Saturday, 28 September 2019

Beware the nuclear con man

Pervez Hoodbhoy in The Dawn

INDIAN leaders of unbridled ambition and meagre wisdom have recently suggested that India might revoke its earlier policy of No First Use (NFU) of nuclear weapons. They should be forgiven. To stay in the public eye, South Asia’s street-smart politicians need to make a lot of noise all the time. Most did not do very well in school and even fewer made it to college or university (and some ended up playing sports there).

Nuclear strategists, on the other hand, are advertised to be academic hotshots. The high-flying ones belong to various think tanks and universities — including prestigious ones in the United States. These so-called experts fill academic journals with thickly referenced research papers, participate in weighty-sounding conferences, and endlessly split hairs on minutiae like the difference between nuclear deterrence versus nuclear dissuasion.

Slyly hinting that NFU has run its course and needs a replacement, several Indian strategists have been openly flirting with a so-called counterforce doctrine — ie the possibility of knocking out Pakistan’s nuclear forces before they are activated. Paid to serve power rather than truth, like the proverbial serpent they whisper ideas into eager official ears. Their academic discourse and heavy language gives the impression that they really know what they are talking about. They don’t. In fact, they are clueless.

Here’s why. Every nuclear nation confines its deepest secrets to an extremely tight inner circle. Outsiders — meaning civilians — are excluded from what is critical. They cannot know such crucial details as the chain of nuclear command, geographical dispersal of warheads and delivery vehicles, intelligence on how well the adversary has concealed its nukes, whether warheads are mated or de-mated from delivery vehicles, integrity of communication channels, the efficacy of decoys and countermeasures, and much other vital information that would determine whether a first strike would achieve its objective.

So how do self-important know-nothing strategists — Indian, Pakistani, and American — ensure their salaries will continue reaching their bank accounts? Well, they write papers and therefore have to perfect the art of saying nothing — or perhaps next to nothing — in 5,000 words. Fact: no nuclear strategist knows the threshold of a nuclear war, can predict the sequence of events following a first strike, or persuasively argue whether nuclear hostilities could somehow be wound down. Of course he can guess — just as every Tom, Dick, and Harry can. But guesses are only guesses.

Could it perhaps be better inside a military organisation? War gaming is certainly a compulsory part of an officer’s training and one can feed parameters into a computer set up for simulating the onset and subsequent trajectory of a nuclear conflict. If properly programmed and proper probabilities are inputted, it will output the probabilities of various possible outcomes. But, as in tossing coins, probabilities make sense only when something can be repeated a large number of times. The problem is that nuclear war can happen only once.

That’s bad enough but, in fact, it’s even worse than that. You can give probabilities for missiles to be intercepted or for getting through, and for mechanical and electrical systems to work or fail. But you cannot assign probabilities for humans to act in a particular way during a crisis because that depends on mood, perception, personality and circumstance. Nuclear strategy pretends to be a science but is by no means one. Where has the other party drawn its nuclear red line (the real, not stated, one)? No one knows.

Consider: would one nuke fired at invading Indian tanks from a Pakistani Nasr missile battery elicit zero, one, three, or 30 Indian nukes as retaliation? The Indians say that a single nuke used against them, whether on Pakistani or Indian soil, constitutes a full-blown nuclear attack upon India. Should one believe them? Would panic ensue and cause one or both sides to descend into a totalistic use-them-or-lose-them mode? No one knows.

The nuclearised confrontation between India and Pakistan over Kashmir is best seen as a territorial fight between two street cats. I have had occasion to watch several. You can hear the growls grow louder. These then combine with hissing after which howls and growls get mixed. Sometimes they fight and sometimes not. Since they have only claws and teeth, never do both cats end up dead. But with nuclear weapons two opponents would strictly eliminate each other. In addition, their war would seriously devastate neighbouring countries and poison much of the globe.

The catfight analogy helps illuminate, for example, Defence Minister Rajnath Singh’s statement that continuation of India’s NFU policy depends upon ‘circumstances’. Since he left ‘circumstances’ unspecified, this could cover everything under the sun. Although dozens of articles were published commenting on his statement, in fact it carried exactly zero content. NFU is purely declaratory, impossible to verify and impossible to enforce. Nevertheless the statement was significant — the growling had become a tad louder. Plus, did you hear a slight hiss?

India’s hint at moving away from NFU towards counterforce owes to its increased military advantage over Pakistan. But hubris often paves the way to overconfidence and disaster. As every military commander worth his salt knows, all plans look fine until the battle begins. Last week a ragtag Houthi militia took out 50 per cent of Saudi Arabia’s oil-producing capacity, underscoring how even a relatively ill-equipped force can wreck an adversary bristling with the most advanced weapons that limitless oil dollars could buy. Sellers of snake oil and con men do not deserve anyone’s ears or respect. Whoever advocates a nuclear first strike should be quickly locked up in a mental asylum.

Some years after the Kargil episode, Gen Pervez Musharraf realised that nuclear weapons had brought Pakistan and India to an impasse. He is so far the only leader courageous enough to explicitly acknowledge this and — most importantly — to say out aloud that, for better or for worse, mutual fear of nuclear annihilation has etched the LoC in stone. It remains to be seen if other Pakistani and Indian leaders can dare to follow his example. Only then might peace get half a chance.

Richard Dawkins: Faith-Based Reasoning vs. Evidence-Based Reasoning

Friday, 20 September 2019

The west’s self-proclaimed custodians of democracy failed to notice it rotting away

British and American elites failed to anticipate the triumph of homegrown demagogues – because they imagined the only threats to democracy lurked abroad writes Pankaj Mishra in The Guardian

Illustration: Nate Kitch/The Guardian

Anglo-American lamentations about the state of democracy have been especially loud ever since Boris Johnson joined Donald Trump in the leadership of the free world. For a very long time, Britain and the United States styled themselves as the custodians and promoters of democracy globally, fighting a great moral battle against its foreign enemies. From the cold war through to the “war on terror”, the Caesarism that afflicted other nations was seen as peculiar to Asian and African peoples, or blamed on the despotic traditions of Russians or Chinese, on African tribalism, Islam, or the “Arab mind”.

But this analysis – amplified in a thousand books and opinion columns that located the enemies of democracy among menacingly alien people and their inferior cultures – did not prepare its audience for the sight of blond bullies perched atop the world’s greatest democracies. The barbarians, it turns out, were never at the gate; they have been ruling us for some time.

The belated shock of this realisation has made impotent despair the dominant tone of establishment commentary on the events of the past few years. But this acute helplessness betrays something more significant. While democracy was being hollowed out in the west, mainstream politicians and columnists concealed its growing void by thumping their chests against its supposed foreign enemies – or cheerleading its supposed foreign friends.

Decades of this deceptive and deeply ideological discourse about democracy have left many of us struggling to understand how it was hollowed from within – at home and abroad. Consider the stunning fact that India, billed as the world’s largest democracy, has descended into a form of Hindu supremacism – and, in Kashmir, into racist imperialism of the kind it liberated itself from in 1947.

Narendra Modi’s Hindu nationalist government is enforcing a seemingly endless curfew in the valley of Kashmir, imprisoning thousands of people without charge, cutting phone lines and the internet, and allegedly torturing suspected dissenters. Modi has established – to massive Indian acclaim – the regime of brute power and mendacity that Mahatma Gandhi explicitly warned his compatriots against: “English rule without the Englishman”.

All this while “the mother of parliaments” reels under English rule with a particularly reckless Englishman, and Israel – the “only democracy in the Middle East” – holds another election in which millions of Palestinians under its ethnocratic rule are denied a vote.

The vulnerabilities of western democracy were evident long ago to the Asian and African subjects of the British empire. Gandhi, who saw democracy as literally the rule of the people, the demos, claimed that it was merely “nominal” in the west. It could have no reality so long as “the wide gulf between the rich and the hungry millions persists” and voters “take their cue from their newspapers which are often dishonest”.

Looking ahead to our own era, Gandhi predicted that even “the states that are today nominally democratic” are likely to “become frankly totalitarian”. Gandhi
with Lord and Lady Mountbatten in 1947. Photograph: AP

Looking ahead to our own era, Gandhi predicted that even “the states that are today nominally democratic” are likely to “become frankly totalitarian” since a regime in which “the weakest go to the wall” and a “few capitalist owners” thrive “cannot be sustained except by violence, veiled if not open”.

Inaugurating India’s own experiment with an English-style parliament and electoral system, BR Ambedkar, one of the main authors of the Indian constitution, warned that while the principle of one-person-one-vote conferred political equality, it left untouched grotesque social and economic inequalities. “We must remove this contradiction at the earliest possible moment,” he urged, “or else those who suffer from inequality will blow up the structure of political democracy.”

Today’s elected demagogues, who were chosen by aggrieved voters precisely for their skills in blowing up political democracy, have belatedly alerted many more to this contradiction. But the delay in heeding Ambedkar’s warning has been lethal – and it has left many of our best and brightest stultified by the antics of Trump and Johnson, simultaneously aghast at the sharpened critiques of a resurgent left, and profoundly unable to reckon with the annihilation of democracy by its supposed friends abroad.

Modi has been among the biggest beneficiaries of this intellectual impairment. For decades, India itself greatly benefited from a cold war-era conception of “democracy”, which reduced it to a morally glamorous label for the way rulers are elected, rather than about the kinds of power they hold, or the ways they exercise it.

As a non-communist country that held routine elections, India possessed a matchless international prestige despite consistently failing – worse than many Asian, African, and Latin American countries – in providing its citizens with even the basic components of a dignified existence.

It did not matter to the fetishists of formal and procedural democracy that people in Kashmir and India’s north-eastern border states lived under de facto martial law, where security forces had unlimited licence to massacre and rape, or that a great majority of the Indian population found the promise of equality and dignity underpinned by rule of law and impartial institutions, to be a remote, almost fantastical, ideal.

The halo of virtue around India shone brighter as its governments embraced free markets and communist-run China abruptly emerged as a challenger to the west. Modi profited from an exuberant consensus about India among Anglo-American elites: that democracy had acquired deep roots in Indian soil, fertilising it for the growth of free markets.

As chief minister of the state of Gujarat in 2002, Modi was suspected of a crucial role – ranging from malign inaction to watchful complicity – in an anti-Muslim pogrom of gruesome violence. The US and the European Union denied Modi a visa for several years.

But his record was suddenly forgotten as Modi ascended, with the help of India’s richest businessmen, to power. “There is something thrilling about the rise of Narendra Modi,” Gideon Rachman, the chief foreign affairs columnist for the Financial Times, wrote in April 2014. Rupert Murdoch, of course, anointed Modi as India’s “best leader with best policies since independence”.

But Barack Obama also chose to hail Modi for reflecting “the dynamism and potential of India’s rise”. As Modi arrived in Silicon Valley in 2015 – just as his government was shutting down the internet in Kashmir – Sheryl Sandberg declared she was changing her Facebook profile in order to honour the Indian leader.

In the next few days, Modi will address thousands of affluent Indian-Americans in the company of Trump in Houston, Texas. While his government builds detention camps for hundreds of thousands Muslims it has abruptly rendered stateless, he will receive a commendation from Bill Gates for building toilets.

The fawning by Western politicians, businessmen, and journalists over a man credibly accused of complicity in a mass murder is a much bigger scandal than Jeffrey Epstein’s donations to MIT. But it has gone almost wholly unremarked in mainstream circles partly because democratic and free-marketeering India was the great non-white hope of the ideological children of Ronald Reagan and Margaret Thatcher who still dominate our discourse: India was a gilded oriental mirror in which they could cherish themselves.

This moral vanity explains how even sentinels of the supposedly reasonable centre, such as Obama and the Financial Times, came to condone demagoguery abroad – and, more importantly, how they failed to anticipate its eruption at home.

Even the most fleeting glance at history shows that the contradiction Ambedkar identified in India – which enabled Modi’s rise – has long bedevilled the emancipatory promise of democratic equality. In 1909, Max Weber asked: “How are freedom and democracy in the long run at all possible under the domination of highly developed capitalism?”

The decades of atrocity that followed answered Weber’s question with a grisly spectacle. The fraught and extremely limited western experiment with democracy did better only after social-welfarism, widely adopted after 1945, emerged to defang capitalism, and meet halfway the formidable old challenge of inequality. But the rule of demos still seemed remote.

The Cambridge political theorist John Dunn was complaining as early as 1979 that while democratic theory had become the “public cant of the modern world”, democratic reality had grown “pretty thin on the ground”. Since then, that reality has grown flimsier, corroded by a financialised mode of capitalism that has held Anglo-American politicians and journalists in its thrall since the 1980s.

What went unnoticed until recently was that the chasm between a political system that promises formal equality and a socio-economic system that generates intolerable inequality had grown much wider. It eventually empowered the demagogues who now rule us. In other words, modern democracies have for decades been lurching towards moral and ideological bankruptcy – unprepared by their own publicists to cope with the political and environmental disasters that unregulated capitalism ceaselessly inflicts, even on such winners of history as Britain and the US.

Having laboured to exclude a smelly past of ethnocide, slavery and racism – and the ongoing stink of corporate venality – from their perfumed notion of Anglo-American superiority, the promoters of democracy have no nose for its true enemies. Ripe for superannuation but still entrenched on the heights of politics and journalism, they repetitively ventilate their rage and frustration, or whinge incessantly about “cancel culture” and the “radical left”, it is because that is all they can do. Their own mind-numbing simplicities about democracy, its enemies, friends, the free world, and all that sort of thing, have doomed them to experience the contemporary world as an endless series of shocks and debacles.

Thursday, 19 September 2019

There is no longer any justification for private schools in Britain

Labour is right to debate the future of these unjust institutions, which at last are no longer seen as untouchable writes Frances Ryan in The Guardian

Pupils at Harrow school, London: ‘Removing charitable status is rightly no longer seen as radical.’ Photograph: Alamy Stock Photo

A few years back, I finished a PhD on how to tackle Britain’s unequal life chances – which, among other measures, included abolishing private schools. Dusty academia seemed the home for this sort of proposal, one that has long filled endless papers but never quite makes it off the page and into reality.

That is no longer the case. In a few days, the Labour party will debate the future of private schools. The grassroots group Labour Against Private Schools (Laps) will bring a motion to the annual party conference in Brighton calling for the full integration of state and private schools, including nationalising the endowments of the hugely wealthy public schools. It has support from six constituency parties so far and the backing of senior party figures, with the shadow chancellor, John McDonnell, putting his weight behind the motion this week. A leaked memo to the Telegraph last week noted that the party is already considering making a manifesto pledge to remove tax breaks from the sector – while leaving the door open to getting rid of the schools altogether.

Removing charitable status is rightly no longer seen as radical. In 2017, that well-known lefty Michael Gove declared that private schools were “welfare junkies”, calling the VAT exemption “egregious state support to the already wealthy so that they might buy advantage for their own children”. The classic argument that private schools deserve tax breaks because they provide bursaries to poorer children is as thin as paper: in 2017, only 1% of private school pupils were schooled for free, while figures show “financial assistance” is considerably more likely to go to affluent middle-class families than children in need. 

It’s exciting, then, that the conversation is no longer restricted to this. For decades, private schools have held an untouchable air in this country. We know very well the damage they cause – both to the children whose education is harmed by losing advantaged peers and their influential parents, and to a society that is stifled by positions of power handed out on the basis of wealth rather than talent. We know how bizarre this set-up is – that 7% of schoolchildren will go on to control much of the media, the judiciary and parliament. And yet it is greeted with borderline rabid resistance by many commentators, while even those on the left have been reluctant to argue for comprehensive solutions. It typifies the worst of class privilege, where a small section of society is permitted to buy power and influence despite all the evidence of the damage that causes, and the rest of us must shrug our shoulders and accept this as an inevitability.

What feels different now is that these ideas are becoming mainstream at a tipping point in this country. Years of austerity have highlighted the resources gap between the highly funded private sector and the starved state sector. When many working-class children don’t have basic equipment in class, the dominance of elite schools feels even more obscene. The calamity of Eton alumni taking their turn at Downing Street, meanwhile, is now a real-time display of how dysfunctional a nation becomes when structured to be forever run by a tiny pocket of the wealthy.

The abolition of private schools is not an outlandish idea but rather an extension of what we already do. Societies constantly set limits on how far a parent can go in giving their child an advantage in life – that’s why it’s illegal for a mother to bribe a university admissions officer to give her son a place, and unethical for a father to do his daughter’s GCSE coursework. This is because it is widely understood that no matter how natural a parent’s desire to do the best for their child, it does not trump the good of society. Other countries, such as Finland, have already acted on this by slowly merging private and state schools.

When many working-class children don’t have basic equipment in class, the dominance of elite schools feels even more obscene

That the recent Telegraph front page had to rely on the retro “politics of envy” accusation to describe Labour’s ideas – akin to a playground cry of “You’re just jealous!” – shows how weak critics’ arguments are. In an era in which the damage of inequality is ever clearer and the movements to tackle it are growing stronger, those who cannot comprehend a desire to make life fairer for other people’s children sound increasingly out of touch.

It’s clear that tackling private schools alone is not enough to level the playing field, but that there are multiple causes of inequality doesn’t seem a good argument to ignore one of them.

The protection of a two-tier school system comes down to a fundamental question about what we think education should be. If we want the education system to be about giving every child a fair shot, then merging state and private schools is the logical move. The question is: what is really stopping our children being educated together?

For the sake of life on Earth, we must put a limit on wealth

It’s not just the megarich: increased spending power leads us all to inflict environmental damage. It’s time for a radical plan writes George Monbiot in The Guardian

It is not quite true that behind every great fortune lies a great crime. Musicians and novelists, for example, can become extremely rich by giving other people pleasure. But it does appear to be universally true that in front of every great fortune lies a great crime. Immense wealth translates automatically into immense environmental impacts, regardless of the intentions of those who possess it. The very wealthy, almost as a matter of definition, are committing ecocide.

Greta Thunberg to Congress: ‘You’re not trying hard enough. Sorry’

A few weeks ago, I received a letter from a worker at a British private airport. “I see things that really shouldn’t be happening in 2019,” he wrote. Every day he sees Global 7000 jets, Gulfstream G650s and even Boeing 737s take off from the airport carrying a single passenger, mostly flying to Russia and the US. The private Boeing 737s, built to take 174 passengers, are filled at the airport with around 25,000 litres of fuel. That’s as much fossil energy as a small African town might use in a year.

Where are these single passengers going? Perhaps to visit one of their superhomes, constructed and run at vast environmental cost, or to take a trip on their superyacht, which might burn 500 litres of diesel an hour just ticking over, and which is built and furnished with rare materials extracted at the expense of beautiful places. The most expensive yacht in the world, costing £3bn, is a preposterous slab of floating bling called History Supreme. It carries 100 tonnes of gold and platinum wrapped around almost every surface, even the anchor.

Perhaps we shouldn’t be surprised to learn that when Google convened a meeting of the rich and famous at the Verdura resort in Sicily in July to discuss climate breakdown, its delegates arrived in 114 private jets and a fleet of megayachts, and drove around the island in supercars. Even when they mean well, the ultrarich cannot help trashing the living world.

‘Superyachts, built and furnished with rare materials, can burn 500 litres of diesel per hour just ticking over.’ The superyacht Aviva off the Cornish coast. Photograph: Simon Maycock/Alamy Stock Photo

A series of research papers shows that income is by far the most important determinant of environmental impact. It doesn’t matter how green you think you are; if you have surplus money, you spend it. The only form of consumption that’s clearly and positively correlated with good environmental intentions is diet: people who see themselves as green tend to eat less meat and more organic vegetables. But attitudes have little bearing on the amount of transport fuel, home energy and other materials you consume. Money conquers all.

The disastrous effects of spending power are compounded by the psychological impacts of being wealthy. Plenty of studies show that the richer you are, the less you are able to connect with other people. Wealth suppresses empathy. One paper reveals that drivers in expensive cars are less likely to stop for people using pedestrian crossings than drivers in cheap cars. Another revealed that rich people were less able than poorer people to feel compassion towards children with cancer. Though they are disproportionately responsible for our environmental crises, the rich will be hurt least and last by planetary disaster, while the poor are hurt first and worst. The richer people are, the research suggests, the less such knowledge is likely to trouble them.

Another issue is that wealth limits the perspectives of even the best-intentioned people. This week, Bill Gates argued in an interview with the Financial Times that divesting (ditching stocks) from fossil fuels is a waste of time. It would be better, he claimed, to pour money into disruptive new technologies with lower emissions. Of course we need new technologies. But he has missed the crucial point: in seeking to prevent climate breakdown, what counts is not what you do but what you stop doing. It doesn’t matter how many solar panels you install if you don’t simultaneously shut down coal and gas burners. Unless existing fossil fuel plants are retired before the end of their lives, and all exploration and development of new fossil fuel reserves is cancelled, there is little chance of preventing more than 1.5C of global heating.

But this requires structural change, which involves political intervention as well as technological innovation: anathema to Silicon Valley billionaires. It demands an acknowledgement that money is not a magic wand that makes all the bad stuff go away.

Tomorrow, I’ll be joining the global climate strike, in which adults will stand with the young people whose call to action has resonated around the world. As a freelancer, I’ve been wondering who I’m striking against. Myself? Yes: one aspect of myself, at least. Perhaps the most radical thing we can now do is to limit our material aspirations. The assumption on which governments and economists operate is that everyone strives to maximise their wealth. If we succeed in this task, we inevitably demolish our life support systems. Were the poor to live like the rich, and the rich to live like the oligarchs, we would destroy everything. The continued pursuit of wealth in a world that has enough already (albeit very poorly distributed) is a formula for mass destitution.

A meaningful strike in defence of the living world is, in part, a strike against the desire to raise our incomes and accumulate wealth: a desire shaped, more than we are probably aware, by dominant social and economic narratives. I see myself as striking in support of a radical and disturbing concept: enough. Individually and collectively, it is time to decide what “enough” looks like, and how to know when we’ve achieved it.

There’s a name for this approach, coined by the Belgian philosopher Ingrid Robeyns: limitarianism. Robeyns argues that there should be an upper limit to the amount of income and wealth a person can amass. Just as we recognise a poverty line, below which no one should fall, we should recognise a riches line, above which no one should rise. This call for a levelling down is perhaps the most blasphemous idea in contemporary discourse.

But her arguments are sound. Surplus money allows some people to exercise inordinate power over others: in the workplace; in politics; and above all in the capture, use and destruction of the planet’s natural wealth. If everyone is to flourish, we cannot afford the rich. Nor can we afford our own aspirations, which the culture of wealth maximisation encourages.

The grim truth is that the rich are able to live as they do only because others are poor: there is neither the physical nor ecological space for everyone to pursue private luxury. Instead we should strive for private sufficiency, public luxury. Life on Earth depends on moderation.

Why can’t we agree on what’s true anymore?

It’s not about foreign trolls, filter bubbles or fake news. Technology encourages us to believe we can all have first-hand access to the ‘real’ facts – and now we can’t stop fighting about it. By William Davies in The Guardian 

We live in a time of political fury and hardening cultural divides. But if there is one thing on which virtually everyone is agreed, it is that the news and information we receive is biased. Every second of every day, someone is complaining about bias, in everything from the latest movie reviews to sports commentary to the BBC’s coverage of Brexit. These complaints and controversies take up a growing share of public discussion.

Much of the outrage that floods social media, occasionally leaking into opinion columns and broadcast interviews, is not simply a reaction to events themselves, but to the way in which they are reported and framed. The “mainstream media” is the principle focal point for this anger. Journalists and broadcasters who purport to be neutral are a constant object of scrutiny and derision, whenever they appear to let their personal views slip. The work of journalists involves an increasing amount of unscripted, real-time discussion, which provides an occasionally troubling window into their thinking.

But this is not simply an anti-journalist sentiment. A similar fury can just as easily descend on a civil servant or independent expert whenever their veneer of neutrality seems to crack, apparently revealing prejudices underneath. Sometimes a report or claim is dismissed as biased or inaccurate for the simple reason that it is unwelcome: to a Brexiter, every bad economic forecast is just another case of the so-called project fear. A sense that the game is rigged now fuels public debate.

This mentality now spans the entire political spectrum and pervades societies around the world. A recent survey found that the majority of people globally believe their society is broken and their economy is rigged. Both the left and the right feel misrepresented and misunderstood by political institutions and the media, but the anger is shared by many in the liberal centre, who believe that populists have gamed the system to harvest more attention than they deserve. Outrage with “mainstream” institutions has become a mass sentiment.

This spirit of indignation was once the natural property of the left, which has long resented the establishment bias of the press. But in the present culture war, the right points to universities, the BBC and civil service as institutions that twist our basic understanding of reality to their own ends. Everyone can point to evidence that justifies their outrage. This arms race in cultural analysis is unwinnable.

This is not as simple as distrust. The appearance of digital platforms, smartphones and the ubiquitous surveillance they enable has ushered in a new public mood that is instinctively suspicious of anyone claiming to describe reality in a fair and objective fashion. It is a mindset that begins with legitimate curiosity about what motivates a given media story, but which ends in a Trumpian refusal to accept any mainstream or official account of the world. We can all probably locate ourselves somewhere on this spectrum, between the curiosity of the engaged citizen and the corrosive cynicism of the climate denier. The question is whether this mentality is doing us any good, either individually or collectively.

Public life has become like a play whose audience is unwilling to suspend disbelief. Any utterance by a public figure can be unpicked in search of its ulterior motive. As cynicism grows, even judges, the supposedly neutral upholders of the law, are publicly accused of personal bias. Once doubt descends on public life, people become increasingly dependent on their own experiences and their own beliefs about how the world really works. One effect of this is that facts no longer seem to matter (the phenomenon misleadingly dubbed “post-truth”). But the crisis of democracy and of truth are one and the same: individuals are increasingly suspicious of the “official” stories they are being told, and expect to witness things for themselves.

On one level, heightened scepticism towards the establishment is a welcome development. A more media-literate and critical citizenry ought to be less easy for the powerful to manipulate. It may even represent a victory for the type of cultural critique pioneered by intellectuals such as Pierre Bourdieu and Stuart Hall in the 1970s and 80s, revealing the injustices embedded in everyday cultural expressions and interactions.

But it is possible to have too much scepticism. How exactly do we distinguish this critical mentality from that of the conspiracy theorist, who is convinced that they alone have seen through the official version of events? Or to turn the question around, how might it be possible to recognise the most flagrant cases of bias in the behaviour of reporters and experts, but nevertheless to accept that what they say is often a reasonable depiction of the world?

It is tempting to blame the internet, populists or foreign trolls for flooding our otherwise rational society with lies. But this underestimates the scale of the technological and philosophical transformations that are under way. The single biggest change in our public sphere is that we now have an unimaginable excess of news and content, where once we had scarcity. Suddenly, the analogue channels and professions we depended on for our knowledge of the world have come to seem partial, slow and dispensable.

And yet, contrary to initial hype surrounding big data, the explosion of information available to us is making it harder, not easier, to achieve consensus on truth. As the quantity of information increases, the need to pick out bite-size pieces of content rises accordingly. In this radically sceptical age, questions of where to look, what to focus on and who to trust are ones that we increasingly seek to answer for ourselves, without the help of intermediaries. This is a liberation of sorts, but it is also at the heart of our deteriorating confidence in public institutions.

The current threat to democracy is often seen to emanate from new forms of propaganda, with the implication that lies are being deliberately fed to a naive and over-emotional public. The simultaneous rise of populist parties and digital platforms has triggered well-known anxieties regarding the fate of truth in democratic societies. Fake news and internet echo chambers are believed to manipulate and ghettoise certain communities, for shadowy ends. Key groups – millennials or the white working-class, say – are accused of being easily persuadable, thanks to their excessive sentimentality.

This diagnosis exaggerates old-fashioned threats while overlooking new phenomena. Over-reliant on analogies to 20th century totalitarianism, it paints the present moment as a moral conflict between truth and lies, with an unthinking public passively consuming the results. But our relationship to information and news is now entirely different: it has become an active and critical one, that is deeply suspicious of the official line. Nowadays, everyone is engaged in spotting and rebutting propaganda of one kind or another, curating our news feeds, attacking the framing of the other side and consciously resisting manipulation. In some ways, we have become too concerned with truth, to the point where we can no longer agree on it. The very institutions that might once have brought controversies to an end are under constant fire for their compromises and biases.

The threat of misinformation and propaganda should not be denied. As the scholars Yochai Benkler, Robert Faris and Hal Roberts have shown in their book Network Propaganda, there is now a self-sustaining information ecosystem on the American right through which conspiracy theories and untruths get recycled, between Breitbart, Fox News, talk radio and social media. Meanwhile, the anti-vaxx movement is becoming a serious public health problem across the world, aided by the online circulation of conspiracy theories and pseudo-science. This is a situation where simple misinformation poses a serious threat to society.

But away from these eye-catching cases, things look less clear-cut. The majority of people in northern Europe still regularly encounter mainstream news and information. Britain is a long way from the US experience, thanks principally to the presence of the BBC, which, for all its faults, still performs a basic function in providing a common informational experience. It is treated as a primary source of news by 60% of people in the UK. Even 42% of Brexit party and Ukip voters get their news from the BBC.

Protesters in London earlier this year. Photograph: Avpics/Alamy

The panic surrounding echo chambers and so-called filter bubbles is largely groundless. If we think of an echo chamber as a sealed environment, which only circulates opinions and facts that are agreeable to its participants, it is a rather implausible phenomenon. Research by the Oxford Internet Institute suggests that just 8% of the UK public are at risk of becoming trapped in such a clique.

Trust in the media is low, but this entrenched scepticism long predates the internet or contemporary populism. From the Sun’s lies about Hillsborough to the BBC’s failure to expose Jimmy Savile as early as they might, to the fevered enthusiasm for the Iraq war that gripped much of Fleet Street, the British public has had plenty of good reasons to distrust journalists. Even so, the number of people in the UK who trust journalists to tell the truth has actually risen slightly since the 1980s.

What, then, has changed? The key thing is that the elites of government and the media have lost their monopoly over the provision of information, but retain their prominence in the public eye. They have become more like celebrities, anti-heroes or figures in a reality TV show. And digital platforms now provide a public space to identify and rake over the flaws, biases and falsehoods of mainstream institutions. The result is an increasingly sceptical citizenry, each seeking to manage their media diet, checking up on individual journalists in order to resist the pernicious influence of the establishment.

There are clear and obvious benefits to this, where it allows hateful and manipulative journalism to be called out. It is reassuring to discover the large swell of public sympathy for the likes of Ben Stokes and Gareth Thomas, and their families, who have been harassed by the tabloids in recent days. But this also generates a mood of outrage, which is far more focused on denouncing bad and biased reporting than with defending the alternative. Across the political spectrum, we are increasingly distracted and enraged by what our adversaries deem important and how they frame it. It is not typically the media’s lies that provoke the greatest fury online, but the discovery that an important event has been ignored or downplayed. While it is true that arguments rage over dodgy facts and figures (concerning climate change or the details of Britain’s trading relations), many of the most bitter controversies of our news cycle concern the framing and weighting of different issues and how they are reported, rather than the facts of what actually happened.

The problem we face is not, then, that certain people are oblivious to the “mainstream media”, or are victims of fake news, but that we are all seeking to see through the veneer of facts and information provided to us by public institutions. Facts and official reports are no longer the end of the story. Such scepticism is healthy and, in many ways, the just deserts of an establishment that has been caught twisting the truth too many times. But political problems arise once we turn against all representations and framings of reality, on the basis that these are compromised and biased – as if some purer, unmediated access to the truth might be possible instead. This is a seductive, but misleading ideal.

Every human culture throughout history has developed ways to record experiences and events, allowing them to endure. From early modern times, liberal societies have developed a wide range of institutions and professions whose work ensures that events do not simply pass without trace or public awareness. Newspapers and broadcasters share reports, photographs and footage of things that have happened in politics, business, society and culture. Court documents and the Hansard parliamentary reports provide records of what has been said in court and in parliament. Systems of accounting, audit and economics help to establish basic facts of what takes place in businesses and markets.

Traditionally, it is through these systems, which are grounded in written testimonies and public statements, that we have learned what is going on in the world. But in the past 20 years, this patchwork of record-keeping has been supplemented and threatened by a radically different system, which is transforming the nature of empirical evidence and memory. One term for this is “big data”, which highlights the exponential growth in the quantity of data that societies create, thanks to digital technologies.

The reason there is so much data today is that more and more of our social lives are mediated digitally. Internet browsers, smartphones, social media platforms, smart cards and every other smart interface record every move we make. Whether or not we are conscious of it, we are constantly leaving traces of our activities, no matter how trivial.

But it is not the escalating quantity of data that constitutes the radical change. Something altogether new has occurred that distinguishes today’s society from previous epochs. In the past, recording devices were principally trained upon events that were already acknowledged as important. Journalists did not just report news, but determined what counted as newsworthy. TV crews turned up at events that were deemed of national significance. The rest of us kept our cameras for noteworthy occasions, such as holidays and parties.

The ubiquity of digital technology has thrown all of this up in the air. Things no longer need to be judged “important” to be captured. Consciously, we photograph events and record experiences regardless of their importance. Unconsciously, we leave a trace of our behaviour every time we swipe a smart card, address Amazon’s Alexa or touch our phone. For the first time in human history, recording now happens by default, and the question of significance is addressed separately.

This shift has prompted an unrealistic set of expectations regarding possibilities for human knowledge. As many of the original evangelists of big data liked to claim, when everything is being recorded, our knowledge of the world no longer needs to be mediated by professionals, experts, institutions and theories. Instead, they argued that the data can simply “speak for itself”. Patterns will emerge, traces will come to light. This holds out the prospect of some purer truth than the one presented to us by professional editors or trained experts. As the Australian surveillance scholar Mark Andrejevic has brilliantly articulated, this is a fantasy of a truth unpolluted by any deliberate human intervention – the ultimate in scientific objectivity.

Andrejevic argues that the rise of this fantasy coincides with growing impatience with the efforts of reporters and experts to frame reality in meaningful ways. He writes that “we might describe the contemporary media moment – and its characteristic attitude of sceptical savviness regarding the contrivance of representation – as one that implicitly embraces the ideal of framelessness”. From this perspective, every controversy can in principle be settled thanks to the vast trove of data – CCTV, records of digital activity and so on – now available to us. Reality in its totality is being recorded, and reporters and officials look dismally compromised by comparison.

One way in which seemingly frameless media has transformed public life over recent years is in the elevation of photography and video as arbiters of truth, as opposed to written testimony or numbers. “Pics or it didn’t happen” is a jokey barb sometimes thrown at social media users when they share some unlikely experience. It is often a single image that seems to capture the truth of an event, only now there are cameras everywhere. No matter how many times it is disproven, the notion that “the camera doesn’t lie” has a peculiar hold over our imaginations. In a society of blanket CCTV and smartphones, there are more cameras than people, and the torrent of data adds to the sense that the truth is somewhere amid the deluge, ignored by mainstream accounts. The central demand of this newly sceptical public is “so show me”.

This transformation in our recording equipment is responsible for much of the outrage directed at those formerly tasked with describing the world. The rise of blanket surveillance technologies has paradoxical effects, raising expectations for objective knowledge to unrealistic levels, and then provoking fury when those in the public eye do not meet them.

On the one hand, data science appears to make the question of objective truth easier to settle. Slow and imperfect institutions of social science and journalism can be circumvented, and we can get directly to reality itself, unpolluted by human bias. Surely, in this age of mass data capture, the truth will become undeniable.

On the other hand, as the quantity of data becomes overwhelming – greater than human intelligence can comprehend – our ability to agree on the nature of reality seems to be declining. Once everything is, in principle, recordable, disputes heat up regarding what counts as significant in the first place. It turns out that the “frames” that journalists and experts use to reduce and organise information are indispensable to its coherence and meaning.

What we are discovering is that, once the limitations on data capture are removed, there are escalating opportunities for conflict over the nature of reality. Every time a mainstream media agency reports the news, they can instantly be met with the retort: but what about this other event, in another time and another place, that you failed to report? What about the bits you left out? What about the other voters in the town you didn’t talk to? When editors judge the relative importance of stories, they now confront a panoply of alternative judgements. Where records are abundant, fights break out over relevance and meaning.

Professional editors have always faced the challenge of reducing long interviews to short consumable chunks and discarding the majority of photos or text. Editing is largely a question of what to throw away. This necessitates value judgements, that readers and audiences once had little option but to trust. Now, however, the question of which image or sentence is truly significant opens irresolvable arguments. One person’s offcut is another person’s revealing nugget.

Political agendas can be pursued this way, including cynical ones aimed at painting one’s opponents in the worst possible light. An absurd or extreme voice can be represented as typical of a political movement (known as “nutpicking”). Taking quotes out of context is one of the most disruptive of online ploys, which provokes far more fury than simple insults. Rather than deploying lies or “fake news”, it messes with the significance of data, taking the fact that someone did say or write something, but violating their intended meaning. No doubt professional journalists have always descended to such tactics from time to time, but now we are all at it, provoking a vicious circle of misrepresentation.

Then consider the status of photography and video. It is not just that photographic evidence can be manipulated to mislead, but that questions will always survive regarding camera angle and context. What happened before or after a camera started rolling? What was outside the shot? These questions provoke suspicion, often with good reason.

The most historic example of such a controversy predates digital media. The Zapruder film, which captured the assassination of John F Kennedy, became the most scrutinised piece of footage in history. The film helped spawn countless conspiracy theories, with individual frames becoming the focus of controversies, with competing theories as to what they reveal. The difficulty of completely squaring any narrative with a photographic image is a philosophical one as much as anything, and the Zapruder film gave a glimpse of the sorts of media disputes that have become endemic now cameras are ubiquitous parts of our social lives and built environments.

Minor gestures pored over for hidden meanings … Emily Maitlis (left) with Nadhim Zahawi and Barry Gardiner on the BBC’s Newsnight. Photograph: BBC

Today, minor gestures that would usually have passed without comment only a decade ago become pored over in search of their hidden message. What did Emily Maitlis mean when she rolled her eyes at Barry Gardiner on Newsnight? What was Jeremy Corbyn mouthing during Prime Minister’s Questions? Who took the photo of Boris Johnson and Carrie Symonds sitting at a garden table in July, and why? This way madness lies.

While we are now able to see evidence for ourselves, we all have conflicting ideas of what bit to attend to, and what it means. The camera may not lie, but that is because it does not speak at all. As we become more fixated on some ultimate gold-standard of objective truth, which exceeds the words of mere journalists or experts, so the number of interpretations applied to the evidence multiplies. As our faith in the idea of undeniable proof deepens, so our frustration with competing framings and official accounts rises. All too often, the charge of “bias” means “that’s not my perspective”. Our screen-based interactions with many institutions have become fuelled by anger that our experiences are not being better recognised, along with a new pleasure at being able to complain about it. As the writer and programmer Paul Ford wrote, back in 2011, “the fundamental question of the web” is: “Why wasn’t I consulted?”

What we are witnessing is a collision between two conflicting ideals of truth: one that depends on trusted intermediaries (journalists and experts), and another that promises the illusion of direct access to reality itself. This has echoes of the populist challenge to liberal democracy, which pits direct expressions of the popular will against parliaments and judges, undermining the very possibility of compromise. The Brexit crisis exemplifies this as well as anything. Liberals and remainers adhere to the long-standing constitutional convention that the public speaks via the institutions of general elections and parliament. Adamant Brexiters believe that the people spoke for themselves in June 2016, and have been thwarted ever since by MPs and civil servants. It is this latter logic that paints suspending parliament as an act of democracy.

This is the tension that many populist leaders exploit. Officials and elected politicians are painted as cynically self-interested, while the “will of the people” is both pure and obvious. Attacks on the mainstream media follow an identical script: the individuals professionally tasked with informing the public, in this case journalists, are biased and fake. It is widely noted that leaders such as Donald Trump, Jair Bolsonaro and Matteo Salvini are enthusiastic users of Twitter, and Boris Johnson has recently begun to use Facebook Live to speak directly to “the people” from Downing Street. Whether it be parliaments or broadcasters, the analogue intermediaries of the public sphere are discredited and circumvented.

What can professional editors and journalists do in response? One response is to shout even louder about their commitment to “truth”, as some American newspapers have profitably done in the face of Trump. But this escalates cultural conflict, and fails to account for how the media and informational landscape has changed in the past 20 years.

What if, instead, we accepted the claim that all reports about the world are simply framings of one kind or another, which cannot but involve political and moral ideas about what counts as important? After all, reality becomes incoherent and overwhelming unless it is simplified and narrated in some way or other. And what if we accepted that journalists, editors and public figures will inevitably let cultural and personal biases slip from time to time? A shrug is often the more appropriate response than a howl. If we abandoned the search for some pure and unbiased truth, where might our critical energies be directed instead?

If we recognise that reporting and editing is always a political act (at least in the sense that it asserts the importance of one story rather than another), then the key question is not whether it is biased, but whether it is independent of financial or political influence. The problem becomes a quasi-constitutional one, of what processes, networks and money determine how data gets turned into news, and how power gets distributed. On this front, the British media is looking worse and worse, with every year that passes.

The relationship between the government and the press has been getting tighter since the 1980s. This is partly thanks to the overweening power of Rupert Murdoch, and the image management that developed in response. Spin doctors such as Alastair Campbell, Andy Coulson, Tom Baldwin, Robbie Gibb and Seumas Milne typically move from the media into party politics, weakening the division between the two.

Then there are those individuals who shift backwards and forwards between senior political positions and the BBC, such as Gibb, Rona Fairhead and James Purnell. The press has taken a very bad turn over recent years, with ex-Chancellor George Osborne becoming editor of the Evening Standard, then the extraordinary recent behaviour of the Daily Telegraph, which seeks to present whatever story or gloss is most supportive of their former star columnist in 10 Downing Street, and rubbishes his opponents. (The Opinion page of the Telegraph website proudly includes a “Best of Boris” section.)

Since the financial crisis of 2008, there have been regular complaints about the revolving door between the financial sector and governmental institutions around the world, most importantly the White House. There has been far less criticism of the similar door that links the media and politics. The exception to this comes from populist leaders, who routinely denounce all “mainstream” democratic and media institutions as a single liberal elite, that acts against the will of the people. One of the reasons they are able to do this is because there is a grain of truth in what they say.

The financial obstacles confronting critical, independent, investigative media are significant. If the Johnson administration takes a more sharply populist turn, the political obstacles could increase, too – Channel 4 is frequently held up as an enemy of Brexit, for example. But let us be clear that an independent, professional media is what we need to defend at the present moment, and abandon the misleading and destructive idea that – thanks to a combination of ubiquitous data capture and personal passions – the truth can be grasped directly, without anyone needing to report it.

Why rigged capitalism is damaging liberal democracy

Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes writes Martin Wolf in The FT

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”  

 With this sentence, the US Business Roundtable, which represents the chief executives of 181 of the world’s largest companies, abandoned their longstanding view that “corporations exist principally to serve their shareholders”.  

This is certainly a moment. But what does — and should — that moment mean? The answer needs to start with acknowledgment of the fact that something has gone very wrong. Over the past four decades, and especially in the US, the most important country of all, we have observed an unholy trinity of slowing productivity growth, soaring inequality and huge financial shocks.  

As Jason Furman of Harvard University and Peter Orszag of Lazard Frères noted in a paper last year: “From 1948 to 1973, real median family income in the US rose 3 per cent annually. At this rate . . . there was a 96 per cent chance that a child would have a higher income than his or her parents. Since 1973, the median family has seen its real income grow only 0.4 per cent annually . . . As a result, 28 per cent of children have lower income than their parents did.”

So why is the economy not delivering? The answer lies, in large part, with the rise of rentier capitalism. In this case “rent” means rewards over and above those required to induce the desired supply of goods, services, land or labour. “Rentier capitalism” means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else. 

That does not explain every disappointment. As Robert Gordon, professor of social sciences at Northwestern University, argues, fundamental innovation slowed after the mid-20th century. Technology has also created greater reliance on graduates and raised their relative wages, explaining part of the rise of inequality. But the share of the top 1 per cent of US earners in pre-tax income jumped from 11 per cent in 1980 to 20 per cent in 2014. This was not mainly the result of such skill-biased technological change. 

If one listens to the political debates in many countries, notably the US and UK, one would conclude that the disappointment is mainly the fault of imports from China or low-wage immigrants, or both. Foreigners are ideal scapegoats. But the notion that rising inequality and slow productivity growth are due to foreigners is simply false. 

Every western high-income country trades more with emerging and developing countries today than it did four decades ago. Yet increases in inequality have varied substantially. The outcome depended on how the institutions of the market economy behaved and on domestic policy choices.  

Harvard economist Elhanan Helpman ends his overview of a huge academic literature on the topic with the conclusion that “globalisation in the form of foreign trade and offshoring has not been a large contributor to rising inequality. Multiple studies of different events around the world point to this conclusion.” 

The shift in the location of much manufacturing, principally to China, may have lowered investment in high-income economies a little. But this effect cannot have been powerful enough to reduce productivity growth significantly. To the contrary, the shift in the global division of labour induced high-income economies to specialise in skill-intensive sectors, where there was more potential for fast productivity growth. 

Donald Trump, a naive mercantilist, focuses, instead, on bilateral trade imbalances as a cause of job losses. These deficits reflect bad trade deals, the American president insists. It is true that the US has overall trade deficits, while the EU has surpluses. But their trade policies are quite similar. Trade policies do not explain bilateral balances. Bilateral balances, in turn, do not explain overall balances. The latter are macroeconomic phenomena. Both theory and evidence concur on this. 

The economic impact of immigration has also been small, however big the political and cultural “shock of the foreigner” may be. Research strongly suggests that the effect of immigration on the real earnings of the native population and on receiving countries’ fiscal position has been small and frequently positive. 

Far more productive than this politically rewarding, but mistaken, focus on the damage done by trade and migration is an examination of contemporary rentier capitalism itself.  

Finance plays a key role, with several dimensions. Liberalised finance tends to metastasise, like a cancer. Thus, the financial sector’s ability to create credit and money finances its own activities, incomes and (often illusory) profits. 

A 2015 study by Stephen Cecchetti and Enisse Kharroubi for the Bank for International Settlements said “the level of financial development is good only up to a point, after which it becomes a drag on growth, and that a fast-growing financial sector is detrimental to aggregate productivity growth”. When the financial sector grows quickly, they argue, it hires talented people. These then lend against property, because it generates collateral. This is a diversion of talented human resources in unproductive, useless directions. 

Again, excessive growth of credit almost always leads to crises, as Carmen Reinhart and Kenneth Rogoff showed in This Time is Different. This is why no modern government dares let the supposedly market-driven financial sector operate unaided and unguided. But that in turn creates huge opportunities to gain from irresponsibility: heads, they win; tails, the rest of us lose. Further crises are guaranteed. 

Finance also creates rising inequality. Thomas Philippon of the Stern School of Business and Ariell Reshef of the Paris School of Economics showed that the relative earnings of finance professionals exploded upwards in the 1980s with the deregulation of finance. They estimated that “rents” — earnings over and above those needed to attract people into the industry — accounted for 30-50 per cent of the pay differential between finance professionals and the rest of the private sector.  

This explosion of financial activity since 1980 has not raised the growth of productivity. If anything, it has lowered it, especially since the crisis. The same is true of the explosion in pay of corporate management, yet another form of rent extraction. As Deborah Hargreaves, founder of the High Pay Centre, notes, in the UK the ratio of average chief executive pay to that of average workers rose from 48 to one in 1998 to 129 to one in 2016. In the US, the same ratio rose from 42 to one in 1980 to 347 to one in 2017.  

As the US essayist HL Mencken wrote: “For every complex problem, there is an answer that is clear, simple and wrong.” Pay linked to the share price gave management a huge incentive to raise that price, by manipulating earnings or borrowing money to buy the shares. Neither adds value to the company. But they can add a great deal of wealth to management. A related problem with governance is conflicts of interest, notably over independence of auditors. 

In sum, personal financial considerations permeate corporate decision-making. As the independent economist Andrew Smithers argues in Productivity and the Bonus Culture, this comes at the expense of corporate investment and so of long-run productivity growth.  

A possibly still more fundamental issue is the decline of competition. Mr Furman and Mr Orszag say there is evidence of increased market concentration in the US, a lower rate of entry of new firms and a lower share of young firms in the economy compared with three or four decades ago. Work by the OECD and Oxford Martin School also notes widening gaps in productivity and profit mark-ups between the leading businesses and the rest. This suggests weakening competition and rising monopoly rent. Moreover, a great deal of the increase in inequality arises from radically different rewards for workers with similar skills in different firms: this, too, is a form of rent extraction. 

A part of the explanation for weaker competition is “winner-takes-almost-all” markets: superstar individuals and their companies earn monopoly rents, because they can now serve global markets so cheaply. The network externalities — benefits of using a network that others are using — and zero marginal costs of platform monopolies (Facebook, Google, Amazon, Alibaba and Tencent) are the dominant examples.  

Another such natural force is the network externalities of agglomerations, stressed by Paul Collier in The Future of Capitalism. Successful metropolitan areas — London, New York, the Bay Area in California — generate powerful feedback loops, attracting and rewarding talented people. This disadvantages businesses and people trapped in left-behind towns. Agglomerations, too, create rents, not just in property prices, but also in earnings.  

Yet monopoly rent is not just the product of such natural — albeit worrying — economic forces. It is also the result of policy. In the US, Yale University law professor Robert Bork argued in the 1970s that “consumer welfare” should be the sole objective of antitrust policy. As with shareholder value maximisation, this oversimplified highly complex issues. In this case, it led to complacency about monopoly power, provided prices stayed low. Yet tall trees deprive saplings of the light they need to grow. So, too, may giant companies.  

Some might argue, complacently, that the “monopoly rent” we now see in leading economies is largely a sign of the “creative destruction” lauded by the Austrian economist Joseph Schumpeter. In fact, we are not seeing enough creation, destruction or productivity growth to support that view convincingly. 

A disreputable aspect of rent-seeking is radical tax avoidance. Corporations (and so also shareholders) benefit from the public goods — security, legal systems, infrastructure, educated workforces and sociopolitical stability — provided by the world’s most powerful liberal democracies. Yet they are also in a perfect position to exploit tax loopholes, especially those companies whose location of production or innovation is difficult to determine.  

The biggest challenges within the corporate tax system are tax competition and base erosion and profit shifting. We see the former in falling tax rates. We see the latter in the location of intellectual property in tax havens, in charging tax-deductible debt against profits accruing in higher-tax jurisdictions and in rigging transfer prices within firms.  

A 2015 study by the IMF calculated that base erosion and profit shifting reduced long-run annual revenue in OECD countries by about $450bn (1 per cent of gross domestic product) and in non-OECD countries by slightly over $200bn (1.3 per cent of GDP). These are significant figures in the context of a tax that raised an average of only 2.9 per cent of GDP in 2016 in OECD countries and just 2 per cent in the US.  

Brad Setser of the Council on Foreign Relations shows that US corporations report seven times as much profit in small tax havens (Bermuda, the British Caribbean, Ireland, Luxembourg, Netherlands, Singapore and Switzerland) as in six big economies (China, France, Germany, India, Italy and Japan). This is ludicrous. The tax reform under Mr Trump changed essentially nothing. Needless to say, not only US corporations benefit from such loopholes. 

In such cases, rents are not merely being exploited. They are being created, through lobbying for distorting and unfair tax loopholes and against needed regulation of mergers, anti-competitive practices, financial misbehaviour, the environment and labour markets. Corporate lobbying overwhelms the interests of ordinary citizens. Indeed, some studies suggest that the wishes of ordinary people count for next to nothing in policymaking.  

Not least, as some western economies have become more Latin American in their distribution of incomes, their politics have also become more Latin American. Some of the new populists are considering radical, but necessary, changes in competition, regulatory and tax policies. But others rely on xenophobic dog whistles while continuing to promote a capitalism rigged to favour a small elite. Such activities could well end up with the death of liberal democracy itself. 

Members of the Business Roundtable and their peers have tough questions to ask themselves. They are right: seeking to maximise shareholder value has proved a doubtful guide to managing corporations. But that realisation is the beginning, not the end. They need to ask themselves what this understanding means for how they set their own pay and how they exploit — indeed actively create — tax and regulatory loopholes. 

They must, not least, consider their activities in the public arena. What are they doing to ensure better laws governing the structure of the corporation, a fair and effective tax system, a safety net for those afflicted by economic forces beyond their control, a healthy local and global environment and a democracy responsive to the wishes of a broad majority? 

We need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy. Fixing this is a challenge for us all, but especially for those who run the world’s most important businesses. The way our economic and political systems work must change, or they will perish.

Sunday, 15 September 2019

Never mind ‘tax raids’, Labour – just abolish private education

As drivers of inequality, private schools are at the heart of Britain’s problems. Labour must be bold and radical on this writes Owen Jones in The Guardian

Labour leader Jeremy Corbyn at the TUC Congress in Brighton. Photograph: Ben Stansall/AFP/Getty Images

The British class system is an organised racket. It concentrates wealth and power in the hands of the few, while 14 million Britons languish in poverty.

If you are dim but have rich parents, a life of comfort, affluence and power is almost inevitable – while the bright but poor are systematically robbed of their potential. The well-to-do are all but guaranteed places at the top table of the media, law, politics, medicine, military, civil service and arts. As inequality grows, so too does the stranglehold of the rich over democracy. The wealthiest 1,000 can double their fortunes in the aftermath of financial calamity, while workers suffer the worst squeeze in wages since the Napoleonic wars. State support is lavished on rich vested interests – such as the banks responsible for Britain’s economic turmoil – but stripped from disabled and low-paid people. The powerful have less stressful lives, and the prosperous are healthier, expecting to live a decade longer than those living in the most deprived areas.

No grammar schools, lots of play: the secrets of Europe’s top education system

Unless this rotten system is abolished, Britain will never be free of social and political turmoil. It is therefore welcome – overdue, in fact – to read the Daily Telegraph’s horrified front-page story: “Corbyn tax raid on private schools”.

The segregation of children by the bank balances of their parents is integral to the class system, and the Labour Against Private Schools group has been leading an energetic campaign to shift the party’s position. The party is looking at scrapping the tax subsidies enjoyed by private education, which are de facto public subsidies for class privilege: moves such as ending VAT exemptions for school fees, as well as making private schools pay the rates other businesses are expected to. If the class system has an unofficial motto, it is “one rule for us, and one rule for everybody else”. Private schools encapsulate that, and forcing these gilded institutions to stand on their own two feet should be a bare minimum.

More radically, Labour is debating whether to commit to abolishing private education. This is exactly what the party should do, even if it is via the “slow and painless euthanasia” advocated by Robert Verkaik, the author of Posh Boys: How English Public Schools Ruin Britain. Compelling private schools to apply by the same VAT and business rate rules as others will starve them of funds, forcing many of them out of business.

Private education is, in part, a con: past OECD research has suggested that there is not “much of a performance difference” between state and private schools when socio-economic background is factored in. In other words, children from richer backgrounds – because the odds are stacked in their favour from their very conception – tend to do well, whichever school they’re sent to. However unpalatable it is for some to hear it, many well-to-do parents send their offspring to private schools because they fear them mixing with the children of the poor. Private schools do confer other advantages, of course: whether it be networks, or a sense of confidence that can shade into a poisonous sense of social superiority.

Mixing together is good for children from different backgrounds: the evidence suggests that the “cultural capital” of pupils with more privileged, university-educated parents rubs off on poorer peers without their own academic progress suffering. Such mixing creates more well-rounded human beings, breaking down social barriers. If sharp-elbowed parents are no longer able to buy themselves out of state education, they are incentivised to improve their local schools. 

Look at Finland: it has almost no private or grammar schools, and instead provides a high-quality local state school for every pupil, and its education system is among the best performing on Earth. It shows why Labour should be more radical still: not least committing to abolishing grammar schools, which take in far fewer pupils who are eligible for free school meals.

Other radical measures are necessary too. Poverty damages the educational potential of children, whether through stress or poor diet, while overcrowded, poor-quality housing has the same impact too. Gaps in vocabulary open up an early age, underlining the need for early intervention. The educational expert Melissa Benn recommends that, rather than emulating the often narrow curriculums of private schools, there should be a move by state schools away from exam results: a wrap-around qualification could include a personal project, community work and a broader array of subjects.

In the coming election, Labour has to be more radical and ambitious than it was 2017. At the very core of its new manifesto must be a determination to overcome a class system that is a ceaseless engine of misery, insecurity and injustice.

Britain is a playground for the rich, but this is not a fact of life – and a commitment to ending private education will send a strong message that time has finally been called on a rotten class system.

BBC to New York Times – Why Indian governments have always been wary of foreign press

Be it India or China or Russia – you can be sure that when a country accuses the foreign media of biased coverage, it has something it wants to hide writes KAVEREE BAMZAI in The Print


An urban legend goes like this – when Indira Gandhi was assassinated, her son Rajiv Gandhi wanted to know if it had been confirmed by the BBC. Until the BBC broadcast the news, it could be dismissed as a rumour.

That was then. Today, fanboys of Prime Minister Narendra Modi’s strident nationalism, accuse the venerable BBC of peddling fake news.

The Western gaze on India is acceptable only if it is about yoga and ayurveda, not Kashmir. Curiously, the Indira Gandhi regime often accused the BBC of being an extension of the Cold War ‘foreign hand’ out to undermine India. Today, the Modi ecosystem accuses it of being anti-Hindu.

The government and the BJP want to actively fix this – with both the carrot and the stick. On the one hand, Hindu groups are protesting outside The Washington Post office in the US, and on the other, NSA Ajit Doval is feting foreign journalists and RSS’ Mohan Bhagwat is scheduling meetings with them.

Be it India or China or Russia – you can be sure that when a country accuses the foreign media of biased coverage, it has something it wants to hide. It’s a good barometer of what’s going on inside. That is why restricting access is common practice. 

Fences & restrictions

Foreign journalists can visit Assam only after taking permission from the Ministry of External Affairs, which consults the Ministry of Home Affairs before issuing a permit. In Jammu and Kashmir, things are no better. A circular from the Ministry of External Affairs says permission has to be sought by foreign journalists eight weeks before the date of visit. From May 2018 to January 2019, only two foreign journalists had got this permission.

That’s not all. Media outlets such as the BBC and Al Jazeera have been trolled on social media for their coverage of Kashmir after the abrogation of Article 370, with the Modi government jumping to say their footage was fabricated.

The criticism has been echoed even by pro-government TV anchors and social media warriors (some like Shekhar Kapur who have justifiably picked on the BBC’s habit of referring to Jammu and Kashmir as Indian-occupied Kashmir).

But India Today did a detailed forensic analysis to show the BBC video was anything but “fake news”. The BBC has also stood by its video (initially reported by Reuters) showing protestors marching on the streets with Article 370 placards and tear gas being used to disperse protests. “A protest the Indian government said did not happen,” @BBCWorld said.

 Always on high alert

India’s sensitivity to how the BBC, in particular, sees it, is not new. John Elliott, who has reported on India, from India, for 25 years, told The Print: “India always seems to want international approval and praise, indicating it is not yet fully confident on the world stage. That leads to extreme sensitivity over negative comment, maybe even more so under Prime Minister Narendra Modi for whom international recognition is a primary aim.”

It doesn’t take much to raise India’s hackles. In 1970, when French maestro Louis Malle’s documentary series Phantom India was shown on the BBC, it resulted in the closure of the BBC’s office in Delhi for two years and the repatriation of its news correspondent Ronald Robson. All because, even though the series was well received by British critics, Indians were upset about Malle’s inclusion in the first programme of ”a few shots of people sleeping on the pavements of Calcutta”. This was the “export of Indian poverty” argument that Nargis Dutt used about Satyajit Ray in 1980, with her now-famous quote: “I don’t believe Mr Satyajit Ray cannot be criticised. He is only a Ray, not the Sun.”

As Sunil Khilnani notes in his book, Incarnations: India in 50 Lives, Nargis felt Ray’s movies were popular in the West because “people there want to see India in an abject condition”. She wanted him to show “modern India”, not merely project “Indian poverty abroad”.

Thin-skinned governments

Of late, though, it is India’s fractious politics, which has made Indian governments extremely thin-skinned. This too has a history. Mark Tully, who became BBC’s Delhi bureau chief after it was allowed to return to India in 1972, fell afoul of prime minister Indira Gandhi in 1975 during the Emergency. As he says in this 2018 interview, at the time it was said he had reported that one of the senior-most cabinet ministers had resigned from her government in protest against the Emergency. Then information and broadcasting minister Inder Gujral stood up for him telling Mohammed Yunus (part of Indira Gandhi’s ‘kitchen cabinet’) that he had checked with the monitoring service and there was no evidence of Tully having said so.

Tully says Yunus told Gujral: ”I want you to arrest him, take his trousers down, and give him a beating and then put him in jail. Those were roughly the words I have recorded in the interview and it is also transcribed in a book I wrote with Zareer Masani called Raj to Rajiv. So, I discovered 18 months after the Emergency that I had had a lucky escape.”

In 2002, Time magazine’s Alex Perry had to face questioning over alleged passport irregularities after he wrote the widely quoted cover story on then prime minister Atal Bihari Vajpayee, wherein he said Vajpayee “fell asleep in cabinet meetings, was prone to ‘interminable silences’ and enjoyed a nightly whisky”. Although there was talk of Perry being thrown out of India, much like Tully, it didn’t happen. Perry left as Delhi bureau chief much later, in 2006. Now a well-known writer, he declined to comment for this story to ThePrint, calling it “old history”. 

Rot within

Nothing is really history in Indian politics, where personalities, issues, and allegations tend to be recycled. The New York Times is routinely accused of an anti-India bias – whether it was the diplomatic immunity of IFS officer Devyani Khobragade then or the Indian government’s abrogation of Article 370 in Jammu and Kashmir now.

As veteran journalist Mannika Chopra points out to ThePrint, Indian politicians have always been wary of the foreign press. “Under Indira Gandhi, it was difficult for foreign correspondents to report on Kashmir or the northeast. Or for visiting reporters to get visas. But the situation has changed. In India today, it would be fair to say the domestic media has, by and large, been won over by the current government, and those who haven’t are wary of speaking out. Independent voices are few. Political journalism has also changed. There are no hard-hitting investigations,” she said.

She points out that it has been left to the foreign press to present a counter-narrative, a dialogue independent of ideological blinkers and pressures. “As for the media within, it is all about being not merely anti-national but also supra-national.”
Elliott jokes that he wished Britain had some of the same sensitivity over international comments on Brexit so ”that we realised how the world sees our descent into constitutional and political chaos”. But perhaps not, given that India’s outrage can span the spectrum—from a BBC interview with a jubilant Jagjit Singh Chauhan in 1984 after Indira Gandhi’s death (as noted by scholar Suzanne Franks) to Jade Goody’s racist slurs in 2007 again then Celebrity Big Brother contestant Shilpa Shetty.

In India’s Republic of Easy Offence, the bar for public anger and government censure is quite low.