In the digital economy, we'll soon all be working for free – and I refuse

The digital economy operates as a kind of sophisticated 
X Factor: someone will make it, but most won't – and the real loser is society

• 
• • Suzanne Moore
  • The Guardian, Wednesday 5 June 2013 20.00 BST

Mary Portas, whose company offered a week-long internship at a Westminster school auction. Photograph: Richard Young/Rex Features

Never mind checking your privilege. Flaunting those enviable privileges is where it's at. Go to any of our big cities and cash will be flowing through ponced-up restaurants nestled between Poundland and the nail bars. They even wave it in our faces.

Already at a private school that charges £7,000 a term? Then you must need a hand up the ladder. So let Mater and Pater bid as internships for Mary Portas or Fabergé are auctioned off. Not so much getting a foot in the door as crowbarring it in with money. Theirs is a world in which austerity remains an abstract idea.

Meanwhile, we have more than a million Neets in the country – young people not in work, education or training. They could do with a helping hand but they have somehow missed the boat. It hardly matters to them that the boat was the Titanic. Their older brothers and sisters have gone to college but are still in a world of part-time pub jobs. They don't have proper salaries and therefore no chance of mortgages. And, of course, in other European countries the situation is even worse.

At this point it is customary to blame the banksters. Or at least the politicians. But there is another group partly responsible for the parlous state in which we find ourselves: the digi-heads of Silicon Valley who told us everything could be kinda free. And easy. In some virtual paradise.

But it's not lovely being asked to work for free, whether you are 18 or 48. On the popular free app known as Facebook, the great music writer Barney Hoskyns put up a manifestothat struck home: he asked "freelance content providers" – be they actors, writers, musicians or photographers – to withdraw from unpaid labour. (I did that a while back – except, of course, for causes I believe in.)

But this is about more than that. It's about technology taking jobs, about what it can and can't provide. Hoskyns quotes Jaron Lanier's new book Who Owns The Future?, in which he argues: "Capitalism only works if there are enough successful people to be customers." Lanier, a computer scientist and a musician, is rightly called a visionary because he sees what is happening, when everything is live-streamed but no one knows the name of the person who made the music any more. Content is free.

Governments play up the idea that a digital future creates jobs rather than eats them up. Culturally, there is now a fantasy world of start-ups and blogs and YouTube TV where a very few people manage to make money but most work simply for "experience".

In an interview with Scott Timberg for Salon, Lanier gives a potent example: Kodak used to have "140,000 really good middle-class employees. Instagram has 13 employees, period." He describes a winner-takes-all world, with a tiny number of successful people and everyone else living on hope. "There is not a middle-class hump. It's an all-or-nothing society."

We can shrug and say it's just another industrial revolution, a move from formal to informal work, the whole "portfolio" number. But where is the social contract, then, if it "doesn't tide you over when you're sick and it doesn't let you raise kids and it doesn't let you grow old"?

The implosion of the middle class produces instability. We cannot all be freelancers for ever. Freelance work, like interning, is fine if you have the funds to manage without a regular income. That is, if you are already wealthy. But the digital economy operates as a kind of sophisticated X Factor. Someone will make it, sure. For more than 15 seconds even, maybe. But most won't. This is why Lanier says the internet may destroy the middle classes, the people who can't outspend the elite. And without that middle group, we cannot maintain a democracy.

He sees musicians and artists and journalists as canaries in the mineshaft of this new economy. Who will pay them? "Is this the precedent we want to follow for our doctors and lawyers and nurses and everybody else? Because, eventually, technology will get to everybody."

Education and healthcare farmed out to the bright-eyed tech nerds? It's already happening. We are already missing the human touch in our hospitals and schools. Gove'snew iPad-levels still cut out the creative subjects from the core – and just when we need the innovations they bring the most. Growth – the holy grail, with nearly half of all European youth unemployed – is impeded when technology eats into job security and therefore has repercussions for pensions and benefits. Those without salaried work cannot hope to support an older generation.

The creative industries, first music and now journalism, saw these changes coming too late. My children have been brought up in a world where they have to compete with those who will work for free. It is only a matter of time until we will all be asked to do the same. And I refuse.

For what is being eroded is not only actual wages but also the very idea that work must be paid for. Huge profits are being made from these so-called opportunities for our youth. But they are, in fact, the exploitation of insecurity. This is not about being anti-technology. It is about being pro-human. Technology is here and it's often great. But we must find a sustainable way of using it so that the stuff we do or make is paid for in living and not virtual wages.

It’s not just school grades that parents buy

Sandie Shaw claims that today, she’d need a private education to make it as a star. Is she right?

Mumford & Sons and Sandie Shaw 

By Harry Wallop

9:05PM GMT 27 Mar 2013

Is there a single public figure in Britain who did not go to private school? With the Prime Minister, the Mayor of London and the Archbishop of Canterbury all owners of the black and pale-blue striped Old Etonian tie, it can sometimes seem that way.

Half the Cabinet, more than half of the country’s top medics and 70 per cent of judges went to fee-paying schools – compared to just 7 per cent of the overall population. It is not just men in suits, wigs and white coats who are likely to have been privately educated. Over a third of Team GB’s Olympic medallists from last summer went to private schools.

This week, the debate was reignited by the improbable figure of Sandie Shaw. The 1960s singer, of Puppet on a String and lack of shoes fame, was in front of the culture, media and sport select committee at the House of Commons. She claimed that it would be impossible for her, the daughter of a Dagenham car worker, to repeat her success in today’s world.

“At the moment, unless you are Mumford & Sons and come from a public school and have a rich family that can support you, you’re on the dole and you’re trying to work and by the time you get a sniff of a record contract you just grab anything they might offer you,” she said.

Poor old Mumford & Sons – forever destined to be wheeled out as an example of the public-school mafia that dominate the Top 40. Most of the members of the “nu-folk” band met while pupils at King’s College Wimbledon, incidentally the same private school attended by Nick D’Aloisio, the 17-year-old who landed himself a £20 million internet fortune this week. Then there are Chris Martin of Coldplay, Florence Welch, Dido, Lily Allen, Radiohead and nice, fresh-faced Will Young – public school educated one and all. Even the Saturdays, the girl band currently occupying the number one slot in the singles chart, contains two members whose parents paid for their education. 

How private schools have continued to attract pupils during the downturn has baffled some economists, particularly considering fees have increased by 75 per cent in the last decade. But this sheer weight of success – across the full spectrum of British life, from the track of Sir Chris Hoy’s Olympic velodrome to the stage of the Birmingham hippodrome – is one of the reasons why parents seem willing to dig deep into their pockets. Sandie Shaw’s comment struck home: a private school education increases your child’s chances, even their artistic ones.

The Sutton Trust, which monitors the rusty wheels of Britain’s social mobility, carried out a snapshot survey of the school backgrounds of 8,000 “notable people” deemed important enough to have their birthdays announced in the broadsheet newspapers. Even the arts – where you might think raw talent rather than education would be the deciding factor in a successful career – were dominated by private school pupils. Half of the 135 theatre producers and directors went to private school, and four out of 10 actors too (including Old Etonians Eddie Redmayne and Damian Lewis).

Pop stars, in fact, were one of the least privileged groups, only out-plebbed by policemen. The government-funded Brit School, the performing arts college in Croydon whose alumni include Amy Winehouse, Leona Lewis and Adele, has a far better track record than Eton, which hasn’t had a chart-topper since Humphrey Lyttelton. Even so, a considerable 19 per cent of singers and band members went to private school.

The success of private schools in the so-called “soft” areas such as sport and the arts is partly down to facilities, which have tended to mushroom over the last generation as schools have entered into sports-hall and recording studio “arms races”. Ed Smith, the former England cricketer, pointed out in his book Luck that when England toured Pakistan in 1987-1988 all but one of the 13 players selected were state-educated. When England played India in the summer of 2011, eight of the team’s 11 were privately educated, including Stuart Broad, an alumnus of Oakham and Andrew Strauss, the captain, who went to Radley.

This happens to be my old school (yes, I am one of the 52 per cent of newspaper journalists who went to private school), an institution where the playing fields stretch almost as far as the eye can see – certainly far enough for every single one of its 640 pupils to be playing cricket on a summer afternoon. It also boasts a state-of-the-art theatre, studio space for smaller productions, a music school and concert hall. My hackles rise when a begging letter arrives asking me to help fund yet another Olympic-standard fencing gallery.

Phil DeFreitas, the cricket all-rounder from the 1988 era, went to Willesden High School in north London. Its playing fields were dug up to build a new City Academy, with a glittering building by Sir Norman Foster. It has a basketball court and an Astro Turf pitch for football, but no lovingly watered cricket wicket. It is no surprise that when DeFreitas retired he ended up as a cricket coach not at his old school, but at Oakham, where his experience was used to train future privately educated Stuart Broads, not comp kids like himself.

It is not just the equipment, however. Lee Elliot Major, at the Sutton Trust, says: “There are just not enough state schools that have an aspirational culture. The grammar schools, whatever you may have thought of them, created pupils who aspired, and most independent schools share that. This is as true for pop stars as it is for doctors and lawyers.”

Jo Dickinson, an accountant and mother of three, is about to send her 11-year-old daughter to a private girls’ school. Both she and her husband, a banker, attended comprehensive schools. “My school was good, but it did nothing to nurture me or give me confidence,” she says. “My daughter’s school prides itself on inviting artists and actors as well as doctors and lawyers to give talks to the girls. It’s just something I never had.”

Rachel Johnson, the journalist and sister of Boris, says: “It’s peace of mind. That’s what you are getting when you take on that third mortgage to pay for fees. It’s the peace of mind that you can’t do anything more for your children.”

She thinks the fabled confidence that private schools give their pupils is more of a “veneer”. She, like many parents, frets that this comes with a major disadvantage. Namely, that children will mix in too narrow a social group, shut off from the real world. But this is usually outweighed by the hope that, articulate or not, they will get a leg-up, often in the form of an unpaid internship. In the 1980s, just five per cent of the film industry workforce had under-taken unpaid work, but this rose to 45 per cent over the last decade.

Ryan Shorthouse, at the Social Market Foundation, and author of a report about access to the creative industries, says it is not the unpaid element that is the key barrier. “Bright, talented and enthusiastic people will always find the means and ways to fund an unpaid internship; but they don’t all have access to the network of these internships. This is particularly the case in the creative industries, which tend to be made up of small firms, without the large-scale work experience schemes accountancy or law firms have.”

The confidence that privately educated children are supposed to possess is generated not just by small class sizes, world-class facilities and an encouragement to aspire. It comes from an innate understanding that they will grow up knowing the right people, that there is a network they can tap into. As Dr Elliot Major says: “Politicians talk of soft skills; it’s more than that. They are life-defining skills – that is what the top private schools are so good at giving their pupils.”

This is something that parents who are lucky enough to have money understand. For all the promises from Michael Gove’s education department to inject academic rigour into the state school system, governments will always struggle to compete with the “life-defining skills” on offer in the private system.

Bullying Interns the Goldman Sachs way

Back on 12 June 2000, as the dot-com bubble was deflating, young Greg Smith was all puffed up, clutching his "extra-large coffee" and looking up "at the formidable tower that housed Goldman Sach's equities trading headquarters" in New York. "Holy shit," he thought, as he arrived for the first day of his summer internship at the Wall Street bank.

More than a decade later, on 14 March 2012, not long after a different financial bubble had burst, the remark may well have risen in a hush over the Goldman dealing room as wide-eyed traders poured over an opinion piece in The New York Times. Title? "Why I'm Leaving Goldman Sachs". Author? Greg Smith. "Today is my last day at Goldman Sachs," Mr Smith proclaimed. Over 12 years, he said, he had understood what made the bank tick. "And I can honestly say that the environment is now as toxic and destructive as I have ever seen it."

Now, Mr Smith, who had risen to become a Goldman executive director and head of the firm's US equity derivatives business in Europe, the Middle East and Africa before quitting, is preparing tell us the full story. According to reports, his biting commentary on Goldman won him a book deal and a cool $1.5m (£930,000) advance, with the product of his labours, imaginatively titled Why I Left Goldman Sachs, set to hit the shelves on 22 October. The night before, he is reported to be planning to break his self-imposed hiatus from the public square with a US television interview. Ahead of the launch, Goldman yesterday said it had conducted a detailed review of Mr Smith's claims and found no evidence to support them.

But as we near the release date, it seems the firm's President Gary Cohn, who along with chief executive Lloyd Blankfein merited special mention in Mr Smith's op-ed for losing "hold of the firm's culture on their watch", is likely to be among those waiting in line for a copy of the tome. "I probably will read it," he said during an interview on Bloomberg television earlier this month. If Mr Cohn wants an early look, the first chapter was released on the Apple iBookstore this week. Titled "I Don't Know, But I'll Find Out", it offers a glimpse of Mr Smith's first days in the belly of the "great vampire squid", as the bank was memorably dubbed by Rolling Stone.

Back then Mr Smith was a dedicated convert to the Goldman cause. That summer's day, the 21-year-old had no premonition of what – in his view – Goldman would become, and how he would go on to feel. Young Mr Smith, then on a scholarship at Stanford, was, to his mind, justifiably proud. "The selection process for any type of job at Goldman Sachs is extremely rigorous. On average, only one in 45 people... who apply for a summer internship, or a full-time job, get an offer," he says. To get ahead, he'd prepped hard for the interview. "I'd read The Culture of Success, a history of the firm by Lisa Endlich, a former Goldman VP," he reveals. Who doesn't, right?

With a toe in the door, Mr Smith was issued with a folding stool and a "big orange ID badge" on a "bright orange lanyard" – status markers to remind an intern that he or she was mere "plebe, a newbie, a punk-kid". "It was innately demeaning," he says, recounting how interns had to carry around the stools "at all times because there were no extra chairs at the trading desks".

The internship itself was demanding. "You came to work at 5:45 or 6:00 or 6:30 in the morning," Mr Smith recalls. Goldman interns were put through two "Open Meetings" a week, where "a partner would stand at the front of the room with a list of names and call on people at will with questions on the firm's storied culture, its history, on the stock market".

"Depending on the personal style of the people in charge, the meetings could be brutal. They were always intense," Mr Smith says, recalling how, on one occasion, an intern was rebuked by a VP for not knowing enough about Goldman's stance on Microsoft shares. "What is our price target? What are the catalysts coming up? How has the stock been trading? Come on," said VP barks, according to the account. The hapless intern "starts to tear up and runs out of the room".

Smith also recalls the treatment handed out to an intern after a managing director ordered a cheddar cheese sandwich and was presented with a cheddar cheese salad. The boss "opened the container, looked at the salad, looked up at the kid, closed the container and threw it in the trash". "It was a bit harsh, but it was also a teaching moment," Mr Smith writes.

The anecdotes chime with the caricature of Wall Street as a laddish jungle where ritual hazing is just part of doing business. But at this early stage there is none of the greed that Mr Smith spoke of in his op-ed – he claimed, for instance, that people in the firm "callously talk about ripping their clients off". Instead, the gruelling intern routine is presented as a way of training new initiates to be "truthful, resourceful, collaborative".

Tantalisingly, though, Chapter 5 is titled "Welcome to the Casino".