Dear Colleagues
As you probably already know, I am migrating my blog activity from this blogsite to a TrueValueMetrics blogspot site.
There has not been a lot of blogging activity in large part because of my work on upgrading a website to make the TrueValueMetrics.Org database easily accessible to people interested in what we are doing.
The link to the blog is: http://truevaluemetrics.blogspot.com
The TrueValueMetrics database work is located at: http://truevaluemetrics.org
The last few days have seen some very important developments in the global sphere ... first Tunisia and now Egypt.
Most of the international news commentary has been very self serving ... but the raw news is very very important to understand. There is obviously a political dimension to the revolt, but there is also an economic and social dimension that is not the subject of much comment. Egypt ... and many other countries around the world have a much bigger young educated class than at any time in the past ... and in many countries the young graduates have far too little opportunity to engage in economic activity that will build a future.
I am an enthusiast for entrepreneurial activity ... and market economics. But I would argue that the singular focus by the modern global corporate community on profit performance without much balance ... if any ... on the issue of social impact is terribly destabilizing. This is, of course, the central thesis of True Value Metrics (TVM), and it is going to be critical, in my view, that something like TVM gets embraced by forward looking corporate leaders sooner rather than later.
Stay tuned
Peter Burgess
Monday, January 31, 2011
Thursday, January 6, 2011
Happy New Year ... and introducing TrueValueMetrics blogspot.
Dear Colleagues
Happy New Year to all.
Hopefully 2011 will see some important changes in the way in which economic and social metrics are handled.
There is something rather disconcerting about the fact that the New York Stock Market price index is suggesting that the economy is doing as well now as it was in the period before the near catastrophic collapse of Lehman Brothers and the implosion of the financial and housing sectors. The Stock Market closed at the end of 2010, higher then pre-Lehman. As one might say in the vernacular "Go figure!"
Of course a big part of the corporate sector has been able to survive and its stockholders prosper by putting a singular focus on profit performance, ignoring everything else. Employment is not in the corporate performance metrics anywhere, yet this is bigger in socio-economic performance impact than profit. If anyone needs convincing that better metrics are needed, I would argue that this aberration is a good argument.
It is easy to improve profit by moving economic activity from a high wage location to a low wage location ... and to lower a host of regulatory standards at the same time. Big corporations have no loyalty to location ... and maybe they should not ... but they should be measured in some way not only for profit performance but also social behavior.
Corporate owners and the stockmarkets are not the only place to point blame. Unions and workers who have engaged in work rule featherbedding should take some of the blame. Nothing is gained by making a corporate business uneconomic and unprofitable ... yet this has been done over and over again by unions and workers.
And of course managers in the corporate world need to share blame as well ... they are the decision makers, and they have made their choices. The choices made by too many high level managers have been self serving, and in due course there should be metrics that sort out those managers that really deserve their rewards and those that do not.
Some of this will become more apparent as time goes on ... some in 2011.
Most of the blogging that has been on Community Analytics CA will start to appear on a new blog True Value Metrics in 2011. This reflects the way the name change has progressed during 2011 and the need to move away from Community Analytics because of a conflict with another organization using the same name. Though we are in different fields, the potential for confusion is too high and since they were in place first, we must move on! The URL is: http://truevaluemetrics.blogspot.com
All the best for 2011.
Peter Burgess
Happy New Year to all.
Hopefully 2011 will see some important changes in the way in which economic and social metrics are handled.
There is something rather disconcerting about the fact that the New York Stock Market price index is suggesting that the economy is doing as well now as it was in the period before the near catastrophic collapse of Lehman Brothers and the implosion of the financial and housing sectors. The Stock Market closed at the end of 2010, higher then pre-Lehman. As one might say in the vernacular "Go figure!"
Of course a big part of the corporate sector has been able to survive and its stockholders prosper by putting a singular focus on profit performance, ignoring everything else. Employment is not in the corporate performance metrics anywhere, yet this is bigger in socio-economic performance impact than profit. If anyone needs convincing that better metrics are needed, I would argue that this aberration is a good argument.
It is easy to improve profit by moving economic activity from a high wage location to a low wage location ... and to lower a host of regulatory standards at the same time. Big corporations have no loyalty to location ... and maybe they should not ... but they should be measured in some way not only for profit performance but also social behavior.
Corporate owners and the stockmarkets are not the only place to point blame. Unions and workers who have engaged in work rule featherbedding should take some of the blame. Nothing is gained by making a corporate business uneconomic and unprofitable ... yet this has been done over and over again by unions and workers.
And of course managers in the corporate world need to share blame as well ... they are the decision makers, and they have made their choices. The choices made by too many high level managers have been self serving, and in due course there should be metrics that sort out those managers that really deserve their rewards and those that do not.
Some of this will become more apparent as time goes on ... some in 2011.
Most of the blogging that has been on Community Analytics CA will start to appear on a new blog True Value Metrics in 2011. This reflects the way the name change has progressed during 2011 and the need to move away from Community Analytics because of a conflict with another organization using the same name. Though we are in different fields, the potential for confusion is too high and since they were in place first, we must move on! The URL is: http://truevaluemetrics.blogspot.com
All the best for 2011.
Peter Burgess
Tuesday, November 30, 2010
Responsibility ... high crime ... firing police!
Dear Colleagues
Thanksgiving is over ... Christmas is coming ... and so is the end of the year. Budgets have to be balanced in most States and Cities around America ... and this means firing workers.
There is something very wrong with the way the economic system works when police are being let go when crime is high. Newark is in a budget bind ... the result of pretty pathetic leadership for decades ... both corporate and political ... but it is what it is. Mayor Cory Booker, the current mayor, is doing a great job of turning this city around, but a 40 year decline cannot be reversed easily ... but he has been doing it.
But now the budget crunch is getting in the way. The checks and balances that are reasonable have now become unreasonable ... Newark has stabilized its crime situation, but it has a long way to go before it will be a low crime city. Newark needs the police to keep police on the payroll ... the crime situation is unfinished business.
Money accounting is not what should be driving public policy. Public policy should be driven by TrueValueMatrics. Money should be allocated so that needs are being satisfied. In Newark, there is a need to reduce crime. Money should be one of the resources available to reduce crime. In Newark, there is a need to have more jobs. Money should be one of the resources available to increase the number of jobs ... maybe good jobs in the Police Department.
With ridiculous situations like the one in Newark, it is no surprise that the economy of the United States remains in trouble with very high unemployment.
But is is also ridiculous that corporate institutions ... banking and others ... are awash in financial liquidity when the needs of society are only getting met at a very very low level.
With wide use of TrueValueMetrics we would be seeing a very different set of behaviors. Money is not a good measure of quality of life and the progress towards a better society.
How is your community doing? Is the quality of life getting better or not?
Peter Burgess
Thanksgiving is over ... Christmas is coming ... and so is the end of the year. Budgets have to be balanced in most States and Cities around America ... and this means firing workers.
There is something very wrong with the way the economic system works when police are being let go when crime is high. Newark is in a budget bind ... the result of pretty pathetic leadership for decades ... both corporate and political ... but it is what it is. Mayor Cory Booker, the current mayor, is doing a great job of turning this city around, but a 40 year decline cannot be reversed easily ... but he has been doing it.
But now the budget crunch is getting in the way. The checks and balances that are reasonable have now become unreasonable ... Newark has stabilized its crime situation, but it has a long way to go before it will be a low crime city. Newark needs the police to keep police on the payroll ... the crime situation is unfinished business.
Money accounting is not what should be driving public policy. Public policy should be driven by TrueValueMatrics. Money should be allocated so that needs are being satisfied. In Newark, there is a need to reduce crime. Money should be one of the resources available to reduce crime. In Newark, there is a need to have more jobs. Money should be one of the resources available to increase the number of jobs ... maybe good jobs in the Police Department.
With ridiculous situations like the one in Newark, it is no surprise that the economy of the United States remains in trouble with very high unemployment.
But is is also ridiculous that corporate institutions ... banking and others ... are awash in financial liquidity when the needs of society are only getting met at a very very low level.
With wide use of TrueValueMetrics we would be seeing a very different set of behaviors. Money is not a good measure of quality of life and the progress towards a better society.
How is your community doing? Is the quality of life getting better or not?
Peter Burgess
Campaign for Community Change
Dear Colleagues
I am interested in the betterment of society ... a reasonable thing to want. But the only people that want to talk to me are people who see me as another ATM machine for them to use. Every organization I have ever contacted is now trying to get me to send them money ... and I am really not interested.
What I would like to do is to help some of these organizations use their money more effectively ... but very few are interested in this, even taking the first steps. Here is an example:
I was very proud as I was growing up that fascism had been defeated ... and proud of the socio-economic progress that was being achieved post war in Europe and the United States ... and proud of progress in many aspects of civil rights. But my big disappointment has been the way in which the modern economy tries to make money and in the process "guts" society. I am proud of my education and my training as an accountant ... but disgusted that accountancy is such a power for measuring money and is irrelevant in measuring the value dimensions of society and economy with the result that big profits get made on top of value destruction in society. Wrong measurement ends up with wrong results.
I would imagine that this group could be more important for the United States than Goldman Sachs ... but nobody will ever know unless they do something like TrueValueMetrics (TVM) to measure the impact they are having on society.
Bluntly put ... good people need to wake up and do TVM type reporting so that the world starts to pay attention to people doing good rather than only paying attention to people making profit.
I am not against profit ... I just think it is only half of what should be being measured!
Peter Burgess
I am interested in the betterment of society ... a reasonable thing to want. But the only people that want to talk to me are people who see me as another ATM machine for them to use. Every organization I have ever contacted is now trying to get me to send them money ... and I am really not interested.
What I would like to do is to help some of these organizations use their money more effectively ... but very few are interested in this, even taking the first steps. Here is an example:
From: Deepak Bhargava, Campaign for Community Change to meThis is their URL http://www.campaignforcommunities.org/ and some contact info from their website.
Dear Peter,
What a way to ruin the holidays.
800,000 people will lose their unemployment insurance if Congress does not pass an extension TODAY. 2 million total people will lose their benefits between now and January 1, 2011. This means unhappy holidays for families and communities everywhere.
Call Your Senator. Demand extending unemployment benefits for a full year.
These benefits are a critical lifeline for Americans and their families at the mercy of the worst job crisis since the Great Depression. This is not the time for Congress to turn its back on unemployed workers desperately looking for jobs that simply aren’t there. Unemployment stands at 9.6 percent and is in the double digits in communities of color.
Call 866-956-1737: Tell your Senator to do what’s right for workers.
Make your voice heard and tell yuor Senator to put politics aside and come together to do what’s right for Americans who’ve lost their jobs and are fighting to survive in this economy.
In solidarity,
Deepak Bhargava and the CCC Team
Campaign for Community Change
The Campaign for Community Change is the action arm of the Center for Community Change. Connect to thousands of community organizers and leaders in a grassroots struggle for change by joining us today.
Subscription Management:
home | who we are | what we do | act | contact us | terms of use | donateI would like to see an organization like this partnering with TrueValueMetrics so that the work that they are doing can be "valued" and compared to what the big organizations in the corporate world are doing that wrecks "value".
Campaign for Community Change |
1536 U Street NW | Washington, DC 20009 |
(202) 339-9300 | toll-free (877) 777-1536 |
info@communitychange.org
I was very proud as I was growing up that fascism had been defeated ... and proud of the socio-economic progress that was being achieved post war in Europe and the United States ... and proud of progress in many aspects of civil rights. But my big disappointment has been the way in which the modern economy tries to make money and in the process "guts" society. I am proud of my education and my training as an accountant ... but disgusted that accountancy is such a power for measuring money and is irrelevant in measuring the value dimensions of society and economy with the result that big profits get made on top of value destruction in society. Wrong measurement ends up with wrong results.
I would imagine that this group could be more important for the United States than Goldman Sachs ... but nobody will ever know unless they do something like TrueValueMetrics (TVM) to measure the impact they are having on society.
Bluntly put ... good people need to wake up and do TVM type reporting so that the world starts to pay attention to people doing good rather than only paying attention to people making profit.
I am not against profit ... I just think it is only half of what should be being measured!
Peter Burgess
American Public Vastly Overestimates Amount of U.S. Foreign Aid
Dear Colleagues
The fact that the American Public is misinformed on this matter should come as now surprise! It would be interested to know anything that the American Public is informed about ... the role of misinformation dominates politics ... dominates marketing ... dominates the media ... and it is no wonder that the American Public ends up being misinformed.
Frankly the knowledge economy that was anticipated when IT (information technology) emerged ... and promptly fueled the the dot.com bubble ... has been hijacked. Our economy is now driven by super-rich kleptocrats who thrive in a world where misinformation flows freely ... and rule of law serves to make the ethically unacceptable quite legal and impossible to stop through any system of due process.
This is not what the American Founding Fathers had in mind.
Maybe with the application of True Value Metrics some sanity might be possible. This is the text of the note that triggered this responce. The text was at this URL http://www.worldpublicopinion.org/
Peter Burgess
The fact that the American Public is misinformed on this matter should come as now surprise! It would be interested to know anything that the American Public is informed about ... the role of misinformation dominates politics ... dominates marketing ... dominates the media ... and it is no wonder that the American Public ends up being misinformed.
Frankly the knowledge economy that was anticipated when IT (information technology) emerged ... and promptly fueled the the dot.com bubble ... has been hijacked. Our economy is now driven by super-rich kleptocrats who thrive in a world where misinformation flows freely ... and rule of law serves to make the ethically unacceptable quite legal and impossible to stop through any system of due process.
This is not what the American Founding Fathers had in mind.
Maybe with the application of True Value Metrics some sanity might be possible. This is the text of the note that triggered this responce. The text was at this URL http://www.worldpublicopinion.org/
Peter Burgess
American Public Vastly Overestimates Amount of U.S. Foreign Aid
As debates about how to deal with the budget deficit have heated up in recent weeks, a new WorldPublicOpinion.org/Knowledge Networks poll finds that Americans continue to vastly overestimate the amount of the federal budget that is devoted to foreign aid.
Asked to estimate how much of the federal budget goes to foreign aid the median estimate is 25 percent. Asked how much they thought would be an "appropriate" percentage the median response is 10 percent.
In fact just 1 percent of the federal budget goes to foreign aid. Even if one only includes the discretionary part of the federal budget, foreign aid represents only 2.6 percent.
Solari in 2002 ... I wonder what has happened since then?
Dear Colleagues
I just "tweeted" the following on @TrueValueMetric
One of the issues that I have been concerned about for a very long time is that there is very little "system thinking" in what most people of good will are doing. A lot of effort goes into thinking about what is wrong and what might be a solution ... and then a book or report is produced ... and then rather little happens after that. The end purpose seems to be merely publishing the book or report.
Accountants ... and I am one ... come from a different mindset. There is, to be sure, the duty to product the financial reports every quarter and year ... and internally perhaps monthly ... but the real job is to have all the data organized so that these reports are easy to produce and also to help the organization get better and better results. A successful accountant is not one that simply produces the reports, but one that has the data that helps make the organization successful and getting better and better.
So my question of Catherine Austin Fitts is not so much how many people liked the report, but how much has society improved.
Sadly my perspective is that between 2002 and now (2010) the world has gone through a huge series of economic bubble busts ... housing ... financial services ... public sector finances ... jobs ... and nobody seems to be measuring anything that really matters. Success seems to be simply to get on track to build another bubble. The system and its metrics are insane.
Good news ... there is a better way! We need to use True Value Metrics to supplement regular business corporate accountancy.
Anyway ... thank you Mark for alerting me to the work being done by Catherine.
Peter Burgess
I just "tweeted" the following on @TrueValueMetric
Solari & The Rise of the Rule of Law by Catherine Austin Fitts from 2002 is worth reading see http://www.courtskinner.com/solari/Rise.htmThis connection was sent to me by Mark Roest, a friend in California. I was interested to see the date when this was published ... 2002 ... and now curious about what has happened since then.
One of the issues that I have been concerned about for a very long time is that there is very little "system thinking" in what most people of good will are doing. A lot of effort goes into thinking about what is wrong and what might be a solution ... and then a book or report is produced ... and then rather little happens after that. The end purpose seems to be merely publishing the book or report.
Accountants ... and I am one ... come from a different mindset. There is, to be sure, the duty to product the financial reports every quarter and year ... and internally perhaps monthly ... but the real job is to have all the data organized so that these reports are easy to produce and also to help the organization get better and better results. A successful accountant is not one that simply produces the reports, but one that has the data that helps make the organization successful and getting better and better.
So my question of Catherine Austin Fitts is not so much how many people liked the report, but how much has society improved.
Sadly my perspective is that between 2002 and now (2010) the world has gone through a huge series of economic bubble busts ... housing ... financial services ... public sector finances ... jobs ... and nobody seems to be measuring anything that really matters. Success seems to be simply to get on track to build another bubble. The system and its metrics are insane.
Good news ... there is a better way! We need to use True Value Metrics to supplement regular business corporate accountancy.
Anyway ... thank you Mark for alerting me to the work being done by Catherine.
Peter Burgess
Friday, November 26, 2010
Obituary ... Norman Macrae ... The unacknowledged giant
Dear Colleagues
This is the text of the Norman Macrae obituary referred to in an earlier post. The Economist URL is http://www.economist.com/node/16374404?story_id=16374404
I am fortunate to know Chris Macrae, Norman Macrae's son who has shared with me many pearls of wisdom that I like to think have improved my work with True Value Metrics and my analysis of important issues. Here is the obituary.
Obituary ... Norman Macrae ... The unacknowledged giant
Few journalists have had as great an influence—or been proved right so often—as the man who, for 23 years, was the deputy editor of The Economist
Jun 17th 2010
WHEN Norman Macrae died on June 11th, aged 89, no major British newspaper published an obituary of him. You could blame The Economist’s tradition of anonymity; you could blame the extraordinary modesty of the man himself who, if you tried to take his photo, would duck down and giggle, convinced that no one could possibly be interested in him.
Yet Norman was one of the intellectual giants of post-war Britain: one of the very few journalists who could bear comparison with the best brains of his time. Like Milton Friedman, he applied free-market principles to public services such as education and council housing. Like Daniel Bell, he charted the shift from the industrial to the post-industrial society. And like Peter Drucker he illuminated the internal workings of companies, the organisations that drove the West’s prosperity and guaranteed its freedoms.
He kept the flame of free-market thinking burning during the long night of collectivism. He predicted the collapse of the Soviet Union, at a time when the CIA was obsessed by Russia’s growing strength, and foresaw the privatisation of industry, when other intellectuals were celebrating the triumph of the “mixed economy”.
Norman was the first journalist to “discover” Japan. In 1962 he wrote a survey predicting that a country most Westerners regarded as synonymous with knick-knacks and knock-offs would become an industrial power-house. He was also the first journalist to “discover” the internet. In 1984 he wrote another survey arguing that life was about to be transformed by “terminals” which would give users access to giant databases. He predicted that the 1973 energy shock would eventually lead to a surge in the supply of energy. He also dismissed the Club of Rome’s prediction that the world was about to run out of food as arrant nonsense.
The Economist was fortunate that Norman decided to park his formidable intellect at 25 St James’s Street. During his almost 40 years here—23 of them, from 1965 to 1988, as deputy editor—he did more than anyone else to provide the intellectual originality of what he liked to describe as “the world’s favourite viewspaper”. He constantly enlivened editorial meetings with proposals to allow Disneyworld to run the West’s cities or to move the British government from London to York. Roy Jenkins rightly described him as the “epitome of the internal spirit of The Economist”.
He could be a brutal editor and a savage critic of flabby ideas. He altered colleagues’ copy with abandon. But he was greatly liked, generous with his time and amiable in conversation. He was also a loyal company man, never allowing his growing renown to go to his head. He frequently slept in his office, his large frame heaped on the floor, and sweated blood to correct errant facts as well as to expunge creeping heresy. More than anyone else, he made sure that The Economist was not blown off course by the winds of ideological fashion or becalmed in routine reporting.
But if The Economist was lucky to find Norman, he was lucky to find The Economist. His website poses a question at the end of each of his essays: “Brilliant? Batty?” and invites readers to join the fray. His undoubted eccentricity was partly a matter of personal style. The words tumbled out in an incoherent jumble interrupted by heaving shoulders and gales of cackling laughter. His handwriting was such a scrawl that only one person in the world, his loyal secretary, Elizabeth Methold, could decipher it—and she could perform this miracle only by holding the script at arm’s length, half-shutting her eyes and (in her words) going into a trance.
The eccentricity extended to his writing. Norman was a punctilious student of statistics. But he was quite happy to illustrate a 1969 article on American productivity with the assertion that a time-and-motion study of housewives at the kitchen sink would “almost certainly find” that the average American housewife was twice as efficient as the average British one. Why? Because the American housewife was capable of instinctively working out in her head, for each chore, “some rough approximation of what modern businessmen call a critical path analysis”.
The Economist provided him with the ideal mixture of freedom and discipline. He could travel to any corner of the world he fancied to produce lengthy reports on anything he wished, from the state of America to the future of mankind. Many of these special reports became books. But he was reined in when he got a bit too wild—as when he advocated writing a cover leader championing a nasal spray to “cure” homosexuals (who, he thought, were driven that way by their aversion to the smell of their mothers). He was passed over three times for the editorship. But, in truth, he was in exactly the right position.
The crystal ball
His greatest gift was his uncanny ability to predict the future. But the problem with the future is that it eventually arrives. Visions that are called from the vasty deep become reality. Ideas that were once pooh-poohed as outlandish become commonplace. “Nobody listened, then everybody did,” Norman wrote ruefully in a 1991 article called “A future history of privatisation, 1992-2022”. To grasp his prescience, it is necessary to return to an era when today’s commonplaces were heresies.
Not so murky to him
During much of the post-war period the market was “out” and the benevolent state was “in”. Public intellectuals such as Kenneth Galbraith argued that the age of the entrepreneur had given way to the age of the giant corporation. Practical politicians poured money into British Steel and the Concorde project. The market meant chaos and unemployment; industrial policy meant smooth growth and jobs for all.
Norman saw this as a recipe for flabby politics and failed economics. In 1954 he coined the term “Butskellism” to describe the portmanteau politics of the Conservative chancellor of the exchequer, R.A. Butler, and a Labour predecessor, Hugh Gaitskell. Throughout the Butskellite era he relentlessly documented the failures of industrial policy and government planning.
This makes it sound as if Norman was nothing more than a prophet of the new right. But the truth is more complicated—and, as befits the man, more idiosyncratic. Even while he embraced the market on micro-economic policy, he remained more or less a Keynesian on macroeconomic policy until the late 1970s. He was a firm believer in pumping up demand with deficit spending and holding down inflation with incomes policy. No deficit was too big and no incomes policy too hopeless. He greeted the first macroeconomic flushes of Reaganism and Thatcherism with sceptical editorials before finally admitting that he had been wrong. It was perhaps the only time he was not ahead of the debate.
Norman also had no time for social conservatism. He worried about broken families and out-of-wedlock births, but entirely from a utilitarian rather than a moral point of view. He dismissed the religious right as vigorously as he dismissed feminists and environmentalists (“both simple and psychotic Americans have too often been dominated by religious liars”). He argued that one of man’s greatest problems in the coming years would be growing life-expectancy—and advocated a “system of planned death” to deal with it. In a survey of America in 1975 he predicted that euthanasia would soon be as acceptable as abortion: “It will not be at all surprising if there is in some quite near decade-and-a-half a similarly swift and equally civilised dash to acceptance of killing off old codgers (by then, like me) as there has been, in so short a twinkling, towards the more emotive act of killing unborn babies.”
In Stalin’s Russia
Why did Norman think as he did? Why did he reject the post-war consensus about the virtues of government? And why did he keep his distance from a new right that embraced so many of his ideas? Part of the answer lies in his personality. Norman was an extraordinarily self-contained figure. He seldom used his telephone to call people, preferring to sit in his office poring over statistics. He had few doubts about the rightness of his opinions. Once he had an idea in his head he pushed it to its logical conclusion—and if he was proved wrong he simply shifted to another idea, which he pursued with equal certainty. Richard Holt Hutton once wrote about Walter Bagehot’s “dash and doubt”. Norman was just dash.
But his outlook was also shaped by his odd adolescence. His father was a British consul in Moscow in 1935-38, and Norman’s summer holidays from school were spent there at the height of Stalin’s purges. He saw members of the embassy staff—including maids his own age—disappearing, probably to be shot. Before and after his posting to Moscow his father also had jobs in Nazi-dominated Europe. Many of his family’s Jewish friends were terrorised and later slaughtered.
When he left school in 1941, Norman wrote later,
Norman’s case for market capitalism did not rest merely on its ability to create wealth, but on its capacity to advance individual freedom. He was almost as critical of big-company capitalism as he was of big-government socialism. In a 1976 survey on “The coming entrepreneurial revolution” he argued that big business was as doomed as big government. Hierarchical managers sitting in their skyscrapers could no longer arrange how brain workers should best use their imaginations. The future lay with small firms that could exploit individual creativity and with bigger firms that could split themselves into small centres and encourage competition between them.
Norman’s critique of the welfare state was inspired by a similar belief in individualism. He pointed out that the market had produced a remarkable equalisation in people’s lives. Rich and poor had access to the same consumer goods—the same television programmes, the same comfortable armchairs, the same plethora of goods in supermarkets, which were spreading from the suburbs to the slums. In 1945 the average Englishman had only one pair of trousers; in the swinging 1960s he had access not only to lots of pairs of (tight) trousers but also to holidays in the sun and cheap mortgages.
The great exception to this story of equalisation was the state. The state distributed its largesse disproportionately to the rich—exactly the opposite of what was supposed to happen—allowing them to end up with better schools and better health services. It also trapped the poorest in poverty, in sink estates with lousy schools and soaring crime and in public-sector jobs with little prospect of long-term prosperity. Norman argued that the only way to change this was to empower individuals—to allow them to own their own homes, through privatisation, and to choose their own schools, through vouchers. Give power to the state and you end up with self-serving interest groups. Give power to the individual and you apply the same creative ingenuity to public services as companies have long done to the invention of washing powder.
Norman’s belief in individualism also drove his enthusiasm for technology. This enthusiasm provoked widespread mirth at The Economist. The man who predicted the rise of the internet in 1984 and preached the virtues of telecommuting in articles on almost anything was by far the most incompetent member of the staff when it came to using new (or not so new) inventions. In battles with the office fax machine he usually came off worse. It was rumoured that paper clips baffled him. The staff were amazed when the Atex publishing system was introduced in 1982 and Norman revealed that he could actually type.
But as a techno-visionary he had few equals. He predicted a world in which “books, files, television programmes, computer information and telecommunications will merge”—in which people could explore the world’s knowledge repositories at a touch of a button, and in which readers would have access to custom-made newspapers paid for by targeted advertising (in typical fashion, he imagined this newspaper emerging from a fax machine at the back of the television). He saw that this revolution would have huge implications for the balance of power. Giant organisations such as governments and companies would lose their comparative advantage. Entrepreneurs would be empowered. Taxpayers would flee the coop and telecommute from rural villages—thus putting more pressure on governments to give up their powers and start serving people rather than bossing them about.
The last clue to Norman was that he was a consummate newspaperman. In print—or indeed on the lecture podium—the cackling incoherence of his speech simply vanished, and he was invariably lucid and frequently amusing, even coruscating. (A similar stylishness could be seen on the tennis court, where the immobility of middle age did nothing to inhibit a well-aimed slice that flummoxed younger and nimbler players.) He was one of the best word-coiners of his generation, producing “intrapreneurship” and “telecommuting” (the coinage of “privatisation” and “Eurocrat” is disputed). He littered his prose with memorable phrases. Milton Friedman was “the maddening gnome of Chicago”. American ghettoes exhibited “public squalor amid private non-affluence”. In diagnosing the failure of British firms to get the most out of computers, he likened them to “former slum dwellers who, when promoted into being council-house tenants, tended to keep coal in the bath”. In championing the virtues of entrepreneurship and people working in small teams, he pointed out that “Jesus Christ tried 12, and that proved one too many.”
Everything he wrote was compulsively readable—partly because he mixed battiness with brilliance and partly because he came at everything from such unexpected angles. His 1975 survey of “America’s third century” started by posing a surprising public-policy quandary:
Our children will probably “progressively” be able to order their babies with the shape and strength and level of intelligence that they choose, as well as alter existing human beings so as to insert artificial intelligence, retune brains, change personality, modify moods, control behaviour.
That raised troubling ethical issues which would be best decided by a world that was shaped by America rather than “the inexperienced Japanese”.
Yet it was those Japanese who best demonstrated Norman’s skills as a journalist. In 1962 he visited Japan to get a measure of how the country had changed since the second world war. He learned little from talking to British ex-pats. But then, in a Mitsubishi factory, he came across a British machine-tool salesman who told him that Japanese workers were getting three times as much out of their machines as their better paid British counterparts.
The resulting article, “Consider Japan”, sealed his global reputation as a journalist and turned him into a hero in Japan (on his retirement in 1988 he was honoured by the emperor with the Order of the Rising Sun). He argued that the key to Japanese success lay in their plethora of tiny entrepreneurial component-makers and in their ability to break up huge plants into “small but brotherly” profit centres. He predicted that the Japanese productivity miracle would transform the world economy.
IMAGE Arise Sir Norman, knight of the rising sun!
An eternal optimist
But for all his interest in the rest of the world, he was a very English figure. His ideas were rooted in the English liberalism of the 19th century — a liberalism that celebrated the individual over the collective, progress over reaction, free thought over superstition. This set him against both the “over-government” that had triumphed in his youth and the religious conservatism that prospered under Reaganism. But it also turned him into an irrepressible optimist. Few people since Bagehot and Macaulay have been so convinced that life is getting better, and that it will get better still if only a few doltish politicians can be elbowed out of the way.
This commitment to classical liberalism ensures that much of his work continues to sing. Norman devoted his energies to two of the most ephemeral bits of journalism—opinionated leaders and lengthy exercises in futurology. Yet a remarkable amount of what he wrote remains relevant today. His 1975 survey on America’s 200th birthday, in which he chastises the Democrats for flirting with the Fabian cult of government expertise, conservatives for flirting with religious extremism, and business for underinvesting in innovation, might easily be a portrait of Barack Obama’s America. Big government has been on the march for much of the past decade. The Beijing consensus celebrates the alliance of big government and big companies. Much of the public sector has resisted the power of vouchers and internal markets. The battle that Norman fought for so long has still not been won.
Copyright © The Economist Newspaper Limited 2010. All rights reserved.
This is the text of the Norman Macrae obituary referred to in an earlier post. The Economist URL is http://www.economist.com/node/16374404?story_id=16374404
I am fortunate to know Chris Macrae, Norman Macrae's son who has shared with me many pearls of wisdom that I like to think have improved my work with True Value Metrics and my analysis of important issues. Here is the obituary.
Obituary ... Norman Macrae ... The unacknowledged giant
Few journalists have had as great an influence—or been proved right so often—as the man who, for 23 years, was the deputy editor of The Economist
Jun 17th 2010
WHEN Norman Macrae died on June 11th, aged 89, no major British newspaper published an obituary of him. You could blame The Economist’s tradition of anonymity; you could blame the extraordinary modesty of the man himself who, if you tried to take his photo, would duck down and giggle, convinced that no one could possibly be interested in him.
Yet Norman was one of the intellectual giants of post-war Britain: one of the very few journalists who could bear comparison with the best brains of his time. Like Milton Friedman, he applied free-market principles to public services such as education and council housing. Like Daniel Bell, he charted the shift from the industrial to the post-industrial society. And like Peter Drucker he illuminated the internal workings of companies, the organisations that drove the West’s prosperity and guaranteed its freedoms.
He kept the flame of free-market thinking burning during the long night of collectivism. He predicted the collapse of the Soviet Union, at a time when the CIA was obsessed by Russia’s growing strength, and foresaw the privatisation of industry, when other intellectuals were celebrating the triumph of the “mixed economy”.
Norman was the first journalist to “discover” Japan. In 1962 he wrote a survey predicting that a country most Westerners regarded as synonymous with knick-knacks and knock-offs would become an industrial power-house. He was also the first journalist to “discover” the internet. In 1984 he wrote another survey arguing that life was about to be transformed by “terminals” which would give users access to giant databases. He predicted that the 1973 energy shock would eventually lead to a surge in the supply of energy. He also dismissed the Club of Rome’s prediction that the world was about to run out of food as arrant nonsense.
The Economist was fortunate that Norman decided to park his formidable intellect at 25 St James’s Street. During his almost 40 years here—23 of them, from 1965 to 1988, as deputy editor—he did more than anyone else to provide the intellectual originality of what he liked to describe as “the world’s favourite viewspaper”. He constantly enlivened editorial meetings with proposals to allow Disneyworld to run the West’s cities or to move the British government from London to York. Roy Jenkins rightly described him as the “epitome of the internal spirit of The Economist”.
He could be a brutal editor and a savage critic of flabby ideas. He altered colleagues’ copy with abandon. But he was greatly liked, generous with his time and amiable in conversation. He was also a loyal company man, never allowing his growing renown to go to his head. He frequently slept in his office, his large frame heaped on the floor, and sweated blood to correct errant facts as well as to expunge creeping heresy. More than anyone else, he made sure that The Economist was not blown off course by the winds of ideological fashion or becalmed in routine reporting.
But if The Economist was lucky to find Norman, he was lucky to find The Economist. His website poses a question at the end of each of his essays: “Brilliant? Batty?” and invites readers to join the fray. His undoubted eccentricity was partly a matter of personal style. The words tumbled out in an incoherent jumble interrupted by heaving shoulders and gales of cackling laughter. His handwriting was such a scrawl that only one person in the world, his loyal secretary, Elizabeth Methold, could decipher it—and she could perform this miracle only by holding the script at arm’s length, half-shutting her eyes and (in her words) going into a trance.
The eccentricity extended to his writing. Norman was a punctilious student of statistics. But he was quite happy to illustrate a 1969 article on American productivity with the assertion that a time-and-motion study of housewives at the kitchen sink would “almost certainly find” that the average American housewife was twice as efficient as the average British one. Why? Because the American housewife was capable of instinctively working out in her head, for each chore, “some rough approximation of what modern businessmen call a critical path analysis”.
The Economist provided him with the ideal mixture of freedom and discipline. He could travel to any corner of the world he fancied to produce lengthy reports on anything he wished, from the state of America to the future of mankind. Many of these special reports became books. But he was reined in when he got a bit too wild—as when he advocated writing a cover leader championing a nasal spray to “cure” homosexuals (who, he thought, were driven that way by their aversion to the smell of their mothers). He was passed over three times for the editorship. But, in truth, he was in exactly the right position.
The crystal ball
His greatest gift was his uncanny ability to predict the future. But the problem with the future is that it eventually arrives. Visions that are called from the vasty deep become reality. Ideas that were once pooh-poohed as outlandish become commonplace. “Nobody listened, then everybody did,” Norman wrote ruefully in a 1991 article called “A future history of privatisation, 1992-2022”. To grasp his prescience, it is necessary to return to an era when today’s commonplaces were heresies.
Not so murky to him
During much of the post-war period the market was “out” and the benevolent state was “in”. Public intellectuals such as Kenneth Galbraith argued that the age of the entrepreneur had given way to the age of the giant corporation. Practical politicians poured money into British Steel and the Concorde project. The market meant chaos and unemployment; industrial policy meant smooth growth and jobs for all.
Norman saw this as a recipe for flabby politics and failed economics. In 1954 he coined the term “Butskellism” to describe the portmanteau politics of the Conservative chancellor of the exchequer, R.A. Butler, and a Labour predecessor, Hugh Gaitskell. Throughout the Butskellite era he relentlessly documented the failures of industrial policy and government planning.
This makes it sound as if Norman was nothing more than a prophet of the new right. But the truth is more complicated—and, as befits the man, more idiosyncratic. Even while he embraced the market on micro-economic policy, he remained more or less a Keynesian on macroeconomic policy until the late 1970s. He was a firm believer in pumping up demand with deficit spending and holding down inflation with incomes policy. No deficit was too big and no incomes policy too hopeless. He greeted the first macroeconomic flushes of Reaganism and Thatcherism with sceptical editorials before finally admitting that he had been wrong. It was perhaps the only time he was not ahead of the debate.
Norman also had no time for social conservatism. He worried about broken families and out-of-wedlock births, but entirely from a utilitarian rather than a moral point of view. He dismissed the religious right as vigorously as he dismissed feminists and environmentalists (“both simple and psychotic Americans have too often been dominated by religious liars”). He argued that one of man’s greatest problems in the coming years would be growing life-expectancy—and advocated a “system of planned death” to deal with it. In a survey of America in 1975 he predicted that euthanasia would soon be as acceptable as abortion: “It will not be at all surprising if there is in some quite near decade-and-a-half a similarly swift and equally civilised dash to acceptance of killing off old codgers (by then, like me) as there has been, in so short a twinkling, towards the more emotive act of killing unborn babies.”
In Stalin’s Russia
Why did Norman think as he did? Why did he reject the post-war consensus about the virtues of government? And why did he keep his distance from a new right that embraced so many of his ideas? Part of the answer lies in his personality. Norman was an extraordinarily self-contained figure. He seldom used his telephone to call people, preferring to sit in his office poring over statistics. He had few doubts about the rightness of his opinions. Once he had an idea in his head he pushed it to its logical conclusion—and if he was proved wrong he simply shifted to another idea, which he pursued with equal certainty. Richard Holt Hutton once wrote about Walter Bagehot’s “dash and doubt”. Norman was just dash.
But his outlook was also shaped by his odd adolescence. His father was a British consul in Moscow in 1935-38, and Norman’s summer holidays from school were spent there at the height of Stalin’s purges. He saw members of the embassy staff—including maids his own age—disappearing, probably to be shot. Before and after his posting to Moscow his father also had jobs in Nazi-dominated Europe. Many of his family’s Jewish friends were terrorised and later slaughtered.
When he left school in 1941, Norman wrote later,
my first job was a public-sector one, with public-sector productivity, as a teenager supposed to throw bombs about as an RAF navigator, creating a slum in the heart of the continent. By the time I got there, the Russians were coming in from the other side. All the politicians, including Churchill and Roosevelt, told us these were fine liberating democrats. And of course I knew from those school summer holidays so briefly before that those were astonishing lies. That has given me one advantage in my 40 years as a newspaperman. I have never since then believed a word either politicians or public relations officers have said.Norman’s early experiences did not just sour him to politicians. They soured him to collectivism in all its many varieties. He had no time for the government-worshipping intellectuals he found when he studied economics at Cambridge in 1945-47. He loathed the feminists and black-power activists he came across in America in the late 1960s and 1970s, smelling in their affection for group rights and their willingness to use intimidation the same intolerance he had smelt in Europe in the 1930s and 1940s. He took his children on trips to eastern Europe in order to teach them the difference between freedom and tyranny. He seldom missed an opportunity to champion the “hard hats” over the “soft heads”.
Norman’s case for market capitalism did not rest merely on its ability to create wealth, but on its capacity to advance individual freedom. He was almost as critical of big-company capitalism as he was of big-government socialism. In a 1976 survey on “The coming entrepreneurial revolution” he argued that big business was as doomed as big government. Hierarchical managers sitting in their skyscrapers could no longer arrange how brain workers should best use their imaginations. The future lay with small firms that could exploit individual creativity and with bigger firms that could split themselves into small centres and encourage competition between them.
Norman’s critique of the welfare state was inspired by a similar belief in individualism. He pointed out that the market had produced a remarkable equalisation in people’s lives. Rich and poor had access to the same consumer goods—the same television programmes, the same comfortable armchairs, the same plethora of goods in supermarkets, which were spreading from the suburbs to the slums. In 1945 the average Englishman had only one pair of trousers; in the swinging 1960s he had access not only to lots of pairs of (tight) trousers but also to holidays in the sun and cheap mortgages.
The great exception to this story of equalisation was the state. The state distributed its largesse disproportionately to the rich—exactly the opposite of what was supposed to happen—allowing them to end up with better schools and better health services. It also trapped the poorest in poverty, in sink estates with lousy schools and soaring crime and in public-sector jobs with little prospect of long-term prosperity. Norman argued that the only way to change this was to empower individuals—to allow them to own their own homes, through privatisation, and to choose their own schools, through vouchers. Give power to the state and you end up with self-serving interest groups. Give power to the individual and you apply the same creative ingenuity to public services as companies have long done to the invention of washing powder.
Norman’s belief in individualism also drove his enthusiasm for technology. This enthusiasm provoked widespread mirth at The Economist. The man who predicted the rise of the internet in 1984 and preached the virtues of telecommuting in articles on almost anything was by far the most incompetent member of the staff when it came to using new (or not so new) inventions. In battles with the office fax machine he usually came off worse. It was rumoured that paper clips baffled him. The staff were amazed when the Atex publishing system was introduced in 1982 and Norman revealed that he could actually type.
But as a techno-visionary he had few equals. He predicted a world in which “books, files, television programmes, computer information and telecommunications will merge”—in which people could explore the world’s knowledge repositories at a touch of a button, and in which readers would have access to custom-made newspapers paid for by targeted advertising (in typical fashion, he imagined this newspaper emerging from a fax machine at the back of the television). He saw that this revolution would have huge implications for the balance of power. Giant organisations such as governments and companies would lose their comparative advantage. Entrepreneurs would be empowered. Taxpayers would flee the coop and telecommute from rural villages—thus putting more pressure on governments to give up their powers and start serving people rather than bossing them about.
The last clue to Norman was that he was a consummate newspaperman. In print—or indeed on the lecture podium—the cackling incoherence of his speech simply vanished, and he was invariably lucid and frequently amusing, even coruscating. (A similar stylishness could be seen on the tennis court, where the immobility of middle age did nothing to inhibit a well-aimed slice that flummoxed younger and nimbler players.) He was one of the best word-coiners of his generation, producing “intrapreneurship” and “telecommuting” (the coinage of “privatisation” and “Eurocrat” is disputed). He littered his prose with memorable phrases. Milton Friedman was “the maddening gnome of Chicago”. American ghettoes exhibited “public squalor amid private non-affluence”. In diagnosing the failure of British firms to get the most out of computers, he likened them to “former slum dwellers who, when promoted into being council-house tenants, tended to keep coal in the bath”. In championing the virtues of entrepreneurship and people working in small teams, he pointed out that “Jesus Christ tried 12, and that proved one too many.”
Everything he wrote was compulsively readable—partly because he mixed battiness with brilliance and partly because he came at everything from such unexpected angles. His 1975 survey of “America’s third century” started by posing a surprising public-policy quandary:
Our children will probably “progressively” be able to order their babies with the shape and strength and level of intelligence that they choose, as well as alter existing human beings so as to insert artificial intelligence, retune brains, change personality, modify moods, control behaviour.
That raised troubling ethical issues which would be best decided by a world that was shaped by America rather than “the inexperienced Japanese”.
Yet it was those Japanese who best demonstrated Norman’s skills as a journalist. In 1962 he visited Japan to get a measure of how the country had changed since the second world war. He learned little from talking to British ex-pats. But then, in a Mitsubishi factory, he came across a British machine-tool salesman who told him that Japanese workers were getting three times as much out of their machines as their better paid British counterparts.
The resulting article, “Consider Japan”, sealed his global reputation as a journalist and turned him into a hero in Japan (on his retirement in 1988 he was honoured by the emperor with the Order of the Rising Sun). He argued that the key to Japanese success lay in their plethora of tiny entrepreneurial component-makers and in their ability to break up huge plants into “small but brotherly” profit centres. He predicted that the Japanese productivity miracle would transform the world economy.
IMAGE Arise Sir Norman, knight of the rising sun!
An eternal optimist
But for all his interest in the rest of the world, he was a very English figure. His ideas were rooted in the English liberalism of the 19th century — a liberalism that celebrated the individual over the collective, progress over reaction, free thought over superstition. This set him against both the “over-government” that had triumphed in his youth and the religious conservatism that prospered under Reaganism. But it also turned him into an irrepressible optimist. Few people since Bagehot and Macaulay have been so convinced that life is getting better, and that it will get better still if only a few doltish politicians can be elbowed out of the way.
This commitment to classical liberalism ensures that much of his work continues to sing. Norman devoted his energies to two of the most ephemeral bits of journalism—opinionated leaders and lengthy exercises in futurology. Yet a remarkable amount of what he wrote remains relevant today. His 1975 survey on America’s 200th birthday, in which he chastises the Democrats for flirting with the Fabian cult of government expertise, conservatives for flirting with religious extremism, and business for underinvesting in innovation, might easily be a portrait of Barack Obama’s America. Big government has been on the march for much of the past decade. The Beijing consensus celebrates the alliance of big government and big companies. Much of the public sector has resisted the power of vouchers and internal markets. The battle that Norman fought for so long has still not been won.
Copyright © The Economist Newspaper Limited 2010. All rights reserved.
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