What is patriotic? Who gets to decide that?

Pervez Hoodbhoy in The Dawn


LAST week an unsigned email from Netra­ckerOnline@gmail.com landed in my inbox. It accused me of stirring “hate against the state and the institutions in the garb of being sane and intellectual” while claiming “we know what cooks in your mind when u address the masses and who u work for”. And so, to deal with me, it says “we can enlist them”. What “them” means is unstated.

Hidden somewhere in cyber space some prankster bearing some personal grudge — possibly a student who couldn’t pass my physics course — might well have authored this email. If so the only action called for has already been taken — hitting the delete button followed by a trash flush. I lost no sleep over this.

But instead, what if today there is actually some organised and systematic effort afoot to frighten and silence those Pakistani voices judged unpatriotic? Could this be why — now for many months — meaningful political analysis and discussion have disappeared from local print and electronic media? Bloggers have disappeared, only to reappear with horrendous tales to tell, and many journalists have been stilled forever.

The evidence is all over: cable operators have been forced to block certain TV news channels, and street hawkers have been warned against selling certain newspapers that don’t toe the line. The line — that mysterious line — can only be inferred because specifying it might reveal too much of who actually draws the line. With some exceptions, owners, editors, anchors, journalists, and opinion writers have fallen quickly into place.

But even if some voices are successfully gagged, I contend such tactics by anonymous actors cannot ever create a more stable or stronger Pakistan. In fact the efforts of NetrackerOnline@gmail.com and his ilk are arguably counter-patriotic. Here’s why.

First, freedom of expression acts as a safety valve against authoritarian rule, tyranny and secret government. Secret government is bad because it is uninhibited by the checks and balances needed for good governance. Accountability is not just about iqamas and politicians. It’s equally needed for generals, judges, lawyers, professors, policemen and milkmen. If certain voices are amplified while others are suppressed, genuine accountability becomes difficult.

Second, true patriotism comes from caring. In fact, real caring is often the reason why some dare raise voices to criticise what they perceive wrong around them. While Mr NetrackerOnline@gmail.com was probably told in his school that criticising state institutions is unpatriotic, this view is without logic.

Should citizens of Pakistan be stopped from sharing and airing their thoughts on PIA’s performance, the national cricket team, or the country’s professors, politicians, or generals? None of these are holy, faultless, and above reproach. No patriotic Pakistani can have beef with the state or any of its institutions provided these function within their respective mandates.

This begs the key question: who is a patriotic Pakistani and acts to benefit it? Equivalently, what is Pakistan’s national interest and who may rightfully define it? Surely this is not for some hidden force to specify. The only proper way is to determine its parameters through open and honest public debate.

Here’s my take, hopefully shared by many millions. A true patriot wants to make Pakistan poverty-free; to help it achieve high standards of justice and financial integrity; to convince its different peoples and provinces about mutual sharing and caring; to help make real universities instead of the ones we have; to explore space and become a world leader in science; to develop literature and the arts; and much more.

The other conception of Pakistani patriotism and national interest — the mainstream one — is different. Taught in schools and propagated via the media, it focuses upon our relations with India. This involves freeing Kashmir from India; deterring India with nuclear weapons; creating strategic depth against India through controlling Afghanistan; neutralising Indian power by nurturing the Pakistan-China relationship; punishing Iran for its friendship with India; etc. This India-centric view has been strengthened by Indian obduracy on Kashmir, its unconscionable repression of Kashmiri protesters, and the emergence of a hard-line anti-Muslim Hindu right.

But now matters other than India are casting dark shadows. Short of nuclear war or a miracle, nothing can now prevent Pakistan from reaching 400 million people in 35-40 years. Water is running short, and environmental destruction is everywhere. Then there are fanatical mullahs that the state appeases, fights, and then appeases again.

Add these all up and you can understand why Mr NetrackerOnline@gmail.com’s mind is being unconsciously governed by the fears of Robert Hobbes (1588-1679). Hobbes famously articulated the dread of a state sliding deep into dystopia. During the English Civil War, he became obsessed with demonstrating the necessity of a strong central authority to avoid the evil of discord and civil war.

In one of the best known passages of English literature, Hobbes writes: “In such condition, there is no place for industry; because the fruit thereof is uncertain: and consequently no culture of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.” His only solution is an absolute authority in the form of an absolute monarch. Else, says Hobbes, there would be a “war of all against all”.

Hobbes was wrong and his negative vision proved false. England grew to be Europe’s most powerful country and a fountain of civilisation. Democracy was central to this; without developing a system resting on freedom of speech and thought England could never have become the cradle of the Scientific Revolution and then the Industrial Revolution. Rejection of military rule, hereditary privilege, and absolute monarchy eventually won universal acceptance.

I wonder if Mr NetrackerOnline@gmail.com and others with a negative vision will get to read this article. Will they realise that trying to shut people up is actually unpatriotic? For all who care for the well-being of Pakistan and its people, it is a patriotic duty to speak against abuses of power. Equating patriotism with passivity and unquestioning obedience is nonsense. Pakistan Zindabad!

Pakistan and Accountability

Najam Sethi in The Friday Times






The split in the House of Sharif is in the open. Nawaz and Maryam Sharif stand apart from Shahbaz and Hamza Sharif. The former want to resist the forceful encroachments of the “Miltablishment” into the affairs of both state and government. The latter see this as a politically suicidal “confrontation” and are resigned to working within the parameters defined by Miltablishment.

The first public manifestation of this split came during the recent bye-elections in NA-120. Hamza exited the scene, leaving Maryam to campaign in a constituency nurtured by him in his capacity as manager of the PMLN electoral machine in the Punjab. The margin of victory – which was deemed critical to the political strategy of father and daughter who were hoping to build a narrative of martyrdom on it — seemed to prove Shahbaz’s point about the power of the Miltablishment. The PMLN vote was significantly eroded by three late developments: the birth of two pro-Miltablishment right wing religious parties that sliced off nearly 10% of the PMLN vote; the “disappearance” of a few core PMLN party workers tasked with galvanizing the voters on election day; and the eruption of over two dozen contenders with a few thousand votes among them that would have gone to the PMLN in normal circumstances.

Now Hamza has gone on TV to acknowledge the political differences in the House of Sharif. But both he and Maryam are now engaged in damage control. Hamza says that these political “differences” do not amount to an unbridgeable rift and he and his father are hoping to persuade Nawaz and Maryam to abandon the path of “confrontation” in the larger national interest. Maryam says she spent a delightful afternoon sipping tea with uncle Shahbaz and cousin Hamza and talk of a family rift is wishful thinking by detractors.

Meanwhile, the Miltablishment remains in an aggressive mood. Having come so far to knock out Nawaz Sharif, it is now silencing the voices of prominent television anchors and channels who are deemed “soft” on Sharif or don’t agree with its “state narrative”. Tactics range from pressurizing cable operators to take troublesome channels off air, calling up channel owners and ordering them to sack critical anchors and attacking dissidents on social media as unpatriotic agents of foreign powers.

Now, in an unprecedented intervention, the army chief has publicly dilated on the “ill-health” of the economy and expressed concern that this is hurting “national security”. Although doomsday scenarios of the economy have been floating around for decades and the situation today is not as bad as on several occasions in the past, this is another damning indictment of the Sharif regime and finance minister Ishaq Dar (he is also in the Miltablishment’s gunsights like his boss Nawaz Sharif). The PMLN prides itself with restoring growth and foreign investment. Ahsan Iqbal, the interior minister in charge of CPEC, has aggressively rebutted the charges, while Khaqan Abbasi, the prime minister, has hurriedly called a meeting to brief the army chief of the “true” situation and allay his fears. But it may be noted that this Miltablishment “intervention” is no less significant than its intervention some years ago in which unfounded allegations of multi-billion dollar “corruption” of the political elite in Sindh were linked to the growth of “terrorism”, paving the way for the arrest of key aides and confidantes of PPP leader Asif Zardari, the removal of a chief minister and the consolidation of unequivocal Miltablishment sway in the province.

But if the political outlook for Nawaz Sharif is not good, the fact remains that the Miltablishment is in no position to impose martial law or even install a hand-picked “technocratic” regime in Islamabad. The Miltablishment has alienated both mainstream parties PPP and PMLN without ensuring that the PTI will win the next elections or indeed play ball even if it does. In fact, it cannot even depend on the support of the two mainstream religious parties Jamaat I Islami and Jamiat I Ulema Islam. Its efforts to build an anti-Nawaz Forward Bloc in the PMLN are also floundering. Nor can it count on the judiciary to approve any such intervention. Indeed, the prospect of sitting in the hot seat with a bristling international community breathing down its neck must be very unsettling. Under the circumstances, martial law can be ruled out.

A technocratic government is also a non-starter. There is no constitutional way to bring it about or sanction it. The only situation in which it may be theoretically possible with the support of the judiciary is one in which elections have been called, parliament has been dissolved and a neutral federal interim government is in place which can be leaned upon to extend its existence and “clean up” the mess. But this would lead to a breakdown of federal-provincial relations and put unbearable strain on state, economy and society.

The tragedy of the nation is that those who would hold the Sharifs and Zardaris accountable are themselves unaccountable and don’t inspire confidence.

The Fourth Envelope

by Girish Menon

Paul, venerated corporate chief

Had three sealed envelopes

Which he consulted

In times of crises

Enabled his long career

And gave it to successor Neil

Neil ascends the throne

In time comes the first crisis

Opens the first envelope

‘Blame your predecessor’

The crisis abates

Neil survives

Changes the firm’s structure

Creates the second crisis

Opens the second envelope

‘Blame the culture’

The crisis is managed

Neil receives huge pay hike

Neil sacks loyal staff

Engulfs in a third crisis

Opens the third envelope

‘Prepare three such envelopes’

Neil is not ready to quit

He calls Paul for counsel

Paul says I have the mantra

That works all the time

You can have it

If you pay me the dime

Neil buys the counsel

‘Blame the economic downturn’

Neil survives the crisis

Decade in the saddle

The firm has not grown

The staff is insecure

The board has cronies

The economic downturn

Neil’s saviour in time

Pakistan Army Accounts - No Audit permitted

 

Accountability without exception Friday Night with Hamid Bashani Ep48 (in Urdu)




History of Pakistan's Foreign Policy - AApas ki Baat with Najam Sethi and Muneeb Farooq

Politician & Military in Pakistan Part II

School leaders quickly forget how tough teaching is

The Secret Teacher in The Guardian

I have recently completed a quest. This quest took several years and led me from the panic-stricken landscape of the newly-qualified teacher (NQT), through the fraught and often terrifying forests of achievement as head of department, to the ivory tower of the senior leadership team (SLT).

Once I stepped inside, the doors closed behind me; I was swept away from the camaraderie of my colleagues and enveloped in a world of administration and posturing. I lived in the darkness there for more than four years, until I had no choice but to escape. Driven mad by bureaucracy, vain nobility and shadowy villains who sought to protect only themselves, I opted to fall upon my sword and return to the chalkface, where I would be reunited with my own morality. And so here I am – older and wiser. 

OK, so that’s a bit of an exaggeration. I actually enjoyed being on the SLT most of the time, but some dramatic life events taught me that data, progression and status are not everything. My mother died within weeks of being diagnosed with a terminal illness and I realised life is for living. So I stepped away from the SLT and return to the classroom, thinking that I would have space to pursue my interests and improve my quality of life in the face of such sadness. I was in for a surprise.

I was certain that my move would buy me more time; no more endless piles of admin, no more mind-numbing meetings until 7pm, no more grim governors’ reports to write, no more dour disciplinary panels to attend. But I had forgotten that the windows in the ivory tower are obscured by pot plants so tall that you can’t see the stressed faces of the teachers as they race past. If you do chance to look up from your paperwork, your rose-tinted glasses made their lives look quite romantic. Oh, how the students adored them! How much fun they had together in their teams! I remembered those days …

I had forgotten that my multitudinous leadership tasks were generously accommodated by my timetable. Yes, I had a lot to do, but I was given a lot of time to do it. How did I forget that it’s impossible to plan adequate lessons in five non-contact periods a week? How did I forget that as I reluctantly sat in meetings, angry that I had failed to see any daylight for the majority of winter, my main-scale colleagues were marking and planning in their classrooms or at their dining tables? How did I think that I had it harder than them?

I had also forgotten how differently you are treated when you are not on the SLT; new staff failed to acknowledge me on the first day in the classroom and even the students seemed to think they could try it on now that my power was diminished. As my fingers hover over reporting Jimmy’s fifth instance of insolence in a week, I wonder if my former SLT colleagues are going to pass the blame on to me, as they so often did to others.

My mistake was not in giving it all up, but in forgetting how hard all teachers work and allowing myself to be sucked in to the dark world of judgment that the SLT inhabits.

Life in the tower is reminiscent of The Emperor’s New Clothes. The headteacher would suggest a crazy idea and every single member of the leadership team would nod in agreement and smile. Meanwhile, the minor failures of main-scale teachers would be aired in evening briefing, upon which each member would shake their heads and tut, obstinately refusing to remember the difficulty of full-time teaching. 

The doors close on accountability, too; as one of the accepted few you become the judge, not the accused. Steely-eyed SLT members brandish clipboards and conduct clinical learning walks and observations for dissection later, but are only observed by each other, allowing weak teaching to be dismissed by close colleagues. In fact, the only time the SLT is truly accountable is when the inspectors call, and that’s when the panic arises. But once they have gone, the “inadequate” teachers only have themselves to blame and the “outstanding” ratings are all thanks to us.

On reflection, I’m not sorry that I left. I never really managed to bridge the gap that so obviously exists between the SLT and other staff. The ridiculous and impossible demands on normal teachers’ time are an enigma to most SLT members. Perhaps an enforced main-scale sabbatical would teach many SLT members an important lesson? My own reminder has certainly made me a better person, even if I am denied the time to be a better teacher.

How to blame less and learn more

Mathew Syed in The Guardian

Accountability. We hear a lot about it. It’s a buzzword. Politicians should be accountable for their actions; social workers for the children they are supervising; nurses for their patients. But there’s a catastrophic problem with our concept of accountability.

 Consider the case of Peter Connelly, better known as Baby P, a child who died at the hands of his mother, her boyfriend and her boyfriend’s brother in 2007. The perpetrators were sentenced to prison. But the media focused its outrage on a different group: mainly his social worker, Maria Ward, and Sharon Shoesmith, director of children’s services. The local council offices were surrounded by a crowd holding placards. In interviews, protesters and politicians demanded their sacking. “They must be held accountable,” it was said.

Many were convinced that the social work profession would improve its performance in the aftermath of the furore. This is what people think accountability looks like: a muscular response to failure. It is about forcing people to sit up and take responsibility. As one pundit put it: “It will focus minds.”

But what really happened? Did child services improve? In fact, social workers started leaving the profession en masse. The numbers entering the profession also plummeted. In one area, the council had to spend £1.5m on agency social work teams because it didn’t have enough permanent staff to handle a jump in referrals.

Those who stayed in the profession found themselves with bigger caseloads and less time to look after the interests of each child. They also started to intervene more aggressively, terrified that a child under their supervision would be harmed. The number of children removed from their families soared. £100m was needed to cope with new child protection orders.

Crucially, defensiveness started to infiltrate every aspect of social work. Social workers became cautious about what they documented. The bureaucratic paper trails got longer, but the words were no longer about conveying information, they were about back-covering. Precious information was concealed out of sheer terror of the consequences.

Almost every commentator estimates that the harm done to children following the attempt to “increase accountability” was high indeed. Performance collapsed. The number of children killed at the hands of their parents increased by more than 25% in the year following the outcry and remained higher for every one of the next three years.

Let us take a step back. One of the most well-established human biases is called the fundamental attribution error. It is about how the sense-making part of the brain blames individuals, rather than systemic factors, when things go wrong. When volunteers are shown a film of a driver cutting across lanes, for example, they infer that he is selfish and out of control. And this inference may indeed turn out to be true. But the situation is not always as cut-and-dried.

After all, the driver may have the sun in his eyes or be swerving to avoid a car. To most observers looking from the outside in, these factors do not register. It is not because they don’t think such possibilities are irrelevant, it is that often they don’t even consider them. The brain just sees the simplest narrative: “He’s a homicidal fool!”

Even in an absurdly simple event like this, then, it pays to pause to look beneath the surface, to challenge the most reductionist narrative. This is what aviation, as an industry, does. When mistakes are made, investigations are conducted. A classic example comes from the 1940s where there was a series of seemingly inexplicable accidents involving B-17 bombers. Pilots were pressing the wrong switches. Instead of pressing the switch to lift the flaps, they were pressing the switch to lift the landing gear.

Should they have been penalised? Or censured? The industry commissioned an investigator to probe deeper. He found that the two switches were identical and side by side. Under the pressure of a difficult landing, pilots were pressing the wrong switch. It was an error trap, an indication that human error often emerges from deeper systemic factors. The industry responded not by sacking the pilots but by attaching a rubber wheel to the landing-gear switch and a small flap shape to the flaps control. The buttons now had an intuitive meaning, easily identified under pressure. Accidents of this kind disappeared overnight.

This is sometimes called forward accountability: the responsibility to learn lessons so that future people are not harmed by avoidable mistakes.

But isn’t this soft? Won’t people get sloppy if they are not penalised for mistakes? The truth is quite the reverse. If, after proper investigation, it turns out that a person was genuinely negligent, then punishment is not only justifiable, but imperative. Professionals themselves demand this. In aviation, pilots are the most vocal in calling for punishments for colleagues who get drunk or demonstrate gross carelessness. And yet justifiable blame does not undermine openness. Management has the time to find out what really happened, giving professionals the confidence that they can speak up without being penalised for honest mistakes.

In 2001, the University of Michigan Health System introduced open reporting, guaranteeing that clinicians would not be pre-emptively blamed. As previously suppressed information began to flow, the system adapted. Reports of drug administration problems led to changes in labelling. Surgical errors led to redesigns of equipment. Malpractice claims dropped from 262 to 83. The number of claims against the University of Illinois Medical Centre fell by half in two years following a similar change. This is the power of forward accountability.

High-performance institutions, such as Google, aviation and pioneering hospitals, have grasped a precious truth. Failure is inevitable in a complex world. The key is to harness these lessons as part of a dynamic process of change. Kneejerk blame may look decisive, but it destroys the flow of information. World-class organisations interrogate errors, learn from them, and only blame after they have found out what happened.

And when Lord Laming reported on Baby P in 2009? Was blame of social workers justified? There were allegations that the report’s findings were prejudged. Even the investigators seemed terrified about what might happen to them if they didn’t appease the appetite for a scapegoat. It was final confirmation of how grotesquely distorted our concept of accountability has become.

What's behind team spirit?

Martin Crowe in Cricinfo

New Zealand gelled as a team int he 1992 World Cup but splintered thereafter © Getty Images

Teamwork, team spirit, team culture, team dynamics - all buzzwords that point to the same thing. Yet in truth it is the team "functionability" that must work if success is to be achieved and a legacy created. Sports teams are no different to business teams, except sport is played out in public and each individual player is under scrutiny, as much as the team's performance is.

In reality, most teams fail, if winning a championship or event or being ranked No. 1 is the measure they are judged by. Those few fortunate enough to hold the trophy aloft, let alone do it often and frequently, like the once all-conquering Manchester United, or the Australian cricket team of yesteryear, they are the ones that come together as one. As d'Artagnan famously said, "All for one and one for all."

There are thousands of opinions, hundreds of books, case studies and manuals on the subject worldwide. There are many ways to skin a cat. Yet really, when all is said and done, it is the simple methods of how people function best in everyday life that need to be executed in a sporting team environment. It comes down to how our relationships work in any form of life, and this points always to the ability to love, to talk, to listen and to commit. In short, to relate.

In my years of experiencing the good and the bad in relationships and teams, studying others, reading lots, and hearing grand and sad stories in all kinds of endeavour, the one thing that stands out more than anything is building and maintaining trust.

Trust stems from a willingness to openly share anything and everything. It is about not being afraid to show vulnerability, admitting mistakes and weaknesses, and generally and genuinely sharing the truth outwardly and honestly among the group. Trust rules the lot.

When it is not built, or is broken, then the essence of the team's functionality is lost. Great leaders and captains have been able to rely on this trust, once established, as the cornerstone to team success.

	Australia have always had the ability to work together even if one or two of the personalities clashed

Ian Chappell, the great Australian captain, would easily speak his mind, using his open-door policy style, by buying his team-mates a beer and sitting them down at the bar, loosening them up a little and getting a natural flow of conversation bedded in. He was famous for building that trust within his all-conquering team of the '70s by simply using straight honest talking and listening. In this he helped create the environment to challenge and debate with each other.

This is incredibly healthy, the key being that the trust generated leads to open challenging discussions and passionate debate based on respect. It doesn't mean you have to hold hands when doing so, just simply to speak your truth "out in the open", be heard, and take time to listen in turn. The worst thing is to speak your truth behind the backs of the team, in particular to the media and opposition. This kills trust, and it kills the desire to continue to share. Once trust and openness are broken, there is no chance going forward.

If the first two are working well, it will go a long way to solving any commitment issues. Committing or buying into the team's work is about the desire to go to great lengths to perform your specialist role for your team's benefit. When team members are allowed to share the truth, there is a natural tendency to buy in to committing wholeheartedly to the decisions made by the team's leaders.

Without commitment there is no accountability. When all are in, it becomes easier to call team members on actions and behaviours that will assist the team cause. When accountability becomes understood, then so too is the need to focus attention to the goals and results of the team. Accountability removes the individual needs, like personal recognition and ego, from the equation.

Australia had a great handle on this with their dominance through most of the 1990s and much of the following decade. They have always had that ability to work together even if one or two of the personalities clashed. This was the open positive conflict working well. West Indies, under Clive Lloyd, showed a real theme to their togetherness, small nations becoming one, and they displayed a spirit unrivalled for 15 long years.

Through the '80s, New Zealand had a mixture of good and bad, but mainly positive functionality. Sometimes there was a lack of attention to team results and accountability, but overall there was an enduring trust, openness and commitment.

	West Indies, under Clive Lloyd, showed a real theme to their togetherness - small nations becoming one © PA Photos  Enlarge

In my term as a Test captain, I didn't allow for enough open debate and sharing, and so we had little trust to start with, and the rest of the dysfunctions followed. My failure was in not generating enough open conflict to ensure everyone had a say, bought in, and truly committed. However, it did come slowly, so by the time of the 1992 World Cup, we had nearly all five functions working smoothly.

Sadly, rather than building on that success, we splintered dramatically, the catalyst being the bomb blast outside our hotel in Colombo in late 1992, an incident that split the team in two when six players and the coach, with families at home, left the tour. From then, as a team, we were damaged goods. Administrators got involved, wrongly, and developed hideous resentment. Over just a few months all the trust we had garnered started to evaporate.

By February 1993, factions were everywhere and our team dynamic was dead. The coach, Wally Lees was sacked for very little reason. Mark Greatbatch was inexplicably replaced as vice-captain, and therefore I lost my trusted lieutenant, and before long, after just one more Test in charge, my tenure as skipper was over too. The team spirit suffered.

My last seven Tests, as a mere batsman not knowing how to retire, were the saddest of all that I played, as I watched a team pretend it existed. There wasn't one ounce of trust. That positive team dynamic never rose again for New Zealand until Stephen Fleming began his own team-building with a young bunch of mates and an experienced and inspirational management, from 1998 to 2003.

The point is, anything can disrupt the dynamic, and so it's vital that whatever happens, or whoever comes into the group, the five functions must be quickly and often referred to: Motivation for maintaining the flow of attention to results; accountability; commitment; open, honest and respectful conflict; and sharing truths - these make the lifeblood of a team's fulfilment and longevity.

Five tips for George Osborne on banking reform

These simple steps would provide the direction for deeper reform of the banking system

• 
• • Prem Sikka
  • theguardian.com, Tuesday 26 November 2013 18.31 GMT

Public pressure for better banking reform from George Osborne, the chancellor, is growing. Photograph: Chris Ison/PA

Some six years after the banking crash, the UK taxpayer is still providing £977bn of loans and guarantees (pdf) to support the ailing banking sector. The reform process is painfully slow. The banking reform bill currently going through parliament (pdf) has grown from 35 pages to 170 pages, but still does not deal with the flaws that led to the crisis. Public pressure for a tougher approach is growing, with figures including the archbishop of Canterbury demanding firmer government action. The chancellor, George Osborne, should at the very least do the following five things. On their own, they won't necessarily solve the deep-seated crisis in our financial institutions, but they would provide the direction for deeper reforms.

1. Think outside the ringfence

Introduce a statutory separation of retail banking from speculative banking and not just the weak "ringfence" he is proposing. Despite the crash, banks remain addicted to gambling with other people's money. They bet on everything from the movement of interest rates, price of commodities, oil, wheat, foreign exchange and much else through complex financial instruments known as derivatives. Derivatives have been described by investment guru Warren Buffett as "financial weapons of mass destruction". Derivatives brought down Lehman Brothers, Northern Rock, Bear Stearns, MF Global, Countrywide, Merrill Lynch, Wachovia and Washington Mutual, just to mention a few. Yet no lessons have been learned.

The Bank of International Settlements (BIS) shows that the notional/face value of over-the-counter (OTC) derivatives is about $693tn. In addition, derivatives are traded on exchanges; adding up to a whopping $1,200tn. The exact economic exposure of the UK banking system is probably considerably lower, but is not known. The Treasury's response to requests for information is that the information "is not currently available". So what do bank balance sheets show us? The financial statements of Barclays Bank (pdf) show the dangers. Its derivatives assets and liabilities of £469bn and £462bn respectively need not net off and could expose it to anything from £7bn to over £900bn. The UK, with a GDP of £1.5tn is in no position to absorb the losses and the knock-on effects. Even Nobel prize winners in economics have been unable to manage the risks in derivatives.

2. Hold banks responsible for losses

Withdraw limited liability from speculative banking. Merely separating the banking arms is not enough because banks use monies from savers, pension funds and insurance companies to finance their gambling habit. Major losses from their bets will ultimately infect the rest of the economy and affect every household. Therefore, the owners of these vast casinos must be held personally liable for the losses.

3. Make them balance the books

Force banks to address their gross undercapitalisation. Barclays has gross assets of £1,500bn against capital of just £63bn. A decline of just 4.22% in the value of its assets could wipe out its entire capital. HSBC has gross assets of $2,700bn (£1,687bn) compared to capital of $183bn (£114bn). It can barely absorb the decline of 6.75% in its asset value. Capital ratios in these ranges have not been and will not be good enough to cushion losses. No doubt some will say that some assets are less risky than others and banks will get away with modest capital ratios, but none of this saved banks previously. So a healthy capital adequacy ratio of at least 12.5%, and higher, should be aimed for.

4. End fat-cattery

Risk capital should be built by clamping down on executive pay. No executive should receive more than 10 times the minimum wage until the required capital levels are reached.

Despite the taxpayer-funded bailouts excessive executive pay is rife and remains linked to reckless risk-taking. The long-term solution is to empower bank employees, savers and borrowers to vote on executive remuneration. They all have a long-term interest in the wellbeing of banks and can curb reckless risk taking.

5. Crack down on the auditors

Bring in a fundamental overhaul of the auditing of banks. Big accounting firms, acting as auditors of banks, are supposed to be the eyes and ears of financial regulators, but the lure of profit is too strong. Almost every ailing bank received a clean bill of health (pdf)from its auditors who received millions of pounds in auditing and consultancy fees. In some cases, banks collapsed within days of receiving the all-clear. Even worse, in some cases auditors were complicit in dubious practices. It is time to remove the accounting firms from audits in the financial sector. That task should be performed by a specially created body, equivalent to the National Audit Office. Unlike the present situation, the financial regulator should have unhindered access to all data held by the auditors.

Is this the start of a new coalition against the corporate scorpions?

A broader view of what is wrong with business in this country is emerging – triggered by business itself

• 
• • Will Hutton
  • The Observer, Saturday 17 November 2012 21.04 GMT

Mothercare chairman Alan Parker has added his voice to those businesses speaking out against those who avoid paying tax in the UK. Photograph: Graham Turner for the Guardian

It's a well-known fable. The scorpion wants to cross a river and pleads with the reluctant frog to carry him on his back; it would be pointless to sting the frog because that way both would drown. Halfway across the river the scorpion stings, dooming both. Why? asks the dying frog. Because it is in my nature, replies the scorpion.

Too many owners and managers of British companies, along with the Big Four accountancy firms that provide them advice on how to structure their affairs to evade and avoid taxation, are like the scorpion. They just can't help themselves from behaving badly, even if it brings everyone down. It is in their nature.

As it becomes clear that we are living through the most protracted period of economic depression for more than 100 years, the result of not just policy mistakes but the way Britain has done capitalism, business itself is beginning to ask the first tough questions about what is wrong. There always was a distinction between good and bad capitalism, but so far the critics of bad capitalism have not strayed far beyond the leader of the Labourparty, some trade unionists, business secretary Vince Cable, the odd business maverick and one or two liberal commentators. But last week some serious companies weighed in, plainly worried about the corporate scorpions riding on their backs.

Andy Street, managing director of John Lewis, broke cover to say that multinational companies trading in the UK but deploying overseas tax havens necessarily must "out-invest and ultimately out-trade" businesses paying full taxes in the UK, who now risk being driven out of business. "Ultimately there will not be a tax base in the UK."

Mothercare chairman Alan Parker joined in. "Unfair pricing from international UK tax dodgers puts our long-term ability to survive and grow under threat," he said. Sebastian James, chief executive of Dixons, tweeted that he agreed with Andy Street: "Retailers making profits in the UK should pay tax in the UK."

Unlike in manufacturing, retailing still has a critical mass of British-owned and British-based companies that have collective heft. With Comet recently joining a lengthening list of retailers going into receivership, Street, Parker and James are breaking ranks from the default position of British business that whatever leaves the mouth of a Tory politician must be good and the words of a Labour politician must be bad.

The ritual ideological incantations of, say, the Free Enterprise Group in the Conservative party – that all British business needs is yet more labour market deregulation, further dismantling of welfarism and striking a detached bargain with the EU – have hitherto gone unchallenged by business. Now a broader view of what is wrong is emerging, triggered by business itself.

What prompted Street's intervention was the disastrous performance by Amazon's public policy director, Andrew Cecil, before the House of Commons public accounts committee, aided and abetted by two flanking cameos from Starbucks and Google. The three scorpions were being quizzed about their tax dodging, but the comptroller of the National Audit Office, Amyas Morse, felt that the lack of evidence brought to the committee by Amazon was " insulting". Meanwhile, Starbucks' claim that it made no money in the UK was palpably disingenuous and persuaded none of the MPs. And Google admitted in effect that it does what it does because it can. It is just in a scorpion's nature.

Senior Treasury officials have worried for many years about the precariousness of the UK's corporate tax base and the ease with which companies could use a combination of transfer pricing and offshore tax havens to avoid UK tax. Mortal threats come from the rise of private equity – for example, private equity-owned Boots is now domiciled in Zug in Switzerland – and the emerging dominance of foreign multinationals in the UK because of our careless indifference both to who owns our companies and how they organise their operations. They need addressing.

For a long time, the arguments about the British economy have been defined by exchanges between opposing poles of the Free Enterprise Group and advocates of a bastard Keynesianism. Director generals of the CBI may have privately conceded that the argument needs to be broader and more sophisticated; that an overvalued exchange rate, the shortcomings of the financial system, the bias against innovation or the abuse of tax havens were all chronic problems. But persuading the powerful CEOs within the CBI to back them has been impossible.

Importers want a high pound. Banks allowed no criticism. Nobody wants to be on the side of high taxation by inveighing against tax havens or to give Labour any succour if it can be helped. A candidate for CBI director general who withdrew from the final shortlist to succeed the outgoing Richard Lambert in late 2010 told me that the job allowed little scope beyond urging more and better training, on which everybody could agree. On many big issues, the CBI was mute or followed the Tory line. Indeed, Lambert, ready to attack wildly overpaid CEOs as risking being aliens in their own country, was felt to have overstepped the line.

At last there is a breaking of ranks. Desperate economic circumstances and a chancellor more anxious to score political points than develop an imaginative economic policy are forcing a transformation in established positions. John Cridland, the current director general, has used the space to develop a more sophisticated policy agenda than his predecessors were allowed. And now British-based retailers are speaking out.

But any effective move against the scorpions requires the state to act and the more it can act with others the more effective it will be. Tax havens were a barely mentioned part of Britain's most effective postwar industrial policy: the swath of concessions used to support the growth of the City. We sponsor more of them than any other advanced country. That has to be reversed. There are many possibilities, ranging from taxing companies on their turnover in the UK to outlawing the use of tax havens, action that is best delivered if the EU can move together, but this is always opposed by the British.

Our fifth-columnist Eurosceptics, allies of the scorpions, are happier that the UK corporate tax base is destroyed and the British economy is owned by foreigners indifferent to their public obligations than to act together with Europeans to further joint British and European interests. Mr Miliband and the Labour party say they are for a better capitalism, against tax havens and are pro-Europeans. Now there is an opportunity to say it and to build a new coalition. Let's hear them.

When Brian Eno met Ha-Joon Chang

Brian Eno has a new album out. How best to explain it? By hooking up with radical economist Ha-Joon Chang to debate everything from finance to free jazz and dogs in parks. Caspar Llewellyn Smith joins in

• Caspar Llewellyn Smith
• The Guardian, Sunday 11 November 2012 19.00 GMT

‘Let’s find a place in between’ … Eno and Chang in conversation. Photograph: Martin Godwin for the Guardian

It's a very Brian Eno notion: rather than submit to a normal interview, the 64-year-old polymath wants to talk about his new album through a conversation with the economistHa-Joon Chang. Inevitably, the discussion, which takes place in Eno's office in Notting Hill, London, barely touches on the record, Lux; instead, it ranges over another of his new creations (an app called Scape), the value of art, and why numbers are like sausages. We also cover the real reason why rightwing Americans won't admit that the war in Iraq was a mistake.

Buy it from 

1. Buy the CD
2. Download as MP3
3. 
4. Brian Eno
5. Lux
6. Warp Records
7. 2012

Eno met Chang through an editor at the latter's publisher. The 49-year old economist is something of a star in that increasingly starry calling, ever since the publication of his 23 Things They Don't Tell You About Capitalism – a book described by the Guardian as "a masterful debunking of some of the myths of capitalism". Born in South Korea and now teaching at Cambridge University, Chang admits to being a fan of early Roxy Music – but, as soon becomes apparent, he and Eno have more in common than that.

Brian Eno: There's an issue we're both interested in – this middle ground between control and chaos. Some economists say you can only have a control model or a chaos model, that you're either a socialist or it's all about the free market. Whereas you say: "Let's find a place in between."

This happens to be an issue with the music I make. It's made for a place somewhere between architecture and gardening. It's not a situation where I'm finessing every tiny detail. I basically set a process in motion and then watch it happen. A lot of the design work is prior to the thing starting, rather than trying to keep control of it once it has started. You try to design the process carefully enough so you get the results you want and don't have to intervene.

Ha-Joon Chang: That's the approach I use in my economics. Central planners thought they could control everything, but there are always elements of uncertainty and surprise. But they then try to control even those. At the other extreme, we have those free-market economists who think there need to be no rules – even that it's OK to kill your competitor. Then you have a system that runs amok because everyone is cheating everyone in trying to beat them. The illusion that this rule-less system can organise itself has been proven completely mistaken – but we still have people wanting to believe in these extremes.

BE: And people saying, well, if you don't believe in that one, you must believe in this one.

HJC: I've read quite a few readers' reviews of my book on Amazon, saying, "Ah, he criticises the free market, he advocates central planning." I don't do that for a minute! But this is our black and white, dichotomous way of thinking – which has really been harmful.

BE: One of the things you're doing when you make art, apart from entertaining yourself and other people, is trying to see what ways of working feel good, what feels right. What gets the results you want? And for me, it isn't top-down architecture that does that – but it's not chaos, either. I don't want to do free jazz! Because free jazz – which is the musical equivalent of free marketeering – isn't actually free at all. It's just constrained by what your muscles can do. It turns out that anything that is called free anything isn't really. It's just constraints that you don't recognise.

HJC: It's a point I make in my book, when I say there's no such thing as a free market. The argument being that in all markets, there are some rules about what you can trade, how you can trade. We think some markets are free only because we totally accept those underlying rules. We just don't see them any more.

BE: You talk about child labour, don't you?

HJC: That's right. In the 19th century, a lot of people were against outlawing child labour, because to do so would be against the very foundations of a free market economy: "These children want to work, these people want to employ them ... what is your problem? It's not as if anyone has kidnapped them ... " But today even the most rightwing economists don't advocate bringing child labour back, because they've got to accept the idea that children have the right to enjoy their childhood and a proper education.

BE: This turns out to be something that happens a lot. Once you've grown to accept something and it becomes part of the system you've inherited, you don't even notice it any longer. We don't even think that not employing children is anti-free market.

So whenever you talk about the free market – or free jazz! – what you really mean is "constrained by rules that we've stopped thinking about". This seems a long way off music, but when you set out to make something, you might just inherit all the ways of making it. If you're a Tin Pan Alley songwriter, you don't question the fact that there are 84 notes on the piano. You're not bothered by the fact that you can't get in between two of them – these are just the ground rules of the working situation. But I did want to question something about composition, and not just because I am a disagreeable sort of person, but because I noticed I liked music that wasn't made by either of these sets of rules. It wasn't command-economy music and it wasn't free-market music. It wasn't top-down architecture, and it wasn't free jazz. I'm referring in particular to things in the mid to late 60s like Terry Riley's piece In C. Have you heard of this piece?

HJC: No.

BE: It's a very interesting example of some very simple rules that produce something very rich. There's a score, and there are 52 bars, and each bar is a slightly different phrase in the key of C. It can be played by any number of musicians, and the rule is that they all start together, all playing to the same tempo, and they keep playing the first bar as many times as they want – each one. But then when you want – say you're playing clarinet – you can move on to bar two, and then you keep playing bar two. And then when you want to move on to the third bar ... well, the piece starts to separate out, and if there are 20 musicians, they might all be playing a different bar, but on top of one another, and it's all in C, so everything works together. So the piece has this beautiful characteristic: it starts out in unison, and gradually it becomes richer and richer and richer. And then they all have to end together, so they gradually converge back.

To make that piece by top-down writing would be impossible … but it's very beautiful.

HJC: And it's different every time?

BE: Yes. That's important. So this is one of the things that the composer has to accept: he or she can't precisely predict the outcome. This is what command economy people have trouble with.

HJC: Exactly.

BE: They're not happy with uncertainty.

Caspar Llewellyn Smith: You talk about a top-down process, and I can imagine what you mean with a composer – someone like Mozart, or even Riley … but where does something like folk music fit into this?

BE: Closer to Riley, I would say. There you have certain musical memes that get passed around, and never faithfully copied. That's the interesting thing. He hears a tune of mine, and thinks, "Oh, that's good, I'll play that." But his version is going to be different from mine. It's very genetic, actually. Whereas classical music was supposed to be perfectly replicable: the score was the ultimate authority.

CLS: Ha-Joon, presumably every economist has their own idea of how the world should be organised. So isn't it a very real problem when politicians come along, with their own agendas, and screw everything up?

HJC: Oh yeah, but my view is that we don't live by bread alone. We have to accept political considerations, and cultural and social considerations …

These days, economics has become such an all-encompassing way of thinking that everything is supposed to justify its existence by how much money it makes. Are you making enough money as a university? Are you making enough money as a classical orchestra? I think it's a fundamentally wrong approach to life. Because economics might be the foundation, if you like … but if you try to create a world in which everything is driven by money and the market, the world will be a much poorer place.

Imagine if all those kings and dukes hadn't commissioned those crazy cathedrals, paintings and music … we'd still be living in sticks and mud. Because none of those things made any economic sense. Human beings' capacity to "waste time" is a miracle – but that's exactly what art is for.

BE: Ha-Joon came up with a good title for a book that I might write: "A Total Waste of Time"!

CLS: Are these questions increasingly urgent, because over the course of the last couple of decades, that rightwing mindset has won out – we have rightwing figures now who, 20 years ago, would have been beyond the pale?

HJC: Absolutely. These ideas have penetrated so deeply into our society, it's poisonous.

BE: It's not only money, it's also other forms of accountability. Look at education in this country. I've just had two daughters go through the system here, and nothing mattered at all, as long as they could get through their A-levels. It doesn't matter if you don't actually understand a word. I could see some of their friends who were good at remembering things, but had no clue at all about what they were talking about, who got A stars.

HJC: In that system, curiosity is actually a great disadvantage. Which means that any creativity gets lost.

BE: It's to do with the act of quantification. It's part of the money thing: something that you can put a figure to immediately assumes a sort of authority, even if it doesn't deserve it.

What is the value of a park? You can't quantify it. We keep them because we've inherited them. But I'm sure there'll be a rightwing movement in the future that says, "Parks? What are they for? People just wander about in them – and there's dog shit all over the place. What's the point of that? A great big piece of real estate in the middle of London that could be generating income – we can quantify that." Quantification is a big temptation for society because it looks like control.

HJC: People tend to think that numbers are quite objective, but numbers in economics are not like this. Some economists say they're like sausages: you don't know what they really are until you cut into them. Once you know, you become very sceptical ...

I'm not against numbers. You need some numbers, to work with. Life would be impossible otherwise. But we've made these numbers into fetishes.

Of course, the more obscure a number is, the more people tend to think it is objective. If you say that the average American goes through three tubes of toothpaste a year, they kind of believe you. But if you say it's 3.72 tubes, they think: "Wow – that must be correct."

Art is not the only area affected by this quantification – education has been affected, family relationships, too – but I think art is the most endangered area of life. It's not obvious how something makes money. Sometimes, you have an artwork that you think is terrible, but then some billionaire is prepared to pay a huge amount for it, and suddenly it becomes valuable. And you are supposed to like it because it's expensive, and it must be expensive because it's worth it. So even the values within the art world are distorted.

BE: When I went to art school, the choice was to enter the art world or the pop world, and a lot of my teachers were disappointed I took the pop route because they thought I was a promising fine artist. But one of the reasons I did is because I thought it was inherently healthier. It had a quasi-democratic basis that the art world doesn't have at all. Tom Wolfe says something in his book The Painted Word about how four curators, 12 collectors and six critics determine an artist's career. Something like that.

This is why the art world has such incredible inertia, because once those people have invested their highly important opinion in something, they're very unwilling to change it. Whereas if you've bought an album by a band but then you don't like their second one, you just say, fuck it, the second one isn't any good.

CLS: And of course, today, you wouldn't even buy that record, you might just stream it.

HJC: Once again, you have to strike a balance between control and the market. Without some very rich guys a lot of great art would never have existed – so control isn't necessarily bad. But if you have only that, then art stagnates; it rots, if only a few powerful people are in charge. So you need a combination.

Your way of encouraging people to make their own music with your new app, Scape, is a good example of a different sort of approach to working.

BE: You drag shapes on to a screen to create a picture, and each shape has its own sound, with its own set of hidden rules. For instance, "when a lot of things are happening at once, I'm going to default into another mode of playing"; or "I only play in the evenings" – that sort of thing. Each piece of music becomes a little musical ecology.

Reading this on mobile? Click here to view

HJC: I've been a big fan of your music over the years. When I was growing up in South Korea in the 70s and early 80s, the country was too poor to buy original records. Everything was bootlegged. The sound would be terrible: we used to call them tempura shop records – it sounded as if someone was deep-frying them.

This new album, Lux, was originally created for a specific space in Turin [the Great Gallery of the Palace of Venaria]. It's very interesting to think of a building as something more than just a physical structure: it's also about its surroundings, its light, and its sound. People don't tend to think of this, but our sense of a building can really be affected by its sound.

BE: Especially with this building, because it has the longest reverberation you can imagine. You snap your fingers, and the sound goes on for 11 seconds. It's a gallery connecting two palaces, actually. It's about 100 metres long, 15 wide and 10 high and any sound you make in there just spreads ... Treating sound as a physical material was only really possible from the time of recording onwards. As soon as people started making recordings, they took sound out of time and put it into space. It goes from being transitory and ephemeral to being something you can almost handle. I call that the materialisation of music. So everything I've been doing, really, has been to do with realising sound can be a material: if you're now thinking about a building, this can be one of the materials you can consider.

CLS: Ha-Joon, what do you make of the success in the west now of Korean pop: K-pop?

HJC: Gangnam Style! Initially a lot of it was really bad imitation of what was going on in Britain and America, but now they've found their own voice. Watch this space, because I think there'll be more interesting stuff coming out of it.

BE: Nearly everything good starts from imitation.

HJC: It's actually a good illustration of how art can be done in a very non-hierarchical way. The success of this guy, Psy, is because he didn't try to protect his work too much: he let everyone copy and create their own versions. So you have versions with Voldemortfrom Harry Potter ... my children are hooked on finding Matrix versions. Some are actually brilliant!

BE: It's a brilliant idea to make something that, like a module, can be plugged into any part of the culture.

CLS: Ha-Joon, in your book you write about different varieties of capitalism.

HJC: One of the general themes is that there are many different ways of organising the system. Different countries do things in different ways. Types of capitalism have different strengths and weaknesses. The problem is that in the last 30 years, we've been told there's only one way of organising capitalism, and it's the American-style free-market way. Countries are put under pressure and they have to rely on, especially if they're poor, foreign aid from rich countries, or they have to borrow money from the IMF. It's one of the reasons this crisis has happened.

There have been a lot of discussions about what needs to change, but there's been a lot of resistance, and popular sentiment hasn't been as coherent as it would have been in an age with strong trade unions and so on.

I'm not too hopeful. But if not now, when? If you can't learn the lessons from the biggest financial crisis in three generations, then we have a problem.

CLS: Ought culture try and shape the debate, or is that not its role? Brian, you've taken a stand on a number of political issues.

BE: I think the way culture changes things is slightly different from that. I've always disliked propaganda and shied away from artists' using their ability to manipulate emotional triggers – which is what artists do - in support of a political message, because I think it's a trick. I would like people to agree with me because they agree with my arguments, not because I'm good at music. So if I take a position publically, of course I get attention because I'm known through my music, but I don't try to support the position in that way.

Culture does change the way we think, just not in the propagandistic way. Art can be a model of how otherwise something could be done. How else it could be? When you see a piece of art, and you think, "Wow, that's wonderful", part of you wants to know, "And how did it get to be that way? Ah, it got to be that way by that mechanism. This is how it's done."

To give you an example of something I don't particularly respond to myself: Jackson Pollock was the expression of a philosophy, and that philosophy said, "If I just let it all come out of here and I'm not going to try to control it all, that's going to work." I don't particularly agree with it. But that picture is a way of thinking about that idea. And very often a work of art is a way of looking at the outcomes of an idea. It's very clear in novels – in fact, the most clear example is in science fiction: you describe a world, and you try to describe how if things were like that, they would turn out. That "what if?" question is a central question that makes human beings successful creatures. We are capable of saying what if this, and what if that, and comparing those outcomes. We love that question, and art is one of the ways we keep rehearsing our ability to answer it.

HJC: It's a great point. The problem is more with the way people think and not the content of it. Human beings are very prone to this black-and-white dichotomous thinking, so if you're a socialist country you allow no market and squash any dissent, if you're a capitalist country you're supposed to – although in fact, many countries don't – you're supposed to put profit and economic growth before any human values. But paradoxically, these two ways of thinking are the same, in the sense that they have this one grand principle to which they are willing to sacrifice everything. This is why when many communists give up communism, they become ardent free-market supporters.

BE: It's a cliche: the ex-Trot.

HJC: I know quite a few ex-Trots who work in the IMF. So if you understand art in the same way Brian does, it gives you the ability to think about alternatives, think about possibilities.

BE: It allows you to think about uncertainty. One of the characteristics of people, whether on the left or the right, is that they can't tolerate uncertainty. They don't want a system with any leaks in it. They want to think they're capable of battening everything down – and if only people would fucking stick to the rules, it would work. When those systems don't work, it's always because, in their opinion, somebody didn't play the game correctly.

HJC: Yes, it's never their principles that are wrong, it's the people who are the problem.

BE: This is why so many rightwing Americans still say Iraq would have been a good war, if only we had sent in more troops in the beginning, if only we'd done this or we'd done that … They will not admit that Iraq wasn't a good war.

CLS: There is explicitly political art – look at the case of Pussy Riot at the moment, for example. So there's a range of ways of going about things.

BE: Well, of course there's a complete spectrum. Although I do often wonder how much of the politics of Pussy Riot the people who support them understand.

HJC: As a consumer, I don't create art, but I think whatever the message is, art has to touch you. I like all kinds of music – classical, pop, rock, electronic. Somehow, as a consumer, you know when something is good and when something is bad.

CLS: It's interesting that you use the word "consumer" – that we live in a world now in which art is something you consume, not something you practise. Art becomes a ready-made lifestyle.

HJC: Yes, but I took two years of piano lessons when I was seven and eight, and that was it.

BE: That's more than I took.