The Public Trust Partnership

GDP growth - the big picture

Official figures showed gross domestic product rose a little more in the fourth quarter of last year rather than 0.1% estimated last month.The upward revision for the fourth quarter was better than revised City forecasts.

The Office for National Statistics said output grew 0.3 per cent in the fourth quarter, not the 0.1 per cent reported in the preliminary estimate. However, gross domestic product growth in the third quarter was weaker than estimates had suggested. The UK economy contracted 5 per cent in 2009, not 4.8 per cent as previously calculated.

The service sector, which accounts for three-quarters of output and includes City firms as well as hotels and restaurants, grew by 0.5% in the fourth quarter, five times faster than previously reported.

Output from industry was lifted from 0.1% to 0.4% with manufacturing registering growth of 0.8% — twice as fast as previously thought.

Household spending rose by 0.4% over the quarter in a sign that record low interest rates and the temporary cut in VAT, which has now been reversed, worked through the economy

Mervyn King, governor of the Bank of England, reinforced his concerns about the UK and global recovery on 23 February, indicating the Bank would resume its purchases of assets if spending and the inflation outlook remained weak.

Mr King was asked at the House of Commons Treasury Select Committee whether more quantitative easing - creating money to buy assets - would be needed, Mr King said: "It may be. We'll have to see how things pan out. My particular concerns at present derive from the state of the world economy."

The Bank published its quarterly inflation report, was of concern from the UK's need to secure growth from investment and net exports rather than household and government consumption.

"Recovery in our largest export market - the euro area - appears to have stalled," he told MPs in his opening remarks.

"To maintain levels of economic activity around the world, high-savings countries must expand their domestic demand while low-savings countries are reducing their net borrowing from abroad. At present, there is little evidence that this is taking place," Mr King said.

So are we in line for a dip or listening to some of my business colleagues a couple of Vs as we lead up to the election in the UK.

Political Economy - we must all play our part

Planning on how to grow an economy should be exciting for leaders in business and politics. It should not be a chore or a mundane incidental piece of thinking but should be shared and a concern of the nation. Wales can extend the capacity for growth but only if it focuses on business growth. I was invited to speak at the Plaid Cymru conference this week.Plaid Cymru through Ieuan Wyn Jones the Deputy First Minister holds the economic portfolio.This is a critical position as Wales needs to increase its competitive position. A conversation was held with business leaders.

I confirmed that I did not want to go back to the days of 1976 when the the Welsh Development Agency began operation nor indeed 2006 pre recession.Nor indeed 1936 when the Government intervened to create the Treforest Industrial Estate. But Government intervention is still important.

The 21^st century is an extraordinary time as we move through a period of opportunity but we can move into the mindset of darkness which could easily pervade our inner selves, if we let it.

 

The people of Wales will only create opportunities by performing and not complaining.

But we should not be choosing between dogmatists who believe they can impose final solutions on creative talent and “light hearted illiterates” who despise knowledge and think of only giving what the public want .This is no choice at all to creating an atmosphere for a new society in Wales.

 

The policy makers we need are those who will constantly think of human society and corporations as a living thing of infinite variety, which is not to be chained to political rhetoric or tied  to their systems but helped to resist the bad and realise the good that is in it that can be promoted in us.

 

The internet shapes opinion and knowledge is the key and this is obtained from deliberation. Who is paid to do this? Plato in his “Republic” said that kings should be philosophers and philosophers kings. This might be difficult for those in public life today. Public men and women may not be philosophers but they must see their roles as adding a real value to the State and not be deluded that they can create or really have a great effect on shaping wealth.Private and public sectors must work together. Political economy is  important but it must know its limits and destructive powers by working together it will work- without it non - competetitive practice will predominate.

 

We cannot base politics on only giving people what they want. Politicians feed the process not opinion from a base of knowledge. Plato confirmed the need for knowledge in those who govern. The evils of when knowledge and opinion are confused. What belongs to knowledge needs to be taken into opinion.

 

“Some try to represent political economy as being dry, cold abstract science, which has no warmth of feeling to spare on suffering humanity…This is far from the truth ;on the contrary, political economy produces feelings so intense for the removal of theses evils , that it will not permit us to rest satisfied with mere declamation, but impels us to examine deeply into the whole matter to discover the true causes of the wretchedness, and the mode by which it may be removed, or at least alleviated” James Wilson, founder and editor of the Economist November 1843

 

 

"Not either or...the World needs informed, literate, and digital participants" says Puttnam

Lord Puttnam tonight at Cardiff Business Club encourages Cardiff to be “…informed, literate, and digital participants”.The evening was sponsored by UWIC and presided over by Vice Chancellor Tony Chapman.

Lord Puttnam said "It is not an either or position . Only by engaging with these new and ever more extraordinary learning processes, facilitated by digital technology, and then taking ownership of the ethos that drives them, will we produce a generation of creative learners with a breadth and a depth of understanding capable of dealing with the immense challenges of this new and very difficult century of ours."

 

After ten years in the advertising industry, Lord Puttnam spent 30 years as an independent film producer. His films include Chariots of Fire - which earned him an Oscar - Local Hero, The Killing Fields, The Mission and My Life So Far. He was chairman and chief executive officer of Columbia Pictures from 1986-1988.

"Teachers are without question the most important people in Britain," he says. 'The future of our society over the next 10 or 20 years is entirely dependent on the quality of teaching' -

“When I was in Sunderland we tried to create opportunities for people and for the region to give the region confidence and self belief. I think we did a good job in that direction.”

”We are getting much better at tailoring to the individual needs, playing to students’ strengths as opposed to criticising their weaknesses,” he added.

“The world of education is going through a metamorphosis which will mean that it is better equipped to deal with the challenges of this 21st century. It is the century for young people.”

Puttnam's passion for education developed after his days at Minchenden Grammar School in London, which he left with only modest academic qualifications. Later, he says, he confided over dinner that he "woke up", and realised what he was missing.

When Mr Blair ‘s government came to power, he became chairman of the Education Standards Task Force and later the General Teaching Council.

Far from sharing what he sees as an unfair media image of teachers, though, Lord Puttnam is one of their champions and demonstrated this by answering questions of teachers in the audience.

 

Who will be a friend ?

On February 4th, 2004 20-year old Mark Zuckerberg launched TheFacebook.com from his Harvard dorm-room. At this time last year Facebook reported having more than 140 million users. We were awed then that the social network was doubling its membership every 12 months. Since then the numbers have more than doubled and the site may have already passed 400 million users.

The world is on Facebook, but check out these 7 articles below  listed in the New York Times for a big picture of the good and the bad about the incredible phenomenon that is Facebook.

1. How a Facebook "Sentiment Engine" Could Be Huge

   Facebook as living census. Facebook is changing peoples' lives by making it easy to share thoughts and keep in touch. Facebook could change the world by offering us a better picture of ourselves as a society than we've ever had before.

2. Facebook's Zuckerberg Says The Age of Privacy is Over

   The Big Z puts it all on the table.

3. The Facebook Privacy Debate: What You Need to Know

   We've covered the Facebook privacy debate in and out. Here's a summary of the key points.

4. How Facebook Beat MySpace: From College Dorm to Platform

   It's the question everybody wants to know. Here's our take on it.

5. Report: Facebook Game Addicts "Paid" to Oppose Health Care Reform

   Incredible, horrifying story. Fortunately Facebook is taking action to prevent this kind of thing in the future, but an important read none the less.

6. Facebook Could Become World's Leading News Reader (Sorry Google)

   Days after we put this post up explaining why it could happen, new traffic numbers proved that it already has happened.

7. Facebook and the Future of Free Thought

   Yes, this really is serious stuff. More than 350 million people use Facebook, many every single day. It's a major cultural force.

Sources

NEW YORK TIMES Facebook's Big Birthday: 7 Must-Read Articles

By MARSHALL KIRKPATRICK  ReadWriteWeb

Published: February 4, 2010

http://www.nytimes.com/external/readwriteweb/2010/02/04/04readwriteweb-facebooks-big-birthday-7-must-read-articles-60941.html

A special report on social networking Online social networks are changing the way people communicate, work and play, and mostly for the better, says Martin Giles  Jan 28th 2010 | From The Economist print edition

http://www.economist.com/specialreports/displayStory.cfm?story_id=15351002&source=hptextfeature

Wales out of recession but how do we realign now

It is often useful to go back to basic understanding and arguing that we need to create value in the welsh economy and emphasise the importance of business. What are the definitions of Depression and Prosperity as economic development and the creation of value must be the key priority in discussing Wales going forward.

"Depression and prosperity may exist in the case of a branch of industry, a region, a whole country or the whole world ." 

"Depression means a state of affairs in which real income consumed or volume consumption per head, real income produced or volume of production per head and the rate of employment are falling are subnormal in the sense that there are idle resources and unused capacity, especially unused labour."

"Prosperity, on the other hand, means a state of affairs in which the real income consumed, real income produced, and level of employment are high or rising and there are no idle resources or unemployed workers , or very few of either."

"Prosperity and Depression " Haberler

 

Reading of how to get out of the recession or as they described it in the 1930's the "depression, I turned to the book shelf this weekend and to Gottfried Haberler, revised edition of Prosperity and Depression 1939. I was struck by the discussion on optimism and pessimism during this time. This is due to perhaps our NZ Welsh Rugby Football Team Coach discussing how attitudes affect performance.

Heberler links the psychology to the economic numbers.Essentially it is about people and attitude. People invest more in an upswing and are reluctant to invest during the downswing .But are they separate in our country.The Banks will gain reserves again and want to borrow at decent rates.The growth cycle starts again but that will require pessimism dying and optimism taking hold in part or as a whole.

The value to be created and we look at value in our Welsh economy needs to look at our economic strenghs.The relevant cost argued Haberlerwas not the employee time to produce something, but the alternative end that has to be forgone.Building value services or products should be part of the UK or Welsh realignment.

Production Possibilities Curve

Haberler demonstrated the logic of this principle by being the first to construct that production possibilities depicts the trade-offs that an economy faces between producing one of two products, such as food and computers. Members of that economy can produce either one of the goods or some combination of the two. The curve shows the additional amount of one good that can be obtained by forgoing a particular quantity of the other.

Haberler explained that even when one of the two countries is absolutely more efficient in producing both goods, each country should still specialise in manufacturing and trading those commodities in which it has relatively greater efficiency. In this example, one country should focus on computer production and the other on food. In developing and consistently applying this reformulated theory of the benefits of international specialisation, he was able to prove the continuing superiority for a policy of trade and in mind the the need for "value" of specialisms. Wales needs to priortise and focus now to build an economic platform.

Even if people were reluctant to spend now because of pessimism and a desire to hold  wealth in a more liquid form, as prices and wages decreased, the real value and purchasing power of their money assets would be increasing, since each unit of money at lower prices would now buy more.

We are hopeful that a point would be reached at which people would find it advantageous to start spending again, at which time unemployment  would no longer have to rise and see wages and prices fall, and all those desiring employment would find employers willing to hire them to satisfy this renewed demand for goods and services.

However, we need to be real and not delude ourselves this depends on individual debt levels and how we bring ourselves out of recession with or without inflation , according to official data from the Insolvency Service, a division of the Department for Business, Innovation and Skills, the number of insolvent individuals in England and Wales is now 134,142 or one in every 320 adults. In the fourth quarter of last year alone, there were 35,574 individual insolvency'ss, up 24.9 per cent from the last three months of 2008.This is a worrying trend and it seems that Banks or the Tax authorities are now keen to press for compensation.

Sources:

OBITUARY:Gottfried Haberler Arthur Seldon Independent

http://www.independent.co.uk/news/people/obituarygottfried-haberler-1619722.html

Haberler, G. 1928. "A New Index Number and Its Meaning" in The Liberal Economic Order. Vol. 11

Haberler, G. 1930. "The Theory of Comparative Costs and Its Use in the Defence of Free Trade" in Selected Essays.

Haberler, G. 1941. "Prosperity and Depression".

Haberler, G. 1951. "Wage Policy, Employment and Economic Stability" in The Impact of the Union. Harcourt Brace, New York.

Haberler, G. 1952. "The Pigou Effect Once More" in Selected Essays. 

Haberler, G. 1959. "International Trade and Economic Development," 1961. "Terms of Trade and Economic Development," and 1964. "Integration and Growth of the World Economy in Historical Perspective" in Selected Essays. .