Tuesday, 20 November 2012

Stop paying for bad news

One hears with increasing frequency of some new revelation about an organisation which casts doubt on its integrity and undermines trust in it to the extent that it is no longer able to function properly, either because the people within it no longer trust their colleagues or because society as a whole  no longer trusts the organisation.

 
For example, if a secret service X is devoted to protecting a parliamentary democracy from destruction by terrorists it must operate on a principle of total secrecy and total trust. It cannot possibly perform its role without keeping secret  the way it operates, the information it has obtained about those wishing to destroy society and the specific measures it has in place to infiltrate hostile groups, intercept their communications or destroy their operations. At the same time all the staff and operatives of X must be able to trust one another – in particular, not to divulge secrets.

 
But the society which X is trying to protect is a democracy with a free press. Suppose some journalists become so motivated by the need for career advancement that they actively seek out transgressions of the internal rules or overall objectives of X. A cost is incurred for every divulgence, true or false: enemies of the state learn something about X and its methods, or the employees suffer diminished trust in each other, which reduces the effectiveness of operations.

 
Consider a national medical service Y (e.g. the UK’s National Health Service) financed by taxation. It needs its staff to be devoted to the well being of all its patients and to trust each other. If a doctor or nurse or porter or cleaner or administrator reveals to a journalist some kind of misdemeanour or bad practice, no matter how rare and unrepresentative, the organisation’s culture is affected and the public becomes less willing to sanction the allocation of tax revenue. Moreover, the confidence of patients is undermined, which in itself can undermine medical treatment.

 
A multinational company Z has branches in several countries. A worker in one country airs grievances to a journalist and this causes a widespread belief that all employees are badly treated, which causes many previously satisfied employees to feel aggrieved. Potential customers then boycott products from Z, its profits fall and workers are made redundant and trust between employers and employees is undermined.

 
Whenever the member of any organisation divulges something negative about it there is a human cost over and above the actual problem reported.  And society is in a sense made up of organisations, so that society as a whole can be badly affected by over-reporting of negative news about the organisations within it. The negative effects are particularly marked when problems in one organisation lead to suspicion that similar organisations have the same problem.


Does this mean one should not report a misdemeanour to the press? No. But what I think is wrong is that the person reporting it should be financially rewarded by the media. If the injustice is so important that its divulgence outweighs in importance the negative impact on the organisation and society in general, then it should be reported regardless of any financial incentive. In general, if an incentive is needed it is, I would argue, questionable whether it should be fed to the public as circulation fodder for a newspaper or to boost the ratings of a TV news show.
 

 Ultimately, if it becomes normal for pedlars of bad news to be rewarded it could be that people start inventing it or distorting events within their employing organisation. In this situation readers would not trust the stories of bad practices and the journalists themselves would no longer profit from bad news they had paid for.
 

The job of a journalist is to proactively unearth news and report it in a balanced and fair way, not to offer incentives to deliver it and in so doing damage the society in which he or she operates.

 Journalist should stop paying for bad news. There may be execptions but in general bringing a genuine injustice to the attention of society should be its own reward.

John

Author, the novel 2077 AD (this is being revised and is not currently available).

Reach me at
cosmik.jo@gmail.com

Saturday, 17 November 2012

Ethical banks vs ethical banking


Money is an essential age-old means by which civilisation is able to function and advance. Without a reliable means of exchange the various parts of an economy of any kind cannot work together to create value.
 
Banks are obviously integral to the storage, flow and investment of money. They are crucial to the wise allocation of funds for creative and worthwhile enterprises such as
 

Charities to rescue those who suffer from deprivation

Companies providing products and services to enhance our lives

Government and public institutions (e.g. NHS in the UK)

Over the last decade or so I have increasingly heard about ethical banks. Recently I came across Triodos while reading Christian Aid News. This has savers (e.g. 30,000 in the UK) who want their money to build a sustainable society and help such organisations as
 
  • Cafedirect, the Fairtrade tea and coffee producer


  • Ecotricity, which provides green energy across the UK
 
It publishes details of all the businesses it lends to and does not provide contractual bonuses to its employees.

 Such organisations are beacons of light in a dark financial world. What is sad is that it is necessary to categorise a small number of these under the heading ‘ethical banks’.  All banks should be ethical, adhering to values of truth, innovation, compassion, loyalty, sustainability and vision for a better future, either as a step towards these values becoming more widespread, or better, as a symptom of a society in which such values prevail.
 
In this kind of society all institutions would function so much more efficiently. So how do we get there?
 
For these values to become widespread in any nation there needs to be moral leadership, inspiration and sound education for all, irrespective of class, gender or race. So it falls on churches, youth groups, schools and universities to guide young people towards these values, which in turn requires leaders to find within themselves the power to lead us in the right direction, a power which, I believe, must ultimately come from faith in our Creator.

 
In the long run we need to make redundant the ethical banking sector by making ethical banking the norm.

Author of the novel 2077 AD.
 
Reach me at cosmik.jo@gmail.com

Wednesday, 14 November 2012

Wealth inequality means economic inefficiency


It is well known that wealth inequality in the USA and UK has grown greatly in recent decades.  E.g. the index of inequality in disposable income over 1975-2009 has risen in both countries:

 
UK: from 0.25 to over 0.34
US: from 0.31 to 0.37

 
Capital wealth has also come to be more unequally distributed. The same trends, though less marked, have occurred across Europe. In Russia and China the inequalities are also, I suspect, increasing but I don’t have comparable data on these.

 
I do not see wealth differentials as intrinsically wrong as long as those at the bottom of the ladder are above a minimum standard of living. If people want to devote their lives to building up personal fortunes, with multiple yachts and houses, that to me is their misfortune as slaves to materialism. Pursuit of wealth for its own sake is destructive of the individual and the society around him or her. Becoming wealthy as an incidental part of seeking to build up the world or add value to it and its people is just something that happens, though the degree of wealth is not in proportion to the worthiness of the activity. People who acquire wealth this way presumably enjoy it. On the other hand there are children living on rubbish tips in India who seem happier than most westerners living in luxury.

 
But these mounting and extreme inequalities are morally wrong, economically unhealthy and socially divisive, a consequence of obsession with gain per se. Society cannot exist without hierarchy but it is not acceptable to consign millions of people to a life without hope, unable to earn a living, and in a constant state of insecurity about housing, food, health, elderly care and the education of their children. Such a society does not reflect the values of Christ.

 
Insight into the problem of wealth inequality in the Anglo-American world and how to deal with it emerged from a recent one page book review by Richard Lambert, former editor of the Financial Times. It appeared in the August 2012 issue of Prospect and the book in question is The Price of Inequality by the Nobel laureate Joseph Stiglitz.

This is what I got from it:
 

Inequality is happening because

  •  the new rich use their political power to gain a larger share of wealth

  •  IT increases the productivity of those who can use it while replacing the jobs of those who can’t

  •  globalisation increases and therefore cheapens the supply of labour


Joseph Stiglitz
The result is not only that a minority get a disproportionately large slice of the wealth cake but that the size of the cake gets smaller because  the rich spend a smaller proportion of their income. Typically they save 15% to 20% of it while the poorest save nothing because they have no spare income. Consequently less money is injected back into the economy and this leads to less economic activity, less wealth generation and more unemployment, unless the savings of the rich find their way into productive investment, which is often far from the case in an economy weighted heavily towards  financial services rather than more value-generating activity.

Moreover, as large wealth differences set in it leads to a decline in social mobility which in turn leads to fewer talented people getting into positions where these talents can be utilised for wealth creation.

Thus large inequalities of wealth mean lower economic efficiency, to the detriment of all. They also have bad social consequences. Stiglitz describes a grim future in which society is divided into haves and have-nots: the rich living in gated communities, the rest in a world marked by insecurity, poor healthcare and mediocre education. At the bottom are millions of young people alienated and without hope.’

 

Three remedies are suggested, particularly for the UK but no doubt they have a more general relevance to the USA and other nations :

 

/1/ help young people in houses where no one works to find their way into work

/2/ increase the incentives to take on and train British workers

/3/ reform the tax system, making it simpler, more progressive and free of tax havens


 Lambert does not mention direct investment by the government in large enterprises. Personally, I think there is a role for major flagship projects which generate technological spin offs, create valuable skills and provide inspiration. The American space programme did this. The revolutionary engine propulsion technology developed by the Skylon project, for example, could employ 70,000 people if a government would support it.(No private investors seem interested, possibly because of bureaucratic or political factors or because they don't understand the technology.)
 
The most just economy is also the most efficient and I don’t believe this is coincidence. It is the way reality has been set up.

 
John
Reach me at cosmik.jo@gmail.com