Surprise! US is not overborrowed. But does it have Growth Story?

If you have even the slightest interest in living in the manner to which you have become accustomed, can I recommend you find 5 hours to watch these three videos of 12 economists talking what is happening in the US financial system and its dealings with the rest of the world?

I am just a lowly psychologist so I try to boil down economics to actionable rules of thumbs that we can use.  When you are done, I’d be interested in your take of mine.

1.  Find your growth story . . . and stick to it!

Find an industry that you enjoy, find the bit that is growing, and grow with it, wherever it takes you.

2.  Help you kids find their growth story

Invest in the things they love to do and take them on holiday to parts of the world where growth is happening.

Think abut a good trip to Brazil, Russia, China or India once in three years, rather than a time-wasting, resource-frittering holiday every year.

And if they have any inclination for languages, help them by doing their homework with them.   It may help when you talk to you grand-children who might be living in another country!

And may be include Arabic on you list of possibles.  Bang on the door of the mosque in your neighbourhood and ask them to include your children in their after-school activities?

3.  Remember that money is losing value as much as houses are losing value

Unless you have a lot of it hanging around, this is a good news story for you. Investors will want to invest in your growth story.

Don’t be desperate for their money. You have something as rare as hens’ teeth.

Bring in investors who believe in your story as strongly as they believe in returns on their capital.

And then write a tight contract for them!  This is a borrower’s market, whatever the mass media tells you.

4.  Learn the numbers and ask your MP and business leaders hard questions

The more we show that we know the numbers, the quicker they will get down and dirty with them too.

Let them watch 5 hours of videos on economic more often than we do.  That’s their job, after all. Let’s get our money’s worth!

5.  Vote with your ballot and your feet for people and firms with growth stories

Question the panic about government borrowing.

It may be different here in the UK – I wish we had a forum like these 12 economists here.  Common sense tells us, though, that we will only get out of our mess with a plan – a plan for getting out and moving along with growth stories in Brazil Russia India and China.

We don’t have to eat and drink ourselves silly to keep up. But starving ourselves and living in sack cloth won’t make us any richer either.

Government borrowing is only a problem when don’t have a plan to make businesses better over the next 5, 10, 20 years.

We want a growth story!  Can we start a fashion?  What will happen if we ask everyone you meet, what is your growth story!

Check my facts on Opportunity UK

Employment opportunities in the UK

Today, Twitterers are retweeting BBC’s report that TUC says 60 people are chasing every job in the south, and elsewhere in UK, each job is chased by 10 people.  Is this true?  And if it true, is it unusual?

I wonder if Andy at SironConsulting a leading recruitment agency would make a comment?

Talk facts not negative emotions

I’m a positive psychologist and I hail from Zimbabwe so I know a fair bit about living in an economic crisis.

  • Bad news outweighs good.  People reading the BBC report on their way to work today will need 3 times as much positive information of greater weight just to think straight!  They will need 5 times as much positive information to be creative and to find solutions to challenges of the day.  Be prepared for a rough day at work and stop to take a walk in the park, listen to the birds and admire the daffodils.  You may need it!
  • Even those of use who are good at maths find it difficult to keep track of numbers with lots of zero’s in them.  I don’t undertand why it is so difficult but generally we need to pull out pen and paper and lay out the arithmetic neatly.  Don’t assume journalists have done this.  They are as dazzled as the rest of us!
  • We need information to guide action not to encourage excitable chatter.  We need facts and figures presented, in context, in a way that supports the purpose of the reader.

I find it hard to find facts and figures about the British economy, so I am going to collect them here.  But do check my numbers.  I do know from living in Zimbabwe that we are prone to make errors when lots of zero’s are involved.  Maybe I’ll add an error from time to time to see if you are doublechecking!

And I am also going to relate the facts I find to the issue at the top of our minds: making a living joyfully in the UK!

Here are my two facts for today and my take on the BBC report.

1   We live and work in the 5th largest economy in the world

Wikipedia figures for GDP by country seem to be 2008 and are probably in USD.  In the last year, the pound has weakened and our economy will be smaller now nominal terms. We have also contracted about 1.5%.  A year ago, India was expected to overtake us in size and I imagine this has happened.

So we are probably not 5th any more.  Maybe we are tenth?  Who knows?

We are still massive by any account.

2   We have 4% of the world’s economy and 1% of the world’s population

We have a disproportionate share of the world’s production and services. Yes, we do.  We are well off.

The world’s GDP is around 50 trillion (million millions or 10^6 x 10^6).  Our GDP in the UK is between 2 to 3 trillion USD.  I’ve taken the lower figure to arrive at 4%.

The world has 6 to 7 billion people (thousand millions or 10^3 x 10^6).  In the UK, have 60 million people.  So 1% of the world live here.

We have 4 x our share of the world economy!

Of course, the USA, with GDP of 15 trillion has 30% of the world economy and a population of 300 million, 5% of the world’s population.  So they have 6x their share of the world’s economy and one-and-a-half times our already disproportionate share.  Pareto’s law in action.  A few people command a disproportion share of resources.

A share in the UK economy

Once, we have remembered that we are quite rich, then we can turn to the issue exercising the TUC – the ability of people to take part in the economy.

Our opinions on this matter provide the underlying tension in western politics and seem to go something like this.  Rich people think they should continue to be rich even if they have just lost billions through bad decisions.  People who seek to make a living through employment believe employment should always be available.

It seems a sterile debate to me.  Looking at the UK from the outside, people quarrelling in a rich economy look like governors of the workhouse in the film Oliver stuffing their faces while the boys ate gruel.

It is quite hard for someone who has lost their job, and who is shocked and frightened, to imagine they are in a psychological state similar to  someone who has lost millions or even billions.   Anyway they are in too much shock to care.

Negative emotions are overwhelming, and psychologsits are pretty confident we need 3-5 moderate positive emotions to outweigh 1 mild negative emotion.  A shock like redundancy needs heaps of positive, which is hard when you’ve just lost the social support system of work and you are short of money too.

But reality and commonsense must also kick in here.  Certainly, claim redundancy money, sign on, and do sensible things.  But consider your basic game plan too.

Why are you waiting for other people?

While you are doing sensible things, do start taking charge of your own life.  Aim to come out of this ‘recession’ not only with your house intact and some savings in the bank, but less, less, LESS, dependent on other people for opportunity.

Can you create opportunity and look for another jobs at the same time?

You must.  Otherwise you are in a bizarre position of feeling poor in a country where we control FOUR TIMES our share of the world’s economy.

There are many simple systems.  Here are 4 suggestions.

  1. Buy British corporate poet, David Whyte‘s CD, MidLife and the Great Unknown and listen to it while you commute, or as you take a walk in a park or field in the gentle spring sun.
  2. Buy What Color is Your Parachute? and do the exercises.
  3. Listen to Dr Srikumar Rao talking at Googletalk (50 min) and follow his advice.
  4. Do my “new person and new url per day” exercise.

Absolutely commit yourself to taking charge of your life and join in unashamed abandon a chase to catch up with the US!

We would like 6 times our share of the world’s economy too!

Not for the sake of gluttony but because it is fun to be innovative and productive and when we trade fairly, people in other countries benefit too.

I would love to hear how you take charge of your life.

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3 rules for beating the recession!

Are we making the recession worse?

On Friday, official statistics confirmed what many have us have known for a while.  The UK is in recession.

What the government statisticians cannot tell us, is how long the recession will last, or how deep and painful it will be.

The extent and depth of our economic pain depends on us: on what we do, and on what we are able to persuade other people to do.

Many people in Britain believe that we are making the recession worse by reacting to all the news in the press. To stay on the safe side, we cut back our expenditure. We don’t spend our pounds, and the people we used to trade with are now short. They have to cut back, and by-and-by, the recession happens, and comes rounds to reduce our business in real terms. Now we genuinely don’t have the pounds to spend, and the spiral continues depressingly downwards.

But what else can we do?

It’s a matter of psychology. If we think of the economy as a soccer game (football to British readers), we are in defence. We have moved back into our own half, and we are defending our goal. Our defenders become very important, and our strikers are the supporting cast.

Rule One, in bad times, is defend the goal and to make very controlled passes. In business terms, we defend the bottom line, we make sure every process is profitable, and we are careful not to provide shoddy service. The opposition will capitalise in a flash on any inability to satisfy our customers.

Now if we continue thinking of the economy as a soccer game, we are in a bizarre position, where both sides have retreated into their half to defend their goal. Picture that for a moment – an empty centre field.

If we continue like this, we’ll have no game at all. That is we will slide into a depression, where the economy, or game, evaporates in front of our eyes.

We need to play against the other side to have a game!  We do to do business to have an economy.

Rule Two, is keep the game going. Keep the forwards looking forward. Dominate the mid-field, and take the game to the opposition. The difference between this, and the game in good times, is simply that our defenders are defending, assiduously. They are not going to move far up field. They are going to do a good job, and be seen and heard to do a good job, so that the forwards can move forward in confidence and do their job!

In a large business, these are the questions we ask.

  • Who is on defence? And are they confident they can defend our goal? When will they need the forwards to come back and help them? How will they know in good time, when to call us back, and what will be the signal?
  • What is our attack game with fewer people at the front? Where are the weaknesses in the other defence? After all they are concentrating their defence too!  What targets will we go after, clinically and surgically? What are our plans to move rapidly into defence when we are called back?
  • And how will we bring both these plans together to dominate the midfield?

In my youth, I was a basketball player. My high school were long term champions. When I went off to university, my university was the opposite. We did well not to be relegated! Playing in such different teams taught me a key element of strategy.

In my high school days, when we were under pressure, as the better team, we slowed the game down. With better ball skills and better training, it paid us to slow the game down, be more measured, and use set pieces. Our total score was lower, but the other side had to work harder to get possession, and were unable to rack up a better score.

At university, playing in a scrappy team in the city league, we took the opposite approach. When we played the very good sides, we took advantage of our youth and played a very, very fast game. When we got hold of the ball, we moved like lightning to score before the other, better side, could get the ball back. And when they had the ball, we hustled and hassled until they made a mistake. If they did not understand this basic rule in strategy, which they often didn’t, they gave us sufficient opportunities to win, or make a very respectable showing.

Rule Three: Though basketball and soccer are very different games, this is the basic rule. Play the game depending on your relative strength.

The big guys will try to slow the game down. They are the guys on defence! The weaker side needs to be quick and agile, but of course, not so dumb as to leave their goal undefended when they have the ball. The strong side may be playing slowly on purpose, but it will move quickly to capitalise on our errors!

The game will be ow scoring, but it will be a satisfying game. We must just remember to get into the midfield and play!

So how do we apply these rules if we are employees?

Do remember that we are not the big strong team!  A lot of advice on the internet is the advice that the big corporations need to follow. We don’t need to slow the game down.  They do. And they will try to convince you to slow down, because it gives them an advantage.

Don’t! You are the young and vigorous team! Play a fast game but also be focused. Name your defence, and keep you goal defended. Get out and hustle, and take your breaks. You have the big guys in their own half. They will sit there for the whole recession hoping for a 0-0 draw. As long as you aren’t rash, you have nothing to lose, and you win on a 1-0 scoreline!

Come with me!

Let’s make a plan to play this game! Why are we camped around our goal when the other team is 100 yards away camped around their’s?

Let’s send out some scouts!  Tell me what you find out! And we will stand together on the winner’s podium!

UPDATE: For an HR Managers perspective on the Recession, I have written a summary on a new post.

Where will you be when the recession ends?

Where are you going to be when the recession ends? And when will it end?daffiodils-by-john-morgan-via-flickr

Out-and-about the parks and landscapes of the internet, three broad scenarios are being discussed:

  • Nothing has changed. This is a temporary downturn. Be careful with your money. Try to avoid being laid off. We’ll be back to normal in 2010, or soon thereafter.
  • The end is nigh. Capitalism is over. And if capitalism is not over, we are going to have a Depression. So go down to the video store to get out some movies on the Great Depression because that is were we are headed.
  • In recent years, we have been spending beyond our means and we need to rethink the basis of our wealth and political power. Cutting back is not the issue. Re-jigging the economy is the issue so that we can emerge ‘re-conditioned’ for the next 30-40 years.

Which camp do you fall into? This is my thinking.

Rough summary of our economic position

The USA has an economy around 5 times the size of the UK’s, and and they have 5 times the population. So we differ in size but not so much in wealth.

China and India have either overtaken the UK last year, or are overtaking us this year in the size of their economy, but they have around 15-17 times our population (each), or over 3 to 4 times the US population.

The US is well ahead of everyone else by a long margin. To stay ahead, though, whether there was a financial crisis or not, they have to do something about their economy.

Obama has been spelling out the issues. The US economy is too dependent on oil. Too many people are reliant on ‘old’ industries, which can be run more efficiently in China and India who also have lower input costs. The numbers of well-educated Chinese and Indian graduates far exceeds the numbers of comparable US graduates.

The issues are not dissimilar in the UK.

My sense of what is important

I get so annoyed to see people being advised to ‘hang on to jobs’ in industries which are in their twilight years. It’s true that as parents we may feel that we have to hang on to whatever income we have, just as as immigrants, for example, run corner shops and drive taxis to give their children a good start in life. But to be too defensive, is not wise.

Since I arrived in the UK, almost one and a half years ago, I’ve been amazed that so many people want to leave. And almost all the young people do.

This is ‘discourse’ to some extent. People talk about going to New Zealand as a way of getting away from something that irritates them. They don’t mean to go, but the idea that they could, relieves them of the trouble of sorting out what bothers them.

When young people say fiercely, “I am going to get away from here”, this too is ‘discourse’, and in part, a currently fashionable way of expressing ambition and determination.

My sense of what we should be giving priority

But, what if we treated the young people of the UK differently?

What if we celebrated their achievements more? What if paid more attention to their dreams? What if we put their dreams more clearly at the top of our national agenda?

Would that be molly-coddlying them? Would that sap their ambition and drive? I don’t think so. I think that knowing we value their dreams as much as their achievements would allow them to pursue their dreams with more confidence and to waste less energy on worrying about failure.

David Whyte, British corporate poet, talks of the dreadful alienation that adolescents feel when they realise that their parents are burdened with life. If we are not living joyously in expectation of where the economy is going, how do we expect our children to?

Come with me

Which industry do you believe is fit for the teen years of this century?

What is catching your eye?

How big will this industry be?

What are its opportunities?

Why does it fascinate you?

I would like to know your dreams.

Which industries do you feel are like daffodil bulbs,  and like to be planted in a good frost, so they can burst into exuberant life at the first hint of spring?

P.S. Thanks to John-Morgan for this wonderful picture of daffodils via Flickr

UPDATE: For an HR Managers perspective on the Recession, I have written a summary on a new post.

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