Wednesday, 4 January 2017


A lesson from 2016.  Most people did not expect Brexit to happen.  It did.  A majority was confident that Trump would not win the presidential election in America.  He did.  There was a strong assumption that this would cause a crash on the stock market.  Shares ended 2016 at around their highest level ever.  There’s nothing wrong with distrusting ‘experts.’

Promises to boardrooms.  Theresa May said in July, ‘If I’m prime minister . . . we’re going to have not just consumers represented on company boards, but employees as well.’  This was a big shift in policy and a test of determination.  She emphasised in late November that there will not be a mandatory requirement for staff to have a place in the boardroom.  This sounds like a dramatic change of mind.  Last year’s green paper on reform of corporate governance sets out a range of options for extended scrutiny of executives’ pay and responsibilities.  There must have been a lot of influential lobbying.  The proposals for reform create the challenge for our prime minister of whether government can simultaneously maintain a pro-business and anti-interventionist stance while disrupting the status quo.

Confidence of workers.  The Press Association points to a new research report conducted by jobs site Glassdoor, which has found that less than a third of workers are confident in the Government’s ability to negotiate Brexit.  Confidence was found to be especially low in regions where strong majorities voted to leave, including the Midlands and the North East.  London also appeared particularly doubtful, with over one in four admitting they would consider leaving the UK to work in another European country after Britain withdraws from the EU, compared to a national average of one in seven.

Cash on its way out?  Cash has been around for 3,000 years. There is a lot of talk from experts that it will cease over the next few years. The Week took a close look at this topic on 17 December. Cash is no longer the main form of money. In the UK, there are 3.4 billion notes in circulation, worth around £68 billion. Yet as a proportion of the total sum held by households and corporate bodies, cash is only 3% - 97% is in bank accounts. Paradoxically, despite all the talk about the end of cash, demand has soared in recent years. The Bank of England has been printing more and more. Law abiding citizens and criminals have a common interest in the preservation of cash – convenience and anonymity. Moreover, a cashless society would give much more power to governments to track the minutiae of our lives and to police all those small transactions – such as paying babysitters and buying cannabis for personal use. It would mark an erosion of our civil liberties. There are a lot of good reasons to hang on to your cash.

Where we live.  In September 2016, there were 3.91 million 16-to-24-year-olds with jobs in the UK. 591,000 were unemployed and 2.06 million were fulltime students. The average age of retirement is 64.7 for men and 63.1 for women. The average age of managers is 45, of whom 7.6% are under 30. Most enter management in their early 30s. The average Briton will be employed by six companies and be made redundant twice during her/his career. 46% of employees in the UK will at some point completely change career.

Don’t worry.  ‘Have no fear of perfection – you’ll never reach it.’ Salvador Dali, (1904-89). Spanish artist.

Keep common. ‘The war against intelligence is always waged in the name of common sense.’ Roland Barthes (1915-80). French writer, critic and teacher.

Monday, 19 December 2016


Attempts to control executives’ pay.  Prime Minister Theresa May has made tackling corporate excess one of her priorities in government.  This is not a new focus of attention, we’ve been there before.  It will not work.  Concentration is on rules.  It is the system that is broken.  We must admit that self-regulation is dead, along with the assumptions we have attached to the ownership of businesses.  Sir Ferdinand Mount is a former adviser to David Cameron as prime minister.  He wrote: ‘We pretend that the shareholders possess powers that they effectively lost long ago, and we imagine that the behaviour of the corporation is disciplined by an array of checks and balances that are often no more than decorative today.’  The Office of National Statistics (ONS) reported in 2012 that nearly 60% of shares in the UK were held in nominee accounts and 10% were registered to private individuals.  This means that most beneficial owners are not permitted to vote directly on matters such as pay.  Maybe now is the time for radical changes?

Self-employment increases.   David Smith, The Sunday Times, points out that there are 4.8 million self-employed people in Britain.  This compares to 3.8 million in 2008, when the financial crisis hit our economy. 3.4 million are fulltime and 1.4 million work part-time. The strongest increase has been self-employed part-timers, up 88% over fifteen years. As well as increasing in absolute terms, the self-employed population has been getting older at a faster rate than the workforce as a whole. Flexible routes into retirement – people winding down gradually – were subjects for speakers at conferences not so long ago.  This seems to be happening by choice rather than by legislation.  Changes of this kind have critics. Some suggest they are exploitation of those who have a shaky position in the labour market. Others are sure ‘involuntary’ self-employment is disguised unemployment. The evidence is that most people who make the move to self-employment earn above the average. Of course, this piece of information does not deal with the overall situation. Prime Minister, Theresa May, has commissioned Matthew Taylor, chief executive of the Royal Society of Arts, to review working practices across the economy.

A mistake.  The Office for National Statistics (ONS) has admitted a big and very embarrassing ‘processing error’ that led it to underestimate by £6 billion Britain’s trade deficit with the rest of the world. The correct figure is £17 billion, the highest since 1955.

Things in the way.  Mahatma Gandhi was the determined, legendary and successful leader of the movement for independence of India. He once said, ‘First they ignore you, then they laugh at you, then they fight you, then you win’. Rhymer Rigby wonders in the magazine Work if there is a similarity to Donald Trump.  He was ignored or laughed at.  The Republican Party in America did not take him seriously until he was its candidate. The Democrats thought they had been handed a gift until he beat Hillary Clinton. Mr Rigby concludes, ‘It is never the risks you worry about that undo you, it’s the ones you don’t worry about’.

Just a thought.  ‘All decent people live beyond their incomes nowadays, and those who aren’t respectable live beyond other people’s.  A few gifted individuals manage to do both.’  Saki (Hector Hugh Munro) (1870 – 1916).  English novelist and short story writer.

Convenient vengeance. ‘Autobiography is an unrivalled vehicle for telling the truth about other people.’  Philip Guedalla (1889 – 1944).  English writer.

Tuesday, 6 December 2016


Stress for lenders. Six of the largest banks and one building society have been assessed on whether they would be able to withstand an economic crisis. This process asks if they would survive oil falling to $20 a barrel, prices of houses going down by 31% and a 4.3% drop in economic output.  One failed to prove it would overcome such an unthinkable combination of financial shocks. Analysts pointed to Standard Chartered as having the most difficulty.  Barclays, HSBC, Lloyds, Nationwide, Royal Bank of Scotland were tested also. The examination is the first pressure from information made publicly available.

Back to Brexit.  One of the important factors in the debate is the way in which opinions of experts were sidelined in favour of more emotive arguments. This has caused objections from academics. Maybe there is a core fault-line which is the start of a redefinition of the future of social sciences in the UK? Not only has the Leave campaign been founded on explicit rejection of advice from sages, but it also exposed a gap between academics and the broader public. Recent surveys have suggested falling public trust in ‘academics’ as a professional group and an increasing sense that they are part of ‘the elite’.

Productivity is a constant concern for managers.  A relatively small percentage increase could add more than £200 billion to the economy.  The Confederation of British Industry (CBI) has highlighted potential gains if local businesses could match those in the best performing regions.  It says jobs would be created and living standards improved.

Second estimate.  The Office of National Statistics (ONS) published recently its new reckoning of growth in the economy (GDP) for the third quarter. This was confirmed at 2.3%. Services moved upwards by 3%, driven by a rise of 5% in expenditure on leisure and 4% expansion of transport and telecommunications. Manufacturing and construction continued to disappoint. Household spending increased by 2.6%. Investment went up by a modest 1.2%. The Government’s outgoings rose by less than 1%. Exports appear to have climbed by 4% and imports remained subdued at just 2.6%. There is no reason for a major slowdown in 2017. The negotiations on Brexit will take some years. We all assume that the starting gun (Article 50) will be fired in March.

Theodore Roosevelt celebrated America’s new commercial power during a speech in Osawatomie, Kansas.  Also, he warned that America’s industrial economy had been taken over by a handful of corporate giants.  They were generating unparalleled wealth for a small number of people and exercising growing control in American politics.  The Economist (17 September) points to Roosevelt’s caution that a country founded on the principle of equal opportunity was in danger of becoming a land of corporate privilege. This was on 31 August 1910. Does it have a familiar ring?

On Trump.  MoneyWeek says most observers find it hard to disagree with the view that Donald Trump spends little time in self-examination.  In the Sunday Telegraph, Bruce Anderson quotes a banker who knows Mr Trump well:  ‘It is impossible to know what he thinks or what he is going to say.  How could it be otherwise?  He has no idea what he will say - until he opens his mouth.’

Just think.  ‘You can tell the ideals of a nation by its advertisements.’  Norman Douglas, quoted on and in TheWeek.

The vanishing act.  ‘Public money is like holy water; everyone helps himself.’  Italian proverb.

Making things work.  Bad administration, to be sure, can destroy good policy; but good administration can never save bad policy.’ Adlai Stevenson (1900-68).  American politician and statesman.

Monday, 21 November 2016


Vision.  At the launch of her campaign to become Leader of the Conservative Party, Theresa May emphasised ’a bold new, positive vision .... a vision of a country that works not for a privileged few, but for every one of us.’ This theme has become a frequent assertion in her speeches as Prime Minister. On the day she became leader, Mrs May said her plans were ‘a different kind of Conservatism’ that ‘marks a break with the past’. However, she might find it easier said than done. Electors know she was home secretary throughout the Cameron/Clegg coalition and the Cameron government. Recent research suggests that 45% of people put themselves on the centre ground of political choices. Only 30% advocate the right-of-centre ground occupied by Thatcherism. With a parliamentary majority of only twelve and both cabinet ministers and rebellious backbenchers showing signs of noisy impatience over delays on Brexit, there are temptations.  More radical domestic reforms would please the parliamentary party and many local branches. Whether Theresa May decides to be in the common ground at right-of-centre or steer her government towards the middle, will be one of the defining stances of her premiership.

Post-Brexit predictions.  The Chartered Management Institute has completed a survey of its members’ predictions for the United Kingdom’s economy after departure from the European Union (EU). The conclusion was that managers expect Brexit will have a negative impact, lead to a shortage of talent and threaten the security of their jobs. 79% of respondents predict this country is set for no economic growth over the next twelve to eighteen months. 48% of managers are not confident their leaders have the ability to manage effectively their organisations with Britain outside the EU.

Pessimism of the big bank.  Ben Broadbent is Deputy Governor of the Bank of England. In a speech at the Wall Street Journal’s offices in London,  he said ‘There’s little doubt that the economy has performed better than surveys suggested immediately after the referendum .... somewhat more strongly than our near-term forecasts as well ....  The central projection in the August inflation report didn’t involve a recession, simply a slowing down in the economy’s rate of growth. But that slowing looks so far to have been more moderate than we feared.’ Mr Broadbent then advised against reading too much into particular pieces of data and predicted that consumers’ spending would be ‘relatively unperturbed’.  The bigger risk would hit investment to businesses, as companies hold off on big spending commitments because of heightened uncertainty. A lack of clarity about the UK’s future trading relationships needn’t result in visible grabbing of productive capacity.  He argued that the effect is likely to be more insidious: decisions to expand might otherwise be delayed.

A glimpse.  Vladimir Putin’s genius as a politician was derived from his ability to understand his electorate and to give it – or more importantly to tell it – what it wanted. To Russia’s men, he has been a tough guy, able to chat with workers and soldiers in their own language. To women he has seemed organised and sober in a country plagued by alcoholism. Internationally, he has been taken seriously, even if not admired universally.

That’s it.  ‘Fiction is the lie through which we tell the truth.’  Albert Camus (1913-60). Algerian philosopher, author and journalist. On the Harvard Business Review online and in TheWeek.

Self-awareness.  What you say about somebody else, anybody else, reveals you.’ James Baldwin (1924-87), in the Paris Review.  American novelist, essayist, playwright, poet and social critic.