Economics – The Oxonian Globalist http://toglobalist.org Oxford University's international affairs magazine Wed, 27 Jan 2016 13:49:18 +0000 en-US hourly 1 https://wordpress.org/?v=4.5.3 Finding the right data for development – the challenge of intangible capital http://toglobalist.org/2015/04/finding-the-right-data-for-development-the-challenge-of-intangible-capital/ http://toglobalist.org/2015/04/finding-the-right-data-for-development-the-challenge-of-intangible-capital/#respond Sat, 11 Apr 2015 10:26:05 +0000 http://toglobalist.org/?p=5627 Finding the right data for development – the challenge of intangible capital As we begin 2015, the year the United Nations Millennium Development Goals (MDGs) expire, development is increasingly about our more-than-Northern and more-than-human world. This is a world of globalisation, increasing interdependence and intertwining of society and nature. In this context we can easily imagine that the truism “what is not measured is not managed” holds true. We cannot run a system, nor evaluate it, without data. But what kinds of data do we have and what kinds do we want to inform governance, institutional arrangement and managerial practices. More often than not best practice in policymaking and international development demonstrates that quantitative data is better or easier to work with than qualitative. But this isn’t necessarily the case.

A telling example of how the “right” numbers can enact a politically tangible reality in need of intervention is the case of biodiversity hotspots – illustrated in figure 1.

Figure 1 | source: “Biodiversity hotspots for conservation priorities” by Myers et al. 2000; Nature.

Figure 1 | source: “Biodiversity hotspots for conservation priorities” by Myers et al. 2000; Nature.

Biodiversity hotspots are regions of the world that contain an extraordinary number of endemic animal and plant species at risk. Other theories that foreground the role of species quality instead of species quantity have come up short on policy-friendly figures, thus making “hotspots” the hot world view to turn to when politicians and policymakers set out to preserve biodiversity. The focus onbiodiversity hotspots serves as a tractable illustration of environmental risk and thus shows policymakers what they should prioritise.

To give another, and perhaps more controversial example, figure 2 illustrates the main differences in wealth between different supra-national income groups. Here the World Bank also produces a quantitatively inspired view of the world.

Figure 2 | source: “Changing Wealth of Nations” 2011; The World Bank

Figure 2 | source: “Changing Wealth of Nations” 2011; The World Bank

However, the World Bank’s main take-away from this table is the predominance of intangible capitalwithin each region. Intangible capital is determined by subtracting all physical, natural and net financial assets accounted for in the measure of total wealth. The World Bank defines what remains as “all nonphysical, nonfinancial assets”, such as human, social and/or institutional capital. In other words, intangible capital accounts for all the economically significant but unquantifiable socio-cultural “stuff”.

Omitting the details of these estimates, it’s important to note that there is a strong positive correlation between intangible capital and total wealth. This indicates that intangible capital such as education, general social trust and (good) institutions of governance contribute significantly to the efficient use of physical, natural and net financial assets, leading to increases in wealth. Traditionally the World Bank has estimated wealth in measures of produced assets (i.e. physical capital), but measures of natural capital, human and institutional resources (i.e. intangible capital) are steadily being incorporated into the organisation’s assessment of a nation’s wealth. The Human Development Index is a prominent example of a measurement that focuses on levels of human capital.

The search for new development indicators and ways to identify, represent and support the socio-cultural qualities of intangible capital raises an interesting challenge for low-income countries, where intangible capital only accounts for 57 percent of the economy. Compared to levels of intangible capital in OECD countries, which stands at 81 percent, it becomes clear that there is scope for socio-economic discovery and development of intangible assets. This change in approach is occasionally ignored by day-to-day development policies that are geared according to quantitative measures of success.

The importance of intangible capital to high performance economies strongly indicates that not everything that counts hasbeen counted. New ways of determining and leveraging intangible capital are needed for a kind of development that is based on fairer representations of the world. That is, representations that include increasingly intangible but ostensibly significant factors. Mapping these factors and translating them into something that makes sense for policy professionals is a key challenge for the 21st century. This is essentially a question of using quantitative and qualitative methods, or a so-called mixed-methods approach, to inform policymaking and development. In short, we need to make qualitative data count. The debate is as relevant as ever since quantitative measures remain the most economically efficient and the easiest to standardise.

The growing demand for evaluation measures that are sensitive to environmental, social and governance (ESG) factors presents an important opportunity for interdisciplinary research. Indeed, interdisciplinarity is a tired term. However, it remains important to underscore that different and often local forms of expertise are necessary for the development of more adequate indicators of ESG performance. These indicators, in turn, are crucial for sustainable socio-economic development.

ESG-oriented reporting mechanisms are accompanied by a growing number of investment indices and close-to-the-ground advisory services that promise to advance investments in more sustainable services and technologies. Equally as important, large institutional investors are looking for opportunities in the impact investment market targeting assets that generate a ‘measurable’ positive impact. Such efforts should help accelerate broad-based prosperity across the globe. Notwithstanding, the growing number of rating agencies and various “standards” shows a continued need for methodological innovation.

While an entire market is being created around the abundance of data in high performance economies, the lack of reliable data in developing countries makes it difficult to measure their actual and potential development. Whether intangible capital is measured and taken into consideration by consultancies, who devise plans for development, depends on the availability of data that falls within the framework of the models mobilized by the same professionals. Accessing such data is fraught with practical obstacles, such as the public’s willingness to partake in research and volunteer data. Meanwhile contemporary efforts to overcome such obstacles in the name of progress and prosperity are faced with difficult ethical debates about Euro-American imperialism and competing interpretations of what development is or how it should be realized.

The indicators we use today have proven unable to asses all kinds of development, and understandably so, if we take into consideration their origin in time and space. This reiterates the constant need for professionals who make it their first priority to shine a light on the multitude of economic intangibles that contribute to economic growth as well as social and environmental prosperity.

Methods are crucibles for understanding and shape the manner in which societies and natural habitats are cared for. We should continuously think about the diversity that escapes the models used for analysing and measuring development. As a new era for development is set to begin after the 2015 Millennium Development Goals, the time is right to think about how economically significant but intangible assets can be given a more prevalent and defining role in the realm of policy making and amongst development professionals in the public and private sector. The answer is not simply to collect more data on a wider range of issues. We need to innovate our data-collecting tools and channel resources towards social innovations that make economic intangibles count. Harnessing a combination of qualitative and quantitative data would be a step in the right direction.

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The gender bias of neoliberal policies http://toglobalist.org/2015/01/the-gender-bias-of-neoliberal-policies/ http://toglobalist.org/2015/01/the-gender-bias-of-neoliberal-policies/#respond Thu, 29 Jan 2015 07:54:27 +0000 http://toglobalist.org/?p=5601 Programme lending (PL) by international financial institutions (IFIs), such as the International Monetary Fund (IMF) and the World Bank (WB), was introduced in the late 1970s to stimulate developing countries’ economies. These loans were conditional upon the implementation of neo-liberal policies by recipient countries in the belief that a market-oriented philosophy would help them adjust to macro-economic problems. However, numerous studies have criticised such policies for inadvertently harming disadvantaged groups. Consequently, IFIs changed their PL strategies in 1999 to follow the Poverty Reduction Strategy Papers (PRSPs). Current policies are now designed support socially vulnerable groups, including women, and female empowerment in the workplace and the wider economy has become a condition in its own right for IFIs. Unfortunately, programme lending remains criticised by activist groups for being anti-poor, anti-equalitarian, and gender-biased.

This article will shed light on the impact of PL on women’s rights and economic situation. For this purpose, key figures from political institutions, NGOs, and international organisations were interviewed in Accra, Ghana, in July 2014.

 

The Structural Adjustment Participatory Review International Network (SAPRIN) report (2004), a cross-national study involving NGOs from nine countries and (initially) the World Bank, found detrimental effects on local populations from trade liberalisation policies, financial sector liberalisation, labour market reforms, privatisation, agricultural sector adjustment policies, mining sector reforms and public expenditure reforms on education and healthcare. PL has contributed to increased impoverishment and economic inequality due to the one-size-fits-all approach of adjustment policy implementation.

 

In most societies, women fulfil core social roles as producers, home managers, mothers and community organizers. With the exception of the first, these burdens are not equitably shared between men and women, resulting in a disproportionate amount of female unpaid work. These socially constructed expectations have led to a variety of outcomes, including women’s disproportionate involvement in unpaid domestic work. In every region worldwide, women spend twice as much time working in the household than men do, and in some parts of the developing world this is up to five times as much. Worldwide, women work more than men when unpaid domestic work is taken into account, and an increase in women’s paid employment over the past decades has not been accompanied by men’s increasing participation in unpaid domestic work (UN, 2010). This alone disadvantages women with regards to economic indicators such as unemployment rates since men have more flexible schedules and domestic commitments when seeking work. Neoliberal economic policies have led to an increase in unpaid domestic work due to budget cuts and austerity measures that disproportionately affect welfare and social security programmes. A side effect of this is that women are forced to devote more time and resources to carrying out domestic duties, inhibiting their involvement within the formal economy.

 

Under the Washington Consensus, Western lenders are pressurizing developing countries to remove price controls, lower food and fuel subsidies, and reduce social spending on health and education. Such policies amount to a redistribution of wealth from socio-economically disadvantaged groups to economic elites. Much of the burden of overcoming these difficulties falls upon women due to their socially ascribed roles as ‘mother’ and ‘home manager’. As household incomes fall in real terms, women are forced to undertake more unpaid domestic work or find additional revenue streams in the informal sector. Recent studies have demonstrated that women working in the informal economy are less likely to enjoy equal pay and are disproportionate more likely to fall into the poverty trap. At the same time, they are denied access to the basic modicum of social security, job protection and labour rights. Moreover, neo-liberal policies disproportionately harm women due to cuts in wages and retrenchment in the public sector. Women working in the formal economy are six times more likely to work in the formal public sector than in the formal private sector. In both instances, women on average are paid between 60-90% of male wages for performing the same work, affecting both female workers and families.

 

Ghana offers an excellent example of the baleful impacts that programme lending can have on socially disadvantaged women. Since 1983, the country has been subjected to a series of structural adjustment programmes by the IMF and World Bank. Whilst generally considered to be a success story by foreign experts, headline statistics have obscured a more complex picture which suggests that the gains of economic growth have not been equitably distributed across society. Over the course of July 2014, your correspondent interviewed 14 experts from state institutions, local activist networks and transnational NGOs in Accra. A majority of these interviewees expressed greater ambivalence about their country’s economic success than expected, with many bringing up the increasingly unequal distribution of economic gains across society as a potential problem.

 

To specifically investigate the deterioration of women’s economic rights and status under PL, the interviews focused on Ghana’s privatisation process since the 1980s. By 2001, 70% of the country’s SOEs had been divested, leading to the country’s poster-child image within international financial institutions. However, privatisation often leads to substantial job losses through the elimination of subsidies, corporate reorganization and higher prices. Indeed, it has been blamed for higher unemployment and the growth of Ghana’s informal sector, which grew from 200% of the formal economy to over 1000% in the last two decades of the 20th century.

 

One interviewee stated that women have been disproportionately pushed into the informal economy because of their low educational attainment, making them more vulnerable to mass lay-offs. Therefore, even though absolute redundancy numbers may be higher for retrenched men (because in absolute terms more men were employed in state-owned enterprises), the impact of their redundancies was small because they found it easier to get employment in the private sector due to their higher educational levels. An estimated 88 percent of Ghana’s workforce is now employed in the informal economy, 65% of which are women. Lacking state support for their businesses, poor infrastructure, healthcare provision and sanitary facilities, adequate vocational training and educational opportunities, these workers are disproportionately likely to be stuck in relative poverty. At the same time, local activists have raised concerns regarding non-existent job protection, labour regulations and social security.

 

For women, these problems are especially troubling. Low levels of state spending on sanitary facilities and healthcare affects women during menstruation and pregnancy to a more severe extent. In the absence of state capital and start-up funds for new businesses, women encounter significant difficulties in starting or expanding enterprises. Within deeply patriarchal societies, formal financial institutions remain distrustful of female lenders, especially those who lack collateral or other resources. Female employees in the workplace have reported high rates of sexual harassment, with victims distrusting the police for fear of official stigmatisation. In the absence of maternity protection, women working in the informal economy often find it difficult to reconcile conflicting demands. Not surprisingly, both interview and empirical data suggest that female workers often feel marginalized by both the state and formal economic institutions.

 

In conclusion, neo-liberal policies by the IFIs such as privatisation are not the cause of inequality and the deterioration of women’s economic rights and status, but their gender-blindness has exacerbated the plight of women.Gender-blind policies harm women and economic growth will never lead to substantive gender equality as long as gender stereotyping prevails. That said, the case study on Ghana – a so-called PL success – further demonstrates, that as long as discrimination and societal roles prevail, economic globalisation will neither improve women’s life nor foster gender equality. Ultimately, a culture of mutual respect may only be achieved after the structural causes of systemic discrimination within society have been eradicated.

 

 

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Dumb justice http://toglobalist.org/2013/11/dumb-justice/ http://toglobalist.org/2013/11/dumb-justice/#comments Mon, 18 Nov 2013 10:58:25 +0000 http://toglobalist.org/?p=5423 Justice, though always blind, has become dumb too. Photo by The Mirror.

Justice, though always blind, has become dumb too. Photo by The Mirror.

“To no one will we sell, to no one deny or delay right or justice.” Magna Carta, the constitutional document that founded this principle, will celebrate its 800th anniversary in 2015. This has not been lost on the Conservative Lord Chancellor, Chris Grayling, who will mark the date with a celebration of Britain’s “unrivalled legal expertise, based on a long history of freedom and justice.” Unfortunately, the celebration will be a bitterly ironic one in light of his commitment to cutting the legal aid budget of England and Wales. It is telling in itself that a complete assessment of the detrimental effect of the cuts upon criminal, civil, and public justice could not possibly fit within this article. Instead, this article will limit itself to arguing that the cuts clash with Magna Carta by creating a two-tier legal system in which the rich have greater access to justice than the poor.

Legal aid is part of the post-war welfare state. The budget set aside for it pays lawyers at below market rates to advise or represent citizens with a sufficiently strong case. The provision of civil legal aid is both means and merits tested and cases with less than a 50% chance of success will not be funded. Evidently, the poor have never had the unfettered access to legal advice enjoyed by the rich. Nevertheless, legal aid recipients could at least expect to be represented by lawyers with a level of expertise that corresponded with the complexity of their case. This expectation peaked in 1979 when 79% of the population qualified for legal aid in one form or another. The legal aid budget is put in perspective, however, if one remembers that even at its peak it would have funded the NHS for just two weeks. As far as expenditure goes, this was a relatively low-cost means of promoting something like a level playing field between rich and poor litigants.

Successive governments, both Labour and Conservative, have been cutting legal aid since 1979. Today the system teeters on the edge. The £2.2bn legal aid budget has been cut by £540m in total with £320m being withdrawn from civil legal aid and £220m from criminal legal aid. These cuts undermine all areas of publicly funded law and effectively spell an end to legal aid in most civil practice areas. As such, they have met with unprecedented opposition from lawyers and non-lawyers alike. The conflict over legal aid is critically important since it is lawyers who speak for us when we enforce our legal rights and it is only through legal aid that most people can afford a lawyer.

From the outset it is important to emphasise that the cuts affect everyone. Although falling with predictable severity upon minorities, the cuts withdraw legal aid from practice areas of concern to all citizens. Amongst much else, it has been withdrawn for family, welfare benefits, employment, clinical negligence, and housing law. It’s likely that even the most law-abiding citizens may someday need advice in these areas. For instance, many of us may require family law advice given that 42% of marriages end in divorce. We might also consider the 30m families on benefits, some of whom will need advice when the introduction of universal credit redefines who merits state support. In the absence of legal aid, those seeking advice must pay for it privately or do without.

The absence of legal aid passes the advantage to the richer party in any dispute. Let’s consider a dispute over child contact during a divorce. In this divorcing couple, the husband had remained the breadwinner while the wife had left her job so she could shoulder familial responsibilities. His independent salary now enables him to afford a solicitor and barrister. These legal experts conduct the complex casework and advocacy that go into building the strongest case possible. In the absence of legal aid, or a trust fund, the unsalaried wife cannot afford these services. Without a barrister, she must represent herself unprofessionally and in a case to which she is emotionally attached. The strength of one’s case does not speak for itself and hers will suffer for lack of expert representation. All else being equal, the husband is more likely to have his way for no better reason than his wealth. This is but one example of how the absence of legal aid fosters an imbalance of power between litigants of unequal means. The richer spouse, landlord, or employer can afford legal resources that are unaffordable to the poorer spouse, tenant, or employee.

The government grants access to justice a fig leaf by offering legal aid in exceptional cases. For example, family law legal aid is available to those who can prove they suffered domestic violence. Stringent benchmarks must, however, be met before a case is acknowledged as exceptional. This is problematic for many reasons of which this article will consider two. First of all, many will lack the means to satisfy the benchmarks. For example, proof of domestic violence may require a doctor’s letter (approximately £50), a memorandum of conviction (£60), and a police disclosure (£75). For many people these sums are simply unaffordable. The most vulnerable, such as those lacking linguistic or intellectual capacity, are even less capable of collecting such proof. Secondly, these benchmarks have an air of Catch-22 about them. For example, legal aid for immigration law has been removed but an exception is made for asylum seekers. Many new arrivals are, however, unlikely either to know of their exceptional status or to have the means of proving it. The collection of proof has become necessary to receive legal aid, but it is lawyers who facilitate the collection of proof.

Grayling responds to these concerns with assurances that the rule of law will be preserved. Ultimately, however, the Conservative argument is not about justice – it’s about money. This is made clear by the well-worn refrain that our legal aid system is “unsustainable”. Making this claim allows Grayling to plead that the hands that cut are tied by austerity. It is a politically convenient argument but one that buckles under scrutiny. The annual savings of £540m will, after five years, have dented Britain’s £1200bn national debt by around 0.2%. Keep in mind that these cuts are imposed by the same administration that found the funds to attack Gaddafi (£1.75bn) and was ready and willing to spend similar amounts on a dubious Syrian adventure. Moreover, multiple academics, lawyers, and non-governmental organisations emphasise that the cuts are a false economy. The savings will be dwarfed by the collateral costs to society created by the inaccessibility of legal advice. If legal aid is not literally unsustainable, and if the actual budgetary savings are doubtful, then what justification remains?

Though never stated outright, the answer is that Conservatives simply do not think the state should subsidise legal advice. This is apparent in calls for an “ambitious culture change” and complaints that “the poor [have become] extremely litigious”. The party’s free market approach towards access to justice has become apparent to practitioners. Liz Davies, barrister at Garden Court chambers, states that the cuts “are about shutting people who can’t afford lawyers out from access to justice.” Grayling insists that such people can turn to cheaper but equally effective alternatives like mediation. What he fails to register is that this is unjust regardless of whether or not these alternatives are workable (and mounting evidence suggests they’re not). It’s unfair because those with money could agree to mediation, but they could also choose to deploy as much legal firepower as their bank account can muster.  Meanwhile, those without money or exceptional circumstances are limited to mediation or self-representation. Those of moderate means might be able to afford legal advice but in the knowledge that it could be ruinous. In Davies’ words, the absence of legal aid creates “a two-tier system of justice allowing rich people to litigate but denying that possibility to the poor.”

Austerity has given air to the otherwise repellent argument that the poor can and must be satisfied with less access to justice. The rich, on the other hand, can enter any dispute safe in the knowledge that they can enforce their legal rights more effectively, for longer, and with less risk, than anyone without comparable resources. Grayling is the figurehead for this new status quo but, love him or loathe him, you can’t deny his immaculate sense of timing. His celebration of Magna Carta will coincide with the moment that wealth is re-established as the primary determinant of whether you can enforce your legal rights. As with so much else in modern Britain, this ambitious new culture is one in which money talks. The result is that the very people most in need of the court’s protection will find that justice, though always blind, has become dumb too.

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The true price of parliament http://toglobalist.org/2013/10/the-true-price-of-parliament/ http://toglobalist.org/2013/10/the-true-price-of-parliament/#respond Sat, 19 Oct 2013 18:12:50 +0000 http://toglobalist.org/?p=5407 69% of MPs feel a pay rise is justified. Photo by RS Deakin via Flickr.

69% of MPs feel a pay rise is justified. Photo by RS Deakin via Flickr.

Those who ply their trade within Westminster remain among the most beleaguered parliamentarians in the world today. In a political landscape mired by cynicism and mistrust, the Independent Parliamentary Standards Agency’s proposal to raise MPs’ salaries in Britain by £8,000 was received by most as ill-judged and offensive. In light of public sector pay freezes for the past two years, an increase to £75,000 per year for our parliamentarians prompted a predictably vitriolic response from the febrile fourth estate. Yet, equally predictably, the story is far more complex.

When placed within the context of a wider discourse on the role of parliamentarians and their previewed worth, it would seem that sober introspection is required on behalf of the electorate. Ian Kennedy, the chairman of IPSA has been accused of lacking political acumen, yet there must always surely be more to political intelligence than a mere appreciation for “good PR”. In an age where politicians have fewer resources than ever and yet must match record levels of expectation, we must ask ourselves whether we retain our cathartic pessimism towards parliament: often unsatisfactory, but a dependable absorbent for a nation’s negativity.

Deeper analysis of IPSA’s proposals shows that the changes would cost the public purse a mere £500,000 extra a year, as rises in salary would be largely offset by alterations to pensions, severance pay and allowances. This is a Faustian pact of, at worst, modest proportions. Westminster MPs remain undeniably underpaid as their Australian counterparts earn twice as much and US Congressmen are paid the equivalent of over £100,000 a year. Singapore is noteworthy in that it also pays its MPs the equivalent of over £100k whilst ranking first in the world for public trust in politicians and transparency of government policy, according to the World Economic Forum. (Admittedly this is a nation which has been described by writer Sue Ann Tellman as exhibiting “happy-faced fascism”.)  Drawing from these examples, it appears to be axiomatic that by paying parliamentarians a more rewarding salary, greater efficiency and immunity to corruption are gained. Of the small handful of countries that pay their MPs less than Britain, only Switzerland stands out as one that displays  similarly laudable characteristics to Singapore. Yet among the other countries, Spain is parsimonious in offering a salary of £27,000. Corruption is second only to unemployment on this nation’s political agenda.

There can be little sense in maintaining such a low paid legislature. Lloyd George knew this in 1911 when he introduced an annual stipend, diversifying parliament beyond the reserve of the wealthy and entitled.  The age of the professional politician had seemingly begun, and yet over a century later we continue to show nostalgia towards philanthropic amateurism within parliament. This sentiment may be admirable on the one hand, but it is surely a misguided anachronism. Low pay for MPs results in a distracted and privately wealthy parliament. When the cost of running a constituency campaign is around £10,000, and many professionals such as lawyers and doctors would take a significant pay cut on entering parliament, the status quo remains, whereby becoming an MP necessitates considerable personal wealth. The predominance of the rich amateur politician is yet to be undercut. A more professional and diverse parliament is an aim listlessly championed by many, but the leaders of all the main parties have condemned the recommendations of the appropriate independent body.

As a consequence we have entered an absurd Dutch auction between our political parties. As Clegg denounced the proposals as “potty’” all parties are promising to deliver our national politics as cheap as the next. Whilst a YouGov poll shows that 69% of MPs feel the pay rise is justified, their leaders are unwilling to present the reasoned argument in favour of a rise. This however is no failing of our political elites; it instead represents a sad indictment of the frenzied attitudes taken towards politicians in which fear of reprisal results in necessary convictions being forsaken for what is deemed palatable.

The tropes of greed and scandal in Westminster have created a bashful cohort of MPs, 232 of whom operate under the spectre of an expenses scandal which occurred before they even entered parliament. The legacy of the expenses scandal, a consequence of underpaying our representatives, is not just a deep mistrust of MPs, but the creation of the very body whose proposals we now seemingly find so abhorrent. The punishment continues, but the true lessons from that scandal have not been learnt.

The political discourse remains one of cynicism and despondence. The Hansard society, dedicated to promoting parliamentary democracy around the world, found that MPs spend on average 69 hours working a week, excluding travel, and yet the motif of a half empty chamber (at times when MPs are too busy with constituency work to attend sessions) heralds moronic accusations of apathy. We want our politicians to be poorly paid and yet immune to bribery; come with real world experience yet have no “past”. Our politics is truly debased and hysterical.

Representative liberal democracy is, quite rightly, an expensive luxury. A rise in salary for our chastised MPs is not a reward, although such remuneration could easily be justified. On the contrary the proposals represent a significant step towards a more focused, professional, and representative parliament where the often inappropriate secondary incomes of MPs could be curtailed and personal wealth would no longer be a prerequisite for entering political office. Salaries of MPs are aptly shown by the global experience to shape not only the character of the political class but also the quality of a national legislature. Acceptance of IPSA’s proposals however is far from likely in a political culture imbued by frenzy, where public attitudes and the media which helps form them are so hostile to our representatives. The necessary cessation of cynicism remains unlikely at present. The road towards a healthier politics has been shown by Mr Kennedy to begin with a sober self-reflection on the part of the electorate. Liberal democracy does not come cheap.

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Water, Food Security and the Challenges of the Fashion Industry http://toglobalist.org/2013/10/water-food-security-and-the-challenges-of-the-fashion-industry/ http://toglobalist.org/2013/10/water-food-security-and-the-challenges-of-the-fashion-industry/#respond Sat, 19 Oct 2013 17:54:18 +0000 http://toglobalist.org/?p=5403 Cotton farmers in South India. Photo by jankie via Flickr.

Cotton farmers in South India. Photo by jankie via Flickr.

Will fashion cause food scarcity? This is one of the many questions that The Guardian has been trying to answer in its highly popular sustainable business blog.

As climate change increases variability in agricultural production, food crops are competing more and more for water and space against more valuable crops. Cotton, for example, which is produced in great quantities for the textile industry, occupies more than 20 million hectares globally in comparison with the 16 million hectares destined to grow food. Cotton is not only displacing food crops, it is driving price spikes in places where people are already struggling to afford food. Thus, it is very likely that the cotton t-shirt we are wearing today has been produced out of unsustainably grown cotton, and has caused the displacement of food crops – and perhaps hunger – to someone in the world.

Apart from the challenges associated with unequal land distribution and food crop displacement, there are numerous other factors that need to be taken into account, such as the main engine of agriculture: water. It takes approximately 2,000 litres of water to produce one t-shirt. To those two thousand litres, we need to add the amount that will be used to wash that t-shirt during its lifetime, the energy utilised to dry it, and the social and environmental impacts associated with its manufacturing and commercialisation, such as child labour and the use of toxic chemicals to dye fabrics. All of these factors need to be multiplied by the number of t-shirts we own. It is then that the plot thickens.

So how can we produce all those fashion items that we love so much in a socially and environmentally responsible way? Until recently, the link between supply chains, the final product, and consumers has been alarmingly under-analysed, especially in the fashion industry, which generates one trillion dollars per year, millions of jobs, and is one of the most relevant industries in terms of economic growth. Yet the fashion industry is also the third most water-intensive; it is poorly regulated, and is generally ignored by academia, politicians, science, and consumers themselves. On the other hand, if changed, the fashion industry is one of the few that could quickly and effectively improve natural resources management. Fashion’s big players can help assert pressure over governments and the financial sector, and motivate consumers to adopt more responsible social and environmental practices.

The social and environmental challenges faced by the fashion industry are enormous. A report published by Greenpeace in 2012 highlighted the lack of regulation regarding the discharge of toxic chemicals into the rivers of the Chinese province of Zhejiang. The province is base to more than 9,000 textile manufacturers whose main clients are big fashion brands like Levi Strauss & Co, Zara, H&M, Limited, Express, Nike, Adidas and Esprit. In 2013, the tragic news of the death of 96 workers due to a collapse in one of Primark’s factories brought even more attention to the lack of sector regulation. This year, GAP was also targeted by Greenpeace, which blamed the brand for polluting the Indonesian river Citarum with chemicals that cause hormonal disruption and bioaccumulation in a great number of species. The GAP scandal motivated Greenpeace to launch “Detox”, an international campaign that challenges big fashion brands to adopt more stringent environmental commitments, such as reducing to zero the use of toxic chemicals in textile production by 2020.

Probably one of the most effective ways to reduce the social and environmental impacts associated with the fashion industry is through voluntary certification. But compared to the Forest Stewardship Council (FSC) or the Roundtable on Sustainable Palm Oil (RSPO) – the schemes created to regulate the forestry or palm oil industries – there are very few voluntary certification schemes available for the fashion industry.

One of the few available schemes is the Better Cotton Initiative, created to reduce the social and environmental impacts associated with cotton production. The initiative is supported by important brands such as H&M and Adidas, and seeks to guarantee that all supply chain actors comply with strict social and environmental standards. This includes making sure that producers are not violating human rights, and using the right amount of water to grow cotton, as well as regulating the companies that sell t-shirts in New York, Paris or London, and elsewhere.

There are other interesting ventures seeking to spark further debate around the challenges faced by the fashion industry. “Visioning Fashion in 2025”, an initiative supported by Levi Strauss & Co and Forum for the Future and implemented in coordination with the Centre for Sustainable Fashion, is working on identifying global scenarios to achieve a more sustainable fashion industry. Although these initiatives have really helped improve our understanding of the key challenges and achieved successful buy-in from major sector players, in reality, most of the substantial changes have been triggered by civil society action and consumers themselves demanding for more transparency and accountability.

So, what can we do as consumers to guarantee that the t-shirts we wear have a lower environmental and social impact? First, we must understand that the price of a product containing certified materials will inevitably be higher than that of a garment that is produced out of forced labour and the unsustainable exploitation of natural resources. Second, we need to demand sustainability commitments from brands like Zara, that go beyond packing our purchases in a recycled paper bag. If Zara set itself more ambitious sustainability targets, it could actually position itself as a change-maker in the sector. Third, we need to modify our consumption patterns. Buying high-quality products that are usually sold at a higher price is usually the way to go. “Fast fashion” or the current tendency to shop low-quality and almost disposable items (e.g. buy a cheap t-shirt and go back to the same store to buy another one in a month or so), is not sustainable and is driving major social and environmental risks. Recycling and re-using is a much more responsible practice, and (thank goodness) is already a trend in some of the biggest fashion capitals in the world like New York and London.

Let’s ask ourselves constantly if the person that sewed the button on our pants was paid a fair price to do so, or if that person died in the collapse of an unregulated factory somewhere in Bangladesh. Let’s ask ourselves if the cotton utilised to produce our t-shirt comes from a Better Cotton Initiative certified producer, or if it was obtained from a mismanaged plantation that is likely to be promoting food insecurity somewhere in India. Let’s ask ourselves what is actually cheaper: buying the same t-shirt over and over again, or investing a bit more in a higher-quality product that will last longer. Let’s ask ourselves if our red t-shirt is also dying a river in the Chinese province of Zhejiang.

Paulina Villalpando holds an MSc in Environmental Change and Management from Oxford University. She is  Executive Director of the accessories brand PAAR.

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Protestation Evaluation http://toglobalist.org/2013/04/protestation-evaluation/ http://toglobalist.org/2013/04/protestation-evaluation/#comments Mon, 22 Apr 2013 21:02:56 +0000 http://toglobalist.org/?p=4621 Occupy London: The crowds and tents which used to occupy the space in front of St Paul’s no longer carry the same influence. Photo by sugarmelon.com via Flickr.

Occupy London: The crowds and tents which used to occupy the space in front of St Paul’s no longer carry the same influence. Photo by sugarmelon.com via Flickr.

The Occupy movement was off to a good start. Arab Spring activists, intellectuals, and most of the New York public supported the protesters. Yet much of that goodwill has now dissipated, and although Occupy has made us aware of the ties between state and corporate avarice, it is unclear how successful it has been. In sum, Occupy is an example of how not to run a movement.

When he addressed Occupy Boston last October, Noam Chomsky encouraged pragmatism amidst radical outrage. The movement has failed to heed his call. This is not individual protesters’ fault, but rather the fault of key organisers. Those claiming Occupy is leaderless have little knowledge of its structure; the movement has numerous charismatic activists, but while they claim to speak on the movement’s behalf, these same leaders have contaminated it with their clout.

The very idea of a leaderless movement is laughable. We live in a world dominated by leaders, and asking people to quickly adopt the leaderless banner is like asking a stone to swim a hundred miles. Unless everyone possesses “class consciousness”, a leaderless organisation is a power vacuum, bound to be sucked into its own implosion. This is precisely what happened to Occupy: protesters gravitated towards organisers, and organisers themselves began to assume lofty roles.

This may not have been such a bad thing, had the organisers a clear vision of the movement’s future. A movement must articulate its aims; it is acceptable that Occupy could not initially do so, but the time has come and passed for demands to be presented.

An Alternative Occupy

So what should Occupy have done differently? Two things: first, not pretend to be leaderless. Occupy has morphed into the obsequious representative democracy it seeks to demolish. The motivation behind leaderless causes is clear – leaders can be corrupted. Yet by eschewing leaders, Occupy has allowed the media to focus selectively and unfairly on incoherent occupiers who are not representative of the movement, and has moreover failed to organise efficiently.

Secondly, Occupy should have galvanised its already significant public support by linking arms with the community-at-large. This involves relationships with religious organisations, labour unions, and other institutions working in localities, with the express goal of maintaining mass endorsement. Furthermore, this keeps the movement grounded, and prevents loquacious utopians from adulterating Occupy. A problem with Occupy Wall Street, specifically, is that its concerns were overwhelmingly student-oriented, to the exclusion of many other viewpoints.

When I visited the steps of St. Paul’s Cathedral last November, I was moved by the power of the spectacle: the building was overshadowed by the protesters camping outside, taking up space and attempting to create a new society within the confines of the old one. Eight months later, I returned to St. Paul’s. Tourists with digital cameras blithely passed by, as Occupy London held a small general assembly. There was none of the same fervour. The occupiers were cynical and exhausted from the tides of past actions.

Occupy Now?

Occupy is the first left-wing movement in many years to attract public support. It has laid the foundation for us to reclaim our democratic and economic rights from governments and corporations. Yet there is reason to be sceptical: the movement survives in small patches of activity, but will never be the same as it once was. The fuel of outrage has simmered into dark clouds of cynicism. Banks continue to commit financial crimes while receiving government welfare. “Austerity” continues to hurt the poor and working-class – money which is instead spent on war and weaponry.

Still we must not resist hope. The population-at-large is angry – it is furious! Occupy may not have succeeded, but we cannot yield to the corrupt institutions that meld state and corporate avarice into anarchic flames of despair. We can learn from Occupy what not to do, and how to leap into the future of opposition. When our institutions of power and responsibility fail us, civil society is our only recourse to redress imbalances of power.

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The Economics of Education http://toglobalist.org/2013/04/the-economics-of-education/ http://toglobalist.org/2013/04/the-economics-of-education/#comments Mon, 22 Apr 2013 20:50:47 +0000 http://toglobalist.org/?p=4630 Singapore Management University: One of the universities caught up in the government’s quota debates. Photo by erwinsoo via Flickr

Singapore Management University: One of the universities caught up in the government’s quota debates. Photo by erwinsoo via Flickr

University degrees are a strange commodity. They don’t surge in value when demand gets feverish but instead, like the shares of a listed company, become diluted when more people get them – as the swamp of fresh, unemployed and frustrated graduates can testify. Perhaps to find a solution, we might look to Singapore, which boasts overall graduate employment rates of over 90% for most degree disciplines.

Yet balancing the equation is an increasingly complex task for a nation with a population of 5.3 million. A progressively educated new generation is demanding an unprecedented extent of higher education opportunities, testing the government’s ingenuity to build an educational framework that accommodates as many as possible, without becoming too crowded.

Access to education is always a touchy topic, and it is tricky for governments to explain to people that granting them greater access through increasing the number of university spaces creates academic inflation. Acknowledging demographic realities, local universities have been expanding enrolment numbers: from 9,000 places in 2001 to 12,000 places in 2011, with plans for 2,000 more places over the next few years, such that 30% of every school cohort will attend local universities by 2015.

Secondary Systems

The numbers game, ever popular with the media, is but one arm of a more understated and underlying strategy of creating alternative pathways in the post-secondary education landscape, giving students at the secondary school level greater options. There are the polytechnics, which provide a more hands-on pedagogy “to train middle-level professionals to support the technological and economic development of Singapore”, according to the Ministry of Education. These accept students with O-level grades who might not qualify for pre-university education at Junior Colleges, which offer two years of high-school style education culminating in A-levels.

Another way might be via the Institutes of Technical Education (ITEs), which have a vocational curriculum that aims to “ensure graduates have the technical knowledge and skills that are relevant to industry”. This caters to students who are assigned to the Normal-Technical academic stream during secondary school, due to a weaker performance in the primary school leaving examinations.

This medium of streaming and differentiating education is a model of economic engineering. It resists the impulse to cater to the masses by creating a homogenous multiplicity of universities, which, if undertaken, might result in unmanageably massive numbers of degrees inundating the market.

Instead, the system portrays each qualification as customized and targeted for a different niche in the labour market. It completes part of the screening process of the potential employer, by tacitly signalling to employers which graduates are suited to which kinds of positions. Qualification holders also feel assured that there is a job somewhere that specifically requires people like them.

The system also regulates the funnelling of students into the workforce, by staggering the timing at which different members of each school cohort enter the market, guarding against workforce imbalances. If three students, Tom, Harry and Jane, complete secondary school together and each pick different educational options thereon, Tom graduates with a NITEC diploma in two years, Harry with a polytechnic diploma in three, and Jane with a degree in five to six years’ time.

A Competitive Market

However, the system is beginning to become a victim of its own success. By adopting a targeted approach to each pathway, the government may have inadvertently juxtaposed them to reinforce direct and linear comparison among students. An impression is then formed, that any educational qualification regarded as lower than a university degree is but a means to the degree, not an end in itself.

Most notably, polytechnic students are gaining an increasingly voracious appetite for university places. Polytechnics are starting to shed off their ‘second-rate’ image, with a small but increasing number of top-rate O-level students choosing the polytechnic route for its more hands-on, industry-attuned system of education. Polytechnic intakes have increased almost twice as much as university intakes in the past seven years. Not every polytechnic student is right for university education, but the pressure on admission rates remains nonetheless significant.

This necessarily causes much consternation on the part of public authorities, who are wary of the imbalances that may ensue. Minister of state for education Lawrence Wong said in July this year, “There is still a significant number of students who will go directly to work and that remains the primary mission of our polytechnics.”

This is manifested in the government’s informal placement of restrictions on the number of polytechnic students who can enter local universities. The quotas for polytechnic students, which range from 20% of a given cohort in the engineering or computing fields, to possibly less than 2% for law and medicine courses, are a lightning rod for social indignation. Critics say there is an inherent bias against students who might be late-bloomers, or simply those who prefer a different method of education from the pen-and-paper-dominated pre-university system.

These quotas have never been formally admitted, but have been inferred from past policy announcements. While these are unlikely to change soon, the government is looking to more actively soak up the greater number of degree-seeking polytechnic students.

Climbing Ladders

One method is the nurturing of the “non-public” education market. SIM University was established to cater to adult learners, a large proportion of which might be polytechnic diploma holders that have been working for some time. The most recent project is the Singapore Institute of Technology, which collaborates with overseas universities to provide degree courses for “polytechnic up-graders”. It is hoped that the increased variety of options will satisfy the appetites of more students.

However, this belies a more subtle policy stance; that the ultimate aim is still to strike a balance in which private education degrees retain a significant degree of comparative advantage for polytechnic students, yet are not regarded as completely on parity with the traditional local, “autonomous” universities.

Employers should still comprehend the difference in premium. The distinction is inferable in that autonomous universities receive substantial funding, unlike their private counterparts.

Ultimately, the most effective parry against social indignation is a willingness to leave opportunities open. Polytechnic students still have a shot at autonomous universities, despite discouraging odds. ITE students get their break too: outstanding NITEC performers can enrol in polytechnics and perhaps even university later on. This potential for upward mobility might just be sufficient psychological assurance for students with such aspirations. The ladders might be hard to climb, but as long as they are not removed there will always be who will climb them.

After all, any education system, regardless of its features, comes down to two aims: making education accessible, yet valuable. The methods may be tweaked, adjusted or even discarded, but the underlying rationale remains unchanged.

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Valuing the Pearl http://toglobalist.org/2013/04/valuing-the-pearl/ http://toglobalist.org/2013/04/valuing-the-pearl/#respond Mon, 22 Apr 2013 20:48:34 +0000 http://toglobalist.org/?p=4627 Hong Kong citizens take to the streets. Photo by Remko Tanis via Flickr

Hong Kong citizens take to the streets. Photo by Remko Tanis via Flickr

Anti-mainland sentiment continues to brew in Hong Kong as locals call for the democratic reforms outlined in the Basic Law, Hong Kong’s pseudo-constitution. Recent administrative developments associated with the mainland’s wider integration strategy only add fuel to the fire. Hong Kong citizens have the heart for change – that has been proven time and time again – but they must remember that democracy is still only a form of government. It is just one cog, albeit an essential one, to be added into Hong Kong’s governing engine. For the engine to work, the question is not simply “when can we elect our own leader and legislators?” but rather “how should we address Hong Kong’s structural problems in light of China’s current agenda and Hong Kong’s role within it?”

China nowadays has a radically different agenda compared with three decades ago. In the early 1980s Deng Xiaoping first entered negotiations with the British government over China’s resumption of sovereignty over Hong Kong. Fresh from its introduction to capitalist market principles, China was not then the economic titan we recognize today: the world’s second-largest economy, largest exporter and a real presence in global affairs.

For China, whose economy already verges on superpower status, the next rational step can only be a principle-based one. Everyone acknowledges China’s sizable contribution to global growth, but other countries may be wary of its rise. China knows that to surpass the United States, global acceptance and approval of its governing values is necessary. When Gu Kailai, wife of the former leading politician Bo Xilai, received a suspended death sentence for the murder of British businessman Neil Heywood, the court voiced as explicitly as possible China’s adherence to the rule of law.

In an age where the Chinese middle-class energetically type away on China’s biggest social network, Sina Weibo, discussing and criticizing the central government’s every move, China realizes that there is progressively less it can get away with should it overlook the law or human rights – values that Western powers hold most dear. Hong Kong is a financial powerhouse and an internationally recognized city in its own right. Perhaps it may also be said to be China’s glamorous but rebellious poster-boy for these Western values.

Party Politics

Based on the announcement of Hong Kong’s previous Chief Executive Donald Tsang, Hong Kong is almost certain to attain universal suffrage for the election of its Chief Executive in 2017 and its Legislative Council in 2020. China has no significant reason why it should renege, at least formally, on these constitutional promises to Hong Kong. Short of a full-blown challenge to China’s sovereignty, the success of the “one country, two systems” model in Hong Kong continues to be in China’s best interests.

Of course, that does not do away with concerns about mainland manipulation of general elections or distrust of the mainland in general. However, Hong Kong’s issues, and indeed the keys to its survival, go beyond a lack of true democracy. It is one thing to demand true democracy; it is another to translate true democracy into good governance.

Herein lays one of Hong Kong’s structural problems: a lack of political talent. Members from any one political party are too spread out amongst the District Councils, the Legislative Council and the Executive Council for any one party to secure the power necessary to effectively govern. Even the largest political party, the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) can only fill just under a fourth of the total number of governing seats. What is needed is a combination of young political talent and urging of Hong Kong’s political parties to move towards some more concrete division of the political spectrum.

The most obvious division would be Hong Kong’s pro-democracy camp against the pro-Beijing camp. The term “opposition camp” is often applied derisively to the pro-democracy camp by proponents of Beijing’s authoritarian stance, but despite the term’s contemptuous nature it is not completely without substance. The different factions of the pro-democracy camp are capable of uniting against flagrant dangers to individual rights and freedoms in Hong Kong – for example a march organized by the pro-democracy camp against the proposed anti-subversion law in 2003 attracted 5 million protestors. However, for them to evolve past their present status as mere pressure groups, these groups must increase the number of members who possess the political acumen required to govern well.

Facing the Future

The importance of this cannot be emphasized enough in the face of the perilous future Hong Kong faces beyond its bid for democracy. A drastically aging population, growing income inequality, rising house prices, and questions of unification with the mainland are but some of the obstacles Hong Kong’s future politicians will have to grapple with. The politicians, if democratically elected, must have an effective presence across all branches of civic life. The worst that can happen under a democratic framework is for crude politicians to derail concerted action with petty squabbles.

It is frequently said that the only way to get things done in Hong Kong is to take to the streets. Good governance under a democratic framework would move debates in parks into the politicians’ chambers, provided that elected officials are sufficiently capable and professional. It is presumably on China’s agenda for Hong Kong to eventually be granted universal suffrage. Those who are pessimistic may see Hong Kong’s economic worth slowly being sapped by other major financial cities in China but they ought not to exaggerate Hong Kong’s downfall just yet. Hong Kong remains an international financial centre and the primary offshore Renminbi trading hub. Most importantly, it still has the rule of law. Those keen for universal suffrage ought to build up the competency of Hong Kong’s institutions in preparation for receiving their most coveted prize – democracy.

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All hail Google http://toglobalist.org/2013/03/all-hail-google/ http://toglobalist.org/2013/03/all-hail-google/#comments Mon, 11 Mar 2013 13:31:01 +0000 http://toglobalist.org/?p=4564 Net Neutrality protest at Google HQ. Photo by Steve Rhodes via Flickr.

Net Neutrality protest at Google HQ. Photo by Steve Rhodes via Flickr.

Heads up!

In case you haven’t noticed Google has become a significant player in how we live our lives from one day to the next. Whether it’s Google search, Google Chrome, Google talk, Gmail, Google maps, YouTube, Google books, Google scholar or Android OS – you can add Google+ to that list if you are a Google employee – at some point, Google has taken control over how people interact with the mysterious universe of the World Wide Web. The frightening thought is that, at no point did we as a society stop to think about the implications of giving one company so much control over the internet – a public “good” – and over information in general.

Why is this bad and who cares?

But Google’s motto is “Don’t be evil” you say. Sure. This is the company’s unofficial motto on which the founders – Larry Page and Sergey Brin – based its code of conduct. In 2006, Google even took action against a bill that was being voted on in the U.S. House of Representatives that gave phone and cable companies greater powers, stating, “Today the Internet is an information highway where anybody – no matter how large or small, how traditional or unconventional – has equal access.”

Google’s code of conduct is also a product of what one of Google’s founders has seen and experienced living in the Soviet Union until he was six; seriously Mr. Brin? When the time came however, none of that stopped them from investing in China and submitting to the iron fist that is China’s great firewall, meaning that when you Googled Tiananmen Square in China, you got images of a lovely rosy square rather than the famous man versus tank rendition that we all know. In fact, China has also hacked into the Gmail accounts of Chinese activists and Senior U.S. government officials – one can only wonder what they did with this information. The fact is that people trusted Google to protect their information. Google failed them. Why should the rest of us trust them?

Fine, I’m a hippy conspiracy theorist who is living in the past and doesn’t want to embrace the future and I’ll even let the tin foil helmet joke run. Forget about privacy and forget about principles for a few minutes and humour a more pragmatic argument. Remember Microsoft? That company with roughly 90% share of the desktop operating system market? How much have you paid for the latest version of Windows or Microsoft Office? Another good example of a future where one company reigns supreme is the diamond industry, controlled by the illustrious family of companies that is DeBeers. The engagement ring originated in Ancient Egypt as a symbol of a never ending cycle; later, the Romans wore betrothal rings made of iron. At what point did diamonds become part of that equation? The diamond ring has become so prolific around the world that now there are rules governing how much you should pay for one in multiples of your monthly salary. How did that start? Clever marketing. How did it become so expensive despite the fact that diamonds aren’t that rare anymore? Monopoly.

What happens if Google decides to start charging us for the use of its services, after we let it grow large enough that it overpowers all the competition or when they can no longer make enough money as we become even more desensitised to online advertising? What happens if Google Android and the new Google Laptop and its operating system become the standard for communicating with the world? How much can they charge for them then? Yes, this is a distant future, but with deep pockets like Google’s, nothing is impossible. In fact, it is very possible that this is Google’s long-term strategy; to become the only “middleman” between us and the internet. When and if that does occur, what happens when the patron saints of Google move on or die, leaving the vast empire that is Google under the authority of someone who may not share their “do no evil” ideology?

If you’ve taken any introductory Economics class, you should know that for consumers, monopolies are bad and competition is good. Without much jargon, monopolists have a tendency to take advantage of consumers: when a company knows that consumers have no choice but to use their services, it’s only natural that they will extract as much profit as possible from them. On the other hand, competition keeps companies in-line and makes it difficult for any one company to overpower consumers. The key word here is “choice”. Choice is having the option to opt out. But what happens when no company is able to compete with Google anymore and that option disappears? What happens when everything we see or do over the internet is through Google? Who knows? The real question is, should we wait to find out and hope for the best, or should we act now to make sure that this never happens?

So what now?

We should certainly be worried about our privacy and about the protection of our information, but to a larger extent this is an issue of being prepared for the eventuality of one firm having monopoly power over a resource that has become a significant part of how our world works. A good first step would be a new global competition policy that would protect consumers from the Google sprawl. Perhaps even curtailing the extent to which Google can integrate their various products; much like what the European Commission did when Microsoft was integrating Internet Explorer with Windows. Making sure that Google alone is not responsible for protecting the vast amounts of information it stores is another important move. Finally, we must ensure that the vast resources of the internet remain accessible in ways other than through Google and in no way should that principle be compromised. The stakes are high. We must be prepared for the day when Google becomes the internet.

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Interview with a Trader: Ghost in the Machine http://toglobalist.org/2013/03/interview-with-a-trader-ghost-in-the-machine/ http://toglobalist.org/2013/03/interview-with-a-trader-ghost-in-the-machine/#comments Wed, 06 Mar 2013 21:10:53 +0000 http://toglobalist.org/?p=4511 President Jacob Zuma addresses Lonmin miners, 22 Aug 2012. Photo by GovernmentZA via Flickr. Used under Creative Commons License Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0

President Jacob Zuma addresses Lonmin miners, 22 Aug 2012. Photo by GovernmentZA via Flickr.

In September 2011, city trader Alessio Rastani sparked a familiar outpouring of vitriol and bile on the financial industry. He claimed in a BBC interview that he and his fellow traders simply don’t care about the ramifications of economic collapse: “We don’t really care that much how they’re going to fix the economy. Our job is to make money from it.” He followed this up with a smug confession: “I got to bed every night and I dream of another recession.”

One common response was sheer denial. Indignant splutterings from besuited “real” city traders were particularly prevalent, dismissively highlighting that Rastani wasn’t on the payroll of any of the big-name city firms.

While Rastani’s modest personal income and unglamorous lifestyle don’t fit well with the stereotype of the mercenary trader, are his comments indicative of a deeper, unpleasant truth? In a profession in which there is money to be made from cataclysm, is it all that surprising to hear such blithe acknowledgement of the unsavoury side of the financial markets?

In this final portion of a series of articles on the insider world of the stock markets, The Globalist poses these difficult questions to professional trader, Mark.

Rather than focus on the more nebulous “ethics” of the market place, Mark is quick to note that standing on the sidelines cheering for a crash is, at best, rather short sighted. When the markets fall, it’s bad news for most. Most individuals, he says, have exposure to stock of some kind, whether its a personal portfolio or, as in many cases, through company pension funds. There is also the looming spectre of the leveraging of private banking capital by the investment side of major public banks – even as Lehman Brothers collapsed, supposedly ring-fenced private capital was sucked into the vortex of market panic. This led to the ignominious tax-payer funded series of bank bailouts.

In short, market crashes aren’t the most appetising prospect for the sane and currently solvent.

Mark takes this point wider, noting that there is something to be learned from statements as vulgar as Rastani’s: “How they’re saying it is ugly, but what they’re saying is ‘This is going to happen at some point’”. Crashes, dramatic and temporarily disastrous as they are, are a fact of the system. Comparing crashes and rallies to a cycle of entropy and growth, Mark argues that when falls happen, traders don’t necessarily have to be participating with driving prices down. That, he says, can be left to a sub-culture of “fairly angsty” professionals. The truth is, if you’re happy to weather the storm, bottomed out markets offer truly rare buying opportunities.

While the lucrative potential of crashed markets are indeed attractive to those on the right side of the trading screen, the market perspective does tend to neglect a crucial fact: market crises have very real, very tangible effects. From ruined pension funds to company wide redundancies, the tidal wave effect of market panic results in huge real-world cost. A study by the lobby group for financial reform, Better Markets, estimated the total loss to household wealth in the US in the financial crash at a staggering $11 trillion.

When it comes to the social impact of the treacherous and destructive whims of the market, Mark is more taciturn. While bearing in mind the ethical implications of speculating on the market, Mark offers a pragmatic perspective:

“If you speculate, especially on the downside, it is actually part of the healthy nature of things. It’s a force of gravity in its own right, perfectly legal and rightly so.”

As a necessary part of the system, degradations in value can be sudden, brutal and dramatic – a crucial, but often unpleasant, fact of the global economy.

However, a serious issue with the pragmatist approach arises when speculation is implicated in all-too-real human cost. In September 2012 striking miners at Lonmin PLCs Marikana site in South Africa clashed with South African police forces, resulting in the deaths of 36 miners. Recalling the incident, Mark elaborates a scenario which really pitted the “trader mindset” against personal scruples:

“A very particular pattern was forming on the chart when the riots were at their height. Meanwhile, miners were very tragically being killed outside the mines. Everything indicated that the price was going to fall. I remember saying to an assistant at the time that we should have £100,000 short Lonmin – it’s going to fall. Sure enough, it fell 6% the following day.”

Unable to get the image of miners lying dead in a South African paddock out of his mind, Mark couldn’t bring himself to take the position: “I really don’t know what I would’ve done with the profits from that trade without a clean conscience – there’s no point in dirty money, you just can’t enjoy it.”

As much as the hyper-technologisation of the marketplace has abstracted trading, it seems that the physical world of asset production occasionally bubbles to the surface a little too uncomfortably, even for the most pragmatic of market players. However, Mark acknowledges himself as a smaller fish in a pond dominated by sharks – a marine sub-species of a more scrupulous breed than the average.

If (as has been demonstrated by limp-wristed policy-maker moves towards greater regulation of the financial sector) ethical trading via regulation is a pipe-dream, should we be worried that the only thing standing between the grotesque commodification of human life are the scruples of unaccountable, invisible corporate bodies?

In a word: yes.

Leaving little more than the ghostly fingerprint in the form of an entry on a vast balance sheet, the corporate trader sits alienated by screen and City, tugging back and forth on the innumerable strands of commodities, equities, assets and futures, sublimating invisible, costless capital from the very physical origins of production. How can s/he feel accountable – particularly when there are a thousand others sitting at the other end tugging back?

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