A failing country - rewarding irresponsibility, corruption and cheating

In a speech in London, Ed Miliband, the current leader of the Labour party, admitted that, following a decade in power, voters looked upon Labour as the party which protected claimants abusing the welfare system (cheating), allowed reckless gambling in the City (corruption) as well as the reward of failure in the boardroom (irresponsibility). 

He said "Labour - a party founded by hard working people for hard working people - was seen by some, however unfairly, as the party of those ripping off our society".

The Labour leader said the party must now focus on changing this perception, he said Labour must become a party that "rewards contribution, not worklessness." He said Labour must also focus on rewarding "entrepreneurship" and "wealth creation", and said that Labour "must change" in order once again to be "the party of the grafters". 

He said Labour had failed to change the 'take what you can culture' (i.e. 'greed') and had "failed to change the ethic of the country" ...

Indeed so ... and they have now effectively admitted it! 

In fact the truth is they made things far worse ... as they showed that Labour, a party backed by the unions, and supposed to represent the interests of honest hard-working people, failed to represent their interests at all ... and, corrupted by power, and focused on media sound-bites and self-interest, acted recklessly and irresponsibly ... without any moral/ethical values at all ... 

Indeed Labour politicians promoted the line 'greed is good', and 'took what they could' for themselves (e.g. just take a look at the expenses scandal, and at all the executive/non-executive positions in large corporations/banks they took up for themselves) ... as they 'milked' their position of power, whilst preaching the moral high ground to everyone else! The truth is that New Labour, during their decade in power, destroyed the country ... and the vast majority of people in the UK are now paying the price ... (nb Tony Blair, on leaving office, immediately joined the bankers, and paid £1m/year for doing virtually nothing!) ... 


So should we trust them now ... definitely not (nb Ed Miliband was himself part of the Government that destroyed the country - and will say anything to regain power). Ok, so should we trust the people currently in power ... definitely not.


One day there will be change ... but it will be led by very different people, and not the leaders of any of the current parties. It's a shame the unions didn't bite the bullet and create a new party to really represent the people (as they threatened to do following all the expenses scandals) ... to fight corruption and greed, as well Miliband, Clegg and Cameron.

House prices - An obsession with failure

Stephanie Flanders recently commented on the Nationwide saying house prices are the same as they were a year ago (i.e. no longer dropping), but asked if this is 'too good to be true' ... take a look at a few of the key issues raised below for instance:

"... house prices are rising in a market where very few properties are changing hands. As the Nationwide points out in today's report, the housing turnover rate - the percentage of the private sector housing stock changing hands on an annualised basis - is still only 4%. That's not much higher than it was at the end of last year, when literally no-one in the market wanted to do anything. Before the crash, turnover was 7-8% ...

... you might expect prices to carry on falling in a market with such little activity - because usually low turnover reflects the fact that everyone expects prices to fall. But the relationship breaks down if there's only a tiny number of houses up for sale. That seems to have been true for most of this year and it's still true ...

... if prices stagnate, or fall further, there'll be plenty who worry about the knock-on effects for confidence and the economic recovery. But it would be good news for young people who are otherwise bearing the brunt of this economic bust ...

... from an economic standpoint, the rise in house prices since the early 1990s has been a massive transfer of wealth from young wannabe home-owners to the older generations who bought when the going was good. It's worked like a tax on young people -and a windfall to large numbers of the middle-aged and old ...

... One way or another - whether through higher lifetime taxes or unemployment at a crucial time in the career - young people are going to be paying for this crisis for a long time to come. It would be no bad thing if they could at least come out of it able to afford a home".

To which I added the comments below:

A good article ... I've haven't read this blog for a while (partly due to poor journalism and partly due to blog spamming from a small minority) ... but having done so today it's good to see the quality of journalism appears to be improving slightly ... IMHO for economic recovery to resume in a sustainable way we need the folly/obsession with house prices to stop, we need to introduce a 'land value tax' into the economic system and challenge planning regulations / restrictions imposed to serve the interests of just a few (i.e. the landowners - e.g. Duke of Westminster et al).

More houses will then be built and young people will then be able to afford a roof over their head, without having to give most of their hard-earned money away each month to bankers in the way of interest. Some of revenues raised from a land value tax could also be re-invested into real value adding activities that create jobs and wealth (instead of manipulating wealth) which would create a more sustainable economy and reduce our debts, balance of payments and trade deficits.

A few areas your report does not refer to however are when interest rates start to rise again from their historic low (e.g. due to inflation from import costs rising with the increasing demise of the pound), continued job losses (and the impact/cost of this to the taxpayer and public debt), as well as lack of opportunities available to young people and the debt we are asking them to take on to go to University.

They will not forgive us, or the leaders who forced this upon them. We must also remember that hard-working people can choose where to live (ie. work and pay their taxes) and can move freely in the EU now too, and as more of them leave the tax burden placed on those remaining will start to spiral upward until they also decide to leave too ... the outcomes are entirely predictable, but an effective intervention strategy from this Government to deal with the problems we face is not.

The "illusion of wealth" and the 'illusion of freedom" ...

Flanders blog "Spending Rows" was an interesting one .... as a number of comments went on to explore more fundamental issues too - like the real reasons the UK is in such a mess ... this is nothing new, but I was struck by one of the last comments ... about the "illusion of wealth" and the "illusion of freedom" ... which I thought I'd share (Post 54 below), with a few additional thoughts ...

–––––––––––––––––

Post 54 (MrTweedy) wrote:

We recently had the "illusion of wealth" through debt, and we are still developing the illusion of freedom through mass market exploitation. Unfortunately, mass market exploitation encourages reckless and feckless behaviour, which in turn acts as a drag on the general economy and the welfare state.

The whole thing is a balancing act, between the positive and negative affects of liberal behaviour. The more liberal we are, the bigger the potential mass market, and the bigger the potential profits for those at the top of the pyramid.

The recent asset bubbles eventually became unstable due to excessive gearing/ leverage. Similarly, if the British population becomes too free (excessive freedom), the liberal bubble will burst, and we'll end up with a bankrupt welfare state and an ungovernable workforce.

In this context, "excessive freedom" is a lack of restraint amongst the wider population. Examples include: health problems, such as diabetes, caused by lack of moderation in diet; drug and alcohol addiction; marital breakdown; financial debt; distrust of authority; loss of social capital and increased individualism; mental health issues due to psychological manipulation from the marketing of lifestyle products and the motivational science of business and the effects of a fast edited media frenzy; trafficking of prostitutes for the sex industry; lack of purpose and lack of shared values; lack of good education, despite half the population possessing a degree; etc etc etc......

Unfortunately, all the above have a financial effect on the economy. 

The three main political parties in Britain all have a liberal mass market agenda, because they know it is much harder to contain the negative affects of liberal behaviour than it is to benefit from the positive affects. They all live in hope of constant economic expansion keeping the balance positive. However, there is a significant risk that the balance will move to the negative as the unstainable elements outweigh the positives. If and when this happens, the liberal bubble will burst and Britain will end up morally and financially bankrupt. We will then have to beg the adult countries of the world to bail us out.

–––––––––––––––––

Post 55 (leanomist) wrote: 

Eloquently put Mr Tweedy (Post 54)

I also believe that many of the results of 'excessive freedom' quoted are generated from the application of outdated 'economics'* too ... 

which systematically generates 'divides' (e.g. individualism), 'waste' (between 40-80% of our taxes are wasted) and 'stress' (e.g. just trying to keep a basic roof over the head**), as well as driving more 'self interest' and 'greed' too (ie. it 'amplifies' them). 

Such outcomes make the overall 'economy' worse, and gives lots of otherwise hard-working people 'little hope' (e.g. future generations) - i.e. the 'values system' is broke, and 21st century 'economics' will have to rebuild it ...

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. Take a look at http://poweromics.blogspot.com for more examples/information.

** If the Government had ensured a steady supply of housing (an actual asset) over the last decade, the focus on property prices going up (asset inflation) would have been much less (and the banks would not have been able to profit so greatly from this failure). When the Government introduced inheritance tax they also made 'land' one of the few things exempt from it too! ... how about taxing 'land ownership', as people cannot avoid it by moving their 'land' abroad, and it would make the mega-rich landowners (e.g. the Duke of Westminster) more likely to release some of it, instead of snapping up more of it and holding on it (nb footballers on £100,000 a week are starting to cashing in on this loophole too) ... so our children don't have to pay 'an arm and a leg' just to get a 'roof over their head', and get more 'freedom' to be 'innovative & creative' too ...

–––––––––––––––––

BBC - Journalism is failing ...

Poweromics Lite - A behind the scenes view of BBC news from Peter Sissons, pointing out how journalism is failing ... which add further weight to previous observations made by Jeremy Paxman ... 

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!

––––––––––––––––––

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.

Massive executive pay is not justified, or needed !

For the global collective of corporate executives, Jeroen van der Veer has just uttered the worst possible heresy.

The chief executive of Shell has said - according to a report in today's Financial Times - that the way he performed for his colossal oil company was neither improved or worsened by the substantial sums of money he is paid.

Most hard-working people already know this, but top executives will be very angry today for someone braking ranks and saying it ...

Take a look at Robert Peston's blog for more detail ... as well as my comments below ...

––––––––––––––––––––

Comment 11 (leanomist)

I think most people on the front line realise this already - it's simply another corrupt & cosy "Gentlemen's club", that apply Poweromics* ... which is being exposed now for all to see ...

Non-executive renumeration committees are part of the same cosy club - and get the favors paid back to them in return ... the fund managers are part of the same game too (and will also join the firing line) ... The losers are the vast majority of people, who work hard, pay their tax and now live in fear of their job ... whilst others 'gamble' away (and profit from) their pensions (and avoid paying as much tax as possible too) !

Most people in these clubs are 'not entrepreneurs' and normally from the finance community. They are also rarely innovative and tend to systematically destroy long-term value, prosperity and growth (e.g. by failing to innovative and applying simple cost cutting exercises) to obtain a large bonus for achieving short-term financial targets and goals**... people we should challenge, stop and/or retrain in 'value management' ... (not reward them with ridiculous salaries, pensions, bonuses, and pay-offs for failure!) ...

Massive corporate pay settlements and rewarding failure have had their day ... and clear self interest, poor moral values and greed have also had their day too ... the application of Poweromics* is being challenged in Government and it's going to be challenged in business too ... 

More people can see it now and it's not going to go away ... for instance I'm writing a Poweromics* blog with more examples to make sure it doesn't ... and to make sure its addressed once and for all ... and anyone who is doing the same will be linked from it too ...

Poor management** and Poweromics have had their day - and with the help of the internet they will soon change forever, and for the better ... because hard-working people will keep the pressure on until it does ... they will vote with their 'voice', their 'feet' and their 'wallet' ... and when the latter two start to occur let's see what happens ...


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 ... take a look at my previous comments and at http://poweromics.blogspot.com for instance.

** 21st century leadership and management are completely different to traditional leadership and management, and focus on continuously improving the long-term value of an enterprise and the lives of people ... not creating fear and sacking them.

––––––––––––––––––––

With mutiny abound, are we bound to get Democracy?

Minister resignations are abound ... but 21st century leadership and management is really what we need ... changing the 'captain', the 'song', or the 'band' will not stop this ship from sinking ... it'll just change who's first to the life-rafts ...

 

... and the time for more fundamental change is now ... but we want a 21st century democracy and a proper say ... 

"Democracy should happen every day, not just on election day"

Take a look at Nick Robinson's blog and my comments below:

––––––––––––––––––

Post 162 (leanomist)

A re-shuffle just after an election is a well known political move by the 'leader' to say - "you were not happy ... but we've changed things ..."

What rubbish ... the only thing that's not changing is the one person in the country who believes he's the only man for the job - ie. Gordon Brown himself!

He can no longer hide behind a moral facade ... it's not what you say, it's what you do (and don't do) that counts ... that's what we're bothered about and that's what all politicians should be judged on ... the age of 'spin' has gone ... and attempting 'moral' spin (referring to their upbringing rather than what they're doing now*) is arguably the most disgraceful form of all ...

However, there are probably few people in his party now that people will believe, or trust (except Frank Field perhaps?) ... do people really trust Hazel Blears as a Minister, or Ed Balls as Chancellor of the Exchequer? If they did, there wouldn't be so much talk of Gordon Brown asking Vince Cable to do it ... !

Ed has built a reputation - but for 'Spin' ... and 'Spin' has had it's day!

We need real 'leaders' who can actually 'lead' ... eg listen, learn, care & support, and show respect, sound knowledge, good judgement, responsibility & an ability to take effective action ... rather than focusing on 'celebrity', 'rewarding failure' and 'making sure they'll be ok'. The Government have wrongly got wrapped up in 'celebrity' ... people do like celebrities, but politicians want a bit of it to rub off on them ... and they also love the fact that it diverts people's attention away from what they are/aren't up to too ... at least most of the time (eg. when Joanna Lumley etc get involved with the Gurkas)!

We need 21st century leaders and 21st century management (not 'spin-doctors' or 'celebrities') and at the moment we have neither ... and the scary thing is they do not seem to be visible in whatever 'color of party' you look towards ... which is probably why so many people are currently so disaffected/frustrated ... and perhaps considering voting for 'more extreme' parties to make a point !

... Given this perhaps we need an intermediate stage, where we vote for those who will truly (and rapidly!) give us a 21st century democracy, which may then start to attract more honorable, respectable and capable people into these roles ... but who can we trust ?!?

Whatever happens, if we don't change radically soon, moral & financial bankruptcy will continue to accelerate (and feed off one another) ... and bring the UK to it's knees... 

We need to make sure we stop the 'rot', ensure everyone can have proper say and are effectively represented (every day, not just on election day).

David Clift, a Future 500 leader and Poweromics** blogger

* Why did Gordon Brown allow himself to represent us at the D-Day remembrance (instead of the Queen - our Head of State) as soon as he found Barack Obama was attending? Rubbing next to 'celebrity' again perhaps? Why has he been trying to ring Susan Boyle (from Britain's got talent) too? Care, respect or more 'celebrity chasing' ?

** 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.

––––––––––––––––––

"Heads" they "Win" ... "Tails" you "Lose"

Rewarding Failure - Saying 'Hello' to the "Golden Goodbye" ... not long ago, following the banking crisis, the UK Government spoke of the imperative to stop rewarding failure ... 

... industry 'leaders' have profited greatly from 'golden goodbyes' for many years, and still do ... despite the clear 'anger' and a great deal of 'government spin' ...

But they are not the only ones profiting from such deals ... MP's are too ... and not surprisingly most are very quiet about it ... it's yet another example of the "do as I say, not as I do" culture we see from those we are supposed to trust ... a key feature of Poweromics* at work.

Many of those MP's who have been found wanting are clearly hanging on to their positions until the next general election to make sure they pocket the most from it ... and they'll probably continue to do so even if they're investigated by the Police and sent to jail ... !

One leader has just spoken out against this, but everyone else seems to be extremely quiet ... are MP's really committed to stopping the MP gravy train, and making the job a Civic responsibility rather than a lucrative and highly profitable 'members club' ... (nb and not a 'club' of 'honorable members')

Let's see ... but their actions to date says they won't, not without a 'fight' ... and as we all know ... "Turkey's don't vote for Christmas ..."

Poweromics in Business - Rewarding Failure

Rewarding Failure (and Poweromics) are starting to be challenged in Business now too ... take a look at Robert Peston's blog and my comment (83) added to it below:

1. True entrepreneurs are innovative leaders who create long-term value, prosperity and growth (e.g. Dyson) ... people we should nurture, support and reward ... (rather than hinder!)

2. Traditional executives, normally from the finance community, are rarely innovative and tend to systematically destroy long-term value, prosperity and growth (e.g. by failing to innovative and applying simple cost cutting exercises) to obtain a large bonus for achieving short-term financial targets and goals* ... people we should challenge, stop and retrain in 'value management' ... (not reward with massive salaries, pensions, bonuses, and pay-offs for failure!) ...

Rewarding failure has had it's day ... and clear self interest, poor moral values and greed have also had their day too ... the application of Poweromics** is being challenged in Government and it's going to be challenged in business too ... 

More people can see it now and it's not going to go away ... for instance I'm writing a Poweromics** blog with more examples to make sure it doesn't ... and to make sure its addressed once and for all ... and anyone who is doing the same will be linked from it too ...

Poor management and Poweromics** have had their day - and with the help of the internet they will soon change forever, and for the better ...

David Clift, a Future 500 Leader

* 21st century leadership and management are completely different to traditional leadership and management, and focus on continuously improving the long-term value of an enterprise and the lives of people ... not creating fear and sacking them.

** Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed ... ... take a look at my previous BBC blog comments for instance.

–––––––––––––

• 
  

  Comment 87 (godfreybrown) 

  
  

  Re 64 William 1965
  
  I agree with you when you say no person who heads up an organisation (as opposed to owning the business) should be able to earn more in one year than the avarage equally well educated working person can earn in a lifetime. 
  
  It is nonsense to say for anyone to say that the sums of money our top bankers and captains of industry deserve to paid the vast sums of money they are now being paid. 
  
  As recent events have shown moany of them managed to get to the top either through nepotisim or the old boy network and as a result we have ended up with far too many business clones suffering from high levels of inbred business idocy and insufficient entreprenurial flair. 
  
  Re: 70 pawns or players
  
  I disagree with you when you say top bankers need to be sufficiently incentivised if they are to do the job we expect of them properly and what a good many who are earning considerably less could do equally well. There is nothing magic in being a top banker providing you have the right connections.
  
  I am totally in favour of someone with genuine entreprenurial flair and business accumin (such as James Dyson) earning vast riches for his ingenutiy, enterprise and genuine hard work over many many years. 
  
  Neither am I against top bankers who put their own money at risk to earn over many years to earn themselves a vast fortune providing it is on the understanding that if the bank goes bust, in the way that we have seen banks go bust recently, then they lose everything they own.
  
  It is a fallacy to say that there are insufficient numbers of suitable people about who can run these sort of organisations. Most large enterprises have very good succession plans in place and if the boards of these companies believe they need to recruit someone exceptional to do the job they want doing then it is time for some of them to be put out to grass because as the saying goes "they have reached their level of incompetence"

  
  

  –––––––––––––
  

  
  

  Comment 88 (whatevernext1)

  
  

  Only 60% of "shareholders" voted against despite the climate being so obviously against such greed. Presumably the 60% felt public pressure is mounting such that they had to do something whereas in the past they turned a blind eye.
  
  The key problem is that the fund maangers are not the real shareholders - who are mainly pension savers - and fund managers and others in the City are on the same gravy train of paying themselves huge amounts effectively from our savings as the PLC directors.
  
  Labour has not changed corporate governance to allow those whose money is actually invested in these companies the ability to vote on key issues such as Board appointments and remuneration. 
  
  Why?-because they get huge political contributions from the City, PLC directors etc and former cabinet ministers and senior civil servants get lucrative appointments with PLC's and in the City.
  
  From expenses to corporate governance, corruption is rife, and we the ordinary public are the ones paying for it through taxes and raids on our pension savings.

  
  

  –––––––––––––
  

  
  

  Comment 89 (alphaptarmigan)

  
  

  Today I attended an Investment conference, hosted by one of our biggest fund managers and this "Corporate Governance" issue generated similar anger from the attendees as the MPs expenses issue. Fund Managers were being encouraged to create a new forum to exercise shareholder power.I can't help but wonder that all this is symptomatic of increasing disatisfaction with the inequalities between the top and the middle/average earners in our society.

  
  

  Looks to me like we are gaining a new enthusiasm for democracy at all levels!

  
  

  –––––––––––––
  

Leadership? What Leadership? What is Leadership?

To say someone has 'failed to lead' requires a definition of what 21st Century 'leadership' and 'management' actually are ... 

One aspect apparent when examining the "DNA of Failure" of leadership/management is the lack of definition and consensus about what they actually are! The second is how out-of-date most 'leadership' and 'management practices' actually are ... and the third is the lack of desire of people in 'power' to change them (but to drive/change other people instead) ...

So let's start with the 21st Century definition I use with next generation leaders:

* 21st Century Leadership is an 'Art' and about 'leading' People 

* 21st Century Management is a 'Science' and about 'managing' Entities/Things (e.g. Businesses, Economies ...)

Moving on further ...

* 21st Century Leadership = Inspiring People + Challenging People + Supporting People + Developing People 

* 21st Century Management = Managing Capability + Improving Capability + Developing Capability + Managing Change 

Given these definitions, are any politicians actually 'leading'? are any of politicians 'managing'? ... Perhaps we have to go back to way out-of-date 20th Century definitions of leadership and management ...

Traditional 'Management' = Tell People + Manage People + Drive Results ( = Transactional 'Leadership') 

Are any of them doing this instead? ... if they are, don't expect any long term success coming from here ... just more Poweromics*, frustration, failure, and lots more ways to waste/steal tax payers money. 

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. 

Comment added to Nick Robinson's "He failed to Lead" blog - comment 257 (leanomist)