About Common Threads

Background as CEO in aerospace/defence, IT, Mergers/Acquisitions/Turnrounds followed by NGO's such as Global Witness / Transparency International (TI). Now, Trustee at TI-UK and Chair the world-wide Defence and Security programme. Also, a writer - Last Line of Defense some time ago and now writing 'All the People' on the drive for democracy and the vote in 19th Century England

Science as a Candle for Democracy

Candle

July 14th celebrates the storming of the Bastille in Paris on that day in 1789. After the War of Independence in America, it was a second revolution to bring democracy to a kingdom, this time in Europe. For Thomas Paine, writing The Rights of Man shortly thereafter (a quote used by the great Christopher Hitchens in his biography of Paine:

“Never did so great an opportunity offer itself to England, and to all Europe, as is prodiced by the two Revolutions of America and France.”

Whether, over two hundred years’ later, the success of the revolutions is properly signalled by the visit to France of the popularist Donald Trump is highly questionable for his visit signifies a distinct darkening of how democracy is faring in the USA, Europe (post-Brexit referendum), Turkey, the Phillipines, India, China, Russia, Saudi Arabia, Israel where serious strains are being felt and ‘strong man’ politics is under way.

It may be straining credibility to equate these dark concerns on democracy with the election of Norman Lamb, a Liberal Democrat Member of Parliament, to the position of Chair of the House of Commons Science and Technology Committee, a Committee whose purpose is to scrutinise the UK Government on its strategy and programmes in this area. Yet, this linking of science and democracy is central to the changes we are currently seeing in the world of politics.

Science in the Soul‘ is a collection of the writings of Richard Dawkins, where he shows his distinct ability to reason and explain to the full.  In the book, Dawkins commends the science populariser, Carl Sagan, as a man that should have won the Nobel Prize: not for science but for literature and it made me re-read his excellent book ‘The Demon-Haunted World‘, published around twenty years ago.

Sagan’s book is about how “scientific thinking is necessary to safeguard our democratic institutions and our technical civilisation” and is so apt in an era of Donald Trump and Brexit (with its Govian taunts about how not to believe experts) that it should be read and re-read by anyone with a desire to understand our current problems and what is needed to extricate ourselves from the hole that we are digging for ourselves. It was also frighteningly prescient. I reprint here, word for word, a sizeable paragraph from the book that accurately forecasts a significant chunk of our world in 2017:

“….science is more than a body of knowledge; it is a way of thinking. I have a foreboding of an America in my children’s or grandchildren’s time – when the United States is a service and information economy; when all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agenda or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what’s true, we slide, almost without noticing, back into superstition and darkness. The dumbing down of America is most evident in the slow decay of substantive content in the enormously influential media, the 30-second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance. As I write, the number one video cassette rental in America is the movie Dumb and Dumber. Beavis and Butthead remains popular (and influential) with young TV viewers. the plain lesson is that study and learning – not just of science, but of anything – are avoidable, even undesirable.”

If an afterlife existed, Carl Sagan would be looking down at the events of 2016, and tut-tutting knowingly, shaking his head and pulling at his long, white beard (all sages have long, white beards in heaven, don’t they?): “I did tell you guys!” he would be shouting, hoping that some mystical ripple would resonate from his screams of despair into our heads, deaf and dumb to all sense.

In the so-called developed world, technology moves forward at a great pace so that major phase transition events bypass us with alacrity. The whole ‘fake news’ environment washed over us only in the last few years as the networked world provided everyone with the ability to be journalists and have an opinion that all can see. As always with new technology, those most capable of utilising it to advantage included the criminally-minded who not just sent emails from Nigeria asking for your money, or emails and texts that would lock up your computer or cellphone if you replied but, more subtly, perverted voting systems and swayed voters by their ability to infiltrate the social networks with lies, distortions and manipulations to a precision that a few thousand votes in the right States resulted in a Trump presidency.

Sagan wrote further on this:

“We’ve arranged a global civilisation in which most crucial elements – transportation, communications, and all other industries; agriculture, medicine, education, entertainment, protecting the environment; and even the key democratic institution of voting – profoundly depend on science and technology. We have also arranged things so that almost no one understands science and technology. This is a prescription for disaster. We might get away with it for a while, but sooner or later this combustible mixture of ignorance and power is going to blow up in our faces.”

“The scientific way of thinking is at once imaginative and disciplined. This is central to its success. Science invites us to let the facts in, even when they don’t conform to our preconceptions. It counsels us to carry alternative hypotheses in our heads and see which best fit the facts. It urges on us a delicate balance between no-holds-barred openness to new ideas, however heretical, and the most rigorous sceptical scrutiny of everything – new ideas and established wisdom. This kind of thinking is also an essential tool for a democracy in an age of change.”

Carl Sagan was a sceptic and the book shows how scepticism, used pro-actively, not as a tool to doubt everything for doubt’s sake, is central to understanding. He provided a toolkit for guarding against a fallacious or fraudulent argument. In summary:

  • Where possible, independently verify the facts
  • Encourage debate on this by opponents and proponents of views expressed
  • Discount ‘authorities’ who generally carry no weight; in science there may be experts, not authorities. In politics, beware such experts.
  • Spin more than one hypothesis
  • Don’t get over-attached to an hypothesis just because it’s yours
  • Quantify where you can
  • If there’s a chain of argument, show that every link works
  • Occam’s Razor – if two solutions exist, choose the simplest
  • Always ask if the hypothesis can be disproved (e.g. Brexit will save British taxpayers £350m a week!)

Now, not everyone has the time to go out and do all this. So, we rely on journalists and others to do so. This brings me back to Norman Lamb, a man who has gained tremendous respect across all parties for his honesty and campaigning zeal (in the area of mental life as an example). He is a democratically-elected member of a Parliament often thought of as the home of democracy (Thomas Paine might have doubted that and the first-past-the-post system of elections means that most in the UK are, effectively disenfranchised) and now Chairs a Committee on Science and Technology. We should be using such institutions to galvanise the linkages between science, technology and democracy to challenge ourselves in how we think so that crass assertions made during the Brexit referendum and by Donald Trump and others (that might lead to the USA’s desertion of the Paris Agreement on environment as just one example) are challenged by not just politicians but by all those that should hold us to scientific thinking.

This means that we should understand why those that wish to believe in such perversions of reality actually do so and why scientific thought processes are so easily overturned, that ‘rigorous scrutiny’ is accepted as the norm. A recent article in the Financial Times, by John Gapper on how CP Snow identified the gap in thinking on science by intellectuals in the 1950’s shows that this is not new, but it is not just intellectuals that have the vote in the 21st Century, it is all the people.

So, a plea to Norman Lamb and his Committee, whatever the Terms of Reference have historically been, it is time to challenge our lack of scientific thinking, the lack of awareness of science and technology throughout the population and how this “combustible mixture of ignorance and power is going to blow up in our faces” – if it hasn’t already.

Democracy took many lives and many years to establish in the western world and elsewhere. It is not yet extinguished but, like a candle that has been burning for many hours, the light is in danger of failing. Sagan’s book was sub-titled: “Science as a Candle in the Dark”. On the day the French commemorate its own democracy, we should not let that candle flutter to extinction.

Candle

Unmasked – Corruption in the West

Unmasked – Corruption in the West

by Laurence Cockcroft and Anne-Christine Wegener

 

Yesterday, 9th December, 2016, was International Anti-Corruption Day and many newspapers and journals used it to publicise the most venally corrupt nations, often those in Africa and the Middle East viz. NY Times.

 

These are developing nations, highlighted by Transparency International’s Corruption Perception Index, where those affected by corruption are most at risk of its exploitation by their leaders.

 

What Laurence and Anne-Christine have done is to shine a light on the developed West, where corruption remains a standard and where the mechanisms that enable corruption around the world, such as highly proficient banking systems, legal and accounting expertise, sophisticated technologies, exist to maximise the ability of those throughout the world to illegally and immorally syphon billions, possibly trillions, of dollars, pounds and euros away from legitimate ownership.

 

This is an important work that provides the bedrock of understanding for those who are interested in dealing with corruption to dig further into the subject. It highlights the enormous degree of corruption in the Americas and Europe, from political to banking, from sport to business to organised crime in a highly readable way but one that provides important information, not gloss. It also shows the huge challenge where, even in highly developed, wealthy economies, the desire to have more seems undiminished.

 

Laurence was a founder of Transparency International (TI) and Anne-Christine was a deputy director of Transparency International’s worldwide Defence and Security Programme (DSP). I am privileged to be both a Trustee of TI-UK and Chair of DSP, so I know the contribution both have made and also the huge work that still needs to be made.

 

The book is an important balance for the anti-corruption world. Corruption is not just in poor countries and, where grand corruption is concerned, the West is involved with the developed world anyway in financing the corruption and in enabling aspects of it such as money laundering. Together with the corrupt practices that appear to be endemic in the West, such as in lobbying, sport, political favours, business, crime-related, the West has a massive anti-corruption agenda to fulfil and knows it.

 

Three things, amongst many, cry out for action. First, there is the need for politicians and business people at the highest level to be far more active and vocal in this area. This includes their associations, such as Chambers of Commerce in the USA that are actively trying to water down the Foreign Corrupt Practices Act to dumb down the level playing field and make corruption easier. Beyond this, politicians in wealthy countries are too devoted to increasing GDP at any cost and the danger is growing that the ethics of doing business will be adversely affected as a direct consequence of the inequalities caused by the banking crash of 2007/8. Brexit and Trump are such outcomes and, viewed from the anti-corruption side, harrowing in their potential.

 

Second, the resources that are provided to implement and manage the laws that politicians might deliver on are woefully inadequate for the task. If legislatures enact new laws to strengthen anti-corruption norms, it is the execution of the laws that fail so often through inadequate expertise and sheer money provided.

 

Third, it is time for anti-corruption to be seen as a positive economic benefit. Corruption is bad for the wealth of the broad population, assisting only those at the top of the tree. In a world that seeks to reduce inequality and where voters are making their positions clear that they will not tolerate their position for much longer, intelligent politics and business (and development aid) means reducing corruption becomes more important. It is a key method of increasing economic well-being by ensuring that enormous flows of corrupt money stays in countries that require it as well as in the economies where it can be properly used rather than syphoned into a tax haven bank account where it remains as dead money. In an age where the velocity of money is slowing, corruption remains a cause of economic decline.

 

Unmasked comes as at important time, just as the world is turning in on itself. The West should learn the lessons that are described so well in the book and use this difficult period to ensure that the first gear in which it has for so long been engaged is kicked into second and upwards not into reverse.

The Spectre of Americanism

 

Americanismtitle3

With Donald Trump’s gracious acceptance of the GOP nomination, his speech was centred around the concept of Americanism. This ‘ism’ is nothing new but there is an ideology within the term that is no less concerning than many others of the same nature: a belief that there is one way of life, centred on an extreme form of an American ideal.

 

“Americanism: A World Menace” was the title of a book written in 1922 by a English writer and socialist (at the time, he was a Communist), William Thomas Colyer. He, together with his wife, Amy, had emigrated to the United States in 1915, a month after they were married, sick of the destruction of the First World War fought by elite monarchies and, perhaps naively, optimistic for the future in the new world. This hope was borne on the back of their reading of the American Constitution and the fight for freedom that those like Tom Paine had foreseen. William and Amy believed that the USA was ripe for Communism.

 

Until 1920, they worked for the cause of socialism, witnessing the Russian Revolution, with some equanimity, as a fight for the rights of common people against elite oppression. They saw the same in the capitalism of the USA, punctured by the need to value everything by its price, elitism and the corruption of business and politics. It was not too long before their naivety was shaken as the Palmer (or Red) Raids of 1920 shattered any remaining illusions.

 

In 1920, Charles Palmer, the left-leaning Attorney General, was almost killed by a bomb planted by some Italian anarchists. He secured the services of a young man to lead the fight against these terrorists and to round up all ‘alien communists’ living in the country. The young man, just twenty-four years of age, who we know as J Edgar Hoover, did as required and hundreds of such men and women were deposited in Deer Island Prison within Boston Harbour.

 

After enduring punishing conditions of extreme over-crowding, lack of food and drink, detailed cross-examinations and witnessing the suicides of several prisoners, William and Amy (two of a handful of English-speakers within a predominantly eastern European prisoner intake) were tried and sentenced to deportation. A group of human rights lawyers succeeded in having Judge Anderson reverse their sentence but Hoover was not one for giving up and a retrial succeeded in having them deported back to England in 1922.

 

William was an economist and, by now, a confirmed Communist. His book, Americanism, was published in that year and was a rasping attack on the American way of life as he had experienced it and which he compared to Prussianism, so soon after the First World War. He saw that the world had a decision to make: Americanism or Communism.

 

He saw Americanism as having a range of characteristics but these were simplified as:

 

  1. An overwhelming pride of race, based on the material development of the country achieved largely through the ability and industry of “foreigners”. Known locally as patriotism.
  2. The establishment of dollar-producing or dollar-collecting capacity as the absolute standard of value, covering every form intellectual and spiritual achievement. Known locally as “practical idealism” based on “equality of opportunity”.
  3. Glorification of “democracy” as an abstract idea, divorced from practical control by the rank and file. Known locally as “the union of efficiency and democracy under sane leadership”.
  4. General lawlessness and contempt for orderly procedure. Known locally under a great variety of flowery and meaningless names, of which “upsurging of the great heart of America” may be taken as an example.

 

When “Americanism” was published, Colyer was a Communist and had just suffered deportation. His vituperation should be seen in that light and he was, thankfully, mistaken in that the USA, for the next 94 years, pursued a direction of capitalism that (after the battles for human rights of the 1960’s) skated outside of rank Americanism, with due respect for a type of democracy, for basic human rights. While business and a dollar-focused valuation of everything remains, it is wrapped in a cushion of values that are often qualitatively robust even if the lack of scientific understanding amongst politicians (including a mistrust of climate change theory and evolution) rankles with other western nations.

 

Now, there is an attempt to revoke the balancing act that has been the USA and recoil into Trump’s Americanism. Based on patriotism, it is a businessman’s total and complete devotion to success measured by the dollar, a promise to provide a way out of the insanity of “political correctness”, an underlying refusal to condemn the gun lobby and the variety of vigilante attacks throughout the USA, that is seen as the natural outpouring of pent-up emotion.

 

Colyer’s four axioms, although written by a Communist, just deported, in 1922, are not too far from Trump’s Americanism of 2016.

 

Colyer wrote how, in “1920, the ‘Knights of the Klu Klux Klan’ began to make themselves felt as a power in modern American life. In that year, in pursuance of the purposes of their order “to maintain for ever white supremacy in all things” and “to keep eternally ablaze the sacred fire of a fervent devotion to a pure Americanism”, masked men wearing the dreaded white robe began to hold parades in southern cities, and to kidnap, flog, tar and feather men and women at will.”

 

That was 1920. Almost a century later, amongst the torment of the southern states as black men are arbitrarily killed by police and police are killed in retaliation, as terrorist atrocities are felt from France to America and, by their thousands upon thousands in the Middle East and Africa, as millions feel under-served by remote democratic institutions as shown by Brexit and the rise of Donald Trump, the spectre of Americanism rises again.

 

In 1848, Karl Marx wrote in The Communist Manifesto that the “spectre of communism” was “haunting Europe”. Donald Trump’s speech-writers could just as easily write, that in 2016:

“The spectre of Americanism is haunting the world. All the powers of the free world have entered into a holy alliance to exorcise this spectre.”

 

Americanism appears to be a far greater and more immediate danger today than Communism was in 1848 (although Communism’s perseverance and evolution into Stalinism and Maoism led to horrific disasters in the next century). The United States could be entering into a period of Americanism as much of the world reacts to the massive turmoil of banking failures in 2008, Syria, Iraq, Afghanistan, Nice, Crimea, Boko Harum, Daesh, and toys with the spirit of Brexit, Le Penn, Haider, and the cry of “everyone for themselves”. Trump’s new doctrines, based on Americanism, calls into question all of society’s safeguards.

 

Colyer’s answer to Americanism was to urge the workers of Great Britain to line up with the workers of the Soviet Union. In 1926, Colyer resigned from Communist Party as Stalin gripped the Soviets ever tighter. The challenge now is to establish a 21st Century response to Americanism (or similar calls to so-called ‘patriotism’) that does not reverse the serious gains made by most in the world since the end of the Second World War, which included the ending of Naziism, Fascism, Stalinism and Maoism (and most other forms of Communism).

An inclusive Democracy needs to be refreshed, not stymied, by a popularism that Americanism extols. It is for all those who have worked for the establishment of human rights and basic qualities of life to double those efforts now before the spectre of Americanism is upon us.

A People’s Charter for the Banks

 

In 1842, Feargus O’Connor led the working people of the United Kingdom into a general strike on behalf of the People’s Charter. The Chartists’ aim was for the House of Commons, then run by the elites of the landowning class plus some merchants and millowners after the 1832 reforms, to become more democratic. The six proposals were:

 

  1. A vote for every man over 21 years
  2. Secret ballots
  3. No land qualification for voters
  4. Payment for Members
  5. Equal constituencies
  6. Annual ballots

 

It took many years for the first five to be enacted and many more for women to achieve equality (something not even envisaged by the Chartists). The Chartists failed to drive change because the British economy continued to improve and the other motors for change (such as Trades Unions) were continuously provided with small (even if sometimes significant) improvements in factory conditions, better hours, better wages and the like. This meant that pressure for change in the way that the Chartists demanded were stifled by more practical changes that were seen to immediately impact the working classes.

 

However, the impact of elites continuing to run the country and ameliorated only by small improvements in conditions was (in hindsight) bound to result in extreme consequences. The First World War was a consequence of elites throughout Europe playing a game decidedly different to the vast majority of people and using them as mere playthings – whether in armies or in factories.

 

The BBC’s current six-parter, Tolstoy’s “War and Peace”, shows clearly who was in charge in 1805. That continued throughout Europe until 1918 at least after millions of lives were lost.

 

It may seem difficult to equate the financial crisis of 2007/8 and the consequences of that crisis to the class crises of the nineteenth century but the similarity of elites that are unwilling to give up any power over the economy remains. The elite may now be different (although bankers held great power in the nineteenth century as well) but the way that Banks and their allies in Governments in the UK (Conservative as well as Labour) see the rest of the country as mere playthings is no different.

 

A new film is about to hit the screens in London – “The Big Short”. Based on Michael Lewis’s book of the same name, published in 2010, it portrays the banking world in the USA as completely indifferent to the problems faced by society as they pursue their own, short-term gains and bonuses. Government is either unable or unwilling to address the problems because the banks are so important to the country – too big to fail – and also because most in Government do not understand what to do.

 

Just as the mill owners of the early nineteenth century were seen by landowners as a necessary partner for the future, Governments see bankers and banking in the UK as necessary for themselves. This means that they tolerate all but the very worst abuses.

 

The FCA – Financial Conduct Authority

 

The FCA is the organization that Parliament developed under the Financial Services and Markets Act 2000 to oversee the financial system. Part of its remit is:

 

The reduction of financial crime.

(1) The reduction of financial crime objective is: reducing the extent to which it is possible for a business carried on—

(a) by a regulated person, or

(b) in contravention of the general prohibition,

to be used for a purpose connected with financial crime.

(2) In considering that objective the Authority must, in particular, have regard to the desirability of—

(a) regulated persons being aware of the risk of their businesses being used in connection with the commission of financial crime;

(b) regulated persons taking appropriate measures (in relation to their administration and employment practices, the conduct of transactions by them and otherwise) to prevent financial crime, facilitate its detection and monitor its incidence;

(c) regulated persons devoting adequate resources to the matters mentioned in paragraph (b)

(3) “Financial crime” includes any offence involving—

(a) fraud or dishonesty;

(b) misconduct in, or misuse of information relating to, a financial market; or

(c) handling the proceeds of crime.

(4) “Offence” includes an act or omission which would be an offence if it had taken place in the United Kingdom.

(5) “Regulated person” means an authorised person, a recognised investment exchange or a recognised clearing house.

 

All this is within a framework of law that sits the financial community within itself. By this I mean that the regulator is charged with the above but only insofar that it does not harm banking competitiveness and so that the resources of the FCA are used efficiently under Section 2 of the law. While consumer information is called up in the law, there is no balancing of the “reduction” of financial crime against the needs of the consumer and nothing about how the financial system and banking in particular is to be used to benefit the overall British economy.

 

This means that the FCA is bound by rules that err on the side of the banking and financial fraternity – a financial brotherhood – and does nothing to impact the financialisation of the economy to which I referred in a previous blog.

 

Evidence of the ability of Government to “rebalance” the objectives of the law in favor of the banks is the recent decision of the FCA to shelve its report on the culture of banking and for it to work on an individual basis with banks (behind the scenes). As Michael Lewis’s book and the film so amply shows, culture is at the heart of the problem. The FCA’s step backwards under acting Head Tracey McDermott appears to be sold evidence of its inability under the current law to be effective on behalf of the British economy unless it has a leader within the FCA with enough integrity of his or her own to challenge the banks on behalf of all consumers and all those potentially impacted by wrongdoings of the banks – like Martin Wheatley. Ms McDermott is now no longer in the running for the Chief Executive position. Does anyone on the shortlist that Chancellor of the Exchequer, George Osbourne, has interviewed come up to those exacting standards: someone that has the integrity to see through the shortcomings of the Financial Services and Markets Act 2000 (FSMA 2000) and is able to bring the banks into line so that they serve the economy?

 

I doubt it as this Government has shown repeatedly that it is hell-bent on balancing the books at the expense of all else – even if that means allowing banks to keep the economy from re-balancing to an economy that uses banks and finance from one where the banks suck the rest dry.

 

This means that the law needs to change. It is so important that the UK is “de-financialised” (like an addict that needs to be properly drawn from drugs) that we should seek the FSMA 2000 to be brought up to date with a Charter for economic improvement so that, at the very least, the FCA has to minimize financial crime not just reduce it and so that, in any decisions it makes, the needs for economic well-being override the considerations in Section 2 that could lead to favouritism towards bank and those individuals within that system.

 

Because it has never been shown that a massive banking system does anything other than reduces the ability of other industries to survive because it raises exchange rates, raises property values, sucks the best people into it, restricts business loans because of short-terminism, pays for short-term advantage and (often) criminality at the expense of good business decisions and overly impresses economically uneducated civil servants and politicians with their results.

 

The lessons of an elite taking hold of an economy and leading it to disaster have not been learned. The lessons of 1842 that led to the First World War and the lessons of 2007/8 have been sidelined as this Government now has a majority in the first-past-the-post House of Commons (still undemocratic) and a Chancellor who has decided that bashing the banks has gone far enough. He has done this without any notion of economic objectivity whatsoever.

 

We now need a People’s Charter for Banking and De-financialisation – maybe just two elements to start with:

 

Change the Financial Services and Markets Act 2000 to:

 

  • Section 6 – Minimize criminal wrongdoing not “reduce”
  • Section 2 – Add an over-riding requirement so that any decision of the FCA has to show that it is taken in regard to overall economic well-being of the country not just to the financial industry.

 

Just like those that had been left out of the elite ruling classes of the 1830’s and 1840’s, those that are not allowed entry to the financialised sector, i.e. the mass of people – the British public, need to challenge how decision-making in that sector, now taking far too much of the British economy and with very disputed benefits to the mass of people (just like early capitalism) need to agitate for change.

In the 1840’s, the Chartists were successful only in bringing the issues of the working class to the attention of the ruling classes. They did not succeed in most of their demands. It took decades until those demands were met and eighty years before women were given the vote. This country still has a House of Lords and unrepresentative democracy in the Commons as a result of first-past-the-post: we are very conservative. Nevertheless, when British people have their backs to the wall, they react. The FCA is putting British people’s back to that financial wall by their inability to tackle banking as it should be tackled – at the centre. With a pending recession in the UK – in the midst of austerity – this is a dangerous situation. Time to make changes.

 

 

 

 

Don’t Look, Won’t Find

DLN

 

Don’t Look, Won’t Find – Money Laundering in the UK

Transparency International – UK just published “Don’t Look, Won’t Find” which exposes enormous gaps in the UK’s ability to stop illicit money coming into the the country.

The report shows how all sectors, from banking to the enablers of money laundering like the accounting firms, legal firms, company registration firms to the sellers of final products and services like auction houses, private education, fail the test of oversight and reporting on a consistent basis.

This means that huge amounts (tens of billions of £’s) enter the country illegally from China, Russia, Africa and elsewhere – depriving those countries of the money they need and, as a by-product, pumping up house prices in London.

I had the privilege to Chair the Advisory Committee for this report – part of the Corrupt Capital project at TI-UK which aims to uncover how London (a major financial centre) needs to work hard to rid itself of corrupt capital that enters its system here and in the many tax havens to which it is connected world-wide.

Those who have written this report have done an excellent job of uncovering the chaos that exists in oversight and reporting systems in the UK.

 

Don’t Look, Won’t Find

Human Rights v Trade

151003_OpiumWar

The Independent today (3rd October) reports that the Foreign Office is placing human rights below trade in its international efforts.

Sir Simon MacDonald, Permanent Secretary at the Foreign Office, said this to the Foreign Affairs Select Committee, chaired by Crispin Blunt – a Conservative MP. The outrage to this frank admission from those like Amnesty International is understandable but the news is not a surprise. The UK has a default mechanism – overseas trade at almost any costs. It is this default that has, at times, been tempered by those heading our foreign ministries (such as Robin Cook and his “ethical foreign policy” and Douglas Hague more recently) but over more than 200 years, Britain has pursued a trade policy which has been usually unyielding.

Mercantile Britain

From the 17th Century onwards, this island nation has pursued conquests and material gain in overseas territories that enabled a minor nation (by population) to erect a massive empire. It was a mixture of bravery, opportunism, single-mindedness and adventurism that took Britain throughout the world as searchers for new lands and the rewards that would come with them. Along with the supreme invention of the joint-stock company that somewhat de-risked such ventures, companies like the East India Company not just took advantage of these overseas territories but set themselves up as military governors of them. This company ruled India until as late as 1858 (after the rebellion of 1857).

From then on, British military might was handled directly by Government. Thus, the mercantile underpinning of our international trade, by then as much as the need to export the produce of the industrial revolution as the need for raw materials, was in place. This was an extrovert linkage between might and trade in the nineteenth century, now it is implicit. One of the worst examples of mercantilism were the Opium Wars in China where Britain fought to ensure that the sale of opium into China would continue.

20th Century Mercantilism

More recently and especially since the end of World War II, when British military might was used to vanquish an evil Nazi regime and almost bankrupted this country, Britain has used its ability to aid overseas trade more subtly. We have now ceased to follow the Palmerston gunboat diplomacy of the nineteenth century but our ability to promote trade along with military capability is still firmly in place.

For much of the twentieth century an example was the Defence Services Organisation (DSO) that promoted our arms exports throughout the world. This was an effective sales force for arms exports that retained the UK’s ability to remain in the top three or four internationally until very recently. Our embassies were (are?) and our military attaches in particular represented not just our Government but the companies that sought to trade in the countries where they were situated.

Alongside this, the UK has developed a record on human rights that is one of leadership on a world-wide scale. In the nineteenth century, our Gladstonian free trade mindset was tempered with a humanity in a section of the population that sought to restrain the might of an empire and restrict its natural tendency to the Benthamite utilitarianism that sought to consider overseas peoples as no more than collateral. While we may seek to measure natural resources in 2015 as “natural capital”, in the nineteenth century, even after we abolished slavery in Britain in 1809, we would still value people our dominions numerically as we would a piece of equipment.

Liberal Free Trade was built on this and while Tories (Conservatives) may have initially tried to stem the Free Trade tide (because of their natural affinity to those that ruled by their ownership of land), they became as fervent in their pursuit of capitalism and mercantilism until now they have adopted the mantle to themselves.

So, while this country spends 0.7% in overseas aid (and trumpets this, rightly, as an example of our desire to alleviate poverty and disease), in this progressively post-Industrial world (where all countries are now so interlinked by trade) we maintain an extraordinary linkage to many tax havens around the world that ensure that companies can reduce their tax burdens at the expense of much of the world’s poorest. London is itself a crucible of money laundering and Tax Justice Network assesses London and its affiliated tax havens in places such as the Cayman Islands, Jersey, British Virgin Islands and elsewhere, as the most secretive combined jurisdictions in the world. This is today’s example of the UK and its desire for financial trade above the rights of the poorest.

Trade vs Human Rights in the 21st Century

Since WWII, the UK has (as stated above) been at the forefront of much that is good in the development of human rights world-wide. Apart from our leadership in the establishment of UN and other basic norms for human rights, this country houses many NGOs that lead in this sector. This is now at risk.

Not only is the current government suggesting that we opt out of various human rights bodies (unable it seems to allow ourselves to be subject to best-case international norms), not only are we potentially removing ourselves from the historical capability of being a home for immigrants that are subject to terror in their own countries, but we are looking to enhance our ability to trade in nations that continue to abhor basic human rights in their own countries.

This is a pandering to economic welfare and materialism that has not been seen since the days of Bentham and the focus on such utilitarianism (then at the expense of the poor working class in this country but now internationalized) is a stark throwback to the default mechanism of our forbears – those who maybe knew they were wrong but had no experience to turn to.

Now, we have no such excuses. The desire to trade unabashed world-wide and not concern ourselves with the dire consequences of the countries with which we trade points to a shallow materialism that is in danger of throwing aside all that so many have worked for so many years. That this country, one of the world’s richest, should consider that the problems faced by those in the countries with which we do business are not of any concern to us is not just wrong but a short-termist mistake.

George Osborne’s recent visit to China is a good example of this. He is not just a head of finance but a senior Cabinet Minister that goes with the blessing of the Government. He left China with the endorsement of the Chinese government as voiced through their newspapers for not overstating human rights issues. Apparently, the UK cares less about people than about profits or increasing our GDP.

So, Mr MacDonald’s statement before the Foreign Affairs Select Committee is no surprise but it is a statement that will have chilling effects. It states that we are giving up our responsibilities on the back of a desire to enrich ourselves at the expense of those outside the UK that suffer oppression and poverty. While we maintain out 0.7% (although some of that is being deflected into defence spending) much of that, in effect, buys us more ability to sell products and services.

Robin Cook did not last long in office as a result of his ethical foreign policy beliefs. We no longer even hint that this remains our aim but the lesser aim of maintaining human rights and challenging those that do not follow our example is now not just under threat but clearly is seen as history. It may be that quantity of life is the belief of this government (and the defocusing on climate change is another example) rather than quality of life and the desire to lead lives that are worth living. We do have average levels of material wealth in this country that are envied in many countries and much that our democracy and ability to live relatively freely within out nation that propels many to want to live here.

Yet, in a global economy, it appears that materialism is now the only objective as we go back in time to the nineteenth century. This time, we have no excuses. Human rights as enshrined in the United Nations Declaration of Human Rights are essential components of how we should not just run our own country but how we should see the world.

On December 10, 1948 the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights the full text of which appears in the following pages. Following this historic act the Assembly called upon all Member countries to publicize the text of the Declaration and “to cause it to be disseminated, displayed, read and expounded principally in schools and other educational institutions, without distinction based on the political status of countries or territories.”

 

PREAMBLE

  • Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world, 
Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people, 
Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law, 
Whereas it is essential to promote the development of friendly relations between nations, 
Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom, 
Whereas Member States have pledged themselves to achieve, in co-operation with the United Nations, the promotion of universal respect for and observance of human rights and fundamental freedoms, 
Whereas a common understanding of these rights and freedoms is of the greatest importance for the full realization of this pledge,

 

Now, Therefore THE GENERAL ASSEMBLY proclaims THIS UNIVERSAL DECLARATION OF HUMAN RIGHTS as a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction.

Article 1.

  • All human beings are born free and equal in dignity and rights.They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

Article 2.

  • Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.

Article 3.

  • Everyone has the right to life, liberty and security of person.

Article 4.

  • No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.

Article 5.

  • No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.

Article 6.

  • Everyone has the right to recognition everywhere as a person before the law.

Article 7.

  • All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.

Article 8.

  • Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law.

Article 9.

  • No one shall be subjected to arbitrary arrest, detention or exile.

Article 10.

  • Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.

Article 11.

  • (1) Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.
(2) No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the penal offence was committed.

Article 12.

  • No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

Article 13.

  • (1) Everyone has the right to freedom of movement and residence within the borders of each state.
(2) Everyone has the right to leave any country, including his own, and to return to his country.

Article 14.

  • (1) Everyone has the right to seek and to enjoy in other countries asylum from persecution.
(2) This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts contrary to the purposes and principles of the United Nations.

Article 15.

  • (1) Everyone has the right to a nationality.
(2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

Article 16.

  • (1) Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.
(2) Marriage shall be entered into only with the free and full consent of the intending spouses.
(3) The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.

Article 17.

  • (1) Everyone has the right to own property alone as well as in association with others.
(2) No one shall be arbitrarily deprived of his property.

Article 18.

  • Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

Article 19.

  • Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

Article 20.

  • (1) Everyone has the right to freedom of peaceful assembly and association.
(2) No one may be compelled to belong to an association.

Article 21.

  • (1) Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.
(2) Everyone has the right of equal access to public service in his country.
(3) The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.

Article 22.

  • Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

Article 23.

  • (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.
(2) Everyone, without any discrimination, has the right to equal pay for equal work.
(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
(4) Everyone has the right to form and to join trade unions for the protection of his interests.

Article 24.

  • Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.

Article 25.

  • (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
(2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

  • (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
(2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
(3) Parents have a prior right to choose the kind of education that shall be given to their children.

Article 27.

  • (1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

Article 28.

  • Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.

Article 29.

  • (1) Everyone has duties to the community in which alone the free and full development of his personality is possible.
(2) In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.
(3) These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations.

Article 30.

  • Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.Human Rights

Kids Company – Reserves of Discomfort

150807_KCReserves

The Financial Times  provides a good understanding of some of the financial woes that beset Kid Company.

As the article shows, Kids Company had only £400k in reserves at the end of 2013 and its Trustees wrote in their audited accounts that this was a major risk.
The Founder says that she argued with Government that they should do more (i.e. give more) to help this situation but Kids Company received over £12 million in 2013 of voluntary unrestricted income. This means that Kids Company management (and the Board of Trustees) decided themselves how to allocate the money between active use and reserves. The Government (at least in this instance) had no burden upon it to allocate money to reserves – Kids Company had adequate funding to do this and should have made this allocation for the benefit of the future of the organisation, its mission and the kids that it supports.

It decided to fund short-term need (always pressing) against long-term viability and got away with that for a long time. Eventually, like a business that overtrades, it goes bust. That is making your organisation unsustainable and for an organisation of this size with this amount of voluntary unrestricted funding (a level that so many well-run charities would welcome) to commit this offence is maddening – it is anger inducing.
For the auditors to simply then sign off the accounts with no comment is appalling. The Trustees knew the situation and commented on it in the accounts in 2013. They were not (yet) insolvent but could read the runes. The auditors should have commented further.
For Government to keep putting money in without understanding the financial problems and not requiring Kids Company to allocate resources to reserves is unsettling. Surely someone in Government could have spoken to a charity finance person and understood the reserves issue (plainly in front of them) and made it a requirement of their funding to have Kids Company allocate more of their voluntary unrestricted income to reserves. Nothing appears to have happened.

This is not unusual in the sector – urgent needs are there to be met and Trustees not strong enough to argue for longer term needs. Trustees have a legal responsibility not just to write sentences in the accounts but to safeguard the organisation from collapse that they could have averted.

Six months’ breathing space at a lower level of operations could have allowed Kids Company to have resurfaced and kids and families still could be getting support in some of the UK’s hardest hit areas. Management and Trustees should look to themselves and no one else for the answers to problems in such a situation; auditors should be more pro-active; Government more discerning.

For the Charity sector as a whole, understanding the need for reserves and the prevention of “over-trading” is a fundamental need. Many Trustees are not up to understanding this requirement; many management staff are unsure how to balance the urgent needs of their beneficiaries in the short-term with those of organisational sustainability. Unfortunately, that is their job. The Charity Sector is not good at this – and every Charity is different. The mission of most charities are worthy enough for Trustees and senior management (and finance people) to try to learn something from this – reserves are not just for show, they have a place in sustaining charities and mitigating risk. It is not enough just to know you have a risk – a charity must take action.

Finally, it is a sad reflection on our times and our country that Kids Company had to undertake its mission in the first place. Its Founder was right in that she saw Government abstaining from its legitimate role in society – a 21st Century society not a 19th Century one. This abstinence then propelled Government (Labour and Conservative) into its Big Society mission – like a wealthy philanthropist giving money to the starving poor. This is Dickensian in the extreme and Kids Company should not have been needed. Many charities do work which are above what we would consider Government to be properly able to do – I suspect that some of the outcome of this will be that in this Dickensian, 19th Century Age of Austerity, we need to reflect more pro-actively on what we ask Charities to do and what we expect from the State.

The Battle of Life

150706_Chartists    150706_AfricanMigrants

In 1846, Charles Dickens published one of his Christmas stories – “The Battle of Life”. Very few remember it now, although at the time it was as popular as A Christmas Carol. While it was a romantic story, it was also a metaphor for living – a reality that the mid-Victorians daily confronted – the battle of life.

As Peter Ackroyd noted in his biography of Charles Dickens:

“…the real importance of the story is to be found in its title. The Battle of Life was a phrase which meant a great deal to mid-Victorian Englishmen: it was even something of a truism in a world for which struggle and domination were the twin commandments, where the worship of energy and the pursuit of power were the two single most significant activities, where there was a constant belief in will, in collision, in progress. Darwin and Malthus both described “the great battle of life” and “the great battle for life”, the important confusion between the two phrases materially assisting the evolutionist’s case”

 

Samuel Smiles, maybe the exponent of what are known as “Victorian values” summed it up:

“The battle of life is, in most cases, fought uphill; and to win it without a struggle were perhaps to win it without honour. If there were no difficulties there would be no success; if there were nothing to struggle for, there would be nothing to be

achieved.”

Battles of life are still fought daily – for survival, for religious conviction, for self-esteem, for self-betterment, for the rights of others unable to fight for themselves, for equality.

In the 21st Century developed world, we often think that the battle of life has been won – we are economically well-off, pretty well educated and maybe complacent about our success. Yet, on a world scale, the battle of life daily persists and it is when we are confronted by the scale of that battle (as many British people were recently in Tunisia and as many were just ten years ago in London) that we are reminded that the Battle of Life goes on unabated.

In Dickens’s time, Britain was well underway with its industrial revolution and bestrode the world as an economic power house even if its working people were poor, with little chance of benefitting from the wealth creation. This gave rise to Chartism – working people’s attempts to gain access to power but this was dealt with by the oligarchy in power at the time in Britain. Our wealth generation was based on a world as supplier and this required a growing Empire from which to extract the raw materials it needed to feed the industrial base and to sell its goods – and a labour force here and overseas that provided it with unceasing supplies to make the machinery of the factories function.

We may have come a long way since then in this country but we remain pre-occupied with ourselves. Not much has changed in terms of Government and institutions since that time. We still have a House of Lords, we retain “first past the post” voting, London remains far wealthier than the rest of the country, we retain a certain disrespect for foreigners, we still want to play a major world role (although much of that is through our soft power status). We remain one of the five permanent members of the United Nations Security Council – still with a veto power. London retains its place as a major financial centre – which many believe assists our economy but many others rue its dependency on money laundering and the part it played in the 2007/08 financial meltdown.

Of course, the world is changing around us. China is now the largest economy in the world and while its per capita wealth is far lower than the west, the fact that it is so large means that, at the centre, it can aggregate massive amounts of money that can be used by Government. This is the real power of growth and economic vitality – the ability to amass funds centrally to spend on military might and security even as millions are still impoverished. On a smaller scale, North Korea still spends money on nuclear weaponry while so many starve.

In Africa and Asia, thousands try to escape the torment of their home countries to live aboard – leading to high-risk escapes on the high seas and many deaths and the recent scenes just across the Channel in Calais.

Industry is now global. The 19th Century British labour market that kept wages low and poverty high (and on which Marx and Engels – living in London and Manchester for most of their lives – based das Capital upon) is now also global – with an international labour market that has exactly the same problems as we had here two hundred years ago: low wages and desperate health and safety conditions (that have led to hundreds of lives lost in building the stadia for the 2022 World Cup in Qatar).

Meanwhile, it would be hard to extract much of this change from the recent General Election here. An election fought by the winning Conservatives on short-term tax breaks and a fear of the unknown – when that “unknown” was held to be Labour Party leftism and Scottish independence fears; when Liberal Democrats lost public trust over university funding; when UKIP gathered around 3 ½ million votes on the back of fear of the foreigners.

It was hard to feel motivated by the short-termism and fear-mongering that underscored that election. It was an election where Liberal Democrats were sent back to the 1970’s in terms of seats won and where they lost more votes in one election than could have been believed and when many argue liberalism should be the 21st Century political answer to all the changes and aspirations of a 21st Century world.

21st Century Aspirations – Economic Freedoms and Responsibilities

It has been educational to listen to the two Liberal Democrat contenders for that party’s leadership recently. Tim Farron and Norman Lamb, two out of the eight remaining Lib Dem M.P.’s in the House of Commons, both appeared before at the Institute of Public Policy Research at separate events.

They spoke and answered questions on a range of issues but the focus was on what liberalism meant to them.

Tim Farron told the meeting at the IPPR that he bases his liberalism on five key values: Freedom, Equality, Quality of Life, Internationalism and Reform. In his manifesto, a sixth value was added – a new economy.

Norman Lamb spoke about similar values and his experience of working as a Health Minister.

Both noted how their vision was formed by Jo Grimond and the debt they (and we) owe to William Beveridge – the man behind social services and the NHS, who identified the “five evils” of society as of squalor, ignorance, want, idleness, and disease as the drivers behind the need of government to be involved in society to a greater degree than before.

It is interesting to remember that Liberal have had to move a long way from the idealists of the 19th Century. While the Tories represented the landowners then, the new middle classes of that Century (who were behind the Free Trade movement as were the Liberals of that time) were not looking towards improving the lot of the common man (and certainly not women). The Factories Acts were gradually introduced throughout that Century as a result of pressure from outside Parliament and often against the deep-seated reservations of the capital class.

Liberals of the 21st Century now understand what J K Galbraith called the “social balance” between the public sector and the private to ensure that needs are met but that individuals are still able to model their own lives within a society that does not deprive them of aspiration and opportunity but actually seeks to improve those life chances. Liberalism also aims to ensure that the individual that lives most of their lives in “civil society” are able to do so with real freedom to enjoy and be fulfilled in that life. Life should not be just a centralized, top-down socialism nor a numbers-driven economics-only rat-race. Life is a complex mix where wealth creation is important (wealth being not just quantity of life but also quality) and so is ensuring that opportunity (such as good education, health and housing) is available to all so that individuals can become the most that they are able. When we also use our abilities on a global stage and enshrine this within the crucial notion of freedom (to believe in and voice your own views without fear), this is 21st Century Liberalism.

Because both Tim and Norman understand the critical elements of liberalism (something central to Nick Clegg – as he understood in a speech in 2012 to …but never reinforced outside that so that people would know what they were voting “for”), it is difficult to separate them on the basis of views held.

For me, the issues come down then, to this:

If Liberals want to become a force for real good in the UK (and world) and want to play a political role and not just be seen as a pressure group, they do not have to be just great campaigners, clammering for redistribution and fairness, but they have to ensure that there is a Liberal Economic Philosophy that enough people believe in.

Liberal Economics for the 21st Century

Having completely bought into all the other values of liberalism, it seems to me that the Liberal Democrats (and Liberal Party before them) have sometimes not grasped the central perceived need of most people – economics and economic freedom. The industrial revolution embedded the zeal for wealth creation amongst the capitalist class that has since become the underlying basis for how people see their lives.

Increased wealth creation has led to better health for those who are fortunate enough to live in the economically developed world and to longer and better lives. Illness does not mean death as it did in the 19th Century for us in the UK. Food is plentiful (although food bank use is on the rise) and we do not suffer from stunted growth as happens too frequently in the developing world – we suffer more from obesity. Education is open to all (albeit in different and not yet good enough for all). Our streets are relatively clean and we have a police force that is designed to serve and a set of laws that are mainly enforced without social stress. We have freedom of expression and democracy.

Much of this is down to wealth creation so that we can be said to be well up Maslow’s Hierarchy of need.

However, inequality is now increasing and the challenges of this country in a world where countries like China are now beginning to dominate economic growth are substantial. The impact is serious in areas like London where housing costs are so high because of the demand from those from overseas – many thought to be laundering questionable money through the London property market.

We also see scenes in Calais on a daily basis how those countries that are not providing economic freedom to their citizens – through corruption and war and mismanagement that leads to hunger and illness – drive their own people from those countries. This is an international problem – African migrants

So, how could Liberal Democrat economic philosophy be developed to tackle the issues that impact everyone – which everyone believes to be crucial to their lives and those of their families and within which the other values of liberalism can be seen to flourish?

We have to focus on responsible wealth creation in this country and overseas that marries the need to galvanise wealth creators (small businesses, risk-takers, new science, co-operation between public and private sector) along with a focus on great education that motivates and provides opportunity, understands how we develop sustainable growth (that assists the environment and connects us with it – not just seeing it as “natural capital” in the way that the 19th Century mill-owner saw workers as capital) and international. In the latter, we have to understand how the UK is a seller to the world and a buyer to the world but also part of that world. That world needs to ensure that the poorest are given opportunities and that sink-holes like corruption are eradicated. That equal playing field that liberalism feels so deeply is now an international playing field.

Economic freedom (the ability to grow our wealth) in a responsible way should be part of any liberal philosophy. But, it is not the 19th freedom to trade freely – it has to be a freedom with responsibilities attached. Together, economic freedom with responsibilities would help us win the battle of life that we all face.

Is FIFA-world just a microcosm of the real one?

Russia's president Vladimir Putin (left) and Fifa president Sepp Blatter

FIFA-world: a virtual world where you get ahead by what you pay and stay ahead by denying the evidence

“When we get bribed, we stay bribed.”

Jon Stewart on his Daily Show in the USA – his take-down of Sepp Blatter and FIFA. The legal onslaught on FIFA-world  has been 24 years in the making – 24 years before the legal process (headed by the US Attorney General Loretta Lynch) went into motion. As Stewart remarked, “even Switzerland” itself had moved on FIFA.

Yet, Sepp Blatter was overwhelmingly affirmed by FIFA delegates for another four years – on the votes of Africa, Asia and Platini’s France amongst others. This was despite the obviously dangerous legal claims made against many senior employees and representatives of FIFA by the US and Swiss legal authorities. This was despite the fact that Blatter has been President of FIFA for so long – it has been on his watch.

The President of FIFA has (under its latest statutes) the following responsibilities:

32. President

The President represents FIFA legally.

He is primarily responsible for:

a)  implementing the decisions passed by the Congress and the Executive Committee through the general secretariat; 

b)  supervising the work of the general secretariat;

c)  relations between FIFA and the Confederations, Members, political bodies and international organisations.

Only the President may propose the appointment or dismissal of the Secretary General.

The President shall preside over the Congress, the Executive and Emergency Committee meetings and those committees of which he has been appointed chairman.

The President shall have an ordinary vote on the Executive Committee and, whenever votes are equal, shall have a casting vote.

If the President is absent or unavailable, the longest-serving vice-president available shall deputise.

Any additional powers of the President shall be contained in the FIFA Organisation Regulations.

As FIFA’s legal representative on planet earth, it seems clear that Blatter would be held accountable for all its actions whether he knows about them (and he claims a complete absence of knowledge) or not. Yet, FIFA members, by a great majority, supported his continued Presidency.

For some of us, this seems absurd. For those of us brought up under democratic systems, where wrongdoing in an elected body is normally punished by the voter, the inability of FIFA to sort itself out appears naïve as does the apparent understanding of the electorate. Yet, to many of those who voted for Blatter, their response was entirely logical.

How FIFA-World Seems to Work

The world has changed over the last fifty years to an extent that is now becoming highly visible. Until the 1950’s, the great western powers and the USSR held military power (hard power) over the rest of the world. One by one, states outside this power block became politically independent. Asian economic power-houses like Japan grew quickly and then China began its sustained and dramatic economic renaissance. After the break-up of the Soviet Union, instead of democracy, economic power brokers developed (with Putin at the top of that tree).

While we understandably focus on military and security threats posed by those like ISIS, the world has been moving on – with economic growth at the centre (softer power).

However, instead of the west’s domination, there are now various centres of economic power – such as China, India and Brazil – which are breaking down long-established norms.

These norms (such as the desire by Western nations to link good governance with economic aid) are under real threat as newly enriched nations like China care less about the good governance of its supply and customer base outside China than it does internally and less than the stated aims of the earlier economic hegemonies.

This compounds the pent-up pressure on the governments of the newly developing world that may be tired of the continuous pressure put on them to do more of what the west wants them to do – such as reduce corruption and improve good governance. This is not the reaction necessarily of their people (most are completely sick of the bribery and corruption that exists, often sick of the absence of real democracy and the absence of real representation) but in many parts of the world, the people do not have a say.

Also, populations are torn between a natural desire to see things properly run (good governance) and feeding their kids or having a roof over their heads. Elsewhere, like in Russia, the government has a rigid control over their people. The same is true in China.

Finally, nations are now (because of their own economic strength and because of alliances with those like China) less likely to fold against the old hegemonies of the USA and Europe.

For all these reasons, FIFA-world seems symbolic of the new world order that is taking place where an organisation that has been corrupt for so long is able to maintain good relationships with its supporters through its economic success and the ability to pass on that financial success to a range of nations and individuals – upon which it also survives. It pays to support Blatter – even if you are in receipt of dirty money.

Despite pressure from the west (notably the UK – via, mainly, its newspapers like the Sunday Times while government was just as mercantilist when London was in the running for the World Cup), FIFA refuses to change from the inside. As there is no ability to march into Switzerland and take over the company by force (the 19th Century ideal), the only method remaining is via international law as applied by the US Attorney General and the Swiss. It has taken 24 years to get to this stage.

What could we be learning from FIFA-world?

This microcosm represented by FIFA-world must have lessons for the new real world order but it is not easy to overcome the concern that fifty years of working towards better governance (e.g. where we have seen increases in the number of democracies throughout the world) is under threat.

The natural focus on material wealth as the highest priority for all nations and all people is understandable. Worldwide poverty indicators are reducing (even if mainly from Chinese economic success). As Maslow showed so clearly in the 1930’s, most people focus on material wealth creation well before there is a serious thought given to quality of life issues.

MAslow

This is clearly seen in practice as the world pursues economic gains even in those countries that are already wealthy. Even the safety and maintenance of nature and the environment becomes translated into a form of costed “natural capital” so that it can enter into our economic thinking. If it has no valuation methodology, then humans seem unable to evaluate it. If we can’t count it, we can’t imagine it, apparently.

This means that issues like corruption are treated as secondary to economic benefit or economic security in most nations. It is no longer just a case of saying “Corruption is bad, stop!” because the complexity of the each situation means that, in the short term, those who gain through corruption and / or being part of a corrupt environment do not visualise the problems quickly enough. Moral crusades are not high enough on Maslow’s hierarchy (which was developed for marketing purposes but serves as a useful tool elsewhere).

Even the use of legal sanction by the USA, while applauded by many in developed nations, is not so well received elsewhere. Blatter knows how to utilize this reaction by appealing to the sensitivities of nations that do well out of FIFA economically and see themselves (as nations and individuals) threatened economically by the ending of corruption. This is not much different from oil-rich nations like Angola preferring to sell to China than the west – because no-one in China is demanding good governance from Sonangol, the dos Santos-owned oil company. It is similar to tribal leaders in Afghanistan that react badly to the west’s demands for an end to corruption in that country.

Those legal sanctions operating in the West (through a range of anti-money laundering devices, FCPA, Bribery Act and the like) can have great power when used against corporations. They are now extra-territorial in scope and can remove any one nation’s or company’s ability to protect themselves from legal onslaught. However, in the UK, for example, implementation of laws such as the Bribery Act are completely under-resourced so reliance has been placed on the US to widen its military policing role to one of legal challenge – where an individual using US assets (banking, currency or legal) is liable.

Such legal sanction needs to be policed (a) by more than just the USA and (b) in a way that is not seen as hegemony by former military world powers.

The first requires resources and a willingness to attack the problem; the second is far more subtle – a need to assess how to convince the world that corruption is hugely damaging to economies, sectors or society and even security (as is seen in Nigeria, Iraq, Afghanistan and many others vulnerable nations where armed forces are depleted by funding being ransacked by a few elites) when the benefits are clearer than the problems.

As an article in today’s National Post in Canada shows so well, giving the World Cup to a country well down Transparency International’s Corruption Perception Indicator (CPI) is asking for trouble. Yet, not giving the World Cup to such nations (which are developing nations in need of such investment and focus) until they have cleaned up their act would be seen to be counter-productive – and construed as anti-poor. There is no support for such a move.

What needs to happen is that good governance is seen as a central tenet of major corporations and of governments (national and local) and, for this to happen, a huge and relentless shift needs to take place in the way the non-FIFA world works so that the real economic needs of people are met while the ugly needs of vested interests that stand to gain through corruption are not.

For corruption to be minimized should be seen as one of the world’s major aims – where we need nations to meaningfully sign up to this in the same way as we sign up to human rights as corruption erodes human rights as well as any impediment known to humankind.

FIFA-world is a microcosm of how the real world tolerates corruption and the 24-year corruption story in FIFA is by no means finished. We need to learn from that story not just to fix FIFA-world but to fix the way the world tolerates corruption.

Note: I am a Trustee of Transparency International – UK

The Strange Death of Liberal England – all over again!

150509_DeathofLiberalism - again

Nick Clegg made a speech on 19th December 2013 to a conference organised by the Open Society Institute and Demos which spelled out what Liberalism is about. It was poorly reported by the media which focused on criticisms of the Conservative policies on tax benefits for married people. But, it was an important speech in that Liberalism – the real third way of British politics – was, for the first time in many years, made the key topic.

In “the Strange Death of Liberal England” written by George Dangerfield in 1935, the twin political opponents of workers and capital were seen to squeeze out the rights of the individual as two opposing armies took over. This death was correctly seen as liberalism and the niceties of that philosophy were sacrificed to economic imperatives. Economic supremacy and economic growth (as measured by wages and GDP) became the real determinant in our politics and economics – a natural result of the economics of the 19th Century.

Now, western economies are relatively wealthy in pure economic terms despite the travails of the last eight years. It is the squeezed middle classes that have faced economic peril – with real antipathy to the financial “class” that seem to have acquired all the economic power. However, “austerity” economics has imperilled the lower paid and the poor on the altar of “balancing the books”.

In 2013, and in his recent resignation speech after an election that punished the Liberal Democrats for much more than cosying up to the Conservatives, Nick Clegg made the case so well. Liberalism stresses the balancing of the needs of individuals against power blocks – against totalitarianism of all kinds. “The values of the open society – social mobility; political pluralism; civil liberties; democracy; internationalism – are the source of my liberalism. And reflecting on the events of the last year, it is clear to me that they have rarely been more important than they are today.” Clegg said in 2013.

In his more recent speech made yesterday, Clegg stated that the loss of liberal values from recent politics spoke of a real risk to freedoms and the pursuit of life over entrenched interest groups. Unfortunately, this message had not been made by Liberals for 5 years (except in the odd speech like in 2013) and the mistrust held by the electorate over the decisions to become part of a Tory-led coalition along with the about-turn on University fees caused enough of the electorate to dismiss the Liberal Democrats. This party became “Tory-light” in the eyes of the young who had voted for them in 2010.

As economies struggle around the world, modern politics should be looking beyond the cul-de-sac of entrenched self-interest and power blocks to the values of the open society called up in Clegg’s 2013 speech. We should measure our rights to exist in ways that are more suitable than GDP or income measured in such straightjacket terms as numbers of £’s or $’s or Euros. Open society should be the way we measure our lives – this requires satisfactory income levels but there is more to what humans need than income to buy things that have diminishing returns to our well-being. Clegg’s speech should have been a useful starting point for what politics should be about beyond the next tax break. I hoped at the time that many would read it, that the press would begin to re-establish itself and begin to help lead the way to a new politics and economics for the 21st Century.

My hopes were dashed by a Liberal Democrat party that forgot its true centre (probably lost anyway when it joined with the Social Democrats thirty years ago) and only remembered it when it had lost.

Where does liberalism go now in the UK?

Perhaps the election throws up another route. The Labour Party’s dismay at it abject failure to ignite interest in the whole of the UK may be seen as an early stage in a change there, too. Born on the back of the struggle of the working class to assert itself in 1900, Dangerfield in his 1935 book showed clearly how that movement of labour was bound to kill off the party that had tried to represent labour up to then (the Whigs and then the Liberals) but from a middle class perspective.

Now, working people have succeeded in asserting their rights and many now aspire to middle income status. The struggle is now for all employed people to struggle in a world where the top 1% seem to be capturing the economies. They also have a mission to improve the lot of those outside of work.

For the Labour Party, this means that their traditional block of supporters seeks different outlets – Scottish Nationalist or UKIP, Green or even Conservative – where aspirations stretch from pure economic to the type of society for our children. Labour has to change to reflect aspiration – not just Tory-light (which Blairism was too close to) but something motivational. Ed Miliband talked about One Nation (a Victorian memory) that David Cameron repeated in his victory speech. This needs to be taken forward to the 21st Century and maybe Labour needs to reach out not go back into itself.

In the past, this was spoken of as a “realignment of left wing politics” but it needs a new 21st Century definition. Liberal thought as Clegg made so clear in 2013 and briefly referred to on 8th May, 2105, could be what drags the Labour Party kicking and screaming into a new mission for this century.

“The values of the open society – social mobility; political pluralism; civil liberties; democracy; internationalism” allied to safeguarding the poor and those who find it difficult to gain traction in that society, providing opportunity for all, motivating all to achieve both economic benefits and quality of life – these could be the new liberal values of Labour – and Liberals. Maybe the realignment is overdue – but, not just with left-ish ideals from the 1930’s, but liberal ideals for the 2020’s.