Climategate - The bursting of another bubble

Following my previous posts questioning the science (and politics) behind climate change, and the reasons for the BBC's lack of reporting (and biased reporting) ... it looks like this particular bubble is just about to burst ... with the Telegraph exposing what it has called "Climategate" ... which will be heard (and felt) by nations and economies all around the world ...

A fellow blogger recently wrote the following on one of Stephanie Flanders' blogs ....

"Not even a whiff of this world breaking story on any the BBC websites main story boards ... a week after the Telegraph coined the term "Climategate" to describe the scandal revealed by the leaked emails from the University of East Anglia's Climatic Research Unit, Google was showing that the word now appears across the internet more than nine million times ..." and referred to the links below:

1. Climate change: this is the worst scientific scandal of our generation

2. Climategate: University of East Anglia U-turn in climate change row

In response I replied:

"An excellent post and I couldn't agree more - take a look at my post a while ago pointing to this folly too ... and this one to see why the BBC report (and don't report) as they do ... all the evidence is now starting to spill out (thanks again to the Telegraph) ... and it's indeed a Climategate ...

As far as the economy is concerned IMHO this now means the 'next bubble' they planned to inflate has just burst in their face ... so now what are they going to do? ... hope? discredit? create more spin? or adopt some effective solutions to our problems ... I'm afraid with the 'shower' sitting within every mainstream political party, it could be any of the above, except for the latter!"

Blogging - why do we do it?

John Demspter, a fresher to the world of blogging, joined Stephanie Flanders blog recently and instantly made an impact. His questioning was sound, his passion to make difference very evident, and his desire to join people together to open up and tackle the issues clear. He also explained why we need to do it ... and for me he articulated this so well I have decided to summarise what he said here ...

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Post 375. At 11:40pm on 21 Nov 2009, Dempster wrote:

"To Leanomist, ishkandar, Bobrocket, stephenblencowe, armagediontimes, glanaflon, CDG & all other bloggers contributing to this website

I suggest that: as adults with a responsibility to the children, the teenagers and the young families who inherit what comes after us, that we do the right and proper thing.

To consider the issues that face this country, we should debate them and as best as we individuals can, in this limited environment in which we blog, endeavour to show that we did at least try.

Having read what you have posted, I do not believe that a single one of you, would not do that which is right by the future of our children.

Our voices are unlikely to be heard, but at least we gave it our best shot.

I am an absolute nobody, I freely admit it, but you lot give me hope, perhaps you can give hope to others."

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Post 383. At 01:13am on 22 Nov 2009, Dempster wrote:

"To Leanomist, ishkandar, Bobrocket, stephenblencowe, armagediontimes, glanaflon CDG, spartacus & all other bloggers contribruting to this website

Those who will come after us, hope that we will do the right and proper thing by them.

If we don’t do it, then what is our legacy?

Imagine if you are a child, would you hope that adults would do the right thing by you?

I suspect that most of us bloggers are not young people. But what we post may influence the future for those who come after us.

I’m still a naïve blogger, and whilst it may be a forlorn hope, perhaps we can make some difference.

Put your self in the position of a young child, what would you hope we would do?

A young child would want us to look after their best interest… perhaps I am wrong?

But you lot know the answer to that question, don’t you".

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and in response I added ...

Post 383 John Demspter - Well put and I agree with you. Your comments sum up very well my reason for writing ... and why I set up the Poweromics blog too ... which will

i) continue until the environment around us changes,

ii) track/chart the history of the revolution,

iii) try to point out all those responsible/culpable, and

iv) try to acknowledge those taking responsibility to try to do something about it.

and with regard to (iv) you are clearly one such person - hence you are already referred to in it - take a look here for instance.

PS Nobody is a nobody - and you've already made an impact here (on me at least).

'For evil to flourish, all it needs is for good men to do nothing' [Edmund Burke]

Squeezing budgets - a Leanomics (and Economystic) view

On Stephanie Flanders recent blog I was asked a question about the squeezing of budgets, and some of the challenges ahead, and in response I wrote:

'IMHO your questions/insights are good. The government (and politicians of all colours) are void of ideas and/or unprepared to take on the challenges ahead in any robust way (nb the main things in Gordon’s toolbox seem to be QE, inflation and spin). IMHO the fundamental problem we actually face is one of outdated leadership & management practices (e.g. in terms of politics, economics, service and enterprise).

There are lots of ways companies & nations will ‘grow’ in the future, but outdated leadership / management practices mean most ‘leaders’ haven’t got a clue how to do it, and the majority of ‘leaders/managers’ will have to ‘unlearn what they have learnt’ in order to access the ‘world of opportunity’ of opportunity that actually exists. The idea of somehow hoping/relying upon a immediate/massive resurgence in manufacturing is also flawed, as is the concept of considering products and services in isolation of each other.

In terms of public sector cuts, IMHO given the level of crisis now faced the only robust solution (both in the short term and the long term) is to rapidly introduce 21st century lean management practice … to continuously, and systematically, remove all non-value adding activities and divert all of our taxes/resources to value adding activities. When enterprises start to do this, most initially find between 40-90% of all time / resources are actually being wasted (and as you can probably imagine with public sector services this tends to be at the higher end of the scale!).

Leaders/managers need to learn how to support front line staff to continuously improve the way the work works (and how to systematically challenge/remove all the barriers to providing value in more effective ways). This process invariably releases resources (a lot of resources!), but the ‘key’ thing is what you do with the resources released. Front line resources released need to be re-invested into improving / increasing the services provided. Managers supporting front line staff to continuously improve how value can be provided are also kept, but the remaining ‘leadership’ and ‘management’ (i.e. who don’t understand the work, create barriers instead of removing them, frustrate front line staff and prefer to ‘manage’ targets / league tables / people rather help/support people) need to find something else to do (e.g. work out how to add value!)

Resources released from front-line services are used to continuously improving the level of value provided and to identify/provide more effective services too (yes – more services – hence the term ‘more for less’). Meanwhile management has to change fundamentally (i.e. to lean management), with far fewer managers carrying out very different work – e.g. supporting front line staff continuously improving the work and systemically removing every barrier in their way of doing this (e.g. the plethora of bureaucracy and flawed policies – nb top line figures for the number of pen-pushers/bureaucrats is just the tip of the iceberg and most current policies are designed to generate waste, not remove it). You can think of this as a systematic ‘bureaucracy stripper’.

Lean management also needs to be applied to Government policies too (nb the bottom up continuous improvement described above would drive this anyway) … for instance changing the vast array of complex tax structures/credits which has resulted in a culture of dependency and armies of paper pushers to ‘check/process’ them all. It would also introduce robust, fairer, and much simpler taxes such as a Land Value Tax (referred to earlier). It was also remove the flawed and outdated targets/league table culture introduced by this Government … for instance take a look at my recent post here.

Lean management is already starting to be applied by forward thinking police forces/hospitals (with dramatic and positive outcomes – 30/40% improved outcomes in terms of time, resources, service quality, staff moral…). Change is coming, but it has been held back/stifled by all the policies/barriers put in place by this Government (e.g. league table/target culture).

Millions of jobs are going to be lost in the short term whether we like it or not … given this we need to make sure we lose the non-value adding ones and reinvest time/resources released from front line services to provide more and better services, so we can start to get back on track and avoid ‘cutting/slashing’ the actual services provided (like countries such as Singapore have done) … we also need to offer the majority of ‘managers’ released training in 21st century leadership and management practice! IMHO the youth of today should also be given the opportunity to separately learn about 21st century leadership & management practice too (e.g. within school), as it would expose them to the actual world of opportunity still out there, and expand their leadership and entrepreneurial qualities too.

Based on Deming’s work, I successfully decoded 21st century leadership and management two years ago, as well as the system diagrams describing the above (P219-223) … for those interested in learning more about this you can always read my book online (via Google books) here …

NB the ‘losers’ – the leeches/managers who add no value, fail to listen/learn, have no interest in helping/supporting anyone (eg like to please their boss, rather than customers / front line staff) and have no interest in learning/applying 21st century leadership & management. The other losers will be those who like to ‘obtain lots more wealth’ but by ‘adding no value’ ...'

Squeezing Budgets - The challenges ahead ...

Stephanie Flanders recently blogged about when and how to squeeze the budgets ... which raised lots of comments, including my own (post 4) below:

'We need as a matter of urgency to cut out the bureacratic leadership/management that add no value and create all the waste/frustration at the front line.

We need to systematically support front line workers to remove 40-80% of the time/resources tied up dealing with failure demand and carrying out non-value add activities, and re-invest their efforts into INCREASING, and CONTINUOUSLY IMPROVING the services provided.

We do not need to 'cut' services (we can increase them), but we do need to radically change (and reduce dramatically) current 'leadership'/'management', create 21st century leadership and management and install 21st century management systems* (nb it's 180 degrees opposite to what we currently have - these systematically remove waste, whereas current systems systematically create it!).

... therein lies the challenge ... and therein lies the future ... other nations have done it ... take a look here for instance ... but in the UK the toxic mixture of ignorance, arrogance, ineptitude and greed will mean the UK will avoid taking decisive action, wait until the last minute and have to try to pull itself from the brink of the abyss ...

* 21st century management systems are decoded in book for instance'.

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A fellow blogger (glanafon) in a subsequent blog then posted the following:

"Leanomist, your one of these 'economystic' types I believe - So :

David Blanchflower favours inflation as a way of getting rid of the debt. I can see the argument for this as it spreads the load, hits savers, so takes money from people who have money. I start with DB because he has at least got it right saying - problem coming - when on the BoE committee.

DB is against cuts due to the unemployment issues. I can see this also. However what he has failed, from what I can see, is to explain how funding the public expenditure prop needed via borrowing can be sustained or how the inevitable cuts are to be phased in. Or how phasing cuts in later makes any real difference if growth is to remain very muted.

Inflation may get rid of the debt, which clearly helps, but it does not get rid of the size of the public sector which is now too large following a contraction in the economy. If there is little growth - the Japanese lost decade - then the public sector has to contract.

A total tax take - direct and indirect - of 43 to 46 percent, mainly 46 percent, has been in place for decades suggesting that 46 percent is a long term ceiling otherwise it would have been breached under pressure a long time ago.

So DB is gambling on growth from what I can see, that has to be his position. But if this is the japanese lost decade that doesn't work, again from what I can see.

Assuming the banking sector is not going to grow at any great rate, the suggestion has been manufacturing takes up some slack. As Kudospeter posted at number 29 'Manufacturing as a percentage of GDP in the UK for the following years were: 1971 31.7% 1981 26% 1991 21.% 1998 15.4% 2003 12.7%, ie an almost straight line decline. I cannot see this trend reversing so where is the growth to come from. Housing percieved wealth has been used as the engine to push individuals expenditure and borrowing and that engine has blown up.

So how can public sector cuts be avoided. I cannot see it. Can't say I like it but I can see it coming. I can't say I know where things are now but a near 10 percent drop in the size of the economy from peak has been mentioned. That was during a time when the public sector was reproted as expanding still at 2 percent. So the hit has been in the private sector and much bigger than 10 percent, much bigger. So the public sector sooner or later has to follow that stat, unless there is quite dramatic growth.

Meanwhile we are close to 1 million young unemployed with an education system pumping the young out every year. OAPs are demanding they work longer which will reduce job release back into the economy.

Now we have Gordon saying he wants to commit to halving the debt, although as usual nobody really knows what he is referring to other than hinself. Halving the debt can onlt mean a mix of inflation - repayment - taxation. All of which are designed to extract money out of the economy. Taking money out of the economy means its not there to be spent.

So Leano can you tell me have I missed anything much in this ..."

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which i will try to respond to in my next post ...

Land Value Tax - a 'no brainer'

Land Value Tax taxes the value of land, and replaces taxation on property. Most of the ‘value is in the land’, which is actually ‘created’ by the state in terms of what it puts around that land, hence the state seeing a return (in terms of tax) for that is entirely reasonable (and more ‘leading nations’ are doing it). In terms of pure economics, it is also argued to be one of the fairest/robust taxes to put in place, as the ultra rich landowners (who have profited heavily recently from all the wealth transfer) pay it, can’t avoid it, and can’t simply pass the cost of it on to others (due to natural supply/demand economics) … I would personally suggest all nations consider this carefully … as successful nations in the future will certainly be looking at it, and using it …

1. http://poweromics.blogspot.com/2009/08/land-of-free-but-whos-paying-for-it.html

2. http://www.landvaluetax.org