Tuesday, 3 November 2009

Economists - new clothes or no clothes?

Stephanie Flanders today posted on a blog entitled the 'economist's new clothes'. Whilst starting a little debate, it choose to refer to the 'latest spin', rather than address the revolution in 'economics' we are likely to see. Hence adding the post (75) below:

IMHO traditional 'economics' is 'too narrow' in scope and also 'out-of-date'. It has also 'failed' hard-working people and is now effectively 'dead'.

But attempts to improve it, change it or widen it, will always be resisted. Dr W Edwards Deming, a creative outsider and a real 'leader', uncovered the "System of Profound Knowledge" and referred to the need for a "New Economics" (over 20 years ago) ... but, when terms are so out of date new words/definitions are needed, and for that reason, and for those interested, I am continuing his work ... using the definitions below:

* 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.

* 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.

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

It is worth noting virtually everything fundamentally centres around 'people' and the 'values' they uphold. It is also worth noting that Ignoromics is what allows Poweromics to flourish, and in my view this summarises the current (and widened) definition of 'economics' that prevails today.

Why not take a look at what 'leaders' everywhere are doing (e.g. your boss, company, service provider, government, politicians, media ...) and look at how many people understand this and/or prepared to do something about it ... I think you'll find its small ... albeit steadily growing (helped by the internet, and recent activities of banks/MP's etc).

IMHO the battle of the future is really one of values, and given the above definitions, can be simply summarised as ...

Leanomics v Poweromics & Ignoromics

For those interested I hope this is helpful ... and I would certainly recommend the work of Dr. W. Edwards Deming ( as well as http://poweromics.blogspot.com ) as a good starting point for looking into this further ... people are still amazed (and learning) how profound his insight actually was ... e.g. he told us far more about the future of economics than Richard Thaler in his lectures and book (I went to one of his lectures in London around the time of release of Nudge). I think you'll find people are still flocking to the latest incremental ideas, not more revolutionary ideas, yet only the economies moving rapidly to the latter will survive and prosper e.g. Singapore's turn-around - http://poweromics.blogspot.com/2009/10/asking-questions-doing-things.html

Whether people like it or not, the clock is ticking away and time is rapidly running out for most economies.

... I also added the following post referring to a previous bloggers (post 74) comments ...

"... Sheer self-interest or FUJIA !! So long the steerers can gain relative to the rest, they will carry on being motivated !! It doesn't matter what the price of beans is, if someone has more beans than someone else, he is relatively wealthier !! ... It's all relative, as Einstein was alleged to have said !! :-) ..."

I couldn't agree more - one of the main drivers of "poor moral values, self-interest and greed" (see post 75) is ENVY ... which drives/motivates people to want more than someone else, particularly those they compare themselves with, hence the term 'keeping up with the Jones's' - it's not absolute wealth that bothers most people, but relative wealth to those they continually compare themselves with, which drives poor moral values, self-interest and greed.

IMHO only a return of 'fundamental values' (e.g. trust, honor, responsibility, respect) will turn around 'economies' in a sustainable way now, and time is on no-one's side.