Why Do We Wait for A Crisis?

The current brouhaha over the impending Fiscal Cliff is yet another example of a national culture that waits for crisis before taking action. The irony in this current example is that our political leaders actually created the cliff to force themselves to address this complex economic issue. In other words, because they couldn't work together to craft a solution to our growing budget demands and dwindling revenue stream they developed a plan is the worst of both worlds to motivate themselves and each other to find a better strategy-or else!

If there is one behavior that is completely debilitating when it comes to both personal and organizational leadership it is postponing the inevitable-and having to develop creative solutions under the pressure of crisis is never an optimal scenario. While the pressure to do something to avoid complete disaster is compelling to finally move forward, the quality of the progress is dubious at best.

So how do leaders inspire action before the point of crisis?

Vision, communication, action and tenacity are the key ingredients for leadership that creates solutions to not only avoid crisis, rather to head-off the problems and incredible waste a crisis creates:

· Vision to see the problems and, more importantly, the roadmap to a solution

· Communication with others including those impacted by the issue to help them understand the situation and develop their understanding and leadership

· Action to move everyone toward solutions, seeing it and talking about it are not enough-action is essential

· The tenacity to keep focused on the issue even when others refuse to deal with it

Ultimately each of these issues comes down to those who are impacted by needing to become a part of the solution-and that ignoring a problem doesn't mean it will go away. It is easy to avoid difficult situation if it is not impacting you directly AND the moment it does and it isn't working the way you want, voila crisis!

Just ask Long Island Utility customers how they felt after Hurricane Sandy revealed gross mismanagement, or those swept away in the recent banking and mortgage-lending crisis. How many people knew there was something wrong and remained silent?

Which brings us back to Congress and the crisis du jour. While we look at our elected leaders with a deep sigh of frustration at the inability to create solutions ahead of the curve, we must also look at ourselves. Why do we keep electing people to office who have no intention of governing only politicking? Why it is so important to hoard every cent we earn without an understanding of the collective good that comes from living in a society that provides such immense public good? And what role can each one of us play in making that collective good as efficient and effective as it can be in the communities where we live and work?

We can't expect anything of our elected officials that we ourselves are unwilling to do. Perhaps as we head toward this fiscal cliff we can ask ourselves this question:

What can I do to shift my addiction to crisis as the precursor to change?

If we the people can begin changing the way we approach our lives, then we will create an example for our elected leaders-and one that is long past due in learning.

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The Eurozone Crisis and Scottish Independence

What are the consequences for the debate about Scottish independence of a Greek exit from the eurozone? No one knows what will happen if Greece leaves. Some economists are predicting something approaching Armageddon, others are more moderate, but it is likely that the whole European economy including Britain's is heading into very difficult times. At times when I read the business sections of the papers, I begin to wonder what on earth we are doing in Scotland debating arcane constitutional matters. I'm as interested in the debate about independence as the next Scot and I'm passionate about Scotland remaining in the UK. But really it's as if Rhode Island decided to clamour for independence a week after the Wall Street crash.

Given that we are heading into still more turbulent waters, is this the time to jump ship and try to set sail on our own? Even if independence were a good idea in principle, which it is not, it would be a bad idea at present, because times are just too uncertain. What are the possible scenarios facing the Eurozone and what consequences do they have for Scotland? Fundamentally there are two choices for the Eurozone. Either it breaks up into sovereign currencies or it becomes something akin to a full blown fiscal union with transfers from the rich regions to the poor regions. This second option would be akin to a United States of Europe.

What have we learned from the whole crisis that has been unfolding for the past two years? Just this, that monetary union requires fiscal union. Fiscal union is what the UK has and what the Eurozone lacks. Now, Mr Salmond wants Scotland to become independent, but to retain the pound. What he wants therefore is the situation which exists at present in the Eurozone. He wants monetary union with the rest of the UK, but not fiscal union. But this is just this position which has lead to the chaos in the Eurozone. The tensions which exist in the Eurozone could equally arise in this new Sterling zone, which would no longer be a fiscal union. The outcome would be the same. Either Scotland would need to recreate the fiscal union with the rest of the UK, which would in effect mean a return to being a part of the UK, or it would have to leave the Sterling zone in order to set up its own currency, call them New Scottish Pounds. These new Scottish pounds would fall relative to Sterling, just as the New Greek Drachma will fall relative to the Euro if Greece is forced out. What I would like to ask my fellow Scots is this. Do you want your savings, your house, and your other property to be redenominated into a devalued currency? If you don't want this, even as a possibility, you must vote against independence.

Let's imagine another alternative. The Eurozone may choose to become a fiscal union and this may work. Personally I doubt that they have what is necessary for a successful fiscal union, such as a common language, a common culture, sufficiently similar economies etc. But be that as it may, with enough will and determination the Eurozone may continue as a fiscal union. Scotland could choose to join. But then really once more this so called independence becomes nothing of the sort. Scotland would be a state in the United States of Europe and would be no more independent than Rhode Island.

The logic of economics suggests that the only way Scotland could be truly independent is to set up its own currency, with its own central bank. This is the model which nearly all recently independent countries such as Latvia, Ukraine and Lithuania, have followed. But doing so, of course, would entail the risk of devaluation to our currency, and would mean that in the event of another crisis Scotland would be the lender of last resort. But if that had been the case in 2008, Scotland would have been bankrupted by RBS and HBOS and would have had to resort to the IMF. Anyone who thinks that there is no risk of further crises in the coming years understands nothing of economics.

Just a final thought. In the storms that are going to batter us in the months and years ahead. Where would you rather be? In HMS Great Britain or in the good ship Braveheart setting off on her maiden voyage with Captain Salmond at the helm.

http://effiedeans.blogspot.co.uk/

The Scottish independence referendum will be in 2014. I'm campaigning for Scotland to remain in the United Kingdom, by means of a regular blog exploring all of the issues involved. Please come and join the debate by clicking on the above link.

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