British Politics



  • @kruse BTW, we’re you suggesting that Boaty McFuckface was a good outcome?



  • @catogrande said in British Politics:

    @kruse BTW, we’re you suggesting that Boaty McFuckface was a good outcome?

    Yep - great outcome.



  • @catogrande said in British Politics:

    The then EEC was little more than a trading alliance and a twitch in the trousers of a few wannabe Eurocrats.

    That's my point. In '74 they didn't know what the final deal was they were voting for - e.g the Euro (and having to pay to bail it out). Same argument used by those wanting a 2nd referendum.

    Anyway, as the chines proverb says "May you live in interesting times"...



  • @victor-meldrew Not quite. We very much knew what we were voting for, just not what it might become 40 years later. In 2016 things were very much more complex.

    Not that I think either referendum was a good thing, just that the circumstances were totally different.



  • @catogrande said in British Politics:

    @victor-meldrew Not quite. We very much knew what we were voting for, just not what it might become 40 years later. In 2016 things were very much more complex.

    Not that I think either referendum was a good thing, just that the circumstances were totally different.

    No they werent. Both were black and white questions with uncertain outcomes.



  • @catogrande

    Both were In or Out choices. We didn't know what the final deal would be or how it would impact the UK going forward in 1974 any more than we did 2016.



  • problem is with providing referendums to the general populace, plenty are able to be swayed into voting for things they really have no idea about and probably shouldnt actually be voting for, but thats democracy for you.



  • @victor-meldrew said in British Politics:

    @catogrande

    Both were In or Out choices. We didn't know what the final deal would be or how it would impact the UK going forward in 1974 any more than we did 2016.

    I would agree with the bolded bit but where I differ from your viewpoint is that firstly being out of the EEC was still very much a known quantity, whereas now, that is far from the case. Secondly the EEC as it was then was a much leaner, simpler organisation centred around trade. It was a lot easier to quantify the benefits, even for the non-politically minded. Today we have much more complexity, open borders, monetary union (broadly, though not UK), EU law, subsidies, quotas, an EU parliament - I could go on. And on. We are 40 years away from knowing how things are like outside the EU. Our former strongest trading partners now have new alliances, we have no substantial trading agreements outside the EU.

    The ability of anyone to get their head round the complexities of stay or go now as opposed to 1974 is a huge difference.



  • @victor-meldrew said in British Politics:

    Nope.

    Replace a well-paid, trained, skilled motivated worker with a cheaper, less skilled option and the re-work from errors and carelessness input to the system will not only reduce the overall output by reducing value-add, it will divert management resources and, worst of all, damage your customer base/reputation.

    Actually the biggest issue with outsourcing is the ability to deal with issues which aren’t in the manual. Ie customer wants x, book doesn’t explain x ...

    There is also an underlying element that people are more content to be told shit news about their contract from a guy in Doncaster than a guy in Mumbai

    Which is why so many companies who outsourced to India brought it back onshore - it was costing them a fortune

    So many? Got examples?

    I do worry that the UK may become viewed as cheap Labour ....



  • @majorrage said in British Politics:

    @victor-meldrew said in British Politics:

    Nope.

    Replace a well-paid, trained, skilled motivated worker with a cheaper, less skilled option and the re-work from errors and carelessness input to the system will not only reduce the overall output by reducing value-add, it will divert management resources and, worst of all, damage your customer base/reputation.

    Actually the biggest issue with outsourcing is the ability to deal with issues which aren’t in the manual. Ie customer wants x, book doesn’t explain x ...

    There is also an underlying element that people are more content to be told shit news about their contract from a guy in Doncaster than a guy in Mumbai

    Which is why so many companies who outsourced to India brought it back onshore - it was costing them a fortune

    So many? Got examples?

    I do worry that the UK may become viewed as cheap Labour ....

    Unlikely when we pay all these bloody Kiwi IT geeks so much...



  • @majorrage said in British Politics:

    So many? Got examples?

    Aviva, BT, LloydsTSB, Scandia, Barclays, Aegon, RBS, Bombardier Transport.... And that's only the businesses that were my clients. Two examples:

    A life insurer moved pensions servicing to Mumbai based on an FTE cost of £350 a day v £500 a day in the UK (Mumbai cost included infrastructure & management). The actual cost, when things like actual training costs from a 50% retention rate, re-work, additional management time in the UK ran out at £520 a day. And that didn't include reputational cost - they only noticed that when they fell from 5th to 13th in the customer/industry rankings.

    Major organisation outsourced invoice payment off-shore. And were then deluged by late-payment complaints, legal letters and court threats. After 12 months we calculated the overall, actual cost as being 20% above UK processing costs.

    Anyway, enough management anecdotes.



  • @majorrage said in British Politics:

    Actually the biggest issue with outsourcing is the ability to deal with issues which aren’t in the manual. Ie customer wants x, book doesn’t explain x ...
    There is also an underlying element that people are more content to be told shit news about their contract from a guy in Doncaster than a guy in Mumbai

    I'd argue the biggest issue is management focussing on cost and not value/ customer service. There's one pension provider whose outsourced operations gets consistently high ratings from customers. They focus on service quality foremost with costs being secondary - it's about the same cost as in the UK.

    The accent thing is fascinating. From the research I saw, it's less the accent than the cultural differences which customers pick up. One outsourcer, bizarrely, tried to alleviate this by getting their agents to bone up on the latest UK soap opera plotlines. (Yes, really)



  • @victor-meldrew said in British Politics:

    @jc said in British Politics:

    Sorry Victor, but at the risk of derailing the conversation, you do know that if you wanted to increase productivity investing in people is the thing you wouldn’t do, don’t you? Given it is the ratio of value-added output to inputs, the lower your cost of inputs (usually through less or cheaper people) the better.

    Nope.

    Replace a well-paid, trained, skilled motivated worker with a cheaper, less skilled option and the re-work from errors and carelessness input to the system will not only reduce the overall output by reducing value-add, it will divert management resources and, worst of all, damage your customer base/reputation.

    Which is why so many companies who outsourced to India brought it back onshore - it was costing them a fortune.

    Sorry Victor, hadn’t got round to getting back to you. I’m interested in your “Nope”answer. Your last couple of paragraphs aren’t wrong, but they have nothing to do with what I said. I said, that “if you wanted to increase productivity investing in people is the thing you wouldn’t do”.

    Now I think there are major flaws with using productivity as a meaningful measure of an economy’s health, in some part for the very reasons you give. But you introduced it.

    Government statisticians generally use a measure called multi factor productivity (MFP) which is a pretty blunt instrument and it’s clear, productivity = output / labour inputs. To increase productivity you have to increase outputs or lower inputs. Increasing inputs will never increase productivity.

    I understand that you’re arguing for increasing the outputs, but if you assume that, all things being equal, every firm is maximising its profit (and why wouldn’t they be in a capitalist model) then they would already be doing that to the best of their ability. It’s largely beyond their control, at least in comparison to the inputs, which they can control.

    Anyway your argument isn’t really to do with classical productivity modelling. What you are arguing is actually something called Overall Labour Effectiveness, which is not really interesting to economists as it’s pretty much self evident.Productivity is another matter though. You probably won’t be surprised to know there are contentious, long running debates about it, notably a profound disagreement between Poms and Yanks about the exogeneity or endogeneity of natural rates of growth. Fascinating stuff.



  • @jc said in British Politics:

    Sorry Victor, hadn’t got round to getting back to you. I’m interested in your “Nope”answer. Your last couple of paragraphs aren’t wrong, but they have nothing to do with what I said. I said, that “if you wanted to increase productivity investing in people is the thing you wouldn’t do”.

    Now I think there are major flaws with using productivity as a meaningful measure of an economy’s health, in some part for the very reasons you give. But you introduced it.

    Government statisticians generally use a measure called multi factor productivity (MFP) which is a pretty blunt instrument and it’s clear, productivity = output / labour inputs. To increase productivity you have to increase outputs or lower inputs. Increasing inputs will never increase productivity.

    I understand that you’re arguing for increasing the outputs, but if you assume that, all things being equal, every firm is maximising its profit (and why wouldn’t they be in a capitalist model) then they would already be doing that to the best of their ability. It’s largely beyond their control, at least in comparison to the inputs, which they can control.

    Anyway your argument isn’t really to do with classical productivity modelling. What you are arguing is actually something called Overall Labour Effectiveness, which is not really interesting to economists as it’s pretty much self evident.Productivity is another matter though. You probably won’t be surprised to know there are contentious, long running debates about it, notably a profound disagreement between Poms and Yanks about the exogeneity or endogeneity of natural rates of growth. Fascinating stuff.

    @JC
    I find this discussion about productivity fascinating. I recently bought a business and I am currently looking at productivity labour training , output/input and efficiencies.
    I have bolded a bit in your post with I think must be false. I think you probably just used brevity to underline a concept, but I would be interested to see you expand on it so that it is accurate. Obviously increasing input can sometimes under certain conditions increase productivity?? If for example labor is your input and productivity is down because inefficiencies are caused by a lack of coverage or skillets, or even over stretching of resources causing costly mistakes or repeated work?

    I am sure your ideas are completely correct in a fully automated environment or mathematical modeling system. But when human inputs are included, which are inherently chaotic. Then things are not so simple, you have to take into account business culture, workplace morale, (due to lack of certain inputs). As a simple example I have been direcly involved in organisations where morale has been terrible because the manager was overworked and simply didnt get back to things on time, staff just gave up trying, another middle manager was employed, things started to happen morale increased and productivity skyrocketed.
    And that ignores the obvious situation of bottlenecks, increasing the input into a system at the right location can eliminate bottlenecks that created lack of productivity upstream.



  • @baron-silas-greenback You’re right, the bolder bit refers to the mathematics of the productivity measurement. Increasing inputs can result in better outcomes, but they come with a cost, and the raw ratio of productivity drops. At least that’s what the maths says. Is that true in the real world? No, and I’m not arguing otherwise. I guess what I’m saying is don’t let politicians suck you into believing that the productivity formula tells you anything useful about how businesses work and profit.

    The neoclassical model teaches that there are two types of input, capital and labour. If the technology doesn’t change you can adjust the labour or capital and it will have an effect on the productivity, but over time the impact will lessen and in fact tend to zero.

    My opinion is that while this is probably true it’s not nearly as relevant as the impact of the most obvious point, that technology does change, and in fact is the elephant in the room. Performing a productivity calculation doesn’t really tell you anything, it’s the change in productivity between two points in time that would be meaningful, if anything. But the paradox is that in the elapsed time between the two measurement points technology will probably have changed, and you don’t have any standardised way of telling you how much of your increased productivity is due to the people, the capital or the technology. And it will be different for each firm, industry or operating environment.

    I’m an economist who worked as a manager, and economics is no substitute for management. More to the point, I don’t agree at all with the notion of throwing in economics-y sounding concepts when people are talking about how to run businesses. They are not the same. I enjoy economics, sad bastard that I am, but it’s an abstract science at the best of times and I often bristle when I see it used to bolster arguments in which it really doesn’t belong, like in this case. Because if you’ve done any you’ll know that pretty much everything is caveated with “ceteris paribus” and “assuming that”, when in fact in the real world all other things are never held equal, and assumptions are things you get sacked for.

    In the example you give, yes, upskilling a workforce can increase output, but it comes at a cost in itself, which will be a capital input, which again lowers productivity. Access to capital may be constrained, so upskilling may not be an option. Where does that show up in the productivity formula? Nowhere. Labour costs are subject to market forces just like everything else; you may not have access to the type of labour you want at the price you can afford to pay. Again, not factored in. Unionisation may constrain your ability to redeploy your workforce or mandate training, or even hire and fire. It may just be a really boring job that employees will always hate. None of these are covered in the productivity formula, but they will obviously impact how you manage your business.

    None of this means that you (or Victor) are wrong, but it does mean the productivity measure is the wrong tool for the job.



  • @jc said in British Politics:

    Increasing inputs will never increase productivity

    I'm coming from a business perspective and am no economist. Unless I'm missing something, you wouldn't increase a country's productivity by cutting a country's education budget 50% on the basis that it reduces the the input cost to the economy?

    Investing in peoples skills isn't actually increasing input costs - you are reducing them by adding value.

    If an unskilled worker earning £10 an hour produces 10 widgets an hour and only 8 are fit to be sold or passed onto the next stage of production, the input cost per widget is £1.25

    Train the worker up and pay her £12/hour so she can produce 15 widgets per hour of which 14 can be sold/moved to the next stage of production and the input cost per widget is £0.85.

    Too many firms think they are maximising their profit by reducing input costs when they are actually increasing their output or system costs. This is often hidden and bites back several years later - normally when the CEO has left with his fat performance cheque.



  • @baron-silas-greenback said in British Politics:

    But when human inputs are included, which are inherently chaotic. Then things are not so simple, you have to take into account business culture, workplace morale, (due to lack of certain inputs)

    Nail. Head.

    The best managers appreciate that the people actually doing the work know what the real problems are, are best placed to improve things and give them the tools, space and support to do just that. Any worker on a Toyota production line can (and is encouraged to) stop the line if he sees something which isn't of the right quality.

    None of this is new - mill owners like Arkwright and Owen worked this stuff out 200 years ago as they realised happy, well-paid staff with good working conditions generated way more profit than if they exploited their workforce.



  • @victor-meldrew said in British Politics:

    @jc said in British Politics:

    Increasing inputs will never increase productivity

    I'm coming from a business perspective and am no economist. Unless I'm missing something, you wouldn't increase a country's productivity by cutting a country's education budget 50% on the basis that it reduces the the input cost to the economy?

    Of course not. And nobody is suggesting that are they? I think the piece you are missing is that the productivity measure you used earlier isn’t measured like that. It’s an aggregate purchasing power parity measurement of value added to the nations GDP divided by the number of labour hours. It’s that simple. Nobody goes out to increase that statistic (which is all it is) by cutting education in any country I’m aware of. In fact I’m not aware of any nation that actively tries to increase it at all. They roll it out to say how cool the government is, or why we need to catch up to Germany. But it’s completely spurious. That’s my point. It’s a functionally meaningless stat used by politicians to justify policies.

    Investing in peoples skills isn't actually increasing input costs - you are reducing them by adding value.

    It depends how you’re measuring it. In the short term you are definitely reducing productivity because the training carries a cost too. You even wrote as much when you used the word “investing”. If you’re asking is it a good idea to educate your citizens, then obviously yes. But will it increase productivity? Who knows. Maybe. Why do you care? I don’t. I believe that you should let companies do what makes the most sense for their business and if they are any good that will mean training their staff, not exploiting them and being good corporate citizens.

    If an unskilled worker earning £10 an hour produces 10 widgets an hour and only 8 are fit to be sold or passed onto the next stage of production, the input cost per widget is £1.25

    Train the worker up and pay her £12/hour so she can produce 15 widgets per hour of which 14 can be sold/moved to the next stage of production and the input cost per widget is £0.85.

    You may be right, but I think there’s a logical flaw in there. It is possible to train them to produce 14 out of 15 good widgets without increasing their pay. They will be less happy than if you pay them £10 per hour for sure. But are you connecting the increased quality to the training or the pay increase? And where’s your evidence? Did you try it both ways? Anyway all this may be true but it’s not economics

    Too many firms think they are maximising their profit by reducing input costs when they are actually increasing their output or system costs. This is often hidden and bites back several years later - normally when the CEO has left with his fat performance cheque.



  • @jc said in British Politics:

    Nobody goes out to increase that statistic (which is all it is) by cutting education in any country I’m aware of. In fact I’m not aware of any nation that actively tries to increase it at all.

    Why not? You said previously that if you wanted to increase productivity investing in people is the thing you wouldn’t do". If education is anything, it's investing in people. And, as you said, "to increase productivity you have to increase outputs or lower inputs. Increasing inputs will never increase productivity."

    It is possible to train them to produce 14 out of 15 good widgets without increasing their pay. They will be less happy than if you pay them £10 per hour for sure.

    Perfectly possible not to share the fruits of the improved efficiency - provided you were happy to accept high attrition rates and associated costs, inflexible, unresponsive staff, low morale and potential customer backlash. Mike Ashley's is a bit of an expert on this, apparently

    Anyway, enough. I'm supposed to be retired from this business crap



  • @victor-meldrew

    Why not?

    Because businesses should be trying to improve their own business/labour force productivity etc, rather than worrying about a macroeconomic stat that doesn't mean what people think it does at a firm level ('takes British workers five days to produce what Germans do in four').

    At a political level targeting an improvement in productivity stats would drive some interesting behaviour. You could increase education funding which could be good (but if done poorly, give people for free what they were already paying for with no increase in participation, as is happening now in NZ), or take the easy route by doing things like hiking the minimum wage (arguable whether it's a good or bad thing to do - but it will raise those productivity stats with little 'effort' if it's your goal - so they'd do it). Instead of taking on harder things like industry mix etc.

    It's arguably the BMI of the business/economics world. Useful at a population health planning level, but individual results - and the actions they should take - vary significantly...