Sunday, 18 May 2008

Investigating Al-Yamamah

Two BAE officials just got detained at a US airport as part of the US Department of Justice's investigation into claims that BAE bribed Saudi princes to secure the largest British export agreement ever.

The question that pops into my mind is: Why the hell is the US government investigating this?

I mean, what business is it of theirs? It's a British company who's (allegedly) bribed Saudi princes. It's also a British company which sells vast amounts of equipment to the US military. It's also a British company that wants more access to the US defence market... It's also a British company that is under low-level but constant rumours of a possible merger with US defence giants. The US government and contractors, it turns out, have some big links with BAE. The question still stands though, just in a different guise: Why would the US government want to investigate this?

I honestly don't know but I see a few possible reasons:

1) The British government knew that it couldn't continue the investigation because the Saudis would go apeshit and cut off all defence contracts with BAE, seriously hurting a company which employs 111,578 in one of Britain's hitherto most successful manufacturing sectors. There's little risk of them doing the same with the US because the relationship of power is inverted there: The US has substantial power over the Saudis, whereas the Saudis have some leverage over us. So the British government called off the investigation and got the US to start theirs. I don't think this is that reasonable though: Why would the UK government want to risk discrediting a major British company?

2) The US Justice Department is going on a crusade to make itself look good and to gain their own, extra, leverage over the Saudis and the Brits. If this is true, expect the investigation to never really come to a conclusion but to fizzle out silently.

3) The US government wants to discredit BAE to protect their own defence contractors from competition, especially after BAE's takeover of Lockheed Martin's Aerospace Electronic Systems division. Potentially they also want to force BAE to lose the contract, hurting them massively and make the option of a takeover/merger with Boeing look far, far more attractive for both parties. And given the option between a US takeover or a collapse of BAE, I am sure that the British government will choose not to exercise its golden share rights.

I'm not sure but I'll say this: I am glad that the SFO did call off the investigation. I think it's morally wrong and touching on the criminal but it's protected a lot of jobs and families and at the end of the day, I don't think the British government should be investigating an arms deal that has done so much domestically. Especially when the only victims will be British workers and executives. It's not a secret in the arms industry that deals are often only signed once substantial "incentives" are offered to those doing the signing in the recipient country and I have no doubt that BAE was not the only firm offering these alleged bribes.

Simply put, calling off an investigation is a bargain to save thousands and thousands of jobs.

Friday, 16 May 2008

In Defence of the Closed Shop

A man is forced, against his will, to join an organisation. If he does not, he loses his job and is thrown onto the dole.
Is this justifiable? Because this is the undeniable truth behind any idea of a closed shop: You join the union and if you do not, you lose your job. Many are critical of this, but I would say that this is justifiable. A man working in a unionised workplace is protected by the collective bargaining agreements regardless of whether he is a union member. I argue that by working in a unionised workplace the man has already forsaken his right to not be a member of a union. I argue that a worker in a unionised workplace who is not a member of a union is the typical 'free-rider' of economists. But, these two statements must be tempered and a closed shop must have effective and regular checks and safeguards.
To be specific about what I mean about a closed shop, I am using the British usage. That is, unlike in America, it is not required that you are already a member of a union to get the job. Rather, if you get a job in a workplace with a closed shop, you are expected to join the union or at least fund the union's activities.
The essential problem with not having a closed shop in a unionised workplace is that some workers can benefit by not paying union dues whilst still reaping the benefits of the union's activities. If a union has 60% density in a single workplace and negotiates a 4% increase in wages or a decrease in working hours of an hour a day - this does not just apply to the 60% of the workforce who are in the trade union. This collective bargaining agreement applies to all workers. So if the non-unionised workers who do not support the activities of the union are benefiting, should they not be supporting the union that benefits them?

It is the free-rider problem in it's purest sense.

The question is then, how can you manage the closed shop? I would place two requirements in order for there to be a closed shop allowed: Firstly, the workforce as a whole, not just the union members, must consistently (as in yearly) vote for it. Secondly, a certain percentage of the workforce must be a member of the union in question before the vote can take place. To be more specific I would say that the majority voting for a closed shop needs to be a qualified majority (say 70%) and the union density should be at least 30%. This would prevent using the closed shop as a tactic to quickly spread trade union membership without the leg-work that is not only usually involved but which should be involved in getting members. This would also prevent situations where a sizeable minority of workers do not feel the union acts in their interests from being forced to join it.

The point of a closed shop is not to force a minority who do not feel well represented by the union to join that union but instead it is to force a few who are well represented by the union to contribute to their representation. Anyone who would use the closed shop to enforce a union's institutional power and not to ensure that a union can properly conduct its work has a fundamentally wrong attitude to workplace relations.

Unions are only effective if they are, for the vast majority of members, a voluntary issue.

Thursday, 15 May 2008

Development Issues...

I've got a bombshell to drop... I don't support giving development aid to developing countries.

Not a very traditional socialist view, is it? The Labour Party championed the 2005 G8 conference pledging billions in debt relief and development aid. We all remember those white bands demanding that something be done to "end poverty now". But does development aid really end poverty? Can it really help developing countries drag themselves out of the pre-industrial age?

First of all let me state what I mean by development aid: Multilateral (World Bank/IMF) and bilateral (USAID, our own DFID, etc...) grants and loans that are used to develop infrastructure, some public services or build economic assets such as the infamous Tanzanian shoe factory or Uzbek cotton mill. This does NOT include aid to help conquer diseases such as malaria or AIDs or famine relief. I also do not believe that we should cut down on the amount we spend on aid, but that it should be focused on, say, malaria, giving everyone access to malaria drugs and preventative treatment. We will help these countries far more by eradicating easy-to-cure diseases that decimate the working population than through handouts of development aid.

My essential point regarding development aid is this: The aid givers (rightly) demand some level of control over how the aid is used and in what context. Also, development aid is not sustainable because it is, like any charity, dependent on the goodwill of the donor. Because of these points, governments become less accountable and by the very nature of aid being charity, can be withdrawn at any time.

One consequence of the conditionality from the aid programs is that development will take place according to the templates and theories of development that the donor institution subscribes to. Given that there are many, many different institutions active in development, the programs differ greatly. It cannot be argued that the World Bank offers the same aid and conditionalities as does, say, the Norwegian government or ActionAid. These organisations operate in many different countries and in any one country you can find programs run by dozens of multilateral institutions, foreign state development agencies and aid organisations. This confuses the picture greatly and adds up to a situation where billions of dollars may be spent over a few years, but are spent on so many uncoordinated programs that there is not any single part of these countries that can develop effectively. How can a good, universal and effective education system be implemented when so many different organisations are involved, each imposing their own conditions? How can the needs of the local economy be met when the education system developed with aid is unsuitable to that country?

Disorganisation and a multitude of competing incentives is not the only problem associated with conditionality. Even if there was only one over-arching program of the programs of development aid in each country, these countries would still be subject to the conditions imposed by the donors. Conditionality in and of itself is not wrong - we have seen the massive corruption that occurs when leaders are just handed hundreds of millions of dollars and given free reign to do what they wish with it.

The biggest problem is that for as long as the majority of a government's income is funded by foreign donors, the government will be more accountable to them than to their own people. I am not saying that only democracies can develop - I think the experiences of Asian countries has proven this - but I am saying that a government which is dependent on taxes for all or nearly all their income is far more dependent and accountable to their own people. The success of their economy is the success of their government. A Thai leader can be undemocratic and put tanks on the street, as has happened, but at the end of the day they still draw their salary, pay for their tanks and for their police with money collected from the Thai people and not from the IMF. The same cannot be said for a country such as Uganda. In Uganda aid makes up 11.5% of their GDP. Taxes are 12.1% of GDP. This means that even should the Ugandan government take on no debt whatsoever, for every £1 spent by the Ugandan government another 95p is spend by aid agencies, largely through the government. How can the Ugandan government exercise freedom and control over it's affairs when nearly half of all they money passing through their hands comes from foreigners, imposing conditions on it's use?

Development aid hobbles the social and political development of developing countries. It maintains the colonial mindset of dependency on foreign countries and foreign wealth. It is also completely unsustainable.

We saw throughout the Cold War massive amounts of aid and other assistance, often in the form of loans, being given to developing countries. But as soon as the competition for third world countries stopped, the need to keep these countries on side fell by the wayside. There was no need to prop up these friendly governments anymore. The ones backing the Soviet Union had to fend for themselves and the ones who had backed us were progressively ignored as we embraced the 'peace dividend'. This experience on a global level has been re-enacted dozens of times in specific countries around the world. The developed world takes an interest in them, whether for political reasons, economic reasons or honestly altruistic reasons, and begins aid programs. But these programs are completely dependent on the will of the developed world. Should we encounter any tough times, you can be guaranteed that one of the first parts of the budget to be cut will be development aid - What government is going to make the massive PR mistake of continuing to hand out hundreds of millions to foreign countries but becoming stingy with pensions?

All this though is just my explanation for why I think development aid has failed and will continue to fail. I think it's a fairly accurate, if very brief, description of the failures of development aid. The strongest point I have to make about aid and development though is this:

There has never been a single country which has developed because of development aid. Not a single one. EVER.

We have been spending billions and billions and billions of dollars, pounds, roubles, yen and euros on development aid since the end of the Second World War. Yet where are the results? Undoubtedly, many countries have developed or are industrialising. South Korea was one of the poorest countries on earth in the 40s and 50s and yet now has companies selling goods and services around the world and enjoys a standard of living that no Briton or Frenchman would criticise, except, perhaps, the long hours. But South Korea did not develop because of development aid -they did obviously have foreign help, but this was foreign investment and not foreign charity. It was not done on the basis of kindness or friendship, it was done because the foreigners who gave the money and help to South Korea expected a tidy profit at the end of it. The same goes for China, Chile, Brazil, Greece, Israel, Mexico, Thailand and every other middle income country. Using foreign wealth has been shown to be essential to increasing wealth and production yet it has never occured where this wealth is done on a charity basis not on a profit basis.

I spend a lot of my time criticising the profit motive, saying that it has no place in education or healthcare or our prison service. But it cannot be denied that it is a very powerful motive and that in development, it is one of the only ways to ensure that foreign capital is locked into a developing country. An aid agency or development ministry can walk away from a recipient country with nothing but a sense of failure - they never expected to get that money back. But a company? They won't walk away from a multi-million dollar investment easily. And even if they do, the factory they built might not have a guaranteed customer anymore, but the products manufactured in these developing countries are hardly as market-specific as the laser tools built at a British factory. A sweatshop making t-shirts has a large market that isn't just limited to a few customers.

The morality of sweatshops and such I'll debate later, but suffice it to say, I don't think it's awful and I don't think we should stop it.

The essential point is that development can only take place if the states in these countries become accountable if not to their own people then at least to their own economy. If the local companies don't depend on aid which has more conditions about including women than about profitability. It's great to get women involved, but how much does it really help women to get them jobs that they lose once the aid dries up? We like to think of ourselves as these enlightened modern people, who're anti-racist and pretty internationalist.

But one of the most common arguments I've run up against is that these countries aren't capable of running themselves. They don't have the good governments necessary. And I think in many ways that's true, but I always ask: How can they have good governments when we never give their governments a chance to govern?

Equally, how can these countries develop until we give them a chance to develop?

Wednesday, 14 May 2008

Up at 4am

I'm finding myself up at 4am watching a program on refridgeration on BBC4 (And so start the yawns...) called "Absolute Zero". It's not particularly interesting, though if something ever comes up about Bird's Eye and the founder's idea of flash-freezing at a pub quiz, I'm the man to have on your team.

So send in your offers and I'll sort through and find the best ones.

The Real Privacy Issues

Hands up everyone who wants to see a telephoto slideshow of Lily Allen topless on the beach. What about a picture of Pete Doherty and Amy Winehouse "locking lips"? I think I can speak for most of us here (which, given this is the first post, is probably just me and a few of my friends who I piss off enough to read it) when I say that none of us really care.

That is, perhaps, a bit elitist of me, and being the utter and complete hypocrite that I am, I still do read the londonpaper on the tube and derive a particularly indignant pleasure at reading about the antics of the C-listers. What I said above is, in all honesty, what I wish I could say. We all have the sneaking desire to see what these people are up to and that's what makes the papers do it. We all knows it's wrong but we still drool over the embarrassment of Amy and her comrades in (the Hawley) arms.

The question is, how can we stop this stuff without relying on the 'good nature' of such wonderful and altruistic men as Rupert Murdoch? A good start would be to enact the Calcutt Report's recommendations. Recommendations which were published in... 1993.

When David Mellor said in 1989 that the tabloids were drinking in the Last Chance Saloon, few would have thought that the editors and the journalists of the tabloid press would exercise powers that would shock everyone but a particularly cynical ex-agent of the KGB. Telephotography, phonetapping, bribery and blackmail of friends, radio scanners and e-mail intercepts are but a few of the invasive techniques that newspapers have used in the past years to get the big story. If the government were using these powers as routinely and for the petty reasons that the press use them for, there would be uproar. Imagine the protests and the riots if the police were spying on you and telling your wife that you were having an affair or telling your employer that when you were in university it wasn't unknown for you to have the odd spliff. So why do we allow the press to get away with this?

Generally, we don't really mind. If anything, it's a minor positive in our lives - these massive intrusions give us a few minutes of entertainment. For society though, it is negative. It gives the press licence to intrude into the lives of a few people who have been thrust into public prominence. Why do they have that right? They'd claim it's in the public interest, but how is it in the public interest to know what Lily Allen's nipples look like? A more relevant case might be that of David Mellor himself. He was having an affair with an actress and was a prominent member of Major's "Back to Basics" cabinet of the mid 90s. This campaign, viewed as a moral campaign, fell apart as scandal after scandal rocked the Tory Party. It cannot be denied that it is important if the political leaders of the country are preaching morality with their government hats on, but as soon as the hats are off are racing to commit their fair share of sins.

It is not so much the stated aims of the press which I disagree with. I agree that gross hypocrisy by politicians should be exposed. I also agree that it is not only a right but a duty of the press to investigate cases of corruption that the police would not otherwise investigate, such as the cash for questions scandal. It is not a right of the press, however, to harass the family members of politicians, to question their own personal relationships and to demand access into their lives that the journalists would, rightly, consider obscene should the politicians be demanding that access to theirs.

The question is the methods. The Privacy Bill supported by the 1993 Select Committee and the Calcutt Reports gives certain, key, recommendations. Amongst these are:

- Making it illegal to take pictures of private property.
- Making it illegal to bug telephones or publish intimate pictures without consent.
- Buy or sell pictures/tapes without consent.
- Bring back the crime of besetting, stopping the press from swarming around someone's house to demand a response.
- And, most importantly, allowing those subject to a story an automatic right to reply.

This last recommendation is the most important, and I believe, the most urgent one to implement. You can keep these frankly obscene rights of the press and let them take photos of people doing whatever they can invent a way to do, but if you give people a right to reply with as prominent a reply as the allegations made - it will stop the press from silly sensationalism and force them to approach stories reasonably. This law exists in countries all over the world and needs to exist in this country.

It will protect the public from the potential risks of the other recommendations but stop the frivolous stories that are all too often engaged in. Newspapers know that libel cases are expensive and rare and that even if they do lose them, they do not lose a massive amount. But if newspapers know that if they pursue a story just for profit that they know is either baseless or an invasion of privacy, they will lose valuable space in the next day's paper that will run a large risk of embarrassing them and hurting their circulation. And in cases which are not just for profit, stories that have merit and are in the public interest, the response of those involved will inform the debate and help people make up their mind on the issue.

I suppose that this is pie in the sky thinking though. The proposals were blocked in 1993 because the Tories couldn't afford to upset the tabloids who, according to the tabloids themselves, had won them the 1992 election. The tabloids are simply just too powerful for any one government to risk pissing off. And when a big chunk of their profits come from scoops that would suddenly become unprofitable or illegal under the new laws, you can guarantee that the owners will mobilise their papers to block the laws and subsequently punish those who voted for it should they actually ignore the wishes of the lords and masters of the press.

And can you really blame politicians? No-one wants to lose their job and in this world, being a politician is hardly the most reliable of livings...