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The European Super League is the perfect metaphor for global capitalism

From elite football to tech giants, our lives are increasingly governed by ‘free’ markets that turn out to be rigged writes Larry Elliott in The Guardian

‘The organisers of the ESL have taken textbook free-market capitalism and turned it on its head.’ Graffiti showing the Juventus president, Andrea Agnelli, near the headquarters of the Italian Football Federation in Rome. Photograph: Filippo Monteforte/AFP/Getty Images


Back in the days of the Soviet Union, it was common to hear people on the left criticise the Kremlin for pursuing the wrong kind of socialism. There was nothing wrong with the theory, they said, rather the warped form of it conducted behind the iron curtain. 

The same argument has surfaced this week amid the furious response to the now-aborted plans to form a European Super League for 20 football clubs, only this time from the right. Free-market purists say they hate the idea because it is the wrong form of capitalism.

They are both right and wrong about that. Free-market capitalism is supposed to work through competition, which means no barriers to entry for new, innovative products. In football’s case, that would be a go-ahead small club with a manager trying radical new training methods and fielding a crop of players it had nurtured itself or invested in through the transfer market. The league-winning Derby County and Nottingham Forest teams developed by Brian Clough in the 1970s would be an example of this.

Supporters of free-market capitalism say that the system can tolerate inequality provided there is the opportunity to better yourself. They are opposed to cartels and firms that use their market power to protect themselves from smaller and nimbler rivals. Nor do they like rentier capitalism, which is where people can make large returns from assets they happen to own but without doing anything themselves.

The organisers of the ESL have taken textbook free-market capitalism and turned it on its head. Having 15 of the 20 places guaranteed for the founder members represents a colossal barrier to entry and clearly stifles competition. There is not much chance of “creative destruction” if an elite group of clubs can entrench their position by trousering the bulk of the TV receipts that their matches will generate. Owners of the clubs are classic rentier capitalists.

Where the free-market critics of the ESL are wrong is in thinking the ESL is some sort of aberration, a one-off deviation from established practice, rather than a metaphor for what global capitalism has become: an edifice built on piles of debt where the owners of businesses say they love competition but do everything they can to avoid it. Just as the top European clubs have feeder teams that they can exploit for new talent, so the US tech giants have been busy buying up anything that looks like providing competition. It is why Google has bought a slew of rival online advertising vendors and why Facebook bought Instagram and WhatsApp.

For those who want to understand how the economics of football have changed, a good starting point is The Glory Game, a book Hunter Davies wrote about his life behind the scenes with Tottenham Hotspur, one of the wannabe members of the ESL, in the 1971-72 season. (Full disclosure: I am a Spurs season ticket holder.)

Davies’s book devotes a chapter to the directors of Spurs in the early 1970s, who were all lifelong supporters of the club and who received no payment for their services. They lived in Enfield, not in the Bahamas, which is where the current owner, Joe Lewis, resides as a tax exile. These were not radical men. They could not conceive of there ever being women on the board; they opposed advertising inside the ground and were only just coming round to the idea of a club shop to sell official Spurs merchandise. They were conservative in all senses of the word.

In the intervening half century, the men who made their money out of nuts and bolts and waste paper firms in north London have been replaced by oligarchs and hedge funds. TV, barely mentioned in the Glory Game, has arrived with its billions of pounds in revenue. Facilities have improved and the players are fitter, stronger and much better paid than those of the early 1970s. In very few sectors of modern Britain can it be said that the workers receive the full fruits of their labours: the Premier League is one of them.

Even so, the model is not really working and would have worked even less well had the ESL come about. And it goes a lot deeper than greed, something that can hardly be said to be new to football.

No question, greed is part of the story, because for some clubs the prospect of sharing an initial €3.5bn (£3bn) pot of money was just too tempting given their debts, but there was also a problem with the product on offer.

Some of the competitive verve has already been sucked out of football thanks to the concentration of wealth. In the 1970s, there was far more chance of a less prosperous club having their moment of glory: not only did Derby and Forest win the league, but Sunderland, Southampton and Ipswich won the FA Cup. Fans can accept the despair of defeat if they can occasionally hope for the thrill of victory, but the ESL was essentially a way for an elite to insulate itself against the risk of failure.

By presenting their half-baked idea in the way they did, the ESL clubs committed one of capitalism’s cardinal sins: they damaged their own brand. Companies – especially those that rely on loyalty to their product – do that at their peril, not least because it forces politicians to respond. Supporters have power and so do governments, if they choose to exercise it.

The ESL has demonstrated that global capitalism operates on the basis of rigged markets not free markets, and those running the show are only interested in entrenching existing inequalities. It was a truly bad idea, but by providing a lesson in economics to millions of fans it may have performed a public service.

Why rigged capitalism is damaging liberal democracy

Economies are not delivering for most citizens because of weak competition, feeble productivity growth and tax loopholes writes Martin Wolf in The FT

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”  

 With this sentence, the US Business Roundtable, which represents the chief executives of 181 of the world’s largest companies, abandoned their longstanding view that “corporations exist principally to serve their shareholders”.  

This is certainly a moment. But what does — and should — that moment mean? The answer needs to start with acknowledgment of the fact that something has gone very wrong. Over the past four decades, and especially in the US, the most important country of all, we have observed an unholy trinity of slowing productivity growth, soaring inequality and huge financial shocks.  

As Jason Furman of Harvard University and Peter Orszag of Lazard Frères noted in a paper last year: “From 1948 to 1973, real median family income in the US rose 3 per cent annually. At this rate . . . there was a 96 per cent chance that a child would have a higher income than his or her parents. Since 1973, the median family has seen its real income grow only 0.4 per cent annually . . . As a result, 28 per cent of children have lower income than their parents did.”

So why is the economy not delivering? The answer lies, in large part, with the rise of rentier capitalism. In this case “rent” means rewards over and above those required to induce the desired supply of goods, services, land or labour. “Rentier capitalism” means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else. 

That does not explain every disappointment. As Robert Gordon, professor of social sciences at Northwestern University, argues, fundamental innovation slowed after the mid-20th century. Technology has also created greater reliance on graduates and raised their relative wages, explaining part of the rise of inequality. But the share of the top 1 per cent of US earners in pre-tax income jumped from 11 per cent in 1980 to 20 per cent in 2014. This was not mainly the result of such skill-biased technological change. 

If one listens to the political debates in many countries, notably the US and UK, one would conclude that the disappointment is mainly the fault of imports from China or low-wage immigrants, or both. Foreigners are ideal scapegoats. But the notion that rising inequality and slow productivity growth are due to foreigners is simply false. 

Every western high-income country trades more with emerging and developing countries today than it did four decades ago. Yet increases in inequality have varied substantially. The outcome depended on how the institutions of the market economy behaved and on domestic policy choices.  

Harvard economist Elhanan Helpman ends his overview of a huge academic literature on the topic with the conclusion that “globalisation in the form of foreign trade and offshoring has not been a large contributor to rising inequality. Multiple studies of different events around the world point to this conclusion.” 

The shift in the location of much manufacturing, principally to China, may have lowered investment in high-income economies a little. But this effect cannot have been powerful enough to reduce productivity growth significantly. To the contrary, the shift in the global division of labour induced high-income economies to specialise in skill-intensive sectors, where there was more potential for fast productivity growth. 

Donald Trump, a naive mercantilist, focuses, instead, on bilateral trade imbalances as a cause of job losses. These deficits reflect bad trade deals, the American president insists. It is true that the US has overall trade deficits, while the EU has surpluses. But their trade policies are quite similar. Trade policies do not explain bilateral balances. Bilateral balances, in turn, do not explain overall balances. The latter are macroeconomic phenomena. Both theory and evidence concur on this. 

The economic impact of immigration has also been small, however big the political and cultural “shock of the foreigner” may be. Research strongly suggests that the effect of immigration on the real earnings of the native population and on receiving countries’ fiscal position has been small and frequently positive. 

Far more productive than this politically rewarding, but mistaken, focus on the damage done by trade and migration is an examination of contemporary rentier capitalism itself.  

Finance plays a key role, with several dimensions. Liberalised finance tends to metastasise, like a cancer. Thus, the financial sector’s ability to create credit and money finances its own activities, incomes and (often illusory) profits. 

A 2015 study by Stephen Cecchetti and Enisse Kharroubi for the Bank for International Settlements said “the level of financial development is good only up to a point, after which it becomes a drag on growth, and that a fast-growing financial sector is detrimental to aggregate productivity growth”. When the financial sector grows quickly, they argue, it hires talented people. These then lend against property, because it generates collateral. This is a diversion of talented human resources in unproductive, useless directions. 

Again, excessive growth of credit almost always leads to crises, as Carmen Reinhart and Kenneth Rogoff showed in This Time is Different. This is why no modern government dares let the supposedly market-driven financial sector operate unaided and unguided. But that in turn creates huge opportunities to gain from irresponsibility: heads, they win; tails, the rest of us lose. Further crises are guaranteed. 

Finance also creates rising inequality. Thomas Philippon of the Stern School of Business and Ariell Reshef of the Paris School of Economics showed that the relative earnings of finance professionals exploded upwards in the 1980s with the deregulation of finance. They estimated that “rents” — earnings over and above those needed to attract people into the industry — accounted for 30-50 per cent of the pay differential between finance professionals and the rest of the private sector.  

This explosion of financial activity since 1980 has not raised the growth of productivity. If anything, it has lowered it, especially since the crisis. The same is true of the explosion in pay of corporate management, yet another form of rent extraction. As Deborah Hargreaves, founder of the High Pay Centre, notes, in the UK the ratio of average chief executive pay to that of average workers rose from 48 to one in 1998 to 129 to one in 2016. In the US, the same ratio rose from 42 to one in 1980 to 347 to one in 2017.  

As the US essayist HL Mencken wrote: “For every complex problem, there is an answer that is clear, simple and wrong.” Pay linked to the share price gave management a huge incentive to raise that price, by manipulating earnings or borrowing money to buy the shares. Neither adds value to the company. But they can add a great deal of wealth to management. A related problem with governance is conflicts of interest, notably over independence of auditors. 

In sum, personal financial considerations permeate corporate decision-making. As the independent economist Andrew Smithers argues in Productivity and the Bonus Culture, this comes at the expense of corporate investment and so of long-run productivity growth.  

A possibly still more fundamental issue is the decline of competition. Mr Furman and Mr Orszag say there is evidence of increased market concentration in the US, a lower rate of entry of new firms and a lower share of young firms in the economy compared with three or four decades ago. Work by the OECD and Oxford Martin School also notes widening gaps in productivity and profit mark-ups between the leading businesses and the rest. This suggests weakening competition and rising monopoly rent. Moreover, a great deal of the increase in inequality arises from radically different rewards for workers with similar skills in different firms: this, too, is a form of rent extraction. 

A part of the explanation for weaker competition is “winner-takes-almost-all” markets: superstar individuals and their companies earn monopoly rents, because they can now serve global markets so cheaply. The network externalities — benefits of using a network that others are using — and zero marginal costs of platform monopolies (Facebook, Google, Amazon, Alibaba and Tencent) are the dominant examples.  

Another such natural force is the network externalities of agglomerations, stressed by Paul Collier in The Future of Capitalism. Successful metropolitan areas — London, New York, the Bay Area in California — generate powerful feedback loops, attracting and rewarding talented people. This disadvantages businesses and people trapped in left-behind towns. Agglomerations, too, create rents, not just in property prices, but also in earnings.  

Yet monopoly rent is not just the product of such natural — albeit worrying — economic forces. It is also the result of policy. In the US, Yale University law professor Robert Bork argued in the 1970s that “consumer welfare” should be the sole objective of antitrust policy. As with shareholder value maximisation, this oversimplified highly complex issues. In this case, it led to complacency about monopoly power, provided prices stayed low. Yet tall trees deprive saplings of the light they need to grow. So, too, may giant companies.  

Some might argue, complacently, that the “monopoly rent” we now see in leading economies is largely a sign of the “creative destruction” lauded by the Austrian economist Joseph Schumpeter. In fact, we are not seeing enough creation, destruction or productivity growth to support that view convincingly. 

A disreputable aspect of rent-seeking is radical tax avoidance. Corporations (and so also shareholders) benefit from the public goods — security, legal systems, infrastructure, educated workforces and sociopolitical stability — provided by the world’s most powerful liberal democracies. Yet they are also in a perfect position to exploit tax loopholes, especially those companies whose location of production or innovation is difficult to determine.  

The biggest challenges within the corporate tax system are tax competition and base erosion and profit shifting. We see the former in falling tax rates. We see the latter in the location of intellectual property in tax havens, in charging tax-deductible debt against profits accruing in higher-tax jurisdictions and in rigging transfer prices within firms.  

A 2015 study by the IMF calculated that base erosion and profit shifting reduced long-run annual revenue in OECD countries by about $450bn (1 per cent of gross domestic product) and in non-OECD countries by slightly over $200bn (1.3 per cent of GDP). These are significant figures in the context of a tax that raised an average of only 2.9 per cent of GDP in 2016 in OECD countries and just 2 per cent in the US.  

Brad Setser of the Council on Foreign Relations shows that US corporations report seven times as much profit in small tax havens (Bermuda, the British Caribbean, Ireland, Luxembourg, Netherlands, Singapore and Switzerland) as in six big economies (China, France, Germany, India, Italy and Japan). This is ludicrous. The tax reform under Mr Trump changed essentially nothing. Needless to say, not only US corporations benefit from such loopholes. 

In such cases, rents are not merely being exploited. They are being created, through lobbying for distorting and unfair tax loopholes and against needed regulation of mergers, anti-competitive practices, financial misbehaviour, the environment and labour markets. Corporate lobbying overwhelms the interests of ordinary citizens. Indeed, some studies suggest that the wishes of ordinary people count for next to nothing in policymaking.  

Not least, as some western economies have become more Latin American in their distribution of incomes, their politics have also become more Latin American. Some of the new populists are considering radical, but necessary, changes in competition, regulatory and tax policies. But others rely on xenophobic dog whistles while continuing to promote a capitalism rigged to favour a small elite. Such activities could well end up with the death of liberal democracy itself. 

Members of the Business Roundtable and their peers have tough questions to ask themselves. They are right: seeking to maximise shareholder value has proved a doubtful guide to managing corporations. But that realisation is the beginning, not the end. They need to ask themselves what this understanding means for how they set their own pay and how they exploit — indeed actively create — tax and regulatory loopholes. 

They must, not least, consider their activities in the public arena. What are they doing to ensure better laws governing the structure of the corporation, a fair and effective tax system, a safety net for those afflicted by economic forces beyond their control, a healthy local and global environment and a democracy responsive to the wishes of a broad majority? 

We need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy. Fixing this is a challenge for us all, but especially for those who run the world’s most important businesses. The way our economic and political systems work must change, or they will perish.

Higher Education in The USA: Rigged from inside and outside?

Edward Luce in The FT

“Nothing is fun until you are good at it,” said Amy Chua in her book Battle Hymn of the Tiger Mother. Eight years later the Yale professor continues to display her prowess. 

This week Sophia Chua-Rubenfeld, Ms Chua’s daughter, was hired as a Supreme Court clerk by Brett Kavanaugh — the judge for whom her mother vouched during his stormy Senate hearings last autumn. 

Ms Chua is a shrewd string-puller. A Supreme Court clerkship sets up a young lawyer for life. Whether she is enjoying the publicity is another matter. Overnight the Chuas have turned into emblems of what Americans distrust about their meritocracy. 

There is much more where that came from. What Ms Chua did was brazen. The liberal academic offered a very public endorsement of the conservative Mr Kavanaugh. As the head of the Yale committee that steers graduates into highly-coveted clerkships, Ms Chua boosted his credibility with her endorsement. 

But the apparent quid pro quo was legal. Actresses Lori Loughlin and Felicity Huffman, on the other hand, are accused of having broken the law. 

The first is alleged to have paid $500,000 to fake athletics records that would help her two daughters enter the University of Southern California. The second has pleaded guilty to paying $15,000 to cheat on her daughter’s standardised admission test. Both Hollywood actresses, and one of their husbands, face likely jail in the “Operation Varsity Blues” scandal. 

Americans would be forgiven for blurring the moral of these tales. 

On pure arithmetic, the average American’s chances of entering a top university are tiny if they are born into the wrong home. Studies show that an eighth grade (14-year-old) child from a lower income bracket who achieves maths results in the top quarter is less likely to graduate than a kid in the upper income bracket scored in the bottom quarter. This is the reverse of how meritocracy should work. Children from the wealthiest 1 per cent take more Ivy League places than the bottom 60 per cent combined. Being born under a roof like Ms Chua’s — with two high-achieving parents obsessed with your success — is almost impossible to match. 

That is how most of the world works. The US has erected three additional barriers. The first is legacy places. In contrast to most other democracies, America’s top universities credit an applicant if a parent, or grandparent, went to the school. A better name for this would be “hereditary preference”, which is antithetical to America’s creed. Roughly one in six Ivy League places are taken by children of alumni. This sharply reduces the places available to children of talent from disadvantaged backgrounds. 

The second is affirmative action. The courts will soon rule on an Asian-American class action suit alleging that Harvard University discriminated against them. A significant — though artfully selected — share of places are reserved for children of Hispanic and African-American backgrounds. The fact that some of those are also legacy applicants adds a layer of irony. Whichever way it goes, the case is likely to end up in the Supreme Court. Mr Kavanaugh, who is a legacy graduate of Yale, could prove the decisive vote on whether affirmative action will survive. That prospect, too, is rich in irony. 

The third barrier is brute wealth. If you endow a library, or a medical lab, the university will bend over backwards to admit your child. A prime example is Jared Kushner, Donald Trump’s son-in-law, whose poor SAT scores critics perceive may have been outweighed by his father’s $2.5m donation to Harvard. The US tax system even rewards such palm-greasing by making it tax-deductible. The fact that the best universities are richer than some countries (Harvard’s $38bn endowment is larger than the GDPs of El Salvador and Nicaragua combined) is no check on their ambitions. They always want more. 

The most egregious figure in the college admissions scandal is William McGlashan, a former partner at TPG, the private equity firm. He allegedly offered a bribe of $250,000 to get his son into a top university. His job was to head TPG’s social impact unit — capitalism’s virtue signalling arm. 

You do well by doing good, goes the saying. Which brings us back to Ms Chua. The best restraint on any elite is its sense of shame. Without that code, anything is possible. Everyone in America seems to know the system is rigged. The real distinction is whether you rig things from inside the law or outside.

Meritocracy is a myth invented by the rich

The college admissions scandal is a reminder that wealth, not talent, is what determines the opportunities you have in life writes Nathan Robinson in The Guardian 

 
‘There can be never be such thing as a meritocracy, because there’s never going to be fully equal opportunity.’ Photograph: Dan Kitwood/Getty Images


The US college admissions scandal is fascinating, if not surprising. Over 30 wealthy parents have been criminally charged over a scheme in which they allegedly paid a company large sums of money to get their children into top universities. The duplicity involved was extreme: everything from paying off university officials to inventing learning disabilities to facilitate cheating on standardized tests. One father even faked a photo of his son pole vaulting in order to convince admissions officers that the boy was a star athlete.

It’s no secret that wealthy people will do nearly anything to get their kids into good schools. But this scandal only begins to reveal the lies that sustain the American idea of meritocracy. William “Rick” Singer, who admitted to orchestrating the scam, explained that there are three ways in which a student can get into the college of their choice: “There is a front door which is you get in on your own. The back door is through institutional advancement, which is ten times as much money. And I’ve created this side door.” The “side door” he’s referring to is outright crime, literally paying bribes and faking test scores. It’s impossible to know how common that is, but there’s reason to suspect it’s comparatively rare. Why? Because for the most part, the wealthy don’t need to pay illegal bribes. They can already pay perfectly legal ones.

In his 2006 book, The Price of Admission: How America’s Ruling Class Buys Its Way into Elite Colleges, Daniel Golden exposes the way that the top schools favor donors and the children of alumni. A Duke admissions officer recalls being given being given a box of applications she had intended to reject, but which were returned to her for “special” reconsideration. In cases where parents are expected to give very large donations upon a student’s admission, the applicant may be described as an “institutional development” candidate—letting them in would help develop the institution. Everyone by now is familiar with the way the Kushner family bought little Jared a place at Harvard. It only took $2.5m to convince the school that Jared was Harvard material.

The inequality goes so much deeper than that, though. It’s not just donations that put the wealthy ahead. Children of the top 1% (and the top 5%, and the top 20%) have spent their entire lives accumulating advantages over their counterparts at the bottom. Even in first grade the differences can be stark: compare the learning environment at one of Detroit’s crumbling public elementary schools to that at a private elementary school that costs tens of thousands of dollars a year. There are high schools, such as Phillips Academyin Andover, Massachusetts, that have billion dollar endowments. Around the country, the level of education you receive depend on how much money your parents have.

Even if we equalized public school funding, and abolished private schools, some children would be far more equal than others. 2.5m children in the United States go through homelessness every year in this country. The chaotic living situation that comes with poverty makes it much, much harder to succeed. This means that even those who go through Singer’s “front door” have not “gotten in on their own.” They’ve gotten in partly because they’ve had the good fortune to have a home life conducive to their success.

People often speak about “equality of opportunity” as the American aspiration. But having anything close to equal opportunity would require a radical re-engineering of society from top to bottom. As long as there are large wealth inequalities, there will be colossal differences in the opportunities that children have. No matter what admissions criteria are set, wealthy children will have the advantage. If admissions officers focus on test scores, parents will pay for extra tutoring and test prep courses. If officers focus instead on “holistic” qualities, pare. It’s simple: wealth always confers greater capacity to give your children the edge over other people’s children. If we wanted anything resembling a “meritocracy,” we’d probably have to start by instituting full egalitarian communism.

In reality, there can be never be such thing as a meritocracy, because there’s never going to be fully equal opportunity. The main function of the concept is to assure elites that they deserve their position in life. It eases the “anxiety of affluence,” that nagging feeling that they might be the beneficiaries of the arbitrary “birth lottery” rather than the products of their own individual ingenuity and hard work.

There’s something perverse about the whole competitive college system. But we can imagine a different world. If everyone was guaranteed free, high-quality public university education, and a public school education matched the quality of a private school education, there wouldn’t be anything to compete for.
Instead of the farce of the admissions process, by which students have to jump through a series of needless hoops in order to prove themselves worthy of being given a good education, just admit everyone who meets a clearly-established threshold for what it takes to do the coursework. It’s not as if the current system is selecting for intelligence or merit. The school you went to mostly tells us what economic class your parents were in. But it doesn’t have to be that way.

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

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

 

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


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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

How wealthy Americans ‘get their kids into university'

 Joshua Chaffin in The FT

William McGlashan had to make his son a football player. And quickly. 

In exchange for a $250,000 payment, a California-based university-admissions consultant had arranged for the younger McGlashan to skirt the normal application process at the University of Southern California and be accepted as a prized American football recruit. A “side door” into the university, the consultant, William Singer, called it. 

The problem was that the boy did not play football. They did not even have a football team at his secondary school. “We have images of him in lacrosse. I don’t know if that matters,” offered Mr McGlashan, a top executive at the private equity firm TPG and co-founder with rock star Bono of the Rise Fund, a socially conscious investment vehicle. 

“They [USC] don’t have a lacrosse team,” Mr Singer responded. Then he took matters into his own hands. “I’m going to make him a kicker/punter,” he decided, listing specialist positions in the sport often occupied by the slight of frame. “I’ll get a picture and figure out how to Photoshop and stuff.” 

“He does have really strong legs,” Mr McGlashan joked. 

The two men bantered about the deal, and how Mr Singer had made other applicants appear to be champion water polo players for the same purpose. Months earlier, the 55-year-old Mr McGlashan had paid Mr Singer $50,000 to have someone doctor his son’s university entrance exam. “Pretty funny. The way the world works these days is unbelievable,” Mr McGlashan observed. 

"I can do anything and everything, if you guys are amenable to doing it"   William Singer, founder of The Edge College & Career Network 

Those discussions are reproduced in a criminal complaint filed by the Justice Department on Tuesday after an investigation into bribery in college admissions that resulted in charges against 50 individuals — including prominent actors and investors — and involved some of the most prestigious names in US higher education. 

At the centre of the scheme was Mr Singer, 58, who was fired in 1988 as a high school basketball coach in Sacramento because of his abusive behaviour toward referees. He later reinvented himself as a svengali in Newport Beach for his apparent mastery of the increasingly cut-throat university admissions game. On Tuesday Mr Singer pleaded guilty to federal charges including racketeering conspiracy and obstruction of justice. 

“OK, so, who we are — what we do is help the wealthiest families in the US get their kids into school,” Mr Singer told one prospective client, Gordon Caplan, the co-chairman of the prominent US law firm Willkie Farr & Gallagher. 

In extensive phone conversations authorities recorded with 32 parents, Mr Singer comes off as an indispensable problem-solver and quasi-magician — a man able to spare one client, the actress of Lori Loughlin, the apparent indignity of having to send her daughter to Arizona State University. 

“I can make [test] scores happen, and nobody on the planet can get scores to happen,” he boasted to one client of his consultancy, The Edge College & Career Network. 

“She won’t even know that it happened. It will happen as though, she will think that she’s really super smart, and she got lucky on a test, and you got a score now. There’s lots of ways to do this. I can do anything and everything, if you guys are amenable to doing it.” 

All told, Mr Singer collected about $25m in bribes over a seven-year period, according to authorities. 

 US college admissions are supposed to be a merit-based business. But it has always had its set-aside places for legacy applicants and the children of those willing to fork over enough money. 

At a time when the affordability of university education is emerging as a major political issue, the revelation that the moneyed elites had gamed the system for their children — at the expense of more deserving candidates — is likely to be seized on by politicians. 

Daniel Golden won a Pulitzer Prize for his book, The Price of Admission, which detailed the underside of the business at a time when globalisation was raising the value of a prestigious university degree — and making it evermore competitive for students to access them. 

Writing for The Guardian newspaper in 2016, Mr Golden called it the “grubby secret of American higher education: that the rich buy their underachieving children’s way into elite universities with massive, tax-deductible donations”. 

He claimed that President Donald Trump’s son-in-law Jared Kushner — not regarded as a brilliant scholar in high school — was accepted by Harvard not long after his father Charles made a $2.5m donation to the university. 

Mr Singer called that “the backdoor”. At The Edge, he came up with a “side door”: arranging bribes for tennis, sailing and soccer coaches so that they would sneak his applicants into school as ostensible sports stars. 

As the criminal complaint noted, many of the schools reserve admissions spaces for their athletics department: “At Georgetown, approximately 158 admissions slots are allocated to athletic coaches, and students recruited for those slots have substantially higher admissions prospects than non-recruited students.” 

USC, a school that was once considered more expensive than selective, was one of Mr Singer’s best bets. With the alleged connivance of the school’s senior women’s athletic director, Donna Heinel, he wangled spots for applicants supposedly destined for its water polo, basketball, football and rowing teams. Ms Heinel and the water polo coach, Jovan Vavic, were dismissed by the school on Tuesday and also criminally charged. 

Running through the complaint is the angst of affluent parents caught up in a school admissions process that is increasingly viewed as a make-or-break gateway to future success. 

One of those charged, Agustin Huneeus, a California vineyard owner, appears tormented that his daughter is losing out to Mr McGlashan’s son, a schoolmate. 

“Is Bill [McGlashan] doing any of this shit? Is he just talking a clean game with me and helping his kid or not? Cause he makes me feel guilty.” 

Mr Huneeus paid $50,000 for someone to doctor his daughter’s college entrance exam. She ended up scoring in the 96th percentile. 

Like Mr McGlashan, Mr Huneeus also opted to pay Mr Singer $250,000 to buy her admission to USC — in this case as a star water polo player. The girl was late in sending a picture so Mr Singer found one of an actual water polo player and submitted that instead.  

On one occasion Mr Singer had two different clients unwittingly sitting fraudulent entrance exams in the same testing room. In order for the scheme to work, he repeatedly emphasised to parents it was essential that they petitioned for medical exemptions so that their children could be given extra time to complete the test — ideally a few days. That way proctors bribed by Mr Singer would have occasion to adjust the results. 

“What happened is, all the wealthy families that figured out that if I get my kid tested and they get extended time, they can do better on the test. So most of these kids don’t even have issues, but they’re getting time. The playing field is not fair,” Mr Singer explains to Mr Caplan, the lawyer, as he markets his services. 

“No, it’s not. I mean this is, to be honest, it feels a little weird. But,” Mr Caplan responds. 

Ultimately, one thing that Mr Caplan and the parents shared was a determination to keep the scheme secret from the children they were desperate to help. It was no easy feat since, in some cases, test scores would be massively inflated for mediocre — even poor — students. 

There was also the need to secure the medical waivers and then petition for the students to take the test at specific facilities in Houston or Hollywood controlled by Mr Singer. (He often advised parents to tell authorities their students had to travel on the appointed date for a wedding or bar mitzvah.) 

“Now does he, here’s the only question, does he know? Is there a way that he doesn’t know what happened?” Mr McGlashan asked of his son at one point. 

Mr McGlashan — who was placed on “indefinite administrative leave” by TPG on Tuesday and did not respond to requests for comment — seemingly managed to put aside his reservations. 

So did another parent, Marci Palatella, the chief executive of a California liquor distributor. She and her spouse paid Mr Singer $500,000 to secure their son’s admission to USC after apparently hearing about his services from “people at Goldman Sachs who have, you know, recommended you highly”. 

As Ms Palatella later confided to Mr Singer, she and her partner “laugh every day” about the scheme. “We’re like, ‘It was worth every cent.’”




FBI affidavit: overview of the conspiracy 


Parents paid about $25m in bribes between 2011 and 2018.

Colleges and universities involved included Yale University, Stanford University, the University of Texas, the University of Southern California, and the University of California Los Angeles, Georgetown and Wake Forest 

Bribes to college entrance exam administrators allowed a third party to assist in cheating on college entrance exams, in some cases posing as the actual students, and in others by providing students with answers during the exams or by correcting their answers after they had completed the exams 

Bribes to university athletic coaches and administrators to designate students as purported athletic recruits regardless of their athletic abilities, and, in some cases, even though they did not play the sport they were purportedly recruited to play 

Having a third party take classes in place of the actual students, with the understanding that grades earned in those classes would be submitted as part of the student’s college applications 

Submitting falsified applications for admission to universities that included the fraudulently obtained exam scores and class grades, and often listed fake awards and athletic activities 

Disguising the nature and source of the bribe payments by funnelling the money through the accounts of a purported, tax-deductible, charity, The Key Worldwide Foundation, from which many of the bribes were then paid

Why we stopped trusting elites

The credibility of establishment figures has been demolished by technological change and political upheavals. But it’s too late to turn back the clock. By William Davies in The Guardian

For hundreds of years, modern societies have depended on something that is so ubiquitous, so ordinary, that we scarcely ever stop to notice it: trust. The fact that millions of people are able to believe the same things about reality is a remarkable achievement, but one that is more fragile than is often recognised.

At times when public institutions – including the media, government departments and professions – command widespread trust, we rarely question how they achieve this. And yet at the heart of successful liberal democracies lies a remarkable collective leap of faith: that when public officials, reporters, experts and politicians share a piece of information, they are presumed to be doing so in an honest fashion. 

The notion that public figures and professionals are basically trustworthy has been integral to the health of representative democracies. After all, the very core of liberal democracy is the idea that a small group of people – politicians – can represent millions of others. If this system is to work, there must be a basic modicum of trust that the small group will act on behalf of the much larger one, at least some of the time. As the past decade has made clear, nothing turns voters against liberalism more rapidly than the appearance of corruption: the suspicion, valid or otherwise, that politicians are exploiting their power for their own private interest.

This isn’t just about politics. In fact, much of what we believe to be true about the world is actually taken on trust, via newspapers, experts, officials and broadcasters. While each of us sometimes witnesses events with our own eyes, there are plenty of apparently reasonable truths that we all accept without seeing. In order to believe that the economy has grown by 1%, or to find out about latest medical advances, we take various things on trust; we don’t automatically doubt the moral character of the researchers or reporters involved.

Much of the time, the edifice that we refer to as “truth” is really an investment of trust. Consider how we come to know the facts about climate change: scientists carefully collect and analyse data, before drafting a paper for anonymous review by other scientists, who assume that the data is authentic. If published, the findings are shared with journalists in press releases, drafted by university press offices. We expect that these findings are then reported honestly and without distortion by broadcasters and newspapers. Civil servants draft ministerial speeches that respond to these facts, including details on what the government has achieved to date.

A modern liberal society is a complex web of trust relations, held together by reports, accounts, records and testimonies. Such systems have always faced political risks and threats. The template of modern expertise can be traced back to the second half of the 17th century, when scientists and merchants first established techniques for recording and sharing facts and figures. These were soon adopted by governments, for purposes of tax collection and rudimentary public finance. But from the start, strict codes of conduct had to be established to ensure that officials and experts were not seeking personal gain or glory (for instance through exaggerating their scientific discoveries), and were bound by strict norms of honesty.

But regardless of how honest parties may be in their dealings with one another, the cultural homogeneity and social intimacy of these gentlemanly networks and clubs has always been grounds for suspicion. Right back to the mid-17th century, the bodies tasked with handling public knowledge have always privileged white male graduates, living in global cities and university towns. This does not discredit the knowledge they produce – but where things get trickier is when that homogeneity starts to appear to be a political identity, with a shared set of political goals. This is what is implied by the concept of “elites”: that purportedly separate domains of power – media, business, politics, law, academia – are acting in unison.

A further threat comes from individuals taking advantage of their authority for personal gain. Systems that rely on trust are always open to abuse by those seeking to exploit them. It is a key feature of modern administrations that they use written documents to verify things – but there will always be scope for records to be manipulated, suppressed or fabricated. There is no escaping that possibility altogether. This applies to many fields: at a certain point, the willingness to trust that a newspaper is honestly reporting what a police officer claims to have been told by a credible witness, for example, relies on a leap of faith.

A trend of declining trust has been underway across the western world for many years, even decades, as copious survey evidence attests. Trust, and its absence, became a preoccupation for policymakers and business leaders during the 1990s and early 2000s. They feared that shrinking trust led to higher rates of crime and less cohesive communities, producing costs that would be picked up by the state.

What nobody foresaw was that, when trust sinks beneath a certain point, many people may come to view the entire spectacle of politics and public life as a sham. This happens not because trust in general declines, but because key public figures – notably politicians and journalists – are perceived as untrustworthy. It is those figures specifically tasked with representing society, either as elected representatives or as professional reporters, who have lost credibility.

To understand the crisis liberal democracy faces today – whether we identify this primarily in terms of “populism” or “post-truth” – it’s not enough to simply bemoan the rising cynicism of the public. We need also to consider some of the reasons why trust has been withdrawn. The infrastructure of fact has been undermined in part by a combination of technology and market forces – but we must seriously reckon with the underlying truth of the populists’ charge against the establishment today. Too often, the rise of insurgent political parties and demagogues is viewed as the source of liberalism’s problems, rather than as a symptom. But by focusing on trust, and the failure of liberal institutions to sustain it, we get a clearer sense of why this is happening now.

The problem today is that, across a number of crucial areas of public life, the basic intuitions of populists have been repeatedly verified. One of the main contributors to this has been the spread of digital technology, creating vast data trails with the latent potential to contradict public statements, and even undermine entire public institutions. Whereas it is impossible to conclusively prove that a politician is morally innocent or that a news report is undistorted, it is far easier to demonstrate the opposite. Scandals, leaks, whistleblowing and revelations of fraud all serve to confirm our worst suspicions. While trust relies on a leap of faith, distrust is supported by ever-mounting piles of evidence. And in Britain, this pile has been expanding much faster than many of us have been prepared to admit.

Confronted by the rise of populist parties and leaders, some commentators have described the crisis facing liberalism in largely economic terms – as a revolt among those “left behind” by inequality and globalisation. Another camp sees it primarily as the expression of cultural anxieties surrounding identity and immigration. There is some truth in both, of course – but neither gets to the heart of the trust crisis that populists exploit so ruthlessly. A crucial reason liberalism is in danger right now is that the basic honesty of mainstream politicians, journalists and senior officials is no longer taken for granted.

There are copious explanations for Trump, Brexit and so on, but insufficient attention to what populists are actually saying, which focuses relentlessly on the idea of self-serving “elites” maintaining a status quo that primarily benefits them. On the right, Nigel Farage has accused individual civil servants of seeking to sabotage Brexit for their own private ends. On the left, Jeremy Corbyn repeatedly refers to Britain’s “rigged” economic system. The promise to crack down on corruption and private lobbying is integral to the pitch made by figures such as Donald Trump, Jair Bolsonaro or Viktor Orbán.

One of the great political riddles of recent years is that declining trust in “elites” is often encouraged and exploited by figures of far more dubious moral character – not to mention far greater wealth – than the technocrats and politicians being ousted. On the face of it, it would seem odd that a sense of “elite” corruption would play into the hands of hucksters and blaggards such as Donald Trump or Arron Banks. But the authority of these figures owes nothing to their moral character, and everything to their perceived willingness to blow the whistle on corrupt “insiders” dominating the state and media.

Liberals – including those who occupy “elite” positions – may comfort themselves with the belief that these charges are ill-founded or exaggerated, or else that the populists offer no solutions to the failures they identify. After all, Trump has not “drained the swamp” of Washington lobbying. But this is to miss the point of how such rhetoric works, which is to chip away at the core faith on which liberalism depends, namely that power is being used in ways that represent the public interest, and that the facts published by the mainstream media are valid representations of reality.

Populists target various centres of power, including dominant political parties, mainstream media, big business and the institutions of the state, including the judiciary. The chilling phrase “enemies of the people” has recently been employed by Donald Trump to describe those broadcasters and newspapers he dislikes (such as CNN and the New York Times), and by the Daily Mail to describe high court judges, following their 2016 ruling that Brexit would require parliamentary consent. But on a deeper level, whether it is the judiciary, the media or the independent civil service that is being attacked is secondary to a more important allegation: that public life in general has become fraudulent.

Nigel Farage campaigning with Donald Trump in 2016. Photograph: Jonathan Bachman/Getty Images

How does this allegation work? One aspect of it is to dispute the very possibility that a judge, reporter or expert might act in a disinterested, objective fashion. For those whose authority depends on separating their public duties from their personal feelings, having their private views or identities publicised serves as an attack on their credibility. But another aspect is to gradually blur the distinctions between different varieties of expertise and authority, with the implication that politicians, journalists, judges, regulators and officials are effectively all working together.

It is easy for rival professions to argue that they have little in common with each other, and are often antagonistic to each other. Ostensibly, these disparate centres of expertise and power hold each other in check in various ways, producing a pluralist system of checks and balances. Twentieth-century defenders of liberalism, such as the American political scientist Robert Dahl, often argued that it didn’t matter how much power was concentrated in the hands of individual authorities, as long as no single political entity was able to monopolise power. The famous liberal ideal of a “separation of powers” (distinguishing executive, legislative and judicial branches of government), so influential in the framing of the US constitution, could persist so long as different domains of society hold one another up to critical scrutiny.

But one thing that these diverse professions and authorities do have in common is that they trade primarily in words and symbols. By lumping together journalists, judges, experts and politicians as a single homogeneous “liberal elite”, it is possible to treat them all as indulging in a babble of jargon, political correctness and, ultimately, lies. Their status as public servants is demolished once their claim to speak honestly is thrown into doubt. One way in which this is done is by bringing their private opinions and tastes before the public, something that social media and email render far easier. Tensions and contradictions between the public face of, say, a BBC reporter, and their private opinions and feelings, are much easier to discover in the age of Twitter.

Whether in the media, politics or academia, liberal professions suffer a vulnerability that a figure such as Trump doesn’t, in that their authority hangs on their claim to speak the truth. A recent sociological paper called The Authentic Appeal of the Lying Demagogue, by US academics Oliver Hahl, Minjae Kim and Ezra Zuckerman Sivan, draws a distinction between two types of lies. The first, “special access lies”, may be better termed “insider lies”. This is dishonesty from those trusted to truthfully report facts, who abuse that trust by failing to state what they privately know to be true. (The authors give the example of Bill Clinton’s infamous claim that he “did not have sexual relations with that woman”.)

The second, which they refer to as “common knowledge lies”, are the kinds of lies told by Donald Trump about the size of his election victory or the crowds at his inauguration, or the Vote Leave campaign’s false claims about sending “£350m a week to the EU”. These lies do not pretend to be bound by the norm of honesty in the first place, and the listener can make up their own mind what to make of them.

What the paper shows is that, where politics comes to be viewed as the domain of “insider” liars, there is a seductive authenticity, even a strange kind of honesty, about the “common knowledge” liar. The rise of highly polished, professional politicians such as Tony Blair and Bill Clinton exacerbated the sense that politics is all about strategic concealment of the truth, something that the Iraq war seemed to confirm as much as anything. Trump or Farage may have a reputation for fabricating things, but they don’t (rightly or wrongly) have a reputation for concealing things, which grants them a form of credibility not available to technocrats or professional politicians.

At the same time, and even more corrosively, when elected representatives come to be viewed as “insider liars”, it turns out that other professions whose job it is to report the truth – journalists, experts, officials – also suffer a slump in trust. Indeed, the distinctions between all these fact-peddlers start to look irrelevant in the eyes of those who’ve given up on the establishment altogether. It is this type of all-encompassing disbelief that creates the opportunity for rightwing populism in particular. Trump voters are more than twice as likely to distrust the media as those who voted for Clinton in 2016, according to the annual Edelman Trust Barometer, which adds that the four countries currently suffering the most “extreme trust losses” are Italy, Brazil, South Africa and the US.

It’s one thing to measure public attitudes, but quite another to understand what shapes them. Alienation and disillusionment develop slowly, and without any single provocation. No doubt economic stagnation and soaring inequality have played a role – but we should not discount the growing significance of scandals that appear to discredit the honesty and objectivity of “liberal elites”. The misbehaviour of elites did not “cause” Brexit, but it is striking, in hindsight, how little attention was paid to the accumulation of scandal and its consequences for trust in the establishment.

The 2010 edition of the annual British Social Attitudes survey included an ominous finding. Trust in politicians, already low, had suffered a fresh slump, with a majority of people saying politicians never tell the truth. But at the same time, interest in politics had mysteriously risen.

To whom would this newly engaged section of the electorate turn if they had lost trust in “politicians”? One answer was clearly Ukip, who experienced their greatest electoral gains in the years that followed, to the point of winning the most seats in the 2014 elections for the European parliament. Ukip’s surge, which initially appeared to threaten the Conservative party, was integral to David Cameron’s decision to hold a referendum on EU membership. One of the decisive (and unexpected) factors in the referendum result was the number of voters who went to the polls for the first time, specifically to vote leave.

What might have prompted the combination of angry disillusionment and intensifying interest that was visible in the 2010 survey? It clearly predated the toughest years of austerity. But there was clearly one event that did more than any other to weaken trust in politicians: the MPs’ expenses scandal, which blew up in May 2009 thanks to a drip-feed of revelations published by the Daily Telegraph.

Following as it did so soon after a disaster of world-historic proportions – the financial crisis – the full significance of the expenses scandal may have been forgotten. But its ramifications were vast. For one thing, it engulfed many of the highest reaches of power in Westminster: the Speaker of the House of Commons, the home secretary, the secretary of state for communities and local government and the chief secretary to the treasury all resigned. Not only that, but the rot appeared to have infected all parties equally, validating the feeling that politicians had more in common with each other (regardless of party loyalties) than they did with decent, ordinary people.

Many of the issues that “elites” deal with are complex, concerning law, regulation and economic analysis. We can all see the fallout of the financial crisis, for instance, but the precise causes are disputed and hard to fathom. By contrast, everybody understands expense claims, and everybody knows lying and exaggerating are among the most basic moral failings; even a child understands they are wrong. This may be unfair to the hundreds of honest MPs and to the dozens whose misdemeanours fell into a murky area around the “spirit” of the rules. But the sense of a mass stitch-up was deeply – and understandably – entrenched.

The other significant thing about the expenses scandal was the way it set a template for a decade of elite scandals – most of which also involved lies, leaks and dishonest denials. One year later, there was another leak from a vast archive of government data: in 2010, WikiLeaks released hundreds of thousands of US military field reports from Iraq and Afghanistan. With the assistance of newspaper including the New York Times, Der Spiegel, the Guardian and Le Monde, these “war logs” disclosed horrifying details about the conduct of US forces and revealed the Pentagon had falsely denied knowledge of various abuses. While some politicians expressed moral revulsion with what had been exposed, the US and British governments blamed WikiLeaks for endangering their troops, and the leaker, Chelsea Manning, was jailed for espionage.

 

Rupert Murdoch on his way to give evidence to the Leveson inquiry in 2012. Photograph: Ben Stansall/AFP/Getty Images

In 2011, the phone-hacking scandal put the press itself under the spotlight. It was revealed that senior figures in News International and the Metropolitan police had long been aware of the extent of phone-hacking practices – and they had lied about how much they knew. Among those implicated was the prime minister’s communications director, former News of the World editor Andy Coulson, who was forced to resign his post and later jailed. By the end of 2011, the News of the World had been closed down, the Leveson inquiry was underway, and the entire Murdoch empire was shaking.

The biggest scandal of 2012 was a different beast altogether, involving unknown men manipulating a number that very few people had even heard of. The number in question, the London interbank offered rate, or Libor, is meant to represent the rate at which banks are willing to loan to each other. What was surreal, in an age of complex derivatives and high-frequency trading algorithms, was that this number was calculated on the basis of estimates declared by each bank on a daily basis, and accepted purely on trust. The revelation that a handful of brokers had conspired to alter Libor for private gain (with possible costs to around 250,000 UK mortgage-holders, among others) may have been difficult to fully comprehend, but it gave the not unreasonable impression of an industry enriching itself in a criminal fashion at the public’s expense. Bob Diamond, the CEO of Barclays, the bank at the centre of the conspiracy, resigned in July 2012.

Towards the end of that year, the media was caught in another prolonged crisis, this time at the BBC. Horror greeted the broadcast of the ITV documentary The Other Side of Jimmy Savile in October 2012. How many people had known about his predatory sexual behaviour, and for how long? Why had the police abandoned earlier investigations? And why had BBC Newsnight dropped its own film about Savile, due to be broadcast shortly after his death in 2011? The police swiftly established Operation Yewtree to investigate historic sexual abuse allegations, while the BBC established independent commissions into what had gone wrong. But a sense lingered that neither the BBC nor the police had really wanted to know the truth of these matters for the previous 40 years.

It wasn’t long before it was the turn of the corporate world. In September 2014, a whistleblower revealed that Tesco had exaggerated its half-yearly profits by £250m, increasing the figure by around a third. An accounting fiddle on this scale clearly had roots at a senior managerial level. Sure enough, four senior executives were suspended the same month and three were charged with fraud two years later. A year later, it emerged that Volkswagen had systematically and deliberately tinkered with emissions controls in their vehicles, so as to dupe regulators in tests, but then pollute liberally the rest of the time. The CEO, Martin Winterkorn, resigned.

“We didn’t really learn anything from WikiLeaks we didn’t already presume to be true,” the philosopher Slavoj Žižek observed in 2014. “But it is one thing to know it in general and another to get concrete data.” The nature of all these scandals suggests the emergence of a new form of “facts”, in the shape of a leaked archive – one that, crucially, does not depend on trusting the secondhand report of a journalist or official. These revelations are powerful and consequential precisely because they appear to directly confirm our fears and suspicions. Resentment towards “liberal elites” would no doubt brew even in the absence of supporting evidence. But when that evidence arises, things become far angrier, even when the data – such as Hillary Clinton’s emails – isn’t actually very shocking.

This is by no means an exhaustive list of the scandals of the past decade, nor are they all of equal significance. But viewing them together provides a better sense of how the suspicions of populists cut through. Whether or not we continue to trust in politicians, journalists or officials, we have grown increasingly used to this pattern in which a curtain is dramatically pulled back, to reveal those who have been lying to or defrauding the public.

Another pattern also begins to emerge. It’s not just that isolated individuals are unmasked as corrupt or self-interested (something that is as old as politics), but that the establishment itself starts to appear deceitful and dubious. The distinctive scandals of the 21st century are a combination of some very basic and timeless moral failings (greed and dishonesty) with technologies of exposure that expose malpractice on an unprecedented scale, and with far more dramatic results.

Perhaps the most important feature of all these revelations was that they were definitely scandals, and not merely failures: they involved deliberate efforts to defraud or mislead. Several involved sustained cover-ups, delaying the moment of truth for as long as possible.

Several of the scandals ended with high profile figures behind bars. Jail terms satisfy some of the public demand that the “elites” pay for their dishonesty, but they don’t repair the trust that has been damaged. On the contrary, there’s a risk that they affirm the cry for retribution, after which the quest for punishment is only ramped up further. Chants of “lock her up” continue to reverberate around Trump rallies.

In addition to their conscious and deliberate nature, a second striking feature of these scandals was the ambiguous role played by the media. On the one hand, the reputation of the media has taken a pummelling over the past decade, egged on by populists and conspiracy theorists who accuse the “mainstream media” of being allied to professional political leaders, and who now have the benefit of social media through which to spread this message.

The moral authority of newspapers may never have been high, but the grisly revelations that journalists hacked the phone of murdered schoolgirl Milly Dowler represented a new low in the public standing of the press. The Leveson inquiry, followed soon after by the Savile revelations and Operation Yewtree, generated a sense of a media class who were adept at exposing others, but equally expert at concealing the truth of their own behaviours.

On the other hand, it was newspapers and broadcasters that enabled all of this to come to light at all. The extent of phone hacking was eventually exposed by the Guardian, the MPs’ expenses by the Telegraph, Jimmy Savile by ITV, and the “war logs” reported with the aid of several newspapers around the world simultaneously.

But the media was playing a different kind of role from the one traditionally played by journalists and newspapers, with very different implications for the status of truth in society. A backlog of data and allegations had built up in secret, until eventually a whistle was blown. An archive existed that the authorities refused to acknowledge, until they couldn’t resist the pressure to do so any longer. Journalists and whistleblowers were instrumental in removing the pressure valve, but from that point on, truth poured out unpredictably. While such torrents are underway, there is no way of knowing how far they may spread or how long they may last.

 

Tony Blair and Bill Clinton in Belfast in April. Photograph: Charles McQuillan/Getty Images

The era of “big data” is also the era of “leaks”. Where traditional “sleaze” could topple a minister, several of the defining scandals of the past decade have been on a scale so vast that they exceed any individual’s responsibility. The Edward Snowden revelations of 2013, the Panama Papers leak of 2015 and the HSBC files (revealing organised tax evasion) all involved the release of tens of thousands or even millions of documents. Paper-based bureaucracies never faced threats to their legitimacy on this scale.

The power of commissions and inquiries to make sense of so much data is not to be understated, nor is the integrity of those newspapers and whistleblowers that helped bring misdemeanours to light. In cases such as MPs’ expenses, some newspapers even invited their readers to help search these vast archives for treasure troves, like human algorithms sorting through data. But it is hard to imagine that the net effect of so many revelations was to build trust in any publicly visible institutions. On the contrary, the discovery that “elites” have been blocking access to a mine of incriminating data is perfect fodder for conspiracy theories. In his 2010 memoir, A Journey, Tony Blair confessed that legislating for freedom of information was one of his biggest regrets, which gave a glimpse of how transparency is viewed from the centre of power.

Following the release of the war logs by WikiLeaks, nobody in any position of power claimed that the data wasn’t accurate (it was, after all, the data, and not a journalistic report). Nor did they offer any moral justification for what was revealed. Defence departments were left making the flimsiest of arguments – that it was better for everyone if they didn’t know how war was conducted. It may well be that the House of Commons was not fairly represented by the MPs’ expenses scandal, that most City brokers are honest, or that the VW emissions scam was a one-off within the car industry. But scandals don’t work through producing fair or representative pictures of the world; they do so by blowing the lid on hidden truths and lies. Where whistleblowing and leaking become the dominant form of truth-telling, the authority of professional truth-tellers – reporters, experts, professionals, broadcasters – is thrown into question.

The term “illiberal democracy” is now frequently invoked to describe states such as Hungary under Viktor Orbán or Turkey under Recep Tayyip Erdoğan. In contrast to liberal democracy, this model of authoritarian populism targets the independence of the judiciary and the media, ostensibly on behalf of “the people”.

Brexit has been caused partly by distrust in “liberal elites”, but the anxiety is that it is also accelerating a drift towards “illiberalism”. There is a feeling at large, albeit amongst outspoken remainers, that the BBC has treated the leave campaign and Brexit itself with kid gloves, for fear of provoking animosity. More worrying was the discovery by openDemocracy in October that the Metropolitan police were delaying their investigation into alleged breaches of electoral law by the leave campaign due to what a Met spokesperson called “political sensitivities”. The risk at the present juncture is that key civic institutions will seek to avoid exercising scrutiny and due process, for fear of upsetting their opponents.

Britain is not an “illiberal democracy”, but the credibility of our elites is still in trouble, and efforts to placate their populist opponents may only make matters worse. At the more extreme end of the spectrum, the far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson, has used his celebrity and social media reach to cast doubt on the judiciary and the BBC at once.

Yaxley-Lennon has positioned himself as a freedom fighter, revealing “the truth” about Muslim men accused of grooming underage girls by violating legal rules that restrict reporting details of ongoing trials. Yaxley-Lennon was found guilty of contempt of court and jailed (he was later released after the court of appeal ordered a retrial, and the case has been referred to the attorney general), but this only deepened his appeal for those who believed the establishment was complicit in a cover-up, and ordinary people were being deliberately duped.

The political concern right now is that suspicions of this nature – that the truth is being deliberately hidden by an alliance of “elites” – are no longer the preserve of conspiracy theorists, but becoming increasingly common. Our current crisis has too many causes to enumerate here, and it is impossible to apportion blame for a collective collapse of trust – which is as much a symptom of changes in media technologies as it is of any moral failings on the part of elites.

But what is emerging now is what the social theorist Michel Foucault would have called a new “regime of truth” – a different way of organising knowledge and trust in society. The advent of experts and government administrators in the 17th century created the platform for a distinctive liberal solution to this problem, which rested on the assumption that knowledge would reside in public records, newspapers, government files and journals. But once the integrity of these people and these instruments is cast into doubt, an opportunity arises for a new class of political figures and technologies to demand trust instead.

The project that was launched over three centuries ago, of trusting elite individuals to know, report and judge things on our behalf, may not be viable in the long term, at least not in its existing form. It is tempting to indulge the fantasy that we can reverse the forces that have undermined it, or else batter them into retreat with an even bigger arsenal of facts. But this is to ignore the more fundamental ways in which the nature of trust is changing.

The main feature of the emerging regime is that truth is now assumed to reside in hidden archives of data, rather than in publicly available facts. This is what is affirmed by scandals such as MPs’ expenses and the leak of the Iraq war logs – and more recently in the #MeToo movement, which also occurred through a sudden and voluminous series of revelations, generating a crisis of trust. The truth was out there, just not in the public domain. In the age of email, social media and cameraphones, it is now common sense to assume that virtually all social activity is generating raw data, which exists out there somewhere. Truth becomes like the lava below the earth’s crust, which periodically bursts through as a volcano.

What role does this leave for the traditional, analogue purveyors of facts and figures? What does it mean to “report” the news in an age of reflexive disbelief? Newspapers have been grappling with this question for some time now; some have decided to refashion themselves as portals to the raw data, or curators of other people’s content. But it is no longer intuitively obvious to the public why they should be prepared to take a journalist’s word for something, when they can witness the thing itself in digital form. There may be good answers to these questions, but they are not obvious ones.

Instead, a new type of heroic truth-teller has emerged in tandem with these trends. This is the individual who appears brave enough to call bullshit on the rest of the establishment – whether that be government agencies, newspapers, business, political parties or anything else. Some are whistleblowers, others are political leaders, and others are more like conspiracy theorists or trolls. The problem is that everyone has a different heroic truth-teller, because we’re all preoccupied by different bullshit. There is no political alignment between figures such as Chelsea Manning and Nigel Farage; what they share is only a willingness to defy the establishment and break consensus.
If a world where everyone has their own truth-tellers sounds dangerously like relativism, that’s because it is. But the roots of this new and often unsettling “regime of truth” don’t only lie with the rise of populism or the age of big data. Elites have largely failed to understand that this crisis is about trust rather than facts – which may be why they did not detect the rapid erosion of their own credibility.

Unless liberal institutions and their defenders are willing to reckon with their own inability to sustain trust, the events of the past decade will remain opaque to them. And unless those institutions can rediscover aspects of the original liberal impulse – to keep different domains of power separate, and put the disinterested pursuit of knowledge before the pursuit of profit – then the present trends will only intensify, and no quantity of facts will be sufficient to resist. Power and authority will accrue to a combination of decreasingly liberal states and digital platforms – interrupted only by the occasional outcry as whistles are blown and outrages exposed.