How to defeat fake news: Lessons from Ireland's abortion referendum

Fintan O'Toole in The Guardian

In all the excitement of what happened in Ireland’s referendum on abortion, we should not lose sight of what did not happen. A vote on an emotive subject was not subverted. The tactics that have been so successful for the right and the far right in the UK, the US, Hungary and elsewhere did not work. A democracy navigated its way through some very rough terrain and came home not just alive but more alive than it was before. In the world we inhabit, these things are worth celebrating but also worth learning from. Political circumstances are never quite the same twice, but some of what happened and did not happen in Ireland surely contains more general lessons.

If the right failed spectacularly in Ireland, it was not for want of trying. Save the 8th, one of the two main groups campaigning against the removal of the anti-abortion clause from the Irish constitution, hired Vote Leave’s technical director, the Cambridge Analytica alumnus Thomas Borwick.

Save the 8th and the other anti-repeal campaign, Love Both, used apps developed by a US-based company, Political Social Media (PSM), which worked on both the Brexit and Trump campaigns. The small print told those using the apps that their data could be shared with other PSM clients, including the Trump campaign, the Republican National Committee and Vote Leave.

Irish voters were subjected to the same polarising tactics that have worked so well elsewhere: shamelessly fake “facts” (the claim, for example, that abortion was to be legalised up to six months into pregnancy); the contemptuous dismissal of expertise (the leading obstetrician Peter Boylan was told in a TV debate to “go back to school”); deliberately shocking visual imagery (posters of aborted foetuses outside maternity hospitals); and a discourse of liberal elites versus the real people. But Irish democracy had an immune system that proved highly effective in resisting this virus. Its success suggests a democratic playbook with at least four good rules.

Fake ‘facts’: A Save The 8th no campaign poster. Photograph: Laura Hutton/Alamy Live News

First, trust the people. A crucial part of what happened in Ireland was an experiment in deliberative democracy. The question of how to deal with the constitutional prohibition on abortion – a question that has bedevilled the political and judicial systems for 35 years – was put to a Citizens’ Assembly, made up of 99 randomly chosen (but demographically representative) voters. These so-called ordinary people – truck drivers, homemakers, students, farmers – gave up their weekends to listen to 40 experts in medicine, law and ethics, to women affected by Ireland’s extremely restrictive laws and to 17 different lobby groups. They came up with recommendations that confounded most political and media insiders, by being much more open than expected – and much more open than the political system would have produced on its own.

It was these citizens who suggested entirely unrestricted access to abortion up to 12 weeks. Conservatives dismissed this process, in Trump style, as rigged (it wasn’t). They would have been much better off if they had actually listened to what these citizens were saying, and tried to understand what had persuaded them to take such a liberal position. The Irish parliament did listen – an all-party parliamentary committee essentially adopted the proposals of the Citizens’ Assembly. So did the government. And it turned out that a sample of “the people” actually knew pretty well what “the people” were thinking. If the Brexit referendum had been preceded by such a respectful, dignified and humble exercise in listening and thinking, it would surely have been a radically different experience.

Second, be honest. The yes side in the Irish debate handed its opponents a major tactical advantage but gained a huge strategic victory. It ceded an advantage in playing with all its cards turned up on the table. Technically, the vote was merely to repeal a clause in the constitution. There was no need to say what legislation the government hoped to enact afterwards. But the government chose to be completely clear about its intentions. It published a draft bill. This allowed opponents of reform to pick at, and often distort, points of detail. But it also completely undercut the reactionary politics of paranoia, the spectre of secret conspiracies. Honesty proved to be very good policy.


Yes campaigners did not assume that an elderly lady going to mass in a rural village was a lost cause

Third, talk to everybody and make assumptions about nobody. The reactionary movements have been thriving on tribalism. They divide voters into us and them – and all the better if they call us “deplorables”. The yes campaigners in Ireland – many of them young people, who are so often caricatured as the inhabitants of virtual echo chambers – refused to be tribal. They stayed calm and dignified. And when they were jeered at, they did not jeer back. They got out and talked (and listened) without prejudice. They did not assume that an elderly lady going to mass in a rural village was a lost cause. They risked (and sometimes got) abuse by recognising no comfort zones and engaging everyone they could reach. It turned out that a lot of people were sick of being typecast as conservatives. It turned out that a lot of people like to be treated as complex, intelligent and compassionate individuals. A majority of farmers and more than 40% of the over-65s voted yes.

Finally, the old feminist slogan that the personal is political holds true, but it also works the other way around. The political has to be personalised. The greatest human immune system against the viruses of hysteria, hatred and lies is storytelling. Even when we don’t trust politicians or experts, we trust people telling their own tales. We trust ourselves to judge whether they are lying or being truthful. Irish women had to go out and tell their own stories, to make the painful and intimate into public property.

This is very hard to do, and it should not be necessary. But is unstoppably powerful. The process mattered, political leadership mattered, campaigning mattered. But it was stories that won. Exit polls showed that by far the biggest factors in determining how people voted were “people’s personal stories that were told to the media”, followed by “the experience of someone who they know”.

Women, in the intimate circles of family and friends or in the harsh light of TV studios, said: “This is who I am. I am one of you.” And voters responded: “Yes, you are.” If democracy can create the context for that humane exchange to happen over and over again, it can withstand everything its enemies throw at it.

'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 financial scandal no one is talking about

Accountancy used to be boring – and safe. But today it’s neither. Have the ‘big four’ firms become too cosy with the system they’re supposed to be keeping in check?

By Richard Brooks in The Guardian


In the summer of 2015, seven years after the financial crisis and with no end in sight to the ensuing economic stagnation for millions of citizens, I visited a new club. Nestled among the hedge-fund managers on Grosvenor Street in Mayfair, Number Twenty had recently been opened by accountancy firm KPMG. It was, said the firm’s then UK chairman Simon Collins in the fluent corporate-speak favoured by today’s top accountants, “a West End space” for clients “to meet, mingle and touch down”. The cost of the 15-year lease on the five-storey building was undisclosed, but would have been many tens of millions of pounds. It was evidently a price worth paying to look after the right people.

Inside, Number Twenty is patrolled by a small army of attractive, sharply uniformed serving staff. On one floor are dining rooms and cabinets stocked with fine wines. On another, a cocktail bar leads out on to a roof terrace. Gazing down on the refreshed executives are neo-pop art portraits of the men whose initials form today’s KPMG: Piet Klynveld (an early 20th-century Amsterdam accountant), William Barclay Peat and James Marwick (Victorian Scottish accountants) and Reinhard Goerdeler (a German concentration-camp survivor who built his country’s leading accountancy firm).

KPMG’s founders had made their names forging a worldwide profession charged with accounting for business. They had been the watchdogs of capitalism who had exposed its excesses. Their 21st-century successors, by contrast, had been found badly wanting. They had allowed a series of US subprime mortgage companies to fuel the financial crisis from which the world was still reeling.

“What do they say about hubris and nemesis?” pondered the unconvinced insider who had taken me into the club. There was certainly hubris at Number Twenty. But by shaping the world in which they operate, the accountants have ensured that they are unlikely to face their own downfall. As the world stumbles from one crisis to the next, its economy precarious and its core financial markets inadequately reformed, it won’t be the accountants who pay the price of their failure to hold capitalism to account. It will once again be the millions who lose their jobs and their livelihoods. Such is the triumph of the bean counters.

The demise of sound accounting became a critical cause of the early 21st-century financial crisis. Auditing limited companies, made mandatory in Britain around a hundred years earlier, was intended as a check on the so-called “principal/agent problem” inherent in the corporate form of business. As Adam Smith once pointed out, “managers of other people’s money” could not be trusted to be as prudent with it as they were with their own. When late-20th-century bankers began gambling with eye-watering amounts of other people’s money, good accounting became more important than ever. But the bean counters now had more commercial priorities and – with limited liability of their own – less fear for the consequences of failure. “Negligence and profusion,” as Smith foretold, duly ensued.

After the fall of Lehman Brothers brought economies to their knees in 2008, it was apparent that Ernst & Young’s audits of that bank had been all but worthless. Similar failures on the other side of the Atlantic proved that balance sheets everywhere were full of dross signed off as gold. The chairman of HBOS, arguably Britain’s most dubious lender of the boom years, explained to a subsequent parliamentary enquiry: “I met alone with the auditors – the two main partners – at least once a year, and, in our meeting, they could air anything that they found difficult. Although we had interesting discussions – they were very helpful about the business – there were never any issues raised.”

 

A new ticker about the Lehman Brothers collapse in New York in 2008. Photograph: Alamy

This insouciance typified the state auditing had reached. Subsequent investigations showed that rank-and-file auditors at KPMG had indeed questioned how much the bank was setting aside for losses. But such unhelpful matters were not something for the senior partners to bother about when their firm was pocketing handsome consulting income – £45m on top of its £56m audit fees over about seven years – and the junior bean counters’ concerns were not followed up by their superiors.

Half a century earlier, economist JK Galbraith had ended his landmark history of the 1929 Great Crash by warning of the reluctance of “men of business” to speak up “if it means disturbance of orderly business and convenience in the present”. (In this, he thought, “at least equally with communism, lies the threat to capitalism”.) Galbraith could have been prophesying accountancy a few decades later, now led by men of business rather than watchdogs of business.

Another American writer of the same period caught the likely cause of the bean counters’ blindness to looming danger even more starkly. “It is difficult to get a man to understand something”, wrote Upton Sinclair, “when his salary depends upon his not understanding it.”
For centuries, accounting itself was a fairly rudimentary process of enabling the powerful and the landed to keep tabs on those managing their estates. But over time, that narrow task was transformed by commerce. In the process it has spawned a multi-billion-dollar industry and lifestyles for its leading practitioners that could hardly be more at odds with the image of a humble number-cruncher.

Just four major global firms – Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG – audit 97% of US public companies and all the UK’s top 100 corporations, verifying that their accounts present a trustworthy and fair view of their business to investors, customers and workers. They are the only players large enough to check the numbers for these multinational organisations, and thus enjoy effective cartel status. Not that anything as improper as price-fixing would go on – with so few major players, there’s no need. “Everyone knows what everyone else’s rates are,” one of their recent former accountants told me with a smile. There are no serious rivals to undercut them. What’s more, since audits are a legal requirement almost everywhere, this is a state-guaranteed cartel.

Despite the economic risks posed by misleading accounting, the bean counters perform their duties with relative impunity. The big firms have persuaded governments that litigation against them is an existential threat to the economy. The unparalleled advantages of a guaranteed market with huge upside and strictly limited downside are the pillars on which the big four’s multi-billion-dollar businesses are built. They are free to make profit without fearing serious consequences of their abuses, whether it is the exploitation of tax laws, slanted consultancy advice or overlooking financial crime.

KPMG abandons controversial lending of researchers to MPs


Conscious of their extreme good fortune and desperate to protect it, the accountants sometimes like to protest the harshness of their business conditions. “The environment that we are dealing with today is challenging – whether it’s the global economy, the geopolitical issues, or the stiff competition,” claimed PwC’s global chairman Dennis Nally in 2015, as he revealed what was then the highest-ever income for an accounting firm: $35bn. The following year the number edged up – as it did for the other three big four firms despite the stiff competition – to $36bn. Although they are too shy to say how much profit their worldwide income translates into, figures from countries where they are required to disclose it suggest PwC’s would have been approaching $10bn.

Among the challenges PwC faced, said Nally, was the “compulsory rotation” of auditors in Europe, a new game of accountancy musical chairs in which the big four exchange clients every 10 years or so. This is what passes for competition at the top of world accountancy. Some companies have been audited by the same firms for more than a century: KPMG counts General Electric as a 109-year-old client; PwC stepped down from the Barclays audit in 2016 after a 120-year stint.

As professionals, accountants are generally trusted to self-regulate – with predictably self-indulgent outcomes. Where a degree of independent oversight does exist, such as from the regulator established in the US following the Enron scandal and the other major scandal of the time, WorldCom – in which the now-defunct firm Arthur Andersen was accused of conspiring with the companies to game accountancy rules and presenting inflated profits to the market – powers are circumscribed. When it comes to setting the critical rules of accounting itself – how industry and finance are audited – the big four are equally dominant. Their alumni control the international and national standard-setters, ensuring that the rules of the game suit the major accountancy firms and their clients.

The long reach of the bean counters extends into the heart of governments. In Britain, the big four’s consultants counsel ministers and officials on everything from healthcare to nuclear power. Although their advice is always labelled “independent”, it invariably suits a raft of corporate clients with direct interests in it. And, unsurprisingly, most of the consultants’ prescriptions – such as marketisation of public services – entail yet more demand for their services in the years ahead. Mix in the routine recruitment of senior public officials through a revolving door out of government, and the big four have become a solvent dissolving the boundary between public and private interests.
There are other reasons for governments to cosset the big four. The disappearance of one of the four major firms – for example through the loss of licences following a criminal conviction, as happened to Arthur Andersen & Co in 2002 – presents an unacceptable threat to auditing. So, in what one former big-four partner described to the FT as a “Faustian relationship” between government and the profession, the firms escape official scrutiny even at low points such as the aftermath of the financial crisis. They are too few to fail.

The major accountancy firms also avoid the level of public scrutiny that their importance warrants. Major scandals in which they are implicated invariably come with more colourful villains for the media to spotlight. When, for example, the Paradise Papers hit the headlines in November 2017, the big news was that racing driver Lewis Hamilton had avoided VAT on buying a private jet. The more important fact that one of the world’s largest accountancy firms and a supposed watchdog of capitalism, EY, had designed the scheme for him and others, including several oligarchs, went largely unnoticed. Moreover, covering every area of business and public service, the big four firms have become the reporter’s friends. They can be relied on to explain complex regulatory and economic developments as “independent” experts and provide easy copy on difficult subjects.

Left to prosper with minimal competition or accountability, the bean counters have become extremely comfortable. Partners in the big four charge their time at several hundred pounds per hour, but make their real money from selling the services of their staff. The result is sports-star-level incomes for men and women employing no special talent and taking no personal or entrepreneurial risk. In the UK, partners’ profit shares progress from around £300,000 to incomes that at the top have reached £5m a year. Figures in the US are undeclared, because the firms are registered in Delaware and don’t have to publish accounts, but are thought to be similar. (In 2016, when I asked a senior partner at Deloitte what justified these riches, he sheepishly admitted that it was “a difficult question”.)

Targeting growth like any multinational corporation, despite their professional status, the big four continue to expand much faster than the world they serve. In their oldest markets, the UK and US, the firms are growing at more than twice the rate of those countries’ economies. By 2016, across 150 countries, the big four employed 890,000 people, which was more than the five most valuable companies in the world combined.

The big four are supremely talented at turning any change into an opportunity to earn more fees. For the past decade, all the firms’ real-terms global growth has come from selling more consulting services. Advising on post-crisis financial regulation has more than made up for the minor setback of 2008. KPMG starred in the ultimate “nothing succeeds like failure” story. Although – more than any other firm – it had missed the devaluation of subprime mortgages that led to a world banking collapse, before long it was brought in by the European Central Bank for a “major role in the asset quality review process” of most of the banks that now needed to be “stress-tested”.

The big four now style themselves as all-encompassing purveyors of “professional services”, offering the answers on everything from complying with regulations to IT systems, mergers and acquisitions and corporate strategy. The result is that, worldwide, they now make less than half of their income from auditing and related “assurance” services. They are consultancy firms with auditing sidelines, rather than the other way round.

The big firms’ senior partners, aware of the foundations on which their fortunes are built, nevertheless insist that auditing and getting the numbers right remains their core business. “I would trade any advisory relationship to save us from doing a bad audit,” KPMG’s UK head Simon Collins told the FT in 2015. “Our life hangs by the thread of whether we do a good-quality audit or not.” The evidence suggests otherwise. With so many inadequate audits sitting on the record alongside near-unremitting growth, it is clear that in a market with very few firms to choose from, poor performance is not a matter of life or death.

 

The ‘big four’ accountancy firms. Composite: Getty / Alamy / Reuters

These days, EY’s motto is “Building a better working world” (having ditched “Quality in everything we do” as part of a rebrand following its implication in the 2008 collapse of Lehman Brothers). Yet there is vanishingly little evidence that the world is any better for the consultancy advice that now provides most of the big four’s income. Still, all spew out reams of “thought leadership” to create more work. A snapshot of KPMG’s offerings in 2017 throws up: “Price is not as important as you think”; “Four ways incumbents can partner with disruptors”; and “Customer centricity”. EY adds insights such as “Positioning communities of practice for success”, while PwC can help big finance with “Banking’s biggest hurdle: its own strategy”.

The appeal of all this hot air to executives is often based on no more than fear of missing out and the comfort of believing they’re keeping up with business trends. Unsurprisingly, while their companies effectively outsource strategic thinking to the big four and other consultancy firms, productivity flatlines in the economies they command.

The commercial imperatives behind the consultancy big sell are explicit in the firms’ own targets. KPMG UK’s first two “key performance indicators”, for example, are “revenue growth” and “improving profit margin”, followed by measures of staff and customer satisfaction (which won’t be won by giving them a hard time). Exposing false accounting, fraud, tax evasion and risks to economies – everything that society might actually want from its accountants – do not feature.

Few graduate employees at the big four arrive with a passion for rooting out financial irregularity and making capitalism safe. They are motivated by good income prospects even for moderate performers, plus maybe a vague interest in the world of business. Many want to keep their options open, noticing the prevalence of qualified accountants at the top of the corporate world; nearly a quarter of chief executives of the FTSE100 largest UK companies are chartered accountants.

When it comes to integrity and honesty, there is nothing unusual about this breed. They have a similar range of susceptibility to social, psychological and financial pressures as any other group. It would be tempting to infer from tales such as that of the senior KPMG audit partner caught in a Californian car park in 2013 trading inside information in return for a Rolex watch and thousands of dollars in cash that accountancy is a dishonest profession. But such blatant corruption is exceptional. The real problem is that the profession’s unique privileges and conflicts distil ordinary human foibles into less criminal but equally corrosive practice.

A newly qualified accountant in a major firm will generally slip into a career of what the academic Matthew Gill has called “technocratism”, applying standards lawfully but to the advantage of clients, not breaking the rules but not making a stand for truth and objectivity either. Progression to the partner ranks requires “fitting in” above all else. With serious financial incentives to get to the top, the major firms end up run by the more materially rather than ethically motivated bean counters. In the UK in 2017, none of the senior partners of the big firms had built their careers in what should be the firms’ core business of auditing. Worldwide, two of the big four were led by men who were not even qualified accountants.

The core accountancy task of auditing can seem dull next to sexier alternatives, and many a bean counter yearns for excitement that the traditional role doesn’t offer. As long ago as 1969, Monty Python captured this frustration in a sketch featuring Michael Palin as an accountant and John Cleese as his careers adviser. “Our experts describe you as an appallingly dull fellow, unimaginative, timid, lacking in initiative, spineless, easily dominated, no sense of humour, tedious company and irredeemably drab and awful,” Cleese tells Palin. “And whereas in most professions these would be considerable drawbacks, in chartered accountancy they’re a positive boon.” Palin’s character, alas, wants to become a lion tamer.

The bean counter’s quest for something more exciting can be seen running through modern scandals like Enron and some of the racy early-21st-century bank accounting. One ex-big four accountant told me that if there was a single thing that would improve his profession, it would be to “make it boring again”.

Where once they were outsiders scrutinising the commercial world, the big four are now insiders burrowing ever deeper into it. All mimic the famous alumni system of the past century’s pre-eminent management consultancy, McKinsey, ensuring that when their own consultants and bean counters move on, they stay close to the old firm and bring it more work. The threat of an already too-close relationship with business becoming even more intimate is ignored. In 2016, EY’s “global brand and external communications leader” waxed biblical on the point: “You think about the right hand of greatness; actually the alumni could be the right hand of our greatness.”

The top bean counter’s self-image is no longer a modest one. “Whether serving as a steward of the proper functioning of global financial markets in the role of auditor, or solving client or societal challenges, we ask our professionals to think big about the impact they make through their work at Deloitte,” say the firm’s leaders in their “Global Impact Report”. The appreciation of the profound importance of their core auditing role does not, alas, translate into a sharp focus on the task. EY’s worldwide boss, Mark Weinberger, personifies how the top bean counters see their place in the world. He co-chairs a Russian investment committee with prime minister and Putin placeman Dmitry Medvedev; does something similar in Shanghai; sat on Donald Trump’s strategy forum until it disbanded in 2017 when the US president went fully toxic by appeasing neo-Nazis; and revels in the status of “Global Agenda Trustee” for the World Economic Forum in Davos.

The price of seats at all the top tables is a calamitous failure to account. In decades to come, without drastic reform, it will only become more expensive. If the supposed watchdogs overlook new threats, the fallout could be as cataclysmic as the last financial crisis threatened to be. Bean counting is too important to be left to today’s bean counters.

In silencing Euroscepticism, Italy’s president has gifted its far right

Yanis Varoufakis in The Guardian

Italy should be doing well. Unlike Britain, it exports considerably more to the rest of the world than it imports, while its government spends less (excluding interest payments) than the taxes it receives. And yet Italy is stagnating, its population in a state of revolt following two lost decades.

Italian president names interim prime minister until fresh elections


While it is true that Italy is in serious need of reforms, those who blame the stagnation on domestic inefficiencies and corruption must explain why Italy grew so fast throughout the postwar period until it entered the eurozone. Was its government and polity more efficient and virtuous in the 1970s and 1980s? Hardly.

The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.

In 2015 the Greek people elected a progressive, Europeanist government with a mandate to demand a new deal within the eurozone. In the space of six months, under the guidance of the German government, the European Union and its central bank crushed us. A few months later, I was asked by the Italian daily newspaper Corriere della Sera if I thought European democracy was at risk. I answered: “Greece surrendered but it was Europe’s democracy that was mortally wounded. Unless Europeans realise that their economy is run by unelected and unaccountable pseudo-technocrats, committing one gross error after another, our democracy will remain a figment of our collective imagination.”

Since then, the pro-establishment government of Italy’s Democratic party implemented, one after the other, the policies that the unelected bureaucrats of the EU demanded. The result was more stagnation. And so, in March, a national election delivered an absolute parliamentary majority to two anti-establishment parties which, despite their differences, shared doubts about Italy’s eurozone membership and a hostility to migrants. It was the bitter harvest of absent prospects and withering hope.

After a few weeks of the kind of post-election horse-trading common in countries like Italy and Germany, the Five Star Movement and League leaders Luigi Di Maio and Matteo Salvini struck a deal to form a government. Alas, President Sergio Mattarella used the powers bestowed upon him by the Italian constitution to prevent the formation of that government and, instead, handed the mandate to a technocrat, a former IMF employee who stands no chance of a vote of confidence in parliament.

Had Mattarella refused Salvini the post of interior minister, outraged by his promise to expel 500,000 migrants from Italy, I would be compelled to support him. But, no, the president had no such qualms. Not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where.

No, Mattarella chose to clash with an absolute majority of lawmakers for another reason: his disapproval of the finance minister designate. Why? Because the said gentleman, while fully qualified for the job, and despite his declaration that he would abide by the EU’s rules, had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.

What is so striking is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?


Beyond his moral failure, the president has made a major tactical blunder

Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.

Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”

If Mattarella takes solace from the fact that previous Italian presidents managed to put in place technical governments that did the establishment’s job (so “successfully” that the country’s political centre imploded), he is very badly mistaken. This time around he, unlike his predecessors, has no parliamentary majority to pass a budget or indeed to lend his chosen government a vote of confidence. Thus, the president is forced to call fresh elections that, courtesy of his moral drift and tactical blunder, will return an even stronger majority for Italy’s xenophobic political forces, possibly in alliance with the enfeebled Forza Italia of Silvio Berlusconi.

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