March Madness

Saturday, March 24, 2012

Whether we like it or not we are driven by a triumvirate of celestial clocks. Our daily cycle is the result of the rotation of the Earth; the ebb and flow of the tides is caused by the interaction of the orbiting Moon and the spinning Earth; and the annual sequence of seasons is the outcome of the tilted Earth circling the Sun.  The other planets, stars and galaxies appear not to have much physical influence – despite what astrologists would have us believe. 

Hares are said to behave oddly in the month of March – as popularised by Lewis Carroll in Alice’s Adentures in Wonderland – but there is another form of March Madness that affects people – one that is not celestial and seasonal in origin – its cause is fiscal and financial. The madness that accompanies the end of the tax year.

This fiscal cycle is man-made and is arbitrary – it could just as well be any other month and does indeed differ from country to country – and the reason it is April 6th in the UK is because it is based on the ecclesiastical year which starts on March 25th but was shifted to April 6th when 11 days were lost on the adoption of the Gregorian calendar in 1752.  The driver of the fiscal cycle is taxation and the embodiment in Law of the requirement to present standard annual financial statements for the purpose of personal taxation.

The problem is that this system was designed for a time when the bean-counting bureaucracy was people-pen-paper based and to perform this onerous task more often than annually would have been counter-productive.  That is the upside. The downside is that an annual fiscal cycle shackled to a single date creates a feast-and-famine cash flow effect. The public coffers would have a shark-fin shaped wonga-in-progress chart!  And preparing for the end of the financial year creates multi-faceted March madness: annual cash hoarding leads to delayed investment decisions and underspent budgets being disposed of carelessly; short term tax minimisation strategies distort long term investment decisions and financial targets take precident over quality and delivery goals. Success or failure hinges on the the financial equivalent of threading the eye of a long needle with a bargepole. The annual fiscal policy distorts the behaviour of system and benefits nobody. 

It would be a better design for everyone if fiscal feedback was continuous – especially as the pace of change is quickening to the point that an annual financial planning cycle is painfully long . The good news is that there are elements of fiscal load levelling aleady: companies can choose a date for their annual returns; sales tax is charged continuosuly and collected quarterly; income tax is collected monthly or weekly. But with the ubiquitous digital computer the cost of the bureaucracy is now so low that the annual fiscal fiasco is technically unnecessary and it has become more of a liability than an asset.

What would be the advantages of scrapping it? Individuals could change their tax review date and interval to one that better suits them and this would spread the bureaucratic burden on the inland revenue over the year; the country would have a smoother tax revenue flow and less ]need to  borrow to fund public expenses; and publically funded organisations could budget on a trimester or even monthly basis and become more responsive to financial fluxes and changes in the system. It could be better for everyone – but it would require radical redesign. We are not equipped to do that – we would need to understand the principles of improvement science that relate to elimination of variation.

And what about the other annual cycle that plagues the population – the Education Niggle? This is the one that requires everyone with children of school age to be forced to take family holidays at the same time: Easter, Summer and Christmas – creating another batch-and-queue feast-and-famine cycle. This fiasco originated in the early 1800’s when educational reformers believed that continuous schooling was unhealthy and institutionalised when the Forster Elementary Education Act of 1870 provided partially state funded schools – especially for the poor – to provide a sufficient supply of educated workers for the burgeoning Industrial Revolution. Once the expectation of a long summer vacation was established it has been difficult to change.  More recent evidence shows that the loss of learning momentum has a detrimental effect on children not to mention the logistical problems created if both parents are working. Children are born all year round and have wide variation in their abilities and rate of learning and to impose an arbitrary educational cycle is clearly more for the convenience of the schools and teachers than aligned to the needs of children, their families or society.  As our required skills become more generic and knowledge focussed the need for effective and efficient continuous education has never been greater. Digital communication technology is revolutionising this whole sector and individually-tailored, integrated, life-long  learning and continuous assessment is now both feasible and more affordable.

And then there is healthcare!  Where do we start?

It is time to challenge and change our out-of-date no-longer-fit-for-purpose bureaucratic establishment designs – so there will be no shortage of opportunties or work for every competent and capable Improvement Scientist!