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Energise entrepreneurship, George

February 20, 2012

I’ve always enjoyed the intellectual-political debate aroused by the work of economists – from Keynes, Samuelson, Krugson to Schumpeter – Samuelson is my benchmark, his Foundations of Economic Analysis would be my Desert Island book, although I admit not much use when learning to cut and sharpen that bamboo pole to catch fish.

So it was that the news that Moody’s have given the UK a negative alert based on uncertainty regarding weakening growth prospects as the UK economy recovers, caught my attention. Whilst the US was downgraded last August by S&P, it subsequently saw the costs of long-term borrowing fall, so a black mark from Moody’s isn’t the be-all and end-all, after-all.

However, the sight of George Osborne – a man with the charisma of a dead moose (yes, I’m not a fan) on our television screens dismissing this as a reality check stirred my frustration further about his lack of leadership and commitment to an entrepreneurial growth based recovery strategy. Despite his political posturing and rhetoric, in reality he has strikingly little room for manoeuvre with the current deficit reduction plan.

Whilst inflation fell and other recent indicators are not all gloomy, there isn’t much wriggle room. Employment statistics make grim reading, surely even for Old Etonians whose personal bounty remains intact. Joblessness is around 2.5m with the 16 to 25 age group hardest hit, so preventing a generation being lost to unemployment has to be a priority. Supporting business start-ups and encouraging entrepreneurship surely has to be on the agenda besides a dogmatic debt reduction monologue. We’re all in this together Georgie boy cried. My arse, as Jim Royle would retort.

Like many, I am of the view that George Osborne’s plan to galvanise the economy through extreme austerity measures has failed, I’m an advocate of the Keynesians who predicted it would. We are being dragged into the deepest and longest economic setback in modern times with long-term implications. Extreme spending cuts required to deliver the government’s self-imposed targets for rebalancing the budget, promise a decade-long austerity. This is causing real hardship to many, many folk.

It is hardly a surprise that the talk is of a lost generation of graduates, a generation burdened with personal debt before they enter the workforce, but still there are some who try to comfort themselves with the hope that, while Britain is going to be a drearier and more austere country than it was, we will muddle through with the rules of the game more or less unchanged.

The last time Britain endured such an extended period of depression and falling living standards – the 1870s and 1880s – saw the mushrooming of the co-operative movement and the emergence of the Labour Party as the more moderate expressions of anger that wanted to challenge the very basis of capitalism. Today, an ideological vacuum pervades the Government, and it coincides with the most testing economic times for decades.

We need vision and visionaries – but what we have is journeymen espousing bankrupt worldviews. Perhaps the most dispiriting aspect of Osborne’s lack of leadership is the vacuum of inspirational ideas about what he wants the economy to be. All he seems able to do is reach for the repetitive and mildly threatening incantations about the menace of public debt. Osborne is operating within a framework that permits no vision for how the British economy can be re-energised and reimagined. The man is bereft of disruptive, innovative thinking.

Against this miserable backdrop, any entrepreneur worth their salt could offer us her insights on the back of a beermat about getting our heads up, and rather managing the decline, kick-back and make a difference with fresh thinking and positive attitudes. Let’s do something different!

The paradox of capitalism is that unless it is balanced by a institutions providing a social consciousness that intervene to share risk fairly to ultimately protect society, it degenerates into what we are living through – business leaders preoccupied with their own remuneration, consumers frightened to spend, sectors such as banking bloated by vast, hidden subsidies and a poverty of innovation and investment. Check out Samuelson, pages 454 to 468 George.

This is an economic model in which the rich get richer, the poor get poorer and everyone else lives with an uncertain future. But everyone else will not hang around and be left out to dry, they will demand to know how reward and risk are distributed in our society. What are the 2,500 bankers in London estimated to be earning £1m a year doing to merit such rewards? As the pension age is extended to 67, the education system moving to a divide on an ability to pay, an NHS run by accountants, unemployment institutionalised and workplace rights removed, what is the quid pro quo, the social deal?

Ask yourself, what sort of society do you want – not just today, but in 25 years time? Are we happy to see the post-war social frameworks whittled away with no replacement? The projected 2020 balance sheet may show no debt, but the lack of innovation and foresight shown now will reverberate with hindsight when we get there, that the ultimate product and legacy of George’s misplaced myopia will be a divided society of haves and have-nots that Charles Dickens would recognise.

The way forward is a policy that commits to investment and innovation and shares the risks of entrepreneurship and of life, led by an enterprising government with a bigger conception of its role than debt reduction. Life is too short to go unnoticed, do something different.

While some of the strongest markets of 2011 are going to get stronger, there is still more room for growth. The hottest industries of 2015 probably won’t revolve around the same leading companies of 2010. In 2005, we weren’t looking at Facebook, Twitter or Netflix digital streaming entertainment, I suspect the leading companies in 2015 will likewise surprise us since we might just be hearing about them now – so seed the growth and job creation, not baton down the hatches.

Without entrepreneurs, we will never get out of our current predicament. Only entrepreneurs have the flexibility of attitudes, the freedom of thinking and the risk-everything ambition and faith to find the path back to prosperity.  The only way the economy is going to regain its lost health and vitality is to nurture and stimulate growth. Entrepreneurs are the only people who can get us there.

It is a watershed moment. He’s had plenty of advice from economists, including several Nobel Prize winners, who warned of the dangers of a one-trick austerity programme. But that advice was ignored and now the government is already expected to borrow £150bn more than planned a year ago. Some 2.67 million 16 to 25 year olds don’t have a job, 8.64% of that age group.

Osborne constantly talks down the economy, claiming he inherited a bankrupt position. He didn’t, but in spouting forth he destroyed what John Maynard Keynes called animal spirits, the entrepreneurial positivity and thinking. Let me offer some dna people Thinking Outloud perspectives that I see a lot of start-up and SMEs in Lancashire living and breathing each day, there is another way to uplift the economy, these people are living with an entrepreneurial mind-set, agile thinking and an attitude to make things happen:

  1. Life’s too short to go unnoticed, do something that makes a difference. Think win, I’m not here to come second.
  2. Disruptive thinking, dare to be different. Avoid rhetoric and the curse of if only
  3. Life rewards people who take action – 20% thinking, 80% doing
  4. Think in the now – why am I doing this? What does success look like?
  5. Have one eye on today, and one eye on tomorrow
  6. Sweat the small stuff – be a strategic thinker and a pot washer
  7. Remember, there is no traffic on the extra mile
  8. Success is an attitude, a state of mind.
  9. Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people – George Bernard Shaw
  10. Discipline clarity and focus – nose to the grindstone, eyes to the stars, the difference between the competition and me…is me.

I suspect that Osborne is neither courageous nor pragmatic enough to change course and introduce policies that would give the economy a major stimulus, through tax cuts, investment subsidies and state-funded spend on nurturing entrepreneurship. I believe that the government has an important role to create the conditions that promote entrepreneurship, upward mobility, and individual responsibility, the principal focus of government policy should move from deficit reduction to attempting to avoid the death spiral of decline – of falling growth, increased unemployment, and falling living standards. It’s not working George, support those folks with fire in their bellies who want to do it for themselves. As Bill Clinton said, I do not believe we can repair the basic fabric of society until people who are willing to work have work. Work organizes life. It gives structure and discipline to life.

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One Comment leave one →
  1. February 23, 2012 8:55 am

    Excellent article Ian!

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