May 2012 Archives
It took me a wee while to find inspiration for my first blog but I found it in a place not renowned for its inspiring qualities.
And from this unlikely beginning, the intention is to provoke debate and stimulate thinking on the business of marketing and the marketing of business. Hopefully you will enjoy sharing and discussing my views.
Last week I had to leave Birmingham for the delights of London. Fortunately this gave me the opportunity to travel with my favourite train company and to meet up again with the people working there who make travelling a real pleasure.
"There are three kinds of lies: lies, damned lies and statistics". The oft-quoted phrase describes the persuasive power of numbers to bolster a weak argument.
In the last few weeks two conflicting sets of statistics have been released about the construction sector.
First out was the Purchasing Managers Index (PMI). The index, which measures new business and employment levels in the construction sector, came in at 55.8 - any figure over 50 demonstrates growth in the sector.
In contrast, the Office for National Statistics (ONS) claimed construction output had contracted by 4.8 per cent in the first three months of this year, helping to push the economy into recession and double-dip.
Both surveys are closely watched economic indicators, so which one is out-of-step?
Experience tells me the truth lies somewhere in between.
It is philosopher George Santayana who provided the maxim that tells us that if we don't learn from the mistakes we made in the past we are destined to repeat them in the future. The current economic situation would certainly suggest we have plenty to learn.
As I will suggest in this blog, what seems fundamentally important to me is that the crisis we are experiencing does not allow some of the more extreme measures being suggested to be implemented. That said, we do need to radical thinking to assist in arresting decline and to underpin future recovery.
Perhaps the most extreme measure that was 'floated' this week was that proposed the idea by Adrian Beecroft who, as well as being worth over £100 million, is a donor to the Conservative party. Clearly he is a man who knows how to make money.
He believes that what would assist business are changes to the legislation to make it easier to dismiss workers.
Business secretary Dr Vince Cable, who increasingly seems to be a lone voice of sanity within the cabinet stated, the idea is "complete nonsense".
Last week's conference of the OECD (Organisation for Economic Cooperation and Development) has identified that growing inequality is an issue that needs to be addressed.
A paper presented by James Galbraith (son of the famous economist), argued that the response of the British and American governments in the 1980s, led by Margaret Thatcher and Ronald Reagan was wrong.
Galbraith believes that their obsession with reducing inflation and deregulation was one that has created greater inequality that still exists. The cheap credit that existed in the last decade, and has caused the current economic crisis, was a way to try and reduce inequality.
So, the argument goes, if our houses are believed to be worth more, we can borrow more; a belief backed up by a paper produced by the National Institute of Economic and Social Research (NIESR) for the Resolution Foundation thinktank.
But making workers feel less secure and paying them less is hardly going to assist in increasing consumption. Indeed, the belief that Britain's recovery is entirely dependent on dealing with 'worker problems' is, I suggest, clichéd.
As has happened before, in times of crisis it is all too easy to see workers as being the impediment to success.
Rather, what we really need is to make workers the key to recovery, not to demonise them.
Manufacturing has often suffered from a poor old-fashioned image. Too often the media use out of date pictures of smokestack industries, re-inforcing the often held view that manufacturing and engineering is a dirty, bygone sector which is no place for people to aspire to work. Nothing could be further from the truth as in this day and age, science, engineering and manufacturing facilities are some of the most exciting, dynamic and clean environments in which to be based.
So, finally the Department of Energy and Climate Change has published the long-awaited draft energy Bill. I would be exaggerating if I said that this particular piece of draft legislation was a cracking read (although it has its moments - including a whopping 393 explanatory notes at the end). But it does grab the attention with a striking foreword.
I read an article recently that highlighted the plight of smaller regional construction contractors and their inability to win new work in these straitened economic times.
The article was based on a survey conducted by Constructionline - a pre-qualification certification scheme for contractors and consultants - which revealed that of the 115 SME contractors surveyed 54 per cent had seen a decrease in their workload in the last three months. One of the biggest challenges, according to 42 per cent of SMEs, is winning new work, while cashflow was also cited as another major worry.
An alternative title to this post could have included the subtitle, 'contemporary capitalism and what it tells us about economic theory?'
Recent news has been dominated by a number of stories that have at their basis economics. I have chosen two which seem to demonstrate that, as the Chinese say, we live in interesting times.
Greece's travails continue to make headlines that suggest we are witnessing the very messy, and potentially catastrophic, end to the dream of single currency.
Friday's flotation by Facebook's, using what is known as an 'IPO' (initial public offering), raised over $105billion. Whilst this amount wouldn't solve Greece's crisis, it would certainly help.
What Facebook's launch certainly does indicate is that if you give investors the opportunity to buy something that has potential, they will buy; even if the world as we know it, at least in some parts of Western Europe, are going to 'hell in a hand- basket'.
What does it tell us, most especially in terms of economic modelling and business prospects?
China. A puzzle wrapped in an enigma surrounded by mystery ? ( As someone said once of something else.) Actually one of the changing realities is that more and more Chinese are travelling here so the opportunity to get some sort of direct insight what China really is thinking is actually increasing. As with almost all Chinese statistics the numbers in this area - and the rate of change - are pretty staggering
Trade figures released this morning showed that the UK's trade in goods deficit was unchanged between February and March.
To return to my refrain, pretty much monthly, since the financial collapse started: the issue is not currency (neither the Euro nor the Drachma); the issue is not deficits. The issue is banking - and bankers.
When the Greeks leave the Euro, clearly the Greek economy will, short term, absolutely tank. Import costs will rocket and so will the prices of basic commodities to the poor ordinary Greeks. Internally held Euros stuffed in biscuit tins and mattresses may help to cushion the immediate blow, and the drachma will float freely massively up and down making everyday life very difficult.
There will be real hardship for ordinary people and businesses who did nothing to cause this impending poverty crisis on our own European doorsteps.
But once the drachma settles down on the currency markets and stringent exchange controls operate (and other old fashioned levers get pulled) then the Greek economy will start to sell things to itself, localise its economy initially; and then eventually its exports will become attractive to all of us.
Never mind the cheapest winter and summer sun holidays available for decades for us poor, benighted, north Europeans!