Budgeting at the BBC
There is just a hint of budgetary incompetence at the BBC. We are told that the BBC were not given the amount of money they had budgeted for when they renegotiated their licence fee franchise with the government last year. So yesterday they announced the best part of 2,000 potential redundancies together with a veritable host of other changes to services.
My question is: had they prepared a budget based on a licence fee that they failed to secure? Alternatively, are they just going through a significant change that would have taken place anyway? If the former, they are incompetent; if the latter, their PR abilities are incompetent.
Duncan Williamson
China and the World Bank
There is a very interesting article in The Economist for the week 13th - 19th October 2007 that caught my eye. Even though the article is mainly concerned with the economics of China's development, I think it has wider implications: both within and outside the country.
The main emphasis of the article is that China is developing in an unbalanced way. Moreover, both the World Bank and the IMF believe that such an imbalance needs to be corrected. One of the reasons for the corrections is so that China will import more goods thus getting its exports and imports more in balance with each other. That will also put the Yuan, or Rinminbi, back in balance.
One of the ways suggested for getting the Chinese Economy into balance is to stop the development of its manufacturing base and put much more effort into developing the service sector of the Economy. Finally, there is some worry that the agricultural sector of the Chinese Economy is too large so it needs to be rebalanced too.
Why is this so interesting, then? Well, taking a massive leap away from that article we can see that the West's drive to make the rest of the world more democratic is foundering in some significant areas of the world, most notably in Iraq and Afghanistan. Not only those two war zones but I know that the USA and the EU are working with a large number of countries as they atempt to drive them to greater democracy.
A significant point here is that the West's view of and drive towards democracy across the world may be misguided. Why do I think that? Simple, as there are countries, indeed regions of the world, that have never practised democracy in the way that we think we do. The implications of this are that when we suggest a new democractic route, these countries might try to comply but they find that it cannot work. On the other hand there are countries, such as Zimbabwe at the moment and Gerogia and Malawi, to take just two examples, throughout the 1980s and 1990s in which democracy was worn on the sleeves of the people in charge but for whom democracy was seen as the last thing they needed.
Back to China: whilst I am not in the least bit suggesting corruption in China or an inability to develop along Western lines, what I am suggesting is that I would look at the World Bank and IMF suggestions very carefully before I took too much notice of them. After all, China is both vast and based on a completely different economic model to the rest of the world. Changing the way that China works must be allowed to take time and who is to say that, for example, the savings/investment ratios of the UK are appropriate for China? The three working papers available to download on which this article in The Economist (see the links below) is based suggest that China needs to cut back on its manufacturing base and develop its service sector. Really and why? The UK's manufacturing sector accounts for just 15% of GDP at the moment, I think (sorry, I haven't checked for a year or so). What would be the implications for China of aspiring to that proportion and how long would it and should it take to get to it? The implications of these working papers are very significant and simply accepting them at face value would be folly: I don't think the authors of them whoever they are and whatever they think, can seriously expect us to believe that they have provided all the answers for China. I think it's lucky for China and for us that it probably doesn't need their advice!
There is, perhaps, a more serious set of questions to ask at this stage: why do the World Bank and the IMF want these changes? Do they want these changes for the benefit of China or for the benefit of the rest of us? My personal view is that it is the latter aspect that is more important for them than the former. I foresee major problems ahead and not only for China as the West gets itself into position to get China to balance its Economy along the lines that they want whether China wants or needs it or not.
Links to the working papers in the article in The Economist
Overpaid? Some say yes!
A lot of people have been saying this for years. Now they are saying it themselves. The Financial Times has just published a report on executive remuneration. Read some of what they say:
Senior executives' criticism of their peers' compensation levels could also encourage activist investors and hedge funds to target underperforming companies with highly-paid leaders at shareholder meetings.
Four out of six chief executives or company presidents polled by the NACD in July and August said the compensation of top executives was high, relative to their performance. Only 2.2% of the nearly 70 chief executives and presidents involved in the survey said compensation was too low, while a third deemed it "just right". Their views were backed up by outside directors, with more than 80% of them saying chief executives were overpaid.
...
Nearly 60 per cent of the directors polled by the NACD said the reason for excessive pay packages was the absence of objective ways to measure an executive's performance. Nearly half criticised the use of options and equity awards that reward executives when the company's share price goes up, rather than when its operations improve.
I'm a bit surprised at these results since the people saying that CEOs are overpaid comprise a lot of the people queuing up to do the job. Good for them!
Please note that this article refers to an American survey and I would GUESS that you would NOT get the same result if you asked British management the same question(s) ... let me know, though, if you disagree!
Duncan Williamson
Stealing ideas ... David Cameron are you reading this?
After that rubbish over the last week of how the government did or didn't steal policy ideas from the Tory Party, The Economist has, purely coincidentally, published a chart showing the most significant sources of innovative ideas. Employees comprise the most important source of ideas followed by business partners; customers and consultants come in at third and fourth but, surprise, surprise, perhaps, COMPETITORS are the fifth most significant source of innovative ideas.
20% of ideas come from competitors.
The source of this information comes from some research carried out by IBM in 2006 and is based on interviews with 760 CEOs and business leaders:
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Now that we all know this, I wonder if Cameron will remove his invective from his perorations.
Speaking of stealing ideas, though: hot foot from that appalling confrontation in the House of Commons, Cameron took himself off to California to meet Arnold Schwarzenegger, Governor of that State. Now, I wonder where he got that idea from? A Labour politician, perhaps?
Duncan Williamson
Cc David Cameron MP
W Hague MP
G Osborne MP
D Davis MP
Checking in
This is a simulcast: both of my blogs are publishing this short post.
I checked into my hotel in Bangkok a couple of hours or so ago and here is a top tip for you.
Because I worked for a company a few years ago whose standard hotel group was the Sheraton Group, I joined the hotel's Preferred Guest programme. I then benefitted from automatic upgrades when checking in as well as gathering points which I have used for free nights at their hotels in Park Lane and Knightsbridge in London.
Why this message then? Well, I have recently moved house and somewhere along the way I have lost my Preferred Guest card ... since I have stayed at this hotel before, they remembered me and automatically upgraded me.
That's service then!
DW
Boiling Frogs
I came across the term 'Boiling Frog Syndrome' in an article in the Economist from the other week and since I hadn't heard of it before I looked it up. This is what I found:
Ric Edelman is the inventor/originator the Boiling Frog Syndrome. ... Here is Edelman's account of the Boiling Frog Syndrome: "If you throw a frog into a pot of boiling water, he'll jump out. But if you place a frog into a pot of lukewarm water and slowly turn up the heat, it will boil to death.
It turns out, then, that I knew the syndrome but not the name. Now I know both!
So now you know how to kill a frog! If you have to, that is.
Duncan Williamson
