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economy

Could this be a Solution to Economic Crisis and the Future of Business?

The Importance of Philanthropy and The Rise of The Nonprofit Organisation

It takes an evolved individual to recognise that the only response that will solve this economic crisis is to give money away. The reasoning is simple; if you do not reinvest into the roots of society then its flower will surely whither.

There are any number of phrases and sayings that reinforce this, but a purely economic reasoning that underpins this is; if less money comes down from the top of the wealth pyramid than goes up, then there is going to be a ‘cash flow” problem.

The people at the bottom can’t create wealth or employment unless they are given something to work with, and if the governments print money it disappears in overhead, loan repayments and spiralling inflation, filtering upwards into the ‘safe’ commodity markets. Nature hates imbalance in all things and will always seek to achieve an equilibrium, the greater the imbalance, the bigger the impetus is to push back, which is why nonprofit organisations are the fastest growing sector in business today.

There is recognition here that there is significant pressure on decision makers in the private sector to provide substantial returns for their investors and this necessarily leads to questionable decisions being made. Banks who repackage high risk loans, energy companies who falsify oil reserves or cut corners with safety, food and drink manufacturers who bulk with addictive and harmful chemicals, you name it. The irony is that this does not necessarily represent greed as many of the share holders are pension funds trying to provide security for the old at the cost of a future for the young.

Nonprofits are free of these pressures, because of donations and accounting rules all transactions are transparent. Salaries are open to scrutiny and bonuses non excitant. Other businesses find that they prefer to deal with the nonprofit organisation as there are no hidden agendas a trust reputation relationship is easier to establish; equally there may even be the possibility of positive PR!

The lesson of the Chinese monkey trap is clear; the monkey is trapped by his desire to acquire the fruit and his inability to let go of it when it is in his grasp. It takes a lot of courage to trust and let go, by some it is called “a leap of faith”.

“Be the change you want to see

– Mohandas Mahatma Ghandi


“Society is judged by the way it treats its prisoners”

Prisoners straight into work programme
“Ex-offenders who claim jobseekers allowance will be immediately referred to the Government’s Work Programme, and employers will be paid for the number of criminals they employ, it has been announced.”

If you treat people less than fairly, do not expect them to play by the rules;

I predict that this scheme will not work, as prisoners will prefer to break their licences rather than to remain on a placement that by necessity will take on the shape of a “chain gang”

For how else will employers trust them?

Prison and Custody officers are taught “Behaviour breeds behaviour”, give respect and you get respect back. I once asked one of the most profliic young offenders in Gloucestershire what it would take to stop him committing crime, he replied “A house, a car, and a job”.

How does this scheme change the twin problems of crime and the poverty that causes it?

Is it only criminals that live in fenced in properties with automatic gates, security guards and bars on the windows?

Where else in society do we find examples of the “something for nothing” culture, so pervasive that our young adults see it as an expectation?

The Chinese monkey trap is an ingenous device, it is a cage far too small to contain a monkey, but it is big enough to hold fruit. Once a monkey reaches in to the cage and takes hold of his prize, his paw becomes too big to retract from the cage. It is his reluctance to let go off his prize that traps him, thus it is with our society today, we are all trapped by the reluctance to let go;
Joblessness and poverty cause depression, addiction, crime, and broken families. Who knew?

“Be the change you wish to see” – Mohatma Ghandi


Geo-Economics: Worried About How the World Will Feed Itself?

Geo-Economics: Worried About How the World Will Feed Itself?.


Does Wealth come at the cost of Freedom?

This is entirely curious; Freedom is a word that is bandied around a lot, especially in the Western world, and I used to think I understood what it meant; now i am not so certain that I can define it adequately.

Any person that lives with in a society has obligations to that society, by definition, or risk being ‘cast out’ (incarcerated). These are the “ties that bind us”.

We now have so many regulations, checks and controls, where can that word be used correctly in its full original sense?

A poor man is confined in the sense that his choices are limited, he has no resources of his own with which to create or space into which he can expand, unless he can ‘persuade’ someone that he has worth or value. A rich man is confined by his wealth, living behind gates, walls and barriers; what is more, feeling the increasing pressure not to trust, friends, institutions and sometimes even family. What is a panic room if it is not a cell? Or a gated property if not a prison?

It is a little known fact that the infamous tower of London where Mary Queen of Scots and Charles I was originally a castle equipped like a palace when they were imprisoned. It is only through the realisation that we have created too many barriers to entry and systems that have too many ‘checks’ and not enough ‘balances’ that economic growth can be possibility.

This possibility can only be made a reality if everybody digs deep, in effort, courage and trust. This applies to *you*, poor or wealthy, find your courage and your strength:

Look about you and “see” that we all need each other and that it is in your best interest to look after your neighbour, your friend, your employer/ee.

For if the worst comes to the worst; Whose loyalty can you actually count on?

Perhaps this is meant by “and the meek shall inherit the Earth”?

The more barriers you build the less free you are…


Why do People Fight Regulation?

In my work as a complex systems analyst I often wondered how it was that the systems I was analysing had become so complicated that they no longer functioned properly, or at all.

To me it seemed simple; you drew a big circle around the system, looked at what was going in, then examined what was supposed to be coming out. “The Big Picture”.

By doing this simple exercise I could surmise what ought to be in the circle and then compared this to what was actually in the circle. They almost never matched, as I had designed a system from scratch whereas the system that I was examining had evolved over time.

The problem with this evolution was that there were always unconnected systems, or two systems doing the same job and systems that used to fulfil a purpose but no one had thought to remove.

In the very worst cases a loop could be found, just like the one I have discovered in society today. In order to get the funds to set up a non profit organisation or company, most fund providers and investors require you to have a non profit organisation or company.

Volkswagon used to have a 1.9 diesel engine, wonderfully simple and easy to maintain. Client demand for power steering meant bolting on a pump, hydraulic clutch and brakes another, air conditioning yet another and when it came to put a turbo system to it, suddenly a whole redesign was going to be needed, because the engine was becoming less able to drive all these bolt ons and remain economical or cool at low revs.

The same thing occurs within bureaucracies and government designed system. The more laws and regulations that are generated, the harder the engine has to work in order to power the system overhead.

As these laws and regulations are created piecemeal, without considering the big picture, the tendency only to create more overhead and push the problem somewhere else rather than solving it.

When I first learned what function a politician or government representative performed, I assumed that it was to render their positions unnecessary. To create a just and equitable system that would require no further tinkering. The judiciary would be there to catch the occasional injustice or inequity that may occur within the system.

The major problem with this premise is that any politician within government needs to justify his or her own existence within the existing framework.

Mathematical logic shows that NP complete systems (where anything that it is possible to be computed, can be computed) with very few rules at all. Isaac Asimov showed us that only four laws would be needed for an effective social legal structure.

So why is it that we have so many laws and regulations when only a few are needed? These extraneous laws, this extra overhead is, quite literally, strangling society and the possibility for business growth.

I would say that now is the time that we need to have a serious look at our approach to regulation and our desire for control. For each control and every regulation are as a ratchet to a cog in clock, slowing it down until it can neither move backward or forwards.

“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.” – Albert Einstein


WHAT ARE THE DANGERS OF PREDICTION?

On 15th February 2012, Mervyn King, head of the Bank of England, made a lengthy speech giving economic projections about the economy of the United Kingdom.  Undoubtedly, a great deal of work had gone into preparing and processing the data, the interpretation of which was:  Modest growth might be expected and that the UK would not slip back in to recession, UNLESS the price of oil increased.

Four days later Iran announces that it will no longer sell oil to the UK or France, as a direct response to the pressure being applied to them about the nuclear energy generation.  Their justification could easily be – “if we are not allowed nuclear power then we are going to need out oil for energy”.  Consequently, oil, and the commodity market in general, has risen sharply, rendering all its forecasts meaningless in an instant.

The credit rating agencies use similar financial predictive mechanisms as a service to investors to show how likely it will be that a country will repay their debts.  When a country’s rating is downgraded, the investors demand a higher interest rate because of the greater risk, which in turn makes it more difficult for that country to meet their obligations. This is a known issue called “pro-cyclic” and despite proposals to prevent it from happening, it is impossible to do so.

Physicists and philosophers have long understood the problem concerning interactions between the observer and the observed.  From the Heisenberg uncertainty principle to the “if a tree falls in a forest and no one is around to hear it, does it make a sound?” thought experiment, the issue remains the same.

The instant someone makes an observation about the future, the future changes.

There is something known as a self fulfilling prophecy, this happens when enough people believe in a prediction, they change their behaviour because of their belief.  This change in behaviour then brings about the future that was predicted.

I am certain that this was what Mervyn King was hoping when he delivered his speech – if enough people believe that recovery is happening then they will start to reinvest in the economy, thus causing the recovery he wishes to see.

In the case of the credit agencies it is exactly the same, by predicting that a country or organisation will fail to repay their debts, they create a situation where this event is even more likely to occur than if they had made no prediction at all.

Despite all the mathematic modelling that has been done, there appears to be one very important thing being missed, especially when dealing with people:

“Future success can’t be judged on past performance”

or, as Albert Einstein put it:

“Anyone who has never made a mistake has never tried anything new.”

Most people tend to learn from their mistakes, either that or they just want to prove you wrong.  Either way, predicting the market or financial system is not a good idea, as it can be viewed as no more than a misguided attempt to influence or control those mechanisms.

The power of belief is not a thing to take lightly, and in this current  economic and political climate people need to believe that the world of finance are starting to see a bigger picture than the narrow view of a bottom line.