Archive for the ‘Private vs public sector’ Category
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.
• ‘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.
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.
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).
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.
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 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).
“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 because 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 – ie a high level of risk resulting from 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.
* 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”.
Not that high pay in the public sector isn’t a valid news story. One wonders, though, when three newspapers (Express, Mail, Telegraph) all lead with stories on public-sector pay (over the course of 6 days) – particularly given the other newsworthy situations occurring on the planet.
The Telegraph quotes a Tory politician: “Ordinary people will be outraged that bonuses are being paid at all in the public sector…”. Compare the quote from another Tory in the Mail’s front-page coverage of a similar story, five days ago: “…this sort of generosity would not be found in the private sector”.
An interesting topic for academic study would be the timing of news stories. Why are we supposed to be thinking, right now, about high pay in the public sector? Why did the MPs’ expenses scandal get reported just when public outrage over the bail-out of banks was peaking? Without empirical studies, we’re left with useless speculation, “conspiracy theory” and Citizen Kane. Fnord.
Aug 25, 2011 – It almost looks like a Mail-Express double-act (see yesterday’s Express). The framing in both cases seems to be provided by the rightwing pressure group, The TaxPayers’ Alliance (both Mail and Express quoted TPA). The “state” (and its “fat cats”) in this case refers to Quangos. “Quango” was originally an acronym for ‘QUasi-Autonomous Non-Governmental Organisation’. The idea was that they would “not be a formal part of the state structure“ – it brought “private sector” framing (and ideology) into the public realm.
Widespread waste, bureaucracy, corruption, etc, followed. It’s now been successfully reframed as “state”.
The Mail story segues smoothly from “state fat cats” to “generous” redundancy payments for public sector workers. It then quotes a Tory politician: “this sort of generosity would not be found in the private sector”, and a TaxPayers’ Alliance spokesperson: “Most taxpayers could only dream of such a generous redundancy.”
Not all quangos (or “public bodies”) are equally wasteful and corrupt. For those who have the time, there is much more to this story. See, as a starting point, Britain’s Shock Doctrine.
• ‘WE’RE FUCKING WITH YOUR HEADS’
• ‘RICH BANKERS AREN’T SO BAD’
• ‘STATE COMMIES EAT BABIES SHOCK’
Aug 24, 2011 – The latest surreal installment in Operation Daily Express Mindfuck. “Hard-pressed workers in the private sector” now have a focus for their feelings of anger and frustration (which are understandable given the long hours, low pay, poor conditions, poor benefits, poor holiday entitlement, idiot bosses, soul-crippling corporate ideology, etc).
“Millions” of them can now feel “infuriated” at their fellow hard-pressed workers in the public sector who apparently don’t have the “curbs on their pay” that private sector workers have.
Where is all the taxpayer money going? The Express reveals the “infuriating” truth: public sector workers will continue to receive “annual ‘increments’ – salary increases given to recognise the length of a worker’s service”.
The private sector, on the other hand, is responsibly exercising “restraint”, by putting “curbs” on workers’ pay. The quīnta essentia of bullshit.