Media on Racism: Part 2 – Framing

Jan 23, 2012 – Top Gear’s “lazy Africans Mexicans” routine was broadcast to millions. It made minor news, with no repercussions. Luis Suarez’s dialogue with Patrice Evra was heard by nobody and unrecorded, but it led to a media frenzy of blaming ‘n’ shaming – with many journalists mistaking their own carelessness for a moral high horse.

The different outcomes can be explained partly by the N-word and partly by a confused application of “zero tolerance” framing, both of which featured in the Suarez coverage, but not in the Top Gear case.

Racism framing & the N-word

No word is racist in itself – it depends on context/frame. Conceptual “frames” for racism include:

1. Racial stereotyping/abuse
2. Ironic slang
3. Comedic mockery of stereotyping/abuse
4. “Quoted” use in reportage, novel, film, etc

BBC and Ofcom initially dismissed the Top Gear incident as category #3 – but a later BBC investigation effectively placed it in category #1 (assuming that “Mexicans” connotes ethnicity – see part 1). That’s supposed to be serious – but you wouldn’t have thought so from the media coverage, or the lack of penalties for Top Gear’s producers.

The Suarez case was different, as it involved the N-word. In English (current usage), both “nigger” and “negro” imply a racist frame. “Negro” in Spanish is a different story, particularly in Latin American usage. The linguistic experts brought in by the Football Association (FA) stated that:

“The term can also be used as a friendly form of address to someone seen as somewhat brown-skinned or even just black-haired. It may be used affectionately between man and wife, or girlfriend/boyfriend, it may be used as a nickname in everyday speech, it may be used to identify in neutral and descriptive fashion someone of dark skin” (para 172 – my emphasis)

And the FA’s experts went further, pointing out that Suarez was innocent of racial abusiveness if his account of his use of “negro” was accurate:

“…the use of ‘negro’ as described here by Mr Suarez would not be offensive. Indeed, it is possible that the term was intended as an attempt at conciliation and/or to establish rapport”. (Para 190)

Of course, this assumes that Suarez’s account (eg that he said “negro” only once) was true. Evra claimed he used the word multiple times, and in a way that the FA’s language experts agreed would be considered offensive. The initial reaction to Suarez’s defence, from some commentators, was that whatever meanings the word had in Suarez’s country, there was “no excuse” for it “in the United Kingdom“…

“Ignorance no excuse”

The Spanish word sounds different – and has different meanings – than the English version. Is it widely known that friendly use of the Spanish word may be mistaken for its racially-offensive use? Is it widely acknowledged that the friendly usage should therefore be avoided? The “ignorance is no excuse” objection doesn’t quite capture the logic – since the speaker might be aware that “negro” is usually offensive in English-language use. A conversation in Spanish is different. A whole cultural/linguistic can of worms is opened up (see “Whose Ignorance?” section below).

The FA’s panel effectively had two choices for “finding” Suarez guilty – they could accept Suarez’s claim of inoffensiveness, but punish him anyway (based on the “ignorance is no excuse” reasoning), or they could accept Evra’s version – ie direct racial insult. By choosing the latter, they effectively freed themselves from entanglement in cultural/linguistic issues – but they also gave themselves a seemingly impossible burden of proof, given the lack of evidence corroborating Evra’s account.

I say seemingly impossible – we shouldn’t forget the media’s role in making extraordinary things possible. (Let’s see… A war with Iraq based on zero evidence of WMDs, a single uncorroborated source and a dodgy dossier?)

Media distortion

So, how did the “quality” press report the crucial matter of Suarez’s use of the Spanish “negro”? First, here’s Stuart James in the Guardian (on the FA panel’s 115-page report):

And then we come to Suárez, whose own statement screamed his innocence and flew in the face of everything the linguistic experts told the FA panel when they analysed what the player said to Evra at Anfield, the context in which it was said and how his comments would be interpreted in his homeland and beyond. The experts’ conclusion, lest it be forgotten, was that Suárez’s remarks would be “considered racially offensive in Uruguay and other regions in of Latin America”. (Guardian, 3/1/12)

This is wholly misleading. Stuart James presumably didn’t read the section of the report which describes how the FA’s linguistic experts agreed with Suarez about non-racial use of the Spanish word “negro” (eg paras 190, 194). The line from the report that’s quoted by Stuart James (taken from the summary, para 453) refers not to “Suarez’s remarks”, but only to Evra’s uncorroborated account of them. The report is quite clear about this. The FA’s experts concluded that:

‘If Mr Suarez used the word “negro” as described by Mr Suarez, this would not be interpreted as either offensive or offensive in racial terms in Uruguay and Spanish-speaking America more generally’
(para 194 – my emphasis)

The question that Stuart James and his media colleagues should perhaps be asking is: why was this important part of the report not cited in a single newspaper report or commentary?

Meanwhile, here’s James Lawton commenting in the Independent:

You cannot do what Suarez did – as proved by video evidence and confirmed by linguistic expertise, including a knowledge of the nuances of references to race in the player’s native Uruguay – and get away with some implausible argument that you were innocent of the charges against you. Not when you have been found, irrefutably, to have said, without the interruption of any other word, “black, black, black…” (Independent, 2/1/12)

This is disturbingly inaccurate and misleading. Three falsehoods in one paragraph (the “confirmed by linguistic expertise”, “proved by video evidence” and “found, irrefutably [...] black, black, black” claims). Lawton not only makes the same mistake as Stuart James regarding the “linguistic expertise”, he also seems unaware that the crucial Evra/Suarez dialogue is not on any video recording. His use of the phrase “found, irrefutably” seems bizarre in the extreme, referring as it does to one man’s unsupported, uncorroborated claim (para 378).

Sadly, this was typical of most UK media coverage. The important point about the FA’s language experts agreeing with Suarez over N-word usage (thereby reinforcing the stance taken by Liverpool FC) was lost beneath the misleading statements and moralising.

Framing wars & PR

In the days following the FA’s Dec 20th verdict (minus reasons, which came later), various news frames jostled for dominance. John Barnes was widely quoted, labelling the case a “witch hunt“. Ian Wright (in the Sun) criticised the FA: “I think the punishment – on all public evidence – is ridiculously harsh…”. (Some reports had already alluded to a previous FA hearing which decided that Patrice Evra’s evidence was “exaggerated and unreliable”). And, of course, there was Liverpool FC’s statement (critical of the FA verdict), which most media described as “strongly worded“, “forceful“, etc.

The coverage was mixed. But this appeared to end after the Guardian pushed hard with a framing of Liverpool’s “shameful” handling of the issue – triggered (it appears) by a seemingly trivial piece of non-news (T-shirts – more on this below). As an outsider, with no affiliations to Liverpool, fan-wise or otherwise, I observed the “respectable” media’s outpouring of vitriol (over nothing very much) with puzzlement. It was almost as if there were some kind of PR/lobbying going on behind the scenes.

“Backlash” against T-shirts!
(& other faux “news”…)

In a match warm-up on 21 December, Liverpool players briefly wore T-shirts printed with a picture of Suarez. This reinforced the message of Liverpool’s earlier statement – and said nothing that wasn’t already articulated in the statement.

The Guardian constructed a “news” story around the T-shirts. In an article headed with the word “Backlash”, it cited a total of three people who objected to the T-shirts. It was a three-person backlash! The Guardian then ran another piece (headed with the word “shameful”) which cited the same three people (footballers Paul McGrath, Jason Roberts and Olivier Bernard). Bernard, now an anti-racism campaigner, offered his reasoning:

“I really didn’t think it was fine to wear the T-shirts. I can understand the club’s side of it, but in society we can’t accept racism and give support to a player who has used racist words” (Guardian, 22/12/11)

Which, of course, makes a pretzel out of logic. The T-shirts (and statement) were to indicate precisely that Liverpool doesn’t accept that Suarez used “racist” words.

The Guardian also ran a tabloid-style “poll” titled: “Were Liverpool’s Luis Suárez T-shirts distasteful?”. Other media ran with the T-shirt story, soon creating a perception that there was “widespread” condemnation of Liverpool’s “handling” of the issue.

Too Much Doubt

I’m reminded of another T-shirt gesture to protest a man’s innocence. It’s a different type of case, but the underlying logic (of protest) is exactly the same. Amnesty International published a statement about the flawed evidence against a man (Troy Davis) convicted of murder. There was a campaign (‘Too Much Doubt’) to raise awareness of problems with the evidence and the legal process.

The Guardian supported the campaign (T-shirts and all). Nobody, to my knowledge, argued that, in so doing, they were supporting the crime (rather than the man and his claims of innocence). The logic of protesting wasn’t drowned out with cries of “shameful” or “beyond the pale” – at least not in the UK’s “liberal” media.

“Zero Tolerance”

“Zero tolerance” on racism has been cited as justification for harsh criticism of Liverpool’s “handling” of the Suarez case. For example, the Guardian’s “Backlash” article stated that:

‘The T-shirts provoked criticism that the gesture conflicted with football’s anti-racism campaign Kick It Out, confusing its zero tolerance message’ (Guardian, 22/12/11)

The “zero tolerance” message has certainly been confused. It’s supposed to be zero tolerance of racism itself, not of the right to dispute somebody’s verdict. “Zero Tolerance” can be a dangerous thing when it’s used to stifle dissent and nullify claims of innocence – it diverges from civilised notions of justice, if one isn’t careful. Instead of being alert to such dangers, media commentators (as usual) seemed in thrall to “official” “authority” (in this case the FA and its “independent” 3-man panel). Unquestioning churnalism resulted.

Whose ignorance?

A cultural/linguistic can of worms is sometimes opened when a word is mistaken for a racial insult. How does one apply “zero tolerance” in these – often ambiguous – circumstances? There are several cases (mainly in USA) of the word “niggardly” being interpreted as a racial slur. In one incident, an aide to the mayor of Washington DC resigned after a complaint that he’d used the word “niggardly” when speaking with two African American employees.

Although this sounds like one of those absurd “political correctness” stories which the Daily Mail likes to make up, it’s true – and it has interesting implications. “Niggard” means ”miser” – it’s unrelated to the racial N-word. But it can be used as a racist code-word. (In March 2010, a billboard appeared in California that referred to President Obama as “niggardly”).

Steven Pinker, the linguist and best-selling author, comments:

‘… it is impossible for anyone to hear “niggardly” without thinking, if only for a moment, of the ethnic slur. [...] Worse, the context is of little help in squelching the wrong meaning. [...] After the various associates of a word light up in the mental dictionary, the rest of the brain can squelch the unintended ones, thanks to the activity that psycholinguists call “post-lexical-access processing” and that other people call “common sense”.’ (New York Times, 2/2/1999)

The ambiguity of “niggardly” among English speakers is different in kind to that of “negro” among Spanish speakers. But ambiguity is ambiguity, and the same question applies in both cases: if offence is taken mistakenly, does responsibility lie with the speaker or the offended party? In the case of the Mayor’s aide who resigned (he was later reinstated), most US media commentary suggested that the offended person’s ignorance was to blame (ie ignorance of the dictionary meaning of “niggardly”). But the reverse seems to be the case with the Suarez incident, even though Patrice Evra initiated the conversation in Spanish.

Conclusion

I’ll now attempt to answer a question posed in part 1 (“Is national stereotyping necessarily less serious than racial stereotyping”). When people are perceived as mere units of a group stereotype, dehumanising horrors can result (as history shows) – whether the stereotyping is racial or national/ethnic. So, I can think of no good reason why the Top Gear case should be seen as less serious than racial use of the N-word in a football match. But the point was probably best made (as Steve Coogan suggested) by imagining the Top Gear presenters doing a routine about “lazy Africans” rather than “lazy Mexicans”.

‘If you are arguing for racial equality with a man who
keeps using the word “nigger”, you will eventually discover
that you are making no headway and that some barrier
prevents clear communication’ — Robert Anton Wilson

Media on Racism: Part 1 – Churnalism

Jan 6, 2012 – 2011 provided some “high-profile” news stories about racism – but even the “quality” press provided little more than churnalism. No doubt it’s safer for reporters to recycle established or “official” views than to delve deeper (or, Editor forbid, to reframe the issue for greater insight). This type of churnalism has its own dangers, as we’ll discover…

Two cases, in particular, are worth looking at (and comparing): BBC2′s Top Gear and Luis Suarez (Liverpool FC footballer). Part 1 considers churnalism and misreporting. (Part 2 will address the media framing).

Top Gear & “Lazy Mexicans”

In January 2011, Jeremy Clarkson and his fellow Top Gear presenters did a routine about “Mexicans”. This led to a trickle of news coverage after a complaint from the Mexican ambassador, but it didn’t become a “proper” story until after Steve Coogan wrote a comment piece (for the Observer) which pointed out that Clarkson & co would never target Africans, Pakistanis or Jews with comparable group-stereotype jokes. When I say it became a “proper” story, I don’t mean penetrating, insightful coverage… I mean: “Celebrity A blasts Celebrity B”.

The official officials who officiated in this case were the BBC and Ofcom. First, the BBC:

‘In a letter to Mexico’s ambassador in London, the BBC said it was sorry if it had offended some people, but said jokes based on national stereotyping were part of British national humour.’

Coogan commented: “The BBC’s initial mealy-mouthed apology was pitiful. It cited the more benign rivalry that exists between European nations (ah, those arrogant French, over-organised Germans), and in doing so neatly sidestepped one hugely important fact – ethnicity [...] The Beeb’s hand-wringing suggested tolerance of casual racism, arguably the most sinister kind.”

The media regulator, Ofcom, then cleared Top Gear of breaching broadcasting regulations:

‘Ofcom said Top Gear “frequently uses national stereotypes as a comedic trope and that there were few, if any, nationalities that had not at some point been the subject of the presenters’ mockery…”.’

Interestingly, the BBC’s Editorial Complaints Unit (ECU) later upheld a complaint about the show:

“Although the remarks were humorously intended [...] their tone and cumulative effect seemed to the ECU to give the impression of reinforcing, rather than ridiculing, the stereotype”

All of which raises some important questions, none of which (to my knowledge) were addressed by media coverage – certainly not by the BBC. (I’ll attempt to deal with these questions in terms of framing in part 2 of this article):

• Is national stereotyping necessarily less serious than racial stereotyping, and if so, why?
• Is national stereotyping okay as long as you abuse all nationalities uniformly and humorously?
• Does the same logic apply to racial stereotyping, and if not, why not?
• Should TV celebrities be punished as severely as, say, footballers?

Trial by media – Luis Suarez

(Note: references to “para” are to relevant numbered paragraphs in the FA report)

This incident started during a football match, after Patrice Evra (Manchester Utd) made the offensive remark, “your sister’s pussy”*, to Luis Suarez. It’s alleged (by Evra) that Suarez used racial insults in the dialogue that followed. (*Evra made the remark in Spanish: “Concha de tu hermana” - para 87).

The official officials who officiated in this case were the Football Association (FA) and their “independent commission” (ie three blokes selected by the FA).

Suarez denies making racial insults. The case boils down to meanings of “negro” in Spanish (nearest equivalent in English is “black”). Suarez claims he said “negro” once, inoffensively. Language experts consulted by the FA agreed that: “the use of ‘negro’ as described here by Mr Suarez would not be offensive. Indeed, it is possible that the term was intended as an attempt at conciliation and/or to establish rapport”. (Para 190)

Suarez claims he said “Por qué, negro?” (“why, black?” – para 205). Evra claims he said “Porque tu eres negro” (“Because you are black” – para 205). The latter could be taken as offensive according to the FA’s language experts, but the phrase struck them as “slightly unusual” (para 182), whereas the phrase claimed by Suarez “sounded right linguistically and culturally”. (Para 191)

Initially Evra claimed (in English) that Suarez said, at one point: “I don’t talk to you because you niggers” (para 131). He later withdrew this claim, after realising Suarez had said, in Spanish, “negro”, not “nigger”. (The report quotes Evra admitting that he is “not exactly fluent in Spanish” – para 87). As the FA’s experts pointed out, “the Spanish word ‘negro’ cannot simply be translated as ‘nigger’.” (They also point out that “It may be used affectionately … it may be used as a nickname in everyday speech … several famous people in Uruguay are known as ‘el negro’…” (para 172)

These important details (and much else of relevance) somehow went unreported in most media coverage following the FA’s publication of a 115-page report (listing the reasons why the 3-man panel found Suarez “guilty”). Unfortunately, ‘churnalism’ had taken the place of responsible reporting…

“Racial abuse” churnalism

The report was published by the FA on New Year’s Eve – which probably didn’t help. What journalist wants to spend the last hours of the year reading 115 pages on racial abuse allegations?

The Guardian led the way with lazy, irresponsible churnalism. Three Guardian articles (each by Stuart James, plus another from Andy Hunter) stated as fact that the panel ‘found that Suárez used the word “negro” or “negros” seven times’.

But no such thing was “found” (even though the panel used that word). There was no evidence or corroborating witness statements confirming the number of times Suarez said “negro”. There was nothing but Patrice Evra’s word. (And Evra had altered his account – he initially told Canal+ TV that Suarez used the racial term “at least ten times” (para 154), but later claimed that this was just “a figure of speech” – para 159 – with the FA report stating that he later claimed Suarez used the word “negro” five times – para 205).

In fact, what the report clearly shows is that there was no evidence or supporting witnesses to back up either player’s version of the crucial dialogue between them on the pitch. The entire case came down to one man’s word against another’s. This explains why the panel spent so much time trying to establish a case (again subjective and uncorroborated) that Suarez’s testimony was “unreliable”.

Headline churnalism: “unreliable” evidence

Following the publication of the report, the Press Association ran with: “FA: Suarez evidence ‘unreliable’,” and virtually all major UK media followed suit with similar headings. In what way was the evidence unreliable? The report cites two things – firstly, a few inconsistencies in Suarez’s accounts of the sequence/timing of events (although the panel concedes this is understandable given that Suarez, unlike Evra, wasn’t permitted to see the video footage while being interviewed, and thus relied on memory more – para 320).

Secondly, the panel said it was “unsustainable and simply incredible” for Suarez to describe his behaviour as “conciliatory and friendly” given that “the players were engaged in an acrimonious argument”. (Para 453)

If journalists hadn’t been so quick to ‘churnalise’ the report’s key “findings”, they might have noticed the problems with this – its circular, subjective nature. The panel apparently took as given the very premise under dispute (ie the “acrimonious” nature of Suarez’s “behaviour” – which remains uncorroborated by witness statements and video footage. The panel’s interpretations of Suarez’s expressions and gestures – eg the pat on the head [para 243] – remain deeply subjective and contested).

As a result of this churnalism, every major newspaper report covering this “unreliable evidence” story failed to mention one of the most important pieces of “unreliable evidence” – namely Patrice Evra’s withdrawn initial claim that he was repeatedly called “nigger” (he later conceded it was “negro”), and his withdrawn claim that Suarez said the racial ‘N-word’ “at least ten times” (paras 154, 159). These inconsistencies are at the heart of the allegations, unlike the arguably more minor inconsistencies in Suarez’s account.

Inconsistencies in the “official” report

Another thing that journalists might have highlighted (if they hadn’t been in such a hurry to copy-n-paste summary “findings”) was glaring inconsistency in the report itself.

One striking example is the panel’s “rejection” of the claim that Evra was angry throughout the match – that he was “tipped over the edge” by events (para 333), putting him in an agitated/vengeful state of mind. Here’s what the report said:

‘We rejected that submission [...] Mr [Ryan] Giggs described the Liverpool v Manchester United game as the biggest match. He did not consider that Mr Evra was wound up save in so far as everyone was wound up to a certain extent given the fixture. We reject the submission that Mr Evra was unduly wound up such that he was tipped over the edge to pursue vengeance against Mr Suarez.’ [Para 333]

But this is inconsistent with the testimony of Giggs (who is a teammate of Evra) cited earlier in the report:

‘It was obvious to Mr Giggs from looking at Mr Evra that he was upset. He said that Mr Evra did not seem quite with it, you might call it red mist [...] Mr Giggs then told Mr Evra to calm down and not get himself sent off’. (Para 114 – my emphasis)

The report also states that Evra was “angry” from the very start of the match, “when he was seen to dispute the outcome of the coin toss with the referee” (para 329). (Evra, by his own admission (para 92), threatened to “punch” Suarez during the game). Of course, none of this negates Evra’s own testimony – but it provides a clearly relevant example of the panel’s inconsistent treatment of the evidence.

To my knowledge, not a single newspaper commented on inconsistencies of this type, which are evident throughout the report. The reporters had their easy-to-churn, momentum-propelled story: the “unreliability” was all Suarez’s. He was not only a racist, but a liar (although they wouldn’t word it quite so bluntly as that). Case closed. How could it possibly be otherwise?

“No Excuse”

An apparently widely-held view arising from the Suarez case (including, it seems, among Guardian writers and editors) is that since Suarez admitted using the Spanish term “negro” (once), he is guilty of racial abuse, that all mitigating circumstances boil down to “excuses”, and that those who defend him are effectively harming efforts to eradicate racism.

This view has far-reaching implications, of course. Even convicted murderers are granted the right to protest their innocence, citing lack of evidence, mitigating factors (such as self-defence, etc). Their defenders are not usually accused of misguidedly supporting murder – at least not by the “liberal” media.

So what explains these “deep” differences in conceptual approach? Was Patrice Evra correct when he claimed that the Spanish for “your sister’s pussy” translates to “fucking hell” in English? (para 87). And are there any meaningful comparisons to be made between the Top Gear and Suarez cases in terms of media treatment? All this will be addressed in Part 2, which concentrates on the media framing aspects…

Click here for Part 2 of this article >

[Update 11/1/12 - Football lawyer, Daniel Geey, has looked in detail
at some of the evidential inconsistencies which I mention above].

Welfare “criminals”

Dec 28, 2011 – Today’s Express front page reports that 33% of JobSeeker’s Allowance recipients have “records of offending” in the last five years. The Sun and Telegraph also covered this story under the blunt headings: “One in three on dole is a criminal”; “Third of unemployed are convicted criminals”.

The figures reportedly come from a “data sharing agreement between the Department for Work and Pensions and the Ministry of Justice”, but at the time of writing, neither DWP nor MoJ appear to have this finding on their websites. [See update, below*]

Predictably, the rightwing TaxPayers’ Alliance (so-called) is quoted by the Express. Robert Oxley (TPA campaign manager) says: “The minority who split their days between claiming benefits and getting rich from the proceeds of crime are giving those who fall on hard times a bad name”. Of course, there’s no indication that the crimes involved made anyone “rich” – after all, we’re not talking about Goldman Sachs here.

(For example, poor people receive criminal records for watching TV without a licence. I don’t see anyone getting rich from that “crime”.)

Not that the details matter to the hard-right ideologues at the Express, Telegraph, Sun and TaxPayers’ Alliance. What matters for them is that welfare is framed as “criminal” and immoral. What matters to them is that public anger is directed away from the wealthy beneficiaries of public misery, and towards “criminals” and people receiving benefits. And if the distinction between “criminals” and people receiving benefits is blurred, that’s viewed as a bonus.

* Update – This story has also been covered by the Daily Mail, Mirror, Star, Metro and Times, but the “government study” on which it’s based remains unavailable – which means it’s difficult to check the figures, and to put them into context. One aspect of context is statistical comparison – for example, 1 in 4 US adults has a criminal record (according to Yahoo! News), the same ratio that the Express cites for all out-of-work UK benefits recipients. It would be interesting to see what proportion of Express journalists has a criminal record.

Alternative headlines:
• ‘BENEFITS RECIPIENTS ROUTINELY CRIMINALISED’
• ‘WAR IS PEACE, WORK IS MANDATORY’
• ‘JOBLESS PUNISHED BY SHAME & EARLY DEATH’

If you see just ONE graph this decade…

Dec 8, 2011 – Unsurprising, but jaw-dropping – this graph which George Monbiot linked to a few weeks ago. A continual rise in productivity, matched by a rise in wages… until around 1980. Hold in mind the perpetual rise in productivity, and consider…

Polly Toynbee recently tweeted about Robert Skidelsky’s Occupy LSX talk: “Modern capitalism over produces work and under produces leisure…Skidelsky speaking sense… says 25 hr [working] w[ee]k… Citizens income for work/leisure choice.”

In his new book (on Keynes & the economic crisis), Skidelsky quotes a paper by Thomas Palley, which argues that under the neoliberal model (starting around 1980): “the commitment to full employment was abandoned as inflationary, with the result that the link between productivity growth and wages was severed.” With productivity growing and wages falling in real terms, consumer demand was built upon increasingly high levels of household debt.

All true, of course. But what many accounts leave out is the staggering level of technological advance since 1980. (Advances which ultimately wouldn’t exist without public funding/infrastructure). This enormous technological component of productivity doesn’t translate into wages for human labour, hence the necessity of solutions such as a Citizen’s Income.

It’s good to see commentators such as Robert Skidelsky and Polly Toynbee talking about a Citizen’s Income. This is the same proposal that goes under the names Basic Income, UBI, National Dividend, etc (I’ve written about these proposals in more detail here). I suspect you’ll be hearing a lot more about Citizen’s Income in the months/years to come.

Meanwhile, I think the graph should be tattooed onto our brains…

Sources of graphs:
http://www.nytimes.com/imagepages/2011/09/04/opinion/04reich-graphic.html
http://www.irle.berkeley.edu/events/spring08/feller/
http://thecurrentmoment.wordpress.com/2011/08/18/productivity-inequality-poverty/
http://jkornacki.com/?p=1195
http://www.huffingtonpost.com/jonathan-tasini/conspiracy-of-silence-wag_b_155531.html
http://currydemocrats.org/in_perspective/american_pie.html
http://www.rebelcapitalist.com/index.php/site/permalink/tapped-out/
http://the-wawg-blog.org/?tag=mega-rich
http://www.exponentialimprovement.com/cms/hannityinsanity.shtml

Frank Luntz reframes Occupy

Dec 5, 2011 – Frank Luntz is the US rightwing’s language guru. He publishes message-framing manuals for conservatives. (BBC’s Newsnight uses him as a pollster, but that’s another story). It was Luntz who, during the US health care debate, advised using terms such as “government-run” instead of “public option” – his focus groups had responded less favourably to the terms that (falsely) implied government funding.

A recent news report claims that Luntz has been advising Republicans on how to talk about the Occupy movement:

“I’m so scared of this anti-Wall Street effort. I’m frightened to death,” said Frank Luntz, a Republican strategist … “They’re having an impact on what the American people think of capitalism.”
(Yahoo! News 1/12/11)

The report lists Luntz’s 10 tips. These include telling the Occupy movement “I get it”, and avoiding the words “sacrifice” and “compromise”. But the ones which caught my attention were:-

• Don’t say “capitalism” … I’m trying to get that word removed and we’re replacing it with either “economic freedom” or “free market”.
• Don’t say that the government “taxes the rich”. Instead, tell them that the government “takes from the rich”.
• Don’t say “government spending”. Call it “waste”.
• Always blame Washington. Tell them, “You shouldn’t be occupying Wall Street, you should be occupying Washington”.

You won’t be surprised to hear that little of this is new. It’s a series of frames (about government and markets) which together form what George Lakoff calls the Economic Liberty Myth. It’s already established in people’s minds from years of repetition via mass media, promoted by “market” thinktanks, city pundits, etc. In a nutshell, it’s about “freedom” – particularly “freedom of competition”, which supposedly leads to optimum “efficiency”, “opportunity”, etc. The “market” is cast as the freedom-loving hero, with the government as villain. (I go into more detail here, under the subheading “The Market Discipline frame”).

Occupy gives it a new twist

It’s the new developments that Frank Luntz is so afraid of. Namely:

• The focus on financial sector bailouts.
• The focus on the “99% vs 1%”; the immoral division of wealth.

The problem for Luntz is that even by “conventional” (ie sympathetic to “market”/city, private-wealth) standards of media coverage, the rightwing Economic Liberty Myth looks simply false in the context of the financial collapse/bailouts. (Why? Again, I provide a more detailed explanation of the framing issues here).

That’s why Luntz is saying: “You shouldn’t be occupying Wall Street, you should be occupying Washington”. And it’s why “market” lobby groups in the UK (such as the TaxPayers’ Alliance) are going to great lengths to frame the financial collapse in terms of government failures – as well as simply shifting the focus (and public anger) back to “government waste” (including the usual tabloid favourites – “benefit cheats“, etc).

The Economic Liberty Myth won’t be able to withstand a sustained, widespread popular focus on the financial collapse/bailouts and the immoral division of wealth – Luntz is right to be frightened.

STRIKE! Work framed as Obedience

Nov 30, 2011 – Today’s Daily Mail states that the 2 million people on strike today will “cause chaos”. After all, we’re not working. We think of “work” in many ways, but there are two dominant frames which tend to maintain the status quo (of appalling pay & working hours, concentrated wealth for the few). These frames are: Work as Obedience and Workers as Resources.

Work as Obedience

In the work-as-obedience frame, there’s an authority (the employer) and there’s obedience to the commands of authority (ie work). This obedience is rewarded (pay). Certain consequences follow from this metaphorical framing. The worker is expected to be loyal, to make sacrifices (contrast with the work-as-exchange* frame). This may explain why, each year, workers give £29 billion in unpaid overtime to their companies (according to TUC figures).

(Consider also that the average worker spends 139 hours a year commuting – another sacrifice).

Remember that frames function “below” consciousness, according to the cognitive scientists (I’ve written about this before: here & here). Why do people tolerate a situation in which income is dependent on obedience (to people they might regard as idiots)? Perhaps it’s because our upbringing results (in most cases) in the work-as-obedience frame being a familiar part of our neurology (consider the paternal representation of school/employer).

In adulthood, this work frame infantilises us, and it’s reinforced by the paternal-strictness type of attacks on the unemployed from politicians and media. Terms such as “workshy” and “scrounger” don’t suggest people aged 45+ who have lost their jobs.

Workers as Resources

The workers-as-resources metaphor is part of ‘market’ framing:

• “Free market” means firms are free to manage their own resources.
• Resources are acquired and disposed of – in a way which minimises costs, maximises “efficiency”, etc.
• Labour is just another resource (as in “labour market”).

Excluded from the workers-as-resources metaphor is the human experience of working in a job, and the distinction between meaningful activity and dehumanising work (not to mention work which physically harms). Orthodox economics of both right and left “treat labor as a natural resource or commodity, on a par with raw materials, and speak in the same terms of its cost and supply” (Lakoff and Johnson, Metaphors We Live By). Workers’ rights movements have fought against exploitation of workers (with some important successes) but have tended to implicitly accept this economic framing.

Protestant Work “Ethic”

The “work as obedience” metaphor is also linked to the moral framing of work which comes from religious traditions, most notably from the Protestant (or, rather, Puritan) Work Ethic. You don’t have to consciously subscribe to these religious beliefs to be affected – moral guilt over “laziness” seems to affect practically everyone in our society (but not in all societies – the framing isn’t universal).

And thus we arrive at these strange notions:

• Work is morally virtuous regardless of the experience of the worker.
• Firms should be “free” to make this experience even worse.

And so (to cut a long historical story short) we get the news frames of guilty “slackers”, irresponsible chaos-causing strikers – in opposition to the moral good (ie market fundamentalism and a joyless, outdated work ethic). And, to many, it looks just like “common sense”. Meanwhile, metaphorical terms such “flexible labour” (or worse, “cheap labour”) hide the reality of human degradation.

* The work-as-exchange frame is something that George Lakoff has written about in his work on conceptual metaphor. In this frame, work is conceptualised as an object of value which belongs to the worker. This is exchanged for money.

Daily Mail lies about strikes

Nov 28, 2011 – Today’s Daily Mail headline reads: ‘NOTHING WILL STOP US FROM STRIKING’. The Mail adds that “unions won’t discuss a last-minute peace deal” and that “Union leaders have declared there is nothing the Government can do to avert the biggest strikes in a generation this week”. [See update #2 below - the Mail has rewritten its story]

The message is clear: “the unions are hell-bent on confrontation” – “nothing” will stop them. (Incidentally, the Nov 30th strikes have massive public support according to polls from the BBC, Guardian, etc – but that’s not part of the Mail’s narrative).

What are the Mail’s statements based on? The report doesn’t mention the source, which is, in fact, an interview with Brendan Barber (TUC head) on BBC’s The Politics Show (27/11/11).

The Mail’s lie becomes clear when one compares its headline (and other statements) with what Barber actually said in the interview. (The following is my transcript of Jon Sopel’s interview with Brendan Barber and Francis Maude, starting at 12m 20s):

Jon Sopel (BBC): Mr Barber we’re about to speak to Francis Maude who is listening to this interview. Is there anything he could say that would get you to call off your action?

Brendan Barber (TUC): Well, at this stage I think that’s probably unlikely…

Sopel: So there’s nothing he can say?

Barber: What Francis Maude has to do, with his colleagues in government, is he has to give people confidence that there is a secure, fair pension going to be maintained for the future… at the moment people simply do not have that confidence…

Sopel: Mr Barber, sorry to interrupt you, isn’t that a rather extraordinary position that there is nothing that the chief negotiator [Maude] could say here on Sunday lunchtime that would get you to call off your action on Wednesday?

Barber: Well, he could certainly have a try… [Barber then outlines the specific policies being forced through by the government, which he wants them to reconsider] … if they’d really take a step back on some of these issues… but having talked to Mr Maude and his colleagues rather a lot over recent months, I fear he’s not prepared to say that – which leaves us with a real difficulty… Unless he comes up with something very surprising then, of course, the action will be going ahead this week.

Sopel: (now questioning Francis Maude): Have you got anything to say to Brendan Barber that might avert these strikes on Wednesday?

Maude: Yes, I’d say, Brendan, call it off. Now. (Listen to the rest of Maude’s comments, starting after 14m 20s).

As I’ve mentioned in previous entries, news frames often provide a narrative with a hero and a villain. This usually boils down to causation in some sense. Who is causing the thing which is making people angry? (And who is trying to prevent that thing from happening?). The “answer” is clear from the Mail’s headline. But since the Mail doesn’t even provide source details, it would be difficult for a casual reader to see that it’s a lie.

Alternative headlines:
• ‘PUBLIC UNITED IN REJECTING CUTS’
• ‘MORE THAN 60% WANT STRIKE’
• ‘GOVERNMENT FAILS PUBLIC SERVANTS’

Update #1, 28/11/11: The Sun has also run with this story (‘Unions chief: We won’t halt strike‘). The Sun is a bit more honest than the Mail – it accurately quotes Barber (“Well, at this stage I think that’s probably unlikely”) and mentions The Daily Politics as the source. The Sun’s first paragraph, however, contains the same lie as the Mail’s: “The leader of the TUC vowed yesterday there is NOTHING the Government can say to make unions call off Wednesday’s strike.”

Update #2, 28/11/11: The online version of the Daily Mail’s headline article (which I also link to above) has been completely rewritten since this morning. The lying headline has been replaced with something about Michael Gove. I’ve scanned the newspaper article, so you can see the original version here. Update #2b, 3/12/11: the online version appears to have been rewritten yet again on 29/11/11, this time with the focus on Ed Miliband rather than Michael Gove.

Update #3, 30/11/11: The Sun (on 29/11/11) asked TUC head Brendan Barber to write 200 words on the case for the strike. Apparently it was so good – so convincing – that the Sun wouldn’t publish it. You can read it here.

Framing Occupy’s “demands”

Nov 23, 2011 – Should the Occupy movement make specific policy demands? I see two different approaches getting coverage – eg George Lakoff’s (Huffington Post) and Michael Albert’s (Guardian)…

Lakoff says it’s “a good thing” that Occupy isn’t “making specific policy demands”. He argues that Occupy is about a shift in “moral focus”, and that, “If the movement is to frame itself, it should be on the basis of its moral focus, not a particular agenda or list of policy demands.”

Lakoff’s work (on moral-framing systems) shows how the American right succeeded by framing political issues in terms of a moral system which appeals to the “rugged individualist” identity, and which gives primacy to self-reliance and self-discipline, etc. Lakoff describes this moral system as follows:

“Conservatives have figured out their moral basis, and you see it on Wall Street. It includes: the primacy of self-interest. Individual responsibility, but not social responsibility. Hierarchical authority based on wealth or other forms of power. A moral hierarchy of who is “deserving,” defined by success.” [George lakoff, Framing Memo for OWS]

A large proportion of “the 99%” appear to vote out of identification with this “conservative” moral system – apparently against their own “rational” interests (as economists would put it). It seems important to realise this. Lakoff’s work is partly an attempt to explain why, and to offer alternative approaches (see below).

Michael Albert (co-editor of ZNet) suggests a different approach in his recent piece for the Guardian. Albert says that when a movement has sufficient strength (in numbers) it should make demands that “appeal to a very wide constituency”. The first example suggested by Albert is “the demand for full employment”:

“[S]eeking full employment makes sense because firing people is a way out of the current crisis that leaves elites stronger than they were before. It is a way out that leads right back to business as usual, with, in addition, a bonus for the rich and powerful in the form of a weakened working class. Clearly, we don’t want that. We want the opposite, a stronger working class and weaker elites. And that is the point. Full employment strengthens all workers, and it weakens all owners.”
[Michael Albert, Guardian, 15/11/11]

Albert adds that the larger “workforce” would work fewer hours “until the economy is back in shape”. He suggests “30 hours’ work for 40 hours’ pay, at least for everyone who is earning less than some quite high amount”.

“Full employment” – a fascist notion?

I shudder in horror whenever I hear the term “full employment”. The well-intentioned folk who propose it aren’t (I hope) thinking of forced labour, but it’s difficult to see how the latter doesn’t follow directly from the former. The ironies here… that a movement such as Occupy would propose an idea that seems deeply conservative* at best, and which has brutally authoritarian implications, at worst. Albert’s claim that “Full employment strengthens all workers, and it weakens all owners” seems, to me, an inversion of evidential reality in important respects – and it appears to confuse “employment” with livable income.

There’s enough material on the fascistic-seeming “full employment” framing for several articles, so I’ll leave further comment for future pieces. For now, consider the ways in which Michael Albert’s suggestions might conceptually “reinforce” the rightwing Economic Liberty Myth (a term coined by Lakoff). For example, Albert says Occupy should demand that people who have been fired are “rehired”. Central to the Economic Liberty Myth is the notion that employers “give jobs” to employees. This is what makes employers the heroes in the narrative – employers as the source not just of income, but of “meaningful activity” (“work”) and social relationships. The only other alternative (according to the myth) is: people sitting at home doing nothing, wasting their lives, isolated, socially useless parasites. In this quaint fairy tale, the employers – the bosses, the owners – save us all from that horrible fate. We demand it.

Lakoff’s alternative

To return to Lakoff’s idea: that Occupy frames itself “on the basis of its moral focus, not a particular agenda or list of policy demands.” What would this look like in practice? Lakoff’s analysis of the “nurturant” morality which underlies progressive politics suggests the following:

• Publicise The Public: Frame in terms of the common wealth, public infrastructure, public lands, public safety nets. As Lakoff puts it: “The Public is not opposed to The Private. The Public is what makes The Private possible. And it is what makes freedom possible. Wall Street exists only through public support. It has a moral obligation to direct itself to public needs.”

• Reframe The Private Market: Large corporations/banks act like private governments and should be framed as such. They use vast amounts of taxpayers’ money. And not just in bailouts. They’ve always depended on publicly-funded infrastructure. Avoid the corporation-as-individual metaphorical frame, which transfers the notion of “rights” from the domain of individual persons to institutions of concentrated wealth and power.

(My own modest contribution – explained here & here – is that the financial sector should be framed in terms of systemic risk rather than by conventional economic-framing of “competition”, “efficiency”, etc).

• Reframe Income/Work: Technology is, to a large extent, publicly-funded. (Boeing and Microsoft, for example, wouldn’t exist without the decades of public funding of aerospace and computer research and development). The great concentration of private wealth resulting from productivity increases (due to publicly-underwritten technological advances) should be framed as immoral. The so-called “labour market” can be framed as an ideological construct which has failed to provide a fair distribution of wealth, even with relatively high levels of “employment”.

Elsewhere (Moral Politics, p421), Lakoff has suggested a Negative Income Tax as a means of more fairly distributing wealth. But since we’re discussing how Occupy might frame a shift in moral focus, rather than specific policy, I won’t go into details here. (I’ve written about Negative Income Tax – and similar schemes – in a previous piece).

Additional material

Douglas Rushkoff does a great job of reframing the whole job/income issue here (video) & here.

See also this interesting piece on Lakoff/Occupy from the Overweening Generalist blog.

* I agree with Bob Black’s essay, The Abolition of Work, that all ideologies (whether Marxist, Liberal or Conservative, etc) seem conservative to the extent that they believe in maximising employment.

“Financial Crisis” & Media Compartmentalising

Nov 16, 2011 – Media compartmentalising, like frames, can be difficult to spot – particularly in reports which seem factually correct and relatively “balanced”.

Take the global financial meltdown (or “credit crunch”, if you think it resembles a breakfast cereal). Much of the reporting of this complex set of events seems “correct” factually, and even in assigning blame. And yet… if you’re like me, you’ve found it inadequate and unsatisfying. There’s a massive cognitive disconnect here, and it can’t be explained in terms of simple media “bias” (political or otherwise).

Here’s the basic narrative from the best media coverage (in a nutshell and in my words):

The financial collapse stemmed from an ideology (Neoliberalism), in which the financial sector was given free rein to profit with minimum regulation – eg from the high-risk (and very lucrative) subprime lending market. It had a false sense of security due to models of risk which ultimately failed when the US property market crashed.

That seems accurate enough, based on the known facts. So why the cognitive disconnect? I would guess it’s due to media compartmentalisation of the following two areas:

1. Framing of market ideology (“Neoliberalism”, “Capitalism”) in terms of things like “business efficiency” and “competition” in the real world.
2. Framing of specific “failures” (particularly to do with “risk” & regulation) in the “virtual” world of finance.

The media reporting of the “facts” of the meltdown tends to use 2, with 1 as general background. The “failures”, as reported, occurred in 2, but the fundamental role of 1 in creating the conditions which led to those “failures” (and to the whole “crisis”) is rarely explored.

There’s a huge disconnect, for example, when regulatory “failures” are reported merely in terms of absence of attention to details and technical matters. The years of deregulation, and the failures of regulators, were both due to a culture in which “market discipline” was believed to be the most “efficient” form of regulation. (See my previous piece on the “market discipline” frame). This was an ideology, a sort of secular religion, in which the “free market” was seen as superior to all other forms of organisation.

Given the framed ideological primacy of competitive profit-making and the presumed non-reality of other kinds of social value, market self-regulation was taken for granted as the right way. One result of this (among others) was the rapid emergence of a multi-trillion-dollar market in over-the-counter derivatives – unregulated, not counted by any central authority… plus international agreements allowing banks to measure their own riskiness.

John Lanchester (author of Whoops! – one of the few accounts of the meltdown to successfully integrate 1 & 2 to produce a convincing narrative) gives an example of conventional media reporting, regarding the ideology:

“You get a glimpse into the world-view when you look at The Economist. It is [...] full of good first-hand fact-finding. [...] But every single piece, on every single subject, reaches the same conclusion. Whatever you’re reading about, it turns out that the solution is the same: more liberalization, more competition, more free markets. However nuanced and original the detail in the bulk of the piece, the answer is always the same; it makes The Economist seem full of algebraic formulas in which the answer is always x.”

Of course, if media reports were framed in a way that showed clearly how “x” was the main, central, primary, fundamental factor (or “cause”) creating the conditions that led to disaster, they couldn’t very well present “x” as the solution to every economic scenario. There are certain realities that The Economist (and other similar media) cannot ignore if they wish to remain remotely credible. And so we get compartmentalisation, whether intentional or not.

There has been, for a long time, a cultural divide in Britain between the The City (finance capitalism) and dirty industry/manufacturing. Ironically, the market ideology which led to massive expansion of the financial sector (over the three decades since Margaret Thatcher came to power) is built on a metaphorical framing (concerning things like “efficiency” and “free competition”) which goes back to Adam Smith’s era. When Smith wrote about the “division of labour” and the “invisible hand of the market“, etc, he wasn’t thinking about risk-modelling for Credit Default Swaps (CDS) on Collateralized Debt Obligations (CDO) on pools of subprime mortgages. He was thinking about “tangible” things like pin factories.

(The insurance giant AIG was the biggest player in the CDS market. It was brought to its knees by CDSs on CDOs, but was Too Big To Fail, and enjoyed the biggest bailout of a private firm in history. How’s that for “efficiency”, “competitiveness” and good old-fashioned industriousness).

Framing “risk” – and its importance

In my previous piece, and above, I’ve singled out “risk” as the all-important factor in the financial sector (in contrast with the importance placed on “efficiency” and “free competition” in general business). Why? Because risk determines the outcomes of finance-capitalism in a way that is far removed from our conceptions of things like competitive efficiency in the “real world”. This is illustrated by how banking works, even at a basic level…

Banks pay a low rate of interest to depositors, and charge a higher rate to borrowers – thus making a profit. Banks don’t really make money from providing a “service” – they make it from taking on risk (eg the risk of loans going bad). It’s a “respectable” form of gambling. There are, of course, rules governing the amount of capital (eg deposits) that banks must keep against the risk of loans not being repaid, etc. These rules limit the amount of lending (and other speculation) that banks can make – ie the level of risk they can take on. But they also limit the banks’ profits. The banks hate this. The ‘innovative’ financial products I’ve been writing about (the ones which played such an important role in the financial meltdown – CDSs, CDOs, etc) were designed to get around the rules on risk – in very complex, and profitable, ways – with the effect of making it practically impossible to monitor systemic risk.

Why Nassim Taleb seems angry…

If you haven’t already seen this entertaining clip of Nassim Taleb (author of The Black Swan) on Newsnight, I recommend it. Taleb is angry with “tie-wearing economists” peddling bogus measures of risk in the financial markets.

If you pay attention to what Nassim is saying, you’ll see that he’s talking almost entirely about risk. (If you’re new to the topic, reading my previous piece might help to clarify some of his points). One of the highlights is when presenter Emily Maitlis asks, “Does this require a mindset change?”.

The “Financial Collapse” & framing

Nov 9, 2011 – What can be said about the financial collapse that may help in terms of framing? A few things…

Market ideology & the
wrong framing of “regulation”

In October 2008, Alan Greenspan admitted he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”

John Lanchester, author of Whoops!, commented: “The entire climate of opinion, in the world of power, was in favour of laissez-faire and deregulation and ‘innovation’, so if it hadn’t been Greenspan advocating this ideology… it would have been someone else. This was the system.”

The ideology has long been sold to the “layperson” via the concept of “efficiency”. Here’s the most simple form it takes:

• Competitive actions (eg for profit) are the most efficient
• Interfering with competition reduces efficiency

“Regulation”, in this frame, means interfering with “free competition”, which means “reduced efficiency”. (From a conservative moral-value system, this is seen as not just bad, but immoral). So, historically, strong regulation has been introduced only after outright disaster. (A good example is the Depression-era Glass-Steagall Act which separated investment – ie “casino” – banking from regular deposit-loan banking.*)

According to former IMF chief economist, Simon Johnson, it’s because of this ideology (ie framing), in confluence with political campaign financing, banking lobby pressure, etc, that “there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing”. (The Quite Coup, The Atlantic, 2009)

Why wrong?

Why is the market framing of “regulation” inappropriate in this context? Because banking, financial speculation, etc, is not about “efficiency”. At least not in the usual way that we understand “efficiency” to be a good thing. Money is made in the financial sector from “managed risk” – where reward correlates with risk, not with “efficiency”. (At a basic level: a risky bet – eg subprime lending – makes more money for a lender than a safe bet makes).

The speculators’ main question is not, “how can we increase efficiency?”. It’s: “how can we most profitably manage risk?”. The answer to this question has come in the form of ‘innovative’ financial products – eg Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDO) – which played a major part in the financial meltdown. (More on this below).

In the context of risk (with “efficiency” relatively low in importance), regulation looks like the hero rather than the villain. But in market framing (“efficiency”, “free competition”, etc) it’s the villain. We should be talking repeatedly about risk: dangerous, unquantified, irresponsible, runaway profit-at-all-costs financial risk-taking by banks – not least because the systemic risk which led to the global meltdown is still present in the system (because the system hasn’t fundamentally changed – eg see Nassim Taleb’s comments).

“Invisible Hand” of Credit Default Swaps

Why were Credit Default Swaps such a major Weapon of Mass Destruction? CDSs are a new (and diabolically clever) way to profitably “manage” risk. They resemble insurance against defaults on loans, but streamlined, packaged and on an industrial scale – with risk apparently magicked away with mathematics and computing power. As John Lanchester puts it: “It’s a basic law of money that risk is correlated to reward – the amount of money you can make is determined by the amount of risk you are willing to take on. But you’ve just engineered that risk out of existence”.**

CDS was a dream product. All the profit from taking on risk, but without the danger of risk (it also helped to bypass banking rules about holding a certain amount of capital in reserve against the risk of outstanding loans – since that risk had ‘disappeared’).

In just over a decade, the CDS market grew from nothing to $54 trillion.***

Take a moment to ponder that figure, since it’s close to the total GDP of the planet. Realise, also, that there was a congressional ban on the regulation of Credit Default Swaps. They could be purchased “over the counter” – rather than traded on a regulated exchange.

So, the banks’ money is generated from risk, not from “efficiency” or “productive work”. It’s like a global casino for the ultra-rich. The ‘innovative’, unregulated financial products supposedly “engineered” risk away in such a clever way that one didn’t need to worry about it. But the taxpayer ended up paying the bill for this ballooning financial risk-taking…

Market “experts” evaluate risk

Something called “Value at Risk” (VaR) became the standard measure of market risk. With the prevalence of ultra-complex ‘innovative’ financial products (such as CDSs) VaR became increasingly popular, as it provided a way for managers (and, basically, everyone who didn’t understand these ‘innovative’ products) to put a figure on the risk being run (using a computer-based “expert” probabilistic formula).

Back in 1997, Nassim Taleb (author of The Black Swan) commented on this industry-standard measure of risk:

“VaR is charlatanism because it tries to estimate something that is not scientifically possible to estimate, namely the risk of rare events. It gives people a misleading sense of precision.”

The “flaw” which Alan Greenspan identified in his own “model” of the way the “world works” (see Greenspan quote, above) is to do with risk, and the fact that deregulated “market discipline” (which takes a central role in Greenspan’s metaphorical world) is unable to cope with the growing systemic complexities of risk in the financial markets. The US housing crash was not a particularly unlikely scenario, but “market discipline” (using market-developed mathematical models of risk) failed to prevent the resulting catastrophe.

The “Market Discipline” frame

“Market discipline” is closely linked to the idea that “free competition” necessarily maximises “efficiency”, producing the optimum outcome for all. The belief is that you don’t need “regulation” (which is seen as unnatural, immoral and inefficient), because you have “market discipline”. It’s part of what Lakoff calls the ‘Economic Liberty Myth.’ This rightwing ideological myth unites the following ideas in a complex moral frame:

• “Free markets are natural and moral”
• “Competition naturally maximises efficiency”
• “Private industry is more efficient than government”
• “Regulation reduces market efficiency”
• “Everybody with sufficient discipline can succeed”
• “Market discipline is natural; regulation is unnatural”

Lakoff describes (eg in Whose Freedom) the ways in which this myth generally fails to account for the facts of economic reality. Building on Lakoff’s thesis, I would argue that banks (and the whole financial sector) provide the starkest possible example of reality failing to conform with market mythology. This is due to the fact that complex risk takes the place of “efficiency” (as primary determining business factor) in a virtual realm of abstract wealth, where efficiency (in its usual, tangible/physical sense) has little meaning.

The reason why the market mythology appeals to so many people (not just rightwing ideologues) is that our thoughts about “efficiency”, “discipline”, etc, are grounded in real experience – eg in physical efforts and human interactions. The market myth is isomorphic  – via metaphor – to a part of that experience. But only to a part.

Non-market framing – what the market myth leaves out:

• Natural economies of scale, the commons – isomorphic to “public infrastructure”
• Natural systemic regulation of the whole (as opposed to partial/anal “discipline”)
• System-wide “efficiency”, not reducible to “competition” of parts
• Natural non-efficient “redundancy” (important aspect of evolution)
• (Etc, etc)

Both market and non-market frames are grounded in “real experience” – but market frames have been promoted far more (as a result of decades of well-funded rightwing thinktank and media activity, etc). As a result, we tend to conceptualise in market terms (“businesses must compete freely, without interference, to maximise efficiency”, etc). But systemic risk in the “global economy” has become obvious to everyone (because it affects virtually everyone). Current market models of risk, driven by market ideology, are not adequate to deal with the level of risk now existing in the market due to deregulation and the expansion of derivatives markets (eg CDS), etc. The cognitive task ahead is to make it obvious – part of common sense – that ideological market framing can be (and most often is) dangerous and destructive to the extent that we mistake it for the whole of reality.

Footnotes:

* The Glass-Steagall Act was abolished in 1999, after pressure from banks. When markets are “booming”, banks become more politically powerful – there’s pressure to remove regulation. See the excellent Atlantic article, The Quiet Coup, by Simon Johnson, former IMF chief economist.

** John Lanchester, Whoops! – Why Everyone Owes Everyone and No One Can Pay

*** Credit Default Swaps are a type of derivative. The global HQ for the derivatives market is London, where the turnover of over-the-counter derivatives peaked (in 2007) at $2.1 trillion every day. (That’s not a typing error. $2.1 trillion every day). [Ibid, p172-173]. According to the Wiki entry on over-the-counter derivatives, “the total outstanding notional amount is US$684 trillion (as of June 2008). Of this total notional amount, 67% are interest rate contracts, 8% are credit default swaps (CDS), 9% are foreign exchange contracts, 2% are commodity contracts, 1% are equity contracts, and 12% are other. Because OTC derivatives are not traded on an exchange, there is no central counter-party. Therefore, they are subject to counter-party risk, like an ordinary contract”.