What is going on in Libya?

The chaotic goings on in Libya expose the weaknesses in modern journalism.  I am particularly disappointed in the BBC, whose radio news is one of my main sources.  The modern journalists job, it seems, is to relay the latest dramatic report, and pass on the odd rumour.  Analysis isn’t their job.  And the biggest crime of all is to report news that is out of date, no matter that it may be more accurate than earlier reports.  24 hour news coverage simply tries to substitute quantity for quality.  I can only stand it for short periods.  The BBC was particularly weak in reporting what happened at the western oil town of Brega yesterday.  This morning I found the best coverage in the Independent, though I have to say I didn’t do a thorough search.  There was a reasonable overview in the FT as well (behind the paywall…).  This matters because what is actually happening informs public policy decisions back here.

The situation appears to be quite chaotic.  The Gaddafi forces clearly have strong grip on Tripoli.  They have some reasonably well organised forces, with access to some heavier weapons, including some air power.  They have control on some other towns too, including Sirte, Muammar Gaddafi’s home town, which is on the coast roughly halfway between Tripoli and the second city, and main rebel stronghold, of Benghazi.  But we shouldn’t exaggerate their strength.  Air attacks seem to be occasional sorties by single aircraft.  In their attack on Brega they needed to use civilian cars.  Mostly they seem unable to dislodge determined resistance from even lightly-armed irregulars.  That is just as well, because the rebel forces lack organization and weapons.  The regular army seems to have dissolved, and probably wasn’t up to much in the first place.

The Gaddafi forces seem to be consolidating.  The main priority for them, apart from continuing to hold Tripoli, is to retake the towns to the west of Tripoli up to the Tunisian border.  This seems to be slow going.  The attack on Brega was interesting because it is in the west of the country, not all that far from Benghazi.  The rebels managed to get in reinforcements, and this seems to have held them.  They may make another attempt today.  Apparently they want to control the airfield, no doubt so that they can get reinforcements and supplies from Tripoli.

What this seems to boil down to is stalemate.  Gaddafi is militarily too strong to dislodge what he holds, but too weak to extend his control very far.  Never mind taking new ground, he probably hasn’t go enough loyal forces to hold much more than he already does.  Meanwhile the economy has collapsed and Gaddafi is politically isolated.  No doubt he has lots of weapons, fuel and ammunition in Tripoli – and cash to pay the mercenaries – but it is difficult to see how he can get reinforcements or replenishments. This means that things could get very ugly in Tripoli, as Gaddafi forces throw their weight around, commandeer food for themselves, and so on.  They will only be defeated when their morale collapses.

So what are we to do?  Military intervention would be very messy.  NATO forces have the competence, but would be very messy politically – getting them out would be difficult as they would be left with the baby in hand.   Arab or African forces would be less politically difficult, but I question their ability to avoid many civilian casualties.  A no-fly zone looks a non-starter; it would take a lot of resources to implement, while not making all that much practical difference.  Isolating Gaddafi will help, but what is needed is some way to break the spirit of his forces.  I don’t know if there is a way to offer his mercenaries or other loyal forces an easy exit – but this could reduce their will to fight.

But in the end, we in the west need to accept that we do not rule the world, and nor should we.  Events will have to take their own course; we can only limit the human suffering at the margins.

Update: 4 March 2011

As usual, some very good coverage in the Economist this week, as consensus settles on the situation being a military stalemate.  The Economist points out that the real significance of the Gaddafi airpower is the ability it gives them to transfer their forces from place to place, and to attack groups of fighters crossing the desert between the main towns.  I think they are exaggerating Gaddafi’s airpower somewhat.  Air forces (and especially combat aircraft) are notoriously difficult to keep in airworthy condition.  The regime may not have the capability to fly more than a few of their aircraft at a time, without external help.  His diplomatic isolation is critical here.

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Get ready for a big fight over bank reform

The recent shenanigans over the government deal with the banks (project Merlin) now make more sense, following Anthony Hilton’s revelation in the Evening Standard (reported here in Lib Dem Voice).  The deal was weak on the banks because the banks did not get what they really wanted – which was to emasculate the Independent Commission on Banking Reform.  George Osborne was quite happy to oblige, it is reported, but the members of the Commission threatened to resign en masse.  This means that if the Commission does propose anything radical, an important part of the government will be against it.  This will (or should) provoke a major national debate.  Time to start marshalling the arguments, and to be all them more ready for the flood of obfuscation and irrelevant arguments that is bound to surround such a debate.  Let me offer some thoughts.

Even in a quick and selective overview, I have shot over 1,500 words.  I offer this below, but for those without the patience to read through this, my conclusions are these:  it is necessary to restrict the activities of wholesale banking so that the returns it makes are substantially lower in ordinary years, and the losses they make in bad years are also much lower; it is also important to make the banks less interconnected.  International reforms on bank capital are already doing some good, but we should not be afraid to do more since we are particularly exposed to a future crisis here in Britain. When it comes to the important business of improving finance to support small and medium sized businesses and innovation, we will need new institutions – the big banks will be of little use; the state must promote this type of financial innovation.

One thing is for certain: the established banks will not like any effective reform.  If Mr Osborne is taking their side, we can expect a battle royal.  It will take both determination and guile to face them down.  I will be reflecting on the latter in future posts.

What’s the problem?  First, there are two clear and legitimate issues for state policy.  We want to avoid the risk of another expensive state bailout of the banking system like that which was forced on us in 2008-2009.  Second we want the banks to lend more, at better rates, to small and medium sized businesses with decent prospects, in order to promote job-creation and the improved efficiency of our economy.  A third issue is politically toxic, and drawing most of the attention – that a lot of bankers seem to be grossly overpaid, with bonuses drawing particular anger.  It is less clear whether this is a legitimate issue for government interference, but we need to understand the issues here nevertheless.

Time to clear the decks a bit so that we can concentrate on what’s really important.  Here are some red herrings, to switch metaphors:

  • Bank bonuses are often blamed for promoting the crisis, on the basis that they distort incentives and incite reckless behaviour.  But why aren’t shareholders, whose stakes are at risk, managing this?  In fact the shareholders were as much a part of the problem in the banking crisis as bonus-crazed staff.  It is the incentives for shareholders that need real attention; sort this out, and the shareholders will sort the staff out.
  • Bankers’ pay is not comparable to that of film stars, sports stars or other entertainers who attract massive rewards.  Entertainment stars are a retail phenomenon which, with modern communications, works on a winner-takes-all basis in a mass market.  This is different on two counts from banking: the mega-profits are on the wholesale side of the industry; and it isn’t winner takes all either – a huge number of individuals and firms are able to attract oversized pay, not a lucky few in sea of wannabes.
  • In fact the issue isn’t really banker’s pay, but why the banks can afford to pay them so much.  Investment banking is hugely profitable in the good years.  This high level of profitability is a sign of wasteful economics, not a reward for value added to society.  A properly functioning industry is not particularly profitable because competition reduces profits.  A company at the frontier of technical innovation can deliver big profits and still be economically worthwhile – but this is not what is going on here.  There has been a lot of innovation in the banking industry, but not much of it has been to the overall benefit of society.
  • For the British, a defining moment of the crisis was the fate of Northern Rock, which had to be bailed out.  The reason why a bailout was forced on the state was that retail deposit insurance arrangements were inadequate, which caused a run, and put too many individuals’ savings at risk.  This problem has largely been fixed, and what happened to Northern Rock is pretty much irrelevant to the ongoing debate – it is simply a source of obfuscating arguments.
  • It is the banks that are the real problem, and not other players like hedge funds and private equity.  These institutions may be responsible for some egregious behaviour, but they also address a big weakness in our system of finance: an excessive aversion to risk in most investment institutions. They are not systemically dangerous. To the extent that they are dangerous, it is because of the ease with which they can get finance from the investment banks and over-leverage…which brings the problem back to the banks.
  • Finally dodgy lending by banks was at the bottom f the crisis, but it is not the main problem that needs to be fixed.  The question is why did so many lenders felt able to suspend the laws of proper management and common sense, and how were they allowed to carry on doing so for so long?  The answer is because it was too easy for them to pass buck to somebody else, in the form of securities put together by the investment banks. Securitization was justified at the time as a method of spreading risk – but this proved a fallacy.

Now, the real issues.  The first is that wholesale banking (services delivered largely within the finance industry, and not to retail customers – mainly investment banking) is much too profitable for too much of the time.  Why? This deserves more analysis, but one problem is clear from the bailouts.  Banks are making bets that pay off well most of the time, but deliver occasional disaster.  If you add up the bets that pay off with the costs of the disasters, then profitability may not look excessive.  But when disaster strikes the downside for bank employees – and shareholders – is limited, and others have to come in to bail them out.  In fact many bankers seem to think of the disasters as acts of God that really shouldn’t be their problem.  This leads to the risks being systemically underpriced.  What to do?  The critical thing is to look at how the bets are financed, and to limit the amount that is done through borrowed money rather than the shareholders’ own capital.  When things go bad, it the money banks (and various intermediaries they do business through) borrowed from elsewhere and can’t repay that cause the systemic problems, not the loss of their own capital.

The second problem is contagion.  If one institution fails then it can bring down others with it, forcing the government to bail the firm out, and creating a wider moral hazard problem referred to as “too big to fail”.  The essential problem is that too many financial institutions are lending too much money to each other.  Retail bank customers can be dragged into this mix, which tends to force governments’ hands.  This is a tough one to tackle, but the key points are to reduce the amount of lending between financial institutions (as in the previous paragraph) and to make sure that banks with retail deposits don’t lend them to other financial institutions, or severely restrict such lending.  While trading in securities by investment banks rightly attracts attention, the lending of money to other financial institutions that is used directly or indirectly to buy securities is just as much a problem.

The third problem is the lack of interest by banks (shareholders as much as managers) in lending to smaller businesses.  The problem is that to be successful this type of business requires information and relationships, and this requires good quality human input.  And that’s expensive.  We see big banks polarising into two types of business: wholesale services within the finance industry or mass retail services using computer algorithms and call centres.  Not much space in the middle.  I don’t think our big UK banks will ever be good at this; it is just too late.  We need innovative new institutions.  Two avenues are worth investigating: trying to improve venture capital facilities, and setting up publicly sponsored and locally focused institutions to lend to businesses, perhaps drawing inspiration from the German and Swiss systems (see this interesting paper from Civitas).

Basically this boils down to two things: cramping the style and reducing the profitability of investment banking.  And encouraging innovation in the supply of finance to small and medium sized businesses.  Forcing the current banks to lend more to businesses will not help; they simply won’t understand what is needed.  Making the big banks separate investment and retail banking would probably be a helpful reform, but it is not necessary and would not be sufficient.  Barclays have managed to insulate their retail from their investment banking businesses quite successfully.  Retail banks become exposed by lending money to investment banks or to the shady investment vehicles they create without them being part of the same organisation.

Some progress has been made on restricting investment banks internationally.  New international rules on capital are already putting investment banking profits under pressure, although not yet to the extent that they are having to cut pay (see this article in The Economist).  Is this enough?  Britain is uniquely exposed to financial crises, and we were lucky not to go the way of Ireland and Iceland, with mass bank failures on our hands. We can’t expect much solidarity from our European friends, given how stingy we have been to them.  An oil crisis is in the works; property prices could yet fall further; monetary policy and fiscal bailout have run out of road.  We shouldn’t shy away from extra measures to reduce our exposure.

Forcing the banks to cut pay is going to be tough going – but it is only then that we will know that reform is working.  High pay is rooted into the culture of these organisations.  Probably some banks will have to fail first.  We must hope that this will be the orderly winding down of some units, but we can’t rule out something worse.  And that leads us to a key paradox that will be at the heart of the argument.  Measures to make banks behave more safely may well cause some systemic instability.  The idea isn’t to abolish financial earthquakes, but to make them smaller and less threatening – even at the price of having more of them.

 

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Fontcrime: Comic Sans lives on

Readers who had seen my post on Public services are different may remember that somebody had been fraudulently buying up phone contracts under my name.  Last Friday I received this letter from the Carphone Warhouse UK Fraud Department.  Apart from the clumsy, evasive wording of the letter, what really hit me was its font.  Comic Sans should have died of ridicule years ago.  There’s even a website called bancomicsans.com.

Actually, Comic Sans has its place.  Its rather childlike appearance makes it quite appropriate for use in primary schools or nurseries, for example.  But what on earth is a fraud department of a major company doing using it?

If nothing else this shows that this department is disconnected from the rest of the company, which no doubt has strict house style rules. This is not a bad thing of itself.  The evasive and non-empathetic wording also shows that no communications professional has been anywhere near it.

As for the outcome, this letter says to me that my case has been filed in the closed category, with a bar being placed on anybody quoting my name an address buying anything from Carphone Warehouse.  I’m not complaining; I have no plans to buy anything from Carphone Warehouse after a couple of rather bad experience with them a few years ago, including another fraud.

But I’m still amazed how so many people are fontblind.

 

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The breaking wave: why I am an agnostic

Earlier this month BBC4 ran a documentary “The Secret Life of Waves”, by documentary-maker David Malone.  Apart from explaining the usual stuff about ocean waves, he went off into to a philosophical and spiritual dimension, comparing waves to life itself.  I found this very moving.  It was also nice to see that non-religious professionals are allowed to offer profound thoughts on spiritual matters.  Normally as soon as you mention “spiritual”, assorted religious types start to gather like vultures around a carcass, all too often offering no more than empty dogma.  Radio 4’s Thought for the Day doesn’t allow non-religious speakers.

When a wave breaks it disappears, but the water that carried it remains.  The wave has a life – a beginning, a middle and an end, but no substance of itself.  It is a manifestation of “energy”, although I find that an unhelpful word.  This is all we really need to know about our own lives.  The idea of an afterlife doesn’t really survive serious reflection.  Mr Malone shows this by pointing out that our concept of heaven – an essentially static place – isn’t at all attractive.

I was brought up a Christian, but the idea of heaven and hell never convinced me.  And I have found the idea of a God that intervenes in response to prayer, or sin or anything else, impossible too.  I accept the scientific view of the universe, of its vastness and of our own origins through evolution.  No heaven and hell; no divine intervention; no personal God.  Christianity was built on these ideas.  Without them the wave starts to break, just as an ocean wave breaks as it enters shallow water.

So why am I not an atheist?  I mainly think and act like one, long since having abandoned membership of a church.

Well in the first place I associate atheism with a hard, evidence-based view of the world.  This world has no room for mystery, as my brother Richard Green points out.    It is of the nature of scientific evidence that there can only be enough to cover a small fraction of what we experience; do we simply pretend not to see the world beyond evidence?  Atheists mock God as an “imaginary friend”, and yet their world requires quantities of a sort of negative imagination.

And the religious insights that attracted me to Christianity remain a powerful influence on me today.  I still cannot think of the Sermon on the Mount without excitement – it’s a flame that still burns bright – to invoke another transitory phenomenon.  It is a crazy, defiant creed that tells you to renounce worldly wealth, turn the other cheek, accept humiliation and not be bound by the letter of the law but by its spirit.  And there is so much more – it angers me that so many Christians seem to ignore what I see as the essence of Christian teaching.

And finally there is the wave of religious experience itself.  It is quite something to stand in an ancient Church and feel continuity with it – or to read ancient scriptures after so many generations before have done so.  It gives a sense of belonging.  The wave may be breaking, but I can’t quite renounce it.

 

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Time to rethink the Bank of England

It seemed a great idea at the time.  Independent central bankers managing our economy on a strictly technical basis, preventing politicians from mis-managing it for short-term ends.  Alas, even if this was not an illusion then, it surely is now.  Central bankers across the world are becoming politically controversial.  Meanwhile their policy decisions, be they changes to the interest rates under their control or buying bonds (“quantitative easing” – QE), either have no effect on the real economy or do not have the effect intended.  But the recent coverage of the Bank of England’s latest interest rate decision shows than most observers are still stuck in the old narrative.  The present system is obsolete; the real question is what the Bank’s role should now be.

Monetary policy, as now conceived, arose in the 1980s, after confidence in economic policy collapsed, amid a toxic combination of high inflation and high unemployment in most countries.  Out of this wreckage came the idea that the economy at large responded to changes in the money supply, which influenced the decisions people made in output and employment, and in prices and wages.  By managing the money supply we could manage the overall economy.  And what was more, we could make this a relatively objective, technical process, by limiting growth to what the economy was able to produce, and keeping inflation into a nice, tidy band.  Fiscal policy, taxes and public spending, were pushed into a relatively minor role, and became politically suspect.  A new economic orthodoxy grew, sometimes called neo-Keynesianism, with Economics students given new sets of diagrams to learn, while economic modellers translated this into more complex mathematical equations.   Then, in 2007, it all went horribly wrong.  Two basic problems are now quite evident.

The first is trying to understand how exactly monetary policy works.  Its advocates had always been vague about this, their case based mainly on historical correlations rather than actual, practical mechanisms.  To the public, policymakers talked about printing presses, as if it was all about the number of banknotes printed and put into circulation…which was clearly nonsensical in a modern economy.  During the 1990s the process focused on the setting of interest rates, with the central bank using its power as banker of last resort to manage interest rates on the overnight deposits made by commercial banks, a process which indirectly affected the supply of money.  While I was studying economics at UCL (in 2005-08) our lecturers admitted this was pretty thin.  Long term interest rates were more important, and yet the central bank’s influence over these was marginal.  More important, as electronic money and “shadow banking” exploded, it was not at clear how central banks were supposed to manage the volume of money supply at all; even defining it became impossible.  The whole thing completely fell apart in 2007 when the interbank market seized up, leaving the central banks’ instrument of management broken.  The central banks pulled their levers one way, and yet the actual supply of money, in practice if not in statistical definition, went the other.

The second problem with monetary policy is more fundamental still.  Real people and markets don’t respond to changes in money supply as they theoretically should.  The main effect of policy changes seems to be on the prices of shares and property – not the amount people consume.  So loosening policy merely inflates asset prices, having little effect on output, prices and employment.  Alan Greenspan, the US Federal Reserve’s previous chairman even seemed to make a virtue out of this – suggesting that strong share prices helped sustain investment and consumer demand.  But this leads central bankers into a very dark place, as the Economist’s Buttonwood column has recently pointed out.  What on earth are central bankers doing trying to manipulate asset prices?  Surely asset prices should be set by a properly functioning free market?

So central banks have comparatively little influence on the real economy, and what influence they do have is mainly on asset prices, rather than on employment and consumer prices.  Accept this and you quickly see that asking them to manage inflation as we do in the UK (or inflation and employment, as in the US) is absurd.  It may not even be healthy to confine inflation to a narrow band – there can be perfectly good reasons why it is right to allow inflation to run ahead at a particular time in a particular economy, or, indeed, to let the supposedly wicked deflation to run.  Central banks’ role should be much more limited.  They should control seigniorage (profits made on the creation of currency) and ensure that the markets for money are orderly.  And that’s about it.  Even managing exchange rates is toxic, as the Swiss are finding.

This is the best reason for raising interest rates in the UK (and US) at present.  They are so low that money markets can’t do their job properly – it is much healthier if savers can expect some rate of return.  And, frankly, asset prices are too high anyway.  Not that anybody on the Bank of England’s MPC seemed to offer anything like this reason for raising rates in their  minutes.  George Osborne still seems to believe that the Bank can help him out if fiscal policy seems to be too tight.  The level of denial remains astonishing.  The game goes on; it’s not going to end well for the Bank, I fear.

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Reflections on the Isle of Wight

I’m just back from a few days break in the Isle of Wight.  It so happens that the Economist’s Bagehot has just blogged on the subject of the island, which was the lasting point of his print column last week.

The island has a bit of a charming, time-warp feel about it.  But Bagehot points out that its people are ahead of the game in one aspect – realising the implications of the coming parliamentary boundary changes.  Interesting to reflect that it has half the population of the borough of Wandsworth – and yet the latter can’t even support a decent local newspaper.

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Sex offenders

Here is an article I had published yesterday in Lib Dem Voice on the disgraceful behavior of political leaders over the recent Supreme Court ruling.  Things didn’t get any better after I wrote the article on Wednesday, judging by Theresa May and Jack Straw on Today in Parliament.  Lib Dem politicians are just keeping their heads down, it seems.

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Megatrends – where will we be in 2030?

Mark Pack recently wrote an article in Liberal Democrat Voice about how badly awry political predictions went in 1992.  Politics, an interaction between adaptive and opportunistic parties is inherently unpredictable.  What about the economy?  The big trends (“megatrends” I will call them, to contrast with “microtrends” in fashion a couple of years back) of the 1990s were technology (internet and mobile phones) and globalisation, especially the rise of China and India.  I may be mis-remembering, but these unfolded more or less as predicted if you discard the excitable froth.  But these trends have played out.  What does the future hold for the British economy.  What will 2030 look like?

First megatrend.  The era of cheap imports is over.  Chinese and Indian costs were so low in some industries that ours could not compete; many jobs were lost in manufacturing, especially.  These jobs were replaced by well paid jobs in more up-market and high tech businesses (including finance) and by a lot of poor quality service jobs too.  On average, Britain prospered, but inequality grew as well.  The economics of this (the law of comparative advantage, to talk technical) is notoriously difficult to pick up intuitively.  But, as the developing economies prosper, their cost advantage erodes.  We saw this with South Korea and Taiwan; it’s now happening to China and India, whose costs are rising rapidly.  There doesn’t seem to be a huge pool of undeveloped countries to replace them at the bottom of the market.  Bangladesh, Pakistan and various African nations might rise to it, but they don’t seem to have the political stability or governance required.  The good news is that the steady stream of job losses will diminish, especially at the lower value end, and jobs will even be repatriated.  The bad news is that our overall living standards will stagnate, since we no longer get the boost from consuming cheap imports.

Second megatrend.  Energy costs are going up.  The range of predictions ranges from the serious to the apocalyptic.  Demand for energy of all sorts, but especially oil, grows as developing countries develop.  There are plenty of energy sources, but to increase overall supply means tapping into energy that’s much more expensive to get.  The consequences of this are quite profound (this is a favourite topic of the Economist Buttonwood blog, like here and here).  This will prove a major drag on living standards and we will have to invest huge sums in both new energy sources (especially alternative energy) and energy conservation (especially our homes).  Something analogous may be happening in food and agriculture.

Third megatrend.  The work force will stagnate.  The baby boomers are retiring, or at least want to wind down; most mothers that want to are already working for as many hours as they want, rather than staying at home with the children. Immigration is coming down, as we fret about the social consequences, and anyway we don’t provide such an attractive proposition to immigrants, as the economies of east Europe steadily catch up.  And productivity has reached such levels that many question the need to work so many hours, and crave a better work-life balance.  This puts a strong damper on the economy, although it’s not all bad.  More leisure, if people want it, is a sign of economic success, not failure.  The problem is if publicly funded benefits are supporting leisure that is not earned (by artificially low pension ages, for example)…though my feeling is that this is less of a problem in Britain than elsewhere.

This is pretty negative stuff.  So what about the fourth megatrend: the continued advance of technology?  This is very difficult to read.  One article I read recently suggested that current technology trends are rather ephemeral: smartphones and social networking don’t have the power to change things like the internet and mobile phones did.  But we can’t know; the Economist carried an interesting article last week on how print technologies are transforming manufacturing industry.  We have to invest a lot of hope in technological change to help meet the other challenges.  Which means we must understand how technological advance works.  It’s disruptive; the law of diminishing returns slowly kills off the current industry leaders (look at Pfizer closing down its R&D outfit because it doesn’t pay any more).  The process is disruptive and favours the nimble, be it glitzy Silicon Valley start-ups, or earnest German family businesses.

So where am I going with all of this?  The trends that shaped our economy in the last 20 years are coming to a halt or reversing.  We face major challenges which mean improvements to standards of living are most likely to come from technological innovation and a more equal distribution of wealth.  Some of the trends of the last 20 years, growing inequality and companies retaining a bigger share of profits, may well go into reverse.  Bad news for share prices.

What should governments do?  First promote innovation – and the key point is to make it easier for smaller and medium sized companies to get cheap finance; which means big changes to our banking system.  Second, energy policy will be critical; even if you are a climate change sceptic, there remains a lot of value in low carbon policy as cover for dealing with rising energy costs.  Third, the public demand for “fairness”, however impossible to define, is here to stay.

Economists may fret about stagnant income, but this doesn’t have to end badly.

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Manufactured outrage won’t help elderly patients

John Humphreys was apoplectic when interviewing Ann Abraham on the Today programme.  She has produced a report detailing several cases of appalling treatment of elderly patients in the NHS.  How on earth can these wonderful dedicated NHS staff we keep hearing about allow such abuse?  Ms Abraham did not try to give us any insight into how such things happened, merely echoing Mr Humphreys’s anger.

Not long after the interview there was a rather interesting counterpoint in the sports report.  Garry Richardson was interviewing the trainer of one of the horses killed at Newbury over the weekend, asking him about how he and his staff felt about the whole thing. This was clearly designed to bring on the normal outpourings of emotion that are now the expected face of public grief.  Such a a beautiful horse; a real character; we’re all devastated; we need answers….and so on.  Instead all he got was, more or less, just a bad day at the office and life goes on.

That would be a more helpful attitude in the NHS case.  Whatever Mr Humphreys and Ms Abraham are suggesting, it really isn’t hard to reconcile the dedication of NHS staff to systematic abuse of patients.  It’s what Richard Adams in Hitchhiker’s Guide to the Galaxy called the “SEP field”, which guarantees a cloak of invisibility.  SEP stands for Somebody Else’s Problem.  Anybody who has worked in a large organisation is familar with the idea of bad things happening while everybody involved is convinced they are doing a highly professional job.

The SEP field arises from the way we organise work, splitting it up into separate bits for which individuals can take responsibility.  We only look at our bit.  Bad things happen between the bits.  The first reaction is to blame management, who are supposed to be making sure the whole thing adds up.  And the quickest and easiest response for management is to make the process yet more complicated by adding in more bits, with checks and controls.  That’s how they tend to behave when people get outraged.  But it doesn’t really help, because the main problem is complexity; nobody wants to take wider responsibility because they don’t understand what’s going on.

This is an old problem, and solutions should be familiar.  You simplify processes, empower staff to act outside their normal remits, and engender team-working attitudes.  Simple but hard.  It means telling people comfortable with their narrow jobs, who think they are doing wonderfully well, that actually they are part of the problem.

But for NHS managers that should be another day at the office.  We, the public, should be encouraging them to be braver.  Instead we stoke up the outrage, and even start suggesting the NHS doesn’t need managers at all.

The NHS needs better leadership at ground level.  We should be demanding it.  Perhaps we should even ask ourselves, as Jeremy Laurance does in the Independent, whether our beloved NHS is capable of ever managing itself properly ever.

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Prisoners’ voting and the European Court

I’m an increasing fan of The Economist’s new Bagehot columnist.  His approach to blog posts is self-confessedly long and unpolished.  But worth bearing with.  His post on the Prisoners’ voting rights and the European Court must be his longest yet.  But wonderful.

Quite apart from the rights and wrongs of giving prisoners the vote, thumbing our noses at the court is the wrong kind of signal to send countries with lest robust judicial systems, like Russia.  Just as the shortcuts we used on the War on Terror have been used by as excuse by countless bad regimes, like Robert Mugabe’s, to bypass due process in their countries.   Moral leadership implies doing things that hurt.  Tony Blair never understood this; the signs aren’t good for Cameron.

At least I can be a little bit proud of the Lib Dems this time.

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