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      

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.  

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!!

Westminster in Never Never Land

Westminster in Never Never Land

The notion that Parliamentary Selections are not campaigned for in any of our Political Parties is another one of those insulting fictions put about by those who want us to believe in Never Never Land (i.e. We are not allowed to grow up). The arrogance of those in the Westminster village is almost beyond belief. So let's have some home truths:

1) Diplomats lie;

2) When found out they claim national interest;

3) Politicians when found out they have supported those lies claim national security - when exposing their hypocrisy is what a mature democracy should have!;

4) Spies spy – that is their job;

5) There is little control over Spies activity because they always call in aid security;

6) From time immemorial bureaucrats (Spies are bureaucrats) have widened and broadened their remit such that personal freedoms are threatened;

7) Having a debate about a possible referendum on Europe while the economy is still 5% smaller than 5 years ago is asinine;

8) Engaging in Party Political bickering when real wages are in decline for the majority and have been for years is puerile;

9) A Prime Minister whose only defence is to attack the opposition (in this case aided by his Dingo Bad Mouther) belies the poverty of his case;

10) Five years after the financial crisis not one Financier and/or Banker has been prosecuted – while we pay for their crimes and they sail off into the sunset with a barrow load of their ill-gotten gains;

11) The metropolitan media live off these stupid stories trying to set the agenda and frame the discussion when ordinary people want some relief from the misery imposed on them by Neanderthal economics;

12) The Welfare State is being dismantled while Conservative MP's have a barbecue at No. 10;

Yes this is a rant. But just to let you know (i.e. Westminster elite and wannabes) we have your number, we know you game – your time may be limited. Real mature democracy has to come!!

Beware Politicians saying trust me

Below is a copy of a letter sent to the Independent 0n 13th June following an article by the Columnist Steve Richards.

Dear Sir,
             Has Steve Richards become an apologist for authoritarianism? (Whistleblowers are more often enemies of liberty than friends of it - Voices 13th June 2013). For democracy to survive the citizen should adopt a sceptical stance in relation to claims by politicians and others that NSA operations (under the Foreign Intelligence Surveillance Act) were within the law and did not monitor the on line activities of Americans. The latter was proven false within 48 hours of President Obama's assertion as the US Government confirmed that it had requested millions of phone records from Verizon to include call duration, location and the numbers of both parties on individual calls. This can only be a pre-cursor to actual monitoring so the words uttered are our old friend the distinction without a difference. The increasing use of the Act can be seen from the following numbers of approved court orders under the FISA:
2009       1329
2011       1745
2012       1856
In that 4 year period only one application was declined.
Having shown that the claim that the FISA did not apply to Americans is false then surely the wording of the Act and the requirement for court orders provide protection for the individual. However that only applies to the USA - no such protection exists elsewhere and the Act (FISA) permits the NSA to investigate any foreign country where it believes US foreign policy interests may be affected. What about the rights of UK and European citizens? Are we a lesser breed?
Steve Richards is also being disingenuous where he states that much of the information about PRISM could have been discerned from publicly available sources followed by thoughtful analysis. Yet it is also claimed that this disclosure has seriously compromised activities via NSA/GCHQ/PRISM. I do not believe that actual or potential terrorists will have missed that!!
As to unintended consequences these are inevitable as would be the case should a Communications Data Bill be enacted in this country. My experience and history show that it is the nature of these bureaucracies to deepen and broaden their activities only to be pulled back after a crisis e.g wrongful imprisonment (remember the Birmingham "bombers").
Yes we do need to be protected against terrorist activities and yes there is a great deal of apathy. That does not mean that elected politicians should simply patronise their electorate by saying leave it to us but should actively engage in a debate about the acceptable balance between security and privacy.


Resources used:
Channel 4 News 10th June interview with Casper Bowden
http://www.bbc.co.uk/news/world-asia-china-22878591
13th June 2013
http://www.bbc.co.uk/news/technology-22839609
13th June 2013
http://www.reuters.com/article/2013/06/11/us-usa-security-eu-idUSBRE95A0K920130611
Independent 13th June 2013
http://www.ft.com/cms/s/0/42d8613a-d378-11e2...
p.s. See also http://www.washingtonpost.com/opinions/daniel-ellsberg-nsa-leaker-snowden-made-the-right-call/2013/07/07/0b46d96c-e5b7-11e2-aef3-339619eab080_story_1.html  (published 8th July 2013)

Labour Struggling with its Past

Labour Struggling with its Past

It was almost a shambles as Labour tried to re-position itself in relation to the national budget/austerity and welfare. Liam Byrne on the Sunday Politics (BBC 1 9^th June 2013) was opaque to the point of complete obscurity - he seemed not to have been fully briefed this applies to a number of other MPs when asked (McGovern [Wirral South] Daily Politics 10th June). Smacks of someone not quite sure what is being done nor why!!

Is re-positioning necessary? Given the political timescales that operate in our system the answer is very probably yes plus the pressure the media has been putting on Labour these past few weeks to come up with some concrete policies. This, in part, is a reflection of the success of the Government in portraying Labour as perennially negative as to reform and therefore not capable of dealing with the real issues of budget and austerity. In addressing the issues many would wish that an approach which drew a more complete picture rather than ad-hoc adjustments to existing positions would help. But we are where we are and now it has to be dealt with.

Dealing with the points above as to why and what. The repositioning is necessary as the General Election is less than 2 years away. Clearly the overhang of blame (partial if not wholly, depending on your personal balance of objectivity versus prejudice) has not been washed away (take note Mr Balls) else Labour's lead in the Opinion Polls would be in the upper teens not bouncing along at 5%. And it is not only the polls - just talk to people they know the score - most of them have lived through it unlike many in the shelter of Westminster and Whitehall!

What to do about the budget deficit? Despite what we might wish for there does appear to be resistance to annual public expenditure exceeding more than 40% of GDP (in normal times and in the UK {for a different take look at Sweden}). Money Lenders (for that is what the Bond Markets do) have regard to that figure although politicians can engender or destroy confidence at the slip of the tongue. I am not saying I support this way of doing things - it is the way things are and likely to be so for many years to come. So the deficit has to come down and (football chant) "We all agree reduce the deficit". However simply reducing expenditure in a random way can lead to what Civil Servants politely call un-planned for outcomes e.g. reducing some benefits will reduce income and therefore spending will decrease which in itself will hold back growth which means a greater demand for some benefits - a downward spiral. Some reductions e.g. Disability Allowances where the cost of the additional administration (greater and more rigorous assessments) exceeds expected savings by a factor of at least 50. This is of course nasty politics by the government because if anyone had to be blamed for the financial situation it is not those on disability. Not only is it nasty but it is stupid - they usually go hand in hand. So deciding what is not at all easy. All the more reason to have a growth strategy combined with deficit reduction. Which brings me to getting people to support what you might wish to do. Overwhelmingly people (when asked about benefit recipients) dislike the apparent non contribution that they make. This has to be addressed! It is the main way in which Labour can reclaim credibilty for its 'welfarism'. This principle of definite contribution means that some form of "workfare" has to be introduced. However this can only be the case where the NMW is vigorously enforced and the "Living Wage" becomes adopted widely. Many in Labour will dislike that idea in which case they will have to seek a more electorally successful policy if it exists. Additionally measures to ensure the proper payment of tax (including a Wealth Tax) by corporations and individuals have to go hand in hand with the restructuring of welfare. Labour must also make clear which parts of the welfare budget are sacrosanct and which are not.

Allowing the media to pick ad hoc which policies to discuss is (and always has been) lazy communication. Time for careful thought and much better preparation!

Resources used:

BBC 2 Daily Politics

BBC 1 Sunday Politics

Independent 8,10,11 June 2013

Sunday Telegraph 9 June 2013

www.heritage.org

Margaret Thatcher

I thought I had better get my two "pen'orth" in as everyone else appears to be so doing. I lived through that period and was engaged in many struggles against her policies. This is not however going to be a rant - I hope it will be a more balanced assessment. MT obviously believed in the power of markets - we now know that, simply applied, this belief is dangerous leading to corruption and enormous inequalities occasioning social breakdown. On the other hand markets do offer the possibility of economic growth and wealth creation. MT shew that it need not be inevitable that the future for Great Britain (in the last decades of the 20th century) would be managing decline. The "big idea" was implemented - freeing up capital markets, floating currency rate, liberalisation of markets and de-regulation. As is so often the case the full implications of such policies had not been properly gauged - if ever that is possible. Consequences in Great Britain were the destruction of manufacturing industries and the elimination of some basic industries (Coal and Steel). With that a new moneyed class was created that traded money or its derivatives while those displaced by these changes were thrown out of work and progressively pauperised. Apologists for MT will say this was not foreseen nor intended but sometimes it is better in politics to own up and say (at least) we should have done better. We are still living with these consequences today. No work contributing to family breakdown and welfare dependency. The destruction of work communities leading to the disappearance of geographical communities with resultant increased crime and misanthropy. "There is no such thing as society" means it's every person for themselves and less concern for the consequences (see City Traders for example).    
Maybe the country needed that kind of shock. Certainly we have witnessed the end of the dream of state socialism so the task for progressives is to marry economic prosperity, a place in the nations of the world and societal strength at home rather than the destructive militant individualism that was the central tenet of MT's beliefs and programme.