Brown: The collapse of the UK economy was down to me

Gordon Brown today admitted he made a mistake in not introducing tougher bank regulation when he was chancellor.  The PM, chancellor from 1997 to 2007, said that in the 1990s the banks had all been calling for less regulation.

"And actually the truth is that globally and nationally we should have been regulating them more," he said in an interview on ITV1's Tonight.  The Conservatives said Mr Brown had "failed", while the Liberal Democrats said his admission was "not enough".  The prime minister said he should have put the "whole public interest" before the banks.

Mr Brown said: "In the 1990s, the banks, they all came to us and said, 'Look, we don't want to be regulated, we want to be free of regulation'." ... "All the complaints I was getting from people was, 'Look you're regulating them too much'. And actually the truth is that globally and nationally we should have been regulating them more," he added.

"So I've learnt from that. So you don't listen to the industry when they say, 'This is good for us'. You've got to talk about the whole public interest."

Ed Balls, who worked with Gordon Brown when he was chancellor, said both had previously admitted they should have done more to control the financial sector.  At Labour's morning press conference he said: "In retrospect we should have been tougher with some of the investment banks which did not know the risks they were running."

Business Secretary Lord Mandelson added: "Regulation should have been more intrusive and the regulatory practice of the Financial Services Authority should have kept pace with the fast-changing developments in the financial services sector."

Shadow chancellor George Osborne said: "So finally Gordon Brown admits he failed to regulate the bankers and increased taxes on the poor (removing the 10p tax band). We've had 13 years of his economic mistakes. Britain can't afford five years more."

Lib Dem Treasury spokesman Vince Cable said: "It's not enough just to hold your hands up and say sorry without having a plan for making sure that the same thing doesn't happen again."

Most people (particularly in the blogosphere) know this already, and many (including myself) believe admitting to being partially responsible for the worst economic mistakes for generations is not enough (i.e honesty) - if he had represented us properly (which as Prime Minister is his job!) he would have always acted in our interests (not the banks), if he was a capable leader he would have asked far more questions (rather than simply listening to the banks), and if he was selfless, honest (and honorable) he would have admitted his mistakes at the time (and resigned without question or delay) ... instead of using spin to create a smoke-screen (e.g. a 'global problem') and deflecting blame onto others (e.g. America - which President Obama will never forget) ... both strategies regularly adopted by those who apply Poweromics* (to maintain their grip on Power).  Given we are fining the leaders of Northern Rock for their failings, perhaps we should fine/charge Gordon Brown for his role too**, so he is made bankrupt, never forgiven and never allowed into a position (or to profit from a position) of power again (e.g. relinquishing any right to a position in the Lords)*. 

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

** NB In China he would have been locked up and probably receive the death penalty (for 'economic sabotage').

Stress - a challenge to 'management' ... and the 'economy'

Whilst some arbitrarily debate whether recovery is already on its way (e.g. based on outdated & flawed GDP measures) ... and others debate what more Quantatitive Easing actually means ... real insights about our 'economy', and some of the additional challenges/chasms ahead, slip out ... almost unnoticed !

With Government debt continuing to grow, with more businesses collapsing and with tax revenues falling rapidly, it doesn't take a rocket scientist to work out that the day of reckoning is not far away. The current Government have simply chosen to defer it - i.e. until after the general election next year - so they can avoid any blame and pass the problem onto someone else (Trust, Honor, Responsibility, Respect - I think not!)

After the general election, the delayed/stored up reality check will hit (like a tsunami), with unprecedented tax hikes and the slashing of public sector jobs (in a desperate attempt to balance the books). Unemployment will continue to rise and the systematic spiral of failure will continue to grow. Unions leaders are already predicting this and are preparing for battle - blaming politicians policies (and bankers greed) for the mess the UK economy is in.

Enough to cause a 'double-dip' recession? The unions certainly think so and so do I. What's more, what they've been referring to so far is arguably just the tip of the iceberg ... so let me explain ... and refer to more insightful news stories published today too ...

Outdated leadership and management practices (19th/20th century), demonstrated by most UK leaders/managers today (including politicians, civil servants etc), primarily focus upon extrinsic motivation, self interest & personal gain ... with managers in offices (remote from the work) making all the decisions, telling people what to do and driving them to hit arbitrary targets in order to get a bonus ... rather than going to the front line, listening to customers/staff and supporting front-line staff in their quest to continually improve how value can be provided to customers (nb this is what 21st century leadership and management practice is all about - take a look at my book for instance) ...

The former systematically generates frustration and stress, for customers and front line staff alike. It also drives people to manipulate 'the system' in order to meet their targets & goals; deflecting people away from the real purpose of the enterprise (i.e. to create value for customers) which destroys teamwork, morale, and the future of the enterprise too. Such practices have also been shown to systematically generate between 40-90% waste in terms of both time and resources as well - i.e. traditional enterprises spend most of their time (and resources) wasting time, effort and money, for their customers ... whilst stressing them out in the process too ...

... and a traditional manager's response to this ... "it's just the way work is" ... and "let's send everyone on a 'stress management' course - to help them to process stress" (and to also reduce the risk of being sued!) ...

The problem with the traditional management statements above is that they are both wrong - and flawed. 21st century management practices do not involve helping people to 'process stress' - they focus on systematically 'eliminating stress'! ... so there is no need for stress management courses at all ... (i.e. such courses are a 'cost of failure', and they do not reduce the risk of leaders/managers being sued either).

Enterprises applying 21st century leadership and management practices do not just transform the performance of the enterprise, they transform the lives of people - forever, and for the better. Most enterprises applying such practices quickly transform their capability (e.g. improvements of between 40-1000%) and change out of all recognition. Staff moral is positively transformed and stress is systematically reduced. People are naturally motivated to innovate, to add value and to help others. They are also more than capable of finding new ways to improve current products/services and to find new products/services that would allow even more value to be created too (given the opportunity). All they need is clear direction, as well as trustworthy leaders & managers who support them on the front line, who listen, learn, and help them to systematically improve how value is provided. Again not rocket science - just rarely practiced in traditional enterprises.

Stress, and the impact of stress, on people is heavily responsible for the 'eighth waste' in 21st century management practice ('untapped talent') - as it destroys people's desire/ability to contribute, to be creative or to think rationally (e.g. take a look at Ch. 8 of my book). It also impacts on people's overall well-being, as well as the well-being of those around them ... which impacts on communities/nations as a whole too (NB hence it's inclusion in the 'BUTS' test).

The National Institute for Health and Clinical Excellence (NICE) today said the cost of work related mental illness was £28bn - a quarter of the UK's total sick bill, and it also made clear that the stress created as a result of bad management/managers was the single biggest cause of problem. The 'economic loss' of stress goes way beyond the £28bn referred to here too ... this is literally just the tip of the iceberg.

Those leaders who believe stress management courses will 'protect them' from 'being sued' are I'm afraid also sadly wrong ... as 'ignorance' is 'not bliss' (or a defence - nb landmark cases are already occurring - but are mostly settled out of court to avoid publicity). The writing is on the wall now that 21st century leaders & managers have demonstrated the capability/outcomes created from applying 21st century practices ... which highlight the way forward, as well as the fundamental flaws in traditional practices ...

21st century leadership/management practice and examples will no doubt be used in evidence against those continuing to apply outdated traditional 19th/20th century practices ... and as millions of law suits start to get filed, yet more traditional private enterprises will go bankrupt ... and yet more taxpayers money will be diverted away from providing front line services (to pay for millions of out-of-court settlements) ... joining all the taxpayers money already being diverted to service Government debt, as well as the colossal (and unfunded) civil service pension liability ...

Double dip, absolutely ... a 'triple dip', and a 'quadruple dip' to follow, very likely too I'm afraid ... unless current leaders/managers change course dramatically, and quickly ...

The UK could successfully turn itself around (nb Singapore did it), but it will require very different political leaders to the ones we have now ... and things are going to have to get much worse before the level of Ignoromics reduces sufficiently for Poweromics to be effectively challenged ...

Referred to in Stephanie Flanders blog "Is Britain growing yet"? (post 64).

A bankrupt system and a vacuum of ideology

Robert Peston seems to be doing a much better job than Stephanie Flanders (BBC economics editor) and Nick Robinson (BBC political editor) these days, as he explained in his recent blog ... where we are, the people responsible, the dilemmas they now have and the vacuum of ideology that exists ... e.g. take a look a few key points below for instance:

"... it is by no means a trivial political event that Gordon Brown should make an explicit attack on what he called a 'bankrupt ideology' that 'markets always self-correct but never self-destruct' ... a somewhat delayed reaction to that recent spot of bother for banks ...

... but this wasn't just any old failure of markets. It was a system breakdown that has prompted a theological crisis for most mainstream economists and an existential crisis for those whom we trusted to deliver financial and economic stabiltity, viz regulators, central bankers and finance ministers ...

... and for politicians ... such as Gordon Brown ... there's something of an ideological crisis .... It's all very well to say, as he did, that 'what failed was the right wing fundamentalism that says you just leave everything to the market and says that free markets should not just be free but values-free' ...

... but for years his government was seduced by this so-called fundamentalism ... and if Brown no longer trusts markets for the efficient allocation of precious resources and the optimal pricing of goods and services, what does he trust? ...

... if markets are no longer the best guarantor that resources won't be wasted in commerce or public service, what is the new insurance policy of optimal resource distribution? ...

... it's all very well to ditch a faith, if it can't be sustained by the facts. But I suspect that voters will want to know what will fill the vacuum ... and although bashing bankers' bonuses may resonate with many, it's not really a comprehensive industrial or economic policy."

To which I added the following comments below:

... "Wise words Mr Peston - perhaps you should be political editor and economics editor too.

* Traditional economics is dead.

* Traditional politics is dead.

* Traditional enterprises are dead.

* Traditional nations will also die, unless they change the above very quickly.

Can Brown fix it .... No - he exacerbated the problem in his 10 years as Chancellor*

Can the Tories fix it .... No - they haven't got a clue, and if they did they wouldn't do it anyway.

Vacuum - there is ... at present ... but as ignorance reduces and things get much worse (which they will again soon - as nothing has been done to address the above issues) the 'battle' of the future will begin - a 'battle of values' that transcends nations (take a here for instance) ... and successful nations will emerge out of the crisis powered by a new form of leadership, economics and politics (which was predicted over 20 years ago but is just starting to come to the fore now) ...

History tells us change things will, and with modern 21st century technology, change will happen in many different ways ... but history also tells us the UK is unlikely to one of the successful nations ... unless it responds right now and it does not falter in this goal.

David Clift, A Future 500 Leader

* Brown was responsible for introducing the 'targets culture' and for driving in highly wasteful 19th century management practices, as well as focusing on a flawed economic strategy which was over reliant on the city, fueling it by overseeing the removal of the constraints that kept commercial & investment banking separate (brought in after the last great depression!), then bailing out the banks with our money without fixing the fundamental problem (and a problem he himself had previously helped to create) ...