before it happened? I believe David Blanchflower almost did (or was at least the closest in the MPC).

Let's ask a few more simple questions:

1. Traditional 'economics' is dead. Does he realise this? 

2. Does he know that real 'leaders' predicted this situation over 20 years ago, and predicted a "New Economics" being born "Out of a Crisis"... 

3. Does he know who predicted this (nb- he was a 'creative outsider' and not a eminent lecturer in economics at Havard), why he said this, and what the new form of 'economics' will look like*?

Business schools are 1-2 generations out of date (cf 21st century practices) and it appears this is similar in Economics too. What we need to do is to ask basic questions, bring more realism to bear and adopt some effective & sustainable solutions for once (not just ones that benefit the speculators, money lenders and gentlemen's clubs). 

David Clift, a Future 500 Leader

* NB It won't be Poweromics! NB Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed. More info available at http://poweromics.blogspot.com

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Comment 8 (leanomist)

Post 5 John_from_Hendon

"The fact that the Bank 'knew' (and I have it in writing, under both Eddie George and Mervyn King) that their interest rate policy was designed to create a credit bubble as it deliberately and wantonly ignored asset price inflation means that the system must be changed"

===========================

... My conversation with an MPC member re the need to include house asset prices inflation properly would support this assertion too ... and hence I agree with John_from_Hendon's conclusion.

Changing one of the 'crew' will do little to stop the ship from sinking, when the whole system was at fault and focused on the wrong targets/goals ... 

... and if the 'leaders' knew this, but chose to do nothing about it, then removing them is arguably the least that should happen (eg. how about taking the losses out of their lucrative pension 'pots' - they would probably have acted then)!

David Clift, a Future 500 Leader

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Comment 19 (John_from_Hendon)

One of the many tragedies of the western World's regulatory systems is that its interrelatedness is not well understood and frankly I can't think why?

This new chap may be young and dynamic but if he was educated into the same fundamentally flawed ideas of economics taught at Harvard (or Balliol) over the last two decades.

Their teaching MUST have substantially contributed to the Credit Crunch. (Leaving aside Milton Friedman's silly ideas that underpinned and gave intellectual support for Thatcherism and Reganomics.)

We are still doing the wrong things! These are after all the people who gave intellectual respectability to ignoring house price inflation and zero interest rates and the dafter quantitative easing! They seem to be surprised that ever lower interest rates gave rise to ever more exotic and dafter and exotic ways for the financial community to fiddle the books to show that they were still making money.

None of the economists in the current cadre of those educated in the unscientific and 'fake science' of economics in the last quarter of a century are fit and proper persons for any responsibility even over a whelk stall let alone the Bank of England's interest rates policy - they have shown by creating the conditions for the recent credit boom and bust that they have failed and their education is a failure. 

(In this I agree with the opinions expressed by the majority of the posters to this blog.)

(MMG - Mervyn Must Go)!

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For evil to flourish ...

Whilst commenting on Stephanie Flanders blog "The Global Property Scene" (Post 25), I was struck by a fellow contributor (ishkander) who made the following observation (Post 75) 

'In English, there is a saying - For evil to flourish, all it need is for good men to do nothing'

This brought an additional meaning to me for the definition of Poweromics, and Ignoromics, and provided a more spiritual dimension to the 'battle of values' ahead too.

Leanomics vs Poweromics & Ignoromics

where 

* Leanomics = People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect.

* Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed. Take a look at http://poweromics.blogspot.com for more information/examples of Poweromics.

* Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.

Until the Government stops trying hard to make us believe that Property = Wealth .... and focuses on improving community well-being, jobs and sustainable enterprise instead ... underpinned by strong moral values such a trust, honor, responsibility, respect ... the UK is going to continue its rapid downward spiral into oblivion.

Jobs are continuing to be lost and job security is at an all time low. The Government is now worried about unrest too ... perhaps because "The Devil makes use of idle hands" ...

... but rather than using this as an excuse to increase police/security and reduce civil liberties, why don't they 'listen' to the people and focus on solving the right problems, rather than the wrong ones (e.g. trying to make property prices ramp up quickly again, so young people and future generations have to be saddled with huge debt once again to get a roof over their head, and so banks, using our money, can make money from them again) ... 

... I'm afraid it comes down to more Poweromics I'm afraid (or should I be calling it 'evil' ?) ... and as my fellow contributor also pointed out ... our 'listening PM' has 'wooden ears"!  

Ishkandar - Thanks for your posts, and your insight. They have been referred to on the Poweromics blog too ... 

Comment added to Post 94 of the blog.

Raising it with the Prime Minister II

... if only he'd be 'open' to 'fresh ideas'! Like never before, the UK desperately needs 21st century ways of improving well-being, reducing stress, increasing innovation and creating a successful & sustainable economy ... traditional methods have failed completely, and 'fresh thinking' is now required ...

My book highlighted the need for new thinking/approaches over two years ago, and showed the systematic failure which will continue to occur until it does ... The Cabinet Secretary (and Head of the Civil Service) Sir Gus O'Donnell is aware of this, and the gulf between what's needed & what we have at the moment ... however a powerful conspiracy between those in Power (Poweromics), combined with a great deal of Ignoromics, acts as a huge barrier to achieving the types of transformation needed to change things for the better ... 

... take a look at the rejected e-petition below, requesting the type of 'fresh thinking' capable of creating a successful future ... !   'Ideas' on how to improve things are clearly not what this Government is interested in or looking for ... as it appears to them to be endorsing an idea! Whatever next!  ... a PM who has never been voted for ... ?  

Perhaps we have to do it in stages, by signing the "Ask the PM to resign" Petition & the give "People Democracy" petitions first (as these managed to get through) ... then perhaps we can get a PM that really wants to listen and really wants to improves the lives of British people ...

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We the undersigned petition the Prime Minister to introduce lean thinking, systems thinking, lateral thinking and creative thinking into Government, Public Services and Mainstream Education

Submitted by David Clift – Deadline to sign up by: 14 December 2009

Category: Government, politics and public administration

More details:

To introduce, in a structured and effective way, lean thinking, systems thinking, lateral thinking, and creative thinking into mainstream education and public services, as well as strategic decision making and policy formulation within Government.

A massive strategic advantage will be gained by those nations and communities doing this, as failure is systematically reduced and more innovative solutions are created. Unintended consequences are also minimized and public services become far more effective & supportive of the communities they serve. Mainstream education will also improve dramatically, and provide a sustainable & effective foundation for improving individual well-being, community contentment and economic prosperity too.

A number of nations are starting to realize this and are already benefiting greatly as a result - e.g. improved innovation, creativity, prosperity and well-being ... as well as less failure, stress and frustration.

Without these things the UK will fall further behind, as nations slow to act will find it very difficult to catch up.