The Problem With . . . Us

Being new year and all I thought it was time for a little self reflection. The world today often feels like it is falling apart, the rest of the time that it is simply grinding along without making much progress. How much of that is to do with us? And would changing ourselves really make much of a difference in the world?

According to surveys of subjective happiness, the UK has been trending upwards for the last 30 years or so. But I think it would be fairly well accepted to say that people feel they work longer and harder than their parents and get to spend less time with their families even if they have greater material wealth. Maybe the trend says more about what people define happiness as rather than an “objective” state of mind.

I think the major change in people during the last half decade or so is the rise of the materialist culture and consumerism. Maybe you could trace the trend back to the end of the second world war, after rationing and shortages luxury items took on a new meaning. Luxuries came pre-earnt as a reward for winning against evil, businesses were quick to capitalise on this and took steps to encourage the practice.

As prosperity grew so did people’s ability to afford luxuries and the baby boom ensured that the cultural genes of this proto-consumerism were widely spread. Now there’s nothing inherently wrong about wanting to better your life and make it comfortable, but when it becomes the measure by which you judge your life something has gone wrong. Apply that thinking across a whole society and you have real problems. Personally I think the consumerism culture as we see it today can be traced back to television through advertising and celebrity.

Advertising these days is highly targeted towards our subconscious. Advertising firms will hire behavioral psychologists to help optimise the sounds, colours and images in their advert to drive it into your brain whether you want it there or not. You might hate the “go compare” adverts but when you need to find insurance that irritating hook that’s been playing in your mind on and off for the last few months will gently re-surface without your bidding.

It doesn’t help that the very act of watching television puts your mind into a suggestive state. The flicker of a television will lull your brain into a slow alpha state usually associated with meditation or relaxation. As your brain is trained to spot differences, every time a shot cuts to another your brain scrabbles to re-asses the scene in front of it making it hard to concentrate or analyse information.

With your ability to rationally assess what is being displayed to you depressed, by the time the adverts come on you are left to rely on an emotional or instinctual response. Advertisers find it incredibly easy to exploit emotion by appealing to a lack of self worth for beauty products, fear in the case of insurance or “family values” if you look at things like those new Wii adverts. It’s easy to think that you’re somehow immune from their effects, but it’s more like you dont even know you’re infected.

If it is easy to influence adults to buy a product then it is easier still to get to children. Advertising to kids pays double in that you can get them to buy your product and also train up a future generation of consumers. A child that watches TV from say 4 when they get home from school till 7 when they have dinner, will spend about 50 minutes watching adverts filled with kids with more stuff than they have. They are exercising little choice but get imprinted with the need for any product that is shown to them enough times. To say that that won’t have an effect on how they live the rest of their lives seems rather naive.

The celebrity culture also goes a long way in explaining consumerism. Humans are still essentially herd animals, during our evolution there have been strong pressures that forge us into groups. We need to protect ourselves from predators, hunt as a pack to kill large prey and divide up tasks to become more efficient. Within such a structure it pays to copy the most successful. When new and complex tasks are required to survive it is easier to learn from someone more successful and that requires a close emotional attachment to your leader.

This inbuilt instinct comes counterproductive when the successful people you start to bond to are people you don’t know and whose lives are so far removed from your own that you have little to learn from them. Celebrity culture has grown up around that hardwired instinct and can be used to get people to buy even more things that they don’t need and encourage a feeling of inadequacy as we are bombarded with images of success we are not able to achieve.

As well as judging ourselves in comparison to the wealth, appearance and possessions of celebrities this mindset has infected how we interact with other “normal” people. It makes us narcissistic, paranoid and greedy. We end up trapping ourselves in debt and obligation in insurance for our faster cars, mortgages for our bigger houses and paying for trinkets that we simply don’t need. The result for most is wealth, but needing to work a job you probably don’t enjoy for the majority of your time to afford it.

Even if we have better diagnostic tools for recognising it and better therapies for treating it it is no surprise that there is a massive increase in mental health issues in a world where we are focused on others rather than ourselves. I think this trend to compare ourselves to others has a lot to do with the fractured society that we live in today.

Where there is endless choice in the clothes and products we buy we are encouraged to find things that express our individuality. With so many options for things that make you unique, it is harder and harder to find anything you share in common with people. We are segregating into ever smaller divisions. Hipsters, emos, chavs, goths, jocks, trendies, wasters the list goes on, they are all people but get separated based on common clothing, that is the state of our schools and colleges today.

No longer are we united as a members of a town, a class or a nation. We’re just people milling around looking for people like us. We see more of people who we appear to share nothing in common with us because we’ve been blinded to the similarities that we might share, and it makes us feel, lonely and depressed.

Whereas the worries of the last century were of world war or nuclear armageddon, issues decided in smoke filled rooms far from the influence of the average citizen, today’s problems are ones that we all contribute to. Global warming, the economy and the breakup of society, these are all things that we’re supposed to be able to change. But we feel isolated and are constantly reminded of how small we are in comparison to these vast global problems.

Politicians have been playing on this sense of weakness for decades, they are unable to give us a truly better world, but they can save us from the fears that we can do nothing about. The shock doctrine has been used to great effect, building up anxiety about 9/11 and launching a wars in Afghanistan Iraq, wailing about the financial crash and shovelling vast wads of cash to the banks, the threat of terrorism being used to curb our civil liberties and fear of the deficit used to drive through a program of politically motivated, unjust and unproductive austerity.

It seems however that this spell is being broken, a populace that has remained meek for two decades is beginning to rise up and assert it’s power. Rather than being atomised, it turns out that the citizenry of this country actually have rather a lot in common. National strikes, occupations, student protests and riots are all gathering people that are unwilling to remain as chattel to be controlled.

Change is inevitable, but how much and how fast, and that depends on us. The world is hanging in the balance, there are many that would seek to tip the balance towards either a slow decline or a sudden collapse for their own benefit. It is up to us to tip the scales in the direction we want to see them go, we may not be powerful, but there are more of us than them.

2012 will be an interesting year, if the unrest we’ve seen in 2011 is anything to go by then it could be a rocky one too. But that simply means it will be an opportunity for real and lasting change for a system that has enslaved the many for the benefit of the few.

The Problem With . . . Schools

Education, education, education. It’s one of the things that Tony Blair got right in his political strategy, even if whether he actually delivered on his priorities is debatable. Education is the foundation upon which a successful society is based, a good educational system relieves the pressure on every other public service and drives productivity and innovation. But the education system we have today is based on a centuries old model and is perceived by many as being unable to perform in the 21st century.

This fact has not gone unnoticed by politicians, whose endless tweaks and counter-tweaks have left us with a system that has so many aims, objectives and measures of success that it doesn’t seem sure what it is for anymore. Students themselves are increasingly coming to terms with the idea that how hard they work in school will have less impact on their future success. As more people ascend further up the educational ladder there is more competition for jobs at whatever level you exit. Unlike for our parents, education is no longer a free ticket into work and so many children are becoming disillusioned with the whole affair.

As pressure on the system to perform grows we are being asked to reassess what the essential components to an education even are. Where do you draw the boundaries between instilling values and social responsibility, enlightening through art and literature, teaching fundamental life skills or training children to join the workplaces of the future, whatever they may be?

Broadly speaking, in primary children are not self aware enough to react badly to the system and in sixth form and above they’re developed enough to take their lives into their own hands. But I think most issues arise in secondary school where children are growing up and coming to terms with themselves and their place in the world.

Education is certainly a challenge, it would be easier if there were one simple answer that would elegantly provide the best outcome for all children but quite simply there is not. That, I believe, is the most fundamental problem with the education system we have today. If we accept that there isn’t a single optimal path to education it seems bizarre that we continue to try and force kids down only one.

The argument for standardisation is that everyone needs certain key pieces of knowledge to survive in life. Who Henry VIII was, how to calculate a percentage, a Shakespeare play or two and why water changes into ice that kind of thing. It’s a nice idea but every child is different, and despite your best intentions to teach them all the same thing not all of them will remember the whole lot once you’ve finished. Will a child getting A’s have a standardised education relative to a child getting D’s? Is the one getting A’s smarter or just more absorbed by the material being tested? Even if they had retained all the same information would they both put it to use in the same way? By trying to cater for everyone our schools no longer cater for anyone. Surely it would be better to tailor education to children’s talents and interests?

By the time one reaches secondary school you have a relatively good idea of what you like and what you’re good at, yet you have to wait another three years before you are given even the most meagre amount of choice in the subjects you pursue. The lack of influence over your curriculum suits neither the bright or the less so. Smart kids sit though hours of material they find utterly tedious and switch off. The kids that are struggling are made resentful of being forced to keep pace with everyone else and start to act out. I think even a small degree of choice would do wonders for motivation and behavior.

School becomes something you are made to do rather than something that you are actively engaging with. If there is no passion for what you’re doing it simply becomes a matter of putting in just enough effort to avoid punishment, you wouldn’t blame yourself for it so why blame kids for not caring about the things they have to study.

I think the curriculum not being so interesting wouldn’t be such an issue , if only it wasn’t being taught in such a stressful way. Standardised testing exerts a constant pressure on both students and their teachers and impacts both negatively. Students are graded as to their worth to society based on a few hours of tests. These test memorisation, isolated skills and specific facts but little else, they provide no account of creativity, initiative, effort, charm, commitment or morality. The very skills that will be most useful to you are ignored while the most boring skills are given the highest preference and will follow you round for the rest of your life. Written tests also don’t take into account the fact that some children are simply better at the exam format than others. Far from being standardised these tests actively discriminate against certain students.

If the tests fail to accurately grade students they do even worse when attempting to grade schools and teachers. Test scores depend on four factors: Students inherent intelligence, what they’ve learnt in school, what they’ve learnt outside school and how they feel on the day.Teachers have control over only one of these factors but are expected to produce consistently better results.

Mary Bousted the General Secretary of the Teachers and Lecturers Union says “educational research tells us that schools make only about 15% difference in a child’s educational achievement. The other 85% is the product of a savagely unequal society – in the UK, by the age of three, a middle-class child has heard one million more words than a working-class child.“

The easiest way to bump up test scores, as they have been for the last 23 consecutive years this is to simply teach the test. With past papers online it isn’t at all hard to focus exclusively on what questions will come up. But this invalidates the whole point of education. Children aren’t taught how to interpret and analyse but to recite.

This encapsulates most of the problems I see with the education system, you spend more time learning to obey than how to think, kids are naturally inquisitive and they react badly to that kind of environment. The pressure from the constant exams, the teachers, the homework, your parents and yourself combined with a lack of interest and little sense of tangible rewards drives kids into survival mode. From my experience there are three outcomes: Run, work incredibly hard and come close to burning out from the stress of it. Hide, go numb and coast through their time. Fight, go off the rails and drop out. None are particularly pretty.

Personally I’d lean towards a skills tree model. English, maths, science would make up the trunk of the curriculum with choices in the branches you pursue in languages, geography, history, and the rest. By breaking down subjects into smaller half-term blocks it would allow far more scope for pursuing the aspects of any given subject that are of interest, rather than dedicating years to a subject you can pick and choose on a shorter time period. There should be more focus on applicable skills as a base for learning which can be developed into “pure” academia if you want to develop that subject. You should have to have very elementary knowledge of most subjects but be allowed to pursue a talent as far as you want to take it. “Consumer choice” seems to be the buzzword at the moment, why not try it in schools?

I think it is also a mistake to strictly organise children into batches of age. Such a fluid system would allow bright students to take classes “early” and slower children later. I think children can really benefit from mixing with those outside their immediate age group. Tests could come at the end of every module and averaged, with an exit exam at the end of school. By taking an average of many small tests it gives a better picture of aptitude without the undue stress. Maybe it would prove rather complicated to implement but I’m sure that more complicated projects have been attempted.

I think a more realistic solution to many of the problems with the education system is to give power back to teachers. Years of regulation stacked on top of legislation means that there are now more things a teacher can’t do than can. Combine that with a litigious society based around “no win no fee” law and school boards that are more willing to side with a vocal minority of parents and teachers are barely able to do their jobs. They are the ones who have been educating children for their whole lives and know the best tactics, tricks and tips. There may be a few bad ones but that is true of any profession, what they need is less interference not more.

It is also important to realise that a lot of the horror stories that one can find about problem kids aren’t a product of the school system but because schools are left to mop up the mess left by society. If children are less disciplined, less attentive and more disruptive then it’s more likely to be because their parents are less able to instill these values in them. I’d be more inclined to point the finger at more families having to have both parents working and for longer, and having to abandon their children to the ADHD quick cuts, flashing lights and adverts of the TV. Children gone wild is more an economic, than educational problem.

It is unfortunate that as I see it a lot of the problems with our current school system are so fundamental as to require it to be torn apart. Only a particularly bold government would be able to actually change education for the better, otherwise we’ll have to put up with more fiddling and fudging to mask the issues at hand.

The Problem With . . . Unemployment

Quite obviously the problem with unemployment is that the people in question are not contributing towards the society that they live in. More than that, in this country they are actively draining the resources of the state by drawing benefits. With government finances in such a state at the moment, a lot of attention has been drawn to the nation’s unemployed, but rational debate seems to be rather lacking. There is too much political capital to be gained by framing welfare cutbacks in relation to the “feral underclass” and “entitlement culture” so even if there are reasonable grounds for welfare reform these arguments are lost amongst right-wing rhetoric.

According to the latest figures there are 2.64 million people out of work and that figure is expected to rise well into next year. Of those people, 1.64 million are claiming Jobseekers Allowance of a maximum of £67.50 a week. It is important to put into perspective how little of the Department of Work and Pensions budget is actually dedicated to JSA – according to the October 2011 figures of the DWP’s £152bn just £4.5bn is allocated to Jobseekers Allowance. That’s only 4.5% of the DWP’s budget or 0.72% of all government spending.

Granted, JSA isn’t the only factor, being unemployed also gives you access to a number of other benefits. Housing Allowance can pay most of your rent depending on where you’re living, Council Tax benefit pays your Council Tax and Child benefits will give £20.30 a week for your first child and £13.40 for any others. Incapacity benefit is around £75 a week if you’re off work for less than a year and £94 if you’re off for longer. I thought it interesting that the government haven’t been accepting incapacity benefit applications for the last 11 months.

What consistently stuns me when people talk about benefit culture is that assumption that it is an easy life. £67.50 a week is enough to survive, but I am sure that no-one is enjoying it. You may be able to buy the basics like groceries, electricity, gas, water and internet but you quickly get crippled by the hidden charges in life. A bike is free right up until you get a puncture or need a new chain, a return bus ticket or two can blow your budget, clothes become a real issue the longer you stay on JSA and a nice shirt for a job interview doesn’t come cheaply, then there’s the socially awkward birthdays and Christmases, travelling to another city becomes impossible and having any fun is a rare luxury. It is enough to survive, but barely.

It may be bad enough being a single person but raising children on unemployment allowance defies belief. Considering how difficult it is to survive on the £8,000 or so a family with two children would receive the statistic that 4 million children in the UK don’t own books seems rather more probable. It is also worth noting that surviving on state benefits actually puts you below the official poverty line for the UK.

Lower income support would mean that more people are driven out of their homes, I have a feeling that the same kinds of people that complain about high benefits payments would be the first to complain about tent cities and shanty towns popping up in their neighborhoods. If you don’t give people enough money to survive then they are more likely to turn to more lucrative and less legal means of supporting themselves, drugs and poverty are a self reinforcing cycle. There may be fewer benefit payments but the associated costs of policing, healthcare and care-taking go up.

As far as I’m concerned our benefits system is in no way gold-plated, and if I’m being honest could stand to be higher for families, to reflect the dearth of statistics that show that the effects of poverty in childhood will likely affect you for the rest of your life. The so called welfare trap can be better handled with a carrot rather than a stick.

It is a regular feature of columns on changes to the benefit system to find an example of someone who currently receives only slightly less than they might earn if they were working to be held up as an example of the entitlement culture. The narrative goes that Labour’s welfare excesses mean the unemployed are unwilling to demean themselves for a few extra pennies and would rather sit on the sofa huffing fags and watching Sky.

First of all I’d challenge that the stereotype even exists and whether those that promote it actually go snooping round enough “chav” houses to give a legitimate opinion. Secondly the statistics don’t support the picture of hordes of long term unemployed. The proportion benefits claimants had been out of work for more than a year remained stable at around 45% between 1983 and 1997. During Labour the rate dropped so only 25% of claimants were long term unemployed, and stayed stable until the financial crash caused it to jump 9 points in a year.

If you think people don’t want to get to work I’d say that it’s not benefits that are too high but the rewards of work that are too low. Despite the catastrophic predictions of the opponents to the National Minimum Wage Act of 1998 the Centre for Economic Performance found that boosting the amount that businesses had to pay their staff actually had no effect on how many people they hired. It was noted that there were often large increases in efficiency as companies sought to do more with their greater labour expenditure. Although this may have been true in the relative boom years, the current situation means that politicians too afraid to tinker with business’ bottom lines and are increasing the minimum wage below the rate of inflation.

Although increases to the minimum wage might so some way to increase the benefits of working, simple remuneration isn’t the only problem. What motivates us to work is a feeling of mastery of a task, of autonomy in how we accomplish it and a greater purpose that we feel our work is contributing to. Where are those feelings when working as a sales clerk, a call centre operatives or doing data entry? You can’t expect to enjoy every job you have, but at least those looking for work could hope to learn some new skills to further their future career.

Low paid, low skilled and temporary work produces few tangible rewards for the employee but it is increasingly an unpleasant reality. Half of the men and a third of the women applying for Jobseekers allowance had been on benefits within the last 6 months, following the cycle of temporary work. As employees rights continue to get shovelled onto the regulatory bonfire this “hire and fire” mentality will spread out of the temporary work sector and affect more and more people.

According to OECD data the UK had the second weakest employment protection of 35 developed countries and only 6% of business owners cited excessive regulation as one of their concerns, yet the conservative government continues to erode workers rights. Speaking on reduced unfair dismissal rights John Philpott, chief economist for the Chartered Institute of Personnel and Development said “The vast weight of evidence on the effects of employment protection legislation suggests that while less job protection encourages increased hiring during economic recoveries it also results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle, with little significant impact one way or the other on structural rates of employment or unemployment.”

The idea of allowing businesses to hire and fire with less concern for their employees is in theory to allow them to look after their own concerns and hopefully survive the economic crash. Many unemployed people means that there will be far more competition for any position offered by a company, which means they can offer a lower salary and fewer perks. The fear of losing one’s job and joining the masses of the unemployed also means that existing employees can pushed further and made to make up shortfalls caused by redundancies. Driving down the average wage makes our businesses more competitive in the world market but has obvious negative domestic effects.

The problem with the current unemployment and benefits debate is that an economic argument is being framed as a moral one. David Cameron talks about “irresponsibility, selfishness, behaving as if your choices have no consequences, children without fathers, schools without discipline, reward without effort, crime without punishment, rights without responsibilities”, all negative qualities for sure. But being unemployed does not put you amongst the ranks of the reprobates that most politicians like to pretend the streets are filled with.

The issue seems even larger when a filth obsessed media and facebook and twitter make it all too easy to find some good-for-nothing waster to justify your prejudice. Turning the unemployed into a hate figure, in a country where there are commonly 40+ applicants for a job and 740 public sector workers lose their jobs every day, is rather repugnant.

When the government eventually do get around to the economic argument it’s still full of holes. The deficit is worth worrying about, but it’s not so big because of welfare. Labour presided over a net reduction in the deficit during their 13 years in office. It was the financial crash that blew the system apart, doubling the deficit in three years. A “freak” occurrence is no reason to start launching assaults on the welfare state. I dread to think what the tories might have managed had there not been a coalition.

In fairness though I think Iain Duncan Smith’s ideas for the Universal Credit sound reasonable. The greatest issue to be solved is that working more than 16 hours cuts your benefit from all to nothing, a more graduated system would go a long way to encouraging people to work. The benefits system is horrifically complicated and none of the departments seem to be in any contact with eachother. Simplifying the procedure could save billions in efficiency, but would require huge upfront costs that the government are unwilling to invest.

Ultimately I think that the issue of unemployment has far less to do with the unemployed as it does with the lack of work for them to go into. When times are tough it is easy to look for a scapegoat to blame your problems on, but unfortunately “benefit scroungers”, “the underclass”, “feckless chavs” or whatever you’d like to label the poor and disadvantaged, aren’t it.

The Problem With . . . Globalisation

Globalisation was one of the defining trends of the 21st century. It allowed and encouraged transnational companies to reap the vast economies of scale available when shipping every conceivable good to every corner of the world. This global free trade would bring prosperity to the entire world as less developed countries would be able to compete with the western world on equal terms and lift themselves out of poverty.

Although the process of opening up the world’s markets has brought great wealth, it has spectacularly failed at distributing it. The developed world has grown far richer in the last century while the developing world is struggling to maintain its meagre gains. This legacy is wrongly blamed on inherent weaknesses of the developing countries and their people.

In fact the successes of the West and the failures of the developing world are largely due to the insidious economic imperialism, loosely termed “free trade”, that is promoted by global institutions like the International Monetary Fund, the World Bank and the World Trade Organisation. Controlled from their inception by the governments of the west, they have skewed every deal against the weak to benefit the strong.

Free trade is a cruel joke. The inherent idea seems to make sense, to allow companies in the developing world to compete in the world market and ship to anywhere they’d like without trade restrictions, so they can take advantage of the earth’s 6 billion consumers. By removing selfish protectionist barriers to trade and not allowing countries to charge tariffs on certain imported goods, then new firms wouldn’t be disadvantaged compared to established ones. This was supposed to encourage the businesses of the third world to enter the global markets, the actual effects are rather different.

What should have been immediately obvious is that without the ability to defend against foreign multinationals, the infant industries in the developing world would be out-competed by the established firms of the developed countries. Rich countries can always undercut a growing industry as they already have the experienced staff, the business contacts, the property rights and the established economies of scale to allow them to function more efficiently. It’s like beginning a boxing match with one fighter blindfolded and calling the match fair when you remove it in the final round.

The injustice is compounded when you come to appreciate that although the developed world doesn’t impose taxes on goods entering the country from elsewhere it can afford to heavily subsidise it’s own favoured industry. Subsidy has essentially the same effect by making native industry more competitive and crowd out foreign producers from the market. One of the more famous examples is that nearly half the EU’s budget is spend on farming subsidies that allow it to swamp the African markets with incredibly cheap grains and drive local farmers out of business.

Free trade has made the developed world incredibly rich so it is easy for them to claim that it is the best method for organising an effective economy. However this displays a shocking hypocrisy in that the countries that are rich today, got that way by employing heavily protectionist policy in their crucial growth stages. Only once a country’s industry is developed is it beneficial to start trading freely. The US was the most protectionist country on earth until 1913 and that was the period during which it was fastest growing.

Britain too has a long history of protectionism, in the 1700’s we wanted to compete with India in textile manufacturing. Indian calico could be sold 50 to 60% cheaper than domestically produced textiles as labour costs at home were so much higher and as yet we lacked the technology to effectively mass produce high quality materials. Throughout the century the UK imposed increasing taxes on imported Indian textiles, rising to 85% at its highest, to drive money into our own industry and let them grow. This allowed the industry to develop, and raised huge sums of money to plough into infrastructure projects that fuelled the industrial revolution. Only when the UK had reached market dominance in 1860 did it adopt free trade.

History has taught us that nearly every country that has achieved a degree of wealth has done so by protecting its “infant industries”, yet developing countries are actively prevented from doing so. The few exceptions to the protectionist rule got their wealth through a rather different mechanism. Countries like the Netherlands, Switzerland and Hong Kong took the stance that patents were artificial monopolies and refused to honour them, giving them a technological boost in their development. Many other countries during their development allowed technology theft, so long as it wasn’t from a countryman.

This route to development is also increasingly being shut out with ever stricter patent laws being applied to all manner of goods. Even strains of grains and wheat are being patented so multinationals can reap a profit from even the most basic of farming enterprises.

The advantage to the rich world is that by shutting down the developing world and preventing them from becoming wealthy they can be exploited. Labour remains cheap and the people replaceable so western goods can be manufactured at very low cost. If the people in the developing world aren’t paid a lot then they will not be able to afford the specialised manufactured goods like cars or computers that the developed world make.

Without a large internal market for these complex goods and no way to protect a growing industry the developing world is unable to add value to it’s raw materials through manufacturing and can only support low value, high volume and often environmentally damaging extractive industries.

The rich world gets vastly reduced price metals, minerals, wood and food as the developing world desperately tries to sell more and more to generate the income to pay for it’s own development. It’s a vicious cycle and the developing world is trapped into it by their own debt, the IMF and World Bank oversee the debt collection and will impose a number of “conditionalities” on the aid a country receives.

For many countries the “aid” given by the IMF has proved disastrous, the advice they give to countries is to open up their country to foreign investment. They suggest privatisation of all state owned assets, cutting public spending, controls on the money supply to reign in inflation. Time after time these policies have crippled economies.

In Hungary in 1990 IMF intervention sent interest rates soaring to 50%, by restricting credit available to businesses. The economy tanked, shrinking 18% in three years, and swathes of its industry was bought up cheaply by foreign investors. In Uganda in the late 1980’s the IMF imposed user fees on schools and hospitals to turn these sectors into attractive markets for foreign investors. Use of both these services collapsed and the people of Uganda suffered. Money that the IMF does invest directly generally goes straight to pay off debt to foreign investors, once this is accomplished their flight from the country drives it into a death spiral as in Thailand in 1997.

The list of failed interventions that have caused economic and social crises goes on and on. South Korea, Indonesia, Russia and Argentina have all entered into agreements with the IMF, neighbors in closely related difficulties that have ignored IMF advice have done significantly better. These agreements are kept entirely secret and take legal precedence over any decision made by a democratically elected official. World Bank figures suggest that between 1960 and 1980, before conditionalities began to be attached to aid, the median annual growth in developing countries was 2.5%. In the 18 years after the IMF and World Bank started interfering the median was 0% growth.

Because of the way the global governance systems are structured it is almost inevitable that they have come to represent only the wishes of the western world. The IMF came into force in 1945 with 187 nations as members to date. To get a decision through it needs 85% of the vote, but the kicker is that the number of votes is apportioned according to their economic power. This means that the rich are able to dictate policy to the poor.

The US with nearly 17% of the votes can veto any proposal on it’s own, as can small clans of other powerful nations. In contrast the poorest 100 nations that are most affected by IMF policy can only barely block a proposal. Another injustice is that all countries are given a basic vote regardless of their wealth, this used to make up 11.3% of all the votes at the time of the IMF’s creation. But as time has gone on and the developed world has grown richer that share has shrunk to just 2.1%, further disadvantaging the developing world.

The World Trade Organisation seems rather more democratic at first glance as each member gets a single vote. But each country’s input is greatly unequal, the WTO’s decisions are more than often decided informally by a caucus of rich nations in the “green room” and then presented to the rest of the delegates. Largely these proposals can be either accepted wholesale or the summit is abandoned and no treaty is ratified at all.

The imbalances of globalisation don’t damage just the developing world, although their issues with the current regime may be more pressing than ours. Exploitation of the global market has fuelled the growth of super-corporations, they are beginning to make their own demands on us and our political system, rather than the other way round. Recent research shows that just 147 companies, of the hundred million or so worldwide, control through direct ownership, shares and investment 40% of the world’s trade.

By growing so large to make use of the economies of scale available to trans-national companies, the world economy is more vulnerable to crises than it has been in world history. The globalisation of business also means that money we spend is more likely to be shipped offshore rather than circulated through the local economy and multiply its effect. Mergers and acquisitions have driven out the small and medium sized businesses and variation in both products and the supply chains we rely on has gone down.

With business so big our power over them has been massively reduced. Small businesses are responsive to our wishes because they rely more on our custom, large businesses have far less interest in the individual and consumer power is greatly reduced. As George Monbiot said, “Were we to tell such monsters that we shall take our custom elsewhere, they will ask us which planet we had in mind.”

If the developed world hadn’t been holding back the rest of the planet we wouldn’t have so much of a problem of companies outsourcing jobs to places where labour is cheaper. Instead of our economies stalling wage growth at home to make us more competitive if we had been helping the developing world to grow their wages wouldn’t undercut ours quite so much.

The rich world gives the developing world billions in aid every year, but if they could manage to increase their share of world trade by just 5% a year they would earn three times the amount they are given. The fact that they can’t trade on better terms is not their own fault but the result of the economic gangsters of the western world. Despite claiming to be acting in their best interests the rich world has consistently torn apart the few protections the developing world has available to it for their own profit.

By keeping them in poverty and dependent on aid, the developed world is kept obedient. Unfortunately this could be the West’s very undoing, debt can only make a country subordinate if it keeps trying to pay it off. A coordinated default, or even a threat of one, would make the west think twice about continuing their economic warfare. If you keep pushing someone, it’s only a matter of time before they start pushing back.

The Problem With . . . Politics

Ever since human societies grew large enough to require a dedicated ruling class politics has always been a messy affair. The more power available, the larger the rewards that can be gained from achieving it, and the greater the lengths people are willing to go to get it. The favours, the fame and the wealth that can be amassed from ruling a country make it an attractive prospect, if getting there requires that you become a national hate figure then to many it is a price worth paying.

Although I’m sure most, if not all, of our politicians began their careers with the best of intentions the ascent through the political system has a tendency to wipe clean any personal ideology. The best way to guarantee your success in politics is to consistently support someone else’s opinion and win the support of the party mechanism.

There is only one position within politics where you can explicitly state your mind and even then you are constrained by a whole raft of other concerns. Governments have to appease the media, big businesses, other world leaders, their own party and most importantly for their future survival, the public. Balancing these interests is an impossible dream and you will be torn to shreds at every available opportunity for failing any one of them.

The most fundamental challenge to politics is that there is no right answer, governments will never be able to please everyone. Political parties operate mainly on the basis of opinion, they claim to know the precise and specific answer to each of the problems afflicting society and yet seem to have different answers to their opposition.

Their theories are essentially untestable and they are unaccountable for their actions.
Take the current austerity measures for example, the tories have taken the position that reducing the government deficit is the answer to our economic problems. Labour violently disagree (or at least they used to) and point to the slow growth we’re experiencing to prove it, but the tories can retort by saying it’s not their policy’s fault but the Eurozone crisis.

Whichever way you spin it government policy affects and is affected by so many external factors that it’s hard to take an objective stance on anything. It leaves you rather open to attack from people that disagree with you, and with only two major parties it is essentially guaranteed that half the population will hate anything you’re doing.

The problem of party politics is a challenging one. To an extent it is necessary to forge a group of people into a unit cohesive enough to run an entire country, but it seems to cause more problems than it solves.

Firstly the clan identity of a political party is rarely strong enough to prevent disputes within cabinet. Cameron struggles with his backbenchers, Brown plotted endless coups against Blair and Thatcher was taken down by subtle maneuvering by John Major. Whether the friction that arose if everyone was running as independents would simply be cataclysmic in comparison we’ll never know.

I think the saddest thing about the party system is how it stifles free expression and new ideas. Younger party members are often wheeled out onto TV to speak at length about how far-sighted and talented their leaders are. It is quite obvious at times how painful the experience is for them as they are forced to repeat the party line even if they have no attachment or actively oppose it. If they do well then their obedience will be rewarded, if not they will be sidelined.

By the time politicians have attained a position of actual power then they will have a whole suite of disastrous policies that they have backed, it gives both the party and the opposition a great deal of power to influence what an individual thinks. Take it a step further and often you’ll see politicians promoting something they actually care about and will actually benefit the country but having to lie about the reasons they think it’s a good idea. Vague populist statements like “bringing jobs and growth” seem to be the most popular white lies at the moment. It is no wonder politicians seem such a dishonest bunch when their job description requires them to lie so often.

The public might be more trusting of the government if they had a bit more of a clue as to what they were up to in their day to day and had to rely less on the word of government spokespeople. Despite the small gestures the previous government made in this direction, the inner workings of government are still shockingly opaque.

Largely we have to rely on the national press to find out what happens in Whitehall, but since the media-savvy Blair team even the media shows signs of being co-opted. Read through any political article and I’ll bet over half of the quotes are from unattributed sources. You’ve no idea who these people are and what agenda they’re trying to promote, you just have to take a guess based on whatever newspaper you read it in.

Whether a policy is good or bad is decided entirely by the national press and presented as fact. I suspect that even political journalists rely on Whitehall mandarins to explain everything to them. Actual policy is written in such obtuse gibberish that extracting meaning from it is near impossible.

The most damaging clauses and addenda are likely to be the ones hidden among 400 pages of garbage. Take the Counter Terrorism Act which stated that publishing information “likely to be useful to a person committing or preparing an act of terrorism” was a crime, the unintended consequence of which was a spate of photographers getting arrested for photographing policemen. Whether this kind of obfuscation is deliberate or not is rather a topic of debate for conspiracy theorists around the world.

If you’d like information directly then you can make a Freedom of Information request but these actually require you to know exactly what to ask for. Minutes of meetings are easy to redact and rarely give a sense of the debate, the FIOA is most flawed in that you are unable to request commercially sensitive information. One of the legacies of this government that is yet to be realised is how little we will know about our government once it has finished outsourcing all its services to private companies.

The average person is woefully ill equipped for understanding politics, this sense of entrapment is what leads to a significant amount of the anger towards politicians. Neither are people able to hold them personally accountable, they can vote out a whole government but that rather misses the point. It does seem rather a cruel joke that shouting at the TV during Question Time is the closest thing the public get to holding their politicians to account.

Politicians almost by definition do not represent the majority of the country, they have attained moderate wealth and success and are at least well connected into the upper classes even if not directly participating. Much has been made of the fact that over three quarters of the cabinet are millionaires and over half went to public school. Broadly speaking our ruling classes have no idea of the problems that are faced by the working class majority of this country.

Their insight into the lives of the people of the country is largely through charts and statistics, I can’t help but feel that this must have a subtle yet profound effect on politicians. Concepts like education, poverty or pollution become abstract concepts as the individuals are smudged into the bigger picture. With the constant streams of bile being projected towards them by the people they’re trying to help, their compassion must begin to erode until there is a clear sense of having to control the mob that they rule over and crush the pretenders in opposition in the most savage manner possible.

A constant pressure to corrupt must exert itself in the minds of politicians and in many ways it is surprising and impressive that these tendencies are not bowed to more often. There may be a whole suite of fundamental and emergent problems with politics, but it is important to realise that our situation could be significantly worse.

Neither of the main parties may know what the answers are, but at least as they cycle into and out of power we can reach a strange kind of average as institutions are built up and then dismantled again. It may be rather flawed and expensive but at the moment it’s the best we’ve got.

I for one will be on the look out for some better way of organising ourselves. Our current brand of democracy is hundreds of years old and I think fails to represent the state of the world as it is today. It may have been relatively efficient in controlling a mass of relatively uneducated, unconnected people, but in the information age this model seems rather out of date.

As the revolutionary spirit sweeps across the globe we’ll have to wait and see what novel solutions to the problems of politics are proposed.

The Problem With . . . The Banks

Some might say, that to see what the problem with banks and the finance sector are you would need only look at the financial crash of 2008, banks and their employees behavior leading up to the crash were irresponsible, greedy and sometimes outright fraudulent. As a result of their actions trillions of pounds were wiped off the stock market as the property bubble they had inflated collapsed and the western world was kicked into a decade long recession.

But there is a bigger picture than simply greedy people making decisions that weren’t in the best interests of their companies or the public, it seems like we’ve forgotten what the banking sector is actually for. Its actual purpose of taking the money of those who have no use for it and giving it back to those who do, this noble and socially useful pursuit has been sidelined in favour of making heaps of cash. To quote Matt Taibbi “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Banks exist to make staggering amounts of money and will cut corners to do it, and despite the damage done we still don’t have a framework to keep them on the straight and narrow. In many ways banks actually damage the wider economy, they look for short term gain over long term investment and artificially inflate pries through speculation. They reward the most ruthless and ambitious with exorbitant amounts of money. And they sell financial instruments no human could ever understand to try and exploit a model of economics that requires an omniscience.

We can trace the banking sector as we know it today back to the “big bang” of financial deregulation. Margaret Thatcher took steps to get Britain back to the finance capital of the world after it was overtaken by Wall Street. What followed was the explosive growth of banking and trading as the UK moved into a “post-industrial” service based economy. Blair and Brown encouraged this growth and continued in their “light-touch” regulatory policy throughout their 13 years. As far as they were concerned they had cracked it, the booming finance sector allowed them to provide all manner of fluffy leftist policy so were quite content to let the markets run themselves.

The mess we’re in now is the result of 25 years, an entire generation, of financial service workers being allowed to do whatever they liked in the pursuit of profit. The entire culture is geared to reward the most selfish, the best liars and the biggest risk takers, it was only a matter of time until the system came crashing down. Now we’ve seen the damage that banks are able to inflict the government takes for granted that lessons have been learnt and doesn’t attempt to prosecute anyone.

Because the people responsible for the crash are men in suits, there seems to be the assumption that they aren’t criminals. The toothless watchdog, the Financial Services Authority isn’t taking any action towards criminal proceedings against those involved in the crash as they were “unlikely” to be successful. Instead they decided to sweep the entire affair under the carpet, not bother to subpoena for further information and allow those they were investigating to continue to work in the business. If the phone hacking scandal has taught us anything it’s that it only takes a small tug at a loose thread before the whole operation unravels.

Federal Judge Jed Rakoff said of the civil settlements being sought for financial crime “a consent judgment that does not involve any admissions [of guilt] and that results in only very modest penalties is just as frequently viewed, particularly in the business community, as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies.”

The UK banks have been staggeringly under-investigated, across the pond there is at least more of an understanding of the crimes being committed, even if they aren’t being properly prosecute. Bankruptcy investigators said Lehman was committing “actionable balance-sheet manipulation”. Bank of America was lied about $5.8 billion worth of bonuses and was fined $33 million. CitiGroup was cherry picking toxic assets to bundle into CDOs, telling their investors they were pure gold and would definitely go up in value while internally they had decided to bet that the mortgages would lose money. They made $160m while their investors mostly pension funds, lost $700m, they settled the case for $125m without admitting wrongdoing. Goldman Sachs were operating a similar scheme. “Just imagine a mugger who steals $70 from some lady’s wallet being sentenced to walk free after paying back twelve bucks.” The UK banks aren’t innocent, we just haven’t tried investigating their crimes.

I can’t help but feel that the obscene remuneration that people working in the finance sector receive goes a long way in creating the irrational greed culture. In fact it is greed that motivates many people to get into the business in the first place, now even more people when faced with a staggering student loan will go to sell their soul to Goldman. With your soul gone the cash is just about the only thing left.

I could just about accept that bankers are paid a lot if I thought that they earnt their reward. But research by Nobel winner Daniel Kahneman showed that “earned” bonuses were apportioned by luck. Over 8 years, the financiers he followed weren’t able to consistently win large bonuses due to their skill, they may as well have been rolling dice.

It is also worth noting that over 50% of all trading on the stock market is now done by computer programs. These are designed to spot micro trends that occur over minutes or hours and buy and sell accordingly. Another interesting fact is that instead of funding business and investment as banks like to claim they do, around 75% of the money they make goes back into buying property. Charging rent on owned property is one of the easiest ways to make a profit.

Banks seem to be doing very little, either making their money from programmers or as landlords, claiming every deal they do make is a stroke of business genius and then taking huge sums of money for doing it. Numerous studies have shown that offering large cash rewards is a bad way to motivate people to do their best, in fact large bonuses actively encourage people to sign off on deals that they know may be damaging to others.

We saw this time and time again during the build up to the financial crash. Companies like Countrywide in the US started giving mortgages to anyone that asked, without the need for a real name, proof of earnings or an address, no-one would buy this junk if they knew what it was, so it was made sure that they didn’t. The mortgages were sold on to banks in their thousands who could package them into Mortgage Backed Securities, hundreds of these could be turned into a multi billion dollar Collateralised Debt Obligation.

The ratings agencies would decide that when you assemble thousands of bits of garbage they turn into a AAA investment. Moody’s projected that 10% of the mortgages would default, instead 18% defaulted in 18 months. The insiders quickly realised how toxic these assets were so pushed them onto any buyer who would take them, spreading the poison all round the world. At no stage did, the lawyers, the credit agents, the brokers or the buyers act to blow the whistle but instead signed off on the deals earned their bonus and stayed quiet.

Derivatives like CDOs and Credit Default Swaps that sunk the world economy already had a bad record having caused massive losses to companies in the past, but they were traded without any safety measures and still are today. The neo-liberal model of the economy says that markets are inherently stable and self correcting, but it requires that every agent acts with total rationality and all possible information to maximise their utility. Such complex derivatives are incompatible with this model (let alone all the other flaws in it) as no-one can read the estimated one billion pages of mortgage information associated with a single CDO.

The most dangerous and near fundamental flaw in investment banking is their ability to fuel speculative bubbles in markets. The price of something has become increasingly detached from its actual worth, and tends to reflect how many investors are scrabbling to get their hands on it.

One of the most famous examples was during the dot-com bubble, when banks abolished their own rules on when to take companies public and start trading their stock. In the early 80’s company had to have been around for five years and profitable for three before being traded. Banks threw that out the window and took brand new, loss making companies and started trading them. The frenzy they could whip up with techniques like laddering and spinning meant that shares skyrocketed. When the bubble crashed and $5 trillion was wiped off the NASDAQ exchange alone the only ones who ended up making money were the banks, the middle men.

After inflating and bursting the US housing market banks turned to other markets and found commodities. Commodities are actual resources oil, copper, wheat and the rest. After the great depression someone had rightly thought that speculation in these essentials would quickly drive up the price to unsustainable levels and banned the practice.

However, in 1991 a Goldman Sachs subsidiary wrote to the US Commodity Futures Trading Comission and asked for a special dispensation to trade in actual goods, they and 14 other companies were granted licence to speculate in markets that are supposed to be governed only by supply and demand. In the early 2000’s there was around $13bn of speculative money in commodities, by 2008 that figure had increased by 2300% to $317bn. This feeding frenzy pushed the price of oil up from $60 a barrel in mid 2007 to $147 in 2008 as barrels were traded an average of 27 times between extraction and consumption. This happened while production was rising and demand was falling, a perversion of economic theory.

Take a look at the share price for copper or for grains and you’ll see the same picture. When the going gets tough and the traditional ways to make money expire banks will turn to anything available to them even if it means forcing average citizens to pay more to survive.

This is the problem with the finance sector, after decades to run amok they have forgotten their purpose. Banks are supposed to foster investment and entrepreneurship to drive growth in their home country, but since their deregulation investment from British banks has actually gone down. Banks have found the returns they can expect from British investment to be too low and too slow. So have turned their attention to elsewhere around the globe, far from the attention of their home regulators they an get into increasingly shady and immoral practices.

The treasury has paid out more to the banks in bailouts than it has received from them in tax in the last decade. Despite owning majority shares in many British banks the government’s plans to force them to pay their way and lend to small businesses through Project Merlin have utterly failed. Instead the attitude seems to be to let business carry on as usual. Highstreet banking may be ring-fenced from the riskier investment banking, but all the structural problems that ensure that a crisis will happen again still exist.

The Problem With . . . The Banks

Some might say, that to see what the problem with banks and the finance sector are you would need only look at the financial crash of 2008. Banks, and their employees behaviour, leading up to the crash were irresponsible, greedy and sometimes outright fraudulent. As a result of their actions trillions of pounds were wiped off the stock market as the property bubble they had inflated collapsed and the western world was kicked into a decade long recession.

But there is a bigger picture than simply greedy people making decisions that weren’t in the best interests of their companies or the public, it seems like we’ve forgotten what the banking sector is actually for. Its actual purpose of taking the money of those who have no use for it and giving it back to those who do, this noble and socially useful pursuit has been sidelined in favour of making heaps of cash. To quote Matt Taibbi “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Banks exist to make staggering amounts of money and will cut corners to do it, and despite the damage done we still don’t have a framework to keep them on the straight and narrow. In many ways banks actually damage the wider economy, they look for short term gain over long term investment and artificially inflate pries through speculation. They reward the most ruthless and ambitious with exorbitant amounts of money. And they sell financial instruments no human could ever understand to try and exploit a model of economics that requires an omniscience.

We can trace the banking sector as we know it today back to the “big bang” of financial deregulation. Margaret Thatcher took steps to get Britain back to the finance capital of the world after it was overtaken by Wall Street. What followed was the explosive growth of banking and trading as the UK moved into a “post-industrial” service based economy. Blair and Brown encouraged this growth and continued in their “light-touch” regulatory policy throughout their 13 years. As far as they were concerned they had cracked it, the booming finance sector allowed them to provide all manner of fluffy leftist policy so were quite content to let the markets run themselves.

The mess we’re in now is the result of 25 years, an entire generation, of financial service workers being allowed to do whatever they liked in the pursuit of profit. The entire culture is geared to reward the most selfish, the best liars and the biggest risk takers, it was only a matter of time until the system came crashing down. Now we’ve seen the damage that banks are able to inflict the government takes for granted that lessons have been learnt and doesn’t attempt to prosecute anyone.

Because the people responsible for the crash are men in suits, there seems to be the assumption that they aren’t criminals. The toothless watchdog, the Financial Services Authority isn’t taking any action towards criminal proceedings against those involved in the crash as they were “unlikely” to be successful. Instead they decided to sweep the entire affair under the carpet, not bother to subpoena for further information and allow those they were investigating to continue to work in the business. If the phone hacking scandal has taught us anything it’s that it only takes a small tug at a loose thread before the whole operation unravels.

Federal Judge Jed Rakoff said of the civil settlements being sought for financial crime “a consent judgment that does not involve any admissions [of guilt] and that results in only very modest penalties is just as frequently viewed, particularly in the business community, as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies.”

The UK banks have been staggeringly under-investigated, across the pond there is at least more of an understanding of the crimes being committed, even if they aren’t being properly prosecute. Bankruptcy investigators said Lehman was committing “actionable balance-sheet manipulation”. Bank of America was lied about $5.8 billion worth of bonuses and was fined $33 million. CitiGroup was cherry picking toxic assets to bundle into CDOs, telling their investors they were pure gold and would definitely go up in value while internally they had decided to bet that the mortgages would lose money. They made $160m while their investors mostly pension funds, lost $700m, they settled the case for $125m without admitting wrongdoing. Goldman Sachs were operating a similar scheme. “Just imagine a mugger who steals $70 from some lady’s wallet being sentenced to walk free after paying back twelve bucks.” The UK banks aren’t innocent, we just haven’t tried investigating their crimes.

I can’t help but feel that the obscene remuneration that people working in the finance sector receive goes a long way in creating the irrational greed culture. In fact it is greed that motivates many people to get into the business in the first place, now even more people when faced with a staggering student loan will go to sell their soul to Goldman. With your soul gone the cash is just about the only thing left.

I could just about accept that bankers are paid a lot if I thought that they earnt their reward. But research by Nobel winner Daniel Kahneman showed that “earned” bonuses were apportioned by luck. Over 8 years, the financiers he followed weren’t able to consistently win large bonuses due to their skill, they may as well have been rolling dice.

It is also worth noting that over 50% of all trading on the stock market is now done by computer programs. These are designed to spot micro trends that occur over minutes or hours and buy and sell accordingly. Another interesting fact is that instead of funding business and investment as banks like to claim they do, around 75% of the money they make goes back into buying property. Charging rent on owned property is one of the easiest ways to make a profit.

Banks seem to be doing very little, either making their money from programmers or as landlords, claiming every deal they do make is a stroke of business genius and then taking huge sums of money for doing it. Numerous studies have shown that offering large cash rewards is a bad way to motivate people to do their best, in fact large bonuses actively encourage people to sign off on deals that they know may be damaging to others.

We saw this time and time again during the build up to the financial crash. Companies like Countrywide in the US started giving mortgages to anyone that asked, without the need for a real name, proof of earnings or an address, no-one would buy this junk if they knew what it was, so it was made sure that they didn’t. The mortgages were sold on to banks in their thousands who could package them into Mortgage Backed Securities, hundreds of these could be turned into a multi billion dollar Collateralised Debt Obligation.

The ratings agencies would decide that when you assemble thousands of bits of garbage they turn into a AAA investment. Moody’s projected that 10% of the mortgages would default, instead 18% defaulted in 18 months. The insiders quickly realised how toxic these assets were so pushed them onto any buyer who would take them, spreading the poison all round the world. At no stage did, the lawyers, the credit agents, the brokers or the buyers act to blow the whistle but instead signed off on the deals earned their bonus and stayed quiet.

Derivatives like CDOs and Credit Default Swaps that sunk the world economy already had a bad record having caused massive losses to companies in the past, but they were traded without any safety measures and still are today. The neo-liberal model of the economy says that markets are inherently stable and self correcting, but it requires that every agent acts with total rationality and all possible information to maximise their utility. Such complex derivatives are incompatible with this model (let alone all the other flaws in it) as no-one can read the estimated one billion pages of mortgage information associated with a single CDO.

The most dangerous and near fundamental flaw in investment banking is their ability to fuel speculative bubbles in markets. The price of something has become increasingly detached from its actual worth, and tends to reflect how many investors are scrabbling to get their hands on it.

One of the most famous examples was during the dot-com bubble, when banks abolished their own rules on when to take companies public and start trading their stock. In the early 80’s company had to have been around for five years and profitable for three before being traded. Banks threw that out the window and took brand new, loss making companies and started trading them. The frenzy they could whip up with techniques like laddering and spinning meant that shares skyrocketed. When the bubble crashed and $5 trillion was wiped off the NASDAQ exchange alone the only ones who ended up making money were the banks, the middle men.

After inflating and bursting the US housing market banks turned to other markets and found commodities. Commodities are actual resources oil, copper, wheat and the rest. After the great depression someone had rightly thought that speculation in these essentials would quickly drive up the price to unsustainable levels and banned the practice.

However, in 1991 a Goldman Sachs subsidiary wrote to the US Commodity Futures Trading Comission and asked for a special dispensation to trade in actual goods, they and 14 other companies were granted licence to speculate in markets that are supposed to be governed only by supply and demand. In the early 2000’s there was around $13bn of speculative money in commodities, by 2008 that figure had increased by 2300% to $317bn. This feeding frenzy pushed the price of oil up from $60 a barrel in mid 2007 to $147 in 2008 as barrels were traded an average of 27 times between extraction and consumption. This happened while production was rising and demand was falling, a perversion of economic theory.

Take a look at the share price for copper or for grains and you’ll see the same picture. When the going gets tough and the traditional ways to make money expire banks will turn to anything available to them even if it means forcing average citizens to pay more to survive.

This is the problem with the finance sector, after decades to run amok they have forgotten their purpose. Banks are supposed to foster investment and entrepreneurship to drive growth in their home country, but since their deregulation investment from British banks has actually gone down. Banks have found the returns they can expect from British investment to be too low and too slow. So have turned their attention to elsewhere around the globe, far from the attention of their home regulators they an get into increasingly shady and immoral practices.

The treasury has paid out more to the banks in bailouts than it has received from them in tax in the last decade. Despite owning majority shares in many British banks the government’s plans to force them to pay their way and lend to small businesses through Project Merlin have utterly failed. Instead the attitude seems to be to let business carry on as usual. Highstreet banking may be ring-fenced from the riskier investment banking, but all the structural problems that ensure that a crisis will happen again still exist.

The Problem With . . . The Media

With the news dying down as politicians, journos and the rest of the global elites go home to spend Christmas with their families I’ll be turning my attention to some of the more structural problems that 21st century society faces in a series of features. Today we’re covering the media.

It has been a tough year for the media industry, already struggling to find a business model that can support them when you no longer need to buy a physical product to get the news, the moral high ground, that newspapers in particular have occupied has been chipped away as the Leveson inquiry drags on.

Some of the stories that have emerged in the last few months have shocked the whole country, but few people are keen to condemn phone hacking outright. We may need stricter rules if we want to prevent journalists from hacking the phones of the deceased, but would those rules prevent proper investigation in the case of corruption? The “public interest” defence is a vague and subjective one, which can allow both genuine good and great harm.

In many ways this represents the role of the entire media industry. We rely on them to gather the news and relay it to us, they educate and inform us, they entertain us and most importantly they are the ones who challenge malpractice and hold those in power to account. But as their power and influence grows so does their capacity to cause harm, misinformation can be spread quickly and easily, cosy relationships with other governmental or business institutions can form, the profit motive can lead to lazy and biased reporting and increasingly media conglomerates come to look more and more like the power structures they were supposed to be challenging.

The primary problem with the media is its consolidation. Television news is dominated by only three main companies, the BBC have a news share of around 60%, ITN who produce for ITV and Channel 4 have around 30%, Sky News is a rather distant third.

The story in print news is similar, as of 2006 data News International had 35% of all newspaper circulation through the Times, the Sun and the News of the World. They also hold large shares in ITV and BSkyB. The Daily Mail and General Trust have a 20% share through the Mail, Metro and Evening Standard alongside some 135 regional newspapers. Trinity Mirror also have around a 20% market share of the national newspaper circulation and own 185 regional newspapers.

The consolidation of news outlets compounds all the other issues, we are more likely to see the same inaccuracies or biases repeated throughout the empire. As we have seen with Rupert Murdoch, media owners can influence the content of the outlets they own. It was best put by Andrew Neil, former editor of the Times to a Communications Select Committee in 2008. “Throughout the 11 years that I was Editor of The Sunday Times, I never got an instruction to take a particular line, . . . but I was never left in any doubt what he wanted.” “in every discussion you had with him, he let you know his views. On every major issue of the time and every major political personality or business personality, I knew what he thought and you knew, as an editor, that you did not have a freehold, you had a leasehold,”
Media corporations are not running conspiracies, they are just run by people who understandably want to make their boss happy by doing what he’d want. The more bosses with different viewpoints, the livelier the media market becomes. My opinion is also that larger organisations also place greater and greater emphasis on profit, the owners are more likely to see a news outlet as a simple asset rather than a public service and insist that corners be cut to make it profitable.

This mentality has hit struggling local newspapers particularly hard. 70% of the local papers in this country are owned by four different companies. In the last few decades the sizes of newsrooms have been cut down further and further until they are simply no-longer able to properly perform their role. Nick Davies, during the research for his book Flat Earth News found a local reporter writing 48 stories in just 5 days, mostly these were simple copy jobs and he could not pursue the one original story he found due to lack of time. A similar story is told in that over two months Northumberland County Council surveyed that 96% of its press releases were written up by local papers almost verbatim.

Known as churnalism in the industry, the practice of copying sections of press releases in the rush to get enough stories published that day is becoming increasingly common. Journalists are finding that they are having less time to pursue lengthy investigations into serious crimes and corruption and have to keep pumping out fluff because it is far easier and quicker. Not to mention the increased pressure to be constantly interacting with the readership on comments sections, blogs and twitter.

Without a strong investigative arm newspapers and broadcasters becomes increasingly leashed to their contacts within different institutions and unhealthy relationships begin to form. It may not quite be a binding law, but it is certainly one of the invisible hands that shapes news coverage, that if you write an unfavourable story about a politician then you won’t expect any advance information from their department again. Falling off the list of favourites cuts a paper out of the loop and puts it at a competitive disadvantage so editors have to think long and hard before criticising the government and other institutions. Making a fuss now might cost you a scoop later.

John Pilger highlighted this issue in his documentary “The War You Don’t See” when he looked into the false information produced by the government and spread by the media in the run up to the Iraq war. Fran Unsworth the head of BBC Newsgathering at the time said “What the BBC had a duty to do is to report what government and their representatives are saying. Which we of course did, we were just reporting quite legitimately the claims that people at the time were making.” It is true that they were simply repeating what government spokespeople were telling them, but the British press still failed in their duty to uncover the truth, which was available to them at the time if they had looked for it. Over reliance on government sources, it might be argued, sent us to war.

However the counter point to this could be even worse one of the possible backlashes from the Leveson inquiry could be a crackdown on journalists talking to police and more junior civil servants, some inside the industry say this is already happening. This elimination of unofficial contact could almost be as damaging as the too comfortable relationships in place at the moment. It would result in a media who cannot peer inside the workings of powerful institutions, that can only present what is given to them by governmental or police press teams. Striking the balance between allowing trusted leakers and whistle blowers to contribute and not allowing the media to be manipulated by them is a difficult balance.

Along a similar vein, corporations and big business are also gaining an increasing role in defining the news output. Taking out advertisements in papers and on TV has greater benefits that just promoting your product. In the unlikely case that a broadcaster decides to run an unfavourable story about your company a call to the chief-editor and a threat to pull your multi-million pound advertising deal can cause a hasty retraction. The Observer reported that Tesco had started asking to see the front pages of the newspapers it was selling in its stores and has at least once asked a story to be changed.

Without more independent outlets with fewer ties to big business there are fewer chances to reveal the malpractice that corporations engage in, even if the smaller organisations did have the resources to expose them.

The media landscape has changed immeasurably in the last few decades, I think few would say for the better. While the internet was supposed to be the saving grace for the news consumer, with bloggers and independents filling the gaps left by the dying newspapers it has largely failed to deliver. Simply put the smaller internet sources lack the organisation, the contacts, the time or the resources to pursue the kinds of investigation that are what the media is supposed to be for. It is a great tool for spreading the news but a poor one for crafting it.

We can hope that what comes out of the Leveson inquiry will be rational, allowing a free press to continue it’s good practice and prevent the bad. The most sensible suggestions I’ve heard are from Max Mosely, he says that the rules are in place it’s just that they simply aren’t enforced. End opt outs like from Private Eye, The Express or The Star, give the PCC independent investigators, let it set the time, position and wording of any apologies that newpapers give and set up a pre-publishing committee to allow editors to inquire as to whether their breaches of privacy are really in the public interest, ignoring their advice would mean a harsher punishment and following it would give some degree of mitigation.

At the moment the self-regulating system means that editors are deciding what is in the public interest without even consulting us. To say that people buy the News of the World because of the salacious gossip and then to use that as an excuse to keep finding even more salacious gossip is totally flawed and needs revision, but we need to beware of anything that impedes upon freedom of our journalists.

Kim Jong-Il’s Korea

Kim Jong-Il, the leader of North Korea died early on Saturday morning from a heart attack aged 69, Korean national media announced his death and his successor today. Kim’s death means a tense time for Koreas neighbours as the regime hands over to new leadership but could eventually lead to some degree of reconciliation with the west.

North Korea was established in 1945 when the Japanese ended their occupation of the country after the end of the war. The divide arose from Russia taking hold of the North and America the South in a temporary trusteeship. Kim Jong-Il’s father, Kim Il-Sung leader of a small anti Japanese army returned from 26 years of exile and was appointed by the Soviets as head of the Peoples Provisional Committee to rule the country.

The Democratic Peoples Republic of Korea, the regime that lasts to this day, was established in 1948 when Kim Il-Sung declared independence from the South and took control of the country. The next few years were spent turning North Korea into a fully fledged communist state.

Kim Il-Sung was keen to attack the South and attempt to re-unite the country, when America troops left in 1950, and with the implicit backing of China and Russia he invaded and quickly took most of the South. The US and UN launched a counter-attack and took first the Southern capital Seoul and then advanced northwards to take the North Korean capital Pyongyang. North Korean history frames their attack on the South as retaliation against an attempted American invasion of the North.

Chinese troops eventually prevent the north from being overrun and after several years of bitter trench fighting Armistice is called in 1953. The two countries have never officially signed a peace treaty.

North Korea was left in ruins after extensive US bombing raids and Kim Il-Sung set about re-building it as a centrally planned, communist economy. By the 1960′s and early 70′s the country was rapidly industrialising, developing far faster than its Southern neighbour. The dark side was the widespread repression of citizens, concentration camps and propaganda deployed through the state owned media.

But by the time Kim Jong-Il began to take control in 1980, his father’s plan of economic and military independence was beginning to unravel. Massive famines afflicted the country in the 90′s because the small amounts of arable land were poorly managed, the country was cut off from trade with other nations and too great a focus on military spending was too great.

Since then North Korea has never quite recovered. It is estimated by the World Food Programme and UNICEF that 7% of North Korean children are severely malnourished, 37% were chronically malnourished and 23% underweight, it is thought that about a quarter of the North’s population require food aid. The country also struggles to get all the supplies it needs for manufacturing, for energy and for treating disease. Some blame economic sanctions on Korea for the lack of development.

These sanctions mainly came into play after North Korea’s terrible human rights record was revealed and its failure to cease it’s nuclear weapons programme. North Korea has been pursuing nuclear weapons since 1956 as it did not trust the Chinese or Russians to uphold their mutual protection pact. After the fall of the Soviet Union this need for protection was even more pressing and efforts towards making weapons of mass destruction were stepped up.

This did not go unnoticed by the International Atomic Energy Agency who sent in a team of weapons inspectors to the country in 1992. The inspectors were not given access to all areas of the supposedly civilian nuclear reactors and so conclude that it may be possible that North Korea is pursuing weapons. This prompts a treaty to be written up between the US and Korea agreeing that the US will provide oil and aid to build two safer nuclear reactors that can’t be so easily used to produce fissile material and in return Korea will cease plutonium production.

Between the signing of the treaty in 1994 and 2002 a series of diplomatic disagreements like George Bush declaring North Korea part of the “axis of evil”, the Koreans launching a satellite over Japan using an ICBM and a misunderstanding or mistake where Korea states it has a right to pursue nuclear weapons if the US owns them and the US taking that as an outright admission.

Eventually the treaty breaks down and North Korea drops out of the nuclear non-proliferation treaty, attaining it’s first weapon in 2006. After a second test in 2009 further UN sanctions are imposed against Korea. This year North Korea had said that it might be willing to re-engage in diplomacy, but it has also suggested it may engage in “sacred war” against the South after offensive banners were hung up on barracks on the southern side of the de-militarised zone.

A consistent diplomatic position is incredibly rare in North Korea. In the coming months it is likely to be even more so. The successor to Kim Jong-Il is his son Kim Jong-Un, he is thought to be in his late 20′s. Although the first Kim ruled off the back of popular support from his opposition to Japanese invasion, Kim Jong-Il had to rely more heavily on the military for control, for Kim Jong-Un that will be even more important.

He will be keen not to be seen as weak by the powerful generals in the country who may wish to seize power. Although he can be relatively safe from a popular uprising as most of the population is lacking the phone and internet services essential for the successes of the Arab Spring and already it is being reported that citizens are being told to stay off the streets.

An unstable regime could be disastrous for the region, a power struggle in a nuclear armed state with the 4th largest military in the world could prove incredibly messy. South Korea has put its troops on a state of high alert and Japan has called an emergency meeting of the national security council to discuss the possible outcomes.

William Hague however is calling for more peaceful change and diplomacy. “This could be a turning point for North Korea. We hope that their new leadership will recognise that engagement with the international community offers the best prospect of improving the lives of ordinary North Korean people.”

With the death of Kim Jong-Il the world is waiting with bated breath to see how the new regime will behave. Although with the country so notorious for mixed messages, at the moment all bets are off.

Cases Brought Against Manning and Assange

Yesterday the preliminary hearing for Bradley Manning began. It will decide whether to hold a full court martial for the 23 laws Manning is alleged to have broken in passing 260,000 American diplomatic to Wikileaks. Julian Assange is also facing extradition to Sweden if his High Court appeal in the new year is rejected. The wheels of (in)justice seem set to grind the pair into a fine dust and dissuade any further leakers from uncovering government wrongdoing.

Bradley Manning was arrested in May 2010 in Iraq where he was serving as an Intelligence Analyst. A quiet and reserved person, with strong political ideals, interested in the hacker scene and gay Manning seemed an unlikely person to join the US military. He wanted to sign up so he could receive financial aid in studying for a Masters in physics and a degree in political science.

When Manning was sent to Iraq he had top level security clearance and access to two classified networks fourteen hours a day. The DoD’s SPIRNET and the Joint Worldwide Intelligence Communications System. Looking around the network he saw many perceived injustices performed by the US military. Particularly the video of two Reuters war correspondents killed by an Apache gunship when their cameras were mistaken for RPGs. Reuters had their Freedom of Information Act request for the video denied, but Wikileaks were able to publish the video under the name Collateral Murder.

In Manning’s own words the networks contained “incredible things, awful things … that belonged in the public domain, and not on some server stored in a dark room in Washington DC.” So he took the decision to copy files onto a blank CD and send them in to Wikileaks. According to Adrian Lamo, the hacker who turned in Manning “He didn’t want to do this just to cause a stir…. He wanted people held accountable and wanted to see this didn’t happen again.”

Over 18 months since his arrest his preliminary trial is beginning. For the first 11 months Manning was kept in Quantico Virginia under conditions some have described as “cruel, inhuman and degrading treatment”. He was kept in a tiny cell for 23 hours a day, prevented from exercising, was allowed no personal possessions, fed anti-depressants which he said left him unable to even write, he was stripped of all clothing at night and had his prescription glasses taken from him leaving him in near blindness. He endured these conditions for 11 months even with no charges held against him, since April he has been held in more liberal conditions.

President Obama says the Pentagon has assured him that the conditions “are appropriate and are meeting our basic standards.” Whereas Daniel Ellsberg wrote in the Guardian “Prolonged isolation, sleep deprivation, nudity – that’s right out of the manual of the CIA for “enhanced interrogation”. We’ve seen it applied in Guantánamo and Abu Ghraib. It’s what the CIA calls “no-touch torture”, and its purpose there, as in this case, is very clear: to demoralise someone to the point of offering a desired confession.”

There was no such confession and now the legal proceedings have begun. Manning faces 23 charges the most serious of which are giving “intelligence to the enemy, through indirect means” and “having knowledge that intelligence published on the internet is accessible to the enemy”. The maximum sentence is the death penalty but the prosecution have said they will not be pushing for it, Manning still faces life in military custody though.

The first day of the trial took a rather unexpected turn, with the defence lawyer David Coombs launching an attack on the judge and the trial itself with the implication that the system is rigged against his client. Whereas these preliminary hearings are usually quick affairs with the defence teams unwilling to give reams of information that could be used against them in the full hearing, Manning’s defence seems to be casting the net wide to undermine the legitimacy of the proceedings.

Primary concerns are that the appointed judge equivalent Lieutenant Colonel Paul Almanza could have conflicting interests as he works as a prosecutor for the US Justice Department who are involved in building a case against Julian Assange. Coombs called for Almanza to step down but this was denied, Almanza said he was unbiased and had not talked to anyone about the Wikileaks case. Not that you’d need to to know what the US government’s desired outcome would be.

The other main challenge from the defence is that although they sent in a list of 48 witnesses to testify for Manning only two of these were accepted (in addition to the 10 witnesses )

But the defence counter-offensive managed to dominate the opening of the hearing and set a tone that could be played out in days to come. Coombs presented a vigorous case to the court that Manning was being denied a fair hearing, decrying the fact that while the prosecution had been allowed all 10 of its requested witnesses, only two of the 48 defence witnesses that Coombs had asked for were being allowed (other than the 10 shared with the prosecution).
“Two out of 48!” he exclaimed. “In a case in which the government has charged [Manning] with aiding the enemy, which carries the maximum sentence right now of death!”

Elsewhere, in England, Julian Assange has recently had his appeal against extradition to Sweden in relation to two rape charges denied. He is now allowed to appeal again in the Supreme Court in a two day hearing on February 1st. There have been 7 judges appointed to the case, correlating to the seriousness and public interest of the case.

The appeal will rest on whether the prosecutor in Sweden had the authority to issue his European Arrest Warrant. If he loses again he may yet be able to appeal to the European Court of Human Rights.

The stakes for Assange are so high because he risks extradition to the US if a legal precedent is set. Both the UK and Sweden would have to agree to the extradition, and although overtly political and military extraditions are prohibited the charges laid against Assange would sidestep such issues. Temporary surrender is also an option to extradite Assange when a “criminal” is wanted in two countries, this could be carried out far easier.
It has taken nearly two years for the power-elites to muster their forces against transparency. The damages done to wikileaks nearly exactly mirror the leaked CIA documents detailing their plans to discredit them. Attacking their supporters like Manning by holding him in extraordinarily cruel conditions, discrediting Assange himself in the wake of the rape allegations and cutting off the source of Wikileaks funding through pressure on Visa, Mastercard and Paypal.

It says a lot that Bradley Manning won 40% of a pubic vote for the Nobel Peace Prize. He is a hero, but the scope of the powers that he challenged made it certain that an example made out of him. He exposed a number of war-crimes and several cases of corruption, he deserves our support for holding up wrongdoing to the light of investigation. Whistle blowers are supposed to be protected not prosecuted, despite their own opinions, the US military shouldn’t be above the law.