It is easy for cynics to question the efficacy of gatherings such as the recent G20 summit. Certainly, the summit’s most immediate tangible output consisted of a group photograph.
Cynicism aside, what the picture does demonstrate is that the world of economic and financial leadership is very male, perhaps to the detriment of the world’s economy (read more about that here). Opportunities for women have expanded dramatically, but it remains difficult for women to be taken seriously in certain fields, of which economics apparently still is one.
It doesn’t help that France’s ex-Justice Minister, Rachida Dati, recently referred to inflation as fellatio. OK, so the two words do sound similar in French, and ‘inflation’ may be a consequence of the act, but it doesn’t help women’s cause, especially when Dati’s attractiveness makes her a desired dispenser.
I went to a lunchtime talk on Friday, presented by Maria Ramos, who is an economist, and could certainly have been in line for a G20 appearance had she remained in government (and yes, while she downplays it, she is attractive). She is currently the Group CEO of Absa (a subsidiary of Barclays), with a long list of other directorships, achievements and accolades. I don’t recall her spending much time talking about inflation, but she did get me very excited when she started talking data.
The numbers that fired my neurons were the ones dealing with youth unemployment in various parts of the world (generally above 20%, and in some countries up to 30%). The European view is that the phenomenon is structural, and therefore immune to a low interest rate environment. The American solution is based upon crashing interest rates in the hope of stimulating the economy.
Actually, I’m probably wrong in my observation that the G20 delegates could not agree on anything. Jobs – or, the absence of them – are one crisis the entire world is facing. The most worrying grouping to be affected by this are the youth, who comprise one-quarter of the workforce, but half the unemployed.
The consequences of millions of young adults remaining unemployed aren’t good. For starters, lower tax collections have a number of knock-on effects, none of which are positive. The potentially more serious implications are socio-political ones. The combination of testosterone, youth and being disaffected are a toxic cocktail, of which civil unrest and other destructive behaviours are a likely outcome. One has to wonder if Islamic militancy would be a threat of similar size if Pakistan, Afghanistan and others were not as impoverished as they are.
Whether one is Spanish, German, South African or American, creating jobs for entrants to the job market are a critical necessity. The How-To part is more challenging. Given the extent of the challenge, especially against the backdrop of the credit crisis, my view is that the situation requires a degree – and type – of creative thought that has not yet been applied by government officials. The fact is, the skills set that is going to get someone into a government position cannot include groundbreaking thinking.
No, “it takes a thief to catch a thief”. The situation requires original thought, preferably on the part of people who are entrepreneurial, or who have experience of what the jobs coal face looks like.
Economists can tell you about the economy in aggregate. They can slice and dice GDP, inflation, budget deficits, or any other collected data. They can show what rate of employment growth is necessary. They definitely can talk data. But the question is this: how many of them have real-life experience of creating jobs? Even the most progressive department of trade and industry is populated by people who are exceptionally skilled at spending their budgets, but who are unlikely – ever – to have run their own businesses.
During Maria Ramos’ presentation there was an observation from the floor that corporates do not create jobs; in fact, they shed them to cut costs. The solutions have to come from elsewhere.
Government has a role to play, in the way it shapes the business environment. Corporates also have a role to play, because of the scale of their procurement. But the solutions require a whole bunch of ‘foxy’ people, to borrow Clem Sunter’s terminology.
When I was a little boy, I thought that trees made the wind, in a classic case of mixed-up cause-and-effect following from my observation of co-existing wind and swaying trees. While I was clearly wrong on this phenomenon, the cause and effect chains in finance and economics are less cut and dried.
I’m of the school that has great respect for an income statement. It’s not that I don’t value the need for a solvent balance sheet, but sound balance sheets are the products of profitable businesses (i.e. good income statements over several years). Capital has to be created before it can be deployed.
By implication, I therefore favour a bottom-up – entrepreneur-centric – approach to job creation. Foxy is good (but not in the sense of FHM magazine!).
I’m sure that our government employs a large number of technocrats with solid academic backgrounds. However, in the words of Einstein, “imagination is more important than knowledge”.
Part of my thinking process behind starting Slingshot was the belief that creativity – original thought founded in imagination – has a disproportionate effect on an organisation’s end results (i.e. the slingshot effect). If there is a ‘job creation’ government body, or forum convened by big business, I’d happily join it. I don’t currently have the one miracle solution that will ‘make South Africa work’ (double meanings intended), but I believe that those great ideas are out there.
Pictures of the violent protests that have characterised G20 gatherings are more newsworthy, but I think we’d all prefer the group photos of central bankers and finance ministers. Even if they’re mostly men.