Time to Bring Down the Corporate Giants?

Over the past week, the new CEO of General Motors, Mary Barra, has been in Congress. Unlike most occasions on which a CEO goes to Congress, she is not there to lobby for lighter regulations or to ask for a bail out because of the financial crisis. Instead, she is having to explain to Representatives and Senators why the company did not recall a large number of cars that have since been show to have potentially fatal safety faults. Barra (and it should be noted that she was not in charge when these events occurred) has not really had an answer beyond trying to deflect the blame away from any individual person. Essentially, her argument is that the right information never made its way up to the C-suite, and therefore the executives at GM could not be expected to act.

As the American website Gawker has argued, this seems to be a direct blow against the ‘myth of the CEO’ – the idea that corporate executives are supernaturally talented people whose work fully merits the multi-million dollar salaries they receive. CEOs are supposedly paid all of this money because of their leadership and their ability to make tough and correct decision. As the Barra testimony shows, they’re mostly leading in the dark and making decisions without the correct information.

This isn’t necessarily to say that CEOs are bad at leadership – it’s something they have been trained in, and have probably shown some talent for at lower levels. But today’s corporations are a totally different proposition from most management roles. They are behemoths, enormous entities with turnovers the size of many nation states’ GDPs. They are incredibly complicated logistical operations, with branches across the globe, hundreds if not thousands of lower managerial roles, an equally large number of chains of command through which information must travel, and hundreds of millions of variables, any one of which could go wrong at any time and create a situation like the one Barra now faces. Basically, the modern corporation is too big to assume that any small group of directors can effectively lead it – even if they are being paid millions.

Although there is a general trend towards ‘bigness’ in the corporate world, we would actually very much benefit from having smaller companies rather than larger ones. A smaller company that was more focused on its core business would have noticed the flaws in their cars sooner, and would have been able to communicate the problem more quickly. But smaller businesses are often better for us in other ways too – they are likely to be more concerned with ensuring jobs stay in the local community, to be more environmentally friendly, to be fairer to their workers and to provide better pay and benefits. Generally speaking, they are less likely to see profit as the only benchmark of success, as the companies of corporate America do. A company with this ‘small is beautiful’ mindset would be less likely to see worker deaths and injuries, less likely to send out faulty cars, and less likely to encourage the inequality of wealth that America currently suffers from.

To this end, it might be time to start arguing for new corporation laws and regulations to limit the overall size of businesses and to encourage the rise of medium- and small-scale businesses that can better bring some humanity back to the world of work and make things fairer for employees. Legislation that encourages worker-owned cooperatives would be even better – as such businesses inevitably have the interests of the poorer workers at their heart – although it may be some time until we see such a thing in the US. Either way, as the case of GM shows, it’s time for the corporate giants that have dominated America for so long to be brought down in favor of a new model of business.

corporate giants, General motors, Marry Barra, financial crisis, C-suite, GDP, management roles, logistical operations, environmentally friendly

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Robin Hood in reverse

Things seem to be getting bigger and bigger every day in the modern world – in fact, it’s increasingly assumed that unless you’re a big country you have no chance in the global economy. Consequently, when looking at a map of the world, people often wonder how small countries like Luxembourg, Lichtenstein, Jersey, and various islands in the Caribbean can keep on existing in this cut-throat world, with such small populations and no natural resources. The answer in many cases is through tax – not the tax of their own citizens, but that from other countries. Many of the smaller nations of the world have become what is known as ‘tax havens’.

Tax havens are like a reverse version of the famous character Robin Hood. While Robin stole from the rich and gave to the poor, the tax havens essentially take money away from the poor and give it to the rich. They operate in this way: rich people in larger countries like the US, UK, France, or Germany would normally have to pay a reasonable amount of their money in tax. This tax would be used to pay for hospitals, schools, and other services for the poorer people of the country, helping everyone to survive. But the rich instead move their money to a tax haven, where they often pay a tax of only 1-2%. The amount of money this raises is more than enough for the citizens of, say, Lichtenstein. But it means the rich people get to keep more of their money, rather than helping their fellow citizens.

Many tax havens are also known for their secrecy – after all, the rich do not want their home countries to find out about how much money they have, in case they insist that they pay their fair share of taxes. The secrecy of the banks in tax haven countries (most famously in Switzerland) is often exploited by corrupt leaders in developing nations, who take aid money and developmental loans and deposit the money in their own account rather than using it to help their people as intended. This has been a major factor in the debt crisis that places like Africa are in – the money still needs to be paid back by the citizens, even though their leaders have stolen it and placed it in tax havens.

In the UK, whenever it is suggested that taxes should be raised on the richest people to help pay for public services, the media will argue that such policies will end with the rich leaving the country and taking their money with them. In truth, their money is mostly already gone, it’s in Switzerland and Luxembourg and the Cayman Islands, where they can avoid paying any tax at all.

What is needed is concerted action from all of the countries of the world to shut down these tax havens by ostracizing them from the world economy until they agree to play by the same rules as the rest of us. This has already started to work with Switzerland, which was always the most vulnerable to pressure because it does not only depend on the income from its tax haven status. Legislation is now being put in place for Swiss banks to disclose information to US authorities to ensure the correct tax is being paid. Now we need to place the same pressure on smaller tax havens, while also offering help with diversifying their economies towards more useful and productive work. The rich will oppose it, because the current arrangement works in their favor – but we must ignore their self-interested claims and realize that by shutting down the havens we can ensure that tax  money is used to pay for services rather than for yachts.

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The rich elites of Venezuela attempt another coup

With all the recent focus on events in Ukraine, other conflicts around the world have been somewhat overshadowed. This includes the recent protests in Venezuela, where across the country there have been street demonstrations, attacks on government buildings, and attacks on protestors by the police.

Where the western media has covered this story at all, it has usually attempted to portray it as a heroic uprising against a corrupt and repressive regime, fitting it neatly into the same narrative as the Ukraine Euromaidan protests. This is unsurprising, of course, as this has been the western media’s approach to Venezuela ever since the late Hugo Chavez came to power, and the current government is led by his successor Nicolas Maduro.

In truth, and as always tends to be the case in Venezuela these days, the protests are actually being coordinated by the various right-wing opposition parties that appeal to the rich elites that used to rule the country before Chavez. They have not managed to win an election since Chavez came to power – and despite their inevitable claims of vote-rigging, no less of a capitalist figurehead than former US President Jimmy Carter has stated that those elections were free and fair. Quite simply, while Chavez was alive, the poor majority in Venezuela were happy to vote for him and support his attempts at wealth redistribution, meaning the opposition never had a chance of winning.

To make up for this lack of electoral popularity, the opposition did not try to come up with new policies that would actually appeal to the poor supporters of Chavez – instead, they decided to try and overthrow Chavez by force. With assistance from the USA, they succeeded for a few days in the early 2000s, but the people of Caracas hit the streets in a genuine popular demonstration and reinstalled their president. They also attempted to bring down the Venezuelan economy by encouraging strikes in the nationalized oil company, but this failed too. At that point, the opposition was out of ideas, besides complaining about how unfair it was that they were no longer in charge of the country, as they had been for hundreds of years.

With Chavez gone, and the less charismatic Maduro replacing him, the opposition parties finally had a chance to make some progress, and came much closer to winning the most recent election. However, rather than continuing to build on their gains and wait until their next chance to democratically win the presidency, they have once again decided that street protests and attempted coups are more their style. Hence, the protests have been focused in rich areas of the country – the poorer side of Caracas, where the people support the government, has barely seen a peep of action; while the richer half of the city, particularly around expensive private schools and universities, has seen large demos.

Ultimately, despite some setbacks, the Chavista project has helped the poor of Venezuela to gain back some of the wealth and power that the elites have gathered for themselves over the centuries. It has redistributed wealth, and, with the help of doctors from Cuba, given medical access to the population. The fact that Chavez and those that follow in his footsteps are having some success can be shown by the response of those elites – rather than engage in electoral battle, they consistently choose to try to sabotage and overthrow the government instead. Without the drive and ambition of Chavez, the Maduro government faces a difficult battle ahead, but it is a battle to create a new and more equal Venezuela for the future, and they should not be thrown off course by these elitist protests.

attacks on government buildings, attacks on protestors, Chavista project, come to power, current government, electoral battle, electoral popularity, elitist protests, encouraging strikes, equality Venezuela, events in Ukraine, expensive private schools, former US president, Hugo Chavez, Jimmy Carter, Maduro government, medical access, nationalized oil company, Nicolás Maduro, opposition parties, protests in Venezuela, recent election, redistribute wealth, repressive regime, rich elites, right-wing opposition parties, street demonstrations, street protests, support attempts, support the government, Ukraine Euromaidan protests, Venezuelan economy, wealth redistribution, western media, win an election

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The Need for International Women’s Day

There was International Women’s Day recently, the 8th March. You probably heard about this, as the day has become increasingly prominent in the media over the past few years. Of course, with increasing recognition inevitably comes increasing criticism, and International Women’s Day is now invariably accompanied by the shrill cries of certain male commentators who argue that there is no need for a day to specifically recognize and address issues that face women, and to ask why there isn’t an international men’s day.

The second of those criticism is easily addressed by pointing out that there is an official, UN-sanctioned International Men’s Day. It’s on November 19th, so don’t forget it and feel free to celebrate as much as you want. The other issue requires a little bit more looking at – is there still a need in the modern world for a day that focuses on women-specific problems? I think there is, because, contrary to what some people convince themselves of, there are still many problems and inequalities facing women around the world.

Physical violence and abuse, particularly from close relatives and partners, for example. During the wars against Afghanistan and Iraq, for example, around 6,600 US soldiers have been killed. During the same time period, 11,700 women in the US have been killed as a result of domestic violence – not too far from double the number of soldiers. Female genital mutilation is still a fairly common practice around the world, and is not only an issue in underdeveloped countries – there is currently a debate going on in the UK about protecting young female students who are taken to their ancestral communities to be circumcised during high school breaks.

UN statistics suggest that at least 250,000 rapes (primarily of women) are reported annually. That data only covers 65 countries, and has no way of taking into account the number of unreported rapes or the prevalence of rape in war zones or other lawless areas – so we can safely assume that the real number is much, much larger. Meanwhile, the conviction rate for reported rapes remains shockingly low – despite some rather flagrant twisting of numbers by the Crown Prosecution Service, the number of reported rapes in the UK that end in convictions is below 10%. In the US, where conviction rates are slightly higher, recent years have seen numerous high profile cases in which victims have been disbelieved, ostracized, or blamed for their own predicament – such as the case of the rapists in Steubenville, Ohio, star football players on the high school team, who were essentially treated by the local community as if they were the victims of the rape they committed.

Discrimination remains an issue as well, even if statistics are improving here. Women are still statistically likely to be paid less than men in equivalent jobs, and are less likely to be promoted to positions of power. The few prominent women in positions of power – such as Marissa Mayer at Yahoo or Hilary Clinton – are often pointed to as a way to suggest that the ‘glass ceiling’ has been shattered. But they remain the exception to the rule, rather than heralding a new era of equality.

So International Women’s Day remains important, because it provides an opportunity to bring attention to problems like these and to highlight the fact that many women around the world remain poor, exploited, and oppressed – and the fact that not all women are in that situation doesn’t detract from this. However, rather than focusing on this for only one day a year, it would be much better if we could remove the need for International Women’s Day altogether by making every day one in which we focus on ending violence, discrimination, and inequality against all people.

[ International Women’s Day, 8th March, physical violence, Crown Prosecution Service, Steubenville, discrimination, Marissa Mayer, Hilary Clinton, glass ceiling ]

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Time to Pop Political Bubbles

We’ve all heard a lot in the past few years about ‘financial bubbles’. These are situations in which investors become extremely confident in a particular resource and invest more and more money into it. Prices inflate, and people become even more confident, which leads to more investment, and so on – the bubble inflates. There was a housing bubble before the 2008 financial crisis, and the famous ‘dot com’ tech bubble of the late 90s. In truth, the confidence was based on assumptions that proved not to be true – for example, the housing bubble was founded on the assumption that cheap credit would be available forever. When that stopped being true in 2008, people could no longer pay their mortgages, and the bubble popped. When bubbles pop, it’s usually because investors start to panic, worried that the fundamentals of their investment are not as strong as they initially appeared to be. They withdraw their money, and the market comes crashing down. This happened to the dot coms, and also to the Southeast Asian bubble economy in 1997.

So financial bubbles are well known, but what about political bubbles? This is a term suggested in a recent book by the political scientists Nolan McCarty, Keith Poole, and Howard Rosenthal, Political Bubbles: Financial Crises and the Failure of American Democracy. They suggest that behind every financial bubble, there is a political bubble – a collection of policies and ideologies that encourage certain market behaviours. Financial bubbles and the crises they lead to are enabled by the political bubbles that grow up before them. The comparison between the two seems obvious – political bubbles are ideologies that people put too much faith into, without examining the underlying truth. In this analogy, eventually people should realize the hollowness of their beliefs, and the political bubble should pop. However, it seems to me that this last element – the popping – does not actually happen to political bubbles with as much regularity as it does to financial ones. The political kind seems to be considerably more robust and able to withstand even the popping of its financial sibling. Let me give you some examples.

It is clear today that the belief that we have a free market in which everyone has equality of opportunity is blatantly false – every day governments intervene in the market through subsidies and tax breaks for corporations, and tariffs on the import of goods from other countries, and the barriers to entry in the economy get higher every day. But according to the political bubble of the free market, if Bill Gates and I were to each start a new business today, we would have an equal chance of success, and the winner would depend entirely on our personal qualities and the strength of our product. Anyone with an ounce of common sense knows that this is not true, because Bill Gates is starting the game with hundreds of billions of dollars, which gives him an inevitable advantage in our supposedly ‘free’ market. The idea that the free market will lead to a ‘trickle down’ of wealth and make us all rich is equally discredited by the increasing income gap we see in the world today. And yet, the political bubble around the ‘free market’ is so huge that even after the unregulated, free market system of the financial sector completely and utterly failed, we believe the solution is to keep doing more of the same.

This leads to another bubble – the public sector bubble. Instead of accepting the end of the free market and putting extra regulations on the banks to ensure the same problems don’t arise again, we have become caught in a bubble which tells us that the problem is the public sector. In this bubble, the crash wasn’t caused by the banks, it was caused by a bloated public sector that accumulated too much government debt. Government debt is, for sure, not the greatest thing in the world – but to suggest that it caused the 2008 crisis is idiocy of the first order. And yet, as a society, we believe it to such an extent that governments around the world have been given a mandate to cut health services, education services, benefits to the disabled, and other hallmarks of a civilized society – all while leaving the banks alone. This bubble is nothing new – it’s been building for some time. You can see it in the structural adjustment programmes of the IMF and World Bank in the 1990s and 2000s, where developing countries were told their problem was government spending on education rather than the crippling debts the rich countries had forced on them.

One more bubble before we finish, something a little more contemporary – the attacks on Russia that we have seen during the Winter Olympics. Certainly Russia has its problems of autocratic leadership and a lack of civil rights for minority groups, but much of the western coverage has been hysterical. Everything has been criticized, from the stray dogs to the hotel rooms being too small. The political bubble at work here also goes back a long way – to the Cold War, and even to the attacks on Bolsheviks that were common in western newspapers in 1917. It’s a bubble that tells us that Russia is different, undeveloped, somewhat barbaric – and it’s a narrative that we lap up, as it conveniently allows us to ignore the problems in our own societies by reverting to a simplified, fairytale version of the world.

These political bubbles hang around for a lot longer than the financial bubbles that often accompany them, and are more pernicious because they are often much harder to identify. It is easy to see when housing is overpriced, but not so easy for any of us to sit down and think deeply about the ideologies that lie behind our understanding of the economy or society. In many cases, these are ideologies that we are indoctrinated with every day – through newspapers, advertisements, universities, and so on. But it’s something we need to start doing if we are ever going to pop these bubbles and allow ourselves to think freely.

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The cult of celebrity

I try to avoid spending too much time reading internet news sites these days, largely because each week seems to bring a focus on some new celebrity controversy, relegating topics of real importance to the bottom of the page. Some American football player rants about an opponent, the internet goes wild. Justin Beiber gets arrested for his latest idiocy, the internet goes wild. The Mayor of Toronto does anything, the internet goes wild (though admittedly, that’s a special case since he’s only a celebrity because of his continual bizarre behaviour). But luckily, the last week or two has seen the golden combination of celebrity controversy and serious political issues.

The actress Scarlett Johansson appeared in a commercial for Soda Stream during the halftime show of the Superbowl. Soda Stream is an Israeli soft drink company that has its main factory on settled land in the West Bank – that is, on land which has historically belonged to Palestinians, but which has been appropriated by the Israeli state, illegally according to international law. This is, not surprisingly, rather controversial, and Johansson has been criticized by many people who believe that settler businesses that use Palestinian land should be boycotted. Johansson disagrees, and claims that because Soda Stream hires some Palestinian workers, it is ‘building a bridge of peace’ in the conflict-torn region.

Soon, the anger over this issue turned on the international NGO Oxfam, for whom Johansson was an ‘ambassador’. Oxfam seem to have fiddled while the crisis grew around them, until eventually Johansson quit her role with the NGO, citing a ‘fundamental difference of opinion’. The issue rumbles on, and will probably continue to do so for a while, but it seems like Oxfam are off the hook for now, and the focus of the anger is firmly back on Johansson and Soda Stream. However, rather than focusing on the issue of the Jewish settlements – of which more than enough has already been written on the internet – I’d like to focus on a different aspect of this episode.

Oxfam were obviously very reluctant to get rid of Johansson, to the extent that it appears she had to quit rather than being kicked out, despite the fact that her actions and public statements obviously go against most of what Oxfam stands for. Clearly, the idea of losing a ‘celebrity ambassador’ for their brand was painful for the NGO – a rather embarrassing state of affairs, as it suggests that PR and media relations are taking priority over the actual message. This also raises the question of why exactly humanitarian causes like those Oxfam champions need these celebrity ambassadors – who have also been employed by various UN agencies for many years now.

It seems to say something rather unflattering about our contemporary culture that issues of famine, war, conflict, and natural disasters seemingly need to be filtered through the lens of celebrity in order for us to care about them. We have become so deferential to those who are richer and more powerful than ourselves that the plight of the poor and oppressed is of no importance to us until the star of We Bought A Zoo decides to tell us about it. This explains why Oxfam seemingly didn’t want to let Johansson go – she might be saying the wrong thing, but at least she’s saying something, and without the glossy sheen that celebrity provides to a cause, no-one will pay any attention. Let’s hope that the plight of the Palestinians and the struggle to remove the Israeli settlements will be kept in the public eye from this point on, even after the gossip magazines have moved on to the next celebrity controversy.

mayor of Toronto, Scarlett Johansson, Superbowl, NGO Oxfam, UN agency, We bought a zoo, NRGLab, Soda stream

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Floods of stupidity

Large parts of the UK are currently completely underwater from floods and storms that have battered the lengthy coastline of this little island. Some people will immediately point out that this demonstrates the power of climate change to impact even the richest countries on the planet. I, however, would argue that the response to the floods merely demonstrates the complete and utter uselessness of politicians in the UK (and possibly elsewhere).

On the absolute stupidest level of complete denial, we have the United Kingdom Independence Party (UKIP). Their leader, Nigel Farage, has claimed that such enormous floods have nothing to do with a changing climate, they’re “just weather”. Another member of the same party has managed to appear an even bigger fool, by claiming that the floods are God’s punishment for gay marriage – yes, in the year 2014, someone really said that out loud. Meanwhile, the former Conservative chancellor Nigel Lawson has said that the floods demonstrate why we shouldn’t build wind turbines in the countryside – I won’t insult your intelligence any further by trying to explain his reasoning.

This complete scientific illiteracy coming from marginal politicians would be laughable if it weren’t being mirrored in more subtle ways by the government itself. There has been a lot of discussion about how to best avoid future flooding, and a number of Conservatives have claimed that dredging the rivers would do the trick – that is, removing the build up of silt from the banks of the rivers to allow water to flow more freely. In actual fact, this wouldn’t do a lot – it would primarily just move the water downstream at a quicker rate, simply flooding a different town. So if it’s not actually a useful response, why are so many politicians suddenly pushing it?

The most sensible response to the issue would be to accept that flooding is here to stay. Because of the changing climate, the UK will start to experience more and more bad winter storms like these in the years to come – perhaps not every year, but certainly on a more regular basis than previously. And if flooding is here to stay, we should engineer our rivers to collect flood water on land that has been set aside specifically for the purpose of being flooded – essentially creating a small lake that will flood each year in the winter and then drain in the summer. This will collect most of the flood waters, reducing their impacts on towns and villages.

But that will not be suggested by the politicians, because it would mean converting agricultural land back to natural land – rich landowners wouldn’t be able to plant any crops on this new flood land, which means they would lose out on a fraction of the generous subsidies they receive from the British government and the European Union. The rich landowners would rather see the people in rural towns and villages get flooded instead, despite the devastation it causes to these communities. And, because this is the way things happen in the UK, when the rich want something, they get it. Hence, the politicians suggest useless dredging rather than any serious solutions.

In the end, then, this is not so much an issue of climate change as it is an issue of political will. As long as it suits the government and the landowners of the UK to do nothing, nothing will get done, and we will continue to suggest minor changes that will not really impact on the problem. It’s time for the UK to understand that these floods are a wake-up call – to realize that climate change is not going away, and eventually we will have to take real action to deal with it, even if it hurts the rich while benefiting the poor.

UK climate change, UKIP, Nigel Farage, gay marriage, scientific illiteracy, marginal politicians, UK flooding

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