Archives for January 2012

Want growth? Want better performance? Ban bonuses!

Why do banksters and senior executives get bonuses? Is it because they’ve delivered outstanding performance? Not really. The reality is that bonuses have become just another way of giving people money…oh, maybe a ‘bonus scheme’ gives shareholders the impression that there are incentives in place to encourage performance, but that’s ‘smoke and mirrors’. As a tool for getting better performance out of an individual, bonuses just do not work.
Probably the worst feature about bonuses is that once given they’re considered to be an entitlement, a part of pay. And when they’re reduced or not given, they become a huge demotivator.
People work best when they’re paid well for what they do – in other words, when money isn’t a primary issue in their working lives. Money worries and bonus jealousies cause unhappiness and demotivate people. Involving people, encouraging them to be innovative, creating an atmosphere that allows them to work with others to make things better (kaizen) is what motivates people best. Add good leadership and you have a winning formula.

This video clip is well worth watching.


We’ll pick up the tab if it means politicians clean up their act, Mr Cameron


After 15 months of deliberation and endless delays, the Committee on Standards in Public Life recommended that there should be a £10,000 cap on ‘political donations’.  Since the committee report in November there’s been complete silence. The LibDems, who have nothing to lose and much to gain, are apparently in favour. Not so The Conservative and Labour party. The Conservatives want a cap of at least £50,000, and Labour doesn’t want to see their union ‘donations’ disappear.

So where do we go from here? Well, Graham Allen who’s chairman of the Political and Constitutional Reform Committee, is urging the government to pull its socks up, take the issue out of the ‘too difficult box’, and deal with the issue without further delay. He thinks that public confidence in politics risks being undermined if some future scandal erupts before a solution is put in place. He’s right. (Does he know something he needs to share with us?)

One of the ‘sticking points’ (apart from the amount of the cap) is the amount of taxpayer’s money that’ll be required to implement the Committee’s recommendation. It’s 29 million. (or approximately the same amount Barclay’s boss Bob ‘I’m not saying sorry’ Diamond has trousered in the last two years.)  Politicians think that to ask the ‘hard-pressed’ electorate to cough up would be a step too far. Nonsense! The electorate would be more than happy to pay up if it meant that it would clean up politics.

The reality is that until money is taken out of politics it will always be open to corruption, however ‘mild’ that corruption might be. The proposed cap of £10,000 is too high. The maximum should be more like £1,500, even if that meant a higher subsidy – and there is an argument that donations should be banned completely. That might be difficult to achieve, but politicians should be under no illusion, the electorate is growing very tired of the endless delays and obfuscation that surrounds this issue. It needs to be dealt with without further delay.

It’s not the threat of an impending scandal that politicians should be worried about, but how the electorate’s frustration at politicians’ unwillingness to clean up their act might manifest itself. It might surprise them. They should remember the expenses scandal is still fresh in everybody’s mind  – as is their  reluctance to come clean.

Set an example to ‘democracies’ across the world, Mr Cameron, take money out of British politics.


David Cameron, mouse or man?


Oh for heaven’s sake Mr Cameron, if you want us to believe your brave words, don’t read them out as if you were a contestant in the Slough Grammar reading competition. Go study Bill Clinton.  Learn how to deliver a speech so that people believe what you’re saying. What you did yesterday in Davos was to convince us that you’re not convincing. You had every right to berate Eurozone leaders. They do need to get a grip and sort things out, but say it in a way you’ll be noticed, not ignored – as you most certainly were.

Whenever David Cameron delivers a speech it’s not only his delivery that lets him down, his whole demeanour shouts insincerity and lack of confidence. He only seems to be at home at PMQs when he’s bullying the boy Miliband. Says volumes about what sort of man David Cameron really is, does it not?

Leaving Cameron’s presentational skills, or lack of, aside, it seemed a little bizarre he should choose to lecture Eurozone leaders on the very day that heralded Britain’s return to recession. Was he trying to blame the Eurozone for Britain’s problems?  (Danny Alexander spent most of Tuesday doing just that.) The Eurozone crisis has certainly not helped, but exports to Eurozone countries have held up well. No, our problems are home grown.

What I detect in Cameron’s ‘demeanour’ is that he’s a frightened man. Why? Because he hasn’t a clue what to do.  Few would argue that the deficit has to be reduced as quickly as possible, but to embark on a programme of naked destruction with no plan for growth, and what’s more, no clue about how to achieve growth, is a recipe for complete disaster. Without growth, the deficit is likely to increase and condemn Britain to decades of austerity. He’s an intelligent man, I think he now realises this, but doesn’t know what to do. He’s lost.

The time has come for him to summon up the courage and to take control. He needs to stop talking and do something. Time for action not words. He needs to listen less to George Osborne and surround himself with wise folk who can provide the ideas and inspiration he and his current set of advisors clearly lack.

There are so many things he can do, but he has to think big. He needs imagination and daring. For example, infrastructure spending: there needs to be a massive Macmillanesque house building programme. The creation of an infrastructure bank to fund other infrastructure projects.  The creation of several ‘business banks’ to ensure SMEs get the loans they need at the right rates – and offer treasury indemnity for a proportion of those loans. There are a host of other ideas, but the key is to get things started as soon as possible. Delay will only exacerbate the problems we already have.

The engine of growth is consumer confidence, and that will only return when Cameron thinks big and acts big. The emphasis must be on the positive with a clear and well articulated programme of action. Now!

But does David Cameron have the will, the balls, does he have the courage? I’m not sure he has. Mouse or man?



The disaster of austerity and a commitment NOT to grow


The rise in retail sales over the Christmas period had some optimists, those still clutching straws, believing that maybe things are not going to be that bad after all. They’re going to be disappointed. In the months to come, the December quarter will be seen as having been a ‘last hurrah’. A last gasp before going under.

And 2012? So far it’s had a very odd feel about it. Nothing has happened, nothing is happening.  It’s as if all crises were put on hold over Christmas and they’ve not resurfaced yet. Is this the lull before the storm? Very possibly.

But this has to be the year when the severity of the austerity programme starts to hit home. The bill is on the table and it’s going to have to be paid. The price? Unemployment. It’s going to rise steeply. More and more businesses are going to give up the unequal struggle. Inequality is going to get worse. For the first time in decades there’s going to be severe hardship in Britain, not only for those on low incomes, but for scores of middle class people who have always somehow managed to dodge the effects of ‘bad times’. This time there’s going to be no escape.

The real worry is that the coalition have fixated on austerity. They seem blind to the fact that austerity alone will not fix the problem. In fact their fixation has made things a whole lot worse. Today, we are told that income levels will not return to 2008 levels for another eight years.

Joseph Stiglitz believes that austerity policies are driven by ‘a combination of ideology and vested interests’ and ‘seem reflect a commitment not to grow’. In the case of Britain it may be less of a commitment not to grow and more of not having a clue what to do.

FEATURED ARTICLE by Joseph Stiglitz

The year 2011 will be remembered as the time when many ever-optimistic US citizens began to give up hope. President John F Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, those in the US are beginning to see not only that those with taller masts have been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake.

In that brief moment when the rising tide was indeed rising, millions of people believed that they might have a fair chance of realising the “American Dream”. Now those dreams, too, are receding. By 2011, the savings of those who had lost their jobs in 2008 or 2009 had been spent. Unemployment cheques had run out. Headlines announcing new hiring – still not enough to keep pace with the number of those who would normally have entered the labour force – meant little to the 50-year-olds with little hope of ever holding a job again.

Indeed, middle-aged people who thought that they would be unemployed for a few months have now realised that they were, in fact, forcibly retired. Young people who graduated from college with tens of thousands of dollars of education debt cannot find any jobs at all. People who moved in with friends and relatives have become homeless. Houses bought during the property boom are still on the market or have been sold at a loss. More than seven million families in the US have lost their homes.

The dark underbelly of the previous decade’s financial boom has been fully exposed in Europe as well. Dithering over Greece and key national governments’ devotion to austerity began to exact a heavy toll last year. Contagion spread to Italy. Spain’s unemployment, which had been near 20 per cent since the beginning of the recession, crept even higher. The unthinkable – the end of the euro – began to seem like a real possibility.

This year is set to be even worse. It is possible, of course, that the United States will solve its political problems and finally adopt the stimulus measures that it needs to bring down unemployment to six or seven per cent (the pre-crisis level of four or five per cent is too much to hope for).

But this is as unlikely as it is that Europe will figure out that austerity alone will not solve its problems. On the contrary, austerity will only exacerbate the economic slowdown. Without growth, the debt crisis – and the euro crisis – will only worsen. And the long crisis that began with the collapse of the housing bubble in 2007 and the subsequent recession will continue.

Moreover, the major emerging-market countries, which steered successfully through the storms of 2008 and 2009, may not cope as well with the problems looming on the horizon. Brazil’s growth has already stalled, fuelling anxiety among its neighbours in Latin America.

Meanwhile, long-term problems – including climate change and other environmental threats, and increasing inequality in most countries around the world – have not gone away. Some have grown more severe. For example, high unemployment has depressed wages and increased poverty.

The good news is that addressing these long-term problems would actually help to solve the short-term problems. Increased investment to retrofit the economy for global warming would help to stimulate economic activity, growth and job creation. More progressive taxation, in effect redistributing income from the top to the middle and bottom, would simultaneously reduce inequality and increase employment by boosting total demand. Higher taxes at the top could generate revenues to finance needed public investment, and to provide some social protection for those at the bottom, including the unemployed.

Even without widening the fiscal deficit, such “balanced budget” increases in taxes and spending would lower unemployment and increase output. The worry, however, is that politics and ideology on both sides of the Atlantic, but especially in the US, will not allow any of this to occur. Fixation on the deficit will induce cutbacks in social spending, worsening inequality. Likewise, the enduring attraction of supply-side economics, despite all of the evidence against it (especially in a period in which there is high unemployment), will prevent raising taxes at the top.

Even before the crisis, there was a rebalancing of economic power – in fact, a correction of a 200-year historical anomaly, in which Asia’s share of global GDP fell from nearly 50 per cent to, at one point, below ten per cent. The pragmatic commitment to growth that one sees in Asia and other emerging markets today stands in contrast to the West’s misguided policies, which, driven by a combination of ideology and vested interests, almost seem to reflect a commitment not to grow.

As a result, global economic rebalancing is likely to accelerate, almost inevitably giving rise to political tensions. With all of the problems confronting the global economy, we will be lucky if these strains do not begin to manifest themselves within the next twelve months.

Joseph E. Stiglitz is University Professor at Columbia University, a Nobel laureate in economics, and the author of Freefall: Free Markets and the Sinking of the Global Economy.





GOP and Netanyahu corner Obama over Iran, but has he a way out?


Slowly but surely the Iran crisis is moving up the agenda. This is no accident. Why? Because Israel, or to be more precise Netanyahu, and the Republican party are in the process of manipulating Obama into a lose-lose situation over Iran in this crucial election year.

Netanyahu believes he has much to gain from a Republican president and much to lose if Obama is returned for a second term. One of the reasons why Republican presidential candidates’ campaign war chests are now groaning with cash donated by AIPAC supporters. (One of Newt, ‘Palestinians are an invented people’, Gingrich’s main backers is Sheldon Adelson, a strong Netanyahu supporter.)

So what’s the score? Well, the US has yet to fully implement the Iran sanctions called for in the recent Senate resolution. Also the White House achieved a waiver from Congress which would allow intervention if the policy was seen to endanger the recovery or result in a rise in the oil price. If Obama invokes such a waiver, Netanyahu hardliners and Republican hawks will scream ‘foul’. (Remember that Iran sanctions have been top of Netanyahu’s agenda for the entire length of this Congress.) Not only that, the wrath of AIPAC supporters will descend on Obama and the Democrats and campaign contributions will evaporate.

The other alternative is that Obama will implement the oil sanctions, spurred on by the EU’s example, and oil prices will rise, this time incurring the wrath of the American public who will feel less inclined to vote for Obama. Either way Obama and the Democrats look as though they are stuffed, but are they?

There is an alternative. Obama could start talking to the Iranians. (Hopefully he could find a way round the ‘Iran Threat Reductions Act’ which bars US officials from even speaking to the Iranians) What has he to offer? How about a nuclear free Middle East? Could he sell that to the Israeli’s? Could he get Israel to give up its nuclear weapons? Sounds impossible, but maybe it’s not such a wacky idea. Apparently 68% of Israelis would be happy for the Middle East to be a nuclear free zone. Time to get one over on Netanyahu, his AIPAC cohorts and the Republicans? Is Obama brave enough? Such an initiative could put Israel in its place and restore US credibility in the Middle East – if it was to be successful. Is Obama brave enough? I wonder.


The danger of an unemployed middle class. David Cameron should read this


Here is a link to a recent article in The New York Times entitled “How the US lost out to iPhone work”. This is an article every politician should read – especially David Cameron. It may be about America, but it has lessons for Britain too.

At a dinner in California last February, President Obama asked Steve Jobs what it would take to get iPhones manufactured in America. Steve Jobs replied, “These jobs are not coming back”. When you read the article you will understand why.

It may be foolish to think that Britain and America are able to compete against cheap Chinese labour or that it would be wise to even attempt to do so, but it’s not just the price of labour, but the quality of that labour. It’s also the availability of educated, trained engineers and craftsmen too. The latter is already having an effect on the middle classes in both countries.

What is frightening in making a comparison between Britain and new economies like China, is how far behind we have fallen in terms of education and training. Even if our politicians suddenly discovered the will to regenerate manufacturing, we just wouldn’t have the trained labour to make it happen, not now, not for at least two decades.

Somehow we seem to have been overcome with an inexplicable lack of will to do – anything. No new ideas, nothing. Content it would seem, to continue in the belief that our future is secure supported by the financial sector and service industries. It is not.

Britain and America have a problem. A badly trained – if trained at all – middle class facing long-term unemployment. The ‘unhappiness’ this is going to generate in years to come is going to make for an interesting time in British politics.

How the US lost out on iPhone work


Royal yacht? The silliest of silly ideas

The timing of Michael Gove’s suggestion that the Queen should have a new Royal yacht as a diamond jubilee present was unfortunate to say the least, made as it was on the very day of the Concordia disaster. Well, I suppose you can’t get things right all the time, but it did come across as inept and insensitive. That’s Michael for you.

But what of the idea itself? Clearly Gove was set up to float the idea to gauge reaction, which appears to have been strongly negative –  a deafening raspberry actually.  But that doesn’t seem to have put off the royalist lickspittles in the Cabinet.

Today, doubtless emboldened by the support of his mates (plus Charles and Anne), David Cameron has come out in favour of the idea with some far-fetched scheme that the yacht could double up as a “training resource for young people”.

Oh for goodness sake Dave, pull the other one! The Royal Yacht Britannia was sold to a hard-pressed British public in the fifties by saying that it could double–up as a hospital ship. It never happened, and was never going to happen. The British people were sold a lie. And anyway the ship was singularly unsuited for such a role. But why on earth do young people need a yacht as a training resource? They don’t. We don’t buy your suggestion at all, Mr Prime Minister. The British people are being sold a lie – again!

As for the funding (a cool £60 million, apparently) there have been noises that there have already been some substantial ‘donations’ made. Whether there have or not, it is totally unacceptable for one penny piece of public money to be spent on such an unnecessary project, particularly at a time when millions of Britons are finding life very, very tough. Austerity means austerity for all – or is it one rule for us and none for them?

If the Queen wants a yacht, then she should pay for it herself – and the cost of manning and maintaining it. If she felt so inclined to rent it out for training young people, then she would be free to so do.

But all this misses the point. To have our ‘royals’ swanning about the world in a yacht in the 21st century is quite simply ludicrous. Do the fawning sycophants who are proposing this idea not realise how utterly ridiculous Britain is going to look? Do the ‘royals’ not understand how stupid they would look? The days of  steaming off to some far off Commonwealth isle, of being greeted by befeathered flunkies and bemused primary school children in funny outfits are gone, are they not?

If the British monarchy is to survive it needs to think less of yachts and more about less exclusive means of transport. Already a living anachronism, they surely don’t need to demonstrate in such a blatant way how out of touch they are? They should beware of fawning Tories bearing gifts.


Oh, wake up England! Devo-max = Tory-max


David Cameron must be pretty pleased with himself. Having poked a stick into the Scottish independence hornet’s nest, he not only buried hapless Ed Miliband’s ‘relaunch’ (great timing), he sent a husk of hares running in all directions and the ‘sleekit’ Salmond into a right tizzy.

And almost without exception every commentator and politician has been focusing on the ‘what if’ scenario of an independent Scotland. From the ownership of ‘Scottish oil’ and ‘Scottish bank debt’ to fiscal powers and currency. The chatter has been deafening.

Up until last Monday, only about 30% of Scots favoured independence. Cameron’s ‘unwelcome, out-of- the-blue, ‘interference’ in Scottish affairs will have nudged a few into the independence camp. Enough to sway a vote? Maybe not, but it’s put the frighteners on. A break up of the Union is possible, more so than it was at the beginning of last week.

So what is David Cameron up to? He professes that he doesn’t want to see a break-up of the Union. That might be so. He says he wants a simple ‘yes’ / ‘no’ question on the independence referendum ballot paper. Should we believe him? Probably not.

David Cameron didn’t pull Scottish independence out of the hat as a diversionary tactic, it’s part of a well thought through strategy by the Conservative party. The outcome they want is for the Scots to accept ‘devo-max’, nearly independence, but not quite. It would satisfy most SNP supporters who realise that full independence is never really going to happen and placate those Scots who fear an end to the Union.

But the beauty of ‘devo-max’ for the Cameron and the Conservatives is that it would mean there would be no Scottish MPs in the House of Commons. No concern to the Conservatives as they only have one. (There may be Scottish ‘senators’ in a reformed House of Lords). But getting rid of 47 Labour / LibDem Scottish seats would be like winning the lottery for the Conservatives.

Everybody seems to have taken the Tory bait. Let’s hope suspicious minds prevail.


SoR’s Picks: “The invented people stand little chance”


NEW The invented people stand little chance …Robert Fisk

The cause of this recession? Economic pundits ignoring history’s voice …Simon Jenkins

Arab League’s ‘roar’ at Syria shows how tiny Qatar is starting to flex its muscle …Robert Fisk

An ugly old tradition is back…M J Rosenberg

Why Israel can’t be a Jewish state… Sari Nusseibeh

Obama: America’s ‘first Jewish president’? … Marwan Bishara

Is inflation the answer?… Raghuram Rajan

Why have no bankers been arrested? …Jon Snow

9/11. For 10 years we’ve lied to ourselves to avoid asking the one real question…Robert Fisk 

America’s self-inflicted decline …Malcolm Fraser

Relations between Turkey and Israel deteriorate … Coffee House

The maths of coalition has opened the door to lobbyists…Simon Jenkins

Prosecuting war crimes? Be sure to read the small print…Robert Fisk

ur social security system must guarantee real welfare…Ruth Lister

Heard the one about the corrupt, lying politician? …Guardian

Cameron’s immigration problem…Fraser Nelson

How long before the dominoes fall? …Robert Fisk

The middle class should leave rioting to the professionals…Dan Hodges

Guilty until proven innocent… Yazmeen El Khoudary

John Major wanted two-party alliance to take on Murdoch…Politics Blog

News International defence in pieces as new documents published…

The parting of the ways: End of consensus for Cameron and Miliband…

Tom Watson: Phone hacking is just the start. There’s a lot more to come out… Politics Blog

The Arab world’s dictators cling on, but for how long? …Robert Fisk


Cameron prepared to sacrifice the Union for Tory party self-interest?


So what on earth prompted David Cameron to rattle Alex Salmond’s cage about the timing of the Scottish referendum on independence? Oh I see, it’s because all the uncertainty is deterring inward investment in Scotland. Really? And the legal position regarding a referendum is unclear…he just wants to get a “fair” and “decisive” vote. Absolute nonsense!

There is no evidence that inward investment has been affected and the legal issue is a total red herring. But a sasenach calling the shots? No Scot whether for or against independence likes that, as David Cameron knows all too well. He is deliberately provoking the Scots. He and his party want them to vote ‘yes’ for independence. Why? because like Liverpool, Scotland is politically unimportant to the Tories. At the last election they managed to win one seat.

The policy of ‘managed decline’ has moved on. David Cameron and the Tory grand strategists have a new plan – ‘managed Scottish independence’. Take the Scottish figures out of the last election results and the Tories would have had a majority of 44. So with the proposed new boundary changes, the next election could see the Tories with a thumping majority in England and Wales. This is a strategy that could see them in power for a very, very long time.  And Labour? Kicked unceremoniously into touch for a long, long time. How could arch cynic David Cameron or any scheming, divisive Tory strategist resist such an opportunity?

As with the Brussels vote, the Tories are quite prepared to put party before anything else. Party before people, party before country – party before Union?

No matter what David Cameron says about not wanting to see the break-up of the United Kingdom, should he be believed?  He needs to be challenged about his real motives. If not independence, poking the stick into the Scottish hornet’s nest could deliver a form of  ‘devo-max’ which could see an end to Scottish representation in Westminster. All his dreams come true.