This topic applies to two events that are hitting two groups. The first one is about one of the final nails that are getting hammered into the coffin that is laughingly called the US economy.
Yet, what is actually in play? On one hand there are the mentions that the US economy is on the rise, so why is the debt limit such a strong issue?
The second issue is one that is playing in the UK, but about that later.
For these issues we need to consider a few chess pieces, that had been ignored in the past and there is only so much you can do before those ‘forgotten’ pieces rear their ugly head. Yes, I agree that there are signs that the US economy is again slightly on the rise. More jobs are offered, people are getting back onto the horse of labouring enterprises. There is however the other side. The government seems to ignore the need to get their budget in order, they ignore that there is a consequence to non-stop borrowing. Excuse upon excuse, story upon story and where does this lead?
The issues got visibility after Sky News reported on a story that involved the interview with Treasury Secretary Jack Lew. Reuters quoted him stating “We cannot afford for Congress to gamble with the full faith and credit of the United States,” Lew told the Economic Club of Washington, a business forum. Yes, he is correct in that, yet the strong story to hunker down on excessive spending is not loudly voiced. That same situation is what the Dutch government is currently facing. The story there was that it will never be like is was ever again is the story in the Dutch case. The pre 2008 life style is gone and likely gone forever. It will take a small nation like the Netherlands 5-10 years to get their spending under control, but it will never be as good as it was before. Why mention the Netherlands? With 16 million people they are at 5% of the American population. Their debt is around 430 billion. This is less than 2% of the national debt the US has and they have now announced austerity measures to reduce their deficit. The measures will be a helping of bitter fruit to nearly all Dutch. The total US debt is said to be around 60 trillion dollars, which boils down to $9000 for every person on the planet. Basically, the annual US Currency degradation is larger than the total debt of the Netherlands and the Dutch are looking at the next 10-15 years of financial hardship, and then only if the economy has picked up to the smallest extent by the end of 2015. If not, then those 15 years might not be enough. So the summary ‘the good times are gone forever’ seems amply put. More important, as the US debt devaluates quicker than the annual interest payments, is there any way out left for the US but bankruptcy?
The RABO bank director had made a comment that ‘all will have to tighten the belt’. Sounds nice, but let’s not forget that financial institutions playing fast and loose with other people’s money was cause to most of these issues. The second link is that he is not just mentioning the massive debt, yet a small mention on how the Dutch have such a good retirement treasury. It is another first attempt to get their fingers on the one place that was supposed to keep a population safe. (at http://nos.nl/audio/552545-directeur-rabobank-we-moeten-met-zn-allen-de-broekriem-aanhalen.html)
The US seems to ignore again and again that there is a limit to spending, so the lesson the Dutch are learning the hard way is one that American is currently not ready to face. They might say yes, there is a limit, but then state that they are nowhere near these limits. I disagree! I reckon that the point of no return was reached in 2011. The outstanding debts are now a matter of more than just multiple generations. The fact that we are given stories about returning economies are one thing, the part on how taxation must be paid (and is not) is silenced again and again. the rich move away their fortunes to the Bahamas or other places that will keep it ‘safe’, in addition corporate America is doing the very same thing by moving their ventures to places like Ireland, which allowed several corporations to pay less than 0.2% in taxation. How can the US survive when people without jobs cannot pay taxation and the super-rich move outside of the reach of the US treasury so they do not have to? These steps are socially undesirable and in my mind it is a form of treason. How can a company hide behind the US as a shield stating they have rights and then move away as they shun their own duties? These ignored elements are part of the problem that is likely to soon leave the US in a state of bankruptcy.
The US claims to be a nation of laws, which is fair enough. I think that they forgot that when greed calls the shots, the law becomes a shield for criminals, whilst becoming an anchor for those they are supposed to protect. It is a topsy-turvy world indeed.
So as we move towards the next 8 weeks of uncertainty, as the Democrats and Republicans are moved into a space that is more polarised then sunglasses, we will see that some will get a few coins from the jittery movement of the markets. Also take notice on how some of these people proclaim on how this is all so much unfair and how spending just a little more will save the people. No! It will not. It has not been a solution for almost 2 administrations. It is time to look for an actual solution, instead of prolonging an absolute failure.
So time to take a look at the UK now!
They have their own deficit, but more importantly, they do have a different set of problems. The NHS was at some point to have some kind of system that would record some forms of information. (Or so it would seem).
The NHS IT system is a failure. So much so, that it is the biggest failure in UK history. I reckon it is big enough to be the biggest failure in European history, but that seems too much like splitting hairs. The program had cost 10 billion pound, which makes it a 0.5% of the total British debt. That takes some doing to be such a failure.
Why are these two events connected?
Apart from the usual suspect that both involved politicians, it seems to me that both situations require a clear vision of what needs to be done. In both places they are lacking. It actually goes further than that, however for that part, let us take a look at the NHS laptop.
The Guardian is giving it some attention at (http://www.theguardian.com/society/2013/sep/18/nhs-records-system-10bn)
To do this, we will need to look at a few quotes that were made in this regard.
“MPs on the public accounts committee said final costs are expected to increase beyond the existing £9.8bn because new regional IT systems for the NHS, introduced to replace the National Programme for IT, are also being poorly managed and are riven with their own contractual wrangles.” This is one of the stronger quotes. We are looking at three distinct parts.
1. ‘Own contractual wrangles’ looks to me that the wrong people were involved in the contractual parts. Too much baggage or too little know-how, no matter how you twist this, when the contract is about ‘disputes‘ the people are not linked to a contract, but driven apart though paper (not unlike less successful marriages). This all makes for a nasty ‘separation’.
2. ‘new regional IT systems‘ and ‘being poorly managed‘ means that this is again a track of issues that are set to how good one’s PowerPoint presentation looks, not on how well an infrastructure can be managed. It is a fatal flaw in any IT project.
3. ‘Final costs are expected to increase beyond the existing £9.8bn‘ Like that is a surprise? This means that the costing’s were never properly done. Even in an age where the UK had a 3 year bad run with the economy, it seems to me that proper setting out a charter was never done. No charter, no limits and no results. It is again the same story we see too often when interested parties see the government not as a customer, but as a gravy train with no end in sight.
The IT is no different from any other business, when they see a governmental place where the gravy train just runs through it and they hope they are the station the train will stop. In my mind I see these places as a spot with too many managers and not enough workers. This is often the situation in many organisations. When it is in a commercial organisation it is a nuisance, and if they do not bring home the bacon, they are often let go at some point. With governmental organisations it is a different thing, more important, when it is done on regional area’s where they all want to be ‘in charge’ it adds up to nothing less than a death sentence to any structure that does not have commercial goals. It will collapse onto itself.
Here is the comparison with the US government. Like the NHS both are spending huge amounts they do not have to reflect upon. Not unlike the US their incomes are going down fast as tax havens take away the annual incomes the UK/US used to have. So in all, we are a looking at an engine that is supposed to run whilst we allowed the fuel tank to be external and no longer attached to the car. How stupid is that approach?
Richard Bacon, who had co-written a book on failing government projects, said that the NHS’s particular problems stem from the original contracts signed before 2002. It comes from a book he wrote with Christopher Hope called Conundrum. I am not disputing his view; it does however show that 10 years later a situation is holding the UK back. Perhaps a better contract team is/was needed? This all reads like my first item I mentioned. Nice that someone from Norfolk can see the issue that the London bigwig’s can’t be bothered to identify on a good day.
The issue I see is that the contracts might have been OK or acceptable at that time, but government situations require a different scope, and signing something that is holding back the UK 10 years later is really a bad contract (from the NHS point of view). So people were hired who lacked that same insight. It is not just on what they were instructed to do, I am questioning whether the right people were ever asked to question the outstanding approach to the long term extent it was needed to be looked at.
Too many are trying the same approach to other scenario’s, which is fair enough, yet those who should be in charge are NOT thinking this through. The mind is lazy, when something works, use it again, I get that! In this case it was not a solution and neither is it when it comes down to spending again and again to shove forward an economy that requires $10 for a return of $0.10. It is bad business through and through.
The one quote from the Guardian article is the crux ‘The government was keen to distance itself from the problem.‘
That is just not an option. Moreover, if it wanted that, it should have never gone near this issue to begin with. If we look at the BBC in 2011 (http://www.bbc.co.uk/news/uk-15014288) the following quote comes forward “Health Secretary Andrew Lansley will say: “Labour’s IT programme let down the NHS and wasted taxpayers’ money by imposing a top-down IT system on the local NHS, which didn’t fit their needs. We will be moving to an innovative new system driven by local decision-making.”
Whilst in July 2010 the issue stated by the BBC (at http://www.bbc.co.uk/news/10557996) was: “Mr Lansley also announced he expected all NHS trusts, which run hospitals and mental health units, to get foundation status by 2013.” So what did get done? More important, it states nothing about abandoning this ‘new’ system at the moment of release.
It all gets a little more hairy when you consider the quote in that very same article ‘Professor Chris Ham, chief executive of the King’s Fund think-tank, said: “It is a very radical programme. We have never seen anything like this since the inception of the NHS in 1948.“‘
It seems to me that this was another PowerPoint approach by those who talk nice but have no idea where the keyboard is stored. Certain quality questions should be asked from those who can only think in election terms. These systems are supposed to outlast them all. This is an issue which has, not once been properly dealt with in either the US or the UK.
How much more tax money will be spent on trains that lead to a place called nowhere?
