It appears to be a “perfect storm.” Post pandemic conditions, and the war in Ukraine, have conspired to create a global economic climate where the prices of all the essentials of life are increasing dramatically. Energy, food, fuel costs are all increasing at unprecedented rates, creating a “cost of living crisis” for all but the highest earners and the wealthy.  This is likely to persist. Thus, for many, life is increasingly becoming a question of what to do in order to survive.

One of four key principles I cite in “Searching for Better” Book Two, is that, “Government is accountable for ensuring that the interdependence of life is recognised, established and maintained for the well-being of all citizens.” This makes government accountable for the well-being of all its citizens. So, it naturally follows that government bears some responsibility for reducing inflation.

This seems reasonable. Since the early Twentieth Century, government has absorbed greater powers and, as a result, people increasingly demand more from it. This includes expecting it to play a role in reducing inflation, notwithstanding that much of this capability – in the form of monetary policy – has been delegated to the Bank of England. Yet, here in the UK, the government has actually contributed to inflation in two ways:

1. By increasing National Insurance Contributions (NIC.) These are born by both individuals and their employers and thus have the effect of reducing individual incomes, while increasing the cost of doing business. While the effect of this on lower earners has admittedly been reduced by raising the threshold for paying it, the overall effect is inflationary.
2. Through failing to significantly reduce the levies charged on fuel.

It is possibly too late now to do much about the first point, but the following chart shows the extent to which government is exploiting the increasing price of fuel.

You may consider this justifiable in light of the increased borrowing (£440 billion) that government incurred as a result of the Covid pandemic. This does need to be repaid. But, there is scant evidence of any such intention. With the government effectively earning 45p for every pound spent on fuel, you can say it is failing in its primary responsibility to look out for the best interests of its citizens. With fuel costs inevitably adding to all other costs, this compounds the inflationary effect and exacerbates the effect on the less affluent members of society. Thus, by failing to act significantly to reduce the fuel levies, government is making a bad situation worse and delaying the resolution of the problem.

Reducing fuel levies may not solve the inflation problem, but it certainly could help reduce its scale.  Even if this is the only way in which government can mitigate the effects of inflation, it needs to act now. Indeed, you could argue that, the longer it delays, the more it is culpable. Even to the extent of being guilty of malfeasance. It may feel secure in the belief that it is two years until the next election, and that people may forget, but that is playing the odds.

As the UK approaches the forthcoming election, the political scene is as dank, dark and dismal as the weather. There isn’t even the light or warmth of a single new idea or even the prospect of innovation down the road. And all this at a time when politicians concede that “politics is broken.”

Politicians acknowledge that they have lost the trust of people, but persist in chicanery, deceit and peddling downright lies. Every politician who talks about why they went into politics says it is because they want to contribute and help make a better society. Yet they seem to lack any sort of moral compass and be incapable of ever answering a question, let alone telling the truth. Depressing doesn’t even begin to touch on the feelings the situation invokes: we are diving beyond despair.

As we revert to a classic ideological clash between socialist and capitalist ideologies, I question whether I am the only one who can see the pendulum we are on.

Margaret Thatcher swept the Conservatives into power on the back of the discontent caused by poor social management and a struggling economy offering abysmal service and handicapped by one strike after another. The restoration of better economic conditions has resulted in those times being largely forgotten for 40 years.

Now, however, her ideology of minimum government interference and trickle-down economics is proving to be fallible as well, and we witness wealth increasingly concentrating in the hands of the wealthy. Yet the Conservatives continue to promote the same policies. A brilliant cartoon in today’s Times newspaper depicts them as the back wheel of an old Penny-farthing bicycle with the front one being Brexit – itself symbolic of a national desire to go back to the “good, old days” when “Britannia ruled the waves.”

If the cartoonist were apply the same logic to the Labour policy he might perhaps replace the Penny-farthing with an ox-wagon. Although perhaps a little extreme, that would represent the nature of the backward step Labour are proposing with their manifesto and so many of the policies that would restore those pre-Thatcher conditions. Their leaders claim that what they are proposing is not revolutionary but is “transformational.” They may be justified in their claim, but is retrogression really transformation? Do we really want to adopt policies that have failed everywhere they have ever been introduced?

The thing is that pendulum moves but it never goes anywhere. It just oscillates back and forth, from one extreme to another. Unfortunately in this instance the extremes are both undesirable yet we seem to be in the throes of yet another conflict between the two with all the doom, gloom and disaster that comes with them. Yet we seem to be incapable of getting off the damn thing. Like it or not, we are riding this pendulum on its nightmare journey to nowhere. By heavens it is depressing, and I want to get off.

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Please get hold of my book,  The Democracy Delusion: How to Restore True Democracy and Stop Being Duped read my ideas as to how we could change our economic systems and promote discussion and debate around them so that we can answer these questions to restore democracy and safeguard a better future for future generations.

Hmm! Societal life-cycle eh?

Could it be that we are at the end of a societal life-cycle?.Have you ever thought about that possibility?

I was stunned recently while reading William Bridges’ 1991 book, “Managing Transitions: Making The Most of Change.” What caught my attention was his statement, “The idea that organizations and societies have life-cycles has been around a long time.” Of course I have been long aware of the concept of the product life-cycle but the idea of an organizational life-cycle was something I had seldom consciously thought about. And I had certainly NEVER thought about a society having a life-cycle! The idea stopped me in my tracks.

Could this perhaps explain much of the political turmoil in the world today? That is a question that certainly warrants consideration.

Building on Shakespeare’s “Seven ages of man” idea, Bridges argue that organizations also go through what he depicts as “The seven stages of organizational life.” He identifies these stages as:

1. Dreaming the dream (i.e. Identifying a better way)
2. Launching the venture (i.e. Finding others who share that vision)
3. Getting organized
4. Making it (i.e. Turning the vision into reality)
5. Becoming an institution (i.e. Becoming fixated on status – and hence the status quo)
6. Closing in (i.e. Complacent self-satisfaction with the way things are)
7. Dying (i.e. Lost sustainability results in some form of demise)

Bridges freely admits that this is his own framework and that there may be others, and also that there is no fixed time for these stages, but his point is that they exist and there are dynamic stages of transition between each one, with what he calls applicable “Organizational Development laws.” These are:

1. Those who are at home with the necessary activities and arrangements of one phase are likely to experience the subsequent phase as a severe personal setback
2. The successful outcome of any phase of organizational development triggers its demise by creating challenges it is not equipped to handle
3. In any significant transition the thing that the organization needs to let go of is the very thing that got it this far
4. Whenever there is a painful, troubled time in the organization, a developmental transition is probably going on
5. During the first half of the life-cycle – up to and including Making it – not to make a transition when the time is right for one will cause a developmental “retardation” in the organization.

Accordingly Bridges argues that “failing to understand the developmental course of organizational life not only confuses issues like the organization’s resistance to innovation, but mistakenly suggests that these are simply “problems to be fixed, rather than the normal behaviour of a stage in the life of the organization. What such an organization needs is not fixing but renewal.”  Citing examples like the US army and IBM he identifies renewal as involving finding ways to reincorporate the energy of the first 3 phases by:

• Redreaming the dream
• Recapturing the venture spirit
• Getting reorganized.

So, what if this does also apply to societies? It seems to me it would be a worthwhile exercise to assume it does. What worlds it might open up. Yet, whether it does or doesn’t may actually be irrelevant. Either way, it certainly seems that we need to take stock and to follow these three steps to recreate, revitalise and re-energise our broken society.

To find this path we need only to ask 3 basic questions:

• What is it time to let go of?
• How will we spend our time in the “neutral zone” between the old and the new?
• What is this new beginning going to require of us and others?

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Please get hold of my book,  The Democracy Delusion: How to Restore True Democracy and Stop Being Duped read my ideas as to how we could change our economic systems and promote discussion and debate around them so that we can answer these questions to restore democracy and safeguard a better future for future generations.

Tax reform is more urgent than you think. The implications of “The Disappearing PLC”  an article in the October 2014 issue of Management Today make this clear. To say it is food for thought is to significantly understate the case.

The article highlights the fact that, since 1997, the Wall Street high, public listings have declined 50% in the USA and UK, 23% in Europe, and 5% in Asia. It goes on to say “Few observers doubt that something fundamental is afoot – and it’s structural rather than cyclical. In other words it is not a blip.” It explains this is driven by two converging forces.

The first is economic. Here the article states, “The publicly quoted company essentially looks like a creature of the 20^th century. Modern business is cash generative far earlier and much less capital intensive then even half a century ago. The need to mobilise outside sources of capital is so much less.”

The second is managerial or ideological. The article cites concern about “public companies fading innovation mojo” and quotes Professor Clayton Christenson “who has the unofficial title of the world’s most influential management guru”  as fretting that “companies anaemic appetite for investor capital is further evidence of this of just this, boding ill for US jobs and growth.”

Another cause of this decline that the article does not specifically identify is what can only be described as “merger mania.” With public companies like Cadbury being subsumed into organisation’s like Kraft Foods it seems inevitable that the number of listed companies must shrink. This compounds the apparent the apparent dearth of new listings that the article bemoans.

Add to this the points I make in “The Democracy Delusion” about industrial scale tax avoidance (epitomised by companies like Amazon and Starbucks making profits of billions in the UK and paying no taxes), and it becomes abundantly clear that this has massive implications for governments. How are they going to replace shrinking tax revenues? Only last week there was an item on the news about tax revenues in the UK being less than forecast!

All this makes makes tax reform more urgent than you think. It imperative that we revisit and reform our national tax systems – URGENTLY.  If we don’t we will be walking blindly into socio-economic and political crisis that will by far exceed any of the major calamities of history in scale. That is why I wrote the book: to try to offer a solution that will help prevent this. Of course it does not have all the answers, but at least my suggestion that companies should not pay tax at all is a provocative starting point for a very important discussion.

The ceaseless cycle of Christmas carols has been put away for another year, only to be replaced by another seasonal cycle with no joy, little originality and only the veneer of goodwill. If the miserable weather and post-holiday blues are not enough, the newspaper headlines will certainly drown you in the dismals!

After a blissful two weeks of virtually news-free isolation, the first headline to greet me on the doorstep on return from holiday was this from The Sunday Times; “PM in new year cash giveaway: Election pledge to raise pensions until 2020: Hints at income tax cuts for all to come.” This was followed by broadcast news that shrieked the next day’s headlines; “George Osborne targets £25 billion more in spending cuts.” It appears that the 2015 election campaign is now underway! Talk about conflicting messages! If you want evidence that politicians are more concerned with re-election than anything else, you don’t have to look any further.

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Standards are slipping and we are blindly letting it happen. People have got used to it. And if we don’t act to change things, they will continue to fall until our whole way of life is destroyed and becomes impossible to retrieve.

At the start of their book, ‘That Used to be Us’  Thomas L Friedman and Michael Mandelbaum give a very telling comparison of the current difference between the China and the US. They cite the example of the massive, beautiful 230,000 square meter (2.5 million square feet) Tianjin Meijiang Convention and Exhibition Centre taking only 8 months to build, and compare that with the fact it took 6 months to repair the escalators at Bethesda station on the Washington Metrorail – 2 separate escalators of 21 steps each.

If that stark comparison is not damning enough the authors complain that:-

• A spokesperson for the Washington Metropolitan Transit Authority said that “the repairs were scheduled to take about six months and are on schedule. Mechanics need (my emphasis) 10-12 weeks to fix each escalator.”
• One of the explanations given for this time was that it included “modernisation” because “the escalators were old and had not been kept in a good state of good repair.”
• The most disturbing aspect was a commuter comment in a newspaper report that “my impression, standing on line there, is people have sort of gotten used to it.”

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€2.1 trillion! That is the estimated amount of tax revenues lost to the shadow economy in Europe this year, according to a recent report in European CEO Magazine. [1] And that is just in Europe: imagine what the global figure must be!  What more do you need to know to recognise that our tax systems and the way we are governed need a serious overhaul?

The “shadow economy” is, by definition, a tacit admission of the extent to which people will go to avoid paying taxes.  And when it reaches such massive proportions it becomes blatantly obvious that there is something fundamentally wrong with our tax systems and clear evidence that something needs to be done about it. Particularly at a time of economic turmoil when national debts threaten the stability of the whole global economy.

And if that isn’t enough to frighten you and convince you of the need for action, factor in the “legitimate” tax avoidance that is so endemic in the world today. This, with its consequences is what I am depicting in “The Democracy Delusion.” The shadow economy is to some extent the inevitable consequence of ordinary people reacting to what they consider to unreasonable taxes and tax rates. Yet, it no more than a reflection of what is occurring legitimately in the real economy and all this is combining to put our tax systems under enormous strain.

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