The glorious, delightful & beautiful Mr. King

Forget the fantastic Mr Fox, all ears should be trained on the nectar-flecked words of the expalicious Mr King.

The Daily mail says… “Mr King wants to see root-and-branch reform and calls for a full review of the way the banking industry is structured and regulated” (he says much more to boot – well worth reading.)

From the beginning this grey, bespectacled gent has been the true voice of the people. There has been some suggestion that his personal style isn’t always conducive to a receptive audience – such gripes have no place when so much is at stake.

Give him a sabbatical to edit the Sun, lets see what happens! The fact that the government continues to argue against his advice shows them in an increasingly poor light.

The sooner everyone crawls out of banker’s pockets, blinking pitifully into the light of well-founded public opinion, and pays due obeisance to common sense as spelt out by the glorious Mr. King – the better it will be for all of us, specially the millions of recently jobless.

p.s. if anyone’s talking to Mr. King – being right about this doesn’t mean that he’s right about everything – such incipient hubris (so easily fallen into) is only one of the many fatal flaws the banksters are in the grip of

Craftsmanship: Anachronism or the future?

Taking pride in your work has become a luxury, something available to the incurably naive but definitely not the pragmatic, successful business person.

There’s a very easy, convenient story which tells us that machines have pushed out craftsmanship. Richard Sennett traces the much deeper relationships between physical touch, tools, how we work together and how we relate to the things we create.

Understanding craftsmanship is particularly important for the marketing industry which is inherently craft based. One challenge for the profession is that as a society we have lost the underlying understanding of what it means to be a craftsman. Marketing professionals cannot help but bring into their work assumptions of more mechanistic management, of command and competition.

We have allowed what Sennett convincingly portrays as a deeper human need to be bartered away as we have adapted to industrialised production. In place of mutual respect for skills, our teamwork is more often driven by command structures and competition. These management approaches suit mechanistic production but undermine the workshop culture necessary for developing craft skills.

Its easy to make the link with obviously craft based businesses, but this thinking may have far broader relevance. Crowd-sourced development which is being applied in so many industries is a crafts based management approach.

As global supply changes, putting more emphasis on local production, suppliers will be less able to rely on lower cost production to create differentiation and will need to relearn a crafts based approach.

There is a lot up for grabs as we come out of the credit crunch. Much of the commentary is about how quickly banks are returning to ‘business as usual’. There’s a lot of reason to believe that craft skills will remain to be seen by capitalists as something difficult to scale and monetise, and therefore of little value. On the other hand, there’s good reason to believe that despite this, the tide is inexorable.

It could be that the major industrial and social shift of the coming period is towards a renewed understanding of craftsmanship. There is no sense of judgement from the author who offers no simple answers. Craftsmanship itself is thoroughly described and we are left to decide whether this is a quaint part of history, or something vital for our future.

Social Mobility

What’s the best way to manage a capitalist, democratic society? Handouts, ‘may the best people win’ or a new-new deal? The mainstream version of the argument circles around degrees of the new-new deal.

When times are tight (and even when they are not) its human nature to re-trench into cultural niches. In other words for elites to form. The only circumstance that can structurally promote social mobility is an excess of job-supply.

Coming at it from the other side to see the phenomenon from the ground up; on the individual level its easy to imagine that two things add up to making a difference: motivation and a pathway to change. Easy to give an individual, more difficult for a crowd.

Motivation is a very human, therefore hard-to-scale phenomenon. You could imagine a sort of social movement to support this but in management speak its the ‘soft’ part. The ‘hard’ factor is pathways, also highly varied by individual so the practical route is to identify the pathway barriers that affect the largest number of people.

Its surprisingly easy to forget that the major pathway barrier here is ‘a job I can get’, followed by a step up the ladder to ‘a job I can enjoy’. Pre-crunch there wasn’t so much competition for any individual job so the ‘…i can get’ was a lesser issue than it is today. Despite this, even in a post-crunch scenario, the most instrumental pathway issue is supply-side – what jobs are available.

This is structurally true because very few people in society are entrepreneurs. The normal behaviour in job seeking isn’t to say ‘what opportunity can I create’ – its ‘what opportunities are there for me to get’.

This brings us to a sort-of conclusion, or an idea, that the best way to manage a capitalist, democratic society is to proactively stimulate economic growth. Not a mind blowing revelation – but take a look at the government’s efforts in this area. At the risk of offending Lord M (oh that he might read my words – swoon) there isn’t an obviously strong, systematic, professional approach to this.

There is outstanding talent in this country but, to take two typological examples, they are either sucked into socially pointless banking or have been so successful there is little pressing need to take on near-impossible challenges, or no easy mechanism to allow it even should they want to. The example of Gerry Robinson’s ‘Can he fix the NHS’ comes to mind, the answer being ‘probably, if only they would listen’.

Handouts, new deals and a competitive environment are all needed to cope with the present needs. A strong, proactive, disciplined approach to putting our (or the world’s) best talent to work creating growth (not cost cuts) is what we really need – and only the government is in a position, in a competitive economy, to instigate such a unilateral approach.

And that’s what will create social mobility.

Of course endless growth is rapidly proving itself to be a thing of the past. All that means is that social mobility requires growth in ‘…that I enjoy’ rather than ‘…that I can get’ but that’s a subject for another lunch time.

More competition – not more capital ratio

A number of articles are recommending that banks should have a larger capital requirement (rainy day money). This is a classic case of treating the symptoms and not the problem. As a pragmatic measure it should statistically reduce the number of problems that become disasters.

But you do run into a fatal flaw almost immediately – LTCM and ‘crunch’ disasters were of an un-predicted scale. According to Taleb, our current system systematically reduces the frequency of problems, while multiplying the severity of any given problem. Which leaves you not knowing how much is enough, and suspecting that ‘enough’ would be an uncomfortably large amount to keep sitting still, doing nothing.

The example of Scottish Free Banking shows that a less regulated, more competitive environment can be stable and successful with very low reserves. The competition commission, treasury, FSA and BoE need to collaborate – not to increase reserves, but to increase genuine, customer-beneficial, competition. Fundamentally this means that banks need to be made more vulnerable to the risk of failure, not less.

Saint Turner (as I now call him) laid bare many of the reasons why there is not genuine competition. The system is – as many highly sane and impartial commentators have pointed out – a huge casino operation, rigged to provide huge fees. The products are not ‘overly complex’, they are just plain fraudulently unnecessary. There shouldn’t be any need to investigate individual products, however in a truly competitive market you would expect a competitor to point out underpriced risk or other product flaws.

Rather than try to deconstruct established players – it would be more useful to carefully foster the growth of new competitors who are somehow isolated from the contamination of the existing industry – and therein, of course, lies the rub. They would need to operate under a new, public service banking charter which guarantees complete transparency – so that external experts can scrutinise to the last detail and confirm fairness. It would need to operate under a separate regulatory framework because almost every time you talk about banking reform you get the same old bleat that regulations prevent any real change.

By doing something like this you would get genuine competition, by adding new competitors rather than destabilising existing players by change.

These may meet no deep customer need and fail – however they might be able to establish a new customer relationship, based on real trust and value. A true Tesco of banking would really shake things up. However, it just shows how strong the banking cartel is, that it would require extremely (to the point of impossibly) strong oversight to ensure that the same old characters, playing the same old tricks didn’t end up just recreating another face for the beast.

Healthcare : killing the American day-dream

I was pootering about New Hampshire not too long ago and fell deeply in love with their motto ‘Live Free or Die’. They don’t pay income tax! Bliss. Sparsely populated, small villages nestle amongst dense forests. Utilities are arranged by local consensus, possibly everyone for themselves (a cesspit) or chipping-in for a communal service.

This is the American dream – that every person gets to live or die by their own hand, under neither the patronage nor tyranny of any other. This belief is only tenable when your resources far outstrip your needs. While every person can stake their claim, grow their crops, build their businesses – creating real growth by consuming uncontended resources and serving unmet needs.

In this instance, for the sake of relative brevity, we will forgo the living rebuke which is the Native American population.

Universal healthcare cuts into the heart of this now-rotten dream. In the dream world its every man for himself and everyone prospers. Accepting that everyone needs to chip-in to help out their fellow men is to accept that they can not prosper. It is to accept that growth without consequences is at an end. It is to accept that you can no longer live without responsibility.

That’s why poor-white-male America is so poisonously bitter. Its why republicans (with a small ‘r’) are choking on their bile. They have lived with this unacknowledged truth for some time. Its been a canker in their miserable souls.

To allow universal coverage in would be to face up to their deepest fears – and there’s not many people who do that without a fight.

Lead in anger – and in joy

Peter Mandleson – a politician who is actually proud of his country? Its been a while since Starbucks honcho Howard Schultz got him hot and bothered but the incident has stuck in the memory. Can you imagine David Cameron, Gordon or any other politician caring enough to get angry about it?

British, upper class (‘U’), conventional wisdom would be that good, solid, old boys of the empire would never wear their heart so shamelessly on their sleeve. Such girlish displays of emotion are for pansies and dilettantes – not people of substance and position. Many generations of inner circle, elite cadre politicking have branded ‘secret squirrel’ lessons deeply into their scarred souls.

These are stunted attitudes, kept alive and defended by stunted people (i.e. the English). If Mandleson should by some utterly surprising accident find himself reluctantly leading the party or nation – then I’d applaud the success of someone with the balls to cry (or indeed get himself into a towering snit, in public).

Did anyone really think bankers would ‘do the right thing’? Are you mad?

Judging by the articles and interviews on the HSBC & Barclays bonuses there seems to have been an idea that bankers would do the gentlemanly thing and at the very least keep their huge bonuses quiet. This shows a farcical ignorance about the nature of the hellish beasts that are investment bankers.

They pride themselves on ‘gaming systems’, ‘taking on the bank – and beating it’, ‘playing the market’ they thrive on brinksmanship and testosterone fuelled dick waving – egging each other on to make ever more sophisticated ways to break laws and codes without being caught. Just look at the ‘high speed trading systems’ that’s fuelled Goldman’s new ‘gordon gekko’ image.

Well they’ve gamed global governments. Right now they’re chucking back Crystal and lighting their golden farts with $100 bills while they mercilessly mock Gordon, Obama and the rest for being gullible fools.

Tax payers money has guaranteed their risk, quantitative easing and companies desperate to get money flowing again are feeding them a fat upside again. In other words they are making billions out of the problem they created, and directly out of your money and mine – money that is now lost to us to put food in the mouths of our children, or to the country for maintaining a desperate healthcare or educational system.

They are quite literally stealing the food from our baby’s mouths.

Is it in any way a good thing? After all we do need banks to get back on their feet. I think it emphatically underlies the ‘no real change’ worry. I haven’t yet seen any proposals that are bold enough to seriously tackle this issue. While that is the case, the Godon Gekkos of our world will continue to mock us and recklessly endanger of security and wellbeing – with our own money.