Inspiring Your Authentic Week

Posted: 12 May 2010 11:50 PM PDT

Of course it makes perfect logical sense. When you are in a hole - stop digging. As an individual or a business if you have too much debt the obvious thing is to stop spending so much.

If you are a country it is rather different. For many countries the public sector makes up a significant part of the economy - up to 50%, more in some cases!!!

If the government cuts spending it not only reduces the amount of cash in circulation, it also cuts tax revenue. Less income tax, less business tax and so on. For a country that is on the edge, cutting spending can tip them into a downward spiral.

We all agree that you have to cut the deficit, massive debt and huge interest payments are not desirable or sustainable - even for countries. But, perhaps counterintuitively, cutting spending is not necessarily the right way.

The best way to reduce the deficit is to increase tax revenues. And the best way to increase tax revenues is to reduce taxes.

Specifically taxes to business. Less cost and fewer barriers to business equals more business, more businesses equals more profits, more jobs equals more tax revenue.

If the government is going to cut spending, cut spending on imports - not internally.

That is far from all. There is another anomaly in our system. Wealthy and experienced investors know that they make far more money, more quickly and more reliably by "betting" on markets than they do investing in enterprise.

The tax system needs to recognise this by offering tax incentives to investment in real business that create value and employment and tax disincentives to market gambling that creates instability.

You might think this sounds far more politically palatable than spending cuts, and you'd be right.

You might then wonder why so many of the governments that are in trouble are cutting spending rather than incentivising investment and this is a good question.

What I think it shows up is that, in most situations, logic is no match for tradition and culture, even among relatively bright people.

And that is precisely the point of leadership. Leadership is about having the courage and communication to move people beyond their previous limitations.

It is easy to recognise the best path to take, many of us do that and some claim credit after the event. What takes courage is to speak up against the flow of tradition and culture and suggest an alternative.

However, courage without leadership makes for a lone voice, easily derided as an eccentric or crackpot. Leadership is the ability to inspire others to follow, and that takes brilliant communication.

We urgently need to move business and government beyond traditions and culture so that we can solve the very significant challenges we are facing and to do that we need a new generation of brilliant and authentic leaders.

On the 29th of May it will be four years since I started these weekly e-mails. A couple of weeks ago Bruce Chapman wrote to me suggesting they would make a good book. I wrote back and said would he be interesting in compiling such a book. He said yes!!!!

So, if you have any favourite Monday morning mails that you would like to see in a book, please let Bruce know.

I have also started the dialogue with Wiley/Capstone, who published my first two books and they are very interested. Watch this space :-)

Are you ready to step up and lead?

Are you ready to train the next generation of leaders?

If you would like to find out more about authentic leadership please visit the dedicated Authentic Leadership microsite and lets have a chat.

If you would are interested in helping to solve these kinds of challenge, you might like to join Authenticis as a consultant. Lets have a chat about that. The next round of training starts in June.

You can subscribe for free at www.neilcrofts.com

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With love

nx

Neil Crofts
Neil Crofts
authentic business

+34 646391384
neil@neilcrofts.com
www.neilcrofts.com
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