Regulating Global Finance and the Impact on Developing Countries

Last Friday the Bretton Woods Project organised a panel debate on the financial crisis, to some extent as a briefing for those working in development NGOs, I guess. The talk took place under the Chatham House rule, so it is difficult to go into much detail concerning the differences of emphasis among the speakers. I think I can say that they divided 2:1 on the regulatory failure vs secular build-up of debt account of the origins of the crisis.

I don't think I will embarrass any of the speakers when I say that there was broad unanimity that effective regulation of the global financial system would be possible without the abolition of the banking secrecy afforded by the offshore sector. Indeed some impatience was expressed about the idea that in order to establish effective financial regulation it might be necessary to abolish the offshore sector - as though it was a distraction from the serious business of regulation.

This reluctance to recognise the role that offshore centres play in undermining financial regulation struck me as both interesting and ill-conceived. The offshore sector facilitates and encourages capital flight and enables kleptocrats to operate with a reasonable expectation of impunity. If financial regulation is to have any positive impact on the developing economies then it must surely address the massive problem of illicit capital flows into the Western banking system.

Furthermore, given the proven failure of state regulators to identify and defend the public interest, the continued existence of a machine that might be used for the furtherance of grand corruption in the developed world might be considered pertinent to a discussion of effective regulation. How do we know our politicians and regulators are honest if the means exist by which they might be bribed under conditions of perfect secrecy?

With that in mind, I started to wonder about the relevance of offshore holdings to the UK Parliament's Register of Members' Interests. The purpose of the register is "to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament, or actions taken in the capacity of a Member of Parliament". The receipt of benefits from offshore trusts or other financial vehicles would seem at first glance to constitute something that might reasonably be thought by others to influence a politician's actions, as they pertain to the offshore sector in particular and to financial regulation in general (pace the speakers at last week's meeting).

If we are to love and trust our elected representatives again - and how we long to do so - then it is necessary for us to know whether they have assets parked offshore, regardless of their provenance. Reasonable people can disagree as to whether the use of offshore facilities is consistent with working as a representative of the British people, but we must be able to go about our business secure in the knowledge that our MPs are not being bribed by shadowy business interests.

I am not saying that they are - I am just saying that we have a right to know whether our representatives are taking advantage of a system that facilitates tax avoidance and evasion on an epic scale, given that their involvement in the offshore economy might reasonably be thought to influence their actions.

Spinwatch Article on Public Commissioning

Spinwatch has just published an article of mine on public commissioning. I am now working on summary of the government's plans for public service content in the Digital Britain white paper. The opportunity exists for us to change the economy of knowledge in this country to an unprecedented extent.

There is a little bit of urgency in all this, mind you. The danger is that the Conservatives are going to get in and use public money to subsidise the activities of US-style local TV/media groups. I am trying to figure out what they have in mind at the moment, but it won't be the well-intentioned transparency and accountability liberal bean feast that the government seems to have in mind, let alone the hearts-and-flowers, democratic-to-its-core be-in that I have put on the table.

Investigations Fund Launched

A group of distinguished investigative journalists working as the Foundation for Investigative Reporting have announced the launch of a new foundation to support investigative journalism:

"We have decided to announce the formation of a Foundation for Investigative Reporting to look at what practical steps can be taken, both to experiment with new means of funding essential investigations and to inspire a new generation of reporters. The Foundation will act as an incubator for new ways of conducting journalism and for new ideas of how to finance this kind of reporting."

The foundation will administer a fund that will be used to support investigative projects - more information can be found at their website, http://www.investigationsfund.org.. At the moment the money will come from private donations. The move has attracted some impressive support - the head of communications at Google has signed the letter and the company is supplying technical assistance - the head of the NUJ is listed as a supporter.

The Foundation for Investigative Journalism also call for a debate about the future of journalism.

This is an initiative that is very much to be welcomed. The crisis in reporting is bad and it is getting worse. There is no question that things are going to change rapidly in the coming months, it is just a question of how they will change. It is important for us all to join this debate - only cooperation between professional investigators and an engaged public can ensure that the changes that take place leave us with a strengthened system for providing the public with the information that it needs.

There are two things to say about this initiative.

Firstly, the sums needed to support journalism as a truly effective check on the state and other powerful institutions are truly vast. The government's plan to give £126 million from the TV license to independent news operations should be the focus for discussions about how we fund investigative journalism in the future. If the Foundation agitates publicly for a mechanism that does not simply give the money to existing institutions it has a real chance to make an important impact on public life in the immediate term.

Secondly, the commissioning process is the crucial point to address. If the public is going to fund investigations through the TV license (or is to raise funds by any other mechanism, such as introducing a levy on certain classes of company) then the public should determine which subjects are investigated. Someone has to decide what gets investigated. If public money is being used, and the aim is to defend and promote the public sphere, then the public should decide how that money is spent.

The practice of investigative journalism will be changed by the introduction of public commissioning, but it is a change that should be embraced by those who wish to see journalism become a civic resource that is truly able to call established power to account and give us due warning of impending disaster.

To find out more -

http://public-commissioning.socialgo.com/home.html

http://www.facebook.com/group.php?gid=120980901717

Responses to "Digital Britain"

Lord Carter has complained today about the media response to Digital Britain:

"I think 90% of the people that are writing these articles have not read the report. But that does not stop them producing 2,500 pieces of copy, almost all of which are inaccurate."

Carter has a number of complaints, and seems particularly exercised by Sir Michael Lyons' (the head of the BBC Trust) habit of calling the television licence fee 'the BBC licence fee'. And it is certainly true that in the masses of coverage of the report I have seen, the proposals for contestable funds for regional and local journalism have been either entirely absent, downplayed or else have suggested that the new funds would go to already established commercial operations. Here's Oliver Luft in the Guardian, for example:

"Each consortium is likely to be made up of existing TV news providers, regional newspaper groups and other media organisations, several of which – including Guardian Media Group, STV and the Press Association – have already expressed an interest in the scheme."

This claim seems to run somewhat counter to what Digital Britain actually says:

"It is clear that additional funding could achieve substantially more per pound of input in the hands of new operators using new media than to sustain a legacy broadcast network and studios for regional news ..." (page 142)

The prose is a little opaque, but it isn't obvious that the authors of the report think it likely that the news consortia proposed will be made up of existing media operators. And indeed if they were it might look like an extra treat for shareholders and senior executives rather than a way of defending and promoting journalism as a civic resource.*

The established media operations have no great interest in promoting the idea of public commissioning. Only the public can promote an idea that cuts across of some many institutional interests.

I wonder if such a public exists in Britain?

*I have finally finished Digital Britain, and the Guardian gloss is in line with its comments on New Consortia on page 156 of the report. These comments do seem to contradict the spirit of the section of the report quoted above. They also sit uneasily with Ofcom's comments earlier this year about the likely costs of replicating ITV's regional news coverage. I explore these and related issues in a summary of the implications of Digital Britain for public service content.

Lessig and Kelly on Socialism

Larry Lessig has taken issue with Kevin Kelly's use of the word socialist to describe the new forms of organization that are emerging on the web. Lessig feels that socialism must entail state compulsion and that to describe the free collaboration online as socialist is to misuse the word, or to use it in a way that is inevitably misleading.

Lessig's hypothetical example, of using the word fascist to describe Obama's policies, is interesting. It would be a major loss if the racist and hyper-nationalist complexion of really existing fascism made it impossible to trace important similarities between the corporatist and anti-democratic politics of the mid-century and the current moment. Another comment has pointed out that it would irresponsible to call Obama's policies fascist and leave it at that. This is exactly correct. His attempts to shore up corporate capitalism with state intervention should be considered in light of what we know about Italian and other forms of capitalism - there are other important parallels, with Britain's National Government in the thirties, for example, But it would be an impoverishment of debate if the connotations of the word fascism made it impossible to make distinctions between elements in fascist thought and policy.

If we turn to socialism, the Marxist tradition contained with it a strong anarchist component - these people were often denounced and killed for the crime of 'left deviationism'. But it is not true to say that Marxism entails statism - Marx has no plausible account for how and why the state would 'wither away' after the Revolution, but that is what he hoped would happen, and many, though by no means all, of his followers agreed with him. And Marxism is not the only, or the most important, tradition in socialism today. The anarchists are dedicated to the end of coercion and see themselves as socialists. Chomsky doesn't describe himself as a libertarian socialist for larks, after all.

There is a strong statist tradition in socialist thought and practice - but there is also a tradition of seeing the state as an institution to be transcended by free human beings engaged in free cooperation and collaboration. There are plenty of problems with describing the various initiatives on the web as socialist, but they cannot be resolved by lexicographical fiat.

Science and the Public Interest

There was a thought-provoking program on scientific innovation on Leading Edge last night, which I caught on my way to the Apollo in Herne Hill. They interviewed an author and engineer called Anne Miller who has studied how to overcome resistance to new ideas in some detail and has written about her findings in a book called The Myth of the Mousetrap.

They also spoke with someone called Don Braben, a scientist who is vehemently opposed to the idea of leaving science to the vagaries of peer review. He proposes that much more research has a genuinely 'blue skies' quality - that is scientific managers concentrate on hiring creative people and then give them the freedom and the time they need to explore things that interest them. This seems like exactly the right approach to science, and is close to what most of us think science is supposed to be about - a mass of divergent projects some of which might end up having some interesting results, a few of which will end up changing the world.

But the current model of proposal and peer review works against this culture of scientific freedom - ideas that might turn out to be world-changing will often (nearly always, perhaps) seem preposterous to a group of informed experts. The difference between a truly innovative approach and a blunder can only be established in retrospect.

I have been arguing for a while that in journalism the public needs to be much more closely involved in the commissioning process. In science I think the public's role is somewhat different. Part of our responsibility is to ensure exactly the kind of scientific freedom that Braben advocates. There is a place for applied research, that is for research within established parameters that does not seek to achieve game-changing results. This kind of research can and should be open to much higher levels of public scrutiny and involvement - it is, after all, our money. But some significant portion of research should be left at the discretion of scientists themselves. Every effort much be made to create a space in which curiosity is given free rein.

To put it another way, some science is like journalism, in that the researcher knows what they want to find out and broadly how to go about it. Some science isn't. It is speculative and easily dismissed up until it is proved to be correct. The challenge is to replace the oligarchy of peer review with a democratic field of public engagement with science on the one hand and an anarchic space for individual inquiry on the other.

A Note on Public Commissioning, Again

What?

Public commissioning is a process by which the public directly controls the funding of investigative journalism. The principle is simple:

Public subsidies to journalism should be spent at the discretion of that public.

In public commissioning journalists write up and present proposals. They can vary in scale and scope from a few weeks to a few months, from the local to the national, from single journalists to teams. The proposals are also made available in printed form in the local library and online. The public can vote for the projects they want to support.

Why?

The existing commercial models for funding journalism are in crisis. Public money will be required if journalism as a civic resource is to survive. But existing state-owned and private media have not proved equal to the task of investigating the state or the dominant interests in the economy. Indeed it is clear that they are structurally unable to do so.

Public commissioning presents an opportunity for the public to gain the information it needs in order to be meaningfully sovereign.

Who?

Journalism needs more public money. The public needs more publicly oriented journalism. The deal that can be struck is clear.

When?

The time is right for a reform of this kind. The Coalition is now arguing for extensive cuts in bureaucracy. What could be more efficient than removing the editorial filter from publicly funded journalism?

How

A set of practical questions needs to be answered. It is clear that new technology provides us with the means to translate public preferences into funding for journalists. The devil is of course in the details, but this site is intended as a forum in which to work through those details and so deal with likely criticisms and objections.

Where?

The proposals can be discussed here along with other elements of a campaign of media reform.

Today I Have Been Mostly ...

Pointing and clicking.

This morning I set up a social network to organise and promote media reform.

This afternoon I am promoting it through my blog.

I expect you all to sign up this evening and get on with building a democratic media culture. If we all get on with it then we could have the whole thing wrapped up by, oh, Tuesday of next week?