Showing posts with label people. Show all posts
Showing posts with label people. Show all posts
Sunday 3 March 2024
Sunday 7 January 2024
Thursday 4 January 2024
Wednesday 14 June 2023
Thursday 8 June 2023
McCarthyism rises in Labour as it readies for power
Having examined how the North of Tyne mayor was barred from standing again, I see something akin to McCarthyism writes Aditya Chakrabortty in The Guardian
I first met the man who has been all over this week’s political headlines four years ago, 300 miles up the A1 from Westminster. It was a bitterly cold Saturday morning in the Northumberland coastal town of Newbiggin and Jamie Driscoll was asking for votes. He’d just caused a minor political earthquake by winning Labour members’ support to run for the new position of mayor of North of Tyne. The cert for that role had been Nick Forbes, Newcastle council leader and longtime big beast – not Driscoll, who had been a local councillor for a few months and who, on winning the selection, had had to rush out to buy his only suit.
I watched this stubbly, scruffy, upbeat outsider doorknock around an estate of small houses and exotic garden statuettes, to a reaction chillier than the wind whipping in from the North Sea. For decades, this had been Labour country, where that political tradition ran through the local economy, its institutions and people’s very identities. But over the past 50 years all that had been destroyed and now it was the land of Vote Leave, desolate and nihilistic. If residents spoke to canvassers at all, it was to spit out statements like “I don’t follow politics”.
After more slammed doors, one activist sighed: “Policy doesn’t matter here. They’ve forgotten what government can do.” For all Driscoll’s ideas and energy, I wrote at the time, his biggest challenge would be closing the vast gulf between the governed and their governors.
That tableau has come to mind many times since the Labour party barred Driscoll from standing for re-election. No more will he trigger democratic earthquakes. Instead, he has become fodder for lobby journalists. When I met him in Newcastle this week, he was slaloming between interviews for Radio 4, ITV, national newspapers, Newsnight and more. The ending of his political career has done more for his national profile than four years in office. I listened as each outlet demanded its shot of Westminster caffeine. Hardly anyone asked what it meant for the north-east, for local democracy, for the people in Newbiggin and anyone else who long ago tuned out all politicians as fraudulent liars only in it for themselves.
And why wouldn’t they? I have chased down and sifted through evidence, much of it never revealed before, and it points to a stitch-up bigger than anything on the Great Sewing Bee. The jumped-up outsider, Driscoll, has been tossed in the bin – but he is merely collateral damage in a one-sided Labour factional fight, whose actors appear not to give a damn for people’s reputations or for the public they’re meant to serve.
Let’s work backwards. Labour officials blocked Driscoll last Friday, soon after he’d been interviewed by a panel drawn largely from the party’s national executive committee. The email he received reads: “[T]he NEC panel has determined that you will not be progressing further as a candidate in this process.” But while the party gave no official reason to the candidate, its enforcers were happy to brief lobby journalists – who in turn quoted anonymous sources that it was because in March he had appeared at a Newcastle theatre with Ken Loach to discuss his films. The renowned director had been expelled as a Labour member in 2021.
I first met the man who has been all over this week’s political headlines four years ago, 300 miles up the A1 from Westminster. It was a bitterly cold Saturday morning in the Northumberland coastal town of Newbiggin and Jamie Driscoll was asking for votes. He’d just caused a minor political earthquake by winning Labour members’ support to run for the new position of mayor of North of Tyne. The cert for that role had been Nick Forbes, Newcastle council leader and longtime big beast – not Driscoll, who had been a local councillor for a few months and who, on winning the selection, had had to rush out to buy his only suit.
I watched this stubbly, scruffy, upbeat outsider doorknock around an estate of small houses and exotic garden statuettes, to a reaction chillier than the wind whipping in from the North Sea. For decades, this had been Labour country, where that political tradition ran through the local economy, its institutions and people’s very identities. But over the past 50 years all that had been destroyed and now it was the land of Vote Leave, desolate and nihilistic. If residents spoke to canvassers at all, it was to spit out statements like “I don’t follow politics”.
After more slammed doors, one activist sighed: “Policy doesn’t matter here. They’ve forgotten what government can do.” For all Driscoll’s ideas and energy, I wrote at the time, his biggest challenge would be closing the vast gulf between the governed and their governors.
That tableau has come to mind many times since the Labour party barred Driscoll from standing for re-election. No more will he trigger democratic earthquakes. Instead, he has become fodder for lobby journalists. When I met him in Newcastle this week, he was slaloming between interviews for Radio 4, ITV, national newspapers, Newsnight and more. The ending of his political career has done more for his national profile than four years in office. I listened as each outlet demanded its shot of Westminster caffeine. Hardly anyone asked what it meant for the north-east, for local democracy, for the people in Newbiggin and anyone else who long ago tuned out all politicians as fraudulent liars only in it for themselves.
And why wouldn’t they? I have chased down and sifted through evidence, much of it never revealed before, and it points to a stitch-up bigger than anything on the Great Sewing Bee. The jumped-up outsider, Driscoll, has been tossed in the bin – but he is merely collateral damage in a one-sided Labour factional fight, whose actors appear not to give a damn for people’s reputations or for the public they’re meant to serve.
Let’s work backwards. Labour officials blocked Driscoll last Friday, soon after he’d been interviewed by a panel drawn largely from the party’s national executive committee. The email he received reads: “[T]he NEC panel has determined that you will not be progressing further as a candidate in this process.” But while the party gave no official reason to the candidate, its enforcers were happy to brief lobby journalists – who in turn quoted anonymous sources that it was because in March he had appeared at a Newcastle theatre with Ken Loach to discuss his films. The renowned director had been expelled as a Labour member in 2021.
Jamie Driscoll addresses the Transport for the North conference in March. Photograph: Ian Forsyth/Getty Images
On Sunday, Labour frontbencher Jonathan Reynolds told Sky News that Driscoll was excluded for sharing a platform with “someone who themselves has been expelled for their views on antisemitism” – a line swiftly amplified by the media, yet not quite true. I asked Loach’s office to forward his letters of expulsion, which say only that he is “ineligible” due to his support of “a political organisation other than an official Labour group”. That was Labour Against the Witchhunt, which did claim allegations of Labour antisemitism were “politically motivated”. Reynolds was conflating the two. I asked how many other journalists had sought clarification. The answer was one.
A column about Driscoll is not the place to litigate Ken Loach’s views, even if I disagree with much of what he says about Labour’s treatment of antisemitism. It barely needs saying that sitting on stage with a director to discuss their films does not mean you share all their opinions. Far more troubling for British democracy is how anonymous, factional briefings are simply machine-pressed into newspaper “facts” then spewed out on TV.
“They were always looking to get me,” Driscoll claimed this week. I have read emails dating back to 2020 where the new metro mayor asks Labour officials for the party’s local membership lists used by councillors, MPs and mayors as standard. But not here: IT issues meant the lists supposedly weren’t shareable. Until this year that is, when he was told the upcoming mayoral contest meant he could only access lists “if you make a confirmation that you are not seeking the selection”. Another email, sent by Driscoll last month to party officials, notes that a local constituency party has been told by a senior official to disinvite him from speaking.
Asked for comment, Labour didn’t reply – but this is petty, attritional stuff, which is what happens when politics is evacuated of ideas and arguments and becomes simply about who is in whose good books. Cliqueishness is hardly exclusive to Keir Starmer’s Labour, but it is starker now because instead of real politics all this lot have is office politics.
Which brings us back to the much-discussed NEC panel, supposedly to divine his suitability to stand. I have viewed footage of the entire hour on Zoom, which discusses nothing of Driscoll’s beliefs or achievements. Three of the five panel members are from groups on the right of the party, and all anyone wants to know is why he spoke to Loach. They refer to the director’s “controversial views” and quote the Jewish Chronicle’s coverage. How, they ask, might the event be viewed by a “hostile media”?
Driscoll replies that Holocaust denial is “abhorrent” and that he has signed up to the International Holocaust Remembrance Alliance’s definition of antisemitism. He recalls how he used to fight fascists in the street. None of it is good enough.
A rather bumptious young man informs the mayor that “you can’t separate someone’s views from their work”. The twentysomething declares that Driscoll shouldn’t have discussed the films but instead attacked Loach’s politics. On that basis, Starmer ought to be disqualified for appearing with Loach on the BBC’s Question Time – and so too should the shadow foreign secretary, David Lammy, who in 2019 wrote a paean in this paper to Loach’s Sorry We Missed You, praising the way it “brings across how the right to a family life has been eroded in modern Britain”.
We all know that a week is a long time in Starmer’s politics, but he did once proclaim a proud regionalism. Now what’s left?
Attacking McCarthyism, Ed Murrow told his TV audience: “We must not confuse dissent with disloyalty. We must remember always that accusation is not proof and that conviction depends upon evidence and due process of law. We will not walk in fear, one of another.”
By these standards, Driscoll is a victim of McCarthyism. The office he holds is now a mere electoral toy to be enjoyed by a favoured faction. And those people in Newbiggin and Ashington and anyone else who might be looking on with half an eye will see nothing but machine politicians serving themselves. This was the swamp out of which Nigel Farage emerged.
On Sunday, Labour frontbencher Jonathan Reynolds told Sky News that Driscoll was excluded for sharing a platform with “someone who themselves has been expelled for their views on antisemitism” – a line swiftly amplified by the media, yet not quite true. I asked Loach’s office to forward his letters of expulsion, which say only that he is “ineligible” due to his support of “a political organisation other than an official Labour group”. That was Labour Against the Witchhunt, which did claim allegations of Labour antisemitism were “politically motivated”. Reynolds was conflating the two. I asked how many other journalists had sought clarification. The answer was one.
A column about Driscoll is not the place to litigate Ken Loach’s views, even if I disagree with much of what he says about Labour’s treatment of antisemitism. It barely needs saying that sitting on stage with a director to discuss their films does not mean you share all their opinions. Far more troubling for British democracy is how anonymous, factional briefings are simply machine-pressed into newspaper “facts” then spewed out on TV.
“They were always looking to get me,” Driscoll claimed this week. I have read emails dating back to 2020 where the new metro mayor asks Labour officials for the party’s local membership lists used by councillors, MPs and mayors as standard. But not here: IT issues meant the lists supposedly weren’t shareable. Until this year that is, when he was told the upcoming mayoral contest meant he could only access lists “if you make a confirmation that you are not seeking the selection”. Another email, sent by Driscoll last month to party officials, notes that a local constituency party has been told by a senior official to disinvite him from speaking.
Asked for comment, Labour didn’t reply – but this is petty, attritional stuff, which is what happens when politics is evacuated of ideas and arguments and becomes simply about who is in whose good books. Cliqueishness is hardly exclusive to Keir Starmer’s Labour, but it is starker now because instead of real politics all this lot have is office politics.
Which brings us back to the much-discussed NEC panel, supposedly to divine his suitability to stand. I have viewed footage of the entire hour on Zoom, which discusses nothing of Driscoll’s beliefs or achievements. Three of the five panel members are from groups on the right of the party, and all anyone wants to know is why he spoke to Loach. They refer to the director’s “controversial views” and quote the Jewish Chronicle’s coverage. How, they ask, might the event be viewed by a “hostile media”?
Driscoll replies that Holocaust denial is “abhorrent” and that he has signed up to the International Holocaust Remembrance Alliance’s definition of antisemitism. He recalls how he used to fight fascists in the street. None of it is good enough.
A rather bumptious young man informs the mayor that “you can’t separate someone’s views from their work”. The twentysomething declares that Driscoll shouldn’t have discussed the films but instead attacked Loach’s politics. On that basis, Starmer ought to be disqualified for appearing with Loach on the BBC’s Question Time – and so too should the shadow foreign secretary, David Lammy, who in 2019 wrote a paean in this paper to Loach’s Sorry We Missed You, praising the way it “brings across how the right to a family life has been eroded in modern Britain”.
We all know that a week is a long time in Starmer’s politics, but he did once proclaim a proud regionalism. Now what’s left?
Attacking McCarthyism, Ed Murrow told his TV audience: “We must not confuse dissent with disloyalty. We must remember always that accusation is not proof and that conviction depends upon evidence and due process of law. We will not walk in fear, one of another.”
By these standards, Driscoll is a victim of McCarthyism. The office he holds is now a mere electoral toy to be enjoyed by a favoured faction. And those people in Newbiggin and Ashington and anyone else who might be looking on with half an eye will see nothing but machine politicians serving themselves. This was the swamp out of which Nigel Farage emerged.
Sunday 14 May 2023
Are smart people deliberately acting stupid? The Rise of the Anti-Intellectual
Nadeem Paracha in The Dawn
Across the 20th century, intellectuals played an important role in political parties and governments, both democratic and authoritarian. According to Richmond University’s Professor of Politics Eunice Goes, intellectuals perform several roles in the policy-making process.
They help politicians make sense of the world. They offer cause-effect explanations of political and economic phenomena, and diagnoses and prescriptions to policy puzzles. They also help political actors develop ideas and narratives that are consistent with their ideological traditions and political goals.
But in this century, politics has often witnessed a backlash against the presence of intellectuals in political parties and in governments. This is likely due to the strengthening of the parallel tradition of anti-intellectualism, which was always (and still is) active in various polities.
This tradition has been more active in right-wing groups. It was especially strengthened by the rise of populist politics in many countries in the 2010s. But mainstream political outfits in Europe and the US still induct the services of intellectuals, even though this ploy has greatly been eroded in the Republican Party in the US after it wholeheartedly embraced populism in 2016, and still seems to be engulfed by it.
Since the 1930s, the Democratic Party in the US has always had the largest presence of intellectuals in it. This policy was initiated during the four presidential terms of the Democratic Party’s Franklin D. Roosevelt (1932-45), during which time a large number of intellectuals were inducted. Their role was to aid the government in bailing the US out of a tumultuous economic crisis, and to develop a narrative to neutralise the increasing appeal of organisations on the far right and the far left. This tradition of inducting intellectuals continued to be employed by the Democrats for decades.
Interestingly, even though the Republican Party has had an anti-intellectual dimension ever since the early 20th century, it carried with it intellectuals to counter intellectuals active in the Democratic Party. This was specifically true during the presidencies of the Republican Ronald Reagan (1981-88) who was, in fact, propelled to power by an intellectual movement led by conservatives and some former liberals. This movement evolved into becoming ‘neo-conservatism’ during the Reagan presidencies. Britain’s Labour Party and Conservative Party have carried with them intellectuals as well, especially the Labour Party.
Some totalitarian regimes too employed the services of intellectuals in the Soviet Union, Germany and Italy. The Soviet dictator Stalin was not very kind to intellectuals, though. But intellectuals played a major role in shaping Soviet communism. Hitler’s Nazi regime had the services of some of the period’s finest minds in Germany, such as the philosophers Carl Schmitt and Martin Heidegger, the logician Rudolf Carnap, and a host of others.
They helped Hitler mould Nazism into an all-encompassing ideology. Just how could some extremely intelligent men start to both romance as well as rationalise a brutal ideology is a topic that has often been investigated, but it is beyond the scope of this column.
In Pakistan, three governments banked heavily on intellectuals to formulate their respective ideologies, narratives and economics. The Ayub Khan dictatorship (1958-69) carried scholars who specialised in providing ‘modernist’ interpretations to various traditional aspects of Islam. This they did to aid Ayub’s modernisation project. The intellectuals included the rationalist Islamic scholars Fazalur Rahman Malik and Ghulam Ahmad Parwez, and, to a certain extent, the progressive novelist Mumtaz Mufti and Justice Javed Iqbal, the son of the poet-philosopher Muhammad Iqbal. The writer Qudrat Ullah Shahab was Ayub’s Principal Secretary.
Z.A. Bhutto’s Pakistan Peoples Party (PPP) was studded with intellectuals who remained active in the party during at least the first few years of Bhutto’s regime (1971-77). These included the Marxist theorist JA Rahim who (with Bhutto) wrote the party’s ‘Foundation Papers’ and then its first manifesto. He also served as a minister in the Bhutto regime till his acrimonious ouster in 1975.
Then there was Dr Mubashir Hassan, who was the main theorist behind PPP’s concept of a ‘planned economy’. He served as the Bhutto regime’s finance minister. The intellectuals Hanif Ramay and Safdar Mir wrote treatises to counter the ideologies of the Islamists. Ramay also formulated the party’s core ideology of ‘Islamic socialism’. The lawyer and constitutional expert Hafeez Pirzada too was a founding member of the party. He was one of the main authors of the 1973 Constitution.
The Ziaul Haq dictatorship adopted the Islamist theorist Abul Ala Maududi as the regime’s main ideologue. Maududi was also the chief of the Jamaat-i-Islami (JI). Zia, when he was a lieutenant general in the early 1970s, used to distribute books written by Maududi to his officers and soldiers. Maududi passed away in 1979, just two years after Zia overthrew the Bhutto regime. But Zia continued to apply Maududi’s ideas to his dictatorship’s ‘Islamisation’ project.
Zia also had the services of the prominent lawyers AK Brohi and Sharifuddin Pirzada. Brohi and Pirzada were instrumental in formulating the murder charges against Bhutto. In his book, Betrayals of Another Kind, Gen Faiz Ali Chisti wrote that Brohi and Pirzada encouraged Zia to hang Bhutto, which he did. Pirzada also wrote oaths for judges sworn in by Zia that omitted the commitment to protect the Constitution. He would go on to do the same for the Musharraf dictatorship (1999-2008). In fact, Sharifuddin Pirzada had also served the Ayub regime.
The rise of populist politics in the second decade of the 21st century has greatly diminished the role of intellectuals in political parties and governments. This is because populism is inherently anti-intellectual. It perceives intellectuals as being part of a detested elite. Therefore, for example, one never expected intellectuals of any kind in Imran Khan’s Pakistan Tehreek-i-Insaf (PTI). This is why the nature of this party’s narrative is ridiculously contradictory and even chaotic.
However, in a January 2022 essay for The Atlantic, David A. Graham wrote that it’s not that intellectuals have vanished from political parties. Rather, due to populism’s anti-intellectual disposition, they have purposely dumbed down their ideas.
According to Graham, “This is the age of smart politicians pretending to be stupid.” If stupidity can now attract votes and save the jobs of intellectuals in parties and governments, then smart folks can act stupid in the most convincing manner. Even more than those who are actually stupid.
Across the 20th century, intellectuals played an important role in political parties and governments, both democratic and authoritarian. According to Richmond University’s Professor of Politics Eunice Goes, intellectuals perform several roles in the policy-making process.
They help politicians make sense of the world. They offer cause-effect explanations of political and economic phenomena, and diagnoses and prescriptions to policy puzzles. They also help political actors develop ideas and narratives that are consistent with their ideological traditions and political goals.
But in this century, politics has often witnessed a backlash against the presence of intellectuals in political parties and in governments. This is likely due to the strengthening of the parallel tradition of anti-intellectualism, which was always (and still is) active in various polities.
This tradition has been more active in right-wing groups. It was especially strengthened by the rise of populist politics in many countries in the 2010s. But mainstream political outfits in Europe and the US still induct the services of intellectuals, even though this ploy has greatly been eroded in the Republican Party in the US after it wholeheartedly embraced populism in 2016, and still seems to be engulfed by it.
Since the 1930s, the Democratic Party in the US has always had the largest presence of intellectuals in it. This policy was initiated during the four presidential terms of the Democratic Party’s Franklin D. Roosevelt (1932-45), during which time a large number of intellectuals were inducted. Their role was to aid the government in bailing the US out of a tumultuous economic crisis, and to develop a narrative to neutralise the increasing appeal of organisations on the far right and the far left. This tradition of inducting intellectuals continued to be employed by the Democrats for decades.
Interestingly, even though the Republican Party has had an anti-intellectual dimension ever since the early 20th century, it carried with it intellectuals to counter intellectuals active in the Democratic Party. This was specifically true during the presidencies of the Republican Ronald Reagan (1981-88) who was, in fact, propelled to power by an intellectual movement led by conservatives and some former liberals. This movement evolved into becoming ‘neo-conservatism’ during the Reagan presidencies. Britain’s Labour Party and Conservative Party have carried with them intellectuals as well, especially the Labour Party.
Some totalitarian regimes too employed the services of intellectuals in the Soviet Union, Germany and Italy. The Soviet dictator Stalin was not very kind to intellectuals, though. But intellectuals played a major role in shaping Soviet communism. Hitler’s Nazi regime had the services of some of the period’s finest minds in Germany, such as the philosophers Carl Schmitt and Martin Heidegger, the logician Rudolf Carnap, and a host of others.
They helped Hitler mould Nazism into an all-encompassing ideology. Just how could some extremely intelligent men start to both romance as well as rationalise a brutal ideology is a topic that has often been investigated, but it is beyond the scope of this column.
In Pakistan, three governments banked heavily on intellectuals to formulate their respective ideologies, narratives and economics. The Ayub Khan dictatorship (1958-69) carried scholars who specialised in providing ‘modernist’ interpretations to various traditional aspects of Islam. This they did to aid Ayub’s modernisation project. The intellectuals included the rationalist Islamic scholars Fazalur Rahman Malik and Ghulam Ahmad Parwez, and, to a certain extent, the progressive novelist Mumtaz Mufti and Justice Javed Iqbal, the son of the poet-philosopher Muhammad Iqbal. The writer Qudrat Ullah Shahab was Ayub’s Principal Secretary.
Z.A. Bhutto’s Pakistan Peoples Party (PPP) was studded with intellectuals who remained active in the party during at least the first few years of Bhutto’s regime (1971-77). These included the Marxist theorist JA Rahim who (with Bhutto) wrote the party’s ‘Foundation Papers’ and then its first manifesto. He also served as a minister in the Bhutto regime till his acrimonious ouster in 1975.
Then there was Dr Mubashir Hassan, who was the main theorist behind PPP’s concept of a ‘planned economy’. He served as the Bhutto regime’s finance minister. The intellectuals Hanif Ramay and Safdar Mir wrote treatises to counter the ideologies of the Islamists. Ramay also formulated the party’s core ideology of ‘Islamic socialism’. The lawyer and constitutional expert Hafeez Pirzada too was a founding member of the party. He was one of the main authors of the 1973 Constitution.
The Ziaul Haq dictatorship adopted the Islamist theorist Abul Ala Maududi as the regime’s main ideologue. Maududi was also the chief of the Jamaat-i-Islami (JI). Zia, when he was a lieutenant general in the early 1970s, used to distribute books written by Maududi to his officers and soldiers. Maududi passed away in 1979, just two years after Zia overthrew the Bhutto regime. But Zia continued to apply Maududi’s ideas to his dictatorship’s ‘Islamisation’ project.
Zia also had the services of the prominent lawyers AK Brohi and Sharifuddin Pirzada. Brohi and Pirzada were instrumental in formulating the murder charges against Bhutto. In his book, Betrayals of Another Kind, Gen Faiz Ali Chisti wrote that Brohi and Pirzada encouraged Zia to hang Bhutto, which he did. Pirzada also wrote oaths for judges sworn in by Zia that omitted the commitment to protect the Constitution. He would go on to do the same for the Musharraf dictatorship (1999-2008). In fact, Sharifuddin Pirzada had also served the Ayub regime.
The rise of populist politics in the second decade of the 21st century has greatly diminished the role of intellectuals in political parties and governments. This is because populism is inherently anti-intellectual. It perceives intellectuals as being part of a detested elite. Therefore, for example, one never expected intellectuals of any kind in Imran Khan’s Pakistan Tehreek-i-Insaf (PTI). This is why the nature of this party’s narrative is ridiculously contradictory and even chaotic.
However, in a January 2022 essay for The Atlantic, David A. Graham wrote that it’s not that intellectuals have vanished from political parties. Rather, due to populism’s anti-intellectual disposition, they have purposely dumbed down their ideas.
According to Graham, “This is the age of smart politicians pretending to be stupid.” If stupidity can now attract votes and save the jobs of intellectuals in parties and governments, then smart folks can act stupid in the most convincing manner. Even more than those who are actually stupid.
Monday 13 September 2021
Tuesday 11 June 2019
How India could sidestep the Middle Income Trap
Rathin Roy - Economic Adviser to the Indian Government
Wednesday 20 June 2018
Democratising the knowledge of Economics - What happens when ordinary people learn economics?
Aditya Chakrabortty in The Guardian
In a makeshift classroom, nine lay people are battling some of the greatest economists of all time – and they appear to be winning. Just watch what happens to David Ricardo, the 18th-century father of our free-trade system. In best BBC voice, one of the group reads out Ricardo’s words: “Economics studies how the produce of the Earth is distributed.”
Not good enough, says another, Brigitte Lechner. Shouldn’t economists study how to meet basic needs? “We all need a roof over our heads, we all need to survive.” Nor does the Earth belong solely to humans. Her judgment is brisk. “Ricardo was talking tosh.”
So much laughter rings out of this room that the folk outside must wonder what’s going on. They’ve been told this is an economics course – and participants on those don’t normally dissolve into giggles.
Inside, Pat Bhatt chimes in: “Everything you see around you comes from nature. That’s the basis of everything. Economics is the wrong word. It should be … ecolo-mics.”
Ooohs and aaahs. “Very clever!” beams the facilitator Nicola Headlam and scribbles it down on the flipboard.
“I invented it,” says Bhatt.
“My work here is done,” replies Headlam. “I’ll get my coat.”
Some days, democracy looks like a bashed-up ballot box. Some days, it looks like a furious demo. But on this sun-splashed weekday morning, democracy looks like this low-ceilinged meeting room in a converted church, slap bang in the middle of the road that runs from Manchester to Stockport.
None of the “students” have ever picked up an economics textbook. At a guess, most would be either stumped or sedated by the Financial Times. Yet here they are, starting a crash course in something that to them is a mystery. The majority are retired, having worked their entire lives. But when asked how many of them feel some control over the economy, not one raises a hand. So who is in charge?
“Journalists – who are paid by rich people.”
Amid all the humour pokes a truth. For this group, economics is something that’s done to them, by people sitting far away in Westminster or the City. They bear the brunt of spending cuts; they struggle with the rottenness of Northern Rail and they see neighbours sinking into debt – and they have no decent account as to why. They have been bashed over the head again and again, and not even been shown the offending shovel.
Over in the corner sits Sue O’Connor, who today comes “sponsored by Visa!” Another gentle joke that masks the debtor’s panic of having her disability benefit hacked back. Cancer meant she lost all her income and wound up in sheltered housing. Now 64, she suffers severe arthritis, yet her Motability caris about to be taken away.
While at a secondary modern, her class was judged too thick to learn any maths. Partly because the teenager wasn’t taught to count, the grey-haired woman still feels she doesn’t count. “Information is power,” she tells the group. “If I can learn in this class, maybe others will listen to me.”
More confident is 70-year-old “raging feminist” Lechner. “The economy is a system, right?” she says. “I understand systems like patriarchy and how it’s set so certain people get hurt … and I want to know how the rules of the economy are set.”
Headlam nods: “Somehow, someone, somewhere made these rules up. They aren’t laws of nature.” And they determine “who’s got what and where and why”.
‘Short of paying nine grand a year for a degree, how else are laypeople meant to find out about the most potent social science of all?’ A flyer for the course. Photograph: Christopher Thomond for the Guardian
That tearing sound you can hear is the veil that normally partitions economics from society and politics.
Up till 2008, someone like O’Connor would have been told over and over that if she’d failed to get ahead it was her fault, not the system’s. She’d just not followed the rules. Then came the financial crisis, which turned into a crisis of economics.
When the Queen famously asked why no economist saw the crash coming, she cut to the heart of the matter: perhaps those who wrote the economy’s laws and policed their observance weren’t so qualified after all. And while some practitioners claim that theirs is a semi-science, all prescriptions to revive the economy – from George Osborne’s historic austerity to the hundreds of billions doled out to asset-owners by the Bank of England – underline how it’s fundamentally political. By the time Michael Gove remarked in the Brexit campaign that “people in this country have had enough of experts”, he was picking a squelchy-soft target.
One of the biggest battles over economics kicked off just up the road from this community centre. At the University of Manchester in 2013, economics undergraduates – tired of memorising abstract models while the eurozone burned – linked up with students from around the world to demand their economics curriculum be changed. Nothing beyond the orthodoxy of free-market economics was being taught; no conflicting global developments, nothing of its critics such as Keynes or Marx, despite their contemporary relevance. Thus began an epic, and epically imbalanced, fight of a bunch of teenagers taking on the very professors marking their exam papers.
Student passions usually fizzle out faster than you can say “snakebite and black”, yet a half decade on, the struggle to prise open economics has got broader. Those ardent undergraduates propping up the union bar are now civil servants pushing for change in government economics; or they’re directing charities such as Economy, which is putting on this crash course in Levenshulme. The aim is to nail the format, then do 15 courses next year, partnering with housing associations, local authorities and others across the UK.
As you might expect from the first session of the first course, this morning’s proceedings betray some nerves. In an ordinary jacket and denim skirt, Headlam tells the class: “We had no idea if you would come.” Unlike the brogue-wearing professoriat, she and her co-facilitator Anne Hines give no sense that they come from a distant planet. Tomorrow morning, former pharmacist Hines sits her own economics exam for an Open University degree course while Headlam, even with her doctorate, describes her academic career as making “target practice for the elite institutions”.
‘Levenshulme is supposed to be gentrifying.’ Photograph: Christopher Thomond for the Guardian
The pair are giving their time for free, and attendees don’t pay a penny. Economy’s Clare Birkett put together the course and organised the pilots on a part-time wage. All five courses, each lasting up to two months and educating anywhere between 50 and 80 people, will together cost little more than the tuition fees for one solitary economics degree.
A few academic economists will ask what authority a bunch of amateurs have, but Birkett has prepared her fighting talk: “If they say, ‘How dare you talk about this?’, I’ll say, ‘Why shouldn’t I? I’ve put in the work, I’ve studied these things. This stuff belongs to all of us.’”
Short of paying nine grand a year for a degree, how else are lay people meant to find out about the most potent social science of all? The internet is full of blind alleys, while even public lectures within universities typically assume some prior knowledge. Given how some economists rage that they’re not listened to enough on issues such as Brexit, it’s notable how little they actually engage with the public (one excellent exception is the annual Bristol Festival of Economics).
Not so long ago, a Levenshulme resident could learn economics – or any number of other subjects – through the adult evening classes offered by the University of Manchester. The extramural programme stretched as far afield as Wigan and Burnley, and by the 1970s employed more than 30 academic staff. Then followed decades of cuts, until the entire department was shut down in 2006.
Which makes economics the humpty-dumpty subject: trust in it is thoroughly broken, yet the public lack the basic tools to put the discipline back together again in a form that reflects their needs. A YouGov survey in 2015 found that more than 60% of respondents did not even know the definition of GDP (gross domestic product) – that staple of BBC bulletins and Westminster debates.
To make the economy more democratic, as everyone from Theresa May to Jeremy Corbyn proposes, we need to democratise knowledge of economics. That’s a truth now cottoned on to by organisations as disparate as the Bank of England and Momentum.
‘Everyone here brings their own lived experience of economics.’ Photograph: Christopher Thomond for the Guardian
Those doing the Levenshulme crash course don’t look like your typical seminar room attendees. Not only are they decades older; all but one is a women. The average undergraduate economics course, according to the Royal Economic Society, is about 67% male and 25% privately educated(compared with 7% of the population). After the class, a charity van pulls up outside, offering three bags of short-dated food for £6. Several “students” collect their groceries for the week.
Everyone here brings their own lived experience of economics. In her motorised wheelchair, Joanne Wilcock notes how “everything is much more expensive when you’re disabled”. Bang on, yet you hardly ever read that in an article on the latest inflation figures. Bhatt knows that Levenshulme is supposed to be gentrifying – “fancy cars, flash weddings” – but notices his neighbours can’t afford to do up their own houses. “All fur coat and no knickers!” he concludes, and the room cracks up.
And if you’re expecting them to trot out the usual left-itudes about fixing the economy, you’re wrong. A discussion about Northern Rail does produce calls for nationalisation – but also arguments as to how it should be turned into a co-op, or run by an arms-length organisation of technocrats.Q&A
Share your storiesShow
Lechner starts on about “citizen scientists” – amateurs who conduct their own experiments – and casts an eye around the room. “Why can’t we be citizen economists?”
That may be the most radical suggestion of the day, because it cuts directly against how both right and left usually do their business. In 1894, the year before cofounding the London School of Economics, Fabian Beatrice Webb confided to her diary: “We have little faith in the ‘average sensual man’. We do not believe that he can do more than describe his grievances, we do not think he can prescribe his remedies … we wish to introduce into politics the professional expert.”
That impulse may now be dressed up in polite euphemism – but it lives on. “So many thinktanks and MPs come up with good ideas to change our economy, but they’re all stuck in their political bubble,” says the head of Economy, Joe Earle. “Ordinary people barely get a say in the thing that rules their lives.”
Contrast that with this class and its polite horizontalism, where no one is presumed to be a total expert and everyone is treated as if they have something valuable to say. It is the seeds of that ferment described by Hilary Wainwright in her recent book, A New Politics from the Left.
‘Aklima Akhter only came to this country in 2013.’ Photograph: Christopher Thomond for the Guardian
Drawing on her experience of feminist and workers’ self-organisation, she writes: “Rebel movements shared and developed their own kinds of knowledge, via practice and through debate and deliberation, and on to producing new ideas and the basis of new institutions. Authority, once it has been confidently questioned by those on whose obedience it depends, crumbles in ways that make it difficult to put back together again.”
At the end of the class, each participant tells the rest the best thing they have learned. There’s a pause when it gets to Aklima Akhter, who only came to this country in 2013 and has been sitting so benignly quiet in her white headscarf. She starts haltingly: “It is difficult for me, you know … the subject, the language.”
All around her are faces pursed in little moues of encouragement, but then Akhter speeds up with fluency. “But my favourite word was ‘nationalisation’. Because when things are privatised it is the rich who get all the benefit.” And for once in this room, no one is laughing.
In a makeshift classroom, nine lay people are battling some of the greatest economists of all time – and they appear to be winning. Just watch what happens to David Ricardo, the 18th-century father of our free-trade system. In best BBC voice, one of the group reads out Ricardo’s words: “Economics studies how the produce of the Earth is distributed.”
Not good enough, says another, Brigitte Lechner. Shouldn’t economists study how to meet basic needs? “We all need a roof over our heads, we all need to survive.” Nor does the Earth belong solely to humans. Her judgment is brisk. “Ricardo was talking tosh.”
So much laughter rings out of this room that the folk outside must wonder what’s going on. They’ve been told this is an economics course – and participants on those don’t normally dissolve into giggles.
Inside, Pat Bhatt chimes in: “Everything you see around you comes from nature. That’s the basis of everything. Economics is the wrong word. It should be … ecolo-mics.”
Ooohs and aaahs. “Very clever!” beams the facilitator Nicola Headlam and scribbles it down on the flipboard.
“I invented it,” says Bhatt.
“My work here is done,” replies Headlam. “I’ll get my coat.”
Some days, democracy looks like a bashed-up ballot box. Some days, it looks like a furious demo. But on this sun-splashed weekday morning, democracy looks like this low-ceilinged meeting room in a converted church, slap bang in the middle of the road that runs from Manchester to Stockport.
None of the “students” have ever picked up an economics textbook. At a guess, most would be either stumped or sedated by the Financial Times. Yet here they are, starting a crash course in something that to them is a mystery. The majority are retired, having worked their entire lives. But when asked how many of them feel some control over the economy, not one raises a hand. So who is in charge?
“Journalists – who are paid by rich people.”
Amid all the humour pokes a truth. For this group, economics is something that’s done to them, by people sitting far away in Westminster or the City. They bear the brunt of spending cuts; they struggle with the rottenness of Northern Rail and they see neighbours sinking into debt – and they have no decent account as to why. They have been bashed over the head again and again, and not even been shown the offending shovel.
Over in the corner sits Sue O’Connor, who today comes “sponsored by Visa!” Another gentle joke that masks the debtor’s panic of having her disability benefit hacked back. Cancer meant she lost all her income and wound up in sheltered housing. Now 64, she suffers severe arthritis, yet her Motability caris about to be taken away.
While at a secondary modern, her class was judged too thick to learn any maths. Partly because the teenager wasn’t taught to count, the grey-haired woman still feels she doesn’t count. “Information is power,” she tells the group. “If I can learn in this class, maybe others will listen to me.”
More confident is 70-year-old “raging feminist” Lechner. “The economy is a system, right?” she says. “I understand systems like patriarchy and how it’s set so certain people get hurt … and I want to know how the rules of the economy are set.”
Headlam nods: “Somehow, someone, somewhere made these rules up. They aren’t laws of nature.” And they determine “who’s got what and where and why”.
‘Short of paying nine grand a year for a degree, how else are laypeople meant to find out about the most potent social science of all?’ A flyer for the course. Photograph: Christopher Thomond for the Guardian
That tearing sound you can hear is the veil that normally partitions economics from society and politics.
Up till 2008, someone like O’Connor would have been told over and over that if she’d failed to get ahead it was her fault, not the system’s. She’d just not followed the rules. Then came the financial crisis, which turned into a crisis of economics.
When the Queen famously asked why no economist saw the crash coming, she cut to the heart of the matter: perhaps those who wrote the economy’s laws and policed their observance weren’t so qualified after all. And while some practitioners claim that theirs is a semi-science, all prescriptions to revive the economy – from George Osborne’s historic austerity to the hundreds of billions doled out to asset-owners by the Bank of England – underline how it’s fundamentally political. By the time Michael Gove remarked in the Brexit campaign that “people in this country have had enough of experts”, he was picking a squelchy-soft target.
One of the biggest battles over economics kicked off just up the road from this community centre. At the University of Manchester in 2013, economics undergraduates – tired of memorising abstract models while the eurozone burned – linked up with students from around the world to demand their economics curriculum be changed. Nothing beyond the orthodoxy of free-market economics was being taught; no conflicting global developments, nothing of its critics such as Keynes or Marx, despite their contemporary relevance. Thus began an epic, and epically imbalanced, fight of a bunch of teenagers taking on the very professors marking their exam papers.
Student passions usually fizzle out faster than you can say “snakebite and black”, yet a half decade on, the struggle to prise open economics has got broader. Those ardent undergraduates propping up the union bar are now civil servants pushing for change in government economics; or they’re directing charities such as Economy, which is putting on this crash course in Levenshulme. The aim is to nail the format, then do 15 courses next year, partnering with housing associations, local authorities and others across the UK.
As you might expect from the first session of the first course, this morning’s proceedings betray some nerves. In an ordinary jacket and denim skirt, Headlam tells the class: “We had no idea if you would come.” Unlike the brogue-wearing professoriat, she and her co-facilitator Anne Hines give no sense that they come from a distant planet. Tomorrow morning, former pharmacist Hines sits her own economics exam for an Open University degree course while Headlam, even with her doctorate, describes her academic career as making “target practice for the elite institutions”.
‘Levenshulme is supposed to be gentrifying.’ Photograph: Christopher Thomond for the Guardian
The pair are giving their time for free, and attendees don’t pay a penny. Economy’s Clare Birkett put together the course and organised the pilots on a part-time wage. All five courses, each lasting up to two months and educating anywhere between 50 and 80 people, will together cost little more than the tuition fees for one solitary economics degree.
A few academic economists will ask what authority a bunch of amateurs have, but Birkett has prepared her fighting talk: “If they say, ‘How dare you talk about this?’, I’ll say, ‘Why shouldn’t I? I’ve put in the work, I’ve studied these things. This stuff belongs to all of us.’”
Short of paying nine grand a year for a degree, how else are lay people meant to find out about the most potent social science of all? The internet is full of blind alleys, while even public lectures within universities typically assume some prior knowledge. Given how some economists rage that they’re not listened to enough on issues such as Brexit, it’s notable how little they actually engage with the public (one excellent exception is the annual Bristol Festival of Economics).
Not so long ago, a Levenshulme resident could learn economics – or any number of other subjects – through the adult evening classes offered by the University of Manchester. The extramural programme stretched as far afield as Wigan and Burnley, and by the 1970s employed more than 30 academic staff. Then followed decades of cuts, until the entire department was shut down in 2006.
Which makes economics the humpty-dumpty subject: trust in it is thoroughly broken, yet the public lack the basic tools to put the discipline back together again in a form that reflects their needs. A YouGov survey in 2015 found that more than 60% of respondents did not even know the definition of GDP (gross domestic product) – that staple of BBC bulletins and Westminster debates.
To make the economy more democratic, as everyone from Theresa May to Jeremy Corbyn proposes, we need to democratise knowledge of economics. That’s a truth now cottoned on to by organisations as disparate as the Bank of England and Momentum.
‘Everyone here brings their own lived experience of economics.’ Photograph: Christopher Thomond for the Guardian
Those doing the Levenshulme crash course don’t look like your typical seminar room attendees. Not only are they decades older; all but one is a women. The average undergraduate economics course, according to the Royal Economic Society, is about 67% male and 25% privately educated(compared with 7% of the population). After the class, a charity van pulls up outside, offering three bags of short-dated food for £6. Several “students” collect their groceries for the week.
Everyone here brings their own lived experience of economics. In her motorised wheelchair, Joanne Wilcock notes how “everything is much more expensive when you’re disabled”. Bang on, yet you hardly ever read that in an article on the latest inflation figures. Bhatt knows that Levenshulme is supposed to be gentrifying – “fancy cars, flash weddings” – but notices his neighbours can’t afford to do up their own houses. “All fur coat and no knickers!” he concludes, and the room cracks up.
And if you’re expecting them to trot out the usual left-itudes about fixing the economy, you’re wrong. A discussion about Northern Rail does produce calls for nationalisation – but also arguments as to how it should be turned into a co-op, or run by an arms-length organisation of technocrats.Q&A
Share your storiesShow
Lechner starts on about “citizen scientists” – amateurs who conduct their own experiments – and casts an eye around the room. “Why can’t we be citizen economists?”
That may be the most radical suggestion of the day, because it cuts directly against how both right and left usually do their business. In 1894, the year before cofounding the London School of Economics, Fabian Beatrice Webb confided to her diary: “We have little faith in the ‘average sensual man’. We do not believe that he can do more than describe his grievances, we do not think he can prescribe his remedies … we wish to introduce into politics the professional expert.”
That impulse may now be dressed up in polite euphemism – but it lives on. “So many thinktanks and MPs come up with good ideas to change our economy, but they’re all stuck in their political bubble,” says the head of Economy, Joe Earle. “Ordinary people barely get a say in the thing that rules their lives.”
Contrast that with this class and its polite horizontalism, where no one is presumed to be a total expert and everyone is treated as if they have something valuable to say. It is the seeds of that ferment described by Hilary Wainwright in her recent book, A New Politics from the Left.
‘Aklima Akhter only came to this country in 2013.’ Photograph: Christopher Thomond for the Guardian
Drawing on her experience of feminist and workers’ self-organisation, she writes: “Rebel movements shared and developed their own kinds of knowledge, via practice and through debate and deliberation, and on to producing new ideas and the basis of new institutions. Authority, once it has been confidently questioned by those on whose obedience it depends, crumbles in ways that make it difficult to put back together again.”
At the end of the class, each participant tells the rest the best thing they have learned. There’s a pause when it gets to Aklima Akhter, who only came to this country in 2013 and has been sitting so benignly quiet in her white headscarf. She starts haltingly: “It is difficult for me, you know … the subject, the language.”
All around her are faces pursed in little moues of encouragement, but then Akhter speeds up with fluency. “But my favourite word was ‘nationalisation’. Because when things are privatised it is the rich who get all the benefit.” And for once in this room, no one is laughing.
Saturday 1 October 2016
Is globalisation no longer a good thing?
John O'Sullivan in The Economist
THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year.
The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation.
In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper.
The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs.
North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought.
A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America.
Keep-out signs
The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants.
There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition.
Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour.
Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion.
But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry.
This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by.
It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology.
The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits.
Multiple hits
This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle.
First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event.
The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation.
Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully.
This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off.
THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year.
The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation.
In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper.
The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs.
North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought.
A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America.
Keep-out signs
The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants.
There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition.
Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour.
Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion.
But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry.
This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by.
It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology.
The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits.
Multiple hits
This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle.
First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event.
The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation.
Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully.
This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off.
Thursday 8 October 2015
Money isn’t restricted by borders, so why are people?
Giles Fraser in The Guardian
Theresa May won’t be around in the early 22nd century when, according to Star Trek at least, Dr Emory Erickson will have invented the transporter – a device that will be able to dematerialise a person into an energy pattern, beam them to another place or planet, and then rematerialise them back again. In such a world people will be able to move as quickly and freely as an email.
The philosopher Derek Parfit has rightly questioned whether such a thing is even philosophically possible: will the rematerialised person be the same person as the dematerialised one, or just a perfect copy. (What would happen if two copies of me were rematerialised? Would they both be me?) Parfit thus raises a fascinating philosophical question about what we mean by personal identity – or what makes me me.
But, just for the sake of argument, imagine what such a device would do to Mrs May’s keep-them-all-out immigration policy. With the transporter, there could be no border controls and no restrictions on the free movement of individuals. Economic migrants would love it. People will be able to live and work where they like, beaming instantly from Syria to Sussex or indeed to Saturn. And because of this, the whole concept of the nation state will eventually wither away. People will have become more powerful than the state.
Fanciful? Of course. Forget about the technical problems. The fundamental problem is that human beings are not fungible. A copy is not the same as its original. A person cannot be dematerialised into a series of digital zeros and ones, get beamed over space and be rematerialised as the same person.
But – and here is the really big thing – money can be. For the whole point about money is that it is fungible. It can be converted into zeros and ones and it can be digitally shot across space. And since the late 1970s, when capital controls were relaxed all around the world, and then even more so since the digital revolution, money has been able to go where it pleases, unimpeded, without any need for a passport or reference to border control. Every day, trillions of dollars are economic migrants, crossing boundaries as if they didn’t exist, pouring in and out of countries looking for the most economically advantageous place to be. And, just as with the fanciful people-transporter example, this free movement of capital is how the nation state is dissolving.
This week the OECD published a report on international companies and tax avoidance. Big companies like AstraZeneca are able to pay next to no tax in the UK because they just transport their profits to a low-tax regime in another country. Indeed, some countries, pathetically prostrating themselves before the gods of finance, exist for little other than this purpose. And so the situation we find ourselves in is that money is free to travel as it pleases but people are not. We have got used to this as the new normal, and it largely goes unremarked. Yes, there are a few on the libertarian fringe who recognise this as a contradiction and argue that people should be as free as capital. But the majority on the right do everything they can to protect the free movement of capital and restrict the free movement of people.
Which is why the neoliberal right in Britain has utterly contradictory instincts over Europe – they want the free trade bit but they don’t want the free people bit. And they scare us with how the free movement of people threatens our national identity but refuse to face the fact that the free movement of capital can be seen as doing exactly the same. They talk a good game about the importance of freedom: but it’s one rule for capital and another for people.
Of course the transporter won’t happen. But with the internet, the imagination can travel where it will. And that means poor people will always see and want what rich people have. And not even Mrs May will be able to stop them crossing dangerous seas and borders to find it.
Theresa May won’t be around in the early 22nd century when, according to Star Trek at least, Dr Emory Erickson will have invented the transporter – a device that will be able to dematerialise a person into an energy pattern, beam them to another place or planet, and then rematerialise them back again. In such a world people will be able to move as quickly and freely as an email.
The philosopher Derek Parfit has rightly questioned whether such a thing is even philosophically possible: will the rematerialised person be the same person as the dematerialised one, or just a perfect copy. (What would happen if two copies of me were rematerialised? Would they both be me?) Parfit thus raises a fascinating philosophical question about what we mean by personal identity – or what makes me me.
But, just for the sake of argument, imagine what such a device would do to Mrs May’s keep-them-all-out immigration policy. With the transporter, there could be no border controls and no restrictions on the free movement of individuals. Economic migrants would love it. People will be able to live and work where they like, beaming instantly from Syria to Sussex or indeed to Saturn. And because of this, the whole concept of the nation state will eventually wither away. People will have become more powerful than the state.
Fanciful? Of course. Forget about the technical problems. The fundamental problem is that human beings are not fungible. A copy is not the same as its original. A person cannot be dematerialised into a series of digital zeros and ones, get beamed over space and be rematerialised as the same person.
But – and here is the really big thing – money can be. For the whole point about money is that it is fungible. It can be converted into zeros and ones and it can be digitally shot across space. And since the late 1970s, when capital controls were relaxed all around the world, and then even more so since the digital revolution, money has been able to go where it pleases, unimpeded, without any need for a passport or reference to border control. Every day, trillions of dollars are economic migrants, crossing boundaries as if they didn’t exist, pouring in and out of countries looking for the most economically advantageous place to be. And, just as with the fanciful people-transporter example, this free movement of capital is how the nation state is dissolving.
This week the OECD published a report on international companies and tax avoidance. Big companies like AstraZeneca are able to pay next to no tax in the UK because they just transport their profits to a low-tax regime in another country. Indeed, some countries, pathetically prostrating themselves before the gods of finance, exist for little other than this purpose. And so the situation we find ourselves in is that money is free to travel as it pleases but people are not. We have got used to this as the new normal, and it largely goes unremarked. Yes, there are a few on the libertarian fringe who recognise this as a contradiction and argue that people should be as free as capital. But the majority on the right do everything they can to protect the free movement of capital and restrict the free movement of people.
Which is why the neoliberal right in Britain has utterly contradictory instincts over Europe – they want the free trade bit but they don’t want the free people bit. And they scare us with how the free movement of people threatens our national identity but refuse to face the fact that the free movement of capital can be seen as doing exactly the same. They talk a good game about the importance of freedom: but it’s one rule for capital and another for people.
Of course the transporter won’t happen. But with the internet, the imagination can travel where it will. And that means poor people will always see and want what rich people have. And not even Mrs May will be able to stop them crossing dangerous seas and borders to find it.
Friday 13 March 2015
Fixing our schools: 'it's not the policy, it's the people'
Heath Monk in The Telegraph
There is an election coming and education is bound to be a key issue because there are still too many schools where students aren’t doing well enough. We’ll have to spend the next few months listening to prospective Education Secretaries explain how they will fix this. But the truth is we don’t need more policy: we need a revolution. And it has already started, quietly.
This ‘Quiet Revolution’ is how school improvement really works. It’s not about top-down decisions made in Westminster; it’s about exceptional school leaders and great teachers transforming their schools through hard work and expertise.
Over the past decades successive governments have used policy to reconfigure curricula, tighten accountability and shake up governance. I’ve worked in the Department for Education alongside the people who made some of these changes and, without a doubt, they are genuinely motivated by the desire to make a positive change.
But while policies can set expectations and contexts, they are not magic wands. They frequently fail to translate to the front line and some of them aren’t even good ideas, creating more noise than signal.
No political party is immune to this sort of thinking. Recent examples include Tristram Hunt’s pedagogic oath to ensure teacher’s moral purpose (as if medical doctors never go bad), Cameron’s ‘war on mediocre schools’ (haven't they always been with us?) and the confusion caused by universal free school meals in primary.
Our political culture now relies on bold promises and vague delivery, and that is not what students from disadvantaged backgrounds need. They are the ones who are most harmed by bad schools and they need a quiet revolution most of all.
The mission of giving these young people a great education will not be achieved just through change at the top. My reading of history is that even loud revolutions leave much unchanged. If the deep structures aren’t modified, you’re just re-arranging the chairs.
It’s school leadership that changes things on the ground. A great headteacher can transform an entire school because they have the skills and vision to understand what their teachers and students need to succeed.
I hope I can take the next Education Secretary around one the schools I’ve visited recently and show them how real school improvement happens. It’s the head who shakes hands with every pupil at the gate; who consistently enforces the rule that every student must be ready to learn by bringing a pencil, pen and ruler to their lessons; or who instils a ‘no hands up’ class room culture so it’s not the same keen students answering questions.
This might sound like window-dressing but there’s lots of data that shows that it is not. These everyday actions lead to shared values, language and culture throughout a school – and that can change students’ lives.
The organisation I work for is part of this Quiet Revolution, though we have borrowed the phrase. We train people who want to become headteachers because they are driven by the moral purpose to give every child the opportunity to succeed.
We’ve devoted part of our website to celebrating and sharing some of the most effective things they’ve seen in schools. This work isn’t revolutionary because of fad or fashion but because they’ve done it really (really) well.
Since Future Leader Jane Keeley became headteacher at Haggerston School in Hackney the school has regained its standing in the community, engaging students and families and improving results. Future Leader Luke Sparkes helped set up Dixons Trinity Academy in one of the most deprived areas of Bradford and has instilled a culture where children love school and are excelling academically.
The work of school improvement isn’t complicated but it is hard. It requires dedication to students and a commitment to continual development. It doesn’t happen systematically just because of edicts from Westminster but because of individuals who know that there isn’t any time to waste.
Every child who leaves school without five good GCSEs including English and maths will face reduced choices and opportunities, damaging lives and communities.
I like the tradition in Ancient Rome, where conquering generals would return in triumph and ride through the city with someone whispering in their ear, ‘Remember: you are mortal.’ Post-election, I’d love to stand behind whoever is at the dispatch box and whisper: ‘It’s not the policy, it’s the people.’
The Quiet Revolution is for school leaders and teachers who believe that every child can achieve, who are always searching for better ways to support their students – and who will not stop, whatever the current system.
Thursday 25 September 2014
India’s Mars mission could be a giant leap
Critics say India has too much poverty for such an endeavour. But space exploration should not be the preserve of the rich west
After a journey of 300 days and 420 million miles, an Indian satellite has arrived in orbit around Mars. To have done so on an economy ticket – at $74m “the cheapest interplanetary mission ever to be undertaken by the world”, according to the mission’s leader – only adds to the significance of the event.
India’s space agency – the Indian Space Research Organisation – is a late entrant to the space race, and the success of Mangalyaan (“Mars craft” in Hindi) makes the country an Asian leader in space exploration, if not yet a global one. The mission has been received with delight on India’s social media and across its political spectrum, where “national pride” is the watchword.
To reach a distant world, where others have failed, might have had special significance for Narendra Modi, India’s prime minister, as he finally heads off to the United States for an official visit, having been denied a visa in the past because of doubts over his role in the 2002 Gujarat bloodshed. Modi and his ministers have been quick to assert collective pride in Mangalyaan as part of their vision of a globally ascendant India, ignoring the fact that the mission was actually fostered by their predecessors.
But questions are being asked. The Economist, not a known advocate of the poor or of government spending on social welfare, demanded to know – not only of India but of Sri Lanka, Belarus, Bolivia and Nigeria, all “minnows” with fledgling space aspirations: “How can poor countries afford space programmes?” Cut aid to such over-reaching parvenus, some in Britain have suggested. The criticism seems partly directed at the fact that the mission was not privately funded, as research in the west increasingly is; state money was channelled towards it without any marketable product emerging.
But inquiry and exploration are not the prerogative of advanced capitalist western nations – with the rest of the world eternally condemned to be a footnote in the history of science, even as its historical contributions to knowledge are forgotten. A country, however “largely third world” its “reality”, as one peevish British economist put it, does not have to circumscribe its sphere of achievement to feeding its people, important as that is. Indeed, it can be argued that in a better world the search for knowledge and the quest for social justice would be necessarily intertwined. As the Economist concedes, India’s weather satellites helped reduce the number of deaths during cyclone Phailin last year.
The real problem, of course, is that in economies that are in addition seeking to win the global capitalist growth race, such symbiosis between people and science is increasingly rare. It’s what the progressive economist Jean Drèze may have had in mind when he described the Mars mission controversially as a flag-waving “delusional dream” – when public health and energy needs ought to be met first. Recent floods in Kashmir speak of failures, technological and political, to anticipate and respond to natural disasters. Indeed, placing industrial development over ecological interests often causes such disasters in the first place.
Serious questions remain about whether science and technology – and not just in poorer countries – can have a greater good in mind when the bottom line is profit. The space race between the US and the Soviet Union was not an affordable luxury undertaken for the sake of knowledge, but intrinsically tied to the military-industrial complex. Whatever the intellectual commitments of India’s space scientists, there’s no doubt that the language of national “heroism” and technological “might”, which underpins a dangerous religiously inflected military and nuclear standoff in the region, afflicts much of the praise poured on the Mars mission’s success.
Perhaps national science and technology policy can be fully prised away from corporate and defence industry interests, and placed firmly in the province of economic justice and social progress. But the current administration’s record is not encouraging: Indian ministers have flouted scientific advice by fast-tracking environmental clearances to corporations including mining firms.
Yet India is fortunate in having a long and diverse history of campaigning science movements that have sought to draw both on indigenous knowledge traditions and direct modern scientific research towards progress in health, literacy, environment, nutrition and sanitation. The best way for India to commemorate the success of Mangalyaan would be to reopen a national debate about how science and technology can best be harnessed in the widest interests of its people.
Sunday 7 April 2013
Patent justice
The HinduThe Supreme Court’s patent denial to Novartis for its anti-cancer drug Gleevec leaves the door open for Indian pharmaceutical companies to produce their own versions of the drug.
Drug patents are designed to create profits that enable more research on diseases affecting millions. But in practice, they have often generated super profits for big pharma companies while erecting access barriers for the poor. The Novartis case spotlights much that is wrong with the system.
The rejection of the Novartis petition challenging one of the most progressive tenets of the Indian Patents Act (1970), as amended in 2005 by the Supreme Court, is a landmark verdict for the public health community and the generic drugs industry, in particular, and for global health. Under the amended Indian Patents Act, Section 3(d) allows drug companies to obtain product patents for new salts or chemical ingredients. This is intended to encourage drug companies to protect their rights and prevent these from being copied by competitors, allowing for a 20-year protection period to recoup investments. However, Section 3 (d) does not encourage frivolous patents. It is intended to encourage only breakthrough innovations and discourage new use of known chemical substances or new delivery mechanisms of existing chemical compounds.
Transnational drug companies not only possess the first mover advantage, but owing to the high-voltage brand image they create, often extend their patents well beyond the already long period of protection. Drug companies are known for ‘evergreening’ patents by filing new patents, tweaking existing molecules to show novelty. Innovation is a red-herring, often used by multinational drug companies to make super-profits at the expense of social good and well-being. Under the mailbox agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions, India received over 9,000 mailbox applications as patent filings post-2000, while a major share of those were for pharmaceutical patents. Global evidence, on the other hand, shows that roughly 275 such patents were filed and granted for blockbuster drugs during this period. In order to pre-empt Indian generics companies from producing these drugs and to keep them away from the market, the big pharma companies have flooded the patent offices with frivolous patent applications, known to be existing molecules tweaked to appear as a novel product.
The R&D myth
The night before the apex court verdict, Novartis threatened to stop investing in research and development in India, if the verdict went against it. How serious is the threat and how realistic the scenario? In India’s drug production of over Rs. 100,000 crore, Novartis’ turnover is a little over Rs. 1,000 crore, constituting around one per cent. Out of the total expenditure of over Rs. 800 crores incurred by Novartis India in 2012, a paltry Rs. 29 lakhs was for R&D, constituting roughly 0.03 per cent of its entire expenditure in India.
Can such low spending can be considered R&D investment? In fact, Novartis R&D expenditure in India for the past five years has been in a similar range. On the other hand, Novartis consistently posted a profitability ratio (Profit After Tax as percentage of Total Income) of over 15 per cent in the last five years, something to envy for other sectors.
Big Pharma argues that if global R&D of innovator companies were to be considered, transnational drug corporations spend over US $ one billion to come up with a new drug. This includes cost of R&D incurred on failed drugs as well, as pharmaceutical companies take, on an average, roughly 12-13 years to get patents on new drugs. The magic one billion dollar figure is a gross overestimate. Even by conservative calculations, this figure would be one-fifth or one-fourth of the billion dollar estimate. But Big Pharma is quick to recoup its R&D spending from blockbuster drugs. Take the case of Gleevec (Imatinib Mesylate), sold in the US. Novartis raked in a total turnover of US $ 1.69 billion from the US alone in 2012 from the drug. The global turnover on Gleevec is anybody’s guess. It is also widely known that the cost of manufacturing drugs is only a fraction of the turnover.
Novartis currently sells Glivec (Gleevec) for Rs. 4,115 per tablet, while Resonance, an Indian generic drug company dispenses it at Rs. 30 per tablet. The annual cost of treatment per patient on Glivec would be in the range of Rs. 15 lakhs while Indian generic companies are offering it at Rs. 10,000. If Novartis were to get its patent on Glivec, Indian generic companies would have to stop their production, and therefore an unaffordable scenario would have prevailed for the common man in not only India but in other developing countries. Thankfully, the court ruled in favour of Section 3 (d) of the Patent Act.
Novartis claims that 95 per cent of cancer patients in India were provided the medicine free. This is patent untruth. Retail market sales in India for Glivec, sold by Indian generics producers are currently worth Rs. 20 crores. Novartis sells Glivec directly to patients and not through the usual retail chain, a system that is designed to make people believe that they offer the drug free.
After seven years of battle, the Supreme Court verdict seals this issue, facilitating Patent Controllers to strictly enforce Section 3 (d), thereby pre-empting pharmaceutical companies that seek to evergreen products. However, there are several other safeguards that are enshrined in the patent law that must be utilised to make life-saving and essential drugs affordable. And one such key safeguard is invoking compulsory licensing for blockbuster drugs, if the original manufacturer fails to sell it affordable rates.
Last year, India invoked the provision to license generic player Natco to produce Nexavar, after Bayer, the innovator failed to make it affordable. Such policy measures are critical, in order to improve access to life-saving medicines, as households in India are known to pay nearly 70 per cent of their health care spending on medicines.
(Dr. Sakthivel Selvaraj is Senior Health Economist, Public Health Foundation of India, New Delhi.)
Also read
Company profits depend on the 'welfare payments' they get from society
Why Novartis case will help innovation
The Supreme Court judgment on Glivec is a blow for a patent regime with a higher threshold of inventiveness
On April 1, 2013, the Supreme Court upheld the Intellectual Property Appellate Board’s decision to deny patent protection to Novartis’s application covering a beta crystalline form of imatinib —the medicine Novartis brands as Glivec, and which is very effective against the form of cancer known as chronic myeloid leukaemia (CML). The judgment marked a crucial conclusion to a saga that has been several decades in the making. The story could start in 1972, if you like, when the Indian Patents Act of 1970 — grounded in the findings of the Bakshi Tek Chand and Ayyangar Committee Reports — came into force, enabling the explosive growth of the Indian generics industry into the world’s largest exporter of bulk medicines. Or, it could start in 2005, when India amended its patent law to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), a trade rule at the World Trade Organisation (WTO) that established a new global regime of intellectual property.
Key lesson
No matter where we start, the saga has come to a close, and the key lesson seeping through is that good sense won. Firstly, the Supreme Court decision was not about the patentability of the imatinib compound as such: that patent, having been instituted in 1993, is excluded from the purview of the Indian patent system, which is only obligated to consider patents filed in 1995 or after. The case the Supreme Court heard was whether Novartis’ beta crystalline form of imatinib was worthy of patent protection: its judgment was that this modification by Novartis did not satisfy the standard of inventiveness required under Indian patent law. Secondly, Indian patent law is as yet unchallenged at the WTO; Novartis’s earlier challenge to the constitutionality and TRIPs compatibility of Indian patent law was rebuffed by the Madras High Court in 2007 and no appeal was pursued. Thirdly, the Supreme Court judgment effectively recast Indian patent law as being nuanced and original in its meshing of domestic political economy concerns with the integrated global economy it participates in.
The outcome of this nuance and originality? Imatinib will continue to be
available to patients in India from multiple suppliers at a price 10 times less than the current cost of Glivec; approximately 27,000 cancer patients in the country who pay for their imatinib will continue to have access to the medicine in the public and private sectors at the lowest cost possible; and should Novartis ever suspend its charitable programme, all 15,000 of the cancer patients who currently receive imatinib free from Novartis will have similarly equitable access to the medicine.
Hackneyed narrative
Despite substantial progress in the popular understanding of the place of patents in a developing country like India, a hackneyed narrative has emerged, especially in the pink press, warning us that this judgment will have a negative impact on innovation in the long run. As it happens, one of the most useful outcomes of the Supreme Court judgment is a renewed focus on what innovation is — and how it should be rewarded. Behind the headlines foretelling various levels of doom — the death of innovation in the country and the end of research for diseases which matter to us — is the popular idea that patents are a proxy for innovation. After all, patents are widely understood as short-term monopolies enshrined in the law and provided as incentive to inventors on the evaluation of publicly disclosed innovation. It would seem as if patents are synonymous with innovation. Except, this is not quite the case.
Minor variations
In the last three decades, the global gold rush for patents has been dominated by filings for minor and mostly inconsequential innovations — at the expense of breakthrough innovation. In large part, this is because weak standards in the patent laws of developed countries (led by the U.S. and Europe) have explicitly encouraged this shift. The whittled-down, lobbied-out, stretched-beyond-recognition patent regime that is characteristic of these countries — and other less-developed countries where they influence the polity — is unfortunately the ‘norm’ to which India now finds itself an ‘outlier.’ But the outlier is a solution: the norm is the problem. A British Medical Journal report from 2012 succinctly summarises the global research situation for new medicines: “This is the real innovation crisis: pharmaceutical research and development turns out mostly minor variations on existing drugs, and most new drugs are not superior on clinical measures.”
If the patent regimes of developed countries are dominated by minor patents, many or most of which have no demonstrable innovation to show, why are they so avidly pursued by global pharmaceutical companies? A Public Library of Science study from 2012 points to the answer: secondary patents extend the patent life (and thereby, the monopoly pricing) of pharmaceutical products long beyond their designated life span, adding, on average, between six and seven years to the patent life of the original compound. Any patent regime which incentivises secondary patents with weak laws will only serve to extend commercial monopolies at low levels of innovation — and will no longer provide the incentive for genuine innovation. The genius of the Supreme Court judgment on Novartis’s patent application lies in restoring the connection between patents and innovation by upholding and legitimising a regime with a higher threshold of inventiveness.
Will Indian patent law change the way the global pharmaceutical industry innovates? No; not immediately, at least. Could it positively affect pharmaceutical innovation in the long run? Absolutely. In the present day, India comprises 1.3 per cent of the global pharmaceutical market by value. That figure, in itself, is why changes to Indian patent law will not help global pharmaceutical giants break free from the incentive model they are prisoners of. At most, they might have to learn how to compete in a crowded market for some of their less original products. The symbolic opportunity presented by the Supreme Court’s backing of Indian patent law, however, is a real threat — and pharma CEOs in New York, London and Basel get it. In the long run, as more countries understand the Indian model, appreciate its legitimacy, and reflect on its benefits to both public health and innovation, they might want the same. And if that happens, when that happens, we may begin to see real, positive change in the way pharmaceutical innovation works.
Empowered scenario
The Indian Patents Act of 1970 was a game changer. From the perspective of 43 years of experience, we can safely say that it shook up the pharmaceutical industry and altered it irreversibly. The new, empowered scenario was most vividly illustrated during the peak of the HIV/AIDS treatment crisis in the first decade of the 21st century, when countries like Brazil, Thailand, South Africa and, of course, India, took health security into their own hands and legitimately moulded their domestic patent systems to respond to the crises within. The Indian Patents Amendment Act of 2005, which gave us the law we have today — a law which was ratified last week — has the potential to change the game once again. This time, however, the change might come more slowly; the hell the Indian government was dragged through has not been lost on anyone. The lengthy trials, the frequent challenges, the full-scale vilification, and every other scare tactic thrown our way by a public-relations juggernaut (along with the implicit support of many developed country governments) was not for nothing. And the Supreme Court judgment is all the more important as a result, for it shows a new way may be hard and tiresome, but is ultimately possible.
(Achal Prabhala works on access to medicines; Sudhir Krishnaswamy is on the faculty of Azim Premji University, and is the Dr. B.R. Ambedkar Visiting Professor of Indian Constitutional Law at Columbia Law School)
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