Category Archives: Financial Sector

The role of the financial sector and its management

Economy Life Cycles

In 1914 UK owned 45% of the world’s foreign direct investment. America’s peaked at 50% in 1967, but is now less than half that, with the UK nowhere. Today China has just 6% but growing fast. America’s manufacturing productivity gains were in decline since 1970s (2.8% pa), well behind Germany (5.4%) and Japan (8.2%). American R&D expenditures in absolute decline. In relative terms the America’s real economy is following UK into absolute decline.

In a forthcoming book – ‘The Road to Co-operation: Escaping the Bottom Line’ – these various economies are identified as on different positions of the economy life cycle: UK and US being post-industrial, Japan and Germany, industrial, and China and India, industrialising. But what does post-industrial mean?

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Osborne’s Wasted Opportunity

In the context of UK’s indebtedness, it might seem that any morsels in the new budget to benefit the real economy, for start-ups, small businesses, for technology and innovation, should be thankfully received. But the real opportunity, the one the now toothless Vince Cable made so much noise about, has been totally ignored. For the financial sector, it really is business as usual. Its rape of the real economy can continue for another year at least without fear of interference.
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Co-ownership Financing Growth

As announced this week, the John Lewis partnership is raising £50m to finance further expansion by issuing a savings bond to its ‘partners’ and customers. If it succeeds it would make a lot of expensive City activity seem rather unnecessary, and its success is not seriously in doubt.  The bond will return  4.5% gross plus 2% in John Lewis vouchers which puts it slightly ahead of the field in terms of returns.  City “experts” seem worried that this sort of thing might catch on. They advise investors to proceed with caution because the issue is not covered by the Financial Services Compensation Scheme.  So, if John Lewis were to go bust over the next five years, investors might lose their money.

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Restoring Enterprise by Burying Dogma

The almost universal acceptance of neoclassical economic theory, at least in Britain and the United States, has resulted in much destruction of professional management practice. The so simplistic dogma leads to a set of mindless clichés which have not only severely damaged enterprise management practice, but, also the wider management of the real economy, as has been seen over the past two years.

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