It's not just corruption. Entrance into elite US colleges is rigged in every way

An FBI sting revealed that wealthy parents are buying their children a place in top universities. But they’re not the only problem: the whole system is rigged writes Richard V Reeves in The Guardian 

 

‘Elite colleges are serving to reinforce class inequality, rather than reduce it.’ Photograph: Boston Globe/Boston Globe via Getty Images


Shock horror! Wealthy Americans are using their money to buy their children places at elite colleges. An FBI investigation, appropriately named Operation Varsity Blues, has exposed a $25m cash-for-admissions scandal. Coaches were allegedly bribed to declare candidates as athletic recruits; test administrators to change their scores, or allow someone else to take the test for them.

At the center of the cheating scheme was William “Rick” Singer, the founder of a for-profit college preparation business based in Newport Beach, California. Among the 33 parents caught in the FBI sting were Hollywood stars Lori Loughlin and Felicity Huffman. Loughlin starred in the series Full House. Huffman is famous for her role in Desperate Housewives; now she will be more famous as a desperate mom. And she’s not alone. The breathless anxiety among many affluent parents to get their kids into the very best colleges is a striking feature of upper-class American life.

Singer’s bribery scheme allegedly allowed parents to buy entrance for their offspring at some of the nation’s most prestigious colleges, including Yale, Georgetown University, Stanford University, UCLA, the University of San Diego, USC, University of Texas and Wake Forest.

FBI officers were at pains to point out that the colleges themselves are not being found liable; though nine athletic coaches were caught in the net.

“Following 10 months of investigation using sophisticated techniques, the FBI uncovered what we believe to be a rigged system,” John Bonavolonta, the FBI special agent in charge said, “robbing students all over the country of their right to a fair shot of getting into some of the most elite universities in this country”.

But here’s the thing: the whole system is “rigged” in favor of more affluent parents. It is true that the conversion of wealth into a desirable college seat was especially egregious in this case – to the extent that it was actually illegal. But there are countless ways that students are robbed of a “fair shot” if they are not lucky enough to be born to well-resourced, well-connected parents.

The difference between this illegal scheme and the legal ways in which money buys access is one of degree, not of kind. The mistake here was to do something illegal. Meanwhile, much of what goes on in college admissions many not be illegal, but it is immoral.

Take legacy preferences, for example. This boosts the admissions chances of the children of alumni; and for obvious reasons the alumni of elite colleges tend to be pretty affluent, especially if they marry each other. (They are also disproportionately white.) The acceptance rate for legacy applicants at Harvard, Yale, Princeton, Georgetown and Stanford is between two and three times higher than the general admission rate. If they don’t get in first time round, they might be asked to take a “gap year” and enter a year later instead, a loophole known as “Z-listing”. A Princeton study found that being a legacy applicant had the same effect as adding 160 SAT points – on the old scale up to 1600 – to a student’s application. Imagine if colleges gave that kind of admissions boost to lower-income kids?

As John W Anderson, the former co-director of college counseling at the Phillips Academy, an elite boarding school in Andover, Massachusetts, once admitted, of the students from his school who are Z-listed for Harvard, “a very, very, very high percent” are legacies. The Harvard Crimson estimates the proportion at around one in two.

Or how about donor preferences? Rather than bribing coaches, the wealthiest parents can just bribe – sorry, donate to – the college directly. In 2017, the Washington Post reported on the special treatment given to “VIP applicants” via an annual “watch list”. Applicants whose parents were big donors would have notes on their files reading “$500k. Must be on WL” (wait list). Even better, these donations are tax free!

As a general rule, the bigger the money the bigger the effect on admissions chances. Among elite aspirational alums, the question asked is “what’s the price?”. In other words, how much do you have to donate to get your child in?

Whatever the price is, those with the fattest wallets can obviously pay it. Peter Malkin graduated from Harvard Law School in 1958. He became a very wealthy real estate businessman, and huge donor. In 1985, the university’s indoor athletic facility was renamed the Malkin Athletic Center in his honor. All three of Malkin’s children went to Harvard. By 2009, five of his six college-age grandchildren had followed suit. (One brave boy dared to go to Stanford instead.)

How elite US schools give preference to wealthy and white 'legacy' applicants


Or how about Jared Kushner, Donald Trump’s son-in-law? Kushner was accepted into Harvard shortly after his father donated $2.5m. An official at Kushner’s high school said there was “no way anybody in the administrative office of the school thought he would, on the merits, get into Harvard. His GPA did not warrant it, his SAT scores did not warrant it.”

David E and Stacey Goel just gave $100m to Harvard. I’m going to go out on a limb here and say that their children probably have an excellent chance of Harvard admission.

Even those parents who are not in the wealthiest brackets, but are squarely in the upper middle class, can use their money to boost their kids’ chances, through tutors, SAT prep classes, athletic coaches. Students who apply early have better chances of admission, which favors more affluent families since early admission precedes financial aid decisions. Many colleges prefer students who have “shown an interest” in their college. How to show an interest? By visiting the campus – easy for those with money for flights and hotels, less so for those on modest or low incomes.

Small wonder that at elite colleges, including most of those targeted in the corruption scheme such as Yale, Duke, Stanford and Wake Forest, take more students from families in the top 1% of the income distribution than from those in the bottom 60% combined.

So hats off to FBI special agent Bonavolonta and his team for exposing the corruption admissions. But it is in fact simply the most visible sign of a much deeper problem with college admissions. Elite colleges are serving to reinforce class inequality, rather than reduce it. The opaque, complex, unfair admissions process is a big part of the problem. From an equality perspective, it is not just Singer and his clients who are at fault: it’s the system as a whole.

David Cameron’s gift to the world: trickle-down tax-dodging

Marina Hyde in The Guardian

An intriguing approach to damage limitation by Panama prat David Cameron, particularly considering the prime minister’s only real life job ever was as a PR. The prime minister appears to have been the last person to realise what everyone else in Westminster could see on Monday. Namely, that he’d be sitting down for an awkward tell-all – or at least a tell-some – by Thursday.

My absolute favourite tale from Cameron’s era as press chief for the culturocidal Carlton Television comes courtesy of the Guardian’s then media correspondent, who rang him up on a story. Like all mediocre PRs, a large part of his strategy was ignoring calls, but having accidentally answered this one he was cornered – and consequently pretended to be his own cleaner. “I can’t prove it was him,” the journalist reflected later, “but it certainly sounded a lot like him.” Well, he does have that central casting cleaner’s voice, so perhaps we ought to leave the case file open. Even so, for the journalists who recall the barefaced whoppers Cameron was able to tell them back in those days, this week has not been an occasion to break out the smelling salts.

“I’ve never tried to be anything I’m not,” Cameron claimed to Robert Peston in his belated confession. What about a cleaner? Or a football fan? Evidently the PM judged it the wrong moment to bring up either impersonations of the help, or Aston Villa. Or, indeed, West Ham. Still, at some point, Fortune was always going to collect on the deal Cameron foolishly made when he called the comedian Jimmy Carr’s (also legal) tax arrangements “morally wrong”. Showbiz now joins football on the list of things upon which he ought never to comment again.

Explaining to Peston that “my dad was a man I love and miss every day”, Cameron admitted that he and his wife had in fact invested in Ian Cameron’s offshore firm Blairmore in 1997, then sold their stake in 2010 for “something like £30,000”. That Cameron’s shifty cover-up has been more damaging than his non-crime is almost too insultingly obvious to state. He will not be assisted by the subconscious dismissiveness in that styling – “something like £30,000”. There is a fine line between fastidious precision and sounding like something north of the average British salary is rather forgettable, and the PM fell on the wrong side of it.

Even so, despite the obvious temptations, it would be a destructive mistake for Cameron’s enemies to get too tribal about these things. For all that this story appears currently to concern the Conservatives, there is something rather more Labourish – New Labourish, particularly – to it. The history of British political scandal dictates that it is traditionally sex that gets the Tories in trouble, and money that lands Labour in hot water.

That the Camerons’ investment in Blairmore lasted from 1997 to 2010 – the precise era of New Labour government – feels like a bit of a signpost. Indeed, for a story featuring something called Blairmore, it is surprising that it is Blair-less. For my money – something like £30, for this bet – the saga this most closely resembles is “Cheriegate”. Back at the very end of 2002, you may remember, Cherie Blair unwittingly used a conman (the gentleman caller of her special-adviser-cum-aromatherapist) to assist her in the purchase of two £250,000 Bristol flats.

Just as it has with Cameron, it took Mrs Blair several days to realise she was going to have to tell the truth, but eventually she too was making an emotional speech explaining that she had only been trying to protect her family “particularly my son in his first term at university [sob] living away from home”. A cri de coeur that certainly put in perspective the worries of other mothers who were at that time sending their 18-year-olds off to her husband’s war in Afghanistan. Toughest game in the world, the university game.

That said, Cameron’s emotional citation of his father, though obviously relevant, does rather recall Gordon Brown when on a sticky wicket. A defensive mention of his dad was Brown’s poker tell, and one almost as inscrutable as Homer Simpson’s habit of dancing round the table shrieking in delight at having been dealt four jacks. Mr Brown was never delighted when he brought up the scrupulous honesty of his Presbyterian minister father, but felt the urgent need in order to bolster the fib he was about to tell. An absurd denial that he’d never contemplated sacking Alistair Darling, for instance, came with the giveaway mention that his father had taught him “always to be honest”.

“He’s a prime minister,” skills minister Nick Boles conceded of Cameron on Friday morning, “but he’s also a human being and he’s a son.” I think we can ignore Mr Boles on the father-son dynamic. His last public reference to it was when he accused the grieving father of a Tory activist who had killed himself of trying to “hound” the party chairman out of a job.

Even so, Labour should consider the bigger picture. There are – how to put this delicately? – certain big political names of the relatively recent era that have yet to feature in the tale of tax avoidance, but on whom you’d be unwise to bet against emerging in some future story, some later data leak. Then again, perhaps these persons unnamed have opened their umbrella firms even more carefully, and we shall never know on the record. But we shall know it in our hearts, with that epistemology made fashionable by Tony Blair. “I only know what I believe,” he once intoned. Don’t we all, Mr Blair. Don’t we all.

The gravest danger of casting the tax debate as some tribal battle between the same old foes is to us – the little people who pay taxes, as Leona Helmsley once deathlessly observed. A tit-for-tat between parties does society in which we all have a stake no favours. Down that path, the path where ordinary people conclude that politicians and companies are all in it together, lies a corrupted society like Greece, where top-tier tax dodging eventually trickled down to dentists and doctors and beyond.

The idea that Britain – where people traditionally paid tax relatively willingly – could ever end up anything like this was unthinkable only a few years ago. It is now rather more thinkable, with the accretion of endless stories about Google, Amazon, the Panama Papers names … Never mind the details. Over time, overall impressions are taken. In the end, ordinary people will only know what they believe, and the fear for society is that they will begin to act accordingly.

Making money is not a vice, but refusing to contribute tax is

 

We can have a vision of a good life that is not simply a yacht off the Virgin Islands, but one in which we have decent schools and hospitals. Photograph: Alamy

Suzanne_Moore in The Guardian


That global elite – I always suspected they were up to no good … I must be psychic! And look, here is the proof: the Panama leaks show all these vultures hiding away their money in perfectly legal schemes to avoid paying taxes in countries out of which they operate their businesses. The yachts flying Panamanian flags off the coast of some of these islands may have been a hint but somehow the wrong-doing of the super rich has simply become part of the environment. A stroll around London reveals rough sleepers among ghost mansions and empty penthouses, bought by those who will never make them homes.

This is just what a globalised capital city looks like. This is where global capital comes to hide itself. Never mind these idyllic tax havens, the UK itself is a centre for a form of money laundering. This is “our” success. 

After the crash of 2008, the City rallied, paying for more than half of the Tory election campaign.

Anger at the bankers dissipated into a sort of shrug of the shoulders. Those who caused the damage hung on to their bonuses. Austerity works by saying that it is in our own self-interest to punish ourselves.

Hopefully some of this compliance is now falling apart, but the Panama leaks reveal something so massive that it’s hard to get to grips with it: big, bad, rich people do secret, mean things.

Jeremy Corbyn, as ever, seems mildly irritated by the workings of global capitalism. After all, he was elected in protest at a leadership that had simply sucked it up. New Labour was so intensely relaxed about wealth that it made up phrases such as “wealth creators”. All of this was personified by Cherie Blair, forever on some grabby supermarket sweep while her hollowed-out husband sells his services to dictators. Corbyn’s asceticism may be a relief, but its not yet an alternative.

Some things need to be said now, and said clearly. Not paying tax may not be illegal, but it is immoral. It is a form of theft. The acceptance of a caste system whereby the likes of David Cameron and George Osborne rule us, and we are not allowed to question the finances of this elite has to stop. We all pay tax to train doctors and maintain the roads they are driven on. The idea that this elite does not use the services that are provided is simply not true.

Try, for instance, calling a private ambulance and having it driven only on private roads? I note, after another strike by junior doctors, that just before the 2010 election, Jeremy Hunt, then culture secretary, reduced his tax bill by £100,000 through a deal that meant he transferred his companies’ office buildings. This is only human isn’t it? Why shouldn’t he do this?

Here is why: tax is a marker of civilisation, a form of a social contract that right now is being torn up in front of our eyes. Even Adam Smith called tax a badge of liberty. And yet for many, freedom is entirely bound up with paying as little tax as possible. The richer you are the more free you are to not contribute – though you are still free to lecture others on the benefits of hard work.

This is what is so peculiar, too, about Cameron telling us he will no longer benefit from his father’s offshore arrangements. He did. He has. That is not in question. But the new kind of privilege is one that sees itself both as God-given and hard-earned. This delusion has hit its apotheosis in Zac Goldsmith, that charisma vacuum, who is strangely listless except when he is stirring up racial tension.

But then this wealth bubble is a private-members club because it is, by nature, profoundly antisocial. Tax-dodging, aversion or whatever polite term we use, is premised on the free movement of money. The social consequences of this, be it the movement of migrants or the closure of industries, is someone else’s problem.

Part of this hyper-capitalism is the idea that only money makes money and people make nothing. “The left” went badly wrong buying into this worldview for a while. Financialisation meant only services would produce profit. But making things, whether you’re assembling a car, or a painting, or a house, still matters. We also became muddled about aspiration. It was good, then it was bad – rather than it being just a fact of life, like breathing. The need is to simply find a language of aspiration that is about all of us. The economy is increasingly spoken of as if it were the weather and completely uncontrollable. No.

We can have a vision of a good life that is not simply a yacht off the Virgin Islands, but one in which we have decent schools and hospitals, and our entrepreneurial skills are both useful and what we use to contribute. Where we understand that we pay tax precisely because there is such a thing as society; making money is neither a vice nor a virtue. Refusing to contribute, though, is a vice. That tight bastard who never buys a round in the pub though he earns more than you? Do you really want him running the country? Because that’s the country in which we currently live.

'We knew we were going to be hit by a tsunami’: John McDonnell Interview

Source The Guardian

John McDonnell arrives with his shirt open at the neck. As the photographer sets up, he says: “I must put a tie on. I want to look respectable.” He rummages in his rucksack and draws out a tie of a very conservative deep blue. As he puts it on, the man who once declared his mission to be “generally fermenting the overthrow of capitalism” jokes: “I’m trying to look more like a central banker.”

This fellow veteran of the Bennite left is Jeremy Corbyn’s closest ally in a shadow cabinet that contains very few true friends of the new Labour leader.

The cartoonish version of his shadow chancellor is a belligerent, divisive, leftwing firebrand. He certainly has a history of incendiary rhetoric and he is unquestionably leftwing. He is not humourless and, if he can be abrasive, today he is doing his best to turn his most emollient face to the world.

He acknowledges that many senior Labour MPs were appalled by his appointment and influential trade union figures urged the Labour leader to make a less contentious choice. The rightwing press have raged against him even more than they have about the election of Corbyn himself. “It was a difficult decision for both him and me” and “we knew we were going to get a tsunami hit us.”

He is a man many love to hate. Why is that? He puts it partly down to “swimming against the tide” for all those decades when his brand of leftwing politics was despised and ignored by successive leaders of the Labour party. He reveals that his wife and family had their doubts about whether he should take it on: he had a mild heart attack two years ago. “I had warnings from them: ‘Come on, look, are you sure?’ But it had to be done.”

After many conversations with Corbyn, they concluded that they had to “ride the controversy” because it was essential that leader and shadow chancellor were as one on economic policy. “We didn’t want to go through a Blair–Brown era again where leader and chancellor are falling out all the time or what went on with Ed [Miliband] and Ed Balls. I think Jeremy’s point of view is ‘I’ve got to have someone who I one hundred percent trust.’ ”

The composition of the rest of the shadow cabinet, he argues, shows that they are not being militantly factional and are genuinely interested in having “a really broad-based team” representing all strands of Labour opinion. “As big a tent as we possibly can.” They started making overtures to people before it was announced that Corbyn had won and he is still appealing to some who quit the shadow cabinet for internal exile on the backbenches. He hopes that they will think again and cooperate on the development of policy. “I’m still having that conversation now with people to see if we can get them back into some role. I think we might be able to.”

Like who? “I would like Chuka [Umunna] to come back, desperately.” He mentions some more of those who have refused to serve. “Shabana Mahmood is a brilliant talent for the future. People like that I’d really like to get back. If we could get them back on board it will send a message that we really are a big tent.”

His friend’s debut week as leader has not been a smooth ride. Even sympathisers have been tearing out their hair over an often shambolic first seven days of unforced errors and forced U-turns which gifted a lot of ammunition to their many enemies in both the press and the Labour parliamentary party. McDonnell acknowledges that it has been “a bit rough” and puts the mistakes down to naivety. Whatever mutinous colleagues say to the contrary, he claims to be completely confident that his friend will lead Labour into the 2020 election.

His own appearance on Question Time involved two apologies. Once for saying that he wished he could have assassinated Margaret Thatcher – “an appalling joke”. And again for a notorious speech in which he commended the bravery and sacrifice of the IRA for using their bombs and bullets to bring “Britain to the negotiating table”. Some of the audience applauded his expression of regret. Others have found his explanation for the IRA speech – that he was praising them to try to sustain the peace process – utterly unconvincing. “I set up the all-party group on conflict prevention and conflict resolution. I chaired it,” he says, but acknowledges: “There’ll be some I’ll never convince.” Part of his problem with presenting himself as one of nature’s peacemakers is that he has a lot of form when it comes to suggesting political opponents should meet violent ends, talking about “lynching the bastard” in reference to the Tory Esther McVey and having “a recurring dream about garrotting Danny Alexander”.

He smiles: “I know.”

Where is that coming from? Liverpool, is his answer. “I’m from the north. You can take the boy out of the north but you can’t take the north out of the boy. I’m a plain speaker.”

Does the mellow version of McDonnell extend to having anything pleasant to say about the man he now shadows, George Osborne? “I’ve tried to get to a situation where you mature, where you don’t personalise your politics. But I go back to my constituency and you should come to my surgery some time, you’d sit down and weep. I have people begging me for a house. I’ve got families living in beds in sheds. Shanty places. So I think Osborne is cut off from the real world. I’m going to challenge him to come down to see them. What angers me is that they don’t have any understanding of the consequences of what they’re doing.”

This promises lively fireworks ahead when he clashes with a Tory chancellor he calls “immoral”. But to opponents within his own party, the message is relentless conciliation. A manifesto he wrote three years ago called for a tax raid on the wealthiest 10%, banning companies from paying their chief executives any more than 20 times the lowest wage, and a new top rate of tax set at 60%. But he says he is not going to dogmatically impose his ideas. What he will instead announce is policy commissions to investigate various areas and he hopes for participation from a wide range of opinion not just confined to the Labour party.

He wants to change the Bank of England’s target so that it considers not just inflation when setting interest rates, but also the effect on jobs, investment and inequality. One of his biggest and most hotly contested ideas is forcing the bank to print money to fund infrastructure projects: so-called “people’s quantitative easing”. The governor of the bank, Mark Carney, has suggested that this would so compromise its independence that he could not remain as its governor. Rather than upbraid Carney for straying into political partisanship, McDonnell mildly responds that he is “going to try to meet him as soon as possible”.

For the first time in many decades, Labour has a shadow chancellor committed to the nationalisation of some strategic industries. Polls suggest that taking the railways back into state control is popular with a majority. He is likely also to strike a chord when he describes the recent sales of shares in chunks of the Royal Mail and Royal Bank of Scotland as “complete rip-offs” that have left the taxpayer seriously short-changed.

What is perhaps most interesting in terms of his personal ideological development and the way in which debate has shifted over the decades is that he no longer advocates, as the left did back in the 1980s, a return to nationalisation across the board. BT was once a state company. Would he seek to bring it back into public ownership again? “Too late,” he says. “Love to but too late.”

Lack of voter faith in Labour’s economic competence lay at the heart of the party’s defeat back in May as it also did when they were thrown out of office in 2010. If the public did not trust Gordon Brown and Alistair Darling with the economy, nor Ed Miliband and Ed Balls, why are they going to trust Jeremy Corbyn and John McDonnell?

“They’re not going to have to trust me or Jeremy Corbyn or whatever. They’re going to have to trust the Labour party.”

He says he wants the membership, which grew during the leadership contest and has drawn in more Corbyn enthusiasts since the result, to get involved in policy making. This also hints at how he and Corbyn think they can mobilise support in the party as a counterweight to the hostility of the great majority of Labour MPs.

“We’ll go on the stump immediately after the party conference, get as many members out there as possible, in the same way that Jeremy went on the stump before. But the difference now will be not urging people to vote for us, it’ll be about urging people to get involved in the discussion. I think Labour MPs will be shocked at the way in which they will be engaged in a democratic process of determining our policies.”

His admirers say McDonnell is a serious thinker about a radically different way of approaching the economy. Asked which writers have most influenced him, he rattles off several names of contemporary, leftwing economists, but at the top of his list he places Karl Marx. ‘You can’t understand the capitalist system without reading Das Kapital. Full stop.’

He says this with a knowing twinkle. That is not an answer you would have got from any previous Labour shadow chancellor in living memory. Nor from any central banker.

Banking keeps getting away with it, just as the unions did

Heads will probably roll for the Libor scandal, but this crisis won't end until the profession's link with politicians is severed

• 
• • Simon Jenkins
  • guardian.co.uk, Thursday 28 June 2012 20.30 BST

Banking first refused regulation and now welcomes it, because only thus can it be protected from the consequences of its own greed. Illustration: Simon Pemberton

 

Too big to fail … now too big to jail? There seems no end to the immunity – moral, political, fiscal and possibly legal – claimed by the present masters of the universe, the bankers. In a side-splitting, coffee-spluttering radio interview today, Sir Martin Taylor, the former chief executive of Barclays, mused that his old board might consider the best person to "turn the page" on the bank's latest scandal might be none other than its author and present chief executive, Bob Diamond. That is presumably despite the bank being fined £290m and pending possible charges of fraud.

Diamond has "taken responsibility" for the division that from 2005 onwards manipulated inter-bank loans so as to disguise the bank's vulnerability in the runup to the 2008 credit crunch. The clear intention was to mislead the market and enrich bank staff with bonuses. Responsibility apparently means Diamond "giving up" a bonus which, surely, he has yet to earn.

A year ago the Barclays chief dazzled the BBC into letting him give a lecture on banking and citizenship, a lecture now sodden with irony. He spoke of the importance of an organisation's culture, of "how people behave when no one is watching", and how "our culture must be one where the interests of customers and clients are at the very heart of every decision we make". Bankers must be good citizens, said Diamond,, or there would be social unrest.

At the time Diamond was demanding his own shareholders pay him not just a salary, but the tax on that salary and then the tax on that taxable benefit. It is not clear who paid the tax in this spiral of greed. Diamond must also have known his colleagues were then being investigated by the Financial Services Authority for irregularities in the bank's trading. Diamond's entire reputation was built on his banking culture, one of bonus-hunting, offshore tax avoidance and killer-takes-all rivalry. For him to give a lecture on ethics invited cliches about Jack the Ripper and door-to-door salesmanship.
The Barclays affair should be a sideshow to our present discontents. The world currently faces the greatest collapse in western statecraft since the second world war. Economists, officials, politicians, even commentators, seem gripped by professional and intellectual rigor mortis, one horribly reminiscent of the 1930s. All experience tells them that a collapse in global demand needs monetary injection, not contraction. Yet they deny it, and bankers lie about it. In Britain we all parrot that £325bn has been "pumped into the economy" by the Bank of England. It has not. The money is nowhere to be seen. It is a device, a headline, a sick joke.

At such times it is comforting to turn from the murky failures of the present to the clear ones of the past. The snoozing Commons Treasury committee is yet again "to call Mr Diamond the account", so it can show off its interrogatory machismo. Lord Myners, formerly of the Guardian, won himself plaudits today by calling Barclays "the most corrosive failure of moral behaviour that I have seen in a major financial institution". But he was a worldly banker himself, and City minister in 2008-9, when the whole house of cards was collapsing amid media reports of "something fishy" in the Libor market. Labour was putty in the hands of the bankers.

From the credit crisis to the present day, the one profession with open access to Downing Street is banking. It lobbies successfully on everything from bailouts to bonuses, non-doms to Tobin taxes, euro regulation to "quantitative easing". When told to lend to small businesses, it refuses. When given money to do so, it buries the money. When ministers plead for lower salaries, it increases them. The government takes over a bank, RBS, and its computers crash. Bankers get ribbed in the press – but so what, when the bonus is in the safe and few are ever called to account, banned from trading, or sent to jail?

Banking gets away with all this because it enjoys the same unaccounted access to power that trade unions enjoyed in the bad old days. It first refused regulation and now welcomes it, because only thus can it be protected from the consequences of its own greed. It preaches the nobility of the markets and then rigs them. We should listen every day to Adam Smith's maxim, that "people of the same trade seldom meet together … but the conversation ends in a conspiracy against the public or in some contrivance to raise prices".

Most running controversies today reflect deep confusion in corporate ethics and accountability. Barclays traders, News of the World reporters, immigration office officials, even drone bombers, turn instinctively to the excuse that they were "just obeying orders". Thus is moral responsibility dispersed and blame passed upwards to the boss, the board, the regulator, the government, ultimately democracy. The great let-out is that "we are all to blame". As the philosopher Reinhold Niebuhr remarked, moral individuals can still constitute an immoral society. Guilt is diffused in a crowd.
Failure of regulation has become a catch-all to sanitise personal and corporate misbehaviour in large organisations. This merely means that, when an outrage has been detected, and a feeding frenzy begins there are howls for heads to roll. Certainly at Barclays public decency, if nothing else, demands some sacrifice. But the real fault lies in bigness, in the ease with which corporations can fall victim to ethical compromise and pretend it is not their fault but the regulator's.

There must surely be a reckoning one day for the loss and agony that the credit crunch has inflicted – and is still inflicting – on millions of innocent victims. But as we seek out the guilty men, we should know that as long as banking retains its stranglehold on policy, the disaster will continue.

Will Western Liberal Values Hold Up During Difficult Times?

Millions of Asians - including Chinese, Indians, Filipinos, Sri Lankans, Pakistanis - and others from different corners of the world have made the West their home. What are the likely social and psychological consequences for us "others" in these hard times?

One of the defining features of Western democracies is said to be its liberal values. What it essentially means for people like us is that our presence is for the most part not considered a big deal. If the economist Benjamin Friedman is right, however, liberal values thrive and indeed depend on continued economic growth and prosperity of citizens.

"Economic growth - meaning a rising standard of living for a clear majority of citizens - more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy." In contrast, when there is economic decline, the "moral character" of citizens takes a hit.

They become less tolerant, less open and less generous towards the have-nots. Friedman contends that "merely being rich is no bar to a society’s retreat into rigidity and intolerance once enough of its citizens lose the sense that they are getting ahead".

In other words, a society's values are fickle. The future prospect of citizens largely determines the values they hold at any point of time. Economic growth matters more for a society's ‘moral character' than the country's overall wealth.

Clearly, the truth is more complex than what the stylized version of Friedman's thesis suggests. Any values that we hold do not change quickly. We let go of our old values and acquire new ones only over time.

But what if some kinds of values - in this case liberal values - are prone to easy abandonment because they never developed deep roots in ways we thought they did?

With no end to bad economic news, how many Europeans and Americans will retain or abandon liberal values? If more of the latter, which members of society are likely to become victims of growing intolerance and injustice?

The so-called "undeserving poor" certainly. Additionally, the victims are also likely to be from among what Canadians label as "visible minorities".

From this perspective, for the millions of visible minorities who live in the West, the hard times of today may be the beginning of worse to come. They face the prospect of greater discrimination in the economic and social spheres or more.

Are we then headed for an era of growing illiberalism in the liberal democracies of the West so far as "others" - whether the poor or visible minorities - are concerned? Are the foundations of liberal democracies really so shallow?

Some of us may recall Fareed Zakaria's seminal article in Foreign Affairs (1997) in which he drew attention to growing illiberalism in new democracies - countries which held reasonably free and fair elections without subscribing to constitutional liberalism. For Zakaria, "liberal constitutionalism" - that "tradition, deep in Western history that seeks to protect an individual's autonomy and dignity against coercion, whatever the source - state, church or society" - separates Western democracies from the rest.

The larger issue may well be whether the celebrated liberal values of Western societies - which together with constitutional and other legal provisions, provide the bedrock of liberal democracy - are really dependent on the continued prosperity of a majority of its citizens or whether they have replaced or compete with older traditions.

Perhaps Zakaria is right about the part where the "tradition" to protect individual autonomy and dignity - by which one should understand the referent to be all individuals irrespective of class or race - against coercion has developed deep roots among a large majority. If that is true, then liberal values may well hold their own in hard times.

What if, however, we overestimated the nature and extent to which liberal values have penetrated these societies without sufficient consideration to ethnic or other differences so that we became blind to its fragile bases?

If Friedman is right, then Western democracies face a challenge from within where "tradition" may not be of much help. Economic stagnation and decline will likely have immoral consequences because the same countries have other traditions too. The laundry list of these other traditions is long and well-known - racism, colonialism, slavery et cetera - and their existence shows up in the public spaces of "civilized" countries in the form of anti-immigrant rallies and demonstrations.

Under current conditions, the social fabric of many Western societies is strained to an extent not experienced at least since the times of the Great Depression. In Europe, as high rates of unemployment become endemic, a shrinking base of taxpayers is expected to support welfare handouts to not only the fair sons and daughters of the soil but dark-skinned others as well. Both in the US and Europe, there has been broad resentment against welfare for the undeserving poor (read African-Americans and Latinos) at least since the Ronald Reagan/Margaret Thatcher years.

The news about "others" from Europe - whether in Germany, the Netherlands or the United Kingdom - is not pretty. It remains to be seen how many American states will follow Alabama's lead in pushing for harsh anti-immigrant laws, invoking uncertainty, fear and worse.

I don't know about other liberal folks but I do wonder about my "moral character" holding up in hard times.

Pushkar is a Montreal-based researcher affiliated with the Institute for the Study of International Development (ISID), McGill University.