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Policy with a magic wand


22 member countries are influenced by extensiv...

Mediterranean, Greece (Photo credit: Wikipedia)

People go to work for all sorts of reasons. One of the most common being to earn money. Obviously, that money, among other uses, is used to earn a living.

Whoever gets things going (or think it is their mandate to get things going) where you live, has priorities including possibly, to ensure that by whatsoever available means, this cycle — of people working to earn a living — continues with relatively few disruptions, for the simple reason that when enough people are no longer able to earn a living, trouble starts.

In recessions such as the current one Britain finds itself in, unemployment is on the rise, and as more people feel the squeeze, questions begin to be asked. But are you not tired of hearing inept leaders, commentators and other sorts — who don’t appear to have solved anything in their entire lives– just repeat the same phrases, over and over again: ” Europe is in a double dip recession” , “We are in times of austerity” , “The government is not doing enough” , “We need to create growth” , “We need more jobs” ….One guy even said the world needs another war ūüėź to mop up the problems and swallow the debt??

As someone who works in an industry¬† where problems of various sorts and magnitude are encountered, solutions proposed, AND implemented on a pretty much daily basis, sometimes in an international context, its natural for my mind to subconsciously begin to think really deeply about solutions to the problems I see and hear of everyday. Also, I’ve been fortunate enough to be surrounded by an incredible team of pragmatists whose attitudes to problems is “Lets try the solution(s)”. Unfortunately, most countries do not have avenues by which policy ideas from the public can be tested, which is understandable since the logistical challenge of managing ideas from the public could be monumental. Instead, policy creation and implementation is the responsibility of scores of uninstructable advisers, fed not by anecdotal research, but instead put in gear by¬† White Papers and Reviews (which themselves can be misleading and unrepresentative).

Watching hard talk (some scary BBC program, consisting of in-depth half-hour one-on-one interviews)¬† 2 days ago , it was painful to watch a Greek Minister fail to mention the one thing that Greece probably needs most: To develop a sustainable industry that can generate a substantial profit, and give a return on investment. All well and good to press ahead with sharp austerity measures, but you just can’t say we need to cut back and expect some magic trick to clean up the rest of your mess. It doesn’t happen like that. Once you’ve done your austerity, where then will growth come from?

I would have expected him to say something like Greece needs to firstly find a market for goods or services¬† (it isn’t beyond imagination for Greece to build factories — and bribe their way to Brussels, so that Europe begins migrating its manufacturing from China to Greece, now that Chinese manufacturing has started to be expensive — and they have began boldly ripping off European brands?) Secondly, Calculate the pricing point of goods / services. No 3 If necessary convert / create some infrastructure to make goods or supply the identified market (4) Begin manufacturing (5) And get every thing that has breath to work + help with advertisement until a miracle happens. If you know anything about the rise of Asian economies, you will know that such an approach has got half a chance of success, certainly far more than just relying on Germany to bail them out, again and again.

In my post here, regarding fixing Britain’s economic woes, I briefly touched upon the notion of¬† positive transformations of countries such as Germany, Brazil and Vietnam. To me, there are a number of lessons that can be learned from these, and it doesn’t matter in what derelict state an economy finds itself in, with a number of measures, it can still make good progress. Except, it may be useful to be a little bit creative with such measures as the biggest game changer ( atleast in the case of Britain), will be when it begins making stuff it can actually sell. Not just stuff it keeps in the shop windows — only a handful of which gets sold each year, but winning on pricing competition, identifying new sources of raw materials and using every trick in the book to encourage home industry.

Its no good relying only on the BP’s, the Barclays, Landrover (they’re now Indian), Rolls Royce, BAE, Tesco, Shell, LLoyds, Glaxo and the others.¬† In any case, what percentage of their profits is re-invested into the economy and trickles to the grassroots? Are their dividends not already being paid to wealthy shareholders — individuals who are unlikely to be disproportionately affected by the present credit crisis? Indeed, its more common than not to hear these corporations embroiled in a Tax avoidance case, corruption or corporate bribery¬† or bonus scandal than anything else.

Maybe, that’s why I’m somewhat inclined to believe claims that a greater percentage of the revenues of SME’s trickles to the grassroots of an economy than is the case with corporations. Obviously, it depends on what you mean by grassroots. And by their very nature, it may be problematic making comparisons between categories of infinitely varying undertakings, but the implication is the same: the small guy, by his simplicity (less¬†bureaucracy, no middle management) is best placed to get the money to where it’s needed most, much more efficiently than the big, fat and complex guy.

So, since we are trying to get more people into work, why don’t we come up with innovative and creative ways of helping the SME that employ more people in full-time roles in proportion to their turnover?¬† For example, lets say a company employs 5 permanent staff and has a turnover of ~ ¬£175,000 (some assumptions here. For this to work, it has to be for SME’s with turnover under ¬£200K only, and must be applicable to those that have permanent staff of equal to or more than 3 people), of which the average salary is ¬£20,000. What the government could do, is match their premises rental or give a tax break in the lines of ~5% Corporation tax rate for 2 years, rising to 7% for the next 2 years, so long as (i) the company makes profit (ii) at least 40% of turnover goes to salaries and (iii) the ratio of boss’ pay to worker’s pay does not exceed 2:1. [in such a scenario, what you don’t want to happen is 4 staff earning ¬£60k, while boss keeps ¬£40k]. Simple, but creative, and come to think of it, if tied with my proposals blogged a while back here, it could be expanded to companies with turnovers of up to ¬£500K or thereabouts…

Pumpkins, photographed in Canada.

Pumpkins(Photo credit: Wikipedia)

On a different note, don’t you think it would be a good idea to encourage sustainable local food-buying cooperatives, which cut out the middlemen between producers and consumers? Surely, this is still in line with the made in Britain theme? Perhaps the Greeks could learn a thing or two about this. They have a reasonably good climate, access to a sea for irrigation. If they can begin to grow everything from grapes to pumpkins, maybe they can flog some pumpkins to the Germans?

As usual with all such things, your biggest problem is likely to be either dissent from nay sayers, cowards or lazy idlers ever fearful of testing new ideas.

Anyhow, if such measures fail, maybe we should all just go and cash mob a handful of Mykonos beaches? Or set up camp on Lesbos? Not quite Greece austerity alleviation fund, but something not too dissimilar. Surely, our collective action should at least go some way to brighten a few faces that side. But failing that, maybe its high time for the Greeks to head to Mount Olympus?

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Discussion

2 thoughts on “Policy with a magic wand

  1. you can hardly criticise Greeks for seeking to minimise taxes in both legal and illegal ways when you’ve done exactly the same, albeit sticking to the legal measures first.

    Posted by offshore bank account | May 14, 2012, 10:10 pm

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  1. Pingback: Fixing Britain’s Woes 2 « Gnstr's blog - May 19, 2012

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