The new normal

Our CEO Jack Graham writes about social change in a post-crisis world.

This article was originally written for the Clore Social Leadership Programme blog by Year Here Chief Executive, Jack Graham.

Social entrepreneurs and charity leaders aren’t renowned for their grasp of macroeconomics.

Recently, a group of fellows of the Clore Social Leadership Programme, including me, expressed how economically illiterate we felt. Beyond the fact that the picture isn’t particularly rosy, my own grasp of economics quickly slips away. Serendipitously, Clore’s Chief Exec, Dame Mary Marsh, is also a Non-Exec Director of HSBC Europe and she arranged a learning session for us with HSBC Global Research.

I left feeling even more strongly that aspiring social leaders must dive into the world of economics if we are serious about building a better society.

Madhur Jha, an economist working for HSBC under Stephen King, took us on a fascinating whistlestop tour of the world’s economy since the financial crisis.

The headlines (relayed by a non-economist!) were:

  • All the fiscal and monetary tools at our disposal are being used and growth is still elusive.
  • Debt, soaring unemployment and slow or no growth are the picture for almost all Western economies.
  • For the foreseeable future, investors will look to emerging markets where, unlike the West, there is less debt, strong labour markets, young populations and rising consumption.
  • The Western markets are rattled by the slightest indication that the Federal Reserve, might start winding down its stimulus – for which, I’ve learned, economists like to use drug and alcohol metaphors, with our economies as the desperate addicts.
  • Debates rage over the appropriate indicator of a well-managed economy (it’s not inflation)
  • Debates rage over regulation and its role in creating a cautious culture in the finance industry that is loath to start lending to SMEs.
  • Debates rage over the effectiveness of quantitative easing.
  • Everything you thought you knew about economics is wrong (as Stephen King explains).
  • No one really knows what to do.
  • The future looks grim.

From HSBC’s perspective, the ‘new normal’ is a 90s and 00s Japan-like scenario of persistently slow growth. How do we drive social change with this backdrop?

Jha suggests that the economic medicine for this malaise will include pension reform and immigration to boost the working age population. The first reduces government expenditure and both should lead to increasing tax returns. These changes, presented as inevitabilities by Jha, may threaten our collective ability to lead happy and dignified older lives and to build integrated and cohesive communities.

Being on the front foot in managing the social implications of economic misery is vital – unless we want to spend the next half-century mopping up the mess. At Year Here, we equip the next generation of social leaders to develop strategies to prepare Britain for inevitable change – from innovative models of care and active ageing to educational experiences that cultivate in young people the skills needed for a future that no one can predict.