We Have To Stop Lying

Over the years I’ve been urged to teach British managers techniques from overseas.  The first muck was Management By Objectives (MBO), an American interpretation of Soviet production targets.  Then fashions turned Japanese, with quality circles, just-in-time, continuous improvement and various kwality initiatives (TQM, TPM, TPM) and even poga oke (fool proofing).  German stuff rarely got much mention as it involved such “socialist” dangers as works councils and rigorous training.  There was plenty of British stuff about, from Action Learning, the Industrial Society, MRP1 and MRP2 (manufacturing recommended practice) and ISO 9001 (as amended).  Most of this stuff was found to fail as often as succeed and it was all considered seriously as management fashion.  Utter piss like excellence was popular.  Much was just a rehash of organisational management 101 – like business process re-engineering.

There are decent management techniques and ideas – but they are lost in social effect because the system is based on idiot notions of profit and income distribution.  The underlying spirit of this muck is fascism, with leaders ‘creating reality’ for the rest of us mugs.  Thatcher is often associated with this ‘modernisation’ that has led us down the road to serfdom.  The crass promise, remade by Bliar and Camerooney (merely Bliar 2), is that getting us all super-efficient will allow us to dominate world competition, earn our way in the world and so on.  The truth, of course, is that it set us on the route to Chinese wages and conditions of employment – and probably set a Chinese Empire in motion – giving them manufacturing expertise was the equivalent in geo-politics of selling guns and whiskey to the Indians in the old westerns.  It was traitorous.

I have no doubt we should be efficient  where we can be – the real reason being to make work easier and for there to be less of it and for us to be able to do other things with our lives in a secure environment, not to get swollen ankles and suicidal feelings working for a Chinese gang-master or Indian load shark – or be ripped off by the rich and the offshore empire based around the City of London, Wall Street, Hong Kong and Singapore – or to see the efficiency gobbled up by lawyers and accountants.

I teach double entry book-keeping and various techniques based around profit and loss, balance sheets and cash flow.  The stuff makes sense when you get the hang of it – even derivatives in basic form as insurance (though we could use other instruments).  Most  people can get enough of a hand on the basics for it to be worth teaching the complexities that underlie business information.  Business runs in cycles and there is a need to build up cash and reserves to survive hard times and innovate.  There are ways to cut costs through financial moves (e.g. repos being a cheaper way to ensure cash flow than bank borrowing).

If I can’t get much of an understanding with most students, I can get them to learn to use the systems – the spreadsheets are much like driving and maintaining a car as opposed to knowing how to build one.  The real problem is dishonesty.  Rather than variations on primitive double entry book-keeping, we have systems that look more like the two sets of books Al Capone’s accountant might keep.

Here’s an example of German government debt.  This is as close to the real situation as I can find (it’s from zerohedge somewhere).  All you need to do is track down what should count and do the sum.  Simples!    It doesn’t suit Frau Merkel to have the situation like this, but if she was CEO of a large company, trying to pass off her figures (which exclude a lot of contingent liability) would get her arrested.  She likes it listed at less than 100%.

German Gross Domestic Product (GDP):                                   $3.2 trillion

Official German Sovereign Debt:                                               $2.618 trillion

Percentage of Liabilities at the European Union:                          27%

Percentage of Liabilities at the ECB                                           18.94%

Germany’s Percentage of the ECB Debt ($4 trillion)                    $757.6 billion

German annual cost for the EU budget                                      $46.36 billion

German Guarantees for the Stabilization Funds                          $280.6 billion

German Guarantees for the Macro Financial Assistance Fund      $211.14 billion

German Target-2 Liabilities                                                     $656 billion

German Guarantee for the EIB Debt                                        $157.29 billion

Sovereign Guarantee for KFW                                                 $588 billion

Total German Sovereign Debt & Guarantees                             $5.315 trillion

Official debt to GDP Ratio                                                             81.8%

Actual German Debt to GDP Ratio                                            139.8%

Of course, I teach all my students that there are no prizes for being technically proficient in commercial or public sector statistics and plenty of cash for signing off on dud ones.  This is the immediately transferable skill!  We are now a pathologically lying society and it needs to be stopped.  It’s much worse than the example above as we are not allowed to do any stock-taking and accounts offshore cannot be accessed.  The problem has been known at least since Gresham and concerns the fact that once immoral practices are allowed they expand to become the norm.  My gaming on the sports field always increased against opposition who did it.

Our problem is umpiring (and let’s face it we can’t trust them without all the technology and public scrutiny).  We are currently wasting our productivity gains on highly inefficient finance and managerial non-jobs.  We can’t even argue properly because all the figures are fudged and we are more ideological than even the Soviets managed.

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