Welcome to the era of the bossy state

The relationship between governments and businesses is always changing. After 1945, many countries sought to rebuild society using firms that were state-owned and -managed. By the 1980s, faced with sclerosis in the West, the state retreated to become an umpire overseeing the rules for private firms to compete in a global market—a lesson learned, in a fashion, by the communist bloc. Now a new and turbulent phase is under way, as citizens demand action on problems, from social justice to the climate. In response, governments are directing firms to make society safer and fairer, but without controlling their shares or their boards. Instead of being the owner or umpire, the state has become the backseat driver. This bossy business interventionism is well-intentioned. But, ultimately, it is a mistake.
 
Signs of this approach are everywhere, as our special report explains. President Joe Biden is pursuing an agenda of soft protectionism, industrial subsidies and righteous regulation, aimed at making the home of free markets safe for the middle classes. In China Xi Jinping’s “Common Prosperity” crackdown is designed to curb the excesses of its freewheeling boom, and create a business scene that is more self-sufficient, tame and obedient. The European Union is drifting away from free markets to embrace industrial policy and “strategic autonomy”. As the biggest economies pivot, so do medium-sized ones such as Britain, India and Mexico. Crucially, in most democracies, the lure of intervention is bipartisan. Few politicians fancy fighting an election on a platform of open borders and free markets.

That is because many citizens fear that markets and their umpires are not up to the job. The financial crisis and slow recovery amplified anger about inequality. Other concerns are more recent. The world’s ten biggest tech companies are over twice as big as they were five years ago and sometimes seem to behave as if they are above the law. The geopolitical backdrop is a far cry from the 1990s, when the expansion of trade and democracy promised to go hand in hand, and from the cold war when the West and the Soviet Union had few business links. Now the West and totalitarian China are rivals but economically intertwined. Gummed-up supply chains are causing inflation, reinforcing the perception that globalisation is overextended. And climate change is an ever more pressing threat.

Governments are redesigning global capitalism to deal with these fears. But few politicians or voters want to go back to full-scale nationalisation. Not even Mr Xi is keen to reconstruct an empire of iron and steel plants run by chain-smoking commissars, while Mr Biden, despite his nostalgia for the 1960s, need only walk through America’s clogged West Coast ports to recall that public ownership can be shambolic. At the same time the pandemic has seen governments experiment with new policies that were unimaginable in December 2019, from perhaps $5trn or more of handouts and guarantees for firms to indicative guidance on optimal spacing of customers in shopping aisles.

This opening of the interventionist mind is coalescing around policies that fall short of ownership. One set of measures claims to enhance security, broadly defined. The class of industries in which government direction is legitimate on security grounds has expanded beyond defence to include energy and technology. In these areas governments are acting as de facto central planners, with research and development (r&d) spending to foster indigenous innovation and subsidies to redirect capital spending. In semiconductors America has proposed a $52bn subsidy scheme, one reason why Intel’s investment is forecast to double compared with five years ago. China is seeking self-sufficiency in semiconductors and Europe in batteries.

The definition of what is seen as strategic may well expand further to include vaccines, medical ingredients and minerals, for example. In the name of security, most big countries have tightened rules that screen incoming foreign investment. America’s mesh of punitive sanctions and technology export controls encompasses thousands of foreign individuals and firms.

The other set of measures aims to enhance stakeholderism. Shareholders and consumers no longer have uncontested primacy in the hierarchy of groups that firms serve. Managers must weigh the welfare of other constituents more heavily, including staff, suppliers and even competitors. The most visible part of this is voluntary, in the form of “esg” investing codes that score firms for, say, protecting biodiversity, local people or their own workers. But these wider obligations may become harder for firms to avoid. In China Alibaba has pledged a $15bn “donation” to the Common Prosperity cause. In the West stakeholderism may be enforced through the bureaucracy. Central banks and public pension funds may shun the securities of firms judged to be anti-social. America’s antitrust agency, which once safeguarded consumers alone, is mulling other aims such as helping small firms.

The ambition to confront economic and social problems is admirable. And so far, outside China at least, bossier government has not hurt business confidence. America’s main stockmarket index is over 40% higher than it was before the pandemic, while capital spending by the world’s largest 500-odd listed firms is up by 11%. Yet, in the longer term, three dangers loom.
High stakes

The first is that the state and business, faced by conflicting aims, will fail to find the best trade-offs. A fossil-fuel firm obliged to preserve good labour relations and jobs may be reluctant to shrink, hurting the climate. An antitrust policy that helps hundreds of thousands of small suppliers will hurt tens of millions of consumers who will end up paying higher prices. Boycotting China for its human-rights abuses might deprive the West of cheap supplies of solar technologies. Businesses and regulators focused on a single sector are often ill-equipped to cope with these dilemmas, and lack the democratic legitimacy to do so.

Diminished efficiency and innovation is the second danger. Duplicating global supply chains is extraordinarily expensive: multinational firms have $41trn of cross-border investments. More pernicious in the long run is a weakening of competition. Firms that gorge on subsidies become flabby, whereas those that are protected from foreign competition are more likely to treat customers shabbily. If you want to rein in Facebook, the most credible challenger is TikTok, from China. An economy in which politicians and big business manage the flow of subsidies according to orthodox thinking is not one in which entrepreneurs flourish.

The last problem is cronyism, which ends up contaminating business and politics alike. Firms seek advantage by attempting to manipulate government: already in America the boundary is blurred, with more corporate meddling in the electoral process. Meanwhile politicians and officials end up favouring particular firms, having sunk money and their hopes into them. The urge to intervene to soften every shock is habit-forming. In the past six weeks Britain, Germany and India have spent $7bn propping up two energy firms and a telecoms operator whose problems have nothing to do with the pandemic.

This newspaper believes that the state should intervene to make markets work better, through, for example, carbon taxes to shift capital towards climate-friendly technologies; r&d to fund science that firms will not; and a benefits system that protects workers and the poor. But the new style of bossy government goes far beyond this. Its adherents hope for prosperity, fairness and security. They are more likely to end up with inefficiency, vested interests and insularity.

Public luxury for all or private luxury for some: this is the choice we face

George Monbiot in The Guardian


Imagine designing one of our great cities from scratch. You would quickly discover that there is enough physical space for magnificent parks, playing fields, public swimming pools, urban nature reserves and allotments sufficient to meet the needs of everyone. Alternatively, you could designate the same space to a small proportion of its people – the richest citizens – who can afford large gardens, perhaps with their own swimming pools. The only way of securing space for both is to allow the suburbs to sprawl until the city becomes dysfunctional: impossible to supply with efficient services, lacking a sense of civic cohesion, and permanently snarled in traffic: Los Angeles for all.

Imagine designing a long-distance transport system for a nation that did not possess one. You’d find that there is plenty of room for everyone to travel swiftly and efficiently, in trains and luxury buses (an intercity bus can carry as many people as a mile of car traffic). But to supply the same mobility with private cars requires a prodigious use of land, concrete, metal and fuel. It can be done, but only at the cost of climate change, air pollution, the destruction of wonderful places and an assault on tranquillity, neighbourhood and community life.

This conflict is repeated in financial terms. In order that the very rich can pay less tax, public playgrounds are allowed to fall apart. The beneficiaries might use the extra money to build private play barns for their children. Public toilets are closed so that some people can install gold-plated taps in their bathrooms. Public swimming pools are put on restricted hours so that the very rich can turn up the thermostats in their private pools. Public galleries need to charge for entry so that billionaires can expand their own art collections. Wealth that could be shared and enjoyed by all is sequestered by a few.


Public luxury for all, or private luxury for some: this is the choice we face at all times – especially at this election

It is impossible to deliver a magnificent life for everyone by securing private space through private spending. Attempts to do so are highly inefficient, producing ridiculous levels of redundancy and replication. Look at roads, in which individual people, each encased in a tonne of metal, each taking up (at 70mph) 90 metres of lane, travel in parallel to the same destination. The expansion of public wealth creates more space for everyone; the expansion of private wealth reduces it, eventually damaging most people’s quality of life.

  ‘Look at roads, in which individual people, each encased in a tonne of metal, each taking up (at 70mph) 90 metres of lane, travel in parallel to the same destination.’ Photograph: Matt Cardy/Getty Images


This is a global issue, as well as a national one. According to the Global Footprint Network, every person in the UK uses the equivalent of 5 hectares of land and sea through the food we eat, the products we use and the carbon we release, which has to be absorbed somewhere if it is not to accelerate global warming. Yet the UK’s “biocapacity” (our ability to absorb these impacts) is a little over 1 hectare per person. Our extravagance is a cost that others must bear.

Public luxury available to all, or private luxury available to some: this is the choice we face at all times, but especially at this election. It is the conflict between these two visions that defines – or should define – our political options. There is a significant difference between Labour and the Conservatives in this respect, but I wish it were stronger.

Labour, through its proposed cultural capital fund, will reinvest in public galleries and museums. It will defend and expand our libraries, youth centres, football grounds, railways and local bus services. Unlike the Conservative manifesto, which is almost silent on the issue, Labour’s platform offers a reasonable list of protections to the living world.

But it also promises to “continue to upgrade our highways” (shortly after vowing to “encourage and enable people to get out of their cars”) and to provide new airport capacity. The conflicts are not acknowledged. Progress in the 21st century should be measured less by the new infrastructure you build than by the damaging infrastructure you retire.

Labour also misses a wonderful opportunity in its plans to expand affordable housing, to promote accommodation that both revives community and makes better use of space. In co-housing developments, people own or rent their own homes but share the rest of the land. Rather than chopping the available space into coffin-sized gardens in which a child cannot perform a cartwheel without hitting the fence, the children have room to run around together while the adults have space to garden and talk. Communal laundries release living space in people’s homes. Carpools reduce the need for parking. Isolation gives way to conviviality.

More importantly, and less surprisingly, the Labour manifesto fails to acknowledge the left’s great conundrum: the environmental damage caused by efforts to create jobs through economic growth. Like the Conservatives, like almost every party everywhere (the Greens are a notable exception), Labour’s economic vision is based on the presumption that there are no limits. Both conservative and social democratic parties see the world as a magic pudding that can never be exhausted. They build their economic programmes on a fairytale.

Kelvingrove Art gallery in Glasgow. ‘Labour, through its proposed cultural capital fund, will reinvest in public galleries and museums.’ Photograph: VisitBritain/Britain on View/Getty Images

And they have another unexamined premise in common: that money legitimately buys you the power to take what you want from the world. There is an almost universal assumption in politics that you have the right to help yourself to as much of the global commons (atmosphere, soil, water, fish) as you can afford, though this reduces what is left for other people to share. You have the right to occupy as much physical space as your money can buy, regardless of the restrictions this imposes on others.

Where does this licence arise? Even if private wealth were obtained through the exercise of virtue (an unlikely proposition at the best of times) or through enterprise and hard work (ever less probable, in this new age of inheritance and rent), it is hard to discern the just principle that translates this money into permission to acquire the space and resources on which other people depend for a decent quality of life. When and by whom was this permission granted? How does it correspond to our notion of equal rights, or our concept of democracy, which is based on an equal power to decide?

You will not find these questions asked in this election or in any other. They are fudged by recourse to the magical belief that there is enough space and resources for everyone to do as they wish, that infinite growth ensures that no one – when the parties’ economic promises are fulfilled – will need to intrude on the interests of others. Yet, on this finite planet, they are the questions that will determine not only the quality of our lives but our security and, eventually, our survival. The primary task of all far-sighted politicians should be to decide first how much we can use, then how it can best be shared.

When the questions that count above all others are beyond the scope of politics, when almost everyone in public life is either too blinkered or too frightened to answer them, when – even in this great, defining election, which at last offers people meaningful political choice – neither large party can even name them, you begin to recognise how much trouble we are in.

It’s divorce day – let’s bust some marriage myths

The conservative narrative baffles: how can tying the knot be both a moral choice and an insurance policy?

• 
• • Zoe Williams
  • The Guardian, Monday 5 January 2015

‘There’s nothing moral about making a promise, the moral part is in keeping it.’ Illustration by Mitch Blunt

It’s “divorce day”, the first working Monday after Christmas, customarily the busiest time of the year for family lawyers. In this age of constant contact, there’s been a modest surge in people seeking advice between Christmas and New Year, but for most, Twelfth Nisi is today (a half-pun for those who have already begun their divorce). If you’re married, there is a one in five chance you’re considering a split (according to a survey by legal firm Irwin Mitchell); it sounds improbably large, but there it is. If it’s not you, it’s probably him; check his phone, that’s how all the best divorces start.

Sir Paul Coleridge, a former high court judge, runs the Marriage Foundation, a charity that encourages getting and staying married. He told the Sunday Times, as part of a marriage-promotion drive in the lead-up to D-Day, of a case he’d seen: “She was the long-term girlfriend of a very high-profile celebrity person by whom she had had no fewer than four children. It was looking as if it was going to come unstuck, and she wanted to talk to me informally about what her position was. She said, ‘We’ll no doubt need an hour or two.’ I said, ‘We’ll need a minute or two because the answer is very simple: you have no rights.’”

Many people – in the 18-34 age group, almost half – believe that “common law” marriage actually comes with rights attached; that cohabiting couples with children have the same access to each other’s incomes, in the event of a split, as married ones do. This is untrue, though the “no ring, no rights” rallying cry of the marriage lobby is a bit of an overstatement (maintenance obligations obviously exist for the non-resident parent, whether previously married or not). This can prove disastrous for the main carer, who is unlikely to be the higher earner and, labouring under an illusion of legal protection, may have made no attempt to shield their finances from the hit of parenthood.

Family lawyers are divided on the answer – some would like to see new legislation that brings the common law into the purview of the actual law. Others, like Coleridge, see this as totally illogical; marriage, being limitless in both time and liability, is about the most profound contract a person can enter into. You can’t just slide into it, via cohabitation and parenthood; you have to enter into it willingly. His view is that marriage must be taught in schools (as a good idea, that is; I believe children already broadly know that it exists), and he’s supported in this by the Centre for Social Justice (CSJ), among others. There is something touchingly absurd about the amount of store people set by telling children things in schools – as if, when you want to alter behaviour, you simply insert a lesson and make it so. It doesn’t even work with oral hygiene.

Conservative belief in the institution of marriage runs like this: making a commitment to one another is what moral people do, and this makes marriage the most stable of all known relationships. Since stability is good for children, marriage is good for children (this mantra is given by the CSJ, especially, as something akin to gravity in its self-evidence).

Then, finally, if it all goes Pete Tong, you have the protection of the law, without which the weaker party may well end up dependent on the state. (The Sunday Times article was illustrated rather vividly by the story of a woman who, while waiting two and a half years for her husband to pay maintenance, said: “I’m pretty sure I cost the government around £400,000.”)

Few of these suppositions make much sense. There’s nothing moral about making a promise, the moral part is in keeping it, which 42% of married people don’t. Arguably, cohabiting couples are more moral than married ones, never making the promise in the first place that, most people agree and 42% prove, is rather unrealistic. In many cases, the so-called stability conferred by marriage is indistinguishable from that bestowed by wealth, which has itself become a major determinant of people’s decision to get married. But the critical contradiction, the bit I really cannot compute, is the idea of marriage as at once a moral choice and an insurance policy. It’s one or the other, surely? The abnegation of the self in the search for true togetherness, or a bid for your spouse’s income: how can it be both?

A conservative would see no contradiction, here: to have taken out the insurance policy of marriage is to have assured one’s self-sufficiency, thus protecting the state from its otherwise 400k liability (that figure does seem improbably high, but let’s go with it). Self-sufficiency is a moral act, to a conservative. In practical terms, this is nonsense; you may have left a copper-bottomed marriage, but if you weren’t rich to begin with, it is highly unlikely that your family earnings will expand to cover two households. Forty-two per cent of single parents live in poverty, 63% have no savings, 71% of all those renting are on housing benefit; so “self-sufficiency” is a byword for affluence, which then has moral superiority conferred upon it.

This is a recurring motif in the political mood music, cropping up in discussions from marriage to poverty to growth. The view from the right is that the ultimate in respectability is to need nothing from anyone: to which the left generally answers, self-sufficiency is about systems, and in the current system, it is very hard to be self-sufficient, however hard you work. But perhaps the question should be: what’s so wrong with needing one another in the first place?

The Myth of Common Sense: Why The Social World Is Less Obvious Than It Seems

By Duncan Watts

“Mankind, it seems, makes a poorer performance of government than of almost any other human activity.”
-Barbara Tuchman, The March of Folly

“This is not rocket science”
-Bill Frist on fixing health care, The New York Times

As these two quotes illustrate, there is something strangely conflicted about contemporary views on government and policy. On one hand, many people are in apparent agreement that government frequently accomplishes less than it ought to, sometimes embarrassingly so. Yet on the other hand, many of these same people are also of the opinion that the failings of government do not imply any great difficulty of the problems themselves—that they are not rocket science, as it were.

Typically the conflict is resolved with reference to the presumed incompetence, pigheadedness, or outright corruption of our leaders. If only we elected the right people, gave them the right incentives, and—above all—if only our political leaders exhibited a little more common sense, everything would be alright. That both “we” and “they” consistently fail to follow these simple steps proves only that common sense is not nearly common enough.

There may be some truth to this attitude. But as a sociologist, I’ve also learned to be skeptical of common sense, especially when it is invoked as the solution to complex social problems.

Sociology has had to confront the criticism that it has “discovered” little that an intelligent person couldn’t have figured out on his or her own.

Sociology, of course, has its own conflicted history with common sense. For almost as long as it has existed, that is, sociology has had to confront the criticism that it has “discovered” little that an intelligent person couldn’t have figured out on his or her own.

Why is it, for example, that most social groups, from friendship circles to workplaces, are so homogenous in terms of race, education level, and even gender? Why do some things become popular and not others? How much does the media influence society? Is more choice better or worse? Do taxes stimulate the economy?

Social scientists have struggled with all these questions for generations, and continue to do so. Yet many people feel they could answer these questions themselves—simply by examining their own experience. Unlike for problems in physics and biology, therefore, where we need experts to tell us what is true, when the topic is human or social behavior, we’re all “experts,” so we trust our own opinions at least as much as we trust those of social scientists.

Nor is this tendency necessarily a bad reaction—any theory should be consistent with empirical reality, and in the case of social science, that reality includes everyday experience. But not everything about the social world is transparent from common sense alone—in part because not everything that seems like common sense turns out to be true, and in part because common sense is extremely good at making the world seem more orderly than it really is.

Common sense isn’t anything like a scientific theory of the world.

As sociologists are fond of pointing out, common sense isn’t anything like a scientific theory of the world. Rather it is a hodge-podge of accumulated advice, experiences, aphorisms, norms, received wisdom, inherited beliefs, and introspection that is neither coherent nor even internally self-consistent. Birds of a feather flock together, but opposites also attract. Two minds are better than one, except when too many cooks spoil the broth. Does absence make the heart grow fonder, or is out of sight out of mind?  At what point does try, try again turn into flogging a dead horse? And if experience is the best teacher, when should one also maintain a beginner’s mind?

The problem with common sense is not that it isn’t sensible, but that what is sensible turns out to depend on lots of other features of the situation. And in general, it’s impossible to know which of these many potential features are relevant until after the fact (a fundamental problem that philosophers and cognitive scientists call the “frame problem”).

Nevertheless, once we do know the answer, it is almost always possible to pick and choose from our wide selection of common-sense statements about the world to produce something that sounds likely to be true. And because we only ever have to account for one outcome at a time (because we can ignore the “counterfactuals,” things that could’ve happened, but didn’t), it is always possible to construct an account of what did happen that not only makes sense, but also sounds like a causal story.

Photo:choupigloupi

To take a common example, think about how we explain success. Why is the Mona Lisa the most famous painting in the world?  Why did J.K. Rowling‘s Harry Potter books sell over 300 million copies?  And why is Madonna the most successful female musical artist of all time? Now that we know who these superstars are, their success seems easy to explain—common sense even. They simply outperformed the competition. Whether they did that through pure genius, clever marketing, or sheer tenacity is a matter of debate (you be the judge), but in the end, it doesn’t really matter.  In the competitive marketplace of ideas, a product succeeds because it represents what people want—otherwise, they wouldn’t have devoted their scarce time, money, and attention to it. Right?

Photo: Joaquín Martínez Rosado

Well, sort of. But if that’s true, why are superstars so hard to pick out in advance?  Why did several children’s publishers reject the initial Harry Pottermanuscript? Why did no one pay much attention to the Mona Lisa for nearly 400 years? And why did music critics dismiss the early Madonna as an attention seeker with limited talent? Whatever their personal preferences, how could they have failed to understand the demands of the marketplace, which after all is precisely what they are rewarded for doing?

Nor is it just the critics who get their predictions wrong—marketers can’t seem to figure out what will sell either. If they could, they wouldn’t waste their efforts on the vast majority of books, movies, and albums that lose money. So what explains why some cultural products are stunningly successful, while most aren’t; and why at the same time, no one, including the experts, seems to be able to predict which is which?

A few years ago, my students and I studied exactly this question by setting up an experiment in which roughly 15,000 participants were asked to listen to, rate, and download songs by unknown bands off a website we created. Some of the participants had to make their decisions independently, while others had information about which of the songs other people liked.  We found two results. First, in the “social influence” condition, popular songs were more popular (and unpopular songs less popular) than in the independent case. But second, it became harder to predict which particular songs would be the most popular.

What these results suggest is that in the real world, where social influence is much stronger than in our artificial experiment, enormous differences in success may indeed be due to small, random fluctuations early on in an artist’s career, which then get amplified by a process of cumulative advantage—a “rich-get-richer” phenomenon that is thought to arise in many social systems.

The random fluctuations arising from social influence were larger than those arising from differences in quality.

A critical feature of this experiment was our ability to create multiple “worlds” in which randomly assigned groups of people could create different versions of history in parallel with each other. By observing how popular the same song became in different worlds, we could measure directly how much of its success can be attributed to some intrinsic “quality,” and how much results from random chance. We found that although, on average, good songs do better than bad songs, the random fluctuations arising from social influence were larger than those arising from differences in quality.

The problem with this explanation, however, is that in real life we never get to experience these multiple histories—only the one history that we have lived through. So although one can argue that Madonna or Harry Potter or even Shakespeare may owe their success more to random chance and cumulative advantage than to intrinsic superiority, it is impossible to refute the common sense view that history took the path that it did because the winners embodied precisely the greatness to which we attribute them. And for a Madonna or a Harry Potter or a Shakespeare fan, that is typically the end of the argument.

Common sense, in other words, is extremely good at making the world seem sensible, quickly classifying believable information as old news, rejecting explanations that don’t coincide with experience, and ignoring counterfactuals. Viewed this way, common sense starts to seem less like a way to understand the world, than a way to survive without having to understand it.

That may have been a perfectly fine design for most of evolutionary history, where humans lived in small groups and could safely ignore most of what was going on in the world. But increasingly the problems of the modern world—distributions of wealth, sustainable development, public health—require us to understand cause and effect in complex systems, with consequences unfolding over years or decades. And for these kinds of problems, there’s no reason to believe that common sense is much of a guide at all.

Fortunately, in recent years the explosive growth of the Internet has brought with it the ability to measure the actions and interactions of millions of people simultaneously. Not just social networking services like Facebook, Twitter and YouTube, but email interactions, instant messaging, and Internet phone calls all provide measurable traces of the person-to-person interactions that have always been at the core of social life, but have until recently been invisible to science.

Already this flood of data has generated enormous interest in the research community, with thousands of physicists and computer scientists beginning to pay attention to problems traditionally in the domain of the social sciences. It’s tempting to look back at past technological breakthroughs, such as the telescope or the microscope, when new instrumentation made the previously invisible visible, and wonder if perhaps social science is on the edge of its own scientific revolution.

Social problems, that is, must be viewed not as the subject of rhetorical debates, but as scientific problems

But if we are to make use of these impressive new capabilities to address the kinds of problems that governments have historically failed to solve, we also need to think differently about the problems themselves. Social problems, that is, must be viewed not as the subject of rhetorical debates, but as scientific problems, in the sense that some combination of theory, data, and experiment can provide useful insights beyond that which can be derived through intuition and experience alone.

Clearly we’re a long way from a world in which cause and effect in social and economic systems can be established with the level of certainty we’ve come to expect from the physical sciences. In fact, the world of human behavior is sufficiently complicated and unpredictable that no matter how long or hard we try, we will always be stuck with some level of uncertainty, in which case leaders will have to do what they’ve always done and make the best decisions they can under the circumstances.

It sounds like a lot of effort for an uncertain payoff, but curing cancer has also proven to be an enormously complex undertaking, far more resistant to medical science than was once thought, yet no one is throwing up their hands on that one. It is time to apply the same admirable resolve to understand the world—no matter how long it takes—that we display in our struggles to address the important problems of physical and medical science to social problems as well.