Monday, 10 November 2014

Small government and big banks........ "Small is Powerful: Why the era of big business, big government and big culture is over"

The big banks have announced that they will be closing up shop in hundreds of locations:

Sunday, 09 November 2014 23:11

Renewed fears for rural bank branches

Written by  Ruralcity Media
Renewed fears for rural bank branches
BIG banks are being urged to keep branches open in small towns where there are no other banks left.
The call by business secretary Vince Cable follows announcements by three major high street banks that they intend to close branches.
Lloyds Banking Group confirmed last month that it would be cutting 9,000 jobs along with the net closure of 150 branches over the next three years.
Although the bank said it would concentrate on closing urban branches, it has abandoned its pledge to keep open "the last branch in town".
Meanwhile, Liberal Democrat MP Tim Farron has urged Barclays and NatWest to honour the same pledge for residents and the community in Sedbergh, Cumbria.
Announcements by both Barclays and NatWest to close their branches would 'be a huge loss' for the area, said Mr Farron.
The Westmorland and Lonsdale MP is working with local residents calling on the banks to make a U-turn on their plans.
Both banks blame a decline in footfall for their closure plans. But the nearest bank when both branches close will be in Kendal, an 11 mile trip.
The Post Office is stepping up to offer some services but the banks are removing their cashpoints from the high street.
Mr Farron, who has tabled an Early Day Motion in parliament about the bank closures, said it was a deeply unsettling time for staff, residents and local businesses.
"Residents are incredibly angry about this and I hope that my meetings and discussions with senior banking executives will make them see sense," he said.
"My message to them is clear: you have received help and in some cases bailouts from taxpayers, many of whom are in the Lakes. We now need your help – don't let us down.
"You have an obligation to us."
Sedburgh councillor Evelyn Westwood added: "People are horrified at the prospect of the banks closing.
"Traders fear it will hit their businesses and the residents, especially the older ones, are sick with worry about how they are going to manage."

Renewed fears for rural bank branches

As in countless other towns, when the 2008 financial crisis hit Sidmouth, several businesses went under - largely due to the banks' unwillingness to extend credit terms to small businesses:
Britain's banks less willing to lend to small businesses, says report - Yahoo Finance UK

Whilst the government seems to favour the big banks:
IMF Survey : Big Banks Benefit From Government Subsidies
A £38bn ‘subsidy’ for Big Four hits small banks - Business News - Business - The Independent

... an alternative for smaller businesses could be to go to smaller banks or to innovative sources such as crowd-funding:
Cash-starved companies are shunning the big banks | This is Money

Why Small Business Loans is Not For Big Banks

And indeed there are even more radical solutions for a resilient local economy:
Futures Forum: An Exeter Pound and the Woergl: 'complementary' and 'interest-free' currencies
Futures Forum: Jeremy Rifkin and the Collaborative Commons

Although not so radical would be a credit union or a truly 'local bank':
Futures Forum: Honiton: a new credit union
Futures Forum: Bank of Dave

Meanwhile, whilst the banks are getting bigger (and more remote), local government is getting smaller (and more remote):
Futures Forum: Volunteers in the community: 'doing jobs for free' or 'empowering communities to take local action'?
Futures Forum: Knowle relocation project: and the longer-term demise of district councils... part seven: "In favour of efficiencies"

In the United States, the arguments over 'small government' have become increasingly political, partisan and polemical:
Research Shows That Small Government Is Efficient Government
Here’s Why Libertarians and other Advocates of Small Government Worry about the “Slippery Slope” - Daniel J. Mitchell - Townhall Finance Conservative Columnists and Financial Commentary 

But a new book out suggests there might be a way out of this impasse which could be accepted across the political spectrum:

Small is beautiful: Why the age of big business and big government is over

Adam Lent is director of the RSA’s Action and Research Centre. You can back the crowdfunding campaign for his book Small is Powerful and pre-order a copy at unbound.co.uk/books/small-is-powerful 
Voters are shifting towards smaller parties – just as they are searching out more unique goods and services
THE CORPORATION has never been less fashionable. Politicians are falling over themselves to tell voters how they will constrain, bully and regulate large companies. It makes sense. The polls tell them that trust in the corporate world is at derisory levels. A recent Populus survey found 61 per cent wanted the government to be tougher on big business.
But the malaise runs well beyond fickle politics. Speak to anyone working in higher education and they will tell you that their brightest undergraduates would rather eat glass than become a tiny cog in a giant conglomerate: the spirit of youth is now all about startups not the City.
This zeitgeist is spreading to every age group. The number of self-employed has increased by 30 per cent in the last decade to reach 4.6m. Why? Because, as RSA research revealed, over 80 per cent say that it is the only way they can achieve the higher levels of autonomy and creativity they want.
And these trends are not confined to the workplace. Companies like Etsy and Ebay thrive because they provide a platform for customers to find that small specialist provider with the authentic human touch which is so desired today.
Chief executives can console themselves with the thought that they are far from alone. A turn away from the big and towards the small is also happening in politics.
In the 1950s, the two main parties could boast almost 4m members and the allegiance of around 95 per cent of the electorate. Today the figures are 320,000 and 65 per cent. While the average voter turns to smaller parties, more active citizens prefer highly focused online campaigns or look to social enterprises and community action to effect change.
Culturally and socially, we are also embracing the small. Each new technological advance is seized as an opportunity to break from the standard and large and opt instead for the unique and personal. We once marvelled, for example, at the sudden explosion of cable television channels. We now wonder how they can compete with the dizzying range of opportunities to consume and produce content generated through platforms like YouTube.
As I explain in my forthcoming book, Small is Powerful, we are witnessing the death of a consensus that insisted big was beautiful for most of the twentieth century. By the 1930s, it was accepted that the concentration of power and wealth in the hands of corporate boards and government ministers was the best driver of progress. Many commentators of the day even feared that Soviet Russia could outpace the capitalist democracies precisely because it had concentrated much more ruthlessly.
While this consensus could deliver secure work, economic stability and a fair share of prosperity, the extreme hierarchy and control was tolerated. But that is no longer the case and, in all likelihood, never will be again.
Does this mean that the days of big government, big business and big culture are numbered? Not entirely. Big still has its advantages, if not quite the range of benefits we once believed. But changes are needed if large organisations are to adapt to a new small world.
Artificial attempts to prop up corporations must end. There is no quicker route to a deeper malaise than using political muscle to defend the big. If smaller organisations can meet consumer and employee preferences then they should not face disadvantage in the market. The best place to start would be to review the £17bn in subsidies and grants Kevin Farnsworth of Sheffield University has calculated the British state will hand out to business this year, much of it going to large firms. But there are a range of other areas such as tax, public procurement, competition law and IP that are also ripe for reform.
If they are to stay ahead of the small trend, corporations must reset relationships with their employees. Performance management has sucked the life out of workplaces: the premium must be on building trust between a company and its staff so both feel free to let autonomy and creativity flourish. The more that large firms see themselves as an alliance of entrepreneurs and less as an army of drones the better.
And the same principle applies to customers. They increasingly expect companies to provide them with the tools not just to customise products but to create them for themselves. The successful corporations will be those that understand themselves as a big platform for the millions of small initiatives launched by their customers.
Adam Lent is director of the RSA’s Action and Research Centre. You can back the crowdfunding campaign for his book Small is Powerful: Why the era of big business, big government and big culture is over and pre-order a copy at unbound.co.uk/books/small-is-powerful @adamjlent 
Small is beautiful: Why the age of big business and big government is over | City A.M.
News about Small Is Powerful, Adam Lent's Shed: Unbound
Why E.F. Schumacher would embrace the digital revolution, by Adam Lent | The Schumacher Institute

Adam Lent will be speaking at the RSA in London later this month:
RSA - Small is Powerful: Beyond Big Business, Big State, and Big Culture
Small is Powerful: Escaping the 20th century love of big power : RSA blogs
small is powerful : RSA blogs

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