The Backlash Begins

July 25, 2011

One of the striking features of the banking crisis was the way in which the Left utterly failed to capitalise upon it. A casual observer would’ve thought that worldwide financial calamity brought on by the mismanagement by the private sector of the planet’s finances would provide the perfect prop to those demanding more state intervention. But this failed to happen – across Europe, right-wing parties cemented their grip on power, in the US a tidal wave of populist anti-statism arose, and in South America the previously leftist governments reached their high water mark.

The populace of the West did not demand revolutionary change. In the Anglo-Saxon world, the ideals of Thatcher and Reagan remained dominant, and libertarianism – the belief in the moral worthiness of the unrestrained entrepreneur – rose in prominence. The reason for this may simply be the absence of an alternate model; with the failure of socialism, what remains? The Left remains mired in a quagmire between infeasible socialism and an economic model – the Third Way – that shackles social concerns to the cyclical nature of capitalism.

There are signs that this may change, however. The third of the UK’s Transparency Crises, the hacking scandal, has reinforced a point that was not made opaquely in the first two. The banking crisis revolved in part around the mis-selling of financial products complex to the point of opacity. An information failure in the banking system – the inability to know whether the people borrowing money were able to pay it back – led to the freezing up of credit. The MPs’ expenses scandal involved the revelation that the complex mechanisms by which MPs were paid for ‘expenses’ were in fact de facto wage hikes concealed in paperwork. The hacking scandal has demonstrated that individuals in possession of a great deal of power and influence are apt to abuse it.

For this is a crisis not just of the relationship between media and Government, but of individualism itself. Markets perform inadequately when their participants have insufficient information. If the power structures of a given market lead to the concealment of information, then that market fails to perform effectively. The post-Thatcher society of individuals maximising their net worth lends itself to the creation of these power structures, as we have seen. If individuals cannot be trusted, then a political and economic system based on that requirement is cast into doubt.

It is notable that the first response of Government to this latest crisis has been to reach for the regulatory toolbox, which stands in contrast to the way in which regulation was only dragged out of the Government in the previous two crises. There is an implicit recognition that individualism has failed, and some form of collective regulation is necessary. Even The Telegraph begins to accept this.

This is a tremendous challenge to libertarians. Socialism failed not because it was perceived as immoral, as they would have you believe, but because it failed to deliver sufficient benefit to those living within it. It failed because individuals are selfish, and best motivated by that. But if that selfishness is so extreme as to necessarily subvert the restricted power structures endorsed by libertarians with ones born of money, then libertarianism fails for the same reason. Morality doesn’t come into it; practicality trumps all.

Chris argues that this failure of individualism requires that some mechanism is set up by the left to prevent capitalists capturing the state in the way in which the hacking scandal has illustrated. I would disagree. These are transparency crises, and the way to overcome transparency crises is to provide more information. I would argue instead for a General Right of Information, giving any member public the right to see any document held by any corporation or similarly legally constituted entity, as well as the public sector. As a liberal, one would think this challenge to individualism is a challenge to my political beliefs. Not a bit of it. At the centre of liberalism has always been the understanding that education – information provision – is necessary for the effective state. It is now our task to extend it.



One of the most amusing parts of the hacking scandal has been the increasingly shrill voices of the Right, who have taken it upon themselves to defend someone they perceive as their man from the Guardian-BBC Axis of Lefties. Somehow, all this phone-hacking nonsense is all the fault of dreadful unwashed types who hate that nice Mr Murdoch for that worst of crimes, being successful.  After all, they say, if you want to take a pop at an organisation with an excessive influence on the media, look at the BBC, which positively dominates our daily life, and refuses to accept that hanging should be brought back and that unmarried mothers should be forcibly sterilised. Clearly its influence upon our lives is pernicious.

Well. That’s quite a strong claim. Contrasted with it are the triumphant cries of the left, sensing the blood of their ancient and decrepit prey in the water. Mr Murdoch is eighty years old, and if he was a bit more poverty-stricken and in a nursing home surrounded by snapping paparazzi, would suddenly find his erstwhile persecutors become his greatest allies. Clearly, once this decrepit Emperor falls down the central shaft of Fox News, we’ll have an immediate revolution in the way our media represent reality.

Okay, perhaps no-one’s making the latter claim, but the former paragraph does summarise the attitude of the likes of Phillips. What’s interesting about this issue is that both left and right manage be simultaneously correct and wrong in exactly the same way.

You see, the media is two different things:

  • A means by which the population access information they use to inform their decisions. This is a clear public good; an educated populace is both more economically productive and better at engaging with democratic decision-making.
  • A means by which the population accesses information that entertains them. This is a clear public good; everyone likes titillating pieces of info, be it gossip, jokes or just an interesting story about something a long way off, and it helps make people happy.

Obviously, there are crossovers, making the above more of a continuum with The Open University at one end and The Daily Sport at the other. Nonetheless, they should both be perceived as separate public goods, with separate means of delivering them. It is immediately clear that different organisations will contain more of one and less than another, depending on their priorities. Herein lies the dispute: lefties think the media is all doing more of the first bit, while righties think the media is all doing more of the second bit. News International is perceived as poisonous by the Left because they think it’s contaminating public discourse by failing to stimulate real debate, while the Right resents the BBC at least in part because it’s hampering the ability of private companies to deliver similar offerings to the market.

What we want, if we’re good liberals, is to determine the most efficient method of delivering a given public good. The answer to this may simply be ‘The Market’. This is clearly true of the second aspect of the media – people have direct access to their preferences and desires with regard to entertainment, and can make the best choices for themselves. It is not, however, entirely true with regard to the first statement – you don’t know the things you don’t know, and can’t determine how best to access them if you have no information on how to access them. You need some mechanism by which people can access information that doesn’t depend upon the information they already possess. The media market can’t deliver that, as people obviously can’t express a preference for something they know nothing about.

Of course, the first aspect of the media is also provided through other methods – via schools, education, public awareness campaigns and self-directed learning. The question for liberals is whether these methods in themselves are sufficient to produce the reflective citizens considered by the likes of Adam Smith to be necessary for a flourishing society.

I feel safe to say that Smith would advocate making learning endemic throughout our society, and in the media especially – the most immediate form of information present to us. Information should not be simply dumped, but presented in many and varying ways in order to stimulate reflection upon it. A significant percentage of this can be left to the markets for art and literature, but they present their own informational barriers to entry. We require an institution that delivers information that encourages reflection and analysis to everyone via modes accessible to them, and does it on a daily basis.

This is the thinking behind the BBC as a means to deliver part of a public good. By and large, it is successful in doing so – its soap operas deal with social issues, it has innumerable documentaries and a solid news service. It is, however, guilty of ‘bloat’ into areas that are more properly the preserve of media intended to serve that second aspect – for example, is it really necessary that the BBC produces little Doctor Who computer games? It can also, especially in the present context, be guilty of not being able to differentiate between objectivity and its perspective as a media organisation, resulting in allegations that it has had an inappropriate focus on the hacking scandal. This may require some institutional tinkering to remedy.

It’s also important to be clear that the BBC isn’t left-leaning – perhaps its individual staff members are, but there’s a strong distinction between individuals and an organisational perspective. What it does do is follow the established line of the main democratically elected parties. None of the main parties advocate a complete halt to all immigration, so the BBC excludes anti-immigration voices – except when they’re elected, like the BNP. None of the main parties is calling for the criminalisation of homosexuality or endorsing discrimination against homosexuals, so the BBC has no space for homophobes. More broadly, questions of its political persuasion actually appear to be a feature of phraseology – referring to Government cuts as Government cuts, for example. This is a matter for the parties to debate between themselves and make representations to the BBC on the back of, which it is institutionally committed to take into account.

So, the BBC is a public service designed to deliver information to the public. This is not the same thing as News International, which is designed to deliver a news product to the public for them to buy if they wish it. They don’t ‘compete’ per se, because they’re designed to do different things, and the public understands that. To illustrate this, compare two figures. One is the audience share for all BBC channels (32.9%), versus the audience share for all Sky channels (6.61%). The other is the audience share for BBC News (70.67%) versus Sky News (4.41%). If the BBC were producing the same product as Sky, it would attract news watchers broadly in line with its overall audience. It’s not, because people actively want news delivered by an institution designed to deliver it as objectively as possible, and simply do not trust non-BBC providers to do so. The market couldn’t deliver that result.

Source for figures: BARB

The Data Protection Act makes provision for anyone to access information held on them by a given organisation. However, it has several exemptions from this, including:

Personal data which are processed only for the special purposes are exempt [if] the processing is undertaken with a view to the publication by any person of any journalistic, literary or artistic material.

You don’t have a right to find out what information newspapers have on you. In other words, if a newspaper has hacked your phone, you don’t have the right to find that out.

I don’t think journalists can be trusted with that exemption. I think it’s time for it to be removed.


The News Must Flow

July 8, 2011

By far the most amusing incident of yesterday’s spontaneous combustion of the News of the World was Charlie Brooker’s pithy Tweet:

It instantly captured how much of the Left perceives its role in this saga; as a collection of plucky rebels facing down an evil corporate empire. However, this is entirely the wrong sci-fi-franchise-prism through which to view these events, not least because it presents the disturbing image of Tom Watson finding out that Rebekah Brooks is his mother in the sequel.

Rather, the best analogy for these events is Frank Herbert’s Dune. For those not familiar with the franchise, the Dune universe revolves around the control of a mysterious substance called ‘spice’ or ‘melange’. ‘Spice’ unlocks various mental abilities, as well as extended life, and is the key to interstellar travel. The only source of the spice is the planet Arrakis, a desert world inhabited by the Fedayeen. The novel is largely a sci-fi re-imagining of Lawrence of Arabia’s exploits in the First World War in securing Middle Eastern oil supplies for the Allies by encouraging the Arabs to revolt.

The reason why I present it as an analogy is that it makes very clear the link between control of the production of a given resource and control in the wider sense. If you control the resource someone requires to travel, then you control their capacity to travel. This is summed up in the novel by the phrase, “He who controls the Spice, controls the universe!”

Why is this relevant? It’s relevant because what’s at stake in the News of the World saga is not control over something as manifest as oil, but rather control over modes of accessing reality. People buy newspapers not to be informed about the world, but to be informed about the world in a particular way. When you buy a newspaper you buy into a worldview. As a result, newspapers tailor their modes of presentation to be line with what they assume their readers want. Over time, this becomes a self-fulfilling prophecy: people base their attitude to the world on the information presented to them, and if this information is repeatedly presented in a given mode, people will take up that mode to inform their own attitude and judgements.

Clearly, control over the modes by which people access information is control – or at least strong influence – over their decision-making. And here we come to the heart of the analogy.

There is absolutely nothing wrong with people tailoring a product to their consumers in order to sell more of that product, that’s how the free market operates. There is something wrong when control over a product becomes more important than selling that product. The contest in Dune for control over Arrakis between House Atreides and House Harkonnen, while ostensibly about profit, is in fact about that power. The Guardian, in the role of House Atreides, has always presented itself as a campaigning newspaper with little interest in profit. For News of the World, twinned with House Harkonnen and its red-headed Baron, they have always been a profit-seeking tabloid.

Baron Harkonnen Rebekah Brooks

No longer. The closure of the best-selling English language tabloid is not a move informed by mere avarice, but by cold political calculation. This decision will cost Murdoch money; the NotW, unlike much of the press, made a profit. It would’ve made a profit again in a couple of months when advertisers started crawling back. High-profile brands are remarkably resilient. People would once again buy it because they enjoyed gutter-tales of celebrity gossip and the angst of parents of murdered children. Its customer base still exists.

But to not make such a nakedly line-drawing move would have eliminated Murdoch’s influence with the political class. It would have handed politicians an ongoing stick to beat him with. His profits would remain, but his influence, and the scope of his newspapers to set the political agenda, would’ve been decreased. As it is, there will be reform, but it will be mitigated by the knowledge that its main target no longer exists. Murdoch has surrendered profit for political power, and in doing so has let the curtain fall back. No longer will it be possible to pretend that much of the press is truly only responding to its readers, rather than the agenda of its masters. As the profit margins of the press continue to decrease, and they are maintained as personal lobbying facilities by moguls, it will be increasingly difficult to see how their continued unregulated existence can be justified.

After all, he who controls the news about the universe, controls the universe. How can anyone have that power?

Few things are more irritating than otherwise sensible people claiming that they read the likes of the Mail and the Telegraph in order to get ‘all the sides of a story’. Newspapers don’t present sides of a story in terms of a measured weighing of pros and cons, they present the range of feelings you could have about a particular story. They certainly don’t, especially in the case of the Mail, bother to argue about why you should have them.

I’ve always felt that if you genuinely want to try to see other points of view, you should try to understand the philosophical underpinnings behind him. Unfortunately, not all points of view have proper philosophical underpinnings, so in those cases it’s better to understand the emotional case that lies at its root.

Last year I blogged my way through Atlas Shrugged, perhaps the most famous libertarian polemic. I did this initially with the hope that Ayn Rand had a proper philosophical backing for the internet’s most popular religion, but was rapidly disabused of this idea. Instead, what I found most fascinating about the book was the emotional case it presented; the virtues of the industrious presented against the moral cowardice of the feckless and avaricious. It is this emotional case which has led to its appeal.

Going to the opposite end of the political spectrum, I have recently finished reading The Ragged Trousered Philanthropists. This book is in many ways the mirror of Atlas Shrugged; a morally compelling account of how capitalism has screwed the working classes over and how only socialism can afford a release. Originally, I considered blogging my way through it, but decided against it for two main reasons. The first is that the standard of prose in TRTP is much better than Rand’s work, which shuts down a whole avenue of potential mocking. The second is that the book is so much less overtly philosophical than Atlas Shrugged, and is set very firmly within a real town at a real period in history. Much of its content makes reference to contemporary legislative and political issues, and a blog of it would prove incomprehensible without providing enough ancillary material to fill a second book.

Nonetheless, it presents a very powerful picture of how capitalism can fail the worst off in society. There are two pieces of it I’d like to explore: The Money Trick and the Co-operative Commonwealth.

The Money Trick is an argument about how capitalism by its very nature screws over the worker. If one considers the capitalist class and the working class as two separate entities, one can understand this argument very clearly. The working class labours for the capitalist class to produce the necessities of life, which on production are owned by the capitalist class. The capitalist class pays the working classes for their labour. The working classes then have to use the money thus paid to buy back the necessities of life after they undertook the work to produce them. The capitalists end up with both the labour they paid for and the money they paid for it. The working classes get to exist.

It’s very clear from this argument that this arrangement is actually worse than slavery. An owner of a slave has an interest in their wellbeing, to ensure that they get maximum value out of their asset. A capitalist employer doesn’t need to care if his employees get sick or die, as there’s plenty more where they came form.

The obvious rejoinder is that the class analysis is wrong; class is a confused inchoate thing, and people on various levels of income have different roles within the economy, and can genuinely see their living standards rise. This is correct, but it’s also important to recognise the fundamental truth contained within the argument: if you’re working all the hours you have to merely sustain your existence, then you’re worse off than a slave. You have no means by which you can improve your prospects if you’re at the top of your field already, as the author’s painters and decorators are. It’s clear that if capitalism is to work for people like that, an element of redistribution is necessary to permit at a minimum some form of advanced training.

The Co-0perative Commonwealth is the author’s vision of a future socialist society, in which all industries are managed by the State and everyone is paid the same, regardless of the work they do. It is presumed that more prestigious jobs will be rewards in themselves for those who choose to take them up, while for jobs such as rubbish collecting, the hours of labour will be constrained to reflect their low status. Pay will remain the same regardless.

There are many other details of this future society in the book, which I will not go into here. However, it’s important to be clear that the society envisioned by the author is inherently romantic. It is an idealised society in which everyone has a chance to flourish in line with their own wishes. And – let’s be clear – it is a wonderful vision of how society might work. Absolute freedom from worrying about the cost of living is something that capitalism will never be able to offer by itself.

The book was written before the formation of the Soviet Union, so it’s wrong to call it to account for not anticipating the horrors that socialism actually brought. However, while socialism never worked in practice, the Co-operative Commonwealth provides an argument that the Right will never be able to refute: that a society in which everyone is free to flourish by any means of their choosing is a wonderful vision. It’s an impossible vision, but that doesn’t stop it being a wonderful vision.

This discord lies at the heart of many of the disputes in politics: an impossible but just society is still something many of the Left would argue politics should be directed towards, while those on the Right argue that politics should be directed towards the possible. The conflict of impossible justice against vicious reality is eternal, and unlike Rand’s doorstopper, this is a book I can heartily recommend.

That pound in your pocket. How much is it worth to you? The haters of rhetoric will say, “A pound, you fool.” The ingenious economists will say, “An amount of goods and services determined by a combination of market forces and fiscal policy”. This is to miss the operative part of the question: how much is it worth to you?

One of the greatest flaws in contemporary discourse is the assumption that money has a linear value; that if you earn £100, then increasing your wages by £100 will double the amount you earn. This would come as a colossal surprise to certain isolated tribes; previously you were earning some, now you are earning more. What appears to be a linear scale of value is in fact a logarithmic scale.  Smaller amounts of money are worth more to an individual than in aggregate if that individual possesses more.

This idea has an immediate level of plausibility if you think of it in terms of our needs. Money necessary to house, clothe and feed oneself is far more important than a tenner to buy trinkets. Indeed, if one thinks in terms of a hierarchy of needs, one could identify the ways in which a given amount of money has more value depending on how fulfilled your needs are. For example, the money required to look after your family has more value than the money required to buy yourself a new CD.

Why is this important? Well, your willingness to do work depends not simply on the amount of money you’ll get as a consequence, but the value of that money to you. Iain Duncan Smith’s call for British employers to recruit more British staff should be seen in this light. It is the case that a significant proportion of immigrants who come here to work do so not simply to live, but to support their families. Remittances to Poland from the UK during the boom years were nearly £1 billion per quarter. That’s a whole lot of plumbing.

In contrast, UK-based unemployed people, especially the young, do not need to support their family as a consequence of the welfare state. Therefore, the cost of their labour is higher, as to make the same work worth their while – to fulfil secondary and tertiary needs which are less important – they need to be paid more. The market price for their labour is not wholly determined by their competence, but by a combination of their competence and the fulfilment of their needs. If the relative needs of immigrants are higher, then they will charge less for providing a given level of competence.

I do not believe for a second that British employees have suddenly become feckless and illiterate, especially as the literacy rate continues to rise. Rather, the people going for the jobs that immigrants are going for are simply out-skilled by immigrants who need them more. If you want British people at the same skill level as immigrants, you have to pay more.

However, that’s not the approach taken by the Government. Instead of raising wages, they’ve opted to raise need. I agree with the benefits cap – it’s a necessary step to take to ensure that the welfare state continues to be perceived as just – but to pretend that it wouldn’t create need is simply disingenuous. People were always going to be forced out of their houses in high-price areas, and conveniently for the employers of London, insufficient work has been done to ensure that spaces are available for them outside the capital. All of a sudden, at the same time as the ‘immigration cap’ is being put in place, London will once again have a supply of cheap labour from people who really, really need the work.

But, of course, Government isn’t joined-up enough to have such a master plan.