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Which way is the economic tide flowing?…

At a time when there is little consensus on the severity of the storms that approach us – the prevailing view at least, appears to be for a hold in Interest Rates by the UK Monetary Policy Committee (MPC).

The comparison with the US economy, in relation to the housing market, is necessarily limited – as the relation of demand and supply is very different. In the UK, we still have demand way ahead of supply, so any house price fall is likely to be more muted and subject to corrective limitations. Prices are unlikely to fall substantially – even if the rate of increase has itself dropped noticeably over the last few months.

However – of course, it is not only for the sake of house prices that the experts comprising the MPC will determine Interest Rates; it is for the general feeling of wealthiness – and the prevailing inclination to retail consumption – that house prices are the best indicator. If a person’s main asset is falling, then they are less likely to consume – further undermining impetus for growth.

Moreover – the link between the Pound and other currencies is also a key determinant: if Interest Rates are lowered, then internationally the Pound seems less of a good option than before – lowering its exchange rate. This in turn has inflationary effects, as consumption from imports become correspondingly more expensive – causing further tightening and concern. As has been noted also – the UK Chancellor (Finance Secretary), Alistair Darling, has very limited room for manoeuvre with Fiscal Policy: UK Government debt is at too high a level to start easing the fiscal reins….we wait in anticipation.

Rock Climbing in Canada…

A friend said to me a number of years ago that one of the definitions of bravery was to be afraid, and then do it anyway…..On that basis, I seem to be a very brave person!

I began my trip to Canada, with 135 Independent Geographic Squadron (Royal Engineers), filled with anticipation and excitement at the prospect of doing a mountaineering course. This excitement changed somewhat when I volunteered instead to do a 5 day rock climbing course….it became trepidation, mixed with terror – although there was also a fair dose of excitement in there aswell…

This was easily borne out – although yes, pretty scary – it was exhilarating. It did take some time to sink in, but the course itself was excellent – our Guide was a world standard Mountain Guide, with International Accreditation – and also a deeply serious climber.

The technical skill involved in climbing is never ending: the knowledge to be gained is so vast and the discipline so rigorous, that one could easily spend a lifetime climbing and still feel you had so much more to learn. I am a lifelong and skilled hiker, and yet the relationship to the land between that of a hiker and climber is so very different: for the hiker it’s usually the views and to be involved with the land, that drive us on. For the climber it’s the challenge and the respect of the climb, the respect that is, for the rockface itself.

Hanging by my fingertips on more than one occasion, during these five days, I found myself asking “did I really volunteer for this??” – one of the first maxims of the Army is never volunteer for anything! But, if you don’t, sometimes you miss out on the spectacular – and that is precisely what the views from the cliff face above Banff in Alberta were. To be on top – literally – of a World Heritage Site, looking down, below the tree line, to these distant buildings. It really did look like a map, but one that you were deeply embedded in.

During the course we learned how to use the various and very complicated pieces of kit – what to expect of their strengths, which in some case were 2.4 tonnes of weight…..! How to use this equipment and the various scenarios for using different bits of kit. We learned about the rope – far more intricate than I might first have imagined. We learned how to belay, and we learned – almost most importantly, to rely on the equipment. To trust in it. That is easier said than done, for it seems an alien thing, to be hanging hundreds of metres above a vertical drop, broken only by the occasional outcrop of sharp, jagged rock, by a piece of rope 10MM in diameter…..

And yet we did, and here am I to tell the tale! Even if only as a course in “Fear Management”, it was exhilarating, and I do hope to climb again with the Army – it was a privilege.

Adam Smith & Edmund Burke – a meeting of minds

Who better to write an introduction to the writings, thoughts and significance of Adam Smith, than Eamonn Butler – the Director of the Adam Smith Institute (ASI).

The ASI is one of the most important Think Tanks in the UK, and through the work of Adam Smith himself, in Europe more broadly. For 30 years they have been leading the field in “injecting choice and competition into public services, extending personal freedom, reducing taxes, pruning back regulation, and cutting government waste.” Yet reading Adam Smith can be daunting – his language, though beautiful and precise, can easily be offputting to those unaccustomed to reading late eighteenth century economics…. And so we have “Adam Smith – A Primer” (feel free to download it, free of charge, from http://www.iea.org.uk/record.jsp?type=book&ID=414)

This is not an idiot’s guide, for Mr Butler has both more respect for his author and his reader, than to presume such a thing; but what it is, is a bite sized, excellently edited and incisive insight into Smith’s more considered subject areas.

On “Self-interest and virtue”, Butler quotes Smith, writing:”some people today wonder how the self-interest that drives Smith’s economic system can be reconciled with the ‘sympathy’ that drives his ethics. Here is his answer: ‘How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.’ In other words, human nature is complex. The baker does not supply us with bread out of benevolence; but nor is it selfinterest which prompts someone to dive into a river to save a drowning stranger. Smith’s books are complementary attempts to identify how self-interested human beings can – and do – live together peacefully (in the moral sphere) and productively (in the economic).”

We heartedly recommend this timely and accessible synthesis of Smith’s most significant contributions to the key field that evolved into Economics.

As an addendum, we urge you to attend the dinner held in part to promote this book, and discuss the link between Smith and Edmund Burke – the practical and learned politician, to Smith’s moral  philosopher. From the Burke Society:

“Yet the economist and the politician found synthesis in a common philosophy based on natural law, limited Government and a distrust of ‘men of systems’ because ‘commerce flourishes most when it is left to itself’.  Such was their mutual admiration that Smith would say of Burke that he ‘agreed with everything he said’ whilst Burke said of the Wealth of Nations that it was the most important book ever written.”

Powerful forces shaping multi media

Here at MBC we have a genuinely broad portfolio of skills. One recent concern that we have helped advise on is the content characterisation of different delivery mechanisms, for accessing your multimedia fix, between this side of the Atlantic and the other.Very learned commentators have written about such a split – recently in the Financial Times of the UK, Eli Noam said:

“Much attention has been given to the middling rank of US broadband penetration, which is lower than in several European countries or Japan. But this obscures the more fundamental, costly, and time-consuming platform upgrades that are taking place in the US.

In much of Europe, broadband is carried to the user’s home over the copper phone lines of the telephone companies, using a technology known as DSL. DSL is the cheap way to go and does not require much investment. But it is relatively limited in data capacity and range. In contrast, in the US broadband is in the process of increasingly being carried over fibre telecom lines and cable television networks, which are vastly more powerful.”

He concludes with the more societally subtle point that, as these two delivery infrastructures embed, they will bring with them greater regulation on the part of European countries lacking such a cable infrastructure – and greater competition in the US, where there will essentially be two competing networks. One will, through regulation, foster greater participation as entry costs will be monitored (despite the greater cost to the consumer). The other will be both more commercial and more dynamic.

Cable companies in the UK have not been noted for their successes. Only recently did NTL announce the loss of 6000 UK based jobs (a net loss lower than this, of 3,600 once newly created outsourced jobs accounted for). This is on top of an already poor quality of service record. We believe regulation itself is to blame for the failure to thrive of the cable companies; regulation of traditional telecoms, in itself stifling competition.

Appearances Matter…

Are we any more obsessed with health matters than in the past? Resoundingly the answer is yes. This does not mean though that the results from this obsession are positive – indeed, for all our attention, affectation and concern – in key areas we have never been so unhealthy.

This Blog occasionally touches on big issues and this is one of those areas that doesn’t lend itself to an easy answer. Why with all the sophistication at our disposal are more children being hospitalised from second hand smoke than ever before? Why are obesity levels unprecedented? Why are heart disease and illnesses related to physical inactivity actually on the rise in our image conscious and sport fixated nation. Appearance has greater sway and yet more than at any time in the recent past, is this appearance built on slight foundations.

Bill Clinton several years back pointed to the fact that this was the first generation where the children could realistically be expected to have shorter life expectancies than their parents….fast food, the sedentary lifestyles that accompany the demise of physically demanding labour and the high toll of the “me” culture – all contributing to a society where image dominated over substance.

A ban on smoking in public places comes into effect in England in July 2007. Schools are being shamed into pressing their controlling Councils to allocate more money to school meals; schools themselves belatedly recognise a lack in the equality of academic outcomes between girls and boys has some root in the limited time given to physical play for boys – their natural adventure being channelled instead into disruption in the classroom. Slowly we are making the case for substance over style, but appearances still matter.

Volunteering a heady contribution…

Voluntarism is a vital form of community involvement, it provides a bond between the citizen and their broader grouping, whether it be social or civic. Business can benefit hugely from “deploying” people on various community activities: they provide ambassadors for the company, giving it credence and relevance to the neighbourhood, and they can bring some of the district back into the company, helping it to remember its core ‘stakeholders’ – be they a potential employment pool, or a new source of customer.

Big companies have been doing this for many years now. Companies with designated PR budgets ensure that their employees are seen volunteering – and, more importantly for them sometimes – where they volunteer. Just as with everything, there are fashionable causes to contribute time and attention to. As Sarah Murray says in a FT article from the tail end of last year, when speaking about Cisco:

“It tends to give people a broader perspective – they often come back with ideas as to the way we do business,”

Employees are allowed to take sabbaticals, typically of about three months, to volunteer on this and other philanthropic projects to which Cisco contributes. As well as being seen as an appealing perk, the sabbaticals allow the company to give its staff valuable opportunities of a break from routine.

Cisco also uses volunteering for team building. Through its work with Habitat for Humanity, for example, the company sends teams to work on construction projects with the charity, which builds affordable housing.

“As part of their development during the year, they do these projects jointly, and you usually have various skills in the team, from technicians to sales people, so it’s interesting to see how these people gel in an environment that’s more level,” says Mr Smith. “Taking them out of their normal comfort zone and putting them somewhere different can often be very powerful.”

Environmentalism is the main recipient of new volunteering schemes, its cache resounds around the workforce and this usually means that it’s easier to obtain willing supplicants to whatever new idea the Chief Exec’ wants to pitch his people into. However, it is vitally important – indeed we have done work on this in the past ourselves, that the “old society” (see dot com distinction between ‘old economy’ and ‘new economy’) is well represented in this largesse of time giving. By this, we mean Scouting, the National Trust, Church groups: Civic Society. We all benefit if we know the people with whom we entrust our children; if we understand the work that it has taken to restore the local park, if the old folk’s home has a brighter cheer to it, as people call in, even just to spend some time. An older and often more rewarding form of currency.