Morals vs Money ... the 'battle' has begun ...

The Archbishop of Canterbury and the Church have stepped further into the frame and are preparing for 'battle' ...

Following the Occupy Movement setting up their protest camp outside St Paul's, more senior figures, led by the Archbishop of Canterbury, have stepped up their attack on the City, speaking of a financial sector which sets a moral tone for a society which had become "scandalously unfair", and drawing attention to the human cost of financial injustice, as well as the need to reset the debate about financial institutions firmly within the context of a bigger story about what human life is for.

They include:

• Dr John Sentamu, The Archbishop of York, has launched an attack on executive pay, saying that FTSE-100 company chief executives were doing a disservice to society with their remuneration, saying "It is hard to imagine a more powerful way of telling someone that they are of little value than to pay them one-third of 1% of your salary ... and among the ill effects of very large income differences between rich and poor are that they weaken community life and make societies less cohesive."

• Ken Costa, a former bank chairman (of investment bank Lazard International) and the Church’s newly appointed leader of an initiative/commission to build links with the City and build bridges between the anti-capitalist protesters and the City (appointed by Dr Richard Chartres, the Bishop of London, following his 'u-turn'). Mr Costa has already said: "It will look at how the market has managed to slip its moral moorings, and explore pragmatic ways of uniting the financial and the ethical." 

• Dr Giles Fraser, the cleric who quit as canon chancellor of St Paul’s, said there was “financial injustice” that had to be addressed. He resigned from the Chapter of St Paul's as clerics fell out over how to deal with the Occupy London protesters camped outside, and has added that the Church should highlight the human cost of financial injustice, but warned its leaders against "proposing specific answer to complex economic problems."  

"Rather, it's the calling of the Church to draw attention to the human cost of financial injustice, and to reset the debate about our financial institutions firmly within the context of a bigger story about what human life is for," he said.

The cathedral executed a u-turn after the intervention of Dr Williams, who sided with the anti-capitalist protesters camped outside the cathedral, and as a result the Corporation of London has now had to suspend its legal action.

Dr Williams, has also called for specific action, calling for the introduction of a financial transaction tax (sometimes referred to as a 'Robin Hood' tax), and started to intervene after becoming increasingly dismayed at the stance taken by Richard Chartres, the Bishop of London, who backed the legal action to have them removed. 

There is still quiet concern at the Cathedral that the stance now being taken by senior clerics and the Church will put off City donors ... who significantly fund St Paul's Cathedral ... which goes a long way to explaining the initial desire of some (such as the Bishop of London initially) to start legal action to remove the protestors ... 

The 'battle' has indeed begun ... Morals vs Money ... and it's not going to be easy ... as even some in the church have clearly initially struggled with this!

From a historical perspective, by not allowing protestors to protest in 'The City' or outside the Stock Exchange, and with the Occupy Movement subsequently choosing to camp out at St Paul's Cathedral instead (which is next to the Stock Exchange), little could they have known that this would spark into action one of largest movements in the world, and see the Church step into the frame to back their cause ... a ground-swell within the Church is clearly developing and gaining a renewed sense of vigor ...

PS Ed Miliband has finally stepped forward again today by writing an article ...

The banks are to blame ... and King's surprised people aren't more angry!

In an interview with the Daily Telegraph, Mervyn King has urged high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.

He accused them of routinely exploiting their millions of customers, stating “If it’s possible for them to make money out of gullible or unsuspecting customers, particularly institutional customers, they think that is perfectly acceptable.” [More evidence highlighting that ignorance is not bliss, and that those misusing power think it's perfectly acceptable to exploit it!]

The Governor also criticised the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.

Mr King expressed regret for not sounding a louder warning over his concerns before the last banking crisis [NB Is this an apology? IMHO he should have been sacked for this!]. The Governor’s remarks are a warning to George Osborne, the Chancellor, as a government commission considers whether to force high street banks to sell off their investment banking arms [NB IMHO this is a must and a no-brainer!]

Mr Osborne is thought to be against such a plan [NB as he's trying to look after his friends in the City!], but Mr King is due to ultimately become responsible for banking regulation and his views are, therefore, critical. In the interview, the Bank Governor said: “We allowed a banking system to build up which contained the seeds of its own destruction. We’ve not yet solved the 'too big to fail’ or, as I prefer to call it, the 'too important to fail’ problem. The concept of being too important to fail should have no place in a market economy.”

When asked whether there could be a repeat of the financial crisis, Mr King said: “Yes. The problem is still there. The search for yield goes on. Imbalances are beginning to grow again.”

Mr King suggested that the culture of short-term profits and bonuses within the banks may ultimately be responsible for the problems. He says that traditional manufacturing industries have a more “moral” way of operating [i.e. banks have few(er) morals!] They care deeply about their workforce, about their customers and, above all, are proud of their products. With the banks there isn’t that sense of longer term relationships. There’s a different attitude towards customers. Small and medium firms really notice this: they miss the people they know”.

The Governor added that good businesses “keep a clear vision of who their customers are, and are run by people who don’t think they should simply maximise profits next week.” He said that the payment of bonuses is part of this cultural problem. “Why do banks in general want to pay bonuses? It’s because they live in a 'too big to fail’ world in which the state will bail them out on the downside.”

Over the past 30 years, he says, “we changed Britain away from a sclerotic economy with inefficiencies and problems in labour relations. Everyone got to the point where we no longer expected government to bail us out. Everyone bought in to market discipline. We were all better off. It was working very successfully.” But now, people have every right to be angry, because “out of what seems to them a clear blue sky”, the crisis comes, they find they lose their jobs and there’s the sharpest fall in world trade since the 1930s. “But, surprise, surprise, the institutions bailed out were those at the heart of the crisis. Hedge funds were allowed to fail, 3,000 of them have gone, but banks weren’t”.

The comments will embarrass the Chancellor, who recently concluded a deal with the banks under which they would be able to resume the payment of bonuses in return for boosting lending [IMHO this is yet another act of treachery, from a Tory millionaire looking after his friends in the City, and who also fund his party].

So why aren't people more angry? ... well there's Ignorance of course ... but there's also a great deal of Apathy! Apathy is a disease in Britain ... a disease that will result in millions of lives being blighted!

Monetary rewards - a recipe for success ... or failure ?

Are monetary rewards the passport to 'success' or a recipe for 'failure' ... should a company incentivize its people to innovate? 

This great 10 minute clip does a fantastic job at answering the above questions ... 

The clip successfully highlights the fundamental flaws in traditional enterprises and economies, as well as the fallacy of "incentivizing" people using monetary reward too* ...

It also goes on to explain what really motivates people ... nb the idea that money is not a motivator is well known and has been for some time (well over half a century in fact) ... as Maslow, Herzberg, Deming (and myself) have all pointed out!

So why is it not prevalent in enterprises and communities all around the world today?

Is it down to ignorance? ... well partly, for instance most mainstream business schools are still teaching flawed and outdated practices! 

Is it down to apathy? ... well partly, given many of those who know better chose not to do anything about it. 

Whilst ignorance and apathy are partly to blame, IMHO the main reason for it is that those currently in power (and who apply Poweromics) like to use monetary reward as a way to 'control people' and to get them to do what they want them to do (whether it's best for customers/company/country or not). Politicians/bankers also deliberately use debt to control people and create compliance too (see 'debt slavery')! 

So it's not hard to see why it's not prevalent yet ... it's because those abusing power like to use it to control people for their own personal gain ... despite the fact that it destroys motivation, the performance of enterprise and the long term success of the country.   

* NB the City's drive to profit from speculation and their ability to profit from the buying and selling of shares are also problematic too. For instance, city bonuses drove 'fraudulent' types of 'innovation' and the creation of 'toxic' financial 'products' (e.g. C.D.O's, C.D.S's and Self-certificated mortgages). City bankers profited heavily from gambling using these products (e.g. creating pyramid schemes using other people's money) ... and left taxpayers to pick up all the losses (resulting in massive Government debt, tax rises and cuts to public services). The City also speculates with shares and profits heavily from the process of buying and selling shares too (nb with bankers again not risking any of their own money). This speculation results in the entire share stock of most publicly traded companies being bought and sold in less than a year, and   results in most executives being incentivized by substantial cash bonuses for creating short-term profit/results too (at the expense of long term sustainable success) - just like the bankers themselves!

Connection between 'worth' and 'reward' obscured

The Archbishop of Canterbury, Dr. Rowan Williams told BBC Two's Newsnight programme: "There hasn't been a feeling of closure about what happened last year" ... "We haven't heard people saying 'well actually, no, we got it wrong and the whole fundamental principle on which we worked was unreal, was empty'."

What we are looking at is the possibility of a society getting more and more dysfunctional if the levels of inequality that we have seen in the last couple of decades are not challenged. Dr Williams went on to say ... "It's a failure to name what was wrong. To name that, what I called last year 'idolatry', that projecting [of] reality and substance onto things that don't have them."

He also said that the crisis was a lesson that "economics is too important to be left to economists" ... and he went on to suggest there was a role for "awkward amateurs" in examining how the City operates.

Dr Williams also said there was a sense of "bafflement" and "muted anger" at the bonus culture and said "I think that's one of those things that feeds the... diffused resentment, that people are somehow getting away with a culture in which the connection between the worth of what you do and the reward you get becomes more obscure".

He could have gone a lot further, and questioned the value/ethics of building an economy based on 'gambling' (instead of adding real value for communities), and the legitimacy of gambling with other people's money ... allowing a small minority to profit greatly when it goes well, only to be bailed out by the vast majority (taxpayers) every time it goes wrong.

He didn't mention the need to split commercial banking from investment banking, but he did mention the importance of 'wealth creation' (value creation & well-being) compared to 'wealth manipulation', which I have referred to in past blogs ... Leanomics will need to replace Poweromics (in terms of 'economics') very soon if our nations are to have any chance of a survival, 'success' and a 'sustainable future'.

More people need to take responsibility and challenge what is happening (see 'for evil to flourish') and as far as having 'awkward amateurs' examining how the City operates - I couldn't agree more ... in fact Leanomics would naturally create this ...

As time goes on, and things get worse, such messages will get progressively stronger, highlighting the fundamental lack of ethical and moral values prevailing in our 'leadership', as well as the fundamental gap (and flaws) between 'creating value' and 'monetary reward' that current exist ...