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With the world as it is, strong leadership is easier said than done

Posted on 21 September 2011 | 8:09am

To a posh Knightsbridge hotel last night, and the launch of the Harvard Business Review in London, which they chose to celebrate with a discussion between me and BT chairman Sir Michael Rake. Nice guy, and very smart.

At one point the moderator, the splendidly named Adi Ignatius, chastised us gently for ‘agreeing too much’.

In fact, we disagreed a lot about education (he was very down on many State schools, and ‘political interference’ in the system; I said the UK’s historic problem was the elite’s devotion to private schools at the expense of the rest, and also that it was impossible to divorce politics from education). We disagreed a fair bit about Europe and the Euro (he was still passionately of the view the euro was a good thing; I said attendance at too many EU summits had made me feel this was a political project posing as an economic one, that the rich countries bent the rules for themselves so shouldn’t be surprised to see the poorer ones following their lead. He was sure the euro would survive. I said volatility was such nothing could be taken for granted).

We agreed about the need for political leadership to steer the world from the current mess, but disagreed about how likely or straightforward that might be. There may be many upsides to globalisation, but I’m not sure the diminution of the power of the individual national leader is one of them.

Barack Obama (cliche alert ‘the most powerful man in the world’) is trying to lead, but the US public have delivered a near impossible political situation, and the right are using it to cause as much trouble as they can, leaving him feeling far from potent. In Germany, because of their history the system is effectively designed to weaken leadership, and Angela Merkel is somewhat between rocks and hard places in the choices she faces. France elected Nicolas Sarkozy on a platform of reform, and the same people who elected him have led the fight to stop him doing what he said he would. And in the UK we have a coalition, one part of which now seems to see its job as curbing the real instincts (which is the place leadership often lies) of the other. Added to which, even with such worrying reports as that which came from the IMF yesterday, and even with the eurozone appearing to lurch from one patched up crise to another, the UK’s economic debate still seems curiously trapped behind the prism of the election, (deficit reduction, pace of) not the huge developments for the worse since.

So yes we need political leadership, but it is not easy for the political leaders. Where Sir Michael and I were in agreement was in saying that both business and the public are aware through their own lives of how tough the situation is, and ready to listen to the leaders who level with them on how bad things are, how bad they may get, and set out a clear strategy to meet clear long-term objectives. We felt none of the current crop of world leaders were doing that effectively.

As Stefan Stern (ex FT, now with Edelman) said, there were some very clever people in the audience, and they seemed to nod along when we both suggested the UK government’s focus on deficit reduction – as much the overhang from an electoral strategy as an economic one for today’s times – was insufficient in terms of setting out where they were trying to take the country. There has to be a strategy for growth, for without it, and without it being clear and credible, confidence is not going to return.

Meanwhile Mr Ignatius disclosed the findings of a Harvard Business Review survey of top business leaders and their assessments of the near future. It made for grim reading, and underlined just how easy it is to say we need strong, clear leadership – one of the findings of the survey – and just how hard it is to provide it right now.

  • Mark Wright

    Democracy is hopelessly inefficient in dealing with worldwide crises such as these. All leaders are shackled by their having gain votes at some point in the not too distant future. This current crisis will take years to sort out. How on earth will this be done when, at best, various countries have no more than 4 years before they have to explain to their electorate why the austerity measures have reduced living standards, employment levels etc. Our political leaders are simply in no electoral position to be bold.

    I therefore propose holding off all national elections until 2020 in order to give the political leaders the space needed to make the decisions necessary to tackle this crisis in a decisive fashion. Without the shackles of their various electorate they will free to make decisions based on their merit as opposed to what is electorally expedient.

    I’m joking of course.

    But at a time when strength is needed the positions of the world’s leaders could not be any weaker.

  • Olli Issakainen

    Strong leadership is a bit difficult in a world where banks, central bankers, credit rating agencies and big corporations have the power.
    Messrs Cameron and Osborne are just sitting on the sidelines and waiting central banks and markets to correct things.
    They have no plan for growth because their ideology says that the government should only guarantee low interest rates and low inflation, and leave the rest to the markets.
    I know it is of no use to talk sense to an ideological chancellor who will not change course no matter what the facts or IMF say.
    But for the rest of us, here is the truth.
    Britain does not have a debt problem.
    The UK public sector net debt was £940.1bn, or 61.4% in July 2011.
    As all economists know, debt becomes a problem for governments at 80-100% of GDP, at 90% for companies and at 85% for households.
    It, of course, matters whether the borrowed money is used for investment or current spending. Labour´s spending before the financial crisis was on capital investment.
    The credit-rates usually downgrade when the debt ratio reaches 100%.
    The Maastricht Treaty debt reference level is 60% of GDP. Under the current plans Britain´s debt will peak at 70% of GDP, under Labour´s plan it would have peaked at 80% of GDP.
    Britain can borrow money at low cost. The average bond maturity (time to repay) is long: 14 years.
    Much of the debt is owned by Britons (including the Bank of England), so debt is in effect an asset.
    Britain has its own currency and can print money. Countries can only go bankrupt if they have incurred debts in other currencies.
    So Mr Osborne either does not understand this, or is deliberately misleading the British public.
    Britain´s problem is lack of growth.
    According to IMF Britain will grow only 1.1% this year, and only 1.6% in 2012 (the Treasury believes 2.5%).
    Premature abandonment of Keynesian stimulus and return to neoliberal orthodoxy of balanced budgets and deregulation has led to a lackluster performance of the British economy.
    It is ridiculous to blame one-off events like weather for the underlying weakness in British economy, as the one-off events always cancel each other.
    It is the Hayekian austerity of Mr Osborne that has killed the recovery and business and consumer confidence.
    We are now heading for a downward spiral due to lack of demand.
    Mr Osborne believes in private sector spontaneously creating recovery from public sector redundancy policy.
    Latest unemployment figures (2.51m) do not support this view.
    A change in economic policy that does not work would not undermine credibility and rise interest rates.
    Mr Osborne´s own plan does not have any credibility because it has no plan for growth. Without growth there will be recession.
    Britain´s consumers and job markets are already in recession. And Britain´s economy is technically in depression, as the output is still well below the levels before the crash.
    Mr Osborne´s cuts are ideological because they will not be reversed after the books have been balanced.
    Growth is the best way to reduce the deficit, not drastic cuts. You only have to look to Europe to see this.
    Growth alone would have halved the deficit without any cuts or tax rises. Strong growth can also wipe out big structural deficits.
    And there are alternatives to cuts: a levy on land values (£50bn), transaction tax on banks and tackling tax avoidance and evasion.
    Mr Osborne should listen to Paul Krugman and Joseph Stiglitz.
    Basically the debate on the economy is between Keynesian stimulus and Hayekian austerity.
    In 2009 George Osborne said that printing money is the last resort of a desperate government. Now he himself wants more quantitative easing from the BoE.
    What logical conclusion can we draw from this..?
    IFS says that Mr Osborne´s plan will cause 10% drop in family living standards.
    All in all, Mr Osborne got the recession wrong, and now he is getting the recovery wrong.
    The reason why he will not change his policy is ideological. He wants to destroy the welfare state. He wants smaller state.
    But his austerity programme will fail. It is failing already. Britain is going to pay heavy social and economic price for Mr Osborne´s experiment.
    Instead of trying to balance the budget, Mr Osborne should balance the economy!

  • Richard McCracken

    I was there.  Thanks for a very entertaining and wide ranging discussion.  The old “too many people studying the wrong subjects” piece of conventional wisdom came up as it always does in the education debate.  Well, let’s hear it for the arts and humanities.  If more investors had paid heed to Volpone and The Alchemist then maybe they wouldn’t have believed rates that were too good to believe – and a working knowledge of the South Sea Bubble might have had an impact on dot.com 

  • Strong, intelligent leaderships come in situations where a wise leader has a powerful mandate.

    At present such mandates only tend to occur within the life a parliament in extreme situations where the public mood is very clear.

    Mass online discussion could change that.  If properly managed it can create structures within which interested parties can present and develop their views with other interested parties.  The multiple interactions which take place allow the insights of individuals to widen and deepen much more rapidly than happens during traditional forms of consultation.  If those in positions of authority take an active part in the process their level of insight and wisdom will also deepen.

    And,, of course, the reach of discussion forums is much wider than that of current consultations. 

    Participants need to be properly identified and guided in how to interact.  The emerging points from discussions need to be mapped.

    But if we properly harness this emerging possibility, fair, effective and properly consulted mandates can be created WITHIN a leadership term in non-extreme circumstances.

    Some of the discussions from which these insights have emerged are in the ‘Future of Government’ discussion group on Linkedin.com.

  • Bt profits rose 71%, they paid a high dividend of 7% yet still increased prices by 5%
    This, unfortunately, does not sound like an understanding business.
    They continue to hemorrage jobs, most especially amongst their poorest paid workers.
    They truly retain immense power and those at the top of the heap rejoice in immense security and bulwark against the economic storm.
    All animals are equal, some animals are more equal than others.
    We are all in this together, just that some of us are more into it than others. Be that encroaching improverishment or snouts in the trough.

  • HEALTH WARNING: The following post contains, a “…usual somewhat offensive line of introduction!”  Please do not read further if you are not of strong disposition.

    Mr. Issakainen,
    Whenever I read one of your entries in Goebbels’ blog, which are invariably long, I’m reminded of the sheep in George Orwell’s Animal Farm. Specifically, after the pigs take over the running of the farm, they teach the sheep to bleat, “Four legs good, Two legs bad.” And after that, the sheep are used at opportune moments to bleat the refrain to quell any disquiet among the other animals.

    Similarly, whatever the topic that Goebbels writes a blog about, it seems that you are ready with your refrain. In the beginning, I thought it was funny. Now it’s just like, “Four legs good, Two legs bad”. Except that people who know a bit about economics, find your refrain just tiresome. Sometimes, I do wonder if you are a real person or as mythical as your red-suited, white-bearded countryman from far north Finland.

    The problem with Dr. Keynes’ theory is that it was suitable for the economy of the 1930s. That’s the one where all manufacturing was done domestically, when crude oil did not play such an important part as it does today & the State owned all the big enterprises, British Rail, British Gas, etc. Also, don’t forget that Britain had a ready-made market for export, called the British Empire.
    And the other problem with Dr. Keynes treatise is that though it tells us what to do in a bust/recession, it does not tell us what to do during boom/growth. Perhaps this is why TB/GB thought spending money hand over fist was a brilliant idea. Which is why we are where we are.

    Today, Britain hardly manufactures anything that the rest of the world wants. And what Britain does export is small, both in terms of size of the market & the number of people employed. Add to that the fact that there are practically no State-owned enterprises and what are we left with?

    A huge, worldwide macro economic problem that appears to be insoluble. All that can be done is to wait for excess supply to “drain off” & hope that demand will pick up. Which is easier said than done.

  • Libdem

    Beware the ides of march……they’re coming to get you……

    Good post Steve.

  • ambrosian

    The predominantly male governing elite are obsessed with the concept of ‘strong leadership’ but many of us amongst the presumably weak and passive ‘led’ are sick of this Neanderthal model of politics.
    Interesting that you write this in the season of party conferences, where all three leaders will do their messianic turn before the adoring faithful. Today we’ve had Clegg doing the long Obama-style pauses and the lip-biting between phrases, though I had to switch off after five minutes as I was feeling nauseous. One of the principal aims of reading meaningless bullshit from an autocue to choreographed applause is to convince the country that you are a ‘strong leader.’ But what people are crying out for today is honesty, empathy, evidence-based policies and, dare I say it, sensitivity, not these alpha males (and occasionally females) with their Leader of the Gang, King of the Jungle preening, posturing, egotistical sense of entitlement, even perhaps ‘destiny’ to lead the rest of us.

    One of the problems for democracies is that those who achieve positions of power are at best profoundly untypical of the populations they govern and at worst are almost pathologically self-deluded, a pathology that often becomes more pronounced the longer they are in power.

    In Britain the problem is exacerbated by the existence of a class and education based political elite with one of the avowed aims of the public schools since the 19th century being to groom the children of the wealthy for positions of leadership.

    Another problem is our adversarial Parliamentary system which reduces debate to a sporting contest between the strong and the weak. Sometimes this becomes explicit as in Blair taunting Major with “Weak, weak, weak!” or Thatcher shouting at the Labour benches (in Lincolnshire dialect) “Frit, frit, frit!”

    Most worryingly, history shows that in critical times like these, one of the most potentially dangerous responses is the cry for a strong leader.

  • must you? really?
    supercilious, self-serving and sloppy slack thought.
    unnecessary – adding nothing of worth.
    go hence and opine elsewhere.

  • Gilliebc

    Hope you’ve got your tin hat ready to hand Steve Cooke!

    I think it’s a bit harsh, let alone completely inaccurate to compare Olli’s posts to watever it was in Animal Farm.  If you look back through the blogs you will find your assertion just isn’t true, by any stretch of the imagination.

    As for the remainder of your post, I think you make one or two good points!  But I’m no economist.

  • MicheleB

    Not all production needs to be about exports and not all exports need to be about hard goods. 

    We had huge building and infrastructure projects for schools about to take place.  In one fell swoop they were cancelled … I daresay Cameron felt butch for once, implementing Mummy Thatcherite swingeing meanness and ideological prejudice on other people’s kids …… jusssss like that …. chuckle.

  • ambrosian

    “Today, Britain hardly manufactures anything that the rest of the world wants.”

    Today Britain is at No 7 in the list of the world’s top ten manufacturing nations. Lower than we used to be but it hardly suggests that we manufacture nothing that anyone wants.

    As for just hoping that demand will pick up, this government has smothered consumer demand and destroyed consumer confidence. That’s why growth has stalled, unemployment has rocketed, tax receipts have fallen, benefit expenditure has increased and, instead of the deficit reducing, government borrowing has just shot up to record levels. You don’t have to be an economist or to engage in arguments about the relevance of Keynes to see that this is economic lunacy.

  • Dave Simons

    If we can dispense with Goebbels, Santa Claus and Orwell’s pigs and sheep, there are some interesting and very debatable points being made. However I’m sure you know that the State did not own all the big enterprises in the 1930s – you mean after the war in the latter 1940s. What did happen during the long boom of the 1950s and early 1960s was that the Keynesian solution, applied by both Conservative and Labour governments, led to investment in schools, health service, housing, vocational training, infrastructure, etc. There was almost full employment – if you wanted a job you asked and usually got it, not necessarily the job of your dreams but a job nevertheless. When Labour lost the election in June 1970 one of the complaints against it was ‘600,000 unemployed’. Post-Thatcher it sounds like utopia.
    If you ‘know a bit about economics’, as I’ve no doubt you do, you’ll know that ‘we are where we are’, not because of Labour profligacy but because of the kind of uncontrolled casino banking which I understand Vince Cable and others are currently claiming that they want to end. Or maybe you follow George Osborne’s mantra about the deficit left by Labour, which sounds like another variation of ‘Four legs, good, two legs, bad’?

  • Libdem

    Read here http://www.economist.com/blogs/buttonwood/2011/09/public-sector-deficits
    It gives some detail about the actual figures rather than the assumptions found in the comments.

  • Gilliebc

    That’s a really good, well observed spot-on post, if I may say so ambrosian.  One with which I completely agree 100%

  • Dave Simons

    Once again I agree with everything you say. We had a few strong leaders during the last century – Hitler, Stalin, Franco, Mussolini, and, some would say, Thatcher. It does matter what the leaders stand for, what they are doing and where they are going.Unfortunately people forget the content and fall for the form, and, yes, that is potentially dangerous.

  • Dave Simons

    I seem to remember that one of your previous posts was one word – ‘rubbish’. I concluded that argument is not one of your strong points. But democracy is based on argument. I therefore suggest that you are fundamentally antipathetical to democracy and should remove the second syllable from your adopted name. That would leave ‘Lib’, but let’s leave that problem for the time being, eh?

  • ambrosian

    My thanks to you and Gilliebc for your agreement. I thought it would provoke the opposite response. I was also mindful that I was posting it on the blog of someone regarded as epitomising the alpha male although most of us realise that’s a media caricature (well, partly!).

    Thatcher is an interesting case. Everything I have read in biographies and diaries has convinced me that she is the most mis-represented leader of modern times and was actually quite a weak leader. Simon Jenkins’ Thatcher and Sons is a particularly insightful and devastating critique of Thatcher from a right of centre author. But the Thatcher myth is now too entrenched to be disturbed by mere facts.

    In contrast, Attlee appeared a nondescript, mousey, ineffectual man and was famously taciturn. He wouldn’t stand a chance of being elected in today’s political environment. Yet he is regarded by many political historians as the greatest PM of the last century.

    In the long term, the combination of politics as image and showbiz with the technological opportunities for direct democracy raises the possibility of a truly frightening dystopia. But by then, for the first time in my life, I’ll have “joined the majority”.

  • MicheleB

    I suppose the reference to Goebbels must be intended to offend AC?

    It shows an utter lack of care about how it might offend Jewish readers but I doubt you have the ability to understand the point, you’re so intent on being hurtful that you’re too thick to be careful with it.

    Don’t try surgery, dope.

  • Matt

    I saw the other day that 60% of our economic output is from the services sector.  Since services depend on a higher level of education and do not rely on lower cost manual labour, they are surely preferable to manufacturing industries in a first world country.

  • Matt

    Alastair I love your writing but PLEASE don’t start using the awful cliche “elites”, imported from the hideously divisive and oppositional US political discourse, especially of the right.  By way of comparison, it is a word that Toby Young seems to be energetically attempting to introduce to this country.

    ‘Elite’ is used to mean anyone from media executives to billionaires to rich urbanites – and as such is meaningless.  You might as well just say ‘my enemies’.

  • Janiete

    Sorry to digress Dave but your comment about the LIbDems losing the ‘Dem’ became much clearer for me after Clegg’s speech yesterday. Really obvious he has abandoned the Social Democratic wing of his party and wants to re-establish an old style Liberal identity to his party. Makes it clear why they chose to cohabit with the Tories and can no longer be classified as  progressive left in political terms.

    Pretty obvious also that many LibDems haven’t realised it yet.

  • Libdem

    Wrong again Dave, it was two words – ‘absolute rubbish’. I could conclude that reading is not one of your strong points but I’ll refrain and ask you a simple question. Do you mean ‘antithetical’? If you do then I could conclude that writing isn’t your thing either.
    The name calling I shall leave to you as you seem to be rather adept at it.

  • Ehtch

    Agree with all your spouting again Alastair, markets are falling like a stone again today – soon that people would realise,in certain places, capitalism is due a funeral, and soon too, some of us, ahem!, could say.

    And by the way, I am posting from my old friends PC up the road from me,Taffy X, since my hard disk drive on my brilliant friend of a computer, after nine years of excellent service, gave up the ghost. No flowers please for my hard disk, donations to integrated circuits lost in action from past online times.

    All the best to all, I will get down to PC World and sort out my online situation, when I get around to it.

  • Gilliebc

    He Steve Cooke, previously known as Scooke7, has a long history of referingto AC as Goebbels.  It always used to be Herr Goebbals, but I see he’s now dropped the Herr.  I’ve taken the issue of this grossly offensive and wildly inaccurate form of address up with Scooke on a couple of previous occasions, as have other commenters also.

    However, I subsequently came to the conclusion that if it doesn’t bother AC unduly, who I’m 99% sure moderates his own site, which is understandable and perfectly fair because it is his site.  Then I shouldn’t let it bother me.

    If Scooke is silly enough to alienate a large majority of the readers and contributors to this site, with his opening form of address to AC, then he can’t really expect to have the rest of his post/s taken seriously enough to discuss properly.  In other words he is simply shooting himself in the foot every time he begins his posts in that uncalled for manner.

    So Scooke, if you read this I hope it gives you food for thought!

  • hi Ehtch.
    lovely that you are here, as ever.

    http://www.frooly.com/product/1274/a-round-tuit-from-sheffield?campaign=googleProducts

    for example…

  • MicheleB

    Good info 🙂  I can be thick myself at times (especially when being unable to resist responding to almost everything as if it’s rude not to  ….. ooooh Vicar) but there are some things that should really stay on a very high and out of reach shelf when someone is needing a cheap insult.

    There are some splendid clever put downs in this cache that Scooke could only try to match. 

    Have a good weekend all !

  • GJ

    We are being entertained to a smoke and mirrors show by the present government. No amount of photo opportunities in Tripoli can distract us from the economic storm we are engulfed in, and heading straight into the heart of; thanks to the reversal of New Labour’s growth strategy.  

    Ideology, and blind faith in an untested economic stategy, are the driving force behind Osbourne’s policies, and pride seems to the enemy of common sense, which is preventing a reversal, which would avoid failure. If Cameron can’t see it, then people like Ken Clarke must, and should act before we reach the point of no return. If the Chancellor won’t change direction, then he should be removed from office, and given a junior position where he belongs.

  • Dave Simons

    No I mean ‘antipathetical’, which the Concise Oxford Dictionary defines as ‘Opposed in nature or disposition (to)’. Omission of the word ‘absolute’ has nothing to do with reading, more to do with memory. I’ll confess I don’t make a special effort to memorise your contributions – they’re not worth it.

  • Gilliebc

    Ehtch – There you are!

    Some of us had noticed your absence and speculated on several reasons that might have explained it.  But, equipment failure hadn’t crossed my mind !

    I guess even the hardest of hard disks can only take so much.  So after nine years of valiant service, I hope you will despatch him/her/it with full military honours!  Or, at the very least a nice bag before binning 🙂

  • Libdem

    Why is it that each pseudo conversation with you results in an insult from you? You are fundamentally antithetical to any opinion not in line with your own thinking.
    You revel in being sesquipedalian which you will remember is frequently associated with those of an anal-retentive character who always have to be right.

  • Dave Simons

    Still having a problem with ‘antithetical’ aren’t you mate? There is ‘thesis’ and there is ‘antithesis’ – every dialectician knows that. Try ‘antipathetical’ – I’m convinced it’s the word you’re groping for.
    ‘Sesquipedalian’? Is that someone whose bike has only one and a half pedals? Do enlighten me.
    ‘Anal-retentive’? I should think we would all prefer to retain that part of our anatomy, but maybe you find yours dispensable? Maybe you should give it a chance.

  • Libdem

    Thanks Dave, you’ve just proved my point.

  • Ehtch

    Thanks both Gillebec and Duncan P-m, but a Sheffield round ‘tuit’ Duncan? I want one of them, yes, whatever it is, sounds interesting.

    And by the way, got my arse down to the local pc world eventually, got a spanking new desktop computer, and a top drawer broadband router, and now I am flying, online. It was a stressful Saturday afternoon, growing new grey hairs and spouting tantrums, when I realised, after indian phonecalls, my old router couldn’t cope with Windows 7. Another quick trip to pc world for a new supa-speedy one started to sort it, and more indian phonecalls I had to made. But the final one to them with talktalk isp was excellent, and here I am, back in the land of the living.

    Yes, Windows 7 – I feel as if I have travelled several generations into the future from Microsoft XL, Doctor Who like….

  • Dave Simons

    My original point, based on your contributions, was that argument is obviously not one of your strong points and that therefore you are antipathetical (repeat – ANTIPATHETICAL) to democracy, which is based on argument. Quite simply you don’t like being answered back. You’ve proceeded to construct a personality which is nothing more or less than your own reflection, and you’ve then projected it onto me. I have demonstrated on previous posts that I am quite open to ‘any opinion not in line with my own’ and I wouldn’t see much point in reading this blog if that wasn’t the case. I make no further comment but let the last few posts be their own testimony.By all means have the last word, but, to return to my original point, don’t sully the LibDems (a political party with which I have a few sympathies but not many) with your adopted name.