In the middle of this year the substantially discredited political class in Westminster huddled together to push through a most illiberal piece of legislation. Its official title is Data Retention Investigatory Powers Act 2014. This legislation was rushed through at short notice just prior to the Summer recess despite the fact that the issues it attempts to rectify (a decision of the European Court of Justice in relation to privacy of the citizen) arose many months earlier. In brief, and of concern here, the legislation provides for the retention of all electronic communication data - in common parlance mass surveillance. Moreover the process by which this will be achieved is: Security Services/Police report to Home/Foreign Secretary who decides whether to proceed for more detail, i.e. peruse the details of particular communications. There is no involvement of the legal system prior to this further action!
Supporters of the Act usually deploy a number of arguments for the Act. Let's deal with some of them:
a) any action will be lawful - not necessarily because if a mistake is made but nothing happens as a result the injured party is not going to be told. See particularly the provisions of Article 8 European Convention on Human Rights where clearly in such a case as outlined there will have been a breach. However alleged national security will prevent disclosure. Yes its where Kafka meets Catch 22.
b) if you have nothing to hide what have you to worry about? - as a patriotic English man and British Citizen I don't have anything to hide but I do want the State to have the ability to peruse my communications with my family and friends nor my legitimate business correspondence especially out of touch Westminster apparatchiks.
c) all the staff in the Security Services/Police are honest and above board and politicians will always act within the law. I am sure we have all had that excuse in business, "That person no longer works for the company - it was a rogue employee". Without going into detail as to a variety of motivations such as money, promotion, principle or just plain voyeurism we only have to recall Weapons of Mass Destruction, telephone hacking, Birmingham 6 and just recently disclosures about Guantanamo. It is simply not plausible to believe what is claimed.
d) we have prevented many terrorist attacks and crimes and have brought many to justice. There is, of course, no independent verification of these claims. So it it is a question of trust?? mmmm!
e) the loss of privacy is worth saving lives - Hazel Blears admits that this is emotive language (progressonline 11th July 2014). This is not the whole equation and certainly there has to be intensive debate before a conclusion may be reached. So the only good thing about the Act is that it has a sunset clause i.e. it lapses in December 2016.
On the technical side the whole project is problematic. In effect unbreakable passwords and encryption exist - some so strong that with today's computing power it could take in excess of one million years to crack them. Take a case where the encryption is breakable it doesn't take a genius to go for multiple layers of encryption enclosing a coded message which may appear meaningless e.g. "The mallard has a green back" with meaning only to the sender and the recipient! How long before an ISP is hacked by a criminal or terrorist or "piggy backing" off some corporate site. I do not know how to but have been told you can spoof MAC addresses (its a security flaw in WPS and I am not aware of the answer). Probably not far off spoofing IP addresses. What about "use once and discard technology", spoof GPS on mobile phones? The point I am making here is that the really serious terrorists and criminals will know all this and will be acting accordingly. Getting involved in a technological arms race is at best never ending and enormously expensive (think how much NSA's Prism and GCHQ are costing)! An example is High Frequency Trading in various stock and financial markets - think also of the mistakes and manipulation.
So my plea is that all these factors have to be discussed in detail before December 2016 and can we all be treated as adults who have much greater experience of life and the foibles of people than most of those in the Westminster village.
Tuesday 16 December 2014
Saturday 28 June 2014
Cameron's Disservice to the UK
When the books are written about the past few
weeks discussions at European level concerning the appointment of a
new Commission President the massive incompetence of David Cameron
will figure large. How is it that in the quest for reform he decided
to fight on the grounds he did – opposing Juncker as the candidate
of the largest Party in the European Parliament following the
continent wide elections in May and objecting to the process saying
it was undemocratic (this from a leader who only won a seat in a
parliamentary constituency and was elected leader of what became the
largest Party in 2010). Whether Juncker is an irretrievable
federalist is relevant but not significant. He will be subject to
enormous pressure from national Heads of government and (strangely
another Cameron criticism) is known as a deal maker! Clearly the
traumas of John Major's premiership and the question of Europe weigh
heavily on his mind. However if it is not clear to David Cameron (it
is, of course, but being deliberately obtuse is part of the
politicians' toolkit, at least in the UK) that many of the so-called
sceptics in his Party really want nothing less than exit from the
European Union. Now I am of an age to remember and to have voted in
the referendum of 1975 and being interested in politics. I also
remember that it was portrayed as Free Trade and Economic Union.
Those of us with an ounce of common knew that if successful such a
union would have to develop politically and that a major driver was
the politics of it all! Put simply it would be very difficult for
constituent parts of a supra-national organisation to go to war with
each other particularly if their trading and economies were so
intertwined. We should not forget that in the 20th century
around 60 million people were killed as a result of wars originating
in Europe.
Turning to David Cameron's strategy and tactics.
It is evident that he needs an urgent refresher on Dale Carnegie's
“How to win friends and influence people”. If he has not read it
then perhaps he should ask for a rebate on his very expensive
education fees! He needs to understand that people do not react very
well to being shouted at and/or threatened especially as they would
claim just as much a democratic mandate as him and that they are
looking after their own country's interests. Nor is it good tactics
to say if I do not get my way then I am not going to stay in this
club. (All too often we witness this “hissy fit” behaviour from
him). Then the arrogant assertion that you will regret this not
having done as I asked. Talking quietly, making the case methodically
and carefully having prepared the ground by developing good working
relationships brings results. David Cameron clearly has spent far to
much time in PR and is now almost detached from reality.
Now I am pro-Europe but nor “starry eyed”.
Reform is necessary but not necessarily in the way David Cameron
wishes. His policy is a mish mash of glib right wing pie in the sky
utterances. It is simply not desirable nor deliverable to have a free
market in goods and services but not have free movement of labour.
That is, not possible and remain an open economy! If we were really
intent on reform we should start with insisting that the accounts be
approved with only minor (in the generally accepted commercial sense
of minor) auditors qualifications. If that is not possible then
the Commission's budget would be progressively cut (say by 5% a year)
until auditors can approve the accounts.
I remain sceptical about political integration but
it is on the agenda and would have been easier to deal with if a
previous Conservative government had not been so keen to expand
eastwards, tellingly not for mainly trade or economic reasons but for
political objectives! (neo-con/liberal stuff and the end of the
USSR). As with many things we have a certain Mrs Thatcher to thank
for that but that is another story.
Thursday 22 May 2014
Advertising - Still a force for Good?
Earlier this year a spat between leaders of the advertising industry and Helen Goodman MP, Shadow Minister for Culture prompted me to look carefully what is being debated. It has become clear that this is another example of a great divide as to the extent to which markets should be left to look after themselves. The belief that to all intents and purposes they (Business) perform better and more effectively when left to the operation of the market has surely been shattered post financial crisis 2008. However that cannot mean the abandonment of markets as history has shown, markets deliver growth and prosperity. As that very left-wing Angela Merkel has said - markets should serve people not be their masters. Such a position (mainstream European Christian Democracy) means that the interface between market operations and society is one of the major concerns of politics and government - hence a completely free hand in business is neither possible nor desirable.
Turning to the particular. What Helen Goodman was saying is in relation to gambling advertising specifically leading to "excessive marketing practices".
Sir Martin Sorrel of WPP interprets this as an attack on the advertising business in total. Now it is accepted that the days of restrained, informative advertising are long gone and now it appears to me that anything goes. A few examples - the furniture retailers who are always having a sale and quoting higher post sale prices that never seem to appear; the supermarkets who now admit to making "joke offers", what was £3.79 last week is now on offer at £5.19. One should wonder what part marketing and advertising played in PPI mis-selling.
I am not advocating legislation to deal with the claimed excessive marketing practices but I have no doubt they have, and continue to, exist. I remain anxious about statutory regulation of the Press but did they not (through their excesses) bring it upon themselves! So Martin Sorrel is wrong to suggest that this is an attack on the business itself. It is an attack on excesses with the clear implication that if companies do not do more in relation to social responsibility than have a budget for it, managed by a middle ranking executive, then intervention will be necessary. Trying to finesse the argument into one of interfering government versus thriving business won't wash. Parts of advertising and marketing need to clean up their act else the political pressure will become irresistible.
Resources used:
Sunday Telegraph 16th February 2014, Martin Sorrel.
campaignlive.co.uk, Danny Rogers, 31st January 2014
Turning to the particular. What Helen Goodman was saying is in relation to gambling advertising specifically leading to "excessive marketing practices".
Sir Martin Sorrel of WPP interprets this as an attack on the advertising business in total. Now it is accepted that the days of restrained, informative advertising are long gone and now it appears to me that anything goes. A few examples - the furniture retailers who are always having a sale and quoting higher post sale prices that never seem to appear; the supermarkets who now admit to making "joke offers", what was £3.79 last week is now on offer at £5.19. One should wonder what part marketing and advertising played in PPI mis-selling.
I am not advocating legislation to deal with the claimed excessive marketing practices but I have no doubt they have, and continue to, exist. I remain anxious about statutory regulation of the Press but did they not (through their excesses) bring it upon themselves! So Martin Sorrel is wrong to suggest that this is an attack on the business itself. It is an attack on excesses with the clear implication that if companies do not do more in relation to social responsibility than have a budget for it, managed by a middle ranking executive, then intervention will be necessary. Trying to finesse the argument into one of interfering government versus thriving business won't wash. Parts of advertising and marketing need to clean up their act else the political pressure will become irresistible.
Resources used:
Sunday Telegraph 16th February 2014, Martin Sorrel.
campaignlive.co.uk, Danny Rogers, 31st January 2014
Wednesday 30 April 2014
Western Capitalism inherently dishonest?
I keep newspaper cuttings to help me keep in touch (this is particularly difficult in the UK due to the excess of comment in our media over actualities and the tendency of many journalists to mix up the two and sometimes to try and set the agenda). Some snippets from the past couple of weeks:
"I believe the markets are rigged"
Brad Katsuyama
Independent 23rd April 2014
This is a review of both a book (Flash Boys by Michael Lewis) and the actions of Brad Katsuyama a financial trader. In essence Mr Katsuyama is saying that in High Frequency Trading (HFT) the market can never be transparent and meet the principles of openness and equality of information (at the time of the deal) as between seller and buyer. He claims that the algorithms used whereby trades are made in thousandths of a second mean that transparency is impossible and that therefore the market is rigged. It has become a race between mathematicians programmers as to who can produce the best system. Negotiation and the application of judgment have gone to be replaced financial and technological arms race! This is without judging whether these trades provide and socially useful purpose other than to enrich the players at the expense of everybody else - pension savers, manufacturers and ordinary folk.
Formula 1 boss Bernie Ecclestone has avoided a potential £1.2bn tax bill as a result of a secret deal with HMRC.
By Darragh MacIntyre BBC Panorama
http://www.bbc.co.uk/news/uk-27144637 28th April 2014
The deal involved a payment of just £10m, according to legal transcripts obtained by BBC Panorama. Revenue & Customs spent nine years investigating the Ecclestone family's tax affairs before offering to settle in return for the
payment from the family trusts in 2008. Mr Ecclestone said he paid more than £50m in tax last year. Panorama's investigation goes back to 1995 when Mr Ecclestone secured ownership of the lucrative TV rights of Formula 1. Shortly afterwards he moved this prize asset offshore, giving the rights to his then wife, Slavica. She transferred them to a family trust in Liechtenstein, before selling them for a huge profit, free of UK tax. It may be the biggest individual tax dodge in British history, and is legally watertight provided Mr Ecclestone did not set up, or
control, the trust. If he had done, Mr Ecclestone has admitted, he could have faced a tax bill of more than $2bn - or £1.2bn. Barrister and tax expert Jolyon Maugham said this was a "pretty substantial" loss of tax. "I'm certainly not aware of anything else remotely approaching that sort of magnitude, in my fairly extensive experience."
UK tax authorities spent nine years investigating the Ecclestones' tax affairs before agreeing a settlement. HMRC does not comment on individual cases, but Panorama has obtained evidence from the previously unpublished transcripts of interviews conducted by a German public prosecutor. One of the lawyers who helped run the Ecclestone family trusts, Frederique Flournoy, told the prosecutor: "In summer 2008, the Inland Revenue offered to conclude the matter if we paid £10m. We decided to pay up." According to Ms Flournoy's evidence, the Ecclestone family trusts earn around £10m in interest every six weeks. Mr Ecclestone says he gave away his fortune to avoid inheritance tax laws that he considered to be "very unfair" at that time. Having gifted the assets to his wife, Mr Ecclestone can't receive payments from his family's offshore trusts. But Ms Flournoy told the German prosecutor he's been receiving payments from his wife since his divorce: "Mrs Ecclestone received disbursements from the Trusts. In other words, she also has a personal asset. That is also the basis on which the divorce ruling fixed the payment amounts to Ecclestone." When asked how high the divorce payments were to Mr Ecclestone, she said: "I don't know the exact figure, however it must be
around $100 million a year."
Mr Ecclestone said his divorce was a "private matter". He says he has always paid his fair share of tax and that he is "proud to be British and proud to make my contribution by paying my taxes here."
Slavica Ecclestone's lawyer said her estate planning was based on legal advice and that she was entitled to privacy in her tax affairs.
A lawyer for the family trusts said Mr Ecclestone has not exerted any control over the management of the trusts. He said the transcripts from the German prosecutor contained errors.
A spokesperson for HMRC said: "The way in which HMRC settles and assures tax disputes has been completely overhauled in recent years, making the process more transparent. "The effectiveness and propriety of such settlements is overseen by a Tax Assurance Commissioner, who publishes an annual
report covering all large settlement cases."
Reproduced without comment.
Hobbling of RBS will cost us dear
Ian Marten
Sunday Telegraph 27th April 2014
Bailing out RBS cost the British taxpayer £45.2bn. Last year RBS made a loss of £8.2bn. Martin takes the view that vetoing bonus payments will make it very difficult for the bank (actually the Investment Bank Arm) to be sold without a substantial loss to the taxpayer. He asserts that all agreed at the time of the rescue that the government would allow RBS to operate as a normal commercial Bank (wasn't that precisely what got us into this mess in the first place?). We then have the tired old arguments about exceptional talent and their requirement for exceptional rewards. If it were truly exceptional there wouldn't be thousands of them! The notion that such neanderthal payment systems do not adversely affect behaviour and contributed to the crisis of 2007/08 is so far removed from reality and understanding of human behaviour as to be a missive from the planet Zog! And no this is not "anti-capitalism" as claimed in the article but a realistic evaluation of how we are where we are and what is required so as to (as best we can) see that it does not happen again. Apologists for continuing with the failed and failing system need to wise up. Away from the metropolitan melee people have seen through this nexus of finance/media/government/city which ignores ordinary people. Hence a veto of bonus payments is right because a start has to be made in reforming this broken model!!
City reeling as disputed US research strikes again
Independent 23rd April 2014
This is really a re-run of the value/accuracy (or otherwise) of the Rating Agencies dispute. A research organization produces a piece of work which results in a 53 per cent drop in a company's share price. Intended or not it cannot be denied that this must be market sensitive information. Yet it appears this can be done without redress.
Now what these examples show is that the market, capitalism, financial operations are actions by people. Bad behaviour will occur where there is the likelihood that there will not be a penalty. Therefore it is not so much the "isms" that need to be addressed but more what is acceptable behaviour and what is not. This is very squarely in the field of politics and no amount of carping will alter that. Perfect competition and transparent markets - equality of information between seller and buyer are principles which have to be upheld and vigorously pursued relentlessly. What has happened in the past few years and is being argued for as the right policy for the future is patent nonsense! So it is not "anti-capitalist", its pro fair markets and equality before not just the law but in dealings with organs of the state.
"I believe the markets are rigged"
Brad Katsuyama
Independent 23rd April 2014
This is a review of both a book (Flash Boys by Michael Lewis) and the actions of Brad Katsuyama a financial trader. In essence Mr Katsuyama is saying that in High Frequency Trading (HFT) the market can never be transparent and meet the principles of openness and equality of information (at the time of the deal) as between seller and buyer. He claims that the algorithms used whereby trades are made in thousandths of a second mean that transparency is impossible and that therefore the market is rigged. It has become a race between mathematicians programmers as to who can produce the best system. Negotiation and the application of judgment have gone to be replaced financial and technological arms race! This is without judging whether these trades provide and socially useful purpose other than to enrich the players at the expense of everybody else - pension savers, manufacturers and ordinary folk.
Formula 1 boss Bernie Ecclestone has avoided a potential £1.2bn tax bill as a result of a secret deal with HMRC.
By Darragh MacIntyre BBC Panorama
http://www.bbc.co.uk/news/uk-27144637 28th April 2014
The deal involved a payment of just £10m, according to legal transcripts obtained by BBC Panorama. Revenue & Customs spent nine years investigating the Ecclestone family's tax affairs before offering to settle in return for the
payment from the family trusts in 2008. Mr Ecclestone said he paid more than £50m in tax last year. Panorama's investigation goes back to 1995 when Mr Ecclestone secured ownership of the lucrative TV rights of Formula 1. Shortly afterwards he moved this prize asset offshore, giving the rights to his then wife, Slavica. She transferred them to a family trust in Liechtenstein, before selling them for a huge profit, free of UK tax. It may be the biggest individual tax dodge in British history, and is legally watertight provided Mr Ecclestone did not set up, or
control, the trust. If he had done, Mr Ecclestone has admitted, he could have faced a tax bill of more than $2bn - or £1.2bn. Barrister and tax expert Jolyon Maugham said this was a "pretty substantial" loss of tax. "I'm certainly not aware of anything else remotely approaching that sort of magnitude, in my fairly extensive experience."
UK tax authorities spent nine years investigating the Ecclestones' tax affairs before agreeing a settlement. HMRC does not comment on individual cases, but Panorama has obtained evidence from the previously unpublished transcripts of interviews conducted by a German public prosecutor. One of the lawyers who helped run the Ecclestone family trusts, Frederique Flournoy, told the prosecutor: "In summer 2008, the Inland Revenue offered to conclude the matter if we paid £10m. We decided to pay up." According to Ms Flournoy's evidence, the Ecclestone family trusts earn around £10m in interest every six weeks. Mr Ecclestone says he gave away his fortune to avoid inheritance tax laws that he considered to be "very unfair" at that time. Having gifted the assets to his wife, Mr Ecclestone can't receive payments from his family's offshore trusts. But Ms Flournoy told the German prosecutor he's been receiving payments from his wife since his divorce: "Mrs Ecclestone received disbursements from the Trusts. In other words, she also has a personal asset. That is also the basis on which the divorce ruling fixed the payment amounts to Ecclestone." When asked how high the divorce payments were to Mr Ecclestone, she said: "I don't know the exact figure, however it must be
around $100 million a year."
Mr Ecclestone said his divorce was a "private matter". He says he has always paid his fair share of tax and that he is "proud to be British and proud to make my contribution by paying my taxes here."
Slavica Ecclestone's lawyer said her estate planning was based on legal advice and that she was entitled to privacy in her tax affairs.
A lawyer for the family trusts said Mr Ecclestone has not exerted any control over the management of the trusts. He said the transcripts from the German prosecutor contained errors.
A spokesperson for HMRC said: "The way in which HMRC settles and assures tax disputes has been completely overhauled in recent years, making the process more transparent. "The effectiveness and propriety of such settlements is overseen by a Tax Assurance Commissioner, who publishes an annual
report covering all large settlement cases."
Reproduced without comment.
Hobbling of RBS will cost us dear
Ian Marten
Sunday Telegraph 27th April 2014
Bailing out RBS cost the British taxpayer £45.2bn. Last year RBS made a loss of £8.2bn. Martin takes the view that vetoing bonus payments will make it very difficult for the bank (actually the Investment Bank Arm) to be sold without a substantial loss to the taxpayer. He asserts that all agreed at the time of the rescue that the government would allow RBS to operate as a normal commercial Bank (wasn't that precisely what got us into this mess in the first place?). We then have the tired old arguments about exceptional talent and their requirement for exceptional rewards. If it were truly exceptional there wouldn't be thousands of them! The notion that such neanderthal payment systems do not adversely affect behaviour and contributed to the crisis of 2007/08 is so far removed from reality and understanding of human behaviour as to be a missive from the planet Zog! And no this is not "anti-capitalism" as claimed in the article but a realistic evaluation of how we are where we are and what is required so as to (as best we can) see that it does not happen again. Apologists for continuing with the failed and failing system need to wise up. Away from the metropolitan melee people have seen through this nexus of finance/media/government/city which ignores ordinary people. Hence a veto of bonus payments is right because a start has to be made in reforming this broken model!!
City reeling as disputed US research strikes again
Independent 23rd April 2014
This is really a re-run of the value/accuracy (or otherwise) of the Rating Agencies dispute. A research organization produces a piece of work which results in a 53 per cent drop in a company's share price. Intended or not it cannot be denied that this must be market sensitive information. Yet it appears this can be done without redress.
Now what these examples show is that the market, capitalism, financial operations are actions by people. Bad behaviour will occur where there is the likelihood that there will not be a penalty. Therefore it is not so much the "isms" that need to be addressed but more what is acceptable behaviour and what is not. This is very squarely in the field of politics and no amount of carping will alter that. Perfect competition and transparent markets - equality of information between seller and buyer are principles which have to be upheld and vigorously pursued relentlessly. What has happened in the past few years and is being argued for as the right policy for the future is patent nonsense! So it is not "anti-capitalist", its pro fair markets and equality before not just the law but in dealings with organs of the state.
Tuesday 4 March 2014
Keeping an eye on Neo-Liberal nonsense
A day doesn't go by without some (never had a proper job) quasi academic spouting off about what we should and should not do! Two examples today of their ideological bankruptcy (why does the media give these numclucks house room?). First William Hague in his statement about Ukraine (House of Commons 4th March 2014) says we must help? Ukraine reform its Labour Market as well as seeking repatriation of stolen property i.e. theft from the ordinary working people of Ukraine by previous politicians and gangster oligarchs. Just a thought but were not these gangster oligarchs previously lauded (by neo-liberals as those who would transform the Ukrainian economy into a vibrant, democratic, market based, European economy! Oh! I forgot: in the neo-liberal mind all we have to do in achieving perfection is reform the labour market because it was all their fault in the first place! Another example of a wilful ignorance of the facts and a proper understanding of human nature.
Two examples today. The second:
just heard: Stephen Davies, of the Institute for Economic Affairs, say: "If you have taken the decision to have a child - which these days is a voluntary decision - why should you then expect other people, in the shape of the taxpayer, to help pick up some of the costs of that decision?"
http://www.bbc.co.uk/news/education-26373725
Now, is it not the case that the government (all governments) want to at least maintain the population for economic, social and cultural reasons. It is one of those unspoken public policies although in France a few years back it became public and explicit. It follows that the government must therefore afford support both for child rearing and child care. Real people do not live in a world/country where the autonomous individual has complete control over their lives as envisaged in the neo-liberal theory. Moreover, as is the case in this report, a talented women had to give up work due to the enormous cost of childcare. The cost now in some cases exceeds the mortgage payments! Failed theory following real world testing!!
Two examples today. The second:
just heard: Stephen Davies, of the Institute for Economic Affairs, say: "If you have taken the decision to have a child - which these days is a voluntary decision - why should you then expect other people, in the shape of the taxpayer, to help pick up some of the costs of that decision?"
http://www.bbc.co.uk/news/education-26373725
Now, is it not the case that the government (all governments) want to at least maintain the population for economic, social and cultural reasons. It is one of those unspoken public policies although in France a few years back it became public and explicit. It follows that the government must therefore afford support both for child rearing and child care. Real people do not live in a world/country where the autonomous individual has complete control over their lives as envisaged in the neo-liberal theory. Moreover, as is the case in this report, a talented women had to give up work due to the enormous cost of childcare. The cost now in some cases exceeds the mortgage payments! Failed theory following real world testing!!
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