HOW DO WE MEASURE GROWTH?

I loved the contribution by Caroline Lucas, our only Green MP, on “The Week in Westminster” (BBC Radio 4) yesterday (13.11) morning. I am not a supporter of her party, nor am I that well informed on the green agenda, but every time I hear her speak I am impressed. She talks a lot of sense; moreover in a courteous way, even when confronted with the leading questions beloved of interviewers, such as this one: “ … are you not coming to the conclusion that you alone can make no difference …?”

The Commons had been discussing economic growth; Ms Lucas wanted the debate to be wider but felt she was the only MP who believed we should look at the quality of growth. She went on to say: “How useful is GDP as a real measure of that growth? Are we better off?”

I agree totally. To take solely the relationship between GDP and jobs, I wrote in a blog post on 27 October, when a higher-than-predicted monthly GDP growth was in the news: “However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.

Can you measure happiness?

So Caroline Lucas asks, “are we better off?” Back in “the good old days”, i.e. before the credit crunch and the recession, there were several studies (including those quoted in Oliver James’ famous book “Britain on the Couch”) showing that British citizens’ self-perceived levels of happiness (or contentment or well-being, call it what you will) had not increased over the previous 50 years even though, by every financial measure, we were indeed all greatly “better off”.

OK, let’s leave aside this hard-to-measure or even impossible-to-measure quality of happiness, or maybe the spiritual wealth of the nation if you like. Are there other measures than GDP with which we could assess the economic wealth of the nation? I don’t know the answer but I’d love to hear your views.

UK plc as a company: turnover? profit? What else?

For example: years ago, when I was in the chemical industry, I remember an Irish customer of mine saying, as his annual financial results were published: “Turnover is vanity; profit is sanity.”

Isn’t the GDP of a country somewhat analogous to the turnover of a company, being the sum of its outputs? So what might be the equivalent of profit for “UK plc”? What measures of “added value” could we track?

Obviously our government is supposed to do more than deliver profit to shareholders, so how best can it – and we – measure how good a job it is doing? As Ms Lucas’s question implies, GDP is not the only measure.

“Answers on a postcard”. As they used to say, back in the day.

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For a link to Caroline Lucas’s interview on “The Week in Westminster”, go to: www.bbc.co.uk/programmes/b00vv0dv#p00c4mrs
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For information on “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com

UK PROPERTY STILL OVERPRICED

House prices up?

I read recently that domestic property prices in the UK increased by an average of 1.8% over the last month. That seemed surprising, given the economic situation but, according to a friend who is “in the know”, it isn’t a meaningful trend because the volume of sales is still small.

… or down?

 

However this rise followed “a big drop” the previous month, according to the Halifax. (I think it was 0.7%) Such a wide variation from month to month would seem to support the fact that these are not really meaningful trends. The less volatile three-month index showed a drop of 1.2% in the quarter.

 

http://www.bbc.co.uk/news/business-11692255

 

First-time buyers still priced out

 

When last month’s drop was announced, a newsreader on BBC Radio 4 actually added: “however, first-time buyers are not taking advantage of the drop in prices”. Well, is that so surprising? Even if that month’s price drop had been a meaningful statistic, which it wasn’t, 0.7% is not much of a drop.

 

More importantly, UK property is still greatly overpriced. Who says so? The “Economist” magazine’s survey of international house price comparisons, taken in turn from official stats on price/rent ratios. According to the table the magazine published in late October, average UK property prices increased by 3% year-on-year; more importantly, property here is 32% overpriced.

 

To compare countries’ housing data over time, including price-to-rent ratios, see www.economist.com/houseprices

To view my guide to personal debt, “Back to the Black: how to become debt-free and stay that way”, go to www.back-to-the-black.com

 

 

IS ECONOMICS A SCIENCE?

Last Sunday I was listening to “Broadcasting House” (aka “B.H.” to fans) on Radio 4; one of the highlights of my listening week.

First up, there appeared to be a wonderful opportunity to find out what two heavyweight economists thought of the current situation and of the government’s policies. They were Lord Desai and the current professor of the subject at Cambridge, whose name I’ve sadly forgotten and probably won’t get around to checking. Sadly, the discussion didn’t convince me that economics, famously called the dismal science, is really a science at all. Their responses to a simple question of what tests we should apply to the new measures to decide their possible efficacy were predictably obscure; at least they were to me. No matter how brilliant these men must be, their communication skills left much to be desired. You’d think the BBC could have wheeled out two better communicators. As there are now chairs for the public understanding of science, and as economics is a sort-of-science, there is a strong case for creating a post of Professor (at the University of Life, of course) for the Public Understanding of Economics. Neither of these two luminaries would have got my vote.

B.H. presenter Paddy O’Connell, however, does get my vote, as an interviewer able to mix gravitas and humour according to the weather conditions. (I’m not joking; he even interviewed people queuing for the grand re-opening of the pier at Weston-super-Mare, during a downpour) I particularly liked the way he chaired the segment where guest reviewers cover the Sunday papers. Sunday’s panel comprised Craig Brown, whom I found disappointing for such a well-known columnist; there was a novelist whose name has escaped me, and the find of the day, Emma Harrison, who runs a recruitment agency called A4E, specialising in helping long-term unemployed people back into work; a worthwhile purpose and seemingly a delightful person to boot.

While many other people on the show, including her fellow-panellists, seems too be recycling the gloom-and-doom aspects of the media’s response to the UK government’s cuts package, Emma Harrison was a lone voice proposing a more positive approach. As the person who clearly had the most experience of working with the people who potentially could be among the worst affected (if the cuts are indeed regressive – see an earlier post) it was encouraging to hear her say that the glass-half-empty approach that tends to be favoured by our media (bad news sells papers, dear boy) can be totally counterproductive. Well said Emma; she’s the only guest on the whole show whom I shall look up on Google.

Finally, a piece about corgis was narrated by Tom Conti. Maybe he needs the work these days but why choose a Scots actor, seemingly exaggerating his native accent, to read a not particularly funny (IMHO) monologue in the person of a dog that is famously Welsh. (This last item is from my “I think you’ll find …” Department of Pedantry). Maybe there was some comic subtlety about this that passed me by.

Finally, I heard a new definition: an optimist is someone who picks up the crossword with pen in hand.

Despite my gripes on this occasion, B.H. still rules for me.

ECONOMY GROWING FASTER THAN EXPECTED BUT PERSONAL DEBT WORRIES PERSIST

The UK’s economy grew at 0.8% between July and September according to official figures from the Office for National Statistics (ONS). That growth is double the 0.4% expected by most analysts.

“This is the second major GDP growth surprise in a row and suggests that the UK economy is more resilient than many had feared,” said James Knightley, economist at ING.

“The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening we remain cautious.”

The key is that phrase “hiring intentions”. I am a glass-half-full person, so I like to focus on the facts that the GDP increase is double what was expected and that it’s the strongest third-quarter figure in a decade, according to the BBC’s Stephanie Flanders.

However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.

Until those “hiring intentions surveys” also show a rise, there will still be large numbers of people going into bankruptcy or taking out an IVA (a Protected Trust Deed in Scotland).

I too was in that situation not so long ago. However I found another way, which I detail in my book “Back to the Black: how to become debt-free and stay that way.”

What is also encouraging is that construction seems to be showing the strongest gains in the last couple of quarters, as this would lead to job creation more than some other sectors.

To quote Stephanie Flanders again: “There is still plenty to worry about in this recovery: much of it beyond our shores, and beyond the government or the Bank of England’s control. But for today at least, I think we’re allowed to join the cabinet in a sigh of relief.”

Here’s a link to that Stephanie Flanders piece: http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/10/good_news_on_gdp.html

If you want to know more about how I personally escaped the threat of bankruptcy and IVA and found another way, go to www.back-to-the-black.com

THOSE CUTS: PROGRESSIVE OR REGRESSIVE?

Are the measures announced in HM Government’s Comprehensive Spending Review progressive or regressive, i.e. do they favour the poorest or the richest, relative to their respective incomes? Or are they totally fair, as claimed? You might well think that this debate has been flogged to death, so I won’t add my inexpert economic analysis; however the Institute for Fiscal Studies (IFS) now states their view that they are on balance regressive.

That’s also the view of Tim Harford, presenter of “More or Less”, one of my favourite radio programmes. Here’s a clip of what he said on the radio on 21 October: http://news.bbc.co.uk/today/hi/today/newsid_9113000/9113265.stm

(BTW, I found that clip easily, from the very user-friendly “Today” website. The programme is of course a National Treasure, though that other NT, Sandi Toksvig, says: “I love the Today programme: twenty minutes of news, crammed into three hours”)

CONSUMER CONFIDENCE INDEX

Nowadays, consumer confidence is taken as an even more important barometer of the economic health of the UK than is any index of industrial output. That’s why it was rather depressing to read this morning that confidence is at its lowest level for more than a year, according to a monthly confidence index published by the Nationwide Building Society. This drop is, of course, in anticipation of the spending cuts to be revealed in the Comprehensive Spending Review next week.

Experts at the British Retail Consortium predicted that the figure would be “volatile” until after the impact of the cuts was known, which seems to me “a PhD in the bleedin’ obvious”. However when we actually look at the numbers, I wonder how meaningful is this “index” and the media coverage it’s had. The September index was reported by the BBC to have dropped by 9 to 53 in September. Thus a drop of 15%. In a month. By contrast, it rose 10% in August. Can both figures really be true? Of course I realise that recent announcements of planned cuts could have prompted a drop this large; however I have looked at the Nationwide website and it’s clear that this index fluctuates greatly almost every month. It was only 45 a year ago; moreover it was 100 only a couple of years before that, at a time when the credit crunch was already well underway. Surely a more meaningful measure of confidence is actual retail sales?

This is clearly a case for study by BBC Radio 4’s excellent programme “More or Less”, which looks more deeply at numbers in the news, especially when they might have been misrepresented (Can that really happen? Shock, horror!). Naturally, most of us know only what the media tells us about the impact of the cuts. For example, I thought I read at the start of the process that the spending reductions would be spread over 4 years or so; however, we never hear that fact nowadays. Whenever the media talk about, say, 25% cutbacks in departments that are not being ring-fenced, the stories give the clear impression that the cuts and the resulting job losses will be more or less immediate.

A related example: one of our allegedly serious papers carried an interview last week with a single mother who would be seriously affected by the recent decision to restrict total benefits payments to UK average income. The article clearly stated that Ms X would have to consider a move out of London, away from family and friends, “within the next couple of months”. However the benefit limit decision will not be effective till 2013; a fact that was not mentioned in the story. Why not? Could this omission be because bad news sells papers? Am I being too cynical?

Here’s my point: the tendency of many media outlets sometimes to oversimplify and usually to paint the worst possible picture of any new development adds further to the stress on people who are already in debt or who think they might be in the future. It’s important to put things in perspective and that’s something that’s hard to do after reading some of our doom-and-gloom media coverage. As that old French philosopher said (at least I think he was a French philosopher, but my information comes from the media), “my life is full of great disasters, most of which never happened”.

If you have concerns about your own debts, read my book “Back to the Black” about the necessity of putting your financial situation in perspective before deciding your response to any demands from your creditors; or any piece of bad news you read in the press.

IN PRAISE OF MANUFACTURING

A most interesting piece on the Today programme this morning, (about 07:15, if you want to find it on iPlayer) about the importance to our economy of the manufacturing sector in general and of small businesses in particular. I switched on part-way through but the interviews I heard were with companies in the Jewellery Quarter in Birmingham; they were honoured in this way, not doubt, solely because the Conservative conference is in the city right now. The excellent presenter (James Naughtie, I think) and his interviewees together made the point that successive governments and the banks have failed to provide the environment where manufacturing could prosper (it’s now a shamefully small proportion of GDP) but that fact has been known for years. But their final clincher was one that had previously escaped me, obvious though it may be to you, dear reader: other things being equal, (which they never are) every new job created in manufacturing will contribute to the creation of far more jobs in supporting businesses than any new job in the service sector. Maybe this fact has always been obvious to the German government and that’s why both their small / medium business sector and manufacturing have been supported by more than words and maybe that’s why their economy is both more healthy and more sustainable than ours.

We’ve often been told about the “trickle-down” theory, i.e. that increased wealth at the top will trickle down to those lower in the food chain (does this justify those massive banking-sector bonuses? Discuss). Maybe it works, maybe not, but this morning’s message about the crucial importance of our manufacturing sector could be called the trickle-round theory. Or the ripple theory. Whatever we call it, I hope that Messrs Cameron, Osborne and Cable were listening to the radio at the same time as I.

Sadly, after that excellent segment normal service was resumed; a piece about Sainsbury’s increased profits followed by one about the will-they won’t-they sale of Liverpool Football Club. The football story was repeated at least four times, I think, between 7:30 and 9:00; the manufacturing story was not. Perhaps that shows where our national priorities lie. No wonder the country’s in the same kind of debt crisis as Liverpool FC but, unlike them, we don’t have an American white knight on the horizon.

PAXO, PAVO AND PLAID

A TV documentary a couple of weeks back during BBC4’s “Italian Opera” series, taken together with a TV interview during this year’s election campaign, reminded me of the importance of the principle of “noblesse oblige”, even when applied to the aristocracy of the media world.

The recent documentary was about Luciano Pavarotti. I will declare an interest in that I once saw him live, nearly 20 years ago at Covent Garden. True, he was said to be past his electrifying best even then. True, he was in “Un Ballo in Maschera” (my favourite opera ever since), where the standout male aria is given to the baritone rather than the tenor. True, his handlers spirited him out of a back door to avoid us autograph-hunters on a cold February evening. Despite all that, we all knew that we were in the presence of greatness. Anyway, back to the TV documentary. (Not before time, I hear you cry).

A procession of notables from the musical world had extolled Pavarotti’s virtues, not only as one of the pre-eminentvoices of his or any other generation but also as probably the most successful populariser of opera. Then up came the face of Jeremy Paxman with a recording of an interview he’d done with the larger-than-life tenor, only a few years before the latter’s death. In answer to a question about when he’d retire, Pavo said that he’d sing for as long as his voice held out. He clearly didn’t believe in retirement, for which I applaud him. Then Paxman, with his trademark sneer, said, “Some people think you should have given up years ago.” To which Pavarotti, with more grace than his interviewer, replied, “Some people are probably right.” A smack in the mouth would have been an alternative response and could have been forgiven.

Journalists are paid to expose the truth from dissembling politicians and, less usefully, to puncture pomposity in celebs of all kinds. Pomposity that I hadn’t observed on the part of this rightfully celebrated guest, by the way. If the public still wanted to hear that voice, even past its best, and the singer wanted to oblige, then who was Paxo to imply that both parties should be denied their respective pleasures? This short but unpleasant interlude reminded me that it’s possible to behave like an ignorant lout, despite having the benefits of a fine mind and fine education; possible but unforgivable.

All of which led to an unconnected but satisfying episode during the election campaign. Paxman on that occasion introduced his guest as follows: “Eurfyl ap Gwilym is Chief Executive of the Principality Building Society. In that exalted position (did I detect more of the trademark Paxo sneer at this point?) he is Plaid Cymru’s economics adviser.” What followed was a delight, as the said adviser reduced Paxman to a splutter. He had contested one of Paxo’s assertions with some data, to which the interviewer responded, “I don’t have those figures in my head”.

“Well, you should have. Do your homework; you have the report there; look up the data.” Or words to that effect. At that point, to my surprise, (and maybe to his credit) Paxman did indeed start to shuffle through his papers, considerably discomfited. That discomfiture was not lost on the audience: the YouTube clip of the interview was apparently one of the most popular of the election campaign. Not the most important episode of that campaign, I know, but … hubris? Pride comes before etc? Both of the above.

ACTING CHALLENGES



An afterthought about that showing of “Old Age Pillagers” that I went to.

I’ve been discovering over the past couple of months that when acting for the camera, rather than on the stage, less is more. With “OAP” I had the extra challenge that, although my character was fairly central, he didn’t say much. I’m not used to that, so I found it hard. Luckily I got lots of tips from the director (Violet Ryder; watch out for her) and from the guy I was playing against, Barrie Palmer. Barrie is a vastly more experienced actor than I; he passed on a tip from Anthony Hopkins, one of my favourite actors. If I remember it correctly, the advice was something like: “don’t act, just be, just think; the audience will see it in your eyes.” Nice work if you can do it; I’ve discovered it’s not as easy as he makes out. I’m studying Hopkins.

“Old Age Pillagers” is a 10-minute short: see http://www.oldagepillagers.webs.com

PORTFOLIO PEOPLE

I love that term, “portfolio working”, which is described as “a lifestyle in which the individual holds a number of jobs, clients and types of work”, all at the same time. For examples, look no further then the originator of the term, Charles Handy himself. The Irish economist and best-selling author began his career with Shell Petroleum (a background he shares with Vince Cable, though the latter spent rather more time there) and then the engineering group Charter Consolidated (now Charter International) before diversifying his activities and living the freelance life. He was subsequently co-founder and Professor of the London Business School but I feel sure those were for him part-time jobs.

He is quoted (www.scribd.com ) as saying, “I told my children when they were leaving education that they would be well advised to look for customers, not bosses.”

To gauge Handy’s style these days, as a portfolio person, read the first few lines of his autobiography: “Some years ago I was helping my wife arrange an exhibit of her photographs when I was approached by a man who had been looking at the pictures. ‘I hear that Charles Handy is here,’ he said. ‘Indeed he is,’ I replied, ‘and I am he.’ He looked at me rather dubiously for a moment, and then said, ‘Are you sure?’ It was, I told him, a good question because over time there had been many versions of Charles Handy.” He then adds, “… not all of which I was particularly proud”. That remark seems typical of the self-effacing nature of the man because, if there is such a thing as a philosopher of management and organisational behaviour, then it is he. Handy has been rated among ‘the Thinkers 50’, a list of the most influential living management thinkers in the world; in 2001 he was second on that list.

I myself discovered portfolio working relatively late. For most of my career I drew a salary working for organisations, ending up as MD of a chemical sales and marketing company which was a subsidiary of a large multinational group. Later I started a training business (but I’ll draw a veil over that for now, as its eventual failure led me into debt) and have since had a mix of mostly part-time jobs and freelance work. Nowadays, if people ask me what I do (the standard opening when meeting a stranger, at least in our British culture), I could reply, as Handy himself would recommend: “Well, that depends. I have a variety of activities. Would you like to hear about my writing? My acting and voiceover work? My radio presenting and after-dinner speaking?” Of course I don’t say that – it would be thought unforgivably “naff” here in Britain – but it would be a good conversation-stopper, if needed.

I wish I had discovered the portfolio way before. People have always been doing this – in fact many women who want or need to combine paid work and family have no choice but to do so at certain times in their lives – but the name, at least, is new.

More celebrated examples of portfolio people can be found, including Anthony Charles Lynton (aka Tony) Blair. Not so long ago he had what I think can accurately be described a “full-time job in an organisation”. To be precise, he was running a country with what was at the time the sixth-largest economy in the world. He decided a change would be good – it was about the time we were overtaken by Italy to become the seventh-largest economy but I am sure that was coincidental – and now he is doing so many different things I hesitate to list them for fear of being out of date. He looks as if he is enjoying the portfolio life too.

There’s another word for portfolio people nowadays: “scanners”. The man who is most associated with this term in the UK is John Williams, a classic example of someone who has gone from the corporate world to being a portfolio person. He used to be a senior consultant at the major accounting and consulting firm Deloittes but he now says that he focuses his time on “helping creative people figure out what they’d like to do with their life, how to make good money out of it and how to have some fun at the same time.”

Williams says of his life since making the switch that he has been “fortunate to achieve some remarkable things for someone so unfocussed and naturally lazy”. A nice mix of pride and self-deprecation.

He quit that job at Deloitte and has since “consulted independently for blue-chip organisations such as the BBC; turned a full-time job offer into a 3-day a week freelance gig that paid me the same income; cold-called The Guardian to win my first piece of paid writing, with no prior experience; and, over the past three years, have developed a meeting of a handful of people in a bar into the successful ‘Scanners Night’ event with up to 70 paid attendees. (www.scannercentral.co.uk )

A recent two-page spread in The Times (http://www.thetimes.co.uk/tto/public/sitesearch.do?querystring=john+williams+scanner&sectionId=342&p=tto&pf=all ) enthuses about him: “John Williams … aims to revolutionise the way we think about work. He says: ‘The rules are changing. My mum’s belief was that work was to be endured, not enjoyed, and her generation didn’t really have a choice.

‘There’s never been a better time — all the tools are there on the internet for you to get paid for what you enjoy. Previously, setting up a business needed premises, funding — but today you could set up your own eBay shop in an afternoon. You need to find the sweet spot between the things you love to do and doing them in a way that solves people’s problems for them — and there is your means of earning a living.’”

Williams concluded, according to The Times: “Now I have a portfolio career consisting of mentoring, corporate creativity workshops, copywriting, blogging … I set my own hours, choose my own co-workers and alternate my place of work between my home, my garden and the local café.”

I got the impression that he prefers his new life to the corporate rat-race.