Henry Mance in The FT
Imagine you are young and idealistic. You want to make the world a better place. You also want your skills to have real impact. You could do worse than spend a few years at McKinsey or JPMorgan, right?
Wrong, says Anand Giridharadas. The 37-year-old American writer wants to kill the idea that businesses, business people and business concepts are uniquely suited to solving the world’s social ills.
His suspicions began as a McKinsey consultant in the 2000s. “I’m not saying the whole thing’s a fraud,” he says. “[But] if you’re there because you’ve been told that it is the only prep school for solving other problems, it’s not true!”
Giridharadas’s scepticism deepened as he watched how philanthropy and profit have merged over the past decade. Silicon Valley billionaires now argue that apps can achieve more than elected governments. Executives evangelise about social investing and triple bottom lines.
Giridharadas argues that such efforts purport to change the world — but actually keep it the same. His new book Winners Take All points out that the rich are obsessed by social “purpose”, at the very time they are hoarding opportunities. Framing problems as “win-win” excuses the rich from making real sacrifices. They have rigged the system as much through this idea as by any law.
“I’m from a privileged background,” admits Giridharadas. “This is a book that grew out of familiarity.” His parents were first-generation immigrants from India: his father became a partner at McKinsey; his mother a homemaker and ceramicist. After studying at Michigan, Oxford and Harvard, Giridharadas watched his activist friends work for consultancies and banks, buying into the idea that it’s possible “to do good and to do well”. He became frustrated. He understood Donald Trump’s appeal as a politician who, for all his faults, recognised that many problems are “win-lose”.
Giridharadas, steeped in the elite culture he is critiquing, feared his book would make him unpopular. Thanks to Trump and Brexit, he now reports the opposite reaction. He has become the insiders’ favourite outsider. Larry Summers, former US Treasury secretary, called his book “required reading”; Silicon Valley entrepreneurs Marc Benioff (Salesforce founder) and Jack Dorsey (Twitter) have praised it. Giridharadas now occasionally texts Benioff on which philanthropic initiatives to support.
What I’m trying to do is convince the public to stop outsourcing the changing of the world to plutocratic elites
“Most of what I’m trying to do is to convince the general public to stop outsourcing the changing of the world to plutocratic elites,” he says. But another aim is to encourage a few enlightened billionaires “to be traitors to their class” and support structural change.
We are meeting in Tate Britain partly because the gallery is quiet and airy, but also because it illustrates one of the problems that exercises Giridharadas. Like many cultural institutions, Tate has received donations from the Sackler family, whose fortune comes from the drugs that caused the US opioid epidemic. Some argue that it’s better for people such as the Sacklers to spend their wealth on philanthropy than pleasure.
Wrong again, says Giridharadas. “If they’d bought yachts, they would have been brought to justice by journalists and regulators and criminal investigators way faster,” he says.
He wants us to stand up to abusive companies, instead of taking crumbs that they “give back”. “Why should an institution like [Tate] lend its prestige to people like that? I don’t think anyone here would care if this museum had three less rooms or had to give away 10 per cent of its art. Why are we all so afraid?”
Giridharadas seems like a man who has rarely been afraid. He is eloquent and confident, as befits someone whose two TED talks have more than a million views each. He grew up in Shaker Heights, Ohio, “famously one of the most racially integrated American suburbs”. When he was seven, his family found that “the adrenalin rush of being an immigrant had kind of crashed”, so they moved to Paris.
There they realised “the ways in which America is unique”. In the US you could become American: neighbours took you to shopping malls, or gave you cheesecake recipes. In France his parents “were guests, and would always be guests”.
After Giridharadas returned to the US, there were times when racists told him to “go home” and years when, as a writer, he struggled to afford health insurance. Overall, though, his life has been a validation of the American dream. “I’ve been very critical of many things about America, but I think I always criticise from a place of understanding the specialness of America,” he says.
He realised as a 17-year-old intern at The New York Times that he wanted to be a journalist. But Jill Abramson, later its editor, told him to go out into the world and see what other people hadn’t. He finished his degree and looked for a job that would take him to India. India was “probably the country I most disliked in the world”. “It’s a common psychodrama among immigrant families — the first thing you know about India is your parents chose to get out of it,” he says. “But at some point in my mind that flipped around — of course I should go there.”
What sort of company would take a 21-year-old graduate in the history of political thought to India? McKinsey, of course. “Within days, I was in a city I’d never been to, advising a pharmaceutical company, an industry I knew nothing about, on designing its leadership development system.”
This is bullshit that is so big and so powerful that it sneaks through undetected, like an odourless gas
The pharma company still went with his recommendations. “Only small bullshit gets called out,” he laughs. “This is bullshit that is so big and so powerful that it sneaks through undetected, like an odourless gas. I really thought it was crazy.” He lasted barely a year at McKinsey. Would he recommend that people work there? “No, I would recommend that many that are there leave.”
But when Giridharadas then began working as a reporter for the International Herald Tribune in India, he celebrated the arc of technology and globalisation — “Microcredit’s going to empower all these people, apps are going to come in, women are going to get educated,” as he recalls it. He wrote India Calling, a book about the country’s rise.
Back in the US, he wrote another non-fiction book, The True American, about a Muslim man shot by a white supremacist after 9/11. Then he spent several years as a fellow at the Aspen Institute, where the great and the good talk about the world’s problems, and he became truly restless about inequality.
In 2015, he was asked to give a speech at Aspen on the theme of forgiveness. Instead, he decided to talk about capitalism’s “extreme winners and extreme losers” — and to call out Aspen itself. “We here in Aspen are in a bit of a tight spot,” he told his audience. “Our deliberations about what to do about this extreme winning and losing are sponsored by the extreme winners. This community was formed by stalwarts of American capitalism; today we sit in spaces named after Pepsi (as in the beverage) and Koch (as in the brothers) . . . we are deeply enmeshed and invested in the establishment and systems we are supposed to question.” The speech went on to form the basis of his book.
How do ideas emerge? Do they mushroom overnight or crystallise over years? Giridharadas’s thinking was fuelled by the work of Thomas Piketty. He seized on a sentence in the French economist’s 2013 Capital in the Twenty-First Century, which said that rising inequality relied, “perhaps primarily, on the effectiveness of the apparatus of justification”.
“Authors often leave breadcrumbs for future writers,” he says. “I just thought, that’s the breadcrumb he’s leaving.” Winners Take All has some wonderful examples of how the rich justify inequalities — by providing superficial, apolitical solutions. There’s the craze for power poses, which are purported to make women feel stronger in public. There’s Even, an app that addressed the problem of insecure work by charging people $260 a year to help smooth their fluctuating income. (It now charges a more modest $96.)
Giridharadas’s most effective critique is of those at the very top. The Sacklers are one set of villains. Social-impact investors are another. Larry Fink, head of the world’s biggest asset manager BlackRock, said last year that every company he invested in would need to have a social purpose. He spoke to a UN meeting about sustainable development. Giridharadas argues that Fink’s statement was “a cover to not change”, so long as BlackRock held on to its shares in companies such as ExxonMobil. (Investors such as BlackRock argue holding shares gives them more influence.)
Then there’s David Rubenstein, the private-equity billionaire who styles himself a “patriotic philanthropist” for supporting causes such as the repair of the Washington Monument. The US government could simply fund such things itself, Giridharadas argues, if Rubenstein and others hadn’t argued for the egregious carried-interest tax loophole since the Reagan years. “The very people who most benefited from that laissez-faire, leave-business-people-alone [approach] now come and say it’s so sad that government can’t fix this problem,” he says. “They created the vacuum!”
Some billionaires are willing to give away almost all their money, but Giridharadas argues that this matters little if they won’t give up their power. “Mark Zuckerberg is not willing to have his company broken up.”
While Piketty’s big idea was a wealth tax, Giridharadas’s is that the elite — if it really wants to change the world — should get out of the way. Zuckerberg, for example, should allow antitrust regulation. “The best form of [corporate social responsibility] is to stop lobbying.”
There are weaknesses in Giridharadas’s vision. Ezra Klein, the US commentator, has pointed out that US elites are probably more responsive today than ever. And business thinkers are aware that current efforts are not enough. Giridharadas quotes Michael Porter, the management theorist, complaining that companies are disconnected from local communities. John Elkington, who came up with the idea of the triple bottom line (social, environmental, financial), wrote last year that it was time for a “concept recall” — dismayed that it had become an accounting tool rather than a way to transform capitalism.
Giridharadas champions government, but the shortcomings of the public sector are not myths. At the time of our conversation, the US government was in partial shutdown and the British government was choked by Brexit; neither seemed able to focus on challenges such as reducing carbon emissions.
We’re often in scenarios where people are talking about the minimum wage, none of whom has ever worried about paying a bill
Though he advocates financial regulation, employee rights and the break-up of monopolies, Giridharadas spends little time on how to bring about these things. Would he stop employing consultants in government? He shies away from that, but argues that Wall Street types are currently “so over-indexed” — “we’re often in scenarios where a bunch of people are talking about the minimum wage, none of whom has ever worried about paying a bill”.
He is excited by the “marriage of community organising and political training initiatives” that was crucial in the election last year of New York congresswoman Alexandria Ocasio-Cortez. Her ideas, he thinks, can appeal beyond the coasts: small businessmen in red states would support initiatives to crack down on tech monopolies. “They don’t like Amazon having [so many] lobbyists in Washington!” he says.
Giridharadas is wary of becoming a court jester, a critic who entertains with uncomfortable truths but who fails to change behaviour. “There’s a big risk of that,” he says. He lives in a “coastal, New York, intelligentsia bubble”, and is married to Priya Parker, herself a successful author and conflict mediator. He is not, in other words, part of a working-class revolt.
While society’s ills have tipped other writers into pessimism, Giridharadas is notable for his optimism about the west. Partly it’s his experience as a second-generation immigrant, partly it’s seeing the depth of government failures in India. “America’s attempting something incredibly hard right now,” he says, describing its transition “from a majority-white superpower to this postmodern, post-ethnic-majority country”.
Actually investing in your people’s ability to have decent lives that don’t make them pissed off every day is a really good bargain
This is the “end of an era, not the end of a country”. Real change — to reduce inequalities and protect the planet — is not implausible. If America could get more people into college, there might soon be stronger popular support for fighting climate change. If Britain could spend more on helping those adversely affected by globalisation, it might avoid populist spasms like Brexit.
“We fail to make these investments,” he says. “Actually investing in your people’s ability to have decent lives that don’t make them pissed off every day is a really good bargain.” The language of win-wins is so pervasive — occasionally even he can’t resist it.
Friday, 1 February 2019
Wednesday, 30 January 2019
Worse than plastic waste: the burning tyres choking India
The British government is already flouting its own rules, allowing scrap tyres to be sent abroad for burning – what will happen post-Brexit asks George Monbiot in The Guardian?
The recent enthusiasm for plastic porn – footage of the disgusting waste pouring into the sea – is a rare reminder that we are still living in a material world. But it has had no meaningful effect on government policy. When China banned imports of plastic waste a year ago, you might have hoped that the UK government would invest heavily in waste reduction and domestic recycling. Instead, it has sought new outlets for our filth. Among the lucky recipients are Malaysia, Thailand and Vietnam, none of which have adequate disposal systems – as I write, our plastic is doubtless flooding into their seas. There’s a term for this practice: waste colonialism.
Our plastic exports are bad enough. But something even worse is happening that we don’t see at all. Every month, thousands of tonnes of used tyres leave our ports on a passage to India. There they are baked in pyrolysis plants, to make a dirty industrial fuel. While some of these plants meet Indian regulations, hundreds – perhaps thousands – are pouring toxins into the air, as officials look the other way. When tyre pyrolysis is done badly, it can produce a hideous mix: heavy metals, benzene, dioxins, furans and other persistent organic chemicals, some of which are highly carcinogenic. Videos of tyre pyrolysis in India show black smoke leaking from the baking chamber, and workers in T-shirts, without masks or other protective equipment, cleaning tarry residues out of the pipes and flasks. I can only imagine what their life expectancy might be.
India suffers one of the world’s worst pollution crises, which causes massive rates of disease and early death. There is no data on the contribution made by tyre pyrolysis plants, but it is doubtless significant. Nor do we know whether British tyres are being burned in plants that are illegal, as our government has failed to investigate this. It seems prepared to break its own rules on behalf of the companies exporting our waste. And this is before Brexit.
Unlike plastic waste, there is a ready market for used tyres within the UK. They are – or were – compressed into tight blocks to make road foundations, embankments and drainage beds. It’s not the closed-loop recycling that should be applied to everything we consume, let alone the radical reduction in the use of materials required to prevent environmental breakdown. But it’s much better than what’s happening to our discarded tyres now. The companies that made these blocks have either collapsed or are in danger of going that way, as they can no longer buy scrap tyres: Indian pyrolysis plants pay more.
I was contacted by a leading tyre block broker, David L Reid. He was halfway through a major order from a local authority when his supplies dried up. The contract was lost, and the local authority had to switch to stone, costing it a further £200,000. He has other interests, so is able to weather this disruption, but his company, like others, has had to cease trading. With some of his former competitors, he has been frantically trying to discover what the government is playing at, so far with little success.
Government guidelines seem clear enough: exporters must be able to demonstrate that the final destination of the waste they send to other countries “operates to human health and environmental protection standards that are broadly equivalent to the standards within the EU”. But when one tyre block company tested the UK Environment Agency’s willingness to enforce this rule, by asking whether it could send tyres to pyrolysis plants in Africa that “will not meet UK and EU pollution controls”, the agency told him “your suggested business plan is acceptable as long as the relevant procedures and documents are completed correctly”.
The UK government’s due diligence consists of asking tyre exporters which companies they intend to sell to, then asking the Indian government whether those companies are legit. It has made no efforts to discover whether the firms receiving these tyres are their final destination, or whether the Indian government is properly regulating them. It has no figures for UK tyre exports to India. Arguing that they are classed as “green waste”, it washes its hands of them as soon as they leave our shores.
To become a tyre trader, all you need to do is fill in a “U2 environmental exemption” form. Then you can buy used tyres from garages, ostensibly for bundling into construction blocks. But there appears to be nothing in British law (or at least in its implementation) to prevent you from using this licence to put them in a shipping container and send them to India.
I put questions to the government about these issues but, despite repeated requests, it failed to send me a response on time. Reid has approached the environment secretary, Michael Gove, his Labour shadow, Sue Hayman, Liam Fox and other MPs and officials, all without answers. Does anyone care? Are the lives of people in India worth nothing to politicians in this country?
It appears that among the first people to export used tyres to India, in 2009, was Richard Cook. He is the former Conservative parliamentary candidate for East Renfrewshire who channelled £435,000 (the origins of which remain mysterious) through Northern Ireland and into the leave campaign in England and Scotland. Investigations by openDemocracy and BBC Northern Ireland alleged that his shipment was classified as illegal by both the Indian government and UK regulators. Indian law at the time forbade used tyre imports. Cook denied the allegations. After I tried to speak to him, his solicitor rang to say “we have intimated a claim for damages against the BBC for defamation” and would not be making any further comment.
In principle, the government could be held to account on this issue by European law. But if this is the way it is prepared to operate before Brexit – flouting its own rules on behalf of British exporters – imagine what it might do after we have left the EU. Every child is taught a basic environmental principle: you clear up your own mess. Our government seems happy to dump it on other people.
‘Every month, thousands of tonnes of used tyres leave our ports on a passage to India.’ Illustration: Sébastien Thibault/The Guardian
What we see is not the economy. What we see is the tiny fragment of economic life we are supposed to see: the products and services we buy. The rest – the mines, plantations, factories and dumps required to deliver and remove them – are kept as far from our minds as possible. Given the scale of global extraction and waste disposal, it is a remarkable feat of perception management.
What we see is not the economy. What we see is the tiny fragment of economic life we are supposed to see: the products and services we buy. The rest – the mines, plantations, factories and dumps required to deliver and remove them – are kept as far from our minds as possible. Given the scale of global extraction and waste disposal, it is a remarkable feat of perception management.
The recent enthusiasm for plastic porn – footage of the disgusting waste pouring into the sea – is a rare reminder that we are still living in a material world. But it has had no meaningful effect on government policy. When China banned imports of plastic waste a year ago, you might have hoped that the UK government would invest heavily in waste reduction and domestic recycling. Instead, it has sought new outlets for our filth. Among the lucky recipients are Malaysia, Thailand and Vietnam, none of which have adequate disposal systems – as I write, our plastic is doubtless flooding into their seas. There’s a term for this practice: waste colonialism.
Our plastic exports are bad enough. But something even worse is happening that we don’t see at all. Every month, thousands of tonnes of used tyres leave our ports on a passage to India. There they are baked in pyrolysis plants, to make a dirty industrial fuel. While some of these plants meet Indian regulations, hundreds – perhaps thousands – are pouring toxins into the air, as officials look the other way. When tyre pyrolysis is done badly, it can produce a hideous mix: heavy metals, benzene, dioxins, furans and other persistent organic chemicals, some of which are highly carcinogenic. Videos of tyre pyrolysis in India show black smoke leaking from the baking chamber, and workers in T-shirts, without masks or other protective equipment, cleaning tarry residues out of the pipes and flasks. I can only imagine what their life expectancy might be.
India suffers one of the world’s worst pollution crises, which causes massive rates of disease and early death. There is no data on the contribution made by tyre pyrolysis plants, but it is doubtless significant. Nor do we know whether British tyres are being burned in plants that are illegal, as our government has failed to investigate this. It seems prepared to break its own rules on behalf of the companies exporting our waste. And this is before Brexit.
Unlike plastic waste, there is a ready market for used tyres within the UK. They are – or were – compressed into tight blocks to make road foundations, embankments and drainage beds. It’s not the closed-loop recycling that should be applied to everything we consume, let alone the radical reduction in the use of materials required to prevent environmental breakdown. But it’s much better than what’s happening to our discarded tyres now. The companies that made these blocks have either collapsed or are in danger of going that way, as they can no longer buy scrap tyres: Indian pyrolysis plants pay more.
I was contacted by a leading tyre block broker, David L Reid. He was halfway through a major order from a local authority when his supplies dried up. The contract was lost, and the local authority had to switch to stone, costing it a further £200,000. He has other interests, so is able to weather this disruption, but his company, like others, has had to cease trading. With some of his former competitors, he has been frantically trying to discover what the government is playing at, so far with little success.
Government guidelines seem clear enough: exporters must be able to demonstrate that the final destination of the waste they send to other countries “operates to human health and environmental protection standards that are broadly equivalent to the standards within the EU”. But when one tyre block company tested the UK Environment Agency’s willingness to enforce this rule, by asking whether it could send tyres to pyrolysis plants in Africa that “will not meet UK and EU pollution controls”, the agency told him “your suggested business plan is acceptable as long as the relevant procedures and documents are completed correctly”.
The UK government’s due diligence consists of asking tyre exporters which companies they intend to sell to, then asking the Indian government whether those companies are legit. It has made no efforts to discover whether the firms receiving these tyres are their final destination, or whether the Indian government is properly regulating them. It has no figures for UK tyre exports to India. Arguing that they are classed as “green waste”, it washes its hands of them as soon as they leave our shores.
To become a tyre trader, all you need to do is fill in a “U2 environmental exemption” form. Then you can buy used tyres from garages, ostensibly for bundling into construction blocks. But there appears to be nothing in British law (or at least in its implementation) to prevent you from using this licence to put them in a shipping container and send them to India.
I put questions to the government about these issues but, despite repeated requests, it failed to send me a response on time. Reid has approached the environment secretary, Michael Gove, his Labour shadow, Sue Hayman, Liam Fox and other MPs and officials, all without answers. Does anyone care? Are the lives of people in India worth nothing to politicians in this country?
It appears that among the first people to export used tyres to India, in 2009, was Richard Cook. He is the former Conservative parliamentary candidate for East Renfrewshire who channelled £435,000 (the origins of which remain mysterious) through Northern Ireland and into the leave campaign in England and Scotland. Investigations by openDemocracy and BBC Northern Ireland alleged that his shipment was classified as illegal by both the Indian government and UK regulators. Indian law at the time forbade used tyre imports. Cook denied the allegations. After I tried to speak to him, his solicitor rang to say “we have intimated a claim for damages against the BBC for defamation” and would not be making any further comment.
In principle, the government could be held to account on this issue by European law. But if this is the way it is prepared to operate before Brexit – flouting its own rules on behalf of British exporters – imagine what it might do after we have left the EU. Every child is taught a basic environmental principle: you clear up your own mess. Our government seems happy to dump it on other people.
Monday, 28 January 2019
The commitment to EU integration must not be underestimated
Wolfgang Munchau in The FT
Aachen is close to the Dutch city of Maastricht, which gave its name to what is probably the most important European treaty of modern times. The treaty of Aachen, signed last week by German chancellor Angela Merkel and French president Emmanuel Macron, is of a different category. But you would be wrong to underestimate its significance. This treaty will set an agenda, just as the Franco-German Elysée Treaty did in 1963. And agendas matter in European discourse.
If you want to think of an analogy, consider the Werner Plan. In December 1969, in the twilight days of the Bretton Woods system of semi-fixed exchange rates, EU leaders held a summit in The Hague to set up a working group to study monetary union. It was headed by Pierre Werner, Luxembourg’s prime minister at the time. Economists were right at the time to dismiss the discussion of a future monetary union as pie-in-the-sky, just as defence experts today are right to dismiss talk about a European army. The Werner Report was an unrealistic road map to a single currency. But it nevertheless managed to put this hugely significant policy agenda on the table. It was another 30 years until the introduction of the euro. But without this first, failed step, it would never have happened.
One of the many reasons why the UK is leaving the EU has been a persistent tendency to underestimate such symbolism. Another is the entrenched belief that the golden era of EU integration is behind us. The widespread dismissal in the UK press of the Aachen Treaty is very much in that tradition.
Being in denial about integration does not square with the facts on the ground. I have often criticised the German government’s handling of the eurozone crisis. But I have never had any doubt about Germany’s ultimate commitment to monetary integration. The Aachen treaty provides no concrete solutions, but at the very least it underlines that commitment. Germany and France say, essentially, that they will do whatever it takes. Like Saint Augustine before them, they just do not want to do it yet.
But they may not be able to wait too long. The EU must make some fundamental choices on the future of its dysfunctional monetary union. In the decade since the financial crisis, many of the problems in both the real economy and the financial sector have been left unaddressed. The so-called banking union has failed in its principal objective to break the doom loop between banks and sovereign borrowers. Italy continues to bail out its banks. I expect Germany to do the same very soon.
The latest economic indicators suggest that the downturn is going to be steeper than previously thought. If short-term interest rates do not rise above -0.4 per cent at the top of the economic cycle, you know you have a very sick underlying economy. The European Central Bank’s latest bank lending survey suggests that credit conditions are now beginning to tighten in Italy, while the Netherlands is suffering from a financial bubble. In other words, we are entering a period in which policy reform will soon be on the agenda.
In the discussion on common defence, we may only be at the point where we were in 1969 on monetary integration. The external event to prompt a rethink in Berlin and Paris has been repeated threats by President Donald Trump that the US will leave Nato. Even in the unlikely event of this happening, Germany and France would not be in a position to create a joint army. Germany, in particular, is politically not ready; it spends only 1.2 per cent of its gross domestic product on defence, as opposed to France’s 2 per cent. The German constitution mandates that any decision to deploy troops has to be agreed by the Bundestag. Attitudes towards military engagement differ fundamentally between the two.
Aachen will not shift German political views on defence. But I would not rule out that, over time, it could become more acceptable for a German government to raise defence spending targets — so long as this occurs in a European context. After the Werner report came a series of loose currency arrangements followed by the European exchange rate mechanism. The way to a common army is not only paved with good intentions but with many small steps, such as a pooling of defence procurement.
In the preamble to the Aachen treaty France and Germany promise to take their “bilateral relations to a new level”. One day, while you are looking the other way, that will actually happen.
Aachen is close to the Dutch city of Maastricht, which gave its name to what is probably the most important European treaty of modern times. The treaty of Aachen, signed last week by German chancellor Angela Merkel and French president Emmanuel Macron, is of a different category. But you would be wrong to underestimate its significance. This treaty will set an agenda, just as the Franco-German Elysée Treaty did in 1963. And agendas matter in European discourse.
If you want to think of an analogy, consider the Werner Plan. In December 1969, in the twilight days of the Bretton Woods system of semi-fixed exchange rates, EU leaders held a summit in The Hague to set up a working group to study monetary union. It was headed by Pierre Werner, Luxembourg’s prime minister at the time. Economists were right at the time to dismiss the discussion of a future monetary union as pie-in-the-sky, just as defence experts today are right to dismiss talk about a European army. The Werner Report was an unrealistic road map to a single currency. But it nevertheless managed to put this hugely significant policy agenda on the table. It was another 30 years until the introduction of the euro. But without this first, failed step, it would never have happened.
One of the many reasons why the UK is leaving the EU has been a persistent tendency to underestimate such symbolism. Another is the entrenched belief that the golden era of EU integration is behind us. The widespread dismissal in the UK press of the Aachen Treaty is very much in that tradition.
Being in denial about integration does not square with the facts on the ground. I have often criticised the German government’s handling of the eurozone crisis. But I have never had any doubt about Germany’s ultimate commitment to monetary integration. The Aachen treaty provides no concrete solutions, but at the very least it underlines that commitment. Germany and France say, essentially, that they will do whatever it takes. Like Saint Augustine before them, they just do not want to do it yet.
But they may not be able to wait too long. The EU must make some fundamental choices on the future of its dysfunctional monetary union. In the decade since the financial crisis, many of the problems in both the real economy and the financial sector have been left unaddressed. The so-called banking union has failed in its principal objective to break the doom loop between banks and sovereign borrowers. Italy continues to bail out its banks. I expect Germany to do the same very soon.
The latest economic indicators suggest that the downturn is going to be steeper than previously thought. If short-term interest rates do not rise above -0.4 per cent at the top of the economic cycle, you know you have a very sick underlying economy. The European Central Bank’s latest bank lending survey suggests that credit conditions are now beginning to tighten in Italy, while the Netherlands is suffering from a financial bubble. In other words, we are entering a period in which policy reform will soon be on the agenda.
In the discussion on common defence, we may only be at the point where we were in 1969 on monetary integration. The external event to prompt a rethink in Berlin and Paris has been repeated threats by President Donald Trump that the US will leave Nato. Even in the unlikely event of this happening, Germany and France would not be in a position to create a joint army. Germany, in particular, is politically not ready; it spends only 1.2 per cent of its gross domestic product on defence, as opposed to France’s 2 per cent. The German constitution mandates that any decision to deploy troops has to be agreed by the Bundestag. Attitudes towards military engagement differ fundamentally between the two.
Aachen will not shift German political views on defence. But I would not rule out that, over time, it could become more acceptable for a German government to raise defence spending targets — so long as this occurs in a European context. After the Werner report came a series of loose currency arrangements followed by the European exchange rate mechanism. The way to a common army is not only paved with good intentions but with many small steps, such as a pooling of defence procurement.
In the preamble to the Aachen treaty France and Germany promise to take their “bilateral relations to a new level”. One day, while you are looking the other way, that will actually happen.
Saturday, 26 January 2019
Thursday, 24 January 2019
How the right tricked people into supporting rampant inequality
An LSE study has traced how we have come to swallow the meritocracy myth. This narrative needs to change writes Polly Toynbee in The Guardian
‘Talking to people using food banks and too often you hear people absorbing the blame. “I should have tried harder at school,” is a frequent refrain.’ Photograph: Murdo Macleod for the Guardian
Why don’t people rebel? The wonder of decades of rising inequality across the west is how placidly people put up with it. UK wages are still below 2008 levels, a growing sector of jobs are nasty – non-unionised, achingly hard, with workers treated worse, the boot on the employer’s foot despite low unemployment. You might call Brexit a kind of protest – but that can be overdone: the vote was swung largely by comfortable older Tory voters in the shires, led – or misled – by privileged ideologues.
Those on the progressive left have been perplexed that rising social injustice hasn’t led to much sign of the oppressed rising up, either in the ballot box or in protest. New research out on Wednesday from the London School of Economics suggests some explanations – though these will be of precious little comfort. Looking at surveys across the OECD’s 23 developed western countries since the 1980s, Dr Jonathan Mijs of the London School of Economics International Inequalities Institute monitors how, as countries become less equal, attitudes of the majority shift in the wrong direction.
Both rich and poor delude themselves they are ordinary
People come to believe more strongly that their country is a meritocracy where hard work and talent take people to the top. They are less likely to think structural inequalities or birth help or hinder people’s rise. The US, home of the American Dream – the myth that everyone has an equal chance to rise from log cabin to White House – is the most unequal, yet 95% now firmly believe in meritocracy, fewer in structural injustice. The UK, Australia and New Zealand are not far behind, sharing this Anglophone disease, a societal “body dysmorphia”: other European countries are less inclined to justify inequality, though the movement has been in that direction. This is the neoliberal triumph over hearts and minds.
The meritocracy myth comes with other tropes, especially placing the blame on the poor, with decreasing social empathy. Believing people sink through their own fault is the necessary adjunct for proving the mega-wealthy got there by merit alone.
In Britain, where inequality shot through the roof in the mid-80s and has stayed there ever since, we have seen how despising inequality’s losers has been deliberately fostered by governments. The Public and Commercial Services Union representing job centre staff, published a pamphlet this week outlining the decline in support for social security, and those who receive it. Remember the sheer spite of Peter Lilley, Tory social security secretary, in 1992 singing to his party conference a Mikado pastiche of a “little list” of people to be despised: “young ladies who get pregnant just to jump the housing queue” and “benefits offenders” making “bogus claims”. From then on the rightwing press and Benefits Street mockery set the tone of public contempt for anyone in need. Iain Duncan Smith used to send out juicy examples of benefit cheats to selected rightwing newspapers, without government figures showing fraud at just 1.1% of the benefits budget. In 2013, Ipsos Mori found that the public think £24 in every £100 is fraudulently claimed.
Politically, the mystery is why politicians got away with making things unfairer after the lid blew off top earning in the 80s. Now there’s less chance of owning a home, fewer savings, more debt and public services deteriorating. Cedric Brown, the first fat-cat shocker to catch the public eye, rewarded in 1995 for privatising British Gas with a salary of £475,000 (47 times that of his average employee), and a £600,000 incentive deal, comes from more innocent days. FTSE 100 CEOs now earn £4m.
Yet riots are extraordinarily rare – the French have always done it: it’s in their founding revolutionary DNA, and it helps to keep them less unequal than the Anglophones. Fear of revolution in cold war years kept unions strong and boardrooms wary of excess: the mid-70s, famed for union militancy, were the most equal years in British history.
This research suggests that as countries get more unequal people live in greater social isolation, locked within a narrow income group. Their friends and family share the same incomes, segregated by neighbourhood and marry similar partners. Children mix less in socially segregated schools. People no longer see over the high social fences so they don’t know how the other half lives, Mijs finds.
Ignorant of the facts, everyone wrongly places themselves on the income scale closer to the middle. Both rich and poor delude themselves they are ordinary. But telling people the facts doesn’t change their attitudes: increasingly they cling to a moral belief that people rise by merit, sinking for lack of it. Spend time talking to people using food banks or in Citizens Advice Bureaus knocked down by benefit sanctions, and too often you hear people absorbing the blame. “I should have tried harder at school,” is a frequent refrain, as if no other forces were at play. Talk to the mega-rich – I once conducted focus groups of earners up to £10m – and they are wilfully ignorant about their super-privilege, unshakable in believing their superior merit.
The right captured the story, the emotions, the moral framing: social democrats need to seize it back with a narrative of immorality that is more compelling. The British Social Attitudes survey suggests a swing back towards empathy with the swelling numbers of poor – more than £4m children. But still inheritance tax remains the most reviled of all taxes. The right forever try to prove the poor are stupider by nature than the rich, but Professor Steve Jones, celebrated geneticist, when asked about the heritability of intelligence, replies deftly that the most important heritable trait, by miles, is wealth.
Why don’t people rebel? The wonder of decades of rising inequality across the west is how placidly people put up with it. UK wages are still below 2008 levels, a growing sector of jobs are nasty – non-unionised, achingly hard, with workers treated worse, the boot on the employer’s foot despite low unemployment. You might call Brexit a kind of protest – but that can be overdone: the vote was swung largely by comfortable older Tory voters in the shires, led – or misled – by privileged ideologues.
Those on the progressive left have been perplexed that rising social injustice hasn’t led to much sign of the oppressed rising up, either in the ballot box or in protest. New research out on Wednesday from the London School of Economics suggests some explanations – though these will be of precious little comfort. Looking at surveys across the OECD’s 23 developed western countries since the 1980s, Dr Jonathan Mijs of the London School of Economics International Inequalities Institute monitors how, as countries become less equal, attitudes of the majority shift in the wrong direction.
Both rich and poor delude themselves they are ordinary
People come to believe more strongly that their country is a meritocracy where hard work and talent take people to the top. They are less likely to think structural inequalities or birth help or hinder people’s rise. The US, home of the American Dream – the myth that everyone has an equal chance to rise from log cabin to White House – is the most unequal, yet 95% now firmly believe in meritocracy, fewer in structural injustice. The UK, Australia and New Zealand are not far behind, sharing this Anglophone disease, a societal “body dysmorphia”: other European countries are less inclined to justify inequality, though the movement has been in that direction. This is the neoliberal triumph over hearts and minds.
The meritocracy myth comes with other tropes, especially placing the blame on the poor, with decreasing social empathy. Believing people sink through their own fault is the necessary adjunct for proving the mega-wealthy got there by merit alone.
In Britain, where inequality shot through the roof in the mid-80s and has stayed there ever since, we have seen how despising inequality’s losers has been deliberately fostered by governments. The Public and Commercial Services Union representing job centre staff, published a pamphlet this week outlining the decline in support for social security, and those who receive it. Remember the sheer spite of Peter Lilley, Tory social security secretary, in 1992 singing to his party conference a Mikado pastiche of a “little list” of people to be despised: “young ladies who get pregnant just to jump the housing queue” and “benefits offenders” making “bogus claims”. From then on the rightwing press and Benefits Street mockery set the tone of public contempt for anyone in need. Iain Duncan Smith used to send out juicy examples of benefit cheats to selected rightwing newspapers, without government figures showing fraud at just 1.1% of the benefits budget. In 2013, Ipsos Mori found that the public think £24 in every £100 is fraudulently claimed.
Politically, the mystery is why politicians got away with making things unfairer after the lid blew off top earning in the 80s. Now there’s less chance of owning a home, fewer savings, more debt and public services deteriorating. Cedric Brown, the first fat-cat shocker to catch the public eye, rewarded in 1995 for privatising British Gas with a salary of £475,000 (47 times that of his average employee), and a £600,000 incentive deal, comes from more innocent days. FTSE 100 CEOs now earn £4m.
Yet riots are extraordinarily rare – the French have always done it: it’s in their founding revolutionary DNA, and it helps to keep them less unequal than the Anglophones. Fear of revolution in cold war years kept unions strong and boardrooms wary of excess: the mid-70s, famed for union militancy, were the most equal years in British history.
This research suggests that as countries get more unequal people live in greater social isolation, locked within a narrow income group. Their friends and family share the same incomes, segregated by neighbourhood and marry similar partners. Children mix less in socially segregated schools. People no longer see over the high social fences so they don’t know how the other half lives, Mijs finds.
Ignorant of the facts, everyone wrongly places themselves on the income scale closer to the middle. Both rich and poor delude themselves they are ordinary. But telling people the facts doesn’t change their attitudes: increasingly they cling to a moral belief that people rise by merit, sinking for lack of it. Spend time talking to people using food banks or in Citizens Advice Bureaus knocked down by benefit sanctions, and too often you hear people absorbing the blame. “I should have tried harder at school,” is a frequent refrain, as if no other forces were at play. Talk to the mega-rich – I once conducted focus groups of earners up to £10m – and they are wilfully ignorant about their super-privilege, unshakable in believing their superior merit.
The right captured the story, the emotions, the moral framing: social democrats need to seize it back with a narrative of immorality that is more compelling. The British Social Attitudes survey suggests a swing back towards empathy with the swelling numbers of poor – more than £4m children. But still inheritance tax remains the most reviled of all taxes. The right forever try to prove the poor are stupider by nature than the rich, but Professor Steve Jones, celebrated geneticist, when asked about the heritability of intelligence, replies deftly that the most important heritable trait, by miles, is wealth.
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