Euroland’s Descent Into Chaos

The European hegemony, and by that I mean those countries that eschew the Anglo Saxon principles of free markets and flexibility of employment, faces a decade of civil, political and economic chaos; as the economic reality of the global economy hits home.

The critical issues facing Euroland include:

 The overvalued Euro.

 The lack of mobility of labour between member states, due to language and bureaucratic barriers.

 The excessively high interest rates being maintained by the unelected, and unaccountable, members of the ECB.

 The self delusion of the occupants of Euroland with regard to their overpaying themselves, relative to the rest of the world, in terms of salary, benefits and pensions.

These issues, unchecked, will have the following consequences:

 Investment from the rest of the world will decline; as companies seek more flexible, business friendly economies to invest in.

 The overvalued Euro will suck in imports and suppress exports; further eroding the job market, and standard of living of Euroland.

 The high interest rates will cause the European economies to stagnate, causing job losses and reduced tax revenues.

 The level of salaries and benefits, which are unsustainable, will be forcibly corrected; either by cuts in salary/benefits or job losses.

 There will be a knee jerk reaction to non Euroland products, ideas and capital flows; causing a rise in protectionism, and the consequential worsening of the Euroland economy.

 The downturn in the Euroland economy will see a rise in racism and attacks on “non Euro” residents.

The situation that Euroland faces, with respect to its rigid inflexible working practices and economic stagnation, is similar to the situation that the UK faced in the 1970’s. The corrective actions effectuated by Margaret Thatcher, and her cabinet, in the 1980’s gave the British economy the flexibility and strength that it needed to survive the economic globalisation of the 21st century.

However, the changes pushed through the British economy in the 1980’s came at a very high price; with job losses in the traditional heavy industries and significant social unrest. The UK, as a society, managed to navigate its way through this period of social upheaval by being fortunate enough to have a Prime Minister and cabinet that had the clarity of vision and strength of purpose to maintain a course of action that they believed to be right.

Euroland, in my opinion, does not have access to such a leader; nor indeed do its political parties have the backbone to present to their voters the unpalatable truth about the situation that they are facing.

The result will be an inevitable economic decline, with Europe spiralling into a decade of social, political and economic chaos. The straws in the wind are already evident; with yet another air traffic controllers strike in France, and the recent demonstrations in Germany and France about public sector benefits and pensions.

My advice to the UK is to avoid further integration with Euroland, as the UK will only be sucked into this impending chaos.

Get Off Your Backsides

Statistics show that for the first time in history, the number of people who are overweight exceed those who are undernourished.

The ignorant amongst you may feel that this is a cause for celebration, proof that mankind is within reach of eliminating hunger.

Let us not delude ourselves, this is nothing to be proud of. The number of under nourished people in the world exceeds 1 billion, and is unlikely to fall below this in the near future.

Those that are overweight are increasing in number (and size) and, aside from the aesthetic issues associated with obesity, face a myriad of serious health issues arising from their bulk. These include, but are not limited to, the following:

 Heart disease

 High blood pressure

 Diabetes

 Cancer

We should be ashamed of ourselves. Where over 1 billion people go hungry another billion, or so, stuff their faces like pigs at a trough.

There are a number of causes of this epidemic of obesity, including:

 The increased slothfulness and sedentary nature of peoples’ lifestyles.

 The abundance of cheap food in the West, pushing the daily calorie intake ever higher each year.

 The increased consumption of fast food and prepared food that is high in sugar and fat.

 Ignorance as to the difference between wholesome nourishment and junk stodge.

 Laziness on the part of parents who, instead of educating and disciplining their children with respect to healthy eating allow them to gorge on crisps, sweets and fries.

I enjoy food and drink, as you will read in my book “Accountants Can Cook”. However, you will see that I use only fresh ingredients; which contain a good balance of protein, fibre and vitamins.

My recommendations for reducing this obscenity of gluttony are:

 Eat less, exercise more.

 Cut out the junk food.

 Cook food from fresh ingredients.

 Learn to say no to your children when they demand junk food.

 Exercise self discipline.

To those of you who say they neither have the time, ability or inclination to follow these recommendations, my answer is simple; “Bullshit”.

Mankind has survived, and flourished, for millennia without junk food; and managed to cook and eat food prepared from fresh ingredients.

Get off your backsides and improve your lives!

Commuting Hell

Those of you in the UK who have the misfortune, like I used to have, of commuting to work by rail on a daily basis; will agree with me that it is an unpleasant, soul destroying experience. Common complaints include the following:

 The trains are often late.

 The trains are overcrowded.

 The interior of the train is often filthy.

 The safety aspects of overcrowding are, to say the least, questionable.

 The ticket prices keep going up, but there is no discernible improvement in the service.

The government claims that it intends to improve the situation; yet, from a user’s perspective, they have yet to make any discernible impact.

The question, as to why are the railways in such a mess, provokes a myriad of answers; including:

 The railways have suffered from years of underfunding.

 The government price controls prevents the rail companies from charging an economically viable fare.

 The privatisation of the railways emasculated management’s ability to manage the system.

These are all very plausible excuses. However, I offer an additional explanation. The system in operation cannot cope with peak time demand because, the number of people wishing to use it during rush hour exceeds its capacity.

This excess demand is brought about by a number of factors. In my opinion, the two key ones are:

 The population of the UK keeps growing, it is now approaching 60 million. I would suggest that this is unsustainable both in terms of absolute numbers, and the level of growth, for such a small island.

 The “desk bound” working population concentrates itself in and around the major city centres, such as London. The majority go to work at the same time each day, and consequently clog up the system.

In my opinion, the problem can be addressed by adopting a “twin track” approach; whereby the government, and the population, work together to improve the situation. I recommend the following:

 Price controls on fares should be removed. The extra revenue earned by the rail companies should then be invested on structural improvements of the network.

 The government should “fast track” planning permission for extending stations and lines in and around major cities; this will allow extra/longer trains to be used by the rail operators.

 The individual citizen, working in tandem with their employer, should cast aside the institutionalised “nine to five” mentality that pervades office culture. Why should the working day only fit into this narrow parameter? Firms should pro-actively encourage flexi-time and home working.

 Instead of clock watching, the length of the working day should be based on the completion of defined tasks. I have worked for many years in offices, and witnessed an inordinate amount of time being wasted by people taking coffee/cigarette breaks, gossiping, going to the pub for lengthy lunches and chatting on the phone. They do this because they are bored, and have little to do to fill their day. Therefore, it should be custom and practice to allow people to go home when they have completed their tasks. This will mean that people will stagger their journeys from the office; thereby easing peak time congestion.

The above suggestion also has the additional benefit of showing exactly how underemployed many office workers are; and should stimulate a much needed re-evaluation of the ways of working in the office environment.

A Busted Flush

Yesterday Clare Short, the UK International Development Secretary, resigned her post in the Cabinet. She cited her reason as being the fact that, in her opinion, the British Prime Minister had misled Parliament over the action taken in Iraq; which she believes to be a breach of international law.

Taken at face value, the resignation may seem to be a highly principled and noble action. However, I would draw your attention to the following salient facts:

 Prior to the Iraq invasion Ms Short threatened to resign, on the principle that she was opposed to any military action which did not have the backing of the UN. However, when push came to shove she chose to stay.

 Since resigning she has used several interviews to attack the non collective nature of the Cabinet, Tony Blair’s presidential style and the alleged rule by “diktat” that has, in her opinion, been omnipresent since Labour’s election victory in 1997. These may well be genuine failings of the Labour administration. However, since in her view they date back to 1997; why has she taken six years to identify them?

 She missed a crucial vote in the Commons last week, stating that there had been a mix up in her diary; adding that she would have voted for the government. She then found herself to be too busy to attend the weekly Cabinet meeting. These events, naturally, heightened press speculation about her imminent departure from government office. My view is that if you intend to resign, don’t play games in the days beforehand; just do it.

 Ms Short is calling on Tony Blair to step down before the next general election, and pave the way for Gordon Brown (the Chancellor) to take over. In my opinion, this betrays the real reason for her resignation; it is not a matter of principle, but personal antipathy towards the Prime Minister.

My advice to others, be they politicians or civilians, who may be contemplating taking the “lonely journey” of resignation is as follows:

 Don’t publicly threaten to resign then change your mind. It diminishes your credibility and dignity.

 When resigning on a matter of principle, stick to your principles; resist the urge to make personal attacks on former colleagues.

 Don’t play hide and seek in the days, or weeks, before resigning; it merely encourages speculation, and diminishes the “shock and awe” impact that your resignation has.

 Don’t go telling tales “out of school” to the media, about events that happened several years in the past. This merely diminishes your personal brand value to that of a B list celebrity; whose only source of publicity are appearances on fatuous reality TV programmes.

In short, if you really do have principles then stick to them; otherwise your resignation will have all the impact of a “busted flush”.

A Hammer to Crack a Nut

The Sunday Times reports that Network Rail has decided that the annual winter chaos on the railway network, caused by falling leaves and branches fouling the tracks, has to stop.

To this end, they have decided to take draconian measures; they will fell the trees lining the railway embankments.

Environmentalists have raised concerns about the damage that this will cause to the ecosystem. However, I would like to draw Network Rail’s attention to another possible drawback to this scheme.

I am not a civil engineer, but strongly suspect that the trees, or rather the roots of the trees, perform an unseen service; namely, they reinforce the structural integrity of the embankments.

Network Rail, by removing the trees, may well be destabilising the structural integrity of the embankments. This in turn may make them prone to slippage, and collapse; thereby causing the trains to be further delayed. I would have thought that leaves and fallen branches were easier to deal with than earth slips.

Comments from Network Rail on this matter are most welcome.

Spam

I, like everyone else with an email account, receive a daily dose of Spam (unsolicited bulk emails). Companies and individuals offer me a myriad of services and products, including:

 Penis enlargement

 Porn

 Cheap loans

 Opportunities to assist ex members of the Nigerian armed forces transfer millions of dollars to Switzerland, using my bank account

All of these “opportunities” are routed swiftly to the trash can.

I believe, as I have stated in the “Vision Thing” section of my website, that the internet is one of the greatest inventions in mankind’s history. It enables people to share ideas, interact with different cultures and to communicate; at the touch of a button. It will lead to an exponential growth in human intellectual, social and cultural development.

Governments, as much as they may wish to, have been unable to control the free movement of ideas and experiences between people and organisations. However, this freedom of communication has several downsides; Spam being one of them.

Speaking from personal experience, I have noticed that the level of Spam is increasing. This clogs up my mailbox, and wastes my time as I have to dispose of it. This increase is due to the fact that Spam has become big business. Unscrupulous individuals and organisations “harvest” the net for email addresses, and sell them on to others who program computers to deluge the hapless recipients with Spam.

Some people fear that this will lead to the eventual “log jamming” of the world wide web, and that people will simply be put off using it.

However, I believe that long before this situation is reached the main ISP’s (internet service providers) will recognise the threat that this poses to their business; and form a regulatory body that will formulate, and enforce, a code of conduct for the net.

I urge them to take action now, before governments try to stick their “snouts in the trough”; and regulate the net to death.

The Impact of the Euro

The European Central Bank (ECB), in its monthly bulletin, has warned that if the UK joins the Euro then the UK’s state healthcare system (NHS) will have to be restricted to emergencies. The ECB believes that the cost of maintaining the NHS would threaten the stability of the fiscal and monetary key performance indicators it has set the European hegemony.

The UK Treasury has expressed surprise at this; they believe that national member states have the right to set fiscal policies, monetary policies and tax levels.

I am afraid I must beg to differ with the view of Her Majesty’s Treasury. Anyone with the slightest understanding of economics should recognise that once you surrender your currency, you abrogate your right to set monetary and fiscal policy.

The ECB’s primary mission is to ensure that European inflation does not rise above a certain pre-determined range. It has a number of tools at its disposal to achieve this, including these two:

 It sets the level of interest rates in the Euro zone. The interest rates have a direct effect on the exchange rate of the Euro, and the level of economic growth of the Euro economies. Currently the Bank of England sets the UK interest rates, joining the Euro would mean that the UK interest rates would be set by the ECB. The level set would affect the level of growth of the UK economy, and the tax take of the Treasury. A high level of interest rates would lead to reduced growth, a reduced tax take and a reduced level of funding available for the NHS.

 The members of the Euro zone have agreed to certain fiscal targets, with respect to government borrowing; in order to ensure financial stability throughout the Euro zone. The ECB monitors these targets, and breaches in them results in member states being fined. Therefore increases in funding for the NHS, or changes in the tax rates, which adversely affect the level of government debt can bring about a fine. Again, a clear example of a loss of individual sovereignty over the key levers of the economy.

In addition to creating a stable fiscal and monetary framework, a European hegemony that desires a stable and robust currency will need to put into place a stable, centralised political framework. This political body will set those policies eg; defence, fiscal, social and healthcare which used to be set by individual nation states.

Taking the above, very simple, analysis into account; I fail to understand why the Treasury expresses surprise at the possible impact on fiscal/monetary policy of joining the Euro.

The fundamental issue facing the British people is whether they wish to pass economic and political sovereignty over to a group of un-elected, unaccountable European bankers.

Additionally, the British people may care to question the quality of the economic and political insight of the Treasury as demonstrated by their expression of surprise at the ECB report. The conclusion of the ECB is rather obvious to anyone who has followed the political and economic development of the EU.

The Enemy Within

I understand that certain school boards in the USA have banned large numbers of books, and study literature, from the curriculum that contain particular words and subjects. Amongst these offensive words and subjects are the following (those that are of a nervous disposition should turn away now):

 Dinosaurs-some people don’t believe in evolution.

 Harry Potter-the characteristics of curiosity and heroism are considered to be gender biased.

 Mountains-these are considered to be unfair subject matter for those pupils who do not live near mountains.

 Mickey Mouse-some people dislike rodents.

I shall stop there; however the list, apparently, goes on and on.

Why have these seemingly innocuous words and subjects become taboo?

The bodies controlling the subject matter deemed fit for stimulating, moulding and educating young minds have, in my opinion, taken the coward’s route when setting the curriculum. They have chosen to avoid confrontation with single issue fanatics, those elements of society who possess closed minds to the people and society around them.

These fanatics cannot tolerate the slightest question to be raised against their inward looking, narrow minded view of themselves and the world. When challenged the fanatics will act like a child throwing a tantrum; and through all the channels available in a free society, media litigation etc, seek to drown out the voice of the people or organisation that dares to challenge their views.

This avoidance of confrontation may give the regulators of education a short term respite from the stress of having to perform their role as educators. However, it stores up trouble for the future. I draw your attention to some of the following lessons from history:

 George Orwell, in his most insightful novel 1984, painted a terrifying vision of a society where words were erased by the state’s thought police in order to control what people could think. The restriction of thought restricts peoples’ ability to question the status quo, this in turn ensures that the state can maintain is control over the population and by definition its grip on power.

 The USA passionately believes in freedom of speech, it has demonstrated this many times, for example; fighting Nazi Germany, standing firm against communism and ousting the Baath government from Iraq. These regimes all controlled peoples’ access to literature, they were afraid of independent thought that would question their right to hold office.

 The USA has introduced a road map to peace in the Middle East which envisages the Palestinians and Israelis living peacefully side by side. This implies a belief in the principles of religious tolerance, whereby Islam and Judaism respect each others beliefs.

The cowardly policy of the education boards has the following consequences and paradoxes:

 The control of educational literature in this absurd manner is in direct contradiction to the beliefs and actions of the USA in its foreign policy, as outlined above.

 The policy of the education boards parallels that of the Orwellian dictatorship.

 Restricting the variety and choice of stimulating literature available to young minds will produce a generation of illiterate, unsophisticated and unimaginative cretins; who will oversee the stagnation of the creative drive and energy that has brought the USA to the pre-eminent position it holds in the world today.

 The lack of challenge and variety in the literature offered to pupils will produce a generation that is intolerant of other peoples’ ideas, way of life and religious beliefs. Is that not the very form of society that the Pilgrim Fathers emigrated from all those centuries ago? Indeed, is that not the form of society that the civil rights marchers of the 1960’s fought to eradicate?

I urge the people, and the leadership, of the USA to take heed and to stand up to the feeble minded bureaucrats who seek to undermine the intellectual and cultural base of the USA.

The hard lesson that the Nazis taught us was that where first you burn books, you next burn people.

The freedoms that you take for granted were hard fought for, the price of these freedoms is eternal vigilance.

The Dulwich Experiment Revisited

I see that the Masters of Dulwich, Eton, St Paul’s and Kings College are diverting scholarship money from merit to means tested bursaries. Dulwich, my old school, will reduce the non means tested scholarship from a maximum of 50% to 33% of funds awarded.

In my view, this is an excellent decision; and is well in keeping with the “radical” inclusive approach to education that Dulwich has championed in earlier generations.

In the 1940’s Dulwich was the first public school to admit pupils on local authority grants. These grants were an innovation of the then Labour government; designed to give gifted children from poor backgrounds access to a wider choice of educational institutions. In an interesting irony the then Master of Dulwich, when introducing what was known as “the Dulwich experiment”, was booed at an old boys’ gathering and called a socialist.

Almost thirty years later I entered Dulwich in 1973, and won a local authority place in 1974. This was a year of change, for Britain again had a Labour government; who this time were pushing the mantra that “all things were created equal”, and those that were not were to be made equal.

In the belief that pupils should not be given the opportunity to maximise their potential; the Labour government abolished local authority places to new applicants. I was the last of a generation to benefit, my parents would not have been able to afford the fees otherwise. I well remember seeing certain “leading” Labour politicians of the day being interviewed, explaining their doctrine as to why “elitism” was to be frowned upon. I found that to be somewhat ironic, as many of them had been to public schools themselves; indeed one was an ex pupil of Dulwich.

This doctrinally inspired abolition, needless to say, prohibited those from poorer backgrounds from entering Dulwich and similar schools. This brought about a change in the social background of the pupils, during my seven years at Dulwich, which could be unscientifically observed by looking at the parents’ cars that arrived each year for Founder’s Day. In 1973 the average car was either a Ford or Leyland, by 1980 the majority were Jaguars and Audis.

Now the wheel has turned full circle. I offer my full support to this initiative, and urge other schools and the government to “buy into it”.

Heightened Threat Levels

I am member of an internet community, and one of our group in the USA sent a message yesterday; in which she expressed her worries regarding the heightened risk of terrorist attacks.

I offered her and the group my opinion, which I have posted below.

"Take heart, speaking as a Brit whose country endured five years of Nazi bombing and thirty odd years of the ocassional IRA bomb we have learnt one or two things.

1 Heightened anxiety, so long as it does not become uncontrolled panic, improves vigilance. The price of freedom is eternal vigilance.

2 FDR was correct when he said, albeit in response to different issues, "we have nothing to fear but fear itself".

3 Act on fact, not rumour.

4 Stiff upper lip, I know it is a trite and hackneyed expression. However, when the chips are down; believe me it is an effective weapon against those that seek to disrupt your lives and cause fear.

Resolution, determination and focus are the qualities that people need to "dig deep" for during periods of increased international upheaval."

Pro Forma Guideline on Internet Usage

Introduction

There has been some discussion as to the time spent by employees surfing the net, during working time. The management of some companies are beginning to feel concerned that this is proving to be a time wasting temptation to some members of staff. These companies, in response to this perceived threat, seek to limit employees access to the internet.

I myself have had personal experience of an organisation where those members of staff who wished to have access to the internet, and email facilities, had to complete a form; stating why they needed it. This form would then be assessed by a committee, if you were lucky you may have the connection up within six weeks!

This is of course totally absurd. We live in the 21st century, the internet has become part of our lives; whether the “ostriches of 19th century management” like it or not. Specifically, it isn’t going to go away!

It is my view that knowledge of both the contents, and techniques, of the internet enhance the individual’s skill set; and hence benefit the company he/she is employed by. I do recognise that, at times, the systems offered to employees can be abused. However, if you treat people as adults; explaining where the boundaries of reasonable/unreasonable usage lie, they will in general act responsibly.

Therefore I have put together a simple, non prescriptive, pro forma guideline that companies could incorporate into their codes of conduct (to read my article Codes of Conduct click here).

Guideline

This guideline is intended to form part of a company’s code of conduct. As such breaches of this guideline would constitute a breach of the code, and shall constitute a notifiable event; requiring registration and action (as deemed appropriate) by the management responsible for implementation of the code.

The company expects that staff will use the internet, email and telephone facilities in a responsible manner. The use of these facilities is encouraged, where the use is for business purposes and supports the goals and objectives of the company.

However, the company expects the following general principles to be adhered to :

 The above systems are company assets; and as such should be used for business purposes. However, personal use of the internet may take place during non work time so long as it does not interfere with an employee’s performance and does not contravene the other rules laid out below.

 It is in the interests of the company, and its employees, that individual members of staff are fully conversant with technological innovations such as the internet.

 A cost conscious approach should be adopted by users when determining which facility to use, and when to use it, eg email is less expensive than a phone call.

 The use of the facilities to access/distribute sexual, offensive, illegal, religious or political material is strictly prohibited.

 Employees shall not allow others (including family members) to use the facilities.

 Employees shall abide by the principle of privacy with regard to other individuals’ facilities, eg unless the owner has given permission, colleagues’ email boxes shall not be read.

 The nature of the internet is such that it accessible to all (including “quacks”). Therefore, information retrieved from the internet, intended to be used for decision making purposes, should be validated for authenticity before being used.

 It is a violation of company policy for any employee, including system administrator (other than for system maintenance) to access information of the system without the employee’s knowledge. However, access without the employee’s knowledge may occur where permission has been granted by senior management when they have taken legal advice.

 The company retains the right to access and disclose information in these systems in order to protect its interests, or when required to by law. Accordingly, employees should not have any expectation of privacy regarding the use of these systems and information stored therein.

 Employees who inadvertently access information or messages that are in breach of the above should notify their senior line manager.

The Implications of the Higgs and Smith Reports

The publication of the Higgs and Smith reports, in response to the major corporate failures of 2001/2002, will add to the responsibilities of both executive and non-executive directors of companies; in relation to corporate governance issues.

A number of the key points include, but are not limited to, the following:

 The audit committee should consist of at least three people, all being independent non-executive directors.

 Fifty percent of the Board will have to be independent non-executives.

 At least one member of the audit committee should have relevant financial/audit experience. It is further desirable that this member have a professional qualification, from one of the professional accounting bodies.

 The key role of the audit committee is to monitor the effectiveness of the company’s internal audit function and to review the company’s internal financial control and risk management system.

 Another key role of the audit committee is to monitor the integrity of the financial statements and significant financial judgements.

 A senior independent non-executive should accompany the executives to the AGM.

 Non compliance with the proposals will need to be explained in the annual report.

 Companies which do not have an internal audit function should consider the need for one annually.

It is currently unlikely that companies that are not listed in London will be obliged to follow these proposals. However, it can be assumed that as a matter of best practice these principles of good corporate governance will be implemented by ethical international companies (be they listed in London or not).

I am a firm believer in the maxim “it is better to be a leader than a follower”; and as such would recommend to any company wishing to enhance its reputation, and by definition brand value, that the recommendations of these reports be implemented sooner rather than later.

It is likely that the demand for non-executive directors will dramatically increase; as companies come to realise that the current “old boys’ network,” of friends serving on each others boards, simply does not fit with the requirements of the proposals.

However, being able to find suitably qualified, truly independent directors; willing to take on the responsibilities envisaged will be a challenge.