A Taxing Debate

Tax is much in the news. The recent budget gave us pastygate, the granny grab and tax reductions – for the highest paid. (It also reduced the tax paid by the lower paid, but that isn’t such a great headline and didn’t seem to feature much in the media coverage.) The London mayoral elections contained allegations against Ken Livingstone (apparently unfounded regarding illegality but possibly guilty of hypocrisy), leading to a “confrontation” in a lift and all mayoral candidates publishing their personal tax details. Tax has been one of the main issues in the Republican nomination race.

Either matching the mood of the zeitgeist – or jumping on the bandwagon – the RSA organised a panel discussion to talk about tax – “Should Tax Be More Taxing?“. There were three speakers from different parts of the spectrum, and the focus was very much on corporate – rather than personal – taxes, and multinational corporations at that, a somewhat more specialised area (although also much in the news).

Mike Lewis from ActionAid‘s main point was that large corporations avoiding tax can be significant and material sums for developing nations. Large, multinational organisations can organise their work to minimise the tax they have to pay: if directors believe that it is their duty to maximise shareholder value, it would be their duty to do so. Avoiding (rather than evading) tax is legal – but multinational corporations can afford legions of tax lawyers to help them stretch the law. Lewis proposed international regulations to reduce corporate tax tourism, but clearly different countries should be able to tax businesses what they want (or need)?

Philip Booth of the Institute of Economic Affairs took the opposite extreme, suggesting that the only way to stop corporate tax avoidance is to stop corporate tax: not as mad as it sounds, since the shareholders and other owners of large organisations have to declare income and pay taxes as individuals. However, Mike Lewis highlighted two problems with this

1. the owners may live in different jurisdiction from where the work is done or the profits made

2. the owners can hide their ownership (and taxes!) in tax havens and behind nominee accounts – so this transfers the problem

Richard Murphy of the Tax Justice Network spoke most convincingly, pointing out that despite tax being central to politics in western democracies, there was little informed debate about tax itself – candidates may bicker about the details of tax rates or exemptions, but not about tax per se. Murphy calculates that tax evasion costs the UK £70bn per year. (HMRC estimates that evasion and avoidance together account for £35bn lost to the government [PDF] – see Table 1.1.) If Murphy is right, that’s about 10% of the total tax take of approximately £600bn (the figures are for different years and may not be wholly comparable, hence the approximation…!): that’s a significant amount and could reduce the government’s austerity programme by a lot. Corporate tax avoidance is put at estimated to be £12bn a year – still an awful lot of money (but also legal, if not morally right).

Murphy believes that one solution is to make corporate tax more transparent – by getting corporations to disclose the tax they pay and where in their annual accounts – the hope being that customers and investors will exercise pressure to bring corporations into line. What won’t help is the government cutting the resources available to investigate tax avoidance and evasion – HMRC is losing 13,000 staff as a result of government cuts.

The UK tax system is clearly a mess. And it gets messier every year: chancellors can’t help tinkering (Gordon Brown was one of the worst) and the tax legislation apparently runs to 11,000 pages – too much for anyone to remember! The complexity leads to lots exceptions: politicians like to push their pet projects, the aim being to promote particular ends – way back in the early 1990s when I had to learn about tax for some exams, I remember their being an exemption relating to companies who launched satellites, applicable I think to only a handful of companies and presumably designed to promote high tech industries. The tax system is full of anomalies.

The Institute of Fiscal Studies published the Mirrlees Review, recommending wholesale reform of the UK tax system. Amongst their recommendations (taken from the press release [PDF] – I am not sufficiently masochistic to read the whole thing!) are

• remove the distinction between national insurance and income tax, and the complexities it creates (unlikely to happen because pensioners are subject to IT but not NI – though tweeking age-related allowances [and hence adding more complication] may be a way around this)

• drastic reform of the benefits system (and the perverse incentives it can produce – thoughthe government is hoping to tackle those anyway)
• extend VAT (not a vote winner, especially after pastygate!)
• reform property taxes
• align tax on employment, self-employment and corporate taxes (this would remove the incentive for individuals to use companies to account for their income, as Ken Livingstone and many others do)
• equalise the tax treatment of corporate debt and equity (this might stop companies over-leveraging, possibly one of the many causes of the financial crisis)

Others call for more radical changes – a flat tax rate, for instance, or moving to a consumption tax (neither would work politically, being highly regressive, despite possibly making economic sense).

Clearly something radical should be done, to simplify the tax system, reduce opportunities for avoidance and promote an equitable society. But agreeing what – maybe even agreeing what the objectives if taxation are – seems very unlikely.

“The Road to Wigan Pier Revisited”. And a bit of a rant by me…

I went to the RSA to hear Stephen Armstrong talk about his journey last year, following in the footsteps of George Orwell, which he describes in The Road To Wigan Pier Revisited. It was a disturbing and challenging talk, because it suggested to me that there had ben a systematic failure of politicians of all hues over the last fifty years.

Armstrong described how, despite the growth in wealth and incomes in this country, the poor were in much the same situation as Orwell described in 1936.

Armstrong told lots of stories – he is a journalist, so that is what he does. Most were depressing – housing estates designed to isolate those living there; employment contracts which won’t guarantee to pay you, but will stop you claiming benefits; short term employment contracts which disincentivise working since leaving and rejoining the benefits system means the worker may go weeks without money; workers too scared to talk openly about their working conditions because they fear reprisals from their employers; the police enforcing civil contacts by arresting debtors so debt collectors could take back property.

Some stories were heart-warning too: the community centre putting on art classes which seem to change the way local people view themselves and the works around them; communities coming together in the face of adversity; a former steel worker with a tattoo of George Orwell on his arm, telling Armstrong “not to fuck up” the book.

Most of the stories told how those in power had let down the people below them – those at the bottom of the pile. Inequality in Britain is at the same level as 1936. (I can’t find the figures, but this data and infographic show a dramatic increase in inequality between mid-1970s and 2000s.) The transfer of population and jobs from the north to the south has taken the heart from communities – just as the relocation of people from slums to new estates broke long-held ties. The de-industrialisation from the 1980s onwards has created a non-working class, whom the demonisation of “chav culture” has left unrepresented. It is easier for politicians to point the blame at “benefits fraudsters” (despite getting his figures very wrong – as pointed out by that well know left-wing paper, the Daily Telegraph) than it is to collect taxes from global corporations.

Armstrong didn’t mention it, but that much of this happened under 13 years of Labour government is a shocking indictment.

(This makes me sound like a rabid socialist; I am not. But the gross wrongs undertaken by politicians seem – well, so wrong!)

Armstrong didn’t have any solutions; nor did the audience. There are no simple answers to complex problems. But the failure of party politics to meet the needs of much of the population suggests to me that party politics won’t be able to supply the answers.

Armstrong believed that much of the problem lay with the disruption of established communities: so perhaps the answers lie within the communities themselves. He mentioned on community leader who, on being asked if the “big society” might be one answer, responded that the big society would fail because it was imposed from above: it had to be communities which solve their own problems.

This may be too much of a get-out clause for central government: they need to take steps to enable communities to tackle local issues. Party politics at a local level has not provided any answers. Is there another model that could enable local communities to coalesce and take locally-oriented action? What would central and local government need to do to facilitate true localisation? To put power in the hands of local people? And can they do it before the underclass we have created decide to do it inspite of, not because of, their representative politicians?

(You can listen to Armstrong’s talk here. Anyone with any solutions can tweet them to Armstrong on @RoadToWigan – he’d love to hear them. Or maybe it would be better just to put them into action…)

Talking about Dialogic Learning…

Last week’s Everything Unplugged discussion was about dialogic learning. I first came across the term “dialogic” when I heard Richard Sennett talk at the RSA last month: Sennett contrasted dialogic against dialectic: the first involving discussion, listening, and understanding, the second involving argument, debate, confrontation, polarisation and adversarial stances.

Our discussion could be summed up by “statement of the bleedin’ obvious”: learning through discussion, sharing ideas and collaborating rather than the intervention of an expert (ie a teacher) to direct our learning and lead us to the truth, has clear benefits. But then we are a self-selected group of people with a clear interest in self-directed leaning through discussion. That’s what we were doing there. Of course it seemed obvious to us.

In part, we were talking more about the Wikipedia article on Dialogic Learning, which reads like an essay and really needs editing (which, somewhat hypocritically, I haven’t been bothered to do), rather than the concept of dialogic learning itself.

But despite perhaps being obvious to us, the idea of dialogic learning is useful. Sennett pointed out how it leads to collaboration rather than confrontation. It teaches people to think for themselves, perhaps in a creative fashion, making new connections and challenging established ideas – critical to innovation, perhaps.

At a time when schools are being criticised for schools are being criticised for failing to adequately prepare students for university and “teaching to the test“, dialogic learning could be a useful method.

We may all know this – but it doesn’t make it any less valid…

(David Terrar’s thoughts on our discussion can be found here.)

Matthew Flinders In Defence of Politics

In a week of strange political events – imaginary petrol shortages created by politicians, pasty-gate, and the surprise by-election landslide by an outside candidate – it was interesting to hear Matthew Flinders talking about his new book “Defending Democracy: why politics matters” at the RSA, and a fascinating and provocative talk it was. Flinders was experimenting with what he called 20/20 – twenty slides in 20 minutes; it wasn’t quite pecha kucha (not least because Flinders controlled the slides, and because he had three times as long for each slide), but it was close.

Given its apparently earnest topic, it was a very entertaining talk, which reinforced Flinders’ desire to get away from dry academia and engage people: he wanted to provoke. He was critical of political scientists who reckon if ordinary people can understand their work, they can’t be doing it properly. Instead, he subscribes to the views of Bernard Crick, who himself adhered to guidelines on writing laid down by George Orwell. (I clearly don’t: Orwell would have written “stuck to” instead of “adhered to”…)

In In Defence of Politics, Crick looked at various threats he saw to politics in the middle of the last centiry – ideology, democracy, nationalism, technology, and “false friends”. Flinders has examined the threats he sees today, using Cricks’ book as a model: he examines the threat to politics of itself, the market, denial, crises, and the media. Where the 20th century was, he said, the century of democracy, the 21st century has seen a divergence: as much of the world cries out for democracy, the advanced western democracies have become distrustful of politics and politicians: we have a view – what Flinders called “the bad faith model of politics” – in which politicians are seen as venal, inept and corrupt: a view Flinders was keen to challenge our knowing cynicism.

He believed that democratic politics delivers more than most of the electorate understand – essentially that we take hard-fought for rights for granted. (It is less than 100 years since women were granted the right to vote in the UK and the franchise was extended to most adult men.) Politicians are people just like us – and those who stand for office apparently do so because they want to change society for the better. It has to be said, though, the thought that politicians are just like us makes me think that maybe we get the politicians we deserve.

Flinders made what he saw as five key points:

• healthy scepticism has given way to a corrosive cynicism, an assumption that politicians are wrong and corrupt

• in modern society, there are no simple solutions to complex problems: and yet people want – and expect, even demand – simple solutions
• we have become democratically decadent: we look to our rights, as if we were consumers of democracy, rather than our responsibilities (and I would say politicians were complicit in this: the Thatcherite revolution in service delivery at all levels made people think as consumers rather than citizens): politics is about voice rather than choice
• there is a deficit in the public understanding of politics: the public are not educated to be politically aware, and Flinders puts the blame for this on the media and political scientists like himself (the corrosive cynicism I am suffering from today can’t help adding politicians to that list – surely it benefits them to keep people in the dark?). We may be media-literate, but we are not politically-literate
• politics is not a spectator sport: it is all very well shouting at politicians on BBC’s “Question Time“, but we need to be more involved than that: Flinders believes we should move to a politics of optimism and actually get engaged with politics

What he thinks this comes down to is public expectations, which will shape the politics of the 21st century. We have high expectations – we want all those simple solutions – which can’t be delivered. We want more – of everything – for less (mostly money). Politicians are trapped – and they make promises which can’t be kept, or try to manipulate our expectations (let’s call that “spin”). It is easier to get into power than it is to govern. Politicians will outbid each other in their promises in order to get into power, increasing public expectations as they do so. (This is Flinders’ need to defend politics from itself – perhaps better phrased as defending politics from politicians.) Politicians work in the short or medium term, but most of the big problems are long term: and so they disappoint.

The media clearly has a role in this as well – another of Flinders’ targets for defense. Only bad news sells. The media like clear cut black-or-white stories – but it is always more complicated than that. By focussing on adversarial “attack politics”, the media contribute to the bad faith surrounding politics. They too want simple answers – and so politicians give simple answers that can be reported. (Some might say that in doing so, they lie.) The media like to make mountains from molehills (pasties make good headlines). Whether this changes in a post-Leveson world remains open.

I think the adversarial nature of party politics in the UK is a central issue. The complex problems we face in the 21st century need a bi-partisan approach – collaboration rather than confrontation. The Liberal Democrats are finding out how hard it is to collaborate: by being in coalition government with the Conservative party, they are seen as sleeping with the enemy. But as Flinders contends, politics is about compromise: no one party has all the answers.

Flinders said that people need to force parties to change: but to change political parties requires working within political parties, which many people aren’t willing to do. Instead, people are focussing on those issues most important to them: the rise of single-issue politics. As party membership falls, and if coalitions become more common, parties may need to change themselves just to survive. People rarely vote for candidates over the party, however good the candidate. Perhaps party allegiance runs too deep.

The Future. Now…

I went to the London Bloggers meetup the other day, which had a panel scheduled to talk about the future of blogging – of much interest to everyone gathered there. It was a good evening – thanks due to Fishburn Hedges for hosting (and the excellent confectionary-based goodie-bags!) and the collective conversation of the meetup (and for Andy for organising this regular bash!) – but I didn’t feel that the panel really addressed their topic: they spoke about what their blogs were doing now and what their next steps would be, but next week isn’t really the future.

But whilst such criticism is fine, it did make me I should put my money where my mouth is. What do I think the future of blogging is?

I have absolutely no qualifications for making any predictions whatsoever: which makes me as qualified as most of the people who make predicitions (the others must work in strategy, technology and futurology, and they would have data to support their views. I don’t…). And of course I will be wrong. This seems very presumptuous. But hey…

So here goes…

• blogging becomes even more mainstream: everyone’s on Facebook; schoolkids use blogs as portfolios of their schoolwork – at least in the west. It can only get bigger, frankly – so normal that it isn’t even worth mentioning. Of course, this means it stops being something specific – no more blogging – but somewhere to put online, digital stuff, and maybe a bit of writing

• blogging becomes more open: I must thank Lloyd Davis for this one, because we were chatting about this over coffee this morning (indeed, maybe that prompted this whole post – thanks, Lloyd!) – but as blogging becomes ever more mainstream, we will want to own everything: no more beholden to Google, Facebook, Twitter, Amazon or whoever, we will move from platform to platform. This may mean the rise of social aggregators. Or not. (Lloyd pointed me to this excellent, challenging post by JP Rangaswami; he may be saying I’m completely wrong, at least about my next point…)
• the resurrection of walled gardens: of course, the providers of services will want just the opposite: the value of the networks they create increases with the number of users, so they will do what they can to keep us – and our data – on their platform: sites will work to become more sticky
• someone will come up with a new, shiny, must-go social network. That does everything. Until the next one comes along
• changing views of privacy – and with it, perhaps, culture: or vice versa; but as billions more people around the world come online (particularly in Asia and Africa), online – and blogging – will change
• everything everywhere – not the UK mobile firm, but mobile: the difference between mobile and non-mobile – static? – access will change and become seamless, or change and become completely differentiated, depending on the use. People have been saying the future is mobile for years, so they’re probably right…

I could play this game for ages, and probably will, but that will do for now…

Press Regulation Post-Leveson

I went to a debate at the RSA on press regulation after Leveson. A bit premature, as all three speakers agreed, but some crystal ball gazing can be fun.

Chaired by John Lloyd, Hugh Tomlinson and Guy Black talked through theirs’ and others’ views – all three were interested parties and active in the media. (Just to be clear, that’s an editor at the FT, a QC and life peer… Hardly non-establishment, then.)

Guy Black spoke first. He had been a director of the Press Complaints Commission until 2004, and clearly felt the PCC had achieved a lot – despite the criticism levelled at it through the Leveson Inquiry so far. He strongly believed that self-regulation without the force of statute was important, primarily because any involvement of Parliament would threaten the independence of any post-Leveson press regulatory body. He sees the ability of the press to hold those in power to account to be crucial, citing the Telegraph’s investigation of MPs’ expenses as an example. (Notwithstanding that it appears to have been Heather Brooke who really broke the story after a painstaking investigation based on freedom of information requests and the Telegraph only got it because they could pay more for the information that was leaked.)

His proposal was a for a self-regulatory body with teeth, enforceable through civil contracts [PDF]. It would have two functions – complaints and compliance – so it could investigate and hold newsrooms to account. Contracts would allow it to levy significant fines.

By using contracts, Black felt that it could be future-proofed – changes would be easy. It would be open to digital as well as analogue publishers (though I am not sure how it would regulate blogs – such as this one; I can see that websites like Huffington Post might be enticed to sign up, but it is hard to envisage common-or-garden bloggers being interested. Regulation of digital media may remain a stumbling block).

Tomlinson came from a very different perspective: he believed the PPC wasn’t responsible for regulation, and hence there had been no self-regulation; and self-regulation would not work. Reporting from a media committee (on which Lloyd sat, too) which had published its recommendations in February [PDF], Tomlinson asserted that regulation would require statute, which could be drawn up to ensure independence from politicians. The statute would only define the powers for the new body (Tomlison even had a name for it – the Media Standards Authority, or MSA).

The MSA would be able to award compensation (which the PCC cannot do, apparently – hence those who feel they have been wrong by the press resort to the courts rather than the PCC) and would be able to discipline members (and presumably enforce any punishment).

Fundamentally, Tomlinson felt some body such as the MSA would need to overturn the old newsroom culture, which had allowed behaviour such as that discussed by witnesses to Leveson to spread.

There were interesting similarities between the two ideas – and I think they were closer than the two protagonists would say. Neither wanted compulsion – both were essentially voluntary schemes (albeit with sanctions and incentives to ensure publishers engage with their schemes). Both relied on contracts to enforce regulation. Both envisage some form of compliance instead of just complaint resolution.

For me, the big question was why no compulsion and why no statutory enforcement? In essence why the MSA rather than OfPress? The answer from both Tomlinson and Black was that to compel publishers to join and have strict OfCom-like regulation, one needed a form of licensing which could be removed: with broadcasters, regulated by OfCom, the sanction for non-compliance is the removal of access to specific channels in the spectrum.

Newspapers are not licensed: there is nothing that OfMed could take away. This is probably a good thing – issuing licences to publish would be riven with difficulties, not least political interference. So a regulator needs to work in a different – and, apparently – voluntary fashion.

The risk of course is that such a regulator lacks teeth.

The questions raised afterwards were interesting, although not necessarily resolved. Were the failures of the press that prompted the establishment of Leveson a failure of regulation or of enforcement? As Ian Hislop pointed out in his submission to Leveson, the behaviour of the press – phone hacking and so on – was illegal, but the police failed to investigate – to enforce the existing law. Sufficient legal powers existed to punish journalists who transgressed the law.

Something that came up again and again was that a change in behaviour – in the newsroom culture – was needed. The press felt and acted above the law. One difficulty is that there are times when it may be advantageous for the press to behave like this. The investigation of MPs’ expenses, for instance, required journalists to break the law to obtain damning information – the details published by the Daily Telegraph were illegally obtained. How can one form of illegal behaviour be condoned whilst another attracts sanction?

The public interest is not, of course, what the public are interested in…

There was a discussion about how the press works in the USA. There is apparently no formal press regulation in America: the US constitution provides certain rights and the press adheres to the first amendment, which includes a right to reply. The speakers believed the US press has higher professionalism than their British colleagues, and a greater pride in their work – both of which are reflected in a different newsroom culture. Many newspapers are local monopolies, reflecting individual cities and providing local news – and being family owned meant that the owners felt responsible for what was printed. (I didn’t buy this at all: local monopolies and restricted ownership sound like a situation ripe for abuse.) Of course, News Corporation – the owner of two newspapers at the heart of Leveson – appears to be run as if it were a family owned enterprise (that family being Rupert Murdoch‘s): their ethics haven’t been helped by keeping it in the family.

There was also discussion of the concentration of media and press power in a few hands – and again Murdoch was invoked. Neither of the models of regulation sought to address press power, just abuses of it.

We’ll have to wait to see what Leveson does actually recommend…

Two Changed Processes That Fail Badly

I have recently been surprised by the way two – very -different – process have been changed that make things way, way more difficult for the user.

Haringay Parking Permits

I live in Haringay, and like many other urban boroughs, there are parking restrictions. I don’t have a car, but I occasionally need visitors’ parking permits, which I can buy from the council.

How It Used To Work

• go to the council offices

• queue for a while
• fill out a form
• hand form to council worker
• pay for the permits using credit card
• receive permits from council worker, up to the limit I’m allowed if I so wish

There may have been an online option, but since this was the first time I needed permits and I needed some quickly, it made sense for me to pick them up from the office and register in person.

How It Works Now

• go to the council offices

• queue for a while
• fill out a form detailing how many permits I wanted (32 in this instance)
• hand form to council worker
• council worker explains that they can’t take payment at the office
• receive eight two-hourly permits from council worker – all she was allowed to distribute – without paying for them
• another council workers makes repeated phone calls to my phone (which I ignore, because I don’t recognise the number)
• council worker finally leaves a message on my voicemail
• I call council back
• I give the council worker my credit card details
• council worker takes payment from my credit card
• council worker puts 24 permits in an envelope (32-8, since I already took 8 permits)
• council worker puts envelope in the post
• postman delivers envelope
• I receive permits

The whole process has been redesigned to create more touch points from the council, meaning much more work for them, much less convenience for me, and decreased security since I have to give my credit card details to someone over the phone (who could be using my card right now…). What’s more, they had to wait three weeks for their money: I wanted to give them money, and the council didn’t want it. It is, frankly, bonkers, and I can’t work out why they would have designed it the way they have: separating out the supply of permits from the payment, and restricting the number of permits that can be given in person, imply there were some issues with the face-to-face parts of the original process. How these were solved by greatly increasing the complexity – and the work done by the council – baffles me.

Photographs from the Wildlife Photographer of the Year exhibition at the Natural History Museum

At last year’s Wildlife Photographer of the Year exhibition, they had some great interactive software that allowed you to select your favourite pictures. They had something similar this year. Except that they completely broke it.

How It Worked Last Year

I think. As much as I can remember…

• sit at a console at the end of the exhibition

• select favourite pictures
• type in your email address
• go home
• log into email
• open email
• click links
• look at favourite pictures online

Simple. Really.

How It Worked This Year

• sit at a console at the end of the exhibition

• select favourite pictures
• scan barcode on ticket stub
• go home
• go to www.nhm.ac.uk
• click on the link to the exhibition
• click on the link which said something like “how to view your favourite pictures”
• type in 16 digit number from ticket stub – yes, a sixteen digit identifier – were they really expecting trillions of visitors?
• register to join the Natural History Museum’s “Wildlife Photographer of the Year community”, which required giving my email address and a password (which must include an upper case character, a lower case character, and a number)
• wait for them to send a confirmation email
• log into email
• click link to confirm my email address
• log into the community site
• look for the link to access my favourite photographs (which the instructions said would be at the bottom of the community page)

Guess what: no link, no photographs.

So the Natural History Museum took a process which was so simple it impressed me last year and did exactly what it needed to do – and which I raved about, sharing the photographs with friends and giving the exhibition free publicity – and ruined it.

What’s more, why do I require a password? Why does the museum make me choose a variety of characters to secure an account which I do not want with a community I have no interest in joining which contains no information about me except my email. What is the security risk? That someone might pretend to be me to look at some pictures which the system has singularly failed to deliver? (Actually, my guess is that the community is open to children of all ages, so they feel the need for some control: but their process has not verified my identify at all. And I am trying to imagine young children navigating this process.

The thing is, I can look at all the pictures without this process anyhow, by going to the exhibition’s online gallery. You could have told me that before going through all this bloody process!

The whole thing has been a waste of time.

I can only think that the Natural History Museum has been told by some social media consultant that they need to have a community, and that they have decided the best way to do this is to force visitors to the exhibition to do this.

Of course, maybe I have been doing something wrong. The process is so complicated – unnecessarily so – that I may have made a mistake. So I’ve just logged in again, following the instructions once more. No photographs, no link.

And apparently no way to delete my account.

Great job there.

“Why It’s Kicking Off Everywhere”: Paul Mason on the social media, revolt and the connected self… #RSAmason

Paul Mason, talking at the RSA on his new book “Why It’s Kicking Off Everywhere, supplied the bits that I had felt missing from the recent RSA Job’s Summit: he explained why the great and good – the economists and politicians with whom we entrust management of our economic and social government – don’t (and won’t – can’t) get it. (You can here a recording of his talk here.)

He was trying to explain why around the world – most notably in the “Arab spring”, but also China, Russia, and the west too (with the Occupy movement) – there had been public uprisings of one sort or another. He painted it as a Shakespearean tragedy in which the common people – the “fools” – sounded philosophical and the powerful and elite sound like idiots.

His argument had three strands:

1. economics
   The “global financial crisis” is not a crisis but the collapse of the neo-liberalism model: the expansion of free markets, deregulation and globalisation since the 1980s lead only to their collapse: the old idea of “get a job, get a house and save for your pension” won’t work any more. The young today will be poorer than their parents, because the nation-states themselves are bankrupt. The never-ending growth of the world economy cannot be sustained, and this is causing a massive rethink in the young. The trouble is that there is no alternative to neo-liberal economic model: religion hasn’t worked, communism hasn’t worked – where else are people going to turn?

   Society’s promises to the young have been broken. The neo-liberal model helped the rich elites to grab more power, but with rampant inflation people are grabbing some back – and it is a growing, disenfranchised middle class who have nothing to lose. Mason quoted Taine from 1879 – “don’t worry about the poor, worry about poor lawyers” – except now in a garrett there is a laptop…

2. technology
   With easy access through mobile and broadband communications to social media, the elite no longer have control of information. Commodified technology makes anyone a publisher, and governments can’t control it. (Though I couldn’t help but recall Evgeny Morozov’s talk in which he discussed how governments can use these technological tools to manage and control information.)

   To Mason, these new technologies and tools reconfigure the dynamics of power. In Kenya, for instance, the spread of mobile communications is seen as the “same as democratic transition”. Social media allow collaboration and co-operation between tribes who would previously have fought each other – they can foster trust from a distance and highlight similarities.

   Knowledge is now distributed and instantly available, rather than being restricted and controlled.

   These new tools are non-hierarchical – but the power-structures in society, like political parties, unions and global institutions are rigidly hierarchic, and this is why Mason thinks they “don’t get it”: they cannot understand how decentralised, self-organising groups such as the demonstrators in Tahrir Square or Occupy Wall Street can function. They cannot conceive it – no beliefs but a will for massive change, no leaders and no command structure. The demonstrators can move more quickly and fluidly than the police – mediated by social media.
   

3. lack of leadership
   Mason quoted Karl Rove describing the world’s leaders as those who create reality – ”when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities”. Now it is out of their hands: it is the those without formal power who create reality, and this is causing a parallel change in behaviour and thinking. Mason drew parallels with the changing perceptions early in the 20th century: a sea-change in society. (He attributed this view to Virginia Woolf – which someone else has verified – but I can’t find anything about Woolf expressing this.) Mason sees a new conception of the self – connected, networked and “leaky”. (Not sure if I really get this, but it is an interesting idea!)

Where does that leave us? In an increasingly uncertain world. Mason drew uncomfortable parallels with late 1920s and 1930s Europe, and we know how ell that ended. Nationalism is on the rise in southern Europe – and in Greece and Italy, elected governments have been replaced by unelected technocrats. Unemployment, particularly among the youth, is reaching scary heights. (This was the starting point for the RSA jobs summit, of course.)

There may be different outcomes in different parts of the world. And it is unknowable, perhaps. Mason questioned whether the nation state may be challenged by technology – but where would this leave the welfare state (the safety net for those unemployed, in the UK and parts of Europe at least)? Twin – and opposing – forces of localisation and globalisation may lead us to new models.

Perhaps we do indeed live in interesting times.

[Mason also gave a talk at the LSE - you can read a transcript here (pdf).]

BarCampBank: Reinventing Finance?

Ten years ago or so, I did a university course on finance and banking; as a final flourish to my presentation, I held up my mobile phone and predicted that in the future we’d be using our phones as electronic wallets. The other day, Barclay’s launched a smart phone app that can be used to transfer money from one person’s account to another. It has taken a decade, but that future seems to be moving closer…

A couple of weeks ago, I went to BarCampBank London (#5, I think), which was full of such talk: how could banks and banking be re-engineered? What is the future of banking? Most of all, what IS a bank?

That question was debated a lot – I think it cropped up in every session – and there wasn’t really a satisfactory answer. Maybe a bank is simply an organisation with a banking licence – or one that the banking regulators deem to be worthy of regulation. (It sounds like the regulators are somewhat more active now than they were six or seven years ago…)

An unconference – albeit one that had a bit more structure than most I have attended – BarCampBank had multiple sessions running concurrently. Some concentrated on technical issues; I attended those that dealt with behavioural and human side of the industry.

The first session I attended was provocatively titled “Is Banking A Human Right?” Whilst possibly quickly consigned to the category of “QTWTAIN”, the discussion was engaging, focussing on customers and their needs rather than the institutions that serve them. “Banking” provides access to many more services than just banking: the unbanked of the world can suffer injustice that those more privileged – that’ll be me – find it hard to conceive. (There are between 600,000 and 1.2 million households without access to the banking system in the UK alone [pdf] figures for 2009.)

The basic bank account promoted by the last Labour government in the UK has done little to plug the gap. (The government likes people to use bank accounts because it may help reduce fraud.) In India, the inability of people to identify themselves has denied them access to banking – one of the drivers for the Indian ID scheme. (An anathema to many BarCampers who can be fierce privacy advocates…)

The next session had a similarly provocative title, “Do social media change anything or everything in finance?” – this time answered with a resounding YES. And, erm, NO.

Banking is clearly social – we use banks to make payments to each other, in all sorts of combinations. (I would maintain that actually any business is social, but that is a different post…) Social networks can be thriving economies – Second Life apparently has a huge economy mediated by “Linden dollars”; eBay a larger one using real dollars exchanged by PayPal; and Facebook credits are the social network’s currency. Dutch law recognises virtual assets within World of Warcraft as real as far as property rights are concerned.

But do social media change anything or are they just a new channel or platform for existing services or organisations providing them? The ease with which some people who have grown up with the service place their trust in Facebook – probably greater than their trust is stolid institutions like banks which they have just seen come crashing to the ground – suggest there might be an opening. But why would Facebook – or Twitter, or Google, or … – want to become a bank? Maybe to use a multi-billion dollar cash pile, though a similar argument was used in the 1990s to predict that Microsoft might become the first virtual bank, which it failed to do. (Observers still discuss the possibility.) Regulators may well determine this – Microsoft had enough problems with regulators without involving more of them, and Google and Facebook look like they may be facing similar regulatory issues in the future.

The need to transfer money cheaply around the world – meeting the needs of the increasing, and increasingly connected, diaspora – may be one driver: a social media bank that could build on existing trust and reputation relationships to leverage scale might succeed.

Similarly, banks are becoming more aware of online trust and reputation. MovenBank is specifically using applicants’ social graph as one of their criteria in lending decisions. Existing online services such as Zopa (who I believe were represented at BarCampBank), Kiva, PayPal and Wonga perform near-banking functions, and some at least have a social aspect to them. Crowd-sourcing and crowd-funding platforms like Kickstarter and Indiegogo (which were also covered by sessions I didn’t attend – next time, I must remember to take my clone…) could morph into banks.

The session “How Could the Finance Sector Work Differently?” was perhaps the least satisfactory – if only because we were instructed to think positively! Bankers of course come in many different types; those manning the local branches of retail banks probably don’t need an injunction to “be humble” and “engage with your community” – because they are deep within it already; those who still believe they are the masters of the universe and wish the rest of us would go away and let them celebrate their riches may however benefit from considering their role in society.

The idea of personalisation of products cropped up, but I am not sure this is necessarily positive – at least from the customers’ point of view. One of the reasons banks were created was the pooling of risk – I could lend money directly to an enterprise, but if I lend it to an intermediary – a bank – who lends to many enterprises, the risk of any one failing to repay my loan is greatly reduced. Excessive personalisation may reduce this – particularly with insurance products: if insurance companies personalise their products to a great degree, those who need insurance may become uninsurable, and those who don’t – well, they don’t need insurance!

This lead onto debate about mutuality. In the wake of the credit crunch and the “global financial crisis” (or GFC as it is known to its friends), mutuality seems to be making a comeback. Apparently, credit unions are more popular, and people feel safer with building societies than banks. This may just be anecdotal, but these institutions feel more local – more community-centric. Surprising since the community – all of in the UK – now own two banks and have a significant interest in others.

There was also a discussion about increased portability – being able to switch providers more easily. But should banks be concentrating on this rather than providing sufficiently good service that we don’t feel the need to move? It is said (though I can’t find any stats to support the assetion!) that we are more likely to get divorced than change our bank: maybe we just want banks to be more committed…

The final session I sat in on was perhaps the most creative: the group was asked to create a narrative for the future of finance – to pitch the movie “Banking 2.0”, if you like. At least, that was how we interpreted the task. The blind leading the visually impaired, we probably came up with as many narratives as there were contributors, despite some sterling facilitation. We tried to come up with a scenario in which banking was re-invented after a future financial crash: what would it look like?

Some envisaged mobile phone companies stepping into the breach left by the collapse of banking – they’d facilitate the transfers of cash between consenting handsets. Others saw bartering as an option. My take was much more apocalyptic, I’m afraid: in the wake of a catastrophic banking collapse – not just Lehman going, but the whole lot – I’m afraid I just saw a disaster movie. Phone companies wouldn’t provide credit, since they’d have no trust in us to pay (and vice versa) – indeed, they’d cancel our accounts when we couldn’t pay. With all our money tied up in failing banks, we couldn’t even buy energy to keep our phones charged. And with the financial system in meltdown, the oil-rich nations wouldn’t sell us the fossil fuel we need to keep the power stations running, so they’d be no electricity anyway.

What interests me is that it wasn’t a phone company which has innovated a banking app, but a bank. There may yet be life in these seemingly moribund institutions… (Though perhaps we should have conceived the movie as a zombie epic, the banks refusing to die…! And Umair Haque has written about the zombie economy.)

[Aden Davies has posted about his views of BarCampBank London 5, including information on some of the more technical aspects discussed.]

Richard Sennett on “Together”

Once more at the RSA, to hear Richard Sennett talk about his new book “Together: The Rituals, Pleasures and Politics of Co-operation”. (Audio here.) He had some very interesting things to say – it was thought provoking – but I was not necessarily convinced.

Sennett reckons that cooperation and collaboration is natural to people – indeed, he said he believed that it might be genetic in nature (though I’d have thought it would be easily explained through culture, especially as Sennett said it develops as we learn – a lot of play is about developing cooperation).

But he then said it is difficult and requires practice – if it is innate, there is clearly a learnt element. Still, it is clearly a complex skill: Sennett focused on three attributes which he contrasted with their modern antithesis, to show where we might be going wrong.

1. dialogics v dialectics: education and legal systems (and much else) lead us to dialectic debate, often confrontational (anyone listen to the “Today” programme or watch “Question Time”: they may then understand that confrontational debate does little to promote understanding and collaboration…); in contrast, dialogic requires the exercise of listening skills – more listening than talking, and what talking there is is questioning and probing. Co-operation requires understanding built on dialogue

2. subjunctive v declarative: Sennett lambasted the “fetish of assertion” – aggressively asserting “I think…” or “I believe…” demanding for a (usually confrontational) response. Instead of confronting others with our convictions, Sennett advised using subjunctive propositions – “It seems to me…” to open discussion and invite participation – building collaboration and teamwork rather than confrontation
3. empathy v sympathy: identifying with others – sympathetically feeling their pain – closes down discussion: understanding another’s position without being able to identify with it, but accepting their need to attend to it, sends messages and builds understanding, It requires curiosity rather than compassion – an interest in other people

[I’m not sure that I am in total agreement with Sennett about these, particular his second and third assertions, though he maintained there is research to support his position.]

Sennett proceeded to discuss co-operation in urban society and workplaces; once more, he was interesting if not (to my mind), wholly convincing. He asserted that the way that we organise work and (his word!) community in modern [western?] society reduces and disables learning to co-operate with those who differ from us.

With regard to work, the focus on project work with short term timeframes plays lip-service to teamwork, but doesn’t let us develop the understanding required of each other to actually pull it off. We don’t have the time to spend with others building that understanding, instead focussing on our short term objectives – after which we move off to work on the next project. We do not have enough invested in the success of our enterprise, instead seeking the next fix.

I disagree about this: those working in a project environment rely on others in the team to deliver the result. We have to co-operate – and having the skills to do so is crucial to our success: those informal “people” skills which might not appear in the job description are necessary to help us build our reputation.

Sennett believed that despite cities being full of difference, we are living in more and more homogenised societies, and rarely mix with those from different races, religions or classes. We are segregating ourselves.

Whilst I can see some aspects of this, I do not believe it is new: surely society was much more homogenous one hundred or two hundred years ago? There are many more opportunities to mix in today’s multicultural society: it might be easier not, but the opportunities are still there.

Sennett had some interesting things to say about the Occupy movement – he has taken an active interest in the movement in the USA, and it seems to fit his model of dialogic, subjunctive, empathetic behaviour. Politicians of all flavours – the dialectics supreme – literally don’t get it: non-hierachical, self-organising, learning, the Occupy movement is about experiences rather than demands, and growing from the shared experience.

Much of what Sennett had to say resonated – particularly stemming from conversations at Tuttle and the C4CC, as well as institutions like the RSA itself creating space for discussion – but the very existence of these fora actually weakens Sennett’s thesis.