Showing posts with label transaction. Show all posts
Showing posts with label transaction. Show all posts
Saturday, 6 January 2024
Friday, 23 June 2023
Fallacies of Capitalism 15: The Voluntary Transactions of Actors in an Economy
A voluntary transaction refers to an economic exchange between two or more parties where each party willingly participates without coercion or external pressure. In a voluntary transaction, individuals are assumed to engage in the exchange because they perceive it to be mutually beneficial, based on their own preferences and subjective judgements of value.
However, the "voluntary transactions" fallacy arises when this concept is applied without considering the power imbalances and information asymmetries that can exist in real-world market transactions. While voluntary transactions are a foundational concept in market economics, it is important to recognise that not all transactions occur under ideal conditions of equal power and perfect information. Here are some additional points to consider:
Power imbalances: In many transactions, there can be significant disparities in bargaining power between the parties involved. For example, in labour markets, workers may face limited employment options and economic pressures, while employers may have more leverage in determining wages and working conditions. These power imbalances can influence the outcomes of the transaction, potentially leading to exploitation or unfair terms.
Information asymmetry: In voluntary transactions, it is assumed that both parties have access to complete and accurate information about the goods, services, or conditions involved. However, in reality, information can be unevenly distributed between buyers and sellers. Sellers may possess superior knowledge about the product, its quality, or potential risks, while buyers may lack access to the same information. This information asymmetry can undermine the notion of fully informed and voluntary choices.
Coercive pressures: While voluntary transactions should be free from coercion, individuals can face external pressures that limit their choices and compromise their ability to make truly voluntary decisions. These pressures can include economic necessity, social or cultural expectations, or systemic inequalities. For example, individuals may accept low-paying jobs or unfavourable contracts due to limited alternatives or the need to meet basic needs.
Market failures: The assumption of voluntary transactions fails to account for market failures, such as externalities or the undersupply of public goods. Externalities occur when the actions of one party impose costs or benefits on others who are not involved in the transaction. Market failures can result in suboptimal outcomes, where voluntary transactions do not account for the broader social or environmental impacts.
By considering these factors, it becomes clear that the "voluntary transactions" fallacy oversimplifies the complexities of real-world market interactions. Recognising the existence of power imbalances, information asymmetries, and other limitations is crucial for understanding the potential consequences of market transactions and designing policies that promote fair and equitable outcomes.
Sunday, 16 January 2022
Will blockchain fulfil its democratic promise or will it become a tool of big tech?
Engineers are focused on reducing its carbon footprint, ignoring the governance issues raised by the technology writes John Naughton in The Guardian
Illuminated rigs at the Minto cryptocurrency mining centre in Nadvoitsy, Russia. Photograph: Andrey Rudakov/Getty Images
When the cryptocurrency bitcoin first made its appearance in 2009, an interesting divergence of opinions about it rapidly emerged. Journalists tended to regard it as some kind of incomprehensible money-laundering scam, while computer scientists, who were largely agnostic about bitcoin’s prospects, nevertheless thought that the distributed-ledger technology (the so-called blockchain) that underpinned the currency was a Big Idea that could have far-reaching consequences.
In this conviction they were joined by legions of techno-libertarians who viewed the technology as a way of enabling economic life without the oppressive oversight of central banks and other regulatory institutions. Blockchain technology had the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables. It combined, burbled that well-known revolutionary body Goldman Sachs, “the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust”. Verily, cryptography would set us free.
At its core, a blockchain is just a ledger – a record of time-stamped transactions. These transactions can be any movement of money, goods or secure data – a purchase at a store, for example, the title to a piece of property, the assignment of an NHS number or a vaccination status, you name it. In the offline world, transactions are verified by some central third party – a government agency, a bank or Visa, say. But a blockchain is a distributed (ie, decentralised) ledger where verification (and therefore trustworthiness) comes not from a central authority but from a consensus of many users of the blockchain that a particular transaction is valid. Verified transactions are gathered into “blocks”, which are then “chained” together using heavy-duty cryptography so that, in principle, any attempt retrospectively to alter the details of a transaction would be visible. And oppressive, rent-seeking authorities such as Visa and Mastercard (or, for that matter, Stripe) are nowhere in the chain.
Given all that, it’s easy to see why the blockchain idea evokes utopian hopes: at last, technology is sticking it to the Man. In that sense, the excitement surrounding it reminds me of the early days of the internet, when we really believed that our contemporaries had invented a technology that was democratising and liberating and beyond the reach of established power structures. And indeed the network had – and still possesses – those desirable affordances. But we’re not using them to achieve their great potential. Instead, we’ve got YouTube and Netflix. What we underestimated, in our naivety, were the power of sovereign states, the ruthlessness and capacity of corporations and the passivity of consumers, a combination of which eventually led to corporate capture of the internet and the centralisation of digital power in the hands of a few giant corporations and national governments. In other words, the same entrapment as happened to the breakthrough communications technologies – telephone, broadcast radio and TV, and movies – in the 20th century, memorably chronicled by Tim Wu in his book The Master Switch.
Will this happen to blockchain technology? Hopefully not, but the enthusiastic endorsement of it by outfits such as Goldman Sachs is not exactly reassuring. The problem with digital technology is that, for engineers, it is both intrinsically fascinating and seductively challenging, which means that they acquire a kind of tunnel vision: they are so focused on finding solutions to the technical problems that they are blinded to the wider context. At the moment, for example, the consensus-establishing processes for verifying blockchain transactions requires intensive computation, with a correspondingly heavy carbon footprint. Reducing that poses intriguing technical challenges, but focusing on them means that the engineering community isn’t thinking about the governance issues raised by the technology. There may not be any central authority in a blockchain but, as Vili Lehdonvirta pointed out years ago, there are rules for what constitutes a consensus and, therefore, a question about who exactly sets those rules. The engineers? The owners of the biggest supercomputers on the chain? Goldman Sachs? These are ultimately political questions, not technical ones.
Blockchain engineers also don’t seem to be much interested in the needs of the humans who might ultimately be users of the technology. That, at any rate, is the conclusion that cryptographer Moxie Marlinspike came to in a fascinating examination of the technology. “When people talk about blockchains,” he writes, “they talk about distributed trust, leaderless consensus and all the mechanics of how that works, but often gloss over the reality that clients ultimately can’t participate in those mechanics. All the network diagrams are of servers, the trust model is between servers, everything is about servers. Blockchains are designed to be a network of peers, but not designed such that it’s really possible for your mobile device or your browser to be one of those peers.”
And we’re nowhere near that point yet.
Illuminated rigs at the Minto cryptocurrency mining centre in Nadvoitsy, Russia. Photograph: Andrey Rudakov/Getty ImagesWhen the cryptocurrency bitcoin first made its appearance in 2009, an interesting divergence of opinions about it rapidly emerged. Journalists tended to regard it as some kind of incomprehensible money-laundering scam, while computer scientists, who were largely agnostic about bitcoin’s prospects, nevertheless thought that the distributed-ledger technology (the so-called blockchain) that underpinned the currency was a Big Idea that could have far-reaching consequences.
In this conviction they were joined by legions of techno-libertarians who viewed the technology as a way of enabling economic life without the oppressive oversight of central banks and other regulatory institutions. Blockchain technology had the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables. It combined, burbled that well-known revolutionary body Goldman Sachs, “the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust”. Verily, cryptography would set us free.
At its core, a blockchain is just a ledger – a record of time-stamped transactions. These transactions can be any movement of money, goods or secure data – a purchase at a store, for example, the title to a piece of property, the assignment of an NHS number or a vaccination status, you name it. In the offline world, transactions are verified by some central third party – a government agency, a bank or Visa, say. But a blockchain is a distributed (ie, decentralised) ledger where verification (and therefore trustworthiness) comes not from a central authority but from a consensus of many users of the blockchain that a particular transaction is valid. Verified transactions are gathered into “blocks”, which are then “chained” together using heavy-duty cryptography so that, in principle, any attempt retrospectively to alter the details of a transaction would be visible. And oppressive, rent-seeking authorities such as Visa and Mastercard (or, for that matter, Stripe) are nowhere in the chain.
Given all that, it’s easy to see why the blockchain idea evokes utopian hopes: at last, technology is sticking it to the Man. In that sense, the excitement surrounding it reminds me of the early days of the internet, when we really believed that our contemporaries had invented a technology that was democratising and liberating and beyond the reach of established power structures. And indeed the network had – and still possesses – those desirable affordances. But we’re not using them to achieve their great potential. Instead, we’ve got YouTube and Netflix. What we underestimated, in our naivety, were the power of sovereign states, the ruthlessness and capacity of corporations and the passivity of consumers, a combination of which eventually led to corporate capture of the internet and the centralisation of digital power in the hands of a few giant corporations and national governments. In other words, the same entrapment as happened to the breakthrough communications technologies – telephone, broadcast radio and TV, and movies – in the 20th century, memorably chronicled by Tim Wu in his book The Master Switch.
Will this happen to blockchain technology? Hopefully not, but the enthusiastic endorsement of it by outfits such as Goldman Sachs is not exactly reassuring. The problem with digital technology is that, for engineers, it is both intrinsically fascinating and seductively challenging, which means that they acquire a kind of tunnel vision: they are so focused on finding solutions to the technical problems that they are blinded to the wider context. At the moment, for example, the consensus-establishing processes for verifying blockchain transactions requires intensive computation, with a correspondingly heavy carbon footprint. Reducing that poses intriguing technical challenges, but focusing on them means that the engineering community isn’t thinking about the governance issues raised by the technology. There may not be any central authority in a blockchain but, as Vili Lehdonvirta pointed out years ago, there are rules for what constitutes a consensus and, therefore, a question about who exactly sets those rules. The engineers? The owners of the biggest supercomputers on the chain? Goldman Sachs? These are ultimately political questions, not technical ones.
Blockchain engineers also don’t seem to be much interested in the needs of the humans who might ultimately be users of the technology. That, at any rate, is the conclusion that cryptographer Moxie Marlinspike came to in a fascinating examination of the technology. “When people talk about blockchains,” he writes, “they talk about distributed trust, leaderless consensus and all the mechanics of how that works, but often gloss over the reality that clients ultimately can’t participate in those mechanics. All the network diagrams are of servers, the trust model is between servers, everything is about servers. Blockchains are designed to be a network of peers, but not designed such that it’s really possible for your mobile device or your browser to be one of those peers.”
And we’re nowhere near that point yet.
Tuesday, 29 May 2018
'It's only a beer': the unwritten contracts between men and women
Attention from unfamiliar men is implicitly transactional, and a failure to pay the price can result in some traumatic consequence writes Kira Smith in The Guardian
Illustration: Molly Mendoza
The first time I failed to pay up, I was a high school student at a bowling alley in my small town in central Pennsylvania. An older man bought me a beer and talked to me while he shot pool. Smoking and drinking in that grungy bowling-alley bar in the seediest part of town, I felt cosmopolitan and mature. I was oblivious to the transaction taking place: by drinking his beer, I was entering into an implicit and unwritten contract in which I was expected to fulfill a sexual obligation. One of my more astute and experienced friends told the man that I had a boyfriend and had no intention of being intimate with him. He became irate and threw a lit cigarette into my hair as I left the bar. I went home scared and confused as to why my acceptance of a beer and friendly conversation had gotten me into a terrifying mess.
What I learned that day is that attention from unfamiliar men is implicitly transactional, and a failure to pay the price can result in some traumatic consequence. I admit that on this point, I have been proven wrong repeatedly over time. But I have also had enough disturbing experiences that every male stranger is suspect. It’s always possible that I am going to be expected to acknowledge a tacit, unwritten contract and obey its terms and conditions. It’s a contract only a man can create, and sometimes it feels like only a man can break it. Women are expected to sign on the dotted line.
In my early twenties, while in Galway, Ireland, I accepted a drink from an older man in a bar the night before I was to board a ferry for more remote islands off the Irish coast. I wouldn’t be in another city for a while and was craving human voices and activity. I declined the offer of a drink and company at first, aware that I might regret accepting. But after his second offer and his insistence that it was “only a beer”, I decided that I could use some conversation.
I was up front about having no intention of sleeping with this man, and I offered to pay for a round of beers. I asked him questions about things that piqued my curiosity: his opinions on Irish politics, the economy and the European Union. I thought that by being direct, I could evade the contract, or that my company alone had value since we were two solitary souls away from home on a rainy night. But after a short while he became increasingly insistent and my rejections became harsher, until we were directly debating whether I would sleep with him. I left the bar in a disappointed huff, only to have him follow me out.
I ran away from him up the tangled Galway cobblestone streets as he yelled obscenities.
Last week at a concert, a woman friend told me that during the course of her day, she is most terrified during the brief period when she gets to the door of her house but doesn’t yet have her keys prepared to unlock the door and is momentarily vulnerable on the doorstep. When I hugged her goodbye, she slipped mace into my hand and offered to drive me to my car only two blocks away.
Another told me of a man who walked behind her into her downtown apartment building when she had been out late. He followed her into her apartment and sat on her couch while she nervously repeated that she would be expecting her boyfriend any minute and he needed to leave.
Or the countless friends who have shared stories of dates they’ve been on where the men pushed against asserted boundaries and assaulted them, even after they had said no.
The de facto existence of violence is acknowledged between women and has likely always been acknowledged by women in the private sphere. Our shared accounts allow us to relate to one another. They turn statistics into flesh and bone, and form the basis for a mutual understanding that something isn’t right. The vocalization of pain and fear is cathartic. As I’ve written this essay and taken opportunities to share my interest in this topic with other women, I’ve found that the conversation almost always leads to swapping stories of threatening encounters, of validating each other’s fears and sharing our coping mechanisms.
My conversations happened during the #MeToo movement, which even a troglodyte like me was exposed to on social media feeds. The use of the phrase “Me Too” to vocalize solidarity with assault survivors was started in 2006 by Tarana Burke, an African American woman and civil rights activist. Many brave people posted stories on media websites about their experiences of sexual harassment and violence in and out of the workplace. This accumulation of stories proved to be powerful, and the current hashtag movement sparked an unprecedented wave of accusations against men who’ve used their positions of power in Hollywood and other highly visible industries to abuse the women who were subordinate to them.
This year, many women and gender-nonconforming people participated in the #MeToo movement, but my own response was very different. I felt deeply uncomfortable and disquieted as the movement’s popularity and exposure grew. Despite my identity as a staunch feminist and my education, which allows me to contextualize my experiences as a woman, I was reluctant to participate. To share my stories would be to relinquish control over them and to expose the inner life that I have constructed. Sharing invites pushback that could invalidate my story and perhaps even lead to violence. Sharing invites conversations with my parents and former partners that I am not prepared to have. Sharing is discouraged thanks to the same mechanisms that force me to be polite to men, even the ones I wish would leave me alone. If I name the violence, then it follows that I am a victim of it, and therefore lack agency.
How did we get to the point where the sharing of women’s everyday experiences is a national news story? How did women become socialized into silence in the first place? How does a hashtag improve conditions for poor Appalachian teenagers smoking cigarettes in shady small-town bars?
As a budding academic, I presented my research in my field – geography – at a large conference when I was still an undergraduate. With my sights set on graduate school, I was glad for the opportunity to learn and network. I met many other academics and talked about my interest in doctoral programs and continuing research. One night during the conference, a fellow student, a young woman, told me that older men at the conference had been hitting on her all day by feigning interest in her work and then giving her their contact information. The stack of business cards on my hotel room nightstand assumed a more sinister aura, and I flipped through them thereafter with suspicion. The cards reflected the current data from the National Center for Education Statistics about gender equity in academic institutions, with the most influential full-time faculty positions awarded to white males, and women working a higher proportion of the part-time adjunct positions. How could I ever be sure that any of the men who had offered to help me were interested in my research or career? What if, instead, my naive gullibility had landed me with a list of numbers from older men trying to sleep with me, rather than legitimate professional opportunities? What if I met with one of them and the encounter turned confrontational?
I never contacted any of the men I met at that conference or any other, thereby reinforcing and reproducing the relations of power within the academy.
Although I crave platonic and professional relationships and interactions with men, the process of creating these relationships feels dangerous. When a man I don’t know speaks to me in public, I am both intrigued and distressed by the potential outcomes, which range from overt violence to friendship and compassion. I want to dissolve the boundaries of gender socialization that keep us all isolated and that ensure I will never know the struggles of the masculine nor they the feminine. But the threat of latent violence makes me turn my head, pretend I didn’t hear, resisting the possibility of engagement and almost always saying no.
On a spring day when I was twenty-four and in graduate school at Portland State University, I stopped on my way home to get a beer and french fries, and to read for class at an outside picnic table. As I was waiting for my fries, a man two tables in front of me asked me if I wanted to join him. I declined, thinking of the previous experiences I’d had when accepting beers from men in bars.
A few minutes later, he asked again, in a humble sort of way. His casual tone was tempting, and I hesitantly agreed.
I joined him at his table. He was friendly and interesting, an eye doctor from the South who had fallen on hard times after his medical practice went under and he lost his home, his car, his savings. But on that day he had been offered his first job in years and was looking for someone to celebrate with. We talked for hours, even moving inside when it started to rain, comparing our experiences in graduate versus medical school, talking about money and moving to Portland from the East Coast.
When I finally got up to leave, he didn’t ask for my number.
The first time I failed to pay up, I was a high school student at a bowling alley in my small town in central Pennsylvania. An older man bought me a beer and talked to me while he shot pool. Smoking and drinking in that grungy bowling-alley bar in the seediest part of town, I felt cosmopolitan and mature. I was oblivious to the transaction taking place: by drinking his beer, I was entering into an implicit and unwritten contract in which I was expected to fulfill a sexual obligation. One of my more astute and experienced friends told the man that I had a boyfriend and had no intention of being intimate with him. He became irate and threw a lit cigarette into my hair as I left the bar. I went home scared and confused as to why my acceptance of a beer and friendly conversation had gotten me into a terrifying mess.
What I learned that day is that attention from unfamiliar men is implicitly transactional, and a failure to pay the price can result in some traumatic consequence. I admit that on this point, I have been proven wrong repeatedly over time. But I have also had enough disturbing experiences that every male stranger is suspect. It’s always possible that I am going to be expected to acknowledge a tacit, unwritten contract and obey its terms and conditions. It’s a contract only a man can create, and sometimes it feels like only a man can break it. Women are expected to sign on the dotted line.
In my early twenties, while in Galway, Ireland, I accepted a drink from an older man in a bar the night before I was to board a ferry for more remote islands off the Irish coast. I wouldn’t be in another city for a while and was craving human voices and activity. I declined the offer of a drink and company at first, aware that I might regret accepting. But after his second offer and his insistence that it was “only a beer”, I decided that I could use some conversation.
I was up front about having no intention of sleeping with this man, and I offered to pay for a round of beers. I asked him questions about things that piqued my curiosity: his opinions on Irish politics, the economy and the European Union. I thought that by being direct, I could evade the contract, or that my company alone had value since we were two solitary souls away from home on a rainy night. But after a short while he became increasingly insistent and my rejections became harsher, until we were directly debating whether I would sleep with him. I left the bar in a disappointed huff, only to have him follow me out.
I ran away from him up the tangled Galway cobblestone streets as he yelled obscenities.
Last week at a concert, a woman friend told me that during the course of her day, she is most terrified during the brief period when she gets to the door of her house but doesn’t yet have her keys prepared to unlock the door and is momentarily vulnerable on the doorstep. When I hugged her goodbye, she slipped mace into my hand and offered to drive me to my car only two blocks away.
Another told me of a man who walked behind her into her downtown apartment building when she had been out late. He followed her into her apartment and sat on her couch while she nervously repeated that she would be expecting her boyfriend any minute and he needed to leave.
Or the countless friends who have shared stories of dates they’ve been on where the men pushed against asserted boundaries and assaulted them, even after they had said no.
The de facto existence of violence is acknowledged between women and has likely always been acknowledged by women in the private sphere. Our shared accounts allow us to relate to one another. They turn statistics into flesh and bone, and form the basis for a mutual understanding that something isn’t right. The vocalization of pain and fear is cathartic. As I’ve written this essay and taken opportunities to share my interest in this topic with other women, I’ve found that the conversation almost always leads to swapping stories of threatening encounters, of validating each other’s fears and sharing our coping mechanisms.
My conversations happened during the #MeToo movement, which even a troglodyte like me was exposed to on social media feeds. The use of the phrase “Me Too” to vocalize solidarity with assault survivors was started in 2006 by Tarana Burke, an African American woman and civil rights activist. Many brave people posted stories on media websites about their experiences of sexual harassment and violence in and out of the workplace. This accumulation of stories proved to be powerful, and the current hashtag movement sparked an unprecedented wave of accusations against men who’ve used their positions of power in Hollywood and other highly visible industries to abuse the women who were subordinate to them.
This year, many women and gender-nonconforming people participated in the #MeToo movement, but my own response was very different. I felt deeply uncomfortable and disquieted as the movement’s popularity and exposure grew. Despite my identity as a staunch feminist and my education, which allows me to contextualize my experiences as a woman, I was reluctant to participate. To share my stories would be to relinquish control over them and to expose the inner life that I have constructed. Sharing invites pushback that could invalidate my story and perhaps even lead to violence. Sharing invites conversations with my parents and former partners that I am not prepared to have. Sharing is discouraged thanks to the same mechanisms that force me to be polite to men, even the ones I wish would leave me alone. If I name the violence, then it follows that I am a victim of it, and therefore lack agency.
How did we get to the point where the sharing of women’s everyday experiences is a national news story? How did women become socialized into silence in the first place? How does a hashtag improve conditions for poor Appalachian teenagers smoking cigarettes in shady small-town bars?
As a budding academic, I presented my research in my field – geography – at a large conference when I was still an undergraduate. With my sights set on graduate school, I was glad for the opportunity to learn and network. I met many other academics and talked about my interest in doctoral programs and continuing research. One night during the conference, a fellow student, a young woman, told me that older men at the conference had been hitting on her all day by feigning interest in her work and then giving her their contact information. The stack of business cards on my hotel room nightstand assumed a more sinister aura, and I flipped through them thereafter with suspicion. The cards reflected the current data from the National Center for Education Statistics about gender equity in academic institutions, with the most influential full-time faculty positions awarded to white males, and women working a higher proportion of the part-time adjunct positions. How could I ever be sure that any of the men who had offered to help me were interested in my research or career? What if, instead, my naive gullibility had landed me with a list of numbers from older men trying to sleep with me, rather than legitimate professional opportunities? What if I met with one of them and the encounter turned confrontational?
I never contacted any of the men I met at that conference or any other, thereby reinforcing and reproducing the relations of power within the academy.
Although I crave platonic and professional relationships and interactions with men, the process of creating these relationships feels dangerous. When a man I don’t know speaks to me in public, I am both intrigued and distressed by the potential outcomes, which range from overt violence to friendship and compassion. I want to dissolve the boundaries of gender socialization that keep us all isolated and that ensure I will never know the struggles of the masculine nor they the feminine. But the threat of latent violence makes me turn my head, pretend I didn’t hear, resisting the possibility of engagement and almost always saying no.
On a spring day when I was twenty-four and in graduate school at Portland State University, I stopped on my way home to get a beer and french fries, and to read for class at an outside picnic table. As I was waiting for my fries, a man two tables in front of me asked me if I wanted to join him. I declined, thinking of the previous experiences I’d had when accepting beers from men in bars.
A few minutes later, he asked again, in a humble sort of way. His casual tone was tempting, and I hesitantly agreed.
I joined him at his table. He was friendly and interesting, an eye doctor from the South who had fallen on hard times after his medical practice went under and he lost his home, his car, his savings. But on that day he had been offered his first job in years and was looking for someone to celebrate with. We talked for hours, even moving inside when it started to rain, comparing our experiences in graduate versus medical school, talking about money and moving to Portland from the East Coast.
When I finally got up to leave, he didn’t ask for my number.
Saturday, 26 January 2013
A Telling Silence
The issues politicians do not discuss are as telling and decisive as those they do. And the loudest silence surrounds the issue of property taxes.
You can learn as much about a country from its silences as you can from its obsessions. The issues politicians do not discuss are as telling and decisive as those they do. While the government’s cuts beggar the vulnerable and gut public services, it’s time to talk about the turns not taken, the opportunities foregone: the taxes which could have spared us every turn of the screw.
The extent of the forgetting is extraordinary. Take, for example, capital gains tax. Before the election, the Liberal Democrats promised to raise it from 18% to “the same rates as income” (in other words a top rate of 50%), to ensure that private equity bosses were no longer paying lower rates of tax than their office cleaners (1). It made sense, as it would have removed the bosses’ incentive to collect their earnings as capital. Despite a powerful economic case, the government refused to raise the top rate above 28%. The Lib Dems protested for a day or two (2), and have remained silent ever since. In the parliamentary debate about cuts to social security, this missed opportunity wasn’t mentioned once (3).
But at least that tax has risen. In just two and half years, the government has cut corporation tax three times. It will fall from 28% in 2010 to 21% in 2014 (4,5). George Osborne, the chancellor, boasted last month that this “is the lowest rate of any major western economy”(6): he is consciously setting up a destructive competition with other nations, creating new excuses further to reduce the UK rate.
Labour’s near-silence on this issue is easily explained. Under Tony Blair and Gordon Brown, who were often as keen as the Conservatives to appease corporate power, the rate was reduced from 33% to 28%. Prefiguring Osborne’s boast, in 1999 Brown bragged that the rate he had set was “the lowest rate of any major industrialised country anywhere, including Japan and the United States.” (7) What a legacy for a Labour government.
As for a Robin Hood tax on financial transactions, after an initial flutter of interest you are now more likely to hear the call of the jubjub bird in the House of Commons. According to the Institute for Public Policy Research, a tax rate of just 0.01% would raise £25bn a year, rendering many of the chamber’s earnest debates about the devastating cuts void (8). Silence also surrounds the notion of a windfall tax on extreme wealth. And to say that Professor Greg Philo’s arresting idea of transferring the national debt to those who possess assets worth £1m or more has failed to ignite the flame of passion in parliament would not overstate the case(9).
But the loudest silence surrounds the issue of property taxes. The most expensive flat in that favourite haunt of the international super-rich, One Hyde Park, cost £135m. The owner pays £1,369 in council tax, or 0.001% of its value(10). Last year the Independent revealed that the Sultan of Brunei pays only £32 a month more for his pleasure dome in Kensington Palace Gardens than some of the poorest people in the same borough (11). A mansion tax – slapped down by David Cameron in October (12) – is only the beginning of what the owners of such places should pay. For the simplest, fairest and least avoidable levy is one which the major parties simply will not contemplate. It’s called land value tax.
The term is a misnomer. It’s not really a tax. It’s a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it.
In 1909 a dangerous subversive explained the issue thus. “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. … the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.” (13)
Who was this firebrand? Winston Churchill. As Churchill, Adam Smith (14) and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They “levy a toll upon all other forms of wealth and every form of industry.”(15) Land value tax recoups this toll.
It has a number of other benefits (16). It stops the speculative land hoarding that prevents homes from being built. It ensures that the most valuable real estate – in city centres – is developed first, discouraging urban sprawl. It prevents speculative property bubbles, of the kind that have recently trashed the economies of Ireland, Spain and other nations and which make rents and first homes so hard to afford. Because it does not affect the supply of land (they stopped making it some time ago), it cannot cause the rents that people must pay to the landlords to be raised. It is easy to calculate and hard to avoid: you can’t hide your land in London in a secret account in the Cayman Islands. And it could probably discharge the entire deficit.
It is altogether remarkable, in these straitened and inequitable times, that land value tax is not at the heart of the current political debate. Perhaps it is a sign of how powerful the rent-seeking class in Britain has become. While the silence surrounding this obvious solution exposes Labour’s limitations, it also exposes the contradiction at heart of the Conservative Party. The Conservatives claim, in David Cameron’s words, to be “the party of enterprise”(17). But those who benefit most from its policies are those who are rich already. It is, in reality, the party of rent.
This is where the debate about workers and shirkers, strivers and skivers should have led. The skivers and shirkers sucking the money out of your pockets are not the recipients of social security demonised by the Daily Mail and the Conservative Party, the overwhelming majority of whom are honest claimants. We are being parasitised from above, not below, and the tax system should reflect this.
The extent of the forgetting is extraordinary. Take, for example, capital gains tax. Before the election, the Liberal Democrats promised to raise it from 18% to “the same rates as income” (in other words a top rate of 50%), to ensure that private equity bosses were no longer paying lower rates of tax than their office cleaners (1). It made sense, as it would have removed the bosses’ incentive to collect their earnings as capital. Despite a powerful economic case, the government refused to raise the top rate above 28%. The Lib Dems protested for a day or two (2), and have remained silent ever since. In the parliamentary debate about cuts to social security, this missed opportunity wasn’t mentioned once (3).
But at least that tax has risen. In just two and half years, the government has cut corporation tax three times. It will fall from 28% in 2010 to 21% in 2014 (4,5). George Osborne, the chancellor, boasted last month that this “is the lowest rate of any major western economy”(6): he is consciously setting up a destructive competition with other nations, creating new excuses further to reduce the UK rate.
Labour’s near-silence on this issue is easily explained. Under Tony Blair and Gordon Brown, who were often as keen as the Conservatives to appease corporate power, the rate was reduced from 33% to 28%. Prefiguring Osborne’s boast, in 1999 Brown bragged that the rate he had set was “the lowest rate of any major industrialised country anywhere, including Japan and the United States.” (7) What a legacy for a Labour government.
As for a Robin Hood tax on financial transactions, after an initial flutter of interest you are now more likely to hear the call of the jubjub bird in the House of Commons. According to the Institute for Public Policy Research, a tax rate of just 0.01% would raise £25bn a year, rendering many of the chamber’s earnest debates about the devastating cuts void (8). Silence also surrounds the notion of a windfall tax on extreme wealth. And to say that Professor Greg Philo’s arresting idea of transferring the national debt to those who possess assets worth £1m or more has failed to ignite the flame of passion in parliament would not overstate the case(9).
But the loudest silence surrounds the issue of property taxes. The most expensive flat in that favourite haunt of the international super-rich, One Hyde Park, cost £135m. The owner pays £1,369 in council tax, or 0.001% of its value(10). Last year the Independent revealed that the Sultan of Brunei pays only £32 a month more for his pleasure dome in Kensington Palace Gardens than some of the poorest people in the same borough (11). A mansion tax – slapped down by David Cameron in October (12) – is only the beginning of what the owners of such places should pay. For the simplest, fairest and least avoidable levy is one which the major parties simply will not contemplate. It’s called land value tax.
The term is a misnomer. It’s not really a tax. It’s a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it.
In 1909 a dangerous subversive explained the issue thus. “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. … the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.” (13)
Who was this firebrand? Winston Churchill. As Churchill, Adam Smith (14) and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They “levy a toll upon all other forms of wealth and every form of industry.”(15) Land value tax recoups this toll.
It has a number of other benefits (16). It stops the speculative land hoarding that prevents homes from being built. It ensures that the most valuable real estate – in city centres – is developed first, discouraging urban sprawl. It prevents speculative property bubbles, of the kind that have recently trashed the economies of Ireland, Spain and other nations and which make rents and first homes so hard to afford. Because it does not affect the supply of land (they stopped making it some time ago), it cannot cause the rents that people must pay to the landlords to be raised. It is easy to calculate and hard to avoid: you can’t hide your land in London in a secret account in the Cayman Islands. And it could probably discharge the entire deficit.
It is altogether remarkable, in these straitened and inequitable times, that land value tax is not at the heart of the current political debate. Perhaps it is a sign of how powerful the rent-seeking class in Britain has become. While the silence surrounding this obvious solution exposes Labour’s limitations, it also exposes the contradiction at heart of the Conservative Party. The Conservatives claim, in David Cameron’s words, to be “the party of enterprise”(17). But those who benefit most from its policies are those who are rich already. It is, in reality, the party of rent.
This is where the debate about workers and shirkers, strivers and skivers should have led. The skivers and shirkers sucking the money out of your pockets are not the recipients of social security demonised by the Daily Mail and the Conservative Party, the overwhelming majority of whom are honest claimants. We are being parasitised from above, not below, and the tax system should reflect this.
Monday, 26 November 2012
Offshore secrets revealed: the shadowy side of a booming industry
The existence of an extraordinary global network of sham company directors, most of them British, can be revealed.
The UK government claims such abuses were stamped out long ago, but a worldwide joint investigation by the Guardian, the BBC's Panorama and the Washington-based International Consortium of Investigative Journalists (ICIJ) has uncovered a booming offshore industry that leaves the way open for both tax avoidance and the concealment of assets.
More than 21,500 companies have been identified using this group of 28 so-called nominee directors. The nominees play a key role in keeping secret hundreds of thousands of commercial transactions. They do so by selling their names for use on official company documents, using addresses in obscure locations all over the world.
This is not illegal under UK law, and sometimes nominee directors have a legitimate role. But our evidence suggests this particular group of directors only pretend to control the companies they put their names to.
The companies themselves are often registered anonymously offshore in the British Virgin Islands (BVI), but also in Ireland, New Zealand, Belize and the UK itself. More than a score of UK agencies sell offshore companies, several of which also help supply sham directors.
One British couple, Sarah and Edward Petre-Mears, who migrated from Sark in the Channel Islands to the Caribbean island of Nevis, have sold their services to more than 2,000 entities, with their names appearing on activities ranging from Russian luxury property purchases to pornography and casino sites.
In 1999, the government claimed Britain's sham director industry had been "effectively outlawed" after a judge, Mr Justice Blackburne, said the court would not tolerate "the situation where someone takes on the directorship of so many companies and then totally abrogates responsibility". But our findings show this has failed to be policed.
These nominee fronts conceal a wide variety of real owners, including those that are perfectly legal, from Russian oligarchs to discreet speculators in the British property market. Their only common factor is the wish for secrecy. Some of the owners we have identified include:
• Vladimir Antonov, the London-based billionaire Russian purchaser of Portsmouth FC, who is currently fighting an extradition request from Lithuania, where he controlled a bank. He denies wrongdoing.
• Yair Spitzer, a north London software engineer who bought and sold London flats. He said: "We were advised by UK accountants that this structure … was perfectly legal."
• The Hackmeys, a wealthy Israeli family, one of whom used a BVI company to buy a £26m London office block. Their spokesman said: "The deal was introduced by a [confidential] joint venture partner who set up the deal and structure."
• Nicholas Joannou, whose Armstrong Group sold shares from an address in Berkeley Square, central London. The Guardian was unable to contact him.
• SP Trading, which was linked in 2009 to a Kazakh businessman and an arms to Iran scandal. The nominee directors in Vanuatu turned out to have no knowledge of the company's true activities. They told us there were "very few cases of misuse by clients".
In a parallel investigation Monday's Panorama on BBC1 is due to show a company formation agent offering to assist its undercover reporter to escape tax. The agent, James Turner, of Turner Little in York, offers nominee directors in Belize and says: "They won't even know that they were a director, they just get paid."
A representative of a second company, Atlas Corporate Services, is asked for maximum confidentiality. He explains that many of its nominees are not even aware of how their names are being used. Jesse Hester, who runs Atlas Corporate Services from Mauritius, is seen assuring a potential client that the UK is unlikely to catch up with him. "Tax authorities don't have the resources to chase everybody down … They reckon it's probably the same rough odds as probably winning the lottery," he says.
The revelations launch a week-long series onthe Guardian site designed to strip away anonymity from offshore companies, the most shadowy aspect of the UK's financial industry. The British Virgin Islands are a particularly successful hideaway, thanks to the exceptional secrecy on offer. This Caribbean territory, which is ultimately controlled by the UK, has sold more than a million anonymously-owned offshore entities since launching itself in 1984 as a tax haven.
The purchasers are often people who, for a variety of reasons, some perfectly legitimate, do not wish to advertise what they are doing with their wealth.
But a worldwide research effort has been launched this year by the ICIJ. It aims to identify, country by country, thousands of the true owners.
The Guardian has collaborated with the ICIJ, a non-profit organisation, to analyse many gigabytes of the British data. This week we intend to reveal the names of more owners. We do not suggest criminal wrongdoing by them. Among those we have contacted, not all go so far as to employ nominee directors. Some insist they have done nothing improper, and are merely taking advantage of legitimate tax breaks or the opportunity for privacy. Critics say, however, that the islands' system can be open to abuse because of its lack of transparency.
Gerard Ryle, the director of the ICIJ, said: "We are applying specialist software to crunch through literally hundreds of thousands of offshore entities to look for patterns. We are marrying our findings with old-fashioned shoe leather and interviews from key insiders who can provide further context on this little known and loosely regulated world. We are satisfied that the information we have is authentic."
Ryle believes the ICIJ's global project, when it is completed next year, will haul into the open a shadowy financial system estimated to conceal the movement around the world of trillions of dollars.
Offshore secrets
Guardian team: David Leigh, Harold Frayman and James Ball.
The project is a collaboration between the Guardian and the International Consortium of Investigative Journalists (ICIJ) headed by Gerard Ryle in Washington DC. Guardian investigations editor David Leigh is a member of ICIJ, a global network of reporters in more than 60 countries who collaborate on in-depth investigative stories that cross national boundaries. The ICIJ was founded in 1997 as a project of the Center for Public Integrity, a Washington DC-based non-profit.
Monday, 28 May 2012
Why economics needs to be seen not as a science but a moral philosophy
Michael Sandel: 'We need to reason about how to value our bodies, human dignity, teaching and learning'
The
political philosophy professor on his new book, What Money Can't Buy,
and why economics needs to be seen not as a science but a moral
philosophy
'What is a good hospital?' … Michael Sandel Photograph: Felix Clay for the Guardian
Something curious happened when I tried to potty train my
two-year-old recently. To begin with, he was very keen on the idea. I'd
read that the trick was to reward him with a chocolate button every time
he used the potty, and for the first day or two it went like a breeze –
until he cottoned on that the buttons were basically a bribe, and began
to smell a rat. By day three he refused point-blank to go anywhere near
the potty, and invoking the chocolate button prize only seemed to make
him all the more implacable. Even to a toddler's mind, the logic of the
transaction was evidently clear – if he had to be bribed, then the potty
couldn't be a good idea – and within a week he had grown so suspicious
and upset that we had to abandon the whole enterprise.
It's a pity I hadn't read What Money Can't Buy before embarking, because the folly of the chocolate button policy lies at the heart of Michael Sandel's new book. "We live at a time when almost everything can be bought and sold," the Harvard philosopher writes. "We have drifted from having a market economy, to being a market society," in which the solution to all manner of social and civic challenges is not a moral debate but the law of the market, on the assumption that cash incentives are always the appropriate mechanism by which good choices are made. Every application of human activity is priced and commodified, and all value judgments are replaced by the simple question: "How much?"
Sandel leads us through a dizzying array of examples, from schools paying children to read – $2 (£1.20) a book in Dallas – to commuters buying the right to drive solo in car pool lanes ($10 in many US cities), to lobbyists in Washington paying line-standers to hold their place in the queue for Congressional hearings; in effect, queue-jumping members of the public. Drug addicts in North Carolina can be paid $300 to be sterilised, immigrants can buy a green card for $500,000, best man's speeches are for sale on the internet, and even body parts are openly traded in a financial market for kidneys, blood and surrogate wombs. Even the space on your forehead can be up for sale. Air New Zealand has paid people to shave their heads and walk around wearing temporary tattoos advertising the airline.
According to the logic of the market, the matter of whether these transactions are right or wrong is literally meaningless. They simply represent efficient arrangements, incentivising desirable behaviour and "improving social utility by making underpriced goods available to those most willing to pay for them". To Sandel, however, the two important questions we should be asking in every instance are: Is it fair to buy and sell this activity or product? And does doing so degrade it? Almost invariably, his answers are no, and yes.
Sandel, 59, has been teaching political philosophy at Harvard for more than 30 years, and is often described as a rock star professor, such is the excitement his lectures command. In person there is nothing terribly rock star about him; he grew up in a middle-class Jewish family in Minneapolis, studied for his doctorate at Balliol college in Oxford as a Rhodes Scholar, and has been married for decades to a social scientist with whom he has two adult sons. His career, on the other hand, is stratospheric.
Sandel's justice course is said to be the single most popular university class on the planet, taken by more than 15,000 students to date and televised for a worldwide audience that runs into millions. His 2009 book Justice, based upon the course, became a global bestseller, sparking a craze for moral philosophy in Japan and earning him the accolade "most influential foreign figure" from China Newsweek. If you heard a series of his lectures broadcast on Radio 4 in the spring you would have glimpsed a flavour of his wonderfully discursive approach to lecturing, which is not unlike an Oxbridge tutorial, only conducted with an auditorium full of students, whom he invites to think aloud.
In keeping with his rock star status, Sandel is currently embarked upon a mammoth world tour to promote his new book, and when we meet in London he has almost lost his voice. His next sleep, he croaks, half smiling, isn't scheduled for another fortnight, and he looks quite weak with jetlag. Understandably, then, he isn't quite as commanding as I had expected. But although I found his book fascinating – and in parts both confronting and deeply moving – in truth, until the very last pages I didn't find it quite as persuasive as I had hoped.
This may, as we'll come on to, have something to do with the fact that its central argument is harder to make in the US than it would be here. "It is a harder sell in America than in Europe," he agrees. "It cuts against the grain in America." This is truer today than ever before, he adds, for since he began teaching Sandel has observed in his students "a gradual shift over time, from the 80s to the present, in the direction of individualistic free-market assumptions". The book's rather detached, dispassionate line of inquiry into each instance of marketisation – is it fair, and does it degrade? – was devised as a deliberate strategy to "win over the very pro-market American audience" – and it certainly makes for a coolly elegant read, forgoing rhetoric for forensic examination in order to engage with free market economics in terms the discipline understands. But I'm just not entirely sure it works.
If, like me, you share Sandel's view that moral values should not be replaced by market prices, the interesting way to read What Money Can't Buy is through the eyes of a pro-market fundamentalist who regards such a notion as sentimental nonsense. Does he win you over then?
He certainly provides some fascinating examples of the market failing to do a better job than social norms or civic values, when it comes to making us do the right thing. For example, economists carried out a survey of villagers in Switzerland to see if they would accept a nuclear waste site in their community. While the site was obviously unwelcome, the villagers recognised its importance to their country, and voted 51% in favour. The economists then asked how they would vote if the government compensated them for accepting the site with an annual payment. Support promptly dropped to 25%. It was the potty-and-chocolate-buttons syndrome all over again. Likewise, a study comparing the British practice of blood donation with the American system whereby the poor can sell their blood found the voluntary approach worked far more effectively. Once again, civic duty turned out to be more powerful than money.
However, a true believer in the law of the market would surely argue that all this proves is that sometimes a particular marketisation device doesn't work. For them it remains not a moral debate but simply one of efficacy. Sandel writes about the wrongness of a medical system in which the rich can pay for "concierge doctors" who will prioritise wealthy patients – but to anyone who believes in markets, Sandel's objection would surely cut little ice. They would say it's a question of whether or not the system is fulfilling its purpose. If the primary purpose of a particular hospital is to save lives, then if it treats a millionaire's bruised toe while a poorer patient dies of a heart attack in the waiting room, the marketisation has clearly not worked. But if the function of the hospital is to maximise profits, then treating the millionaire's sore toe first makes perfect sense, doesn't it?
"I suspect that you have – we have – a certain idea of what a hospital is for, such that a purely profit-driven one misses the mark; it's deficient in some way; it falls short of what hospitals are properly for. You would say, wouldn't you, that that hospital – that market-driven one – is not a proper hospital. They've misidentified, really, what a hospital is for. Just as if they were a school that said: 'Our purpose isn't, really, primarily, to educate students, but to maximise revenue – and we maximise revenue by offering certain credentials, and so on,' you'd say: 'Well, that's not a proper school; they're deficient in some way.'"
I would, I agree. But a rabid rightwinger wouldn't. They would say the profit motive is in itself blameless, and pursuing it by mending people's bodies or expanding their minds is no different to making motor cars, as long as it works.
"My point is that the debate, or the argument, with someone who held that view of the purpose of the hospital would be a moral argument about how properly to understand the purpose of a hospital or a school. And, yes, there would be disagreement – but that disagreement, about purpose, would be, at the same time, a moral disagreement. I'd say 'moral disagreement', because it's not just an empirical question: How did this hospital define its mission? It's: What are hospitals properly for? What is a good hospital?"
I don't think that would convince a hardliner at all. Similarly, I imagine a hardline rightwinger might read Sandel's chapter about the practice in the US of corporations taking life insurance policies out on their staff, often unbeknown to the employees, and think: what's the problem? Sandel writes about the "moral tawdriness" of companies having a financial interest in the death of an employee, but as he doesn't suggest it would tempt them to start killing their staff, these policies would strike many on the right as a rational financial investment.
At this point Sandel begins to peer at me across the table with an expression of mild disgust and disbelief. Is this woman really, I think I can see him wondering, from the Guardian? So I explain hastily that I tried very hard to read his book wearing Thatcherite glasses.
"You tried a bit too hard," he says wryly. "You shouldn't have tried so hard. You should have gone with the flow a bit more." Which feels like a disappointing answer.
The irony is that I think Sandel would have written a more powerful book had he not tried to argue the case on free-market economists' own dry, dispassionate terms. It is, as he rightly points out, the language in which most modern political debate is conducted: "Between those who favour unfettered markets and those who maintain that market choices are free only when they're made on a level playing field." But it feels as if by engaging on their terms, he's forcing himself to make an argument with one hand tied behind his back. Only in the final chapter does he throw caution to the wind, and make the case in the language of poetry.
"Consider the language employed by the critics of commercialisation," he writes. "'Debasement', 'defilement', 'coarsening', 'pollution', the loss of the 'sacred'. This is a spiritually charged language that gestures toward higher ways of living and being." And it works, for the book suddenly makes sense to me. His closing elegy to what is lost by a society that surrenders all decisions to the market almost moved me to tears.
"Does that mean I should have just started and ended with the poetry, and forgotten about the argumentative and analytical part?" he asks. "I want to address people who are coming to this from different ideological directions." But funnily enough, I think the poetry might well do a better job of persuading those very sceptics he's trying to convert.
A fascinating question he addresses is why the financial crisis appears to have scarcely put a dent in public faith in market solutions. "One would have thought that this would be an occasion for critical reflection on the role of markets in our lives. I think the persistent hold of markets and market values – even in the face of the financial crisis – suggests that the source of that faith runs very deep; deeper than the conviction that markets deliver the goods. I don't think that's the most powerful allure of markets. One of the appeals of markets, as a public philosophy, is they seem to spare us the need to engage in public arguments about the meaning of goods. So markets seem to enable us to be non-judgmental about values. But I think that's a mistake."
Putting a price on a flat-screen TV or a toaster is, he says, quite sensible. "But how to value pregnancy, procreation, our bodies, human dignity, the value and meaning of teaching and learning – we do need to reason about the value of goods. The markets give us no framework for having that conversation. And we're tempted to avoid that conversation, because we know we will disagree about how to value bodies, or pregnancy, or sex, or education, or military service; we know we will disagree. So letting markets decide seems to be a non-judgmental, neutral way. And that's the deepest part of the allure; that it seems to provide a value-neutral, non-judgmental way of determining the value of all goods. But the folly of that promise is – though it may be true enough for toasters and flat-screen televisions – it's not true for kidneys."
Sandel makes the illuminating observation that what he calls the "market triumphalism" in western politics over the past 30 years has coincided with a "moral vacancy" at the heart of public discourse, which has been reduced in the media to meaningless shouting matches on cable TV – what might be called the Foxification of debate – and among elected politicians to disagreements so technocratic and timid that citizens despair of politics ever addressing the questions that matter most.
"There is an internal connection between the two, and the internal connection has to do with this flight from judgment in public discourse, or the aspiration to value neutrality in public discourse. And it's connected to the way economics has cast itself as a value-neutral science when, in fact, it should probably be seen – as it once was – as a branch of moral and political philosophy."
Sandel's popularity would certainly indicate a public appetite for something more robust and enriching. I ask if he thinks academia could do with a few more professors with rock star status and he pauses for a polite while before smiling. "That's a question I would rather have you answer than me, I would say." That someone as unflashy and mild-mannered as Sandel can command more attention in the US than even a rightwing poster boy academic such as Niall Ferguson must, I would say, be some grounds for optimism. On a purely personal level, I ask, is there any downside to engaging with the world through the eyes of moral philosophy, rather than simple market logic?
"None but the burden of reflection and moral seriousness."
It's a pity I hadn't read What Money Can't Buy before embarking, because the folly of the chocolate button policy lies at the heart of Michael Sandel's new book. "We live at a time when almost everything can be bought and sold," the Harvard philosopher writes. "We have drifted from having a market economy, to being a market society," in which the solution to all manner of social and civic challenges is not a moral debate but the law of the market, on the assumption that cash incentives are always the appropriate mechanism by which good choices are made. Every application of human activity is priced and commodified, and all value judgments are replaced by the simple question: "How much?"
Sandel leads us through a dizzying array of examples, from schools paying children to read – $2 (£1.20) a book in Dallas – to commuters buying the right to drive solo in car pool lanes ($10 in many US cities), to lobbyists in Washington paying line-standers to hold their place in the queue for Congressional hearings; in effect, queue-jumping members of the public. Drug addicts in North Carolina can be paid $300 to be sterilised, immigrants can buy a green card for $500,000, best man's speeches are for sale on the internet, and even body parts are openly traded in a financial market for kidneys, blood and surrogate wombs. Even the space on your forehead can be up for sale. Air New Zealand has paid people to shave their heads and walk around wearing temporary tattoos advertising the airline.
According to the logic of the market, the matter of whether these transactions are right or wrong is literally meaningless. They simply represent efficient arrangements, incentivising desirable behaviour and "improving social utility by making underpriced goods available to those most willing to pay for them". To Sandel, however, the two important questions we should be asking in every instance are: Is it fair to buy and sell this activity or product? And does doing so degrade it? Almost invariably, his answers are no, and yes.
Sandel, 59, has been teaching political philosophy at Harvard for more than 30 years, and is often described as a rock star professor, such is the excitement his lectures command. In person there is nothing terribly rock star about him; he grew up in a middle-class Jewish family in Minneapolis, studied for his doctorate at Balliol college in Oxford as a Rhodes Scholar, and has been married for decades to a social scientist with whom he has two adult sons. His career, on the other hand, is stratospheric.
Sandel's justice course is said to be the single most popular university class on the planet, taken by more than 15,000 students to date and televised for a worldwide audience that runs into millions. His 2009 book Justice, based upon the course, became a global bestseller, sparking a craze for moral philosophy in Japan and earning him the accolade "most influential foreign figure" from China Newsweek. If you heard a series of his lectures broadcast on Radio 4 in the spring you would have glimpsed a flavour of his wonderfully discursive approach to lecturing, which is not unlike an Oxbridge tutorial, only conducted with an auditorium full of students, whom he invites to think aloud.
In keeping with his rock star status, Sandel is currently embarked upon a mammoth world tour to promote his new book, and when we meet in London he has almost lost his voice. His next sleep, he croaks, half smiling, isn't scheduled for another fortnight, and he looks quite weak with jetlag. Understandably, then, he isn't quite as commanding as I had expected. But although I found his book fascinating – and in parts both confronting and deeply moving – in truth, until the very last pages I didn't find it quite as persuasive as I had hoped.
This may, as we'll come on to, have something to do with the fact that its central argument is harder to make in the US than it would be here. "It is a harder sell in America than in Europe," he agrees. "It cuts against the grain in America." This is truer today than ever before, he adds, for since he began teaching Sandel has observed in his students "a gradual shift over time, from the 80s to the present, in the direction of individualistic free-market assumptions". The book's rather detached, dispassionate line of inquiry into each instance of marketisation – is it fair, and does it degrade? – was devised as a deliberate strategy to "win over the very pro-market American audience" – and it certainly makes for a coolly elegant read, forgoing rhetoric for forensic examination in order to engage with free market economics in terms the discipline understands. But I'm just not entirely sure it works.
If, like me, you share Sandel's view that moral values should not be replaced by market prices, the interesting way to read What Money Can't Buy is through the eyes of a pro-market fundamentalist who regards such a notion as sentimental nonsense. Does he win you over then?
He certainly provides some fascinating examples of the market failing to do a better job than social norms or civic values, when it comes to making us do the right thing. For example, economists carried out a survey of villagers in Switzerland to see if they would accept a nuclear waste site in their community. While the site was obviously unwelcome, the villagers recognised its importance to their country, and voted 51% in favour. The economists then asked how they would vote if the government compensated them for accepting the site with an annual payment. Support promptly dropped to 25%. It was the potty-and-chocolate-buttons syndrome all over again. Likewise, a study comparing the British practice of blood donation with the American system whereby the poor can sell their blood found the voluntary approach worked far more effectively. Once again, civic duty turned out to be more powerful than money.
However, a true believer in the law of the market would surely argue that all this proves is that sometimes a particular marketisation device doesn't work. For them it remains not a moral debate but simply one of efficacy. Sandel writes about the wrongness of a medical system in which the rich can pay for "concierge doctors" who will prioritise wealthy patients – but to anyone who believes in markets, Sandel's objection would surely cut little ice. They would say it's a question of whether or not the system is fulfilling its purpose. If the primary purpose of a particular hospital is to save lives, then if it treats a millionaire's bruised toe while a poorer patient dies of a heart attack in the waiting room, the marketisation has clearly not worked. But if the function of the hospital is to maximise profits, then treating the millionaire's sore toe first makes perfect sense, doesn't it?
"I suspect that you have – we have – a certain idea of what a hospital is for, such that a purely profit-driven one misses the mark; it's deficient in some way; it falls short of what hospitals are properly for. You would say, wouldn't you, that that hospital – that market-driven one – is not a proper hospital. They've misidentified, really, what a hospital is for. Just as if they were a school that said: 'Our purpose isn't, really, primarily, to educate students, but to maximise revenue – and we maximise revenue by offering certain credentials, and so on,' you'd say: 'Well, that's not a proper school; they're deficient in some way.'"
I would, I agree. But a rabid rightwinger wouldn't. They would say the profit motive is in itself blameless, and pursuing it by mending people's bodies or expanding their minds is no different to making motor cars, as long as it works.
"My point is that the debate, or the argument, with someone who held that view of the purpose of the hospital would be a moral argument about how properly to understand the purpose of a hospital or a school. And, yes, there would be disagreement – but that disagreement, about purpose, would be, at the same time, a moral disagreement. I'd say 'moral disagreement', because it's not just an empirical question: How did this hospital define its mission? It's: What are hospitals properly for? What is a good hospital?"
I don't think that would convince a hardliner at all. Similarly, I imagine a hardline rightwinger might read Sandel's chapter about the practice in the US of corporations taking life insurance policies out on their staff, often unbeknown to the employees, and think: what's the problem? Sandel writes about the "moral tawdriness" of companies having a financial interest in the death of an employee, but as he doesn't suggest it would tempt them to start killing their staff, these policies would strike many on the right as a rational financial investment.
At this point Sandel begins to peer at me across the table with an expression of mild disgust and disbelief. Is this woman really, I think I can see him wondering, from the Guardian? So I explain hastily that I tried very hard to read his book wearing Thatcherite glasses.
"You tried a bit too hard," he says wryly. "You shouldn't have tried so hard. You should have gone with the flow a bit more." Which feels like a disappointing answer.
The irony is that I think Sandel would have written a more powerful book had he not tried to argue the case on free-market economists' own dry, dispassionate terms. It is, as he rightly points out, the language in which most modern political debate is conducted: "Between those who favour unfettered markets and those who maintain that market choices are free only when they're made on a level playing field." But it feels as if by engaging on their terms, he's forcing himself to make an argument with one hand tied behind his back. Only in the final chapter does he throw caution to the wind, and make the case in the language of poetry.
"Consider the language employed by the critics of commercialisation," he writes. "'Debasement', 'defilement', 'coarsening', 'pollution', the loss of the 'sacred'. This is a spiritually charged language that gestures toward higher ways of living and being." And it works, for the book suddenly makes sense to me. His closing elegy to what is lost by a society that surrenders all decisions to the market almost moved me to tears.
"Does that mean I should have just started and ended with the poetry, and forgotten about the argumentative and analytical part?" he asks. "I want to address people who are coming to this from different ideological directions." But funnily enough, I think the poetry might well do a better job of persuading those very sceptics he's trying to convert.
A fascinating question he addresses is why the financial crisis appears to have scarcely put a dent in public faith in market solutions. "One would have thought that this would be an occasion for critical reflection on the role of markets in our lives. I think the persistent hold of markets and market values – even in the face of the financial crisis – suggests that the source of that faith runs very deep; deeper than the conviction that markets deliver the goods. I don't think that's the most powerful allure of markets. One of the appeals of markets, as a public philosophy, is they seem to spare us the need to engage in public arguments about the meaning of goods. So markets seem to enable us to be non-judgmental about values. But I think that's a mistake."
Putting a price on a flat-screen TV or a toaster is, he says, quite sensible. "But how to value pregnancy, procreation, our bodies, human dignity, the value and meaning of teaching and learning – we do need to reason about the value of goods. The markets give us no framework for having that conversation. And we're tempted to avoid that conversation, because we know we will disagree about how to value bodies, or pregnancy, or sex, or education, or military service; we know we will disagree. So letting markets decide seems to be a non-judgmental, neutral way. And that's the deepest part of the allure; that it seems to provide a value-neutral, non-judgmental way of determining the value of all goods. But the folly of that promise is – though it may be true enough for toasters and flat-screen televisions – it's not true for kidneys."
Sandel makes the illuminating observation that what he calls the "market triumphalism" in western politics over the past 30 years has coincided with a "moral vacancy" at the heart of public discourse, which has been reduced in the media to meaningless shouting matches on cable TV – what might be called the Foxification of debate – and among elected politicians to disagreements so technocratic and timid that citizens despair of politics ever addressing the questions that matter most.
"There is an internal connection between the two, and the internal connection has to do with this flight from judgment in public discourse, or the aspiration to value neutrality in public discourse. And it's connected to the way economics has cast itself as a value-neutral science when, in fact, it should probably be seen – as it once was – as a branch of moral and political philosophy."
Sandel's popularity would certainly indicate a public appetite for something more robust and enriching. I ask if he thinks academia could do with a few more professors with rock star status and he pauses for a polite while before smiling. "That's a question I would rather have you answer than me, I would say." That someone as unflashy and mild-mannered as Sandel can command more attention in the US than even a rightwing poster boy academic such as Niall Ferguson must, I would say, be some grounds for optimism. On a purely personal level, I ask, is there any downside to engaging with the world through the eyes of moral philosophy, rather than simple market logic?
"None but the burden of reflection and moral seriousness."
Thursday, 3 January 2008
Happiness For Sale
By Mike Ghouse
02 January, 2008
MikeGhouse.net
MikeGhouse.net
A sale transaction requires consideration for exchange of products and services. The consideration in buying happiness is your effort. Happiness is on Sale, it is on sale, because the effort required is minimal against the gain. Though a lopsided transaction, the supply is plentiful and does not take away anything from anyone but enrich every one with a heart felt smile.
Remember the last time you helped someone? You got some one up when he or she fell and you were thanked profusely for that act of kindness, do you recall that joy? You were beaming and your fellow workers and friends wanted to know what it was; you humbly shared the small experience.
Do you recall the twinkle in your eyes and wanted to praise those two that made the national news recently? When a man fell on the tract in New York subway, the other man jumped to save his life risking his own. Then a Bangladeshi student stood up against the bullies who beat up the subway passengers who wished Happy Hanukkah to that bully.
Life becomes meaningful and powerful when you do things for others; it is the anecdote against sorrow that surrounds us from time to time. That is the wisdom in Bahai, Buddhist, Christian, Hindu, Islam, Jain, Jewish, Native religions, Shinto, Sikh, Wicca, Zoroastrian and other faiths – living for the sake of others, a proven formula for happiness.
Way back in 1978, my Peugeot 504 failed me on a Saudi Freeway to Dhahran, I stood there in 116 degrees heat waving at every vehicle that drove on a full throttle going over 140 MPH. I was dying with thirst and blisters were all over my lips and my face, I looked like some one from the western movies. The drivers, who wanted to stop, could not do so within a walking range. After nearly five hours of eternity, a man finally stopped and drove his Toyota truck the full half mile in reverse. His Burqa Clad wife was with him on the passenger's side and in the back were a couple of goats and sheep. I was imagining sitting with the goats and started feeling faintly, but he pulled his wife closer to him and asked me to hop in that little Toyota. I was too tired to worry where I was going. He gave me the life giving water and drove.
We barely communicated with my minimal Arabic and his English, we went to his home some where in the outer rim of the town of Abqaiq. His family brought in the tea and other refreshments followed by a huge dinner with several of his friends. He had one of his friends haul off my car and was getting it fixed; the fuel injection vehicles don't work very well in that kind of heat. I had purchased that Car from Nick Gruev, an Albanian American friend out of Houston.
The Sheikh's friends came were fixing the Hubbly Bubbly (Huqqa) and passing it between their friends, I was dreading to put that thing in my mouth should it come to me, sure enough it did and reluctantly I pretended puffing it. Around 8 PM, his mechanic friend drove up with my car.
As I was ready to leave, I thanked Shaikh Ahmed Al-Sabah profusely and pulled my wallet to pay, he pushed my hand and said "Aqhi, you are my guest and don't even think of it." I pleaded, it was the greatest favor a stranger has done to me and I asked, how I can pay.
He looked at me intently and asked, would you promise me something? In gratitude I said yes, but shuddered what now? He took time and looked at me again and said these life changing words to me "Next time, if you see some one needing help, would you stop and help?" I eagerly said Yes, satisfied; he asked again, are you sure? I gave an emphatic yes, to which he said, "Alhamdu Lillah (praise the lord) that is my reward.
I buy happiness at every nook and corner; it is very satisfying to see other people in their full human form when they give their beautiful smile. A genuine smile is the most beautiful thing on the earth, nothing compares to it.
Every day, you have those opportunities. Make an effort in doing things for others and see how easy it is to be happy.
Here are a few thoughts for you to ponder:
Push yourselves to be prejudice free against people from every meeting, incident, TV shows, and work or news items that you come across.
Find excuses to greet other people and wish them well, don't worry what they think of you, just do it and see the response and counter response.
Work on bringing humility and fight off every thought and action that gives you the idea that your race, faith, nation, culture, language or life style is superior to others.
Commit to yourselves that your words and actions do not flare up conflicts, but mitigate them.
Commit yourselves that you are going to do your share of living for others, for starters one hour a week will enrich you with joy.
It does not take any money; it is your goodwill that brings you the joy. It is yours to keep and is on sale.
Best wishes for 2008
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