Sit-aside: a solution for our times

The UK normally produces more management consultancy than is needed by domestic clients at any one time. Since it is difficult to store management consultancy for consumption at a later date, and demand in export markets is subdued, there is a need to provide incentives to reduce over-production.

A proposal very worthy of consideration is now being mooted: Sit-aside.

Under this scheme, management consultants will be able to claim support payments so long as they remain unutilised on client work, and instead devote their spare time to cultivating useful crops such as linseeds, oilseeds and protein crops such as peas, beans and lupins.

Management consultancies will be allowed a choice as to which teams of individuals will sit-aside each year; or alternatively the same team could be sat-aside for a number of years. This will give management consultancies more flexibility as they plan future staff utilisation, either on billable work for clients, or as claimed sit-aside credits.

Management consultancies would be obliged, however, to manage their sat-aside team so that it could be brought back into production if necessary.

It might be argued that price cuts would be a better method of reducing over-production; but this would overlook the fact that Sit-aside will act directly and quickly to reduce production and provides significant environmental benefits.

Sitting in their offices, the damage to the economy caused by these management consultants in the normal course of affairs will be significantly reduced. The sat-aside consultancy resources will provide important ancillary benefits, such as acting as buffer zones for preventing buzzword drift, providing habitat for the incubation of new management fads, becoming idea-banks where beneficial ideas can live and breed, and creating wildlife corridors around offices where animals and birds can find cover.

They will provide stewardship on behalf of the nation for key legacy management consultancy assets including PowerPoint formats, process mapping methodologies and work breakdown structures. And a pound spent supporting a management consultant will be spent in turn on goods and services created and delivered in the UK, thereby revitalising the economy in deprived areas such as Surrey and Berkshire.

In assessing bids for Sit-aside payments the Government will use the flexibilities available under the “Temporary Community Framework for State Aid Measures to support access to finance in the current financial and economic crisis”. The focus will be on ensuring that the management consultancy industry emerges from the current downturn with the skills and technology base needed to be competitive in the global market.

Enough of the gloom! Let's not look backwards: let's look forwards!

Forward to kick-starting the economy! Time to commit to Sit-aside!

A short lesson in economics for bankers

The expression "those bankers just don’t get it" is becoming exhausted through repetition, but their capacity for self delusion still amazes.

It has become fashionable to suggest that they (along with regulators, governments and the rest of us) had got stuck in belief in an economic paradigm based on the supremacy of rationalism.

Recent events, however suggest that they’re not very hot at applying even this old style economics.

The argument that bonuses still have to be paid (e.g. by RBS) to prevent staff migration (e.g. to Barcap) surely flies in the face of traditional economics. Why?

1. The banking sector employs twice as many people internationally as it did 15 years ago.

2. In London that ratio is 3 to 1.

3. The demand for banking services will now shrink as the depression continues, and banks will be shedding staff in the tens of thousands.

4. It’s anyone’s guess but we might assume that two in three wholesale, investment or forex bankers will become redundant.

5. In a buyers’ market the price bankers can charge for their labour will therefore plummet,

6. and they’ll be lucky to have a job at all, let alone a bonus.

But I suggest that there is one area where performance related pay is now badly needed, the Cabinet.

How about making Ministers’ take home pay dependent on the delivery of the pledges in the manifesto and the achievement of all the targets they spray around like a tom cat sprays wee?

That might concentrate the buggers’ minds.

[Ed: I apologise for GOM's use of offensive language; he does get carried away sometimes]

Beyond satire

Satirists might just as well pack their bags at the moment.

No sooner has one had a Swiftean moment than we read that the government has implemented it.

This weekend revealed that the FSA is to award itself £10m of bonuses.

And we have just heard that Tessa Jowell is attempting to remove gender differences from the Olympics by, for example, allowing women to compete in heavyweight wrestling.

I’d be tempted to suggest that the Secretary of State for Health has announced that men will soon be able to have babies, but there’s no point.

It’s probably already in the pipeline.

Not select enough

One of the inquisitors on this morning’s Treasury Select Committee meeting revealed his lamentable ignorance by referring to "siren calls from risk managers", meaning siren as in claxon or fire alarm. And everybody else adopted the solecism without any indication of irony.

So now we know why Bankers and Parliamentarians have so let us down; it’s very simply their lack of a classical education.

Funny how much clearer life gets as one gets older.

Or as my old friend Catullus used to say "Totum ut te facient, Fabule, nasum"

Antilogisms

Years ago the witty chaps in The Times’ PHS column coined a new term, "antilogism", for a word or expression that means the opposite of what you’d expect. Not quite the same as an oxymoron, but more like a thumping great one or two word porky.

The term never caught on, and you won’t find it in the dictionary, but the financial crisis has brought the concept back out of the closet. We need that word again.

How else would you describe the following?

A security = something that is spectacularly insecure

Wealth management = the destruction of your savings

Investment management = the incompetent and spendthrift loss of your investment

Savings product = structured theft

Managed risk = unmanaged risk

Financial planning advice = guesswork on fees

Typical 10 year return = the same number with a negative sign in front of it

Personal pension provision = throwing your own savings away

Private sector occupational pension scheme = conspiring with your employer to throw your and their savings away

Defined benefit scheme = undefined benefit scheme

Public sector pensions provision = a charge on current tax payers, an increasing number of whom are private sector pensioners

Financial Service Authority = a body that isn’t an authority on either finance or service

Department of Work and Pensions = a group of civil servants overseeing the annihilation of both

Royal Bank of Scotland = an institution that is neither Royal nor Scottish

Bradford & Bingley = Whitehall & Madrid

Equitable Life = unfairness whichever way you look at it.

But the crisis is throwing up some terms that have a ring of truth: vulture funds do prey on the weak, and as more and more of our finance houses are nationalised the Bank of England is becoming exactly that.

A solution for your problem

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Another roll of the dice

If we were to throw a die to forecast our future we might, like Luke Rheinhart’s Dice Man, load the odds so that one face predicts rapid recovery, four faces offer progressively increasing degrees of gloom ranging from a one-year recession to four-year deflation, and the sixth face suggests something very more radically threatening.

It is probably not too pessimistic to suggest that within a year or so the sixth face of the economic die will give us a scenario in which our bankrupt liberal democratic (and as it happens, capitalist) nation states will have no choice but to accept bail-outs from countries whose politics we abhor.

In this scenario our economic survival becomes dependent on Saudi Arabia, China or Russia and its old ’Stans. None of these are remotely liberal or democratic by our standards, nor are they strictly capitalist in our terms, in the sense of a diversified, decentralised economy.

Will this dependency come without demands? I suspect not.

For decades "our" IMF has bailed out third world countries only so long as they promise to adopt developed world capitalist economic management principles. I think we can be reasonably certain that financial support from the purveyors of sovereign wealth such as China will carry similar or more stringent obligations.

What is therefore at risk is not just our economic viability but the very freedom we have fought for over centuries to run our societies as we wish.

The supposed destructive threat of Al Qaeda will have materialised, but it will have been delivered not from Islam but by the free market capitalist fundamentalists that have infested our economy, out-manoeuvred our regulators and seduced their political masters.

The axis of evil will have triumphed but that axis will emerge to be not the barbarian at the gate but the enemy within.