200 Years of Peace? 200 Years of Rockets and Bombs?

Dec 24, 1814 – Signing of the Treaty of Ghent between USA and UK

Dec 24, 2014 – Arms Trade Treaty

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While we have been commemorating the centenary of the beginning of the First World War, it is now exactly 200 years since the UK and USA signed the Treaty of Ghent signaling the end to the War of 1812 and the establishment in British eyes of American equality, firm agreement on borders and freedom to sail the seas and an agreement to seek the end of slave trafficking. The Treaty was deemed to be “an honourable peace” for the United States that many believe was a rallying call to its citizens – honourably exiting the War with firm borders and a fundamental view of nationhood. The UK and USA have been at peace (outside the odd skirmish) for 200 years and “The Star Spangled Banner” (written in 1814 to commemorate the bombardment of Fort McHenry in Chesapeake Bay by the Royal Navy) remains the anthem of the USA to this day – while its lyrics remain constant:

“And the rockets’ red glare, the bombs bursting in air”

During those 200 years, however, the world has been stricken with world wars and regional conflicts that rewrote borders almost everywhere. We live now with the consequences of borders drawn up by Empires that bore very little resemblance to the needs of the people within them. In many countries in Africa and Asia, nations were brought into being that collected many different peoples. In Africa, these people were then subjected to rulers that grouped them into so-called tribes (that Fukuyama describes as newly created) and have been the cause of much bloodshed since then. Nigeria, for example, was never a nation until it was created by the British and the Muslim north and Christian south are uneasy bedfellows.

21st Century Nationhood

The 21st Century offers both great opportunities and great risks. The nations that have been established during those last 200 years may, in many cases, bear little resemblance even after all those years to the people that live there.

  • We see this in nations like Ukraine where Russia is attempting destabilization through the indigenous Russian populations in the East.
  • We see this in a country like Nigeria – split between a Muslim north and a mainly Christian south.
  • We see this throughout the Middle East where the so-called Islamic State (IS) calls for a caliphate and an end to the “arbitrary” borders brought in by the British and others after the First World War, where Sunni and Shia are pitted against each other.
  • We see it in many African states, where colonial rulers attempted to develop states which had not existed before and where definition by nation is still hugely misunderstood.
  • We see it in China where Tibet has long wanted its independence and where the Uighurs still rally against Han domination.
  • We see it even in western Europe where, for example, the Scots only narrowly decided to remain in the UK after a referendum, where the Catalans are keen to split from Spain and where many northern Italians yearn to split from the under-developed and relatively ungovernable south.
  • We saw it in the Soviet Union which broke up into states that were better aligned;
  • We saw it as Yugoslavia split.
  • We saw it as Czechoslovakia split.

Multi-National groupings

 

The 21st Century has, however, witnessed a rapid drive to globalism so that the inter-relationships of countries with others are more complicated than ever. Whether it is China in Africa or the USA in Central America, leading economies are progressively more dependent on others.

This is now a world where multi-national companies are in competitive positions with nations. Maybe not in the same way that the British East India Company – which still had its monopoly intact at the time of the Treaty of Ghent in 1812 – but where agreements under way such as TTIP (Transatlantic Trade and Investment Partnership) between the EU and USA, companies are expanding their rights to take Governments to court under the ISDS – investor-state dispute settlement mechanism. Several countries (such as South Africa and Indonesia) are now opting out of such arrangements  which provide an equality between corporations and governments that could well be said to be anti-democratic.

Beyond companies, nations are increasingly engaged in arenas such as the UN, EU, NAFTA, African Union, ASEAN and multitudes of other multi-national engagement devices.

With the rise of the internet and social media, it is also far easier for individuals from opposite sides of the world to group together and do so within seconds.

Orwell posited three regional groupings with continuous warfare in his “1984”. 66 years on from when that book was written, the bipolar world of the US and Soviet Union became the unipolar world of the USA and now sees the rise of China fighting for prime position economically and others fighting for the next division placings within a world of fast communication and many forms of potential divisiveness and opportunities for engagement.

Big Brother may well be in place but it is more two-way as Snowden recently showed. As long as there remains a free press and the use of the internet is available, this will continue in ways that Orwell did not foresee (outside of states like North Korea and, at a lower level, China).

 

Shifting sands

It is not just in the Middle East that the sands shift as IS is fought by the Kurds and local national forces.

Sands continuously shift throughout the world as people group around a variety of causes, ideas and faiths and behind a variety of organisations and individuals. In a complex world, change is constant as our experiences evolve. However, it is clear that nations can no longer hide within themselves – each nation is exposed externally and internally as communication systems expand.

It took several weeks for the fact that the Treaty of Ghent had been signed to be relayed to those in the USA still fighting and dying.

Now, drones don’t just provide the means to inflict missiles on enemies but also provide data and information within milliseconds. Mobile phones provide instant photos and videos worldwide. The so-called Arab Spring was clearly accelerated by such media and took Middle Eastern governments by surprise as a result of that speed. In Tunisia, the results have been impressive for democracy even if elsewhere the forces for vested interests have re-emerged.

We do not know how humans will be organized in 200 years’ time. Issues like the environment and global warming will take precedence as the real (rather than promised) effects bite. These and other impacts will provide a changing environment that will, as always, require the most from human ingenuity. As we would appear to the world of 1814, the world of 2214 will feel very different to now – even if we can assume that technology will maintain our enjoyment of the planet.

But, what we assume to be stable – the nations that we are part of – will undoubtedly shift over this century and beyond. As rapid and increasingly ubiquitous communications become ever more the norm for most of us, and, after what may be a long period of difficult adjustment, there could be a tendency towards a better understanding of humanity beyond national boundaries and of our place on this planet.

While the Treaty of Ghent is hardly a cause of much celebration and it has been almost forgotten amongst the sounds of WWI commemorations, it was significant in that it signaled friendly relations between the most prosperous nation on earth at the time (the UK) and its wayward child (the USA) – two “united” nations that remain and prosper 200 years later – much of that owing to their “special” relationship that has matured during that time.

Today, 24th December, 2014, the Arms Trade Treaty (ATT) comes into effect. Could this be the positive event that will be celebrated 200 years from now? That Treaty has been signed up to by 130 nations – not even signed by Russia and China and still to be ratified by one of the signatories to the Treaty of Ghent – the USA. It took several months for the ratification of that Treaty by the US Senate in 2015 – owing mainly to communication delays. There is no such excuse in 2014/15. Let the ATT not be delayed any further – let nations not be swayed by the arms companies.

For now – let’s all enjoy the festive season and my best wishes for 2015!

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Why use GDP for our EU Membership Fees?

There was some useful analysis in the Financial Times on how the charge for the UK’s membership is calculated but the real question should be how the UK’s membership fee is actually derived and whether it is proper to do so in that way.

75% of our membership fee is based on Gross National Income – see Eurostat website – basically GDP plus overseas resident income less foreigners’ income from the UK.

The base of GDP (so well explained in Diane Coyle’s recent book “GDP“)  is fraught with problems as GDP is a measure of gross output in reality and not a real measure of wealth. In addition, it seems that there is no sense of income per head of population so that we could be getting poorer per head and still pay more into the EU.

The focus on GDP (imports and VAT making up the rest of the membership fee) should be what we focus upon. While sales figures may be fine as the base for membership clubs, using it as the major source of our EU fee is problematical and deserves more scrutiny as GDP was never intended to become the source for such calculations but is a lazy measurement – ignoring, for example, factors for wealth per capita.

In a 21st Century organisation such as the EU, the cost of running the central bureaucracy should be something that is transparent, understood and rational. It is now time for a thorough review of our membership fee – and an understanding of how we are taxed to pay for the EU political hub in Brussels.

The USA rebelled over taxation without representation and it is interesting that we in the UK (the electors) have never been asked about this issue – maybe minor in terms of our GDP but clearly a raw nerve. There is a rebellion around the concept of the UK within the EU and the fact that our membership costs are not understood (by the Treasury as well as the rest of us by all accounts) does need to be remedied.

 

Trickle-down Economics – The Thatcher Legacy

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This was originally posted in 2013 just after the death of Margaret Thatcher. Now that the Conservatives have amassed a majority at the General Election, I am re-publishing as the message holds even firmer today.

“In our system, everything is done according to a pyramid approach: the order is given from the top and carried out at the base.”

No, this was not Margaret Thatcher but Jiangwen Qu – professor at Kumming’s Centre for Asian Studies, talking about China. (Taken from China’s Silent Army, Juan Pablo Cardenal and Heriberto Araujo).

He went on to say: “We believe that other countries should follow this model, because if you let everybody give their opinion it is difficult to make decisions.”

Yet, it demonstrates how in our so-called democracy, the top-down theory of decision-making was so faulty. Margaret Thatcher won three general elections because the Labour Party was split between the left-wing (originally led by Michael Foot) and the right, which broke away to form the Social Democrats. In the UK’s ridiculous “first-past-the-post” election system, a party needs only 35-40% of the vote for a substantial majority – that was Margaret Thatcher’s luck. This luck had already been seen in her victory over Edward Heath in the leadership contest in 1975 – although it has to be said that she took full advantage of that luck.

Margaret Thatcher always said that she believed in democracy but made great fortune from its deficiencies. Apart from a rigged election system that gives minor parties full majorities, she did not practice democracy in terms of decision-making. Her cabinet (where the Prime Minister is supposed to be prima inter pares – first amongst peers) was where “the order is given from the top and carried out at the base”. This was her style from the time she became Prime Minister to the time she was thrown out by those who had the substance to rebel after 13 years of her idiosyncratic style of democratic rule.

Leadership and Democracy

Within a system such as ours, Margaret Thatcher did not split the country – her support was far less than half the country (usually than 40% of the voting population) and even those that voted for were split between various streams of the Tory party. She fragmented it. Her supporters in 2013 would mainly be found in UKIP today  although she would have still used the Tory Party as it is the only vehicle for power. The split was far worse as it demonstrated that rule of a democratic party would be by just the largest minority and with extreme policies.

Those policies did change the economic landscape that had been moving to rigid control by sclerotic centrist organisations such as Trades unions, Public Sector, old-style corporations and successive governments that had no vision for society.

Thatcher destroyed the comfiness of society in her own terms and put in its place more top-down doctrines around monetarism. Because liberalism had floundered after the first World War, centrist forms such as socialism and corporatism were, it seemed, all that there was left. Even the linking of Liberals and Social Democrats in he 1980’s was to prove a failure of liberalism as the Liberal Party moved towards a centrist European ideal and away from the localism and bias away from the centre that had characterized the party from its inception.

Strong leadership takes advantage of democracy in the UK (and still does) and the trade-off between the two is a constant battle. Where no leadership exists (and this is a story of today) then democracy does not replace it until some form of leadership appears. In the UK, we still have sclerotic centrist organisations that support the status quo and no vision or leadership for the 21st Century that would inspire the change that wealthier and better-educated citizens would aspire to.

The Centre going Forward

There is a massive danger that the completely centrist and statist system operating in China (as quoted in the first paragraph above) will, because of China’s growth and rapid ascendance, come to dominate political thinking the world over. Liberal Democracy is already wilting in western Europe as major decision-making is made by the unelected (in Brussels and for some time in Italy) with nations such as Portugal, Spain, Cyprus and Ireland ruled from the centre (read Germany). This is far away from localism and screams about the loss of Liberalism. The now-disgraced and jailed Chris Huhne remains a fan of the EU and the Euro – not a surprise that his background is social democracy not liberalism.

The 20th Century was a battleground between the forces of darkness epitomized by  extreme Nationalism, Communism and Fascism on one hand and the forces of democracy on the other. Millions lost their lives and millions more suffered in gulags and concentration camps for democracy and the end of extremism.

The 21st Century battleground is more complex as the war between the different political forces of centrist and localism is splintered by the battles for resources and markets (and by the impending battle for climate and conservation) and between north and south and rich and poor and corruptors and corrupted.

Thatcherism knew only Hayek-style liberalism – an understandable reaction against socialism and the fear that fascism was created around that fear. In its place, The Road to Serfdom (Hayek’s best known work and Thatcher’s quasi-bible) postured a place for Government in monetarism and information provision – working to ensure that the market could work through transparent pricing. This was its limit and disregarded the essence of society (although Thatcher did not assert that society did not exist, she might as well) as did Hayek in his complete opposition to anything that wreaked of socialism – even social democracy was something that Hayek viewed as naturally leading to totalitarianism.

The problems that Hayek missed and that Thatcher and Reagan made possible (and that China is already risking) is that while socialism runs everything from the centre, the opposite camp of economic liberalism naturally tends towards a small minority at the top owning all the assets and all the decision-making apparatus. It is clear from the history of the last 30 years that the rich are getting richer while the poor get poorer (in terms of direct wealth and the supporting services offered to them) and that the dynamism needed in society from the other sectors is dying. Margaret Thatcher notoriously believed that there would be a trickle-down effect. That was nonsense and that is now proved.

Worse, a market-led economy which is based around numbers only (with GDP growth as the religion) leads to huge societal dislocations. The NHS is a valid case where management by statistics leads to deaths and the complete abandonment of human character – as evidenced by the maltreatment of the elderly. The opposite system (as in the USA) based on insurance only leads to only the wealthy having good medical services.

Worse, the motivation by quantity alone means that quality of life is abandoned in the drive for more goods. This is the market at work when left to its own devices. The market is driven by the simplest routes to success – numbers. We cannot be solely market-driven even if the market is the best form of driving entrepreneurialism.

People-centricity not Centrism or top-down

Society has experimented with many forms of government and economics. On the latter, we have a general agreement that market-led economics works best, but it is market-led not liberal or libertarian markets. Market-led means that other decision-making mechanisms are relevant wherever the market tends to extremism – such as domination of the market by monopolies or when the rich 1% control all the assets.

In the West, we believe that democracy works best because we all have a stake and are all equal under the law. Huge, developing countries like India and Brazil have similar philosophies but are riven by corruption. China is a centrist “civilization state” which directs from the core and will, at some stage, erupt into democracy. Russia is a centrist state by tradition and a mafia-dominated chaos.

Where we believe in equality under the law, we have to strike balances which Hayek / Thatcher / Reagan economics cannot achieve. This balance has to ensure that the drive is towards the individual but that society steps in to take out excesses. The balance is developed by society – with civil society and civil society organisations strengthened against the powers of the centre wherever they are.

This is far away from a socialist state where assets are owned and / or controlled from the centre and where equalization is the norm. Balance (whatever it is called) rewards entrepreneurship but would not award bankers or managers in the same way. It would not have made the reduction to 45% in the top income tax rate in the UK – whether or not this had been financially sensible in the short-term – as it shows a total disregard to society and the motivation of the great majority of its citizens that are struggling to prosper.

People-centricity and a focus on society using the best of the market and democracy but using brain power and ingenuity as well as technology represent the 21st Century as we struggle against top-down, centrism, climate change, resource degradation and inequality.

It is not what Margaret Thatcher intended as it requires not just the whip but also the driving force of human capability in all areas of society to see beyond the numbers or the desire to control from the top. It is leadership by motivation and inspiration.

With the death of Margaret Thatcher, let’s lay to rest trickle-down economics  along with socialism and fascism.

When Bush Senior said “it’s the economy, stupid”, society was shelved.

Let’s talk society not just economics. Human brain power not numbers. Ingenuity not GDP. Well-being not hospital stats. Quality not quantity. Society not just economics. Real leadership, motivation and inspiration.

Cyprus – Cinderella and the Ugly Sisters

The oldest known version of the Cinderella story dates back to ancient Greece – how ironic.

Cyprus was, for many years, an idyllic island – originally settled by Mycenaean Greeks around 4,000 years ago. Known for its beauty and its beaches, it became a tax haven before 2004 when it joined the European Union. Its economy benefitted enormously – Cyprus did, indeed, go to the Ball.

The Sisters turn Ugly

Yet Cyprus is now being rejected by its two ugly sisters – the EU and Russia, who have conspired with Cyprus throughout the last ten or so years by enabling illicit money to flow into the country. Cyprus has benefitted from its relationships with the EU and Russia but those sisters are now turning ugly.

Isaac Newton was an alchemist but even he could not transmogrify base elements into gold. Modern counterparts are far more able to magically transform base elements into gold on a massive scale that would amaze even the alchemists of the seventeenth and eighteenth centuries. Now that money is digitized, base elements (the profits made from illicit activities) can be changed in seconds within banks situated in secret jurisdictions.

The essence of the problems in Cyprus is that a vacation destination, home to many hard-working and energetic people, has been itself transmogrified into an offshore banking centre that is many times the size of the rest of the economy. That the part of Cyprus within the European Union is close to bankruptcy is astonishing enough to many.  Even more astonishing is the evidence that is mounting about a small country enriched in the short-term by a Faustian sale of its soul to Russian criminals.

Cyprus is an island with around 1 million people and a GDP of around $24 billion. Some years ago, the government of Cyprus decided (or was persuaded) that attracting huge sums of digitized money from wherever it could get it would increase their income. So, through increased secrecy laws, a multitude of double-taxation agreements with other countries and low tax rates in Cyprus, it created itself as a tax haven. Russians, for many years with interests in the country, flocked to Cyprus – preceded by their money. Cyprus became a home of money laundering as well as a tourist destination. The combination has been very powerful.

The banking crisis

When the sub-prime crisis hit in 2007/8, Cyprus was enjoying substantial growth. However, it had followed the high interest rates in Greece and invested in Greek banks. When they failed so famously (requiring massive “haircuts” from those investing in them), Cyprus – massively over-extended in them – suffered badly.

While its two ugly sisters worked out a way to enable Cyprus to be the beneficiary of illicit hot money for many years, one ugly sister (the EU) rebels at the thought of such mismanagement leading to a call on it to prop it up. While the EU is full of tax havens – from the City of London to Luxembourg to Austria – the political will of members of the EU such as Germany to continue to prop up Cyprus is vanishing fast. Hard-working German taxpayers, already riled by the needs of Greece, the political anarchy in Italy and the mass youth unemployment in Spain, have been further spooked by the machinations of discredited politicians in Cyprus – already in hock to the Russian mafia on a grand scale. This is why they demanded a contribution from Cypriots that resulted in the mass demonstrations in Nicosia and elsewhere as the middle classes were confronted by the fact that their insured deposits in Cypriot banks were not, after all, insured against the EU.

Where’s the Fairy Godmother?

Cyprus now realizes that its pact with the devil (Russian mafia) and its focus on becoming a secretive, tax haven has turned sour. To remain in the EU, it needs to save its banks. To save its banks, it needs to raise significant sums from its people (in terms of further tax revenue or long-term bond issues) and also from other, overseas, depositors. The latter are mainly Russians – and much of that money is illicit. The mere thought of taxing the Russian mafia is enough to make the story of Cinderella into a horror film – that might make the new wave of horror films based on fairy tales (such as Hansel and Gretel – Witch Hunters) look insipid by comparison.

There appears to be no Fairy Godmother who will let Cinders go to the Ball. It seems to be the case that Cyprus is between the rock and the hard place – between two ugly sisters: one that has plied it with funny money for years, the other that has conspired with it to do so and stayed quiet until now.

Greece has suffered five years of depression. The problems for Cyprus are only just beginning but whereas Greece’s problems remain its own, Cyprus is in much more danger – it is in hock to a mafia-ridden nation and appears to have few friends within the EU who are willing to turn it around. For its people, this could be a disaster – economically and also in terms of the way of life for its citizens. The EU allowed this situation to develop – it should not be blind to the plight of its smallest member. It is enough that fear has been struck into the citizens of Cyprus and to those in Italy, Greece, Spain and maybe France, who now know that bank deposits are not theirs any longer. Bank runs come from times like this.

Allowing Cyprus to be so wayward for so long is bad enough – to allow it to go completely off the rails and into the clutches of a mafia state would be too far.  Cyprus needs a short-term remedy and a long-term plan to get it away from the drug of tax havens. The EU has to turn from Ugly Sister into the Fairy Godmother (and stay the course) or this may well be a Lehman moment that will not easily be forgotten.

See-through Society – transparency

Cleaning Up

Chuka Umuna, the Shadow Business Secretary, recently called for companies in the UK to declare their tax payments to Her Majesty’s Revenue and Customs (HMRC). This followed the widely reported, bad publicity surrounding the minimal tax payments made in the UK by Amazon, Google, Starbucks and many others. Whilst not wishing to name and shame, he believes that all companies should glory in the tax they pay. Justin King, head of Sainsbury’s, one of the big four food retailers in the UK, made a similar statement, suggesting that consumers could make change happen through their custom. International Corporations have been cleaning up by transferring their tax liabilities to low tax regimes and tax havens – they can virtually choose where to pay tax.

Nick Clegg, the leader of the Liberal Democrats and Deputy Prime Minister, states in his most recent letter to LibDem members: “The idea of combining a strong economy with a fair and transparent society is something that will also be seen in an international context this year when we host the G8 in Northern Ireland.”

Transparency is becoming the mantra of the well-meaning in society and many would say “about time, too”. While not the answer to all of societies’ ills, it is a precursor to re-directing society towards solving some of the greatest problems we have – because transparency of key information allows people (civil society) to make informed decisions – either on their own (through the marketplace) or through their government.

Sweeping away the leaves

For years, organisations like Transparency International have campaigned for dramatic improvements in the way governments, publicly owned organisations and companies provide important information. The danger with secrecy (and the UK remains a very secretive country) is that beneath the opacity of information lie secrets that those with vested interests wish to keep hidden. Whilst secrecy is always claimed by Governments to benefit all of us where they wish to enforce it, the evidence is usually to the contrary. The benefits of secrecy accrue to vested interests and results in economic mismanagement at best – at worst, in countries which are, for example, resource-rich and economically poor, it leads to mass corruption, impoverishment of the mass of people, illness and suffering.

Economics and economies thrive on the open availability of good information and only monopolies thrive on secrecy. It is only when information is made available that proper judgments can be made by the mass of participants in the marketplace.  In a world population of billions, markets can only work where information is not controlled from the top down. Stockmarkets and financial markets depend on the freest possible flow of information to the widest audience and there has been a progressive move towards freer access to information along with the spread of technology that enables it to be used. The driving force is the same human one that drives freedom and democracy. There is an inherent motor behind individual freedom and the right to self-govern and the same motor drives transparency because it is with transparency that the potential can be seen and with transparency that informed decisions can be made.

Transparency is not closing your eyes when the wind blows

In the UK, a nation that always appears to be governed by a conservative mindset where change is difficult, where the Official Secrets Act dominates, where GCHQ and CCTV appear ubiquitous, where the challenge to maintain a fairness between an open society and a society that bears down on terrorism often seems so far weighed in the latter’s direction, the motor for transparency often seems to be running in neutral. Conservatism (especially in England) means keeping things the same and with direction from the centre. This often means that vested interests operating from the centre or with the centre will disallow the move towards more openness. The Labour government provided a Freedom of Information Act, for example, to the chagrin of its then leader, Tony Blair., who was and remains a centrist. In a sense the provision of the Act was odd, because Labour remains as much a centrist party as the Conservatives. Nevertheless, the human motor for more transparency was stronger than the urge to opacity in this case – even if the Act is not itself allowing the freedoms desired.

Yet, it was a step towards a more open society and towards transparency that many countries would relish. A free press (the subject of so much discussion following and before Leveson) has helped to unearth the secrecy in banking, for example, that has plagued the UK for centuries. Manipulation of LIBOR, money laundering, sub-prime casino banking and support for tax havens may have helped to make London a key banking centre but it did not insulate the UK from the collapse in 2007 – it made it far worse – and “only when the tide goes out do you discover who was swimming naked” (Warren Buffet commenting on naked transparency). Sometimes, opening our eyes hurts.

Nothing to Hide?

One example of eye strain concerns the opacity of the banks and their cozy relationship with Government (not just in the UK). The secrecy allied to the special relationship has hindered the UK to an intolerable degree. Under Nigel Lawson (one of Margaret Thatcher’s Chancellors) the post-manufacturing society was hailed as the future as banks gained more freedoms and we all kept our eyes closed. Yet, we now see Germany as Europe’s economic motor because of its manufacturing prowess and the revitalization of the British motor industry (although hardly any it owned by Brits) is now lauded much louder than our “success” in financial services. The illusion of banking remains, though – as a key driver of the economy rather than what it really is – a provider of services that should assist the real economy. And the illusion has been propped up by a lack of real transparency which enables banking to remain a secret society.

Transparency is the ability to be strong enough to reveal information because there is nothing to hide. The true strength of transparency is the confidence that it portrays. So, the opportunity for companies and Governments to be open, to be transparent, only exists where there is not much to hide. Clearly, international companies that are paying virtually no corporation tax on sizeable UK earnings have something to hide; clearly, those (companies and individuals) who put money into offshore tax havens or to secrecy jurisdictions may have something to hide.

If banks and individuals had nothing to hide, Wegelin, the oldest Swiss bank, which is closing as a result of its plan to take on all the clients of Swiss banks that had decided to be more transparent with the US authorities over tax evasion would still be open for business. Their clients, who wished anonymity, made their way to Wegelin – which had been founded in 1741. They knew they were doing wrong and Wegelin knew the same – and the bank is closing after a hefty fine from US regulators and after 271 years. Secrecy was in the bank’s DNA – it could not evolve to the realities just beginning to dawn in the 21st Century. It became extinct.

So, lack of transparency in a world with eyes opening can be also hurt and be expensive and the US executive is now proving to be vigilant on  behalf of transparency on a world-wide basis – as is the US Congress which passed legislation in 2010 called Dodd-Frank. Part of this related to section 1504 which requires extractive industry companies registered with the SEC (Security and Exchange Commission) to disclose their revenues and taxes paid on a country by country basis worldwide. This includes all companies registered on the NYSE no matter where they are based. The EU looks to be following this example so that the people of resource-rich, economically poor countries will know how much money their precious natural resources raise in annual income and then can follow through what their Governments do with that money.

However, the American Petroleum Institute and the US Chambers of Commerce (vested interests if ever there were) are trying to fight back and have initiated a law suit in the US to nullify section 1504

How curious that libertarians fight on behalf of secrecy – the proponents of a free market arguing against a main tenet of economics – free information.

Battle lines are being drawn – the light and the dark.

21st Century Schizoid Man, King Crimson’s take on Spiro Agnew, was written in 1969 but the 21st Century does even now witness such schizoid tendencies characterized by corporate and governmental secretiveness, emotional coldness and apathy that typifies the illness. The lack of openness is world-wide and exhibited by the Chinese authorities’ suppression of its Southern Weekly newspaper when an editorial criticizing Chinese leadership was thrown out and one supporting the leadership was superimposed. Anyone reading Martin Jacques book “When China Rules the World” would not be surprised at the suppression. It characterizes the central leadership of this “civilization state” but Jacques argues that we see it too much with western eyes. But, what if we in the West are right and democratic freedom and openness are the motors that drive our human endeavours? What if the Chinese have, for 2,000 years, actually got it wrong. As China grows stronger, the move away from freedom for information will intensify and Chambers of Commerce will battle against laws for transparency that they will argue provides Chinese firms with advantages. This is a battle that has to be fought world-wide.

Our pursuit of progressively greater freedom (whether press freedom, open markets, democracies, freedom of speech) and equality (of race, religion (or non-religion, sex, sexual orientation and more) appears to be the real motor rather than the schizoid tendencies of the centrist control of monopolies, dictators, and vested interests. Transparency is a hugely important base upon which this basic human drive can persist. In a post-2007 world where the risk is that wealth is being driven to the top 1%, the drive for transparency is fundamental.

Locked out of Power and Making a Noise

How do we contribute to society and how do we influence the future?

 

There is a dangerous gap opening up between people and institutions that current forms of democratic parties and other organisations set up to channel views to those instruments of power are not able to bridge. The problem is manifold:

Political parties which dominate most democratic societies are filled with professional politicians who have little (or at best moderate) understanding of the real world outside of politics;

Civil service bodies and public sector institutions are (as they have always been) full of careerists who are no longer “tempered” by the social reality that broadly based political parties would provide;

Campaign organisations are also full of careerists who work their way up the system internally and may have little real association with society outside their own silo of interest.

Corporations (especially large, multinationals) have a tremendous power in a world dominated by numbers – growth objectives – and can fund large campaigning groups of their own.

Ever-Changing society

There is no equilibrium in society although it feels like stasis has been reached. Different bodies are continually evolving as the environment changes politically and socially and economically. The problem is that entrenched interest groups (drawn from those sectors above) continuously work to make their positions more secure.

In the past, four, main sources of change were developed to open up society to change:

Political parties

Campaign groups

The media

Communications

But, mainstream sectors have succeeded, in the main, in wrapping the first three groups into that mainstream. There is a dependency on each other and a difficulty in breaking through with new ideas and attempting to force through decisions on even the most important issues.

The global economy has exacerbated this problem – as international needs lead to massive international organisations that succeed always in taking decision-making away from the individual.

Improved communications have through history succeeded in transforming the ability of individuals to learn more and have a greater say. The printing press was followed by the telephone, which was followed by the fax machine and the mobile telephone and the internet. Mass communication is now available that provides the ability for all of us to understand more of what is being done in our name. Social systems such as Twitter enable communication in an instant; mobile telephony and digital technology allows information in microseconds. This has had repercussions in events like the Arab Spring but the rigidity of social norms fights back most often.

Society’s complex underpinning will see some new emergence develop from this – but, what is it likely to be and how can the individual become involved rather than be part of a sector that more clearly matches that of Orwell or Huxley’s nightmares?

The drift to Centralised control

Maybe it’s a natural occurrence – that as organisations develop, they coalesce and form groups and associations that begin to meld into international committees that appear completely remote from most of us.

This is certainly true of political parties, true of sports associations (like FIFA or the International Olympic Committee), true of international organisations (like the UN, WTO), major NGO’s and charities, political groupings such as the EU, international corporates (such as the banks). Most people don’t know most of these organisations and many (like FATF – the Financial Action Task Force) have for years seemingly gloried in their anonymity.

With the rise of the internet, we were meant to discover more but that same rise has meant that less spending goes into traditional media organisations like campaigning newspapers. This has meant a reduction in in-depth investigations and analysis and much-reduced investment by newspapers and other media outlets in providing the type of information we need as individuals in society to keep the massive organisations on their toes.

In a major sense, the rise of the internet has had consequences that were not envisaged and has led to a major centralization of power structures – more immune from investigation than before.

We must not be misled by the closure of the News of the World in the UK after the hacking enquiry – the NotW was a scandal rag that was part of the new world of celebrity. Its loss is not great.

The loss of whole departments where the main task was to investigate and analyse how society works (and where it does not) and the rise of the internet as a news medium (and comment in 140 characters) shows that, so far, what has emerged is leading to centralization not the reverse.

Does Centralised control matter?

Democratic society is supposed to provide individuals with the ability to influence the way our society is run. So, centralized control does affect us all. While the drive to consumerism may suggest that we would not mind if we were ruled like in China (more goods supplied to keep the population quite), I suspect that this tendency does not appeal to all of us. Centralised control does not stop at Tiananmen Square – it has no controls. “”Unlimited power is apt to corrupt the minds of those who possess it” (William Pitt the Elder) is borne out through history and the idea that we can allow others complete freedom to guide us through life is obnoxious to most of us I suspect.

What are the options for decentralising?

The centralization of sectors of society needs to be continuously prodded. That can be done both internally (i.e. within those instruments of power) but mainly externally (from other organisations and / or individuals).

Working within is tough – the structures bind staff to their culture and it is very difficult to break out. A feature of British politics has been how the Liberal Party (a party for the individual within a coherent society and always opposed to centralization and totalitarianism) has become (especially since it became the Liberal Democrats) so bound up with the EU project – a centralizing force that is now seen to be breaking up.

External pressure may now be the only way to elicit change and to change the environment so that something less centralized can emerge.

The Centre for Civil Society in Australia is a good example of an organization that has been set up to prod society. www.civilsociety.org.au

The Centre for Investigative Journalism in London is another. http://www.tcij.org/

NGO’s like Global Witness are important contributors. www.globalwitness.org

All such organisations are set up to prod (some quite heavily) the existing structures – they are all dependent on external funding.

We need some creative destructionism – in the same way that Apple created new products that tore at our desire for more than pure functionality (although Apple is now part of that central structure); in the same way that Google tore into the online world and is now a core of that central structure – within the non-economic sphere, the way we live outside of numbers and products.

There are some options that remain that can assist in developing society so that we learn the lessons of the 20th Century – where communism and fascism drove the world to and then away from totalitarianism. Those lessons are now in danger of being unlearned – where the danger of unbridled centralism of society is occurring without (thankfully) war, but just the same potential results. We could wake up and find the world run from the centre. Maybe it is already and the drift to unequal wealth distribution a symptom.

That suggests more of an effort is needed to point a finger at our structures and the best way to do this is through our participation – and through some independent organisations, especially in investigative journalism, which can expose, fight for freedom of speech, help to analyse the impact of centralised decisions on society and expose fraud and corruption: many groups, many individuals wanting to open up the closed doors.

Does a tree that falls in a forest make a noise?

Politics – the battle lines between citizens and the state

 

Why the party system is breaking down

Communications leads to changes

 

Types of government have changed with changes in communications. When communications was by word of mouth, strong central government through despotic leaders was the norm.

 

With the advent of the printing press, information could be made more available and (certainly in the West) education could be obtained more widely, leading to different forms of government and wider emancipation.

 

Now, with the dramatic communication changes wrought through mobile telephony and the internet, information (of all types, good and bad, intelligent and unintelligent) is made available throughout the world and the strains in our current governing structures are made worse.

 

The Arab Spring erupted for a variety of reasons but spread through new communication devices and systems. The organization of mass campaigns becomes easier and the attempts to stifle protests by shutting down websites and demanding changes to other, online capabilities is progressively harder.

 

Is the Party over?

 

Political parties are now finding it tougher to piece together coherent and wide-ranging policies that appeal to more than a small percentage of a nation’s population. In a word of communication possibilities, single-issue lobbying is becoming the norm. Politicians in the west continuously argue for choice but the choice that is now on offer, between major political parties without a cause (such as labour rights in the early 20th Century) is not welcomed.

 

As wealth increases (as we develop into the Affluent Society of Galbraith – see:   https://jeffkaye.wordpress.com/2012/05/06/the-affluent-society-and-social-balance/

 

so do the opportunities to connect with a wide range of issues – be they environmental, health, sport, education, self-help, business, charitable or whatever. The numbers of people that engage with politics becomes less because people are engaging with single issues. Parties rarely have a key message that intoxicates any more and are driven to compromise on a wide range of issues that appeal to no-one in particular. This means that voting may be on single issues or they are watered down to choose a party that is less bad than the others.

 

 

 

 

Greece – democracy’s floundering founder

 

In Greece, so dismally rent by bad government and economic disaster, the situation is playing out. Here, the people cannot elect a majority party to power and are being forced to vote again until they do. The party system is broken in Greece and single-issue politics dominates to the extent that the people have made their choice but the politicians don’t like it and tell them to do it again.

 

This makes a mockery of democracy in the home of democracy – an irony that is surely not lost on anyone but a potential disaster. The problem is that even if the Greek people are forced to make a different decision in a few weeks’ time, there is no guarantee that the result will be accepted by them and the demonstrations will begin again. The parties need to adapt to the will of the people by ensuring that the single-issues are wrapped into an acceptable set of policies that the majority are willing to accept – they should have done this first time around and it speaks volumes about the paucity of leadership in Greece that this has not happened.

 

Centralisation no longer works

 

A problem with the European Community which has been exacerbated by the Euro is that political judgements made after the end of the Second World War are not relevant to the 21st Century. While trading blocks are an economic decision, a political block (aimed at tying Germany into a framework which would prevent it from the belligerence of two world wars and providing Europe with a seat at any political table for many years to come) becomes a heavy weight to bear in a world that is likely to eschew centralization.

 

Vastly improved communications (including air travel) means that real globalization is the norm. Opportunities are now in place for a dramatic de-centralisation of political power in many countries and between them. Even if we need the UN, the WTO and other world-wide organisations, they are based on a 19th Century division based on the nation-state. We witness daily the huge challenges that this brings in places like Sudan or Iraq – nation states drawn by the pencils and rulers of 19th Century European civil servants, where older affiliations strike at the heart of the state philosophy.

 

In developed nations, the struggle is less severe but the economic stresses that are beginning to tear at countries like Greece, Spain (where half of the young people are unemployed), Ireland (the scene of a mass exodus after so many years of its reversal) are leading to a disenfranchisement. Italy, with an unelected government of “technocrats”, is surely not the model for the future – where votes are wasted and bankers rule from the centre.

 

A New Model needed?

 

New Model politics has to take into account the needs of a better-educated and often single-issue motivated people who need politicians that are there for them.

 

The political parties have to show themselves to be free from corruption and independent of being in politics for what they can get out of it.

 

The parties have to work together where needed and confront the problems of the past that means that each party opposes each other.

 

In the UK, this has been shown very clearly when, after a hundred years of parties being set up to oppose others, the Coalition of Tories and Liberal Democrats is set upon by many (especially a quixotic press) because they are trying to work together!

 

This is likely to be the norm. It means that coalitions will be the norm. This will be the political “new normal” to go with the new normal posited for our economic future.

 

Single-issues dominate our thinking and generate enthusiasm more than any political party in the developed world. It is only where democracy is new that parties with major and wide-ranging programmes gain real enthusiasm – which is usually dissipated quickly. Elsewhere, massive disenfranchisement is continuous and leads to a dissatisfaction with politics and politicians.

 

Parties are now the vested interests that need to change. We should see a situation where each party’s manifesto shows clearly what they would do together if that is the way it turns out – not be scared of the prospect because it may lose some votes early on. This is a big change but essential as voters’ (citizens’) needs over single issues dominate and they have no way to select a range of issues from those on offer – only a range of parties with massive ranges of policies.

 

In a world of perceived “choice”, the parties need to change to excite and enthuse or we will suffer the continued estrangement of citizens and political parties that will not result well.