Category Archives: Ethics

Posts about ethics and morality

The Only Way Is Ethics

Ethics

The news last week that the financial regulator, the Financial Conduct Authority, was dropping its investigation into the culture and conduct of the banking industry came as no surprise. But it was deplorable and depressing news. With over 50% of Conservative Party funding coming from the City of London, any reasonable person will be highly suspicious as to who leant on the FCA to cancel their review. (Of course, the FCA will deny any outside pressure!) I would expect any genuinely independent investigation into the business practices of financial services would conclude that greed, aggressive pursuit of narrow self-interest and other such unethical behaviour is endemic.

The Way That They Do It

My previous post, The City: Paragon or Parasite, considered the benefits, or otherwise, to the UK of a huge financial sector. My conclusions were that an over-powerful City is bad news for us all. But this is not just about what they do, but also the way that they do it.

The Spread of Unethical Practice

For several months, I had been considering a piece on the general standard of business ethics today. My belief is that the rot started in the City in the 1980s and has spread widely since. I’d welcome a debate on the timing and sequence of events, but my recollection goes something like this.

The banks started it, with unjustifiably high penalty charges and fees, e.g. for going a few pounds (or pence) overdrawn. The spread of interest rates between borrowing and savings rates has gradually widened over the years, enabling banks to cream off more and more of the difference as profits.

Coincidentally, today’s Observer carries a piece by Will Hutton which lists further examples of unethical banking practice. Quoting from economist John Kay, here’s a sample: “Investment banks, according to Kay, have three other main routes to make profits, all deploying the innocent word ‘arbitrage’. In plain English, fiscal arbitrage is playing games avoiding tax; regulatory arbitrage is about doing in one country what is forbidden in others; and accounting arbitrage is about hiding what you are up to.”

After the banks, their cousins the insurance industry continued the decline in ethical standards. They had two main wheezes. Firstly, financially useless products, such as PPI, were aggressively sold via retailers. Secondly, they started pushing up prices to “lazy” existing customers on premium renewal, whilst aggressively price-cutting to gain market share from new customers. The “disloyalty bonus” was born.

Next, the privatized utility companies copied the insurers with the same “disloyalty bonus” tricks – see my earlier post Cat and Mouse. They also invented a spectacularly complex mix of tariffs designed to make price comparisons difficult. They adopted the practice of rapid price rises in the retail price of gas and electricity when wholesale prices rose, together with very slow retail price cuts when the wholesale price fell. The petrol companies quickly took up the “rapid rise, slow fall” strategy to retail pricing. The privatized rail companies adopted the “confusing fares” policy.

Major multinational (usually American) online retailers adopted the tax avoidance game through lack of transparency and phoney transfer pricing between their operations in different countries. The customer service call centres of major brands offer appalling service. I recall a survey which showed customers wait six or seven times longer to get a reply from customer service numbers than from sales departments.

The market for mobile phone service is fiercely competitive. Companies compete mainly on the headline price, with the usual price complexity thrown in to confuse. They have to make their profits somehow. An example is grossly excessive overpricing for some aspects of their service. I was recently caught out by such a practice when I exceeded the limit on my mobile data usage. The effective rate per megabyte was a totally unjustifiable seventy times higher than the package rate.

Whatever Happened to Mutual Respect?

I could go on with further examples, but you get the point. It would be a rose-tinted fantasy to say that all was wonderful in the world of business ethics thirty or forty years ago. But, as companies were smaller, decision making was taken at a more local, and personal, level. Perhaps the pompous Captain Mainwaring-like bank manager was not obviously better than “the computer says no”. But, for the former, normal rules of human behaviour demanded a measure of mutual respect. It’s so much easier to treat your customers badly if the decision is “made” by an online algorithm.

Captain Mainwaring and Computer Says No
Mainwaring v “Computer Says No”

Campaign to Stop the Rot

In those areas where we do have a genuine choice to take our business elsewhere, we have some measure of control. But in the areas of “natural monopoly” like rail travel, gas and electricity, the poor customer feels helpless. In the 1970s, CAMRA (The Campaign for Real Ale) was a great, successful fightback against corporate uniformity and blandness. We need an equivalent “Campaign for Business Ethics” to start the fight back – come on, CAMBErs! Wakey-wakey! You’ve nothing to lose!

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Cheats Never Prosper – Or Do They?

Ethics, Politics

When I was a child, my grandmother had a number of oft-repeated sayings which she saw as part of our moral education. On such saying was “cheats never prosper”. In this post, I want to explore this idea in a variety of contexts: education, gambling, city trading.

Education

Exam cheatingIn this data rich internet age, there is a whole industry of software available to examination boards and universities to detect cheating. With copying and pasting just a couple of mouse clicks, it’s so easy just to plagiarize another’s work. There’s a saying in education along the lines of: “to steal from one other is plagiarism, to steal from more is research”.

Betting on the Horses

Horse racingWhen I first started work in the 1970s, people still took a whole hour for lunch. One of my colleagues regularly spent his lunch hour carefully studying the racing pages of several newspapers. He explained it was his hobby. He made small bets and reckoned, with enough study, he could make about a 10% return on his bets over a year. In the horse racing world, it’s perfectly fine to make a little money this way. What is not right – in fact, illegal – is to use specific information about a jockey throwing a race for gain or similar misdemeanours. Once again, it’s specific, rather than general, knowledge that creates the problem.

City Trading

There’s a similar distinction when investing in, say, stocks and shares. Insider trading is a crime. Using information that is not available to others, for personal gain, is clearly morally wrong. But there is a difficulty here. There’s a continuum between inside knowledge gained through personal contacts and that accumulated as part of one’s daily work as a city trader. Information flows continually around the (electronic) trading floor and the fastest and best at picking up on this will be the winners in this game. A City trader is, after all, nothing more than a gambler with other people’s money. Sebastian Faulks’s 2009 novel A Week in December illustrates this beautifully.

PPI Mis-sellingA further moral hazard – and clearly a form of cheating – in the City was the fixing of the so-called LIBOR rate of exchange between banks. A further example is the mis-selling of Payment Protection Insurance (PPI), which took a further twist this summer.

As so-called financial “products” (of which more some other time) have got ever-more complex, problems have compounded. The ability of people to understand what is going on gets ever more challenging. So too is it harder for regulators to do their overseeing role properly. In all these examples, deciding between what is fair and what is cheating becomes harder and harder.

Conclusion

The orthodox economic view since the 1980s asserts that unfettered free markets make the best – indeed the only – way to run economies. The not-so-implicit subtext is that “greed is good”. This, in turn, gives encouragement to those who have few scruples about how they make their money. The key message about cheating becomes: “don’t get caught”. And yet, (mentally healthy) human beings have brains that are hard-wired to the concept of fairness. We have lots of evidence that cheats appear to prosper – at least, for some of the time.

Perhaps my grandmother was wrong – but I, and many others, don’t like it.

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Vive la Paix

Ethics, Politics

Peace Eiffel TowerFrancois Hollande’s headstrong language of war echoes earlier comments by George W Bush. Look where that got us. At least Barak Obama seems to have learnt the lessons of the recent past with more balanced, statesmanlike comments so far.

With whatever it takes to overcome the psychopathic, murderously intolerant ideas of Salafist ideology, we must never forget one thing. Our ultimate goal must continue to be to build a world of peace, toleration and mutual respect. Hard to imagine right now, but we, civilised, humans must just keep on trying. We will stumble and deviate many times on the way. But together we must continue to search for a path to a better future. Our children and grandchildren deserve no less of us.

Long live peace.

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Two Castles (part 2)

Ethics, The economy

… but castles built on sand!

In the first of these two posts on the power of the human imagination I covered the case of religion. This one is on:

Free Market Fundamentalism

I will firstly look at the false doctrine which has monopolised economics thinking for 35 years and then at the specific case of the thinking that caused the 2008 global crash.

Religious Style Dogma

Neoliberalism – what I call free market fundamentalism – began to have an impact on Western political thinking, particularly in the US and UK, from the late 1970s. Its ideas began to take hold from work by Milton Friedman and others, drawing on Friedrich Hayek, at Chicago University. Chile, under the dictator General Pinochet, was an early practitioner of these ideas, with disastrous results for the majority of Chileans. The ideas then took hold in Western governments, in influential bodies such as the World Bank, International Monetary Fund and World Trade Organisation. Central to the new doctrine was the rejection of Keynesian economic ideas, the supremacy of the free market, lower taxation and reduction in the role and scale of government.

The effects, over the past 35 years, can be summed up as follows:

  • Economic growth in the developed countries slowed to about half of the rate of the previous 30 years
  • Income and wealth inequality increased dramatically: only the very rich have seen a rise in living standards
  • The scale and frequency of major economic crises increased.

It’s obvious to me that this 35-year experiment actually failed with the crash of 2008, but government and other key institutions have carried on as if nothing wrong has happened. University departments have been teaching this doctrine as if it were the only way to run an economy. This has led to students from several universities holding protests demanding that their syllabuses are widened to explain the 2008 failure and to include teaching rival economic theories.

Osborne Machiavellian Prince
Osborne: Machiavellian Prince of the FMFs

The dominance of free market fundamentalism has all the hallmarks of old-style religion. And just like such religion, it is based upon false premises:

  1. The only motive human beings have in making (economic) decisions is the pursuit of material self-interest. Not so: see my earlier post Being Human II: The Four Cs, or as highly-regarded Cambridge economist Ha-Joon Chang puts it: “… we have many other motives – honesty, self-respect, altruism, love, sympathy, faith, sense of duty, solidarity, loyalty, public-spiritedness, patriotism and so on” from 23 Things They Don’t Tell You About Capitalism (2010).
  2. Market participants (companies, individuals) know what they are doing, i.e. they make rational decisions. Again, to quote Chang: “The world is very complex and our ability to deal with it is severely limited”. A trivial example is people queuing at a busy bus stop so that everybody doesn’t have to remember the order in which people arrived. 1978 Nobel prize-winning economist Herbert Simon wrote about “bounded rationality”, which describe how people’s ability to make rational decisions is severely restricted when faced with complex problems. Government regulations, the notorious “red tape”, work by restricting choice and simplifying problems, reducing the risk that things may go wrong.

As we saw in part 1 of this post, it is possible to build great cathedrals and great intellectual arguments on false assumptions. The same applies to the advocates of free market fundamentalism. The next section illustrates the crucial example which led to the 2008 global financial crash.

A Case Study: Fool’s Gold

Gillian Tett is a highly respected journalist for the Financial Times. She has a PhD in social anthropology from Cambridge University. She wrote the book Fool’s Gold in 2009. She uses her anthropologist’s insight to tell the story of the group of highly intelligent, innovative bankers who invented the complex new financial products which led to the 2008 crash.

The story starts in Florida in 1994, when a group of J.P. Morgan employees held a conference to develop ideas to develop the market in derivatives. These are complex products which “sit on top” of traditional loans and mortgages. But these traditional products are bundled up and repackaged in a way in which they can be sold again in a different form which, on the face of it, reduces the risks of default. These clever people worked out that at this bundling and repackaging process could be repeated and re-sold. Banks could then earn commission several times over on ever-more complex products based upon a given set of “real” assets (e.g. property). The whole scheme involved complex mathematical models using the ever more powerful computers becoming available.

There was one problem, however. In a certain set of highly unlikely circumstances, there was a risk of huge losses derived from assets worth a fraction of the money at stake. But the computer programs which produced the figures for the products did not contain any way of expressing this small risk. The risky circumstances were so unlikely that J.P. Morgan and subsequently all its competitors launched these new products and made a lot of money.

Actually, there was another problem. Once everyone in banking had jumped on the bandwagon, nobody other than the original group understood about the tiny risks. Neither did the financial regulators. In other words, nobody selling the products knew what they were doing.

But – wait for it – there was a third problem. Those tiny risks weren’t as tiny as the original clever people thought. Most people who’ve looked at the workings of markets will have heard about “bulls” and “bears”. These exemplify the lemming-like behaviour of market traders when sentiment changes from optimism to pessimism. (A good example is when, in 2010, George Osborne falsely compared the UK economy to that of Greece). When the markets got themselves into one of these spells of irrational behaviour and everyone started selling, the whole house of cards fell down. Matters were saved from getting much, much worse by the intervention of those institutions so hated by free market fundamentalists: national governments. This means that the original clever people got their models wrong.

So deregulation – leaving markets to themselves – is crazy when they don’t make rational decisions: they don’t know what they’re doing!

Conclusion

So people don’t behave like Hayek and Friedman said they do. And the only people who have benefited from continuing the pretence are the super-rich, large corporations and the politicians who represent them.

Overall Conclusion

By linking together this and my previous post, my overall point is that it is possible to build a very sophisticated logically consistent set of ideas (and real objects like cathedrals) based upon false assumptions. Other obvious examples are the Tea Party movement in the USA and our own UKIP. Modern communications makes it easy for like-minded people to network their ideas for mutual reinforcement, untroubled by inconvenient truths.

These towering “castles” can look very impressive. They can bring great joy and comfort, for example, in my “magical” Lincoln moment. But they can also bring tremendous grief and pain – think of murdering pro-life extremists in the USA motivated, ultimately, by the loopy idea of “ensoulment”. The more impressive-looking these “castles” become, the more likely people are to believe the whole package of ideas is true. But if real foundations don’t exist, these are no more than castles built on sand.

 

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Two Castles (part 1)

Ethics, Religion

… but castles built on sand!

This is the first of two posts on the power of the human imagination. The second is on the economic theory I call free market fundamentalism. But this one is on:

Religion

I will look at this through two very different perspectives: architecture and philosophy.

Architecture

I am what some may think is a contradiction. I am a humanist who enjoys walking around churches and cathedrals (well, some* at least). I love a good cathedral: the sense of space, tranquillity, the sun streaming though stained glass, the lofty, vaulted ceiling. All these combine to produce a mixture of joy, wellbeing and a haven of calm secluded from the frenzied pace of 21st century living.

I have sometimes tried to imagine these great buildings at the time of their construction. Whole armies of people – architects, stonemasons, carpenters, artists and more – working to a common plan. Perhaps 4 or 5 generations of these workers spent their entire working lives on these awesome structures, the early generations never living long enough to see the finished design. The buildings themselves would tower over the modest mediaeval dwellings to a greater degree than they do in today’s cities.

Lincoln Cathedral
Lincoln Cathedral

A memorable occasion was a visit to the beautiful Lincoln Cathedral one Saturday afternoon when my wife and I were taking a weekend break in that delightful city. By sheer luck, we entered just as a concert of religious and secular music by a barber-shop quartet a capella was starting in the choir of the cathedral. The acoustics were fabulous and, combined with the inspiring surroundings, the effect was – dare I say? – magical.

These great buildings stand as a proud monument to the skills and imagination of people long since dead and they continue to bring awe, joy and peace of mind today.

*Two counter-examples spring to mind. The first was an overbearing gothic monstrosity in Prague, with walls dripping with artefacts in gold-leaf and marble. The overall effect, I presume, was to intimidate and bully the flock into believing in the church’s teachings. The sense of claustrophobia was oppressive. I came out of there muttering comments about “architectural fascism”. The second, perhaps unsurprisingly, is the obscene excrescence built in the middle of the elegant Great Mosque in Cordoba. I rate this as the worst act of architectural vandalism I have ever encountered. Both are exemplars of what I call “Catholic tat”. I feel truly sorry for anyone impressed by these disgusting shows of wealth and power.

Philosophy

As a non-believer, I continue to be fascinated by the philosophical (and theological) reasoning given by religious apologists for their belief in God. This led me to sign up for a weekend course at Cambridge on the question of “God and evil”. I didn’t know what “theodicy**” meant until recently: I’ve now read quite a few of them, together with their critics’ responses.

Saint Augustine
St Augustine

What has struck me about these theodicies is their sheer complexity and sophistication. The arguments get more and more nit-picking as the meaning of words and concepts are dissected to an ever-finer degree. The CVs and credentials of protagonists on both sides are often highly impressive. These sometimes towering exercises in thought are the metaphysical equivalent of the physical structures of the great churches and cathedrals discussed above.

But the whole enterprise of theodicy has left me with two thoughts. Firstly, building a whole structure of ideas on what I believe to be a false premise reminds me of a parent teaching a child not to lie. Children, having told a little “fib”, usually get found out. On cross-examination by a doubting parent, they have to elaborate a whole pile of further, less and less plausible, lies to maintain consistency in their story. One can see the relief on a child’s face when they finally confess the truth: the sheer effort of lying is much harder than telling the truth in the first place.

This leads me to my second insight. My own conviction that God doesn’t exist essentially comes down to the attraction, for me, of Occam’s Razor. Simplifying slightly, this principle can be stated as follows: given two alternative explanations for a phenomenon, the simpler is to be preferred. This is because it is more likely to be true. Given the choice of explanations for evil between the complexity of any theodicy and the alternative that God does not exist, the latter wins hands down.

**It’s basically a reasoned argument put forward in an attempt to reconcile the existence of evil in the world with the existence of an all-seeing, all-powerful, perfectly good deity.

Conclusion

What both these examples illustrate is the sheer scale and complexity of the “castles” – physical and intellectual – that can be built by the human imagination, even if their “foundations” are made of sand. (Not literally, of course, in the case of the cathedrals!) Even so, as I have shown, they can bring great benefit and happiness to humankind. But they can bring great misery and suffering, too, as I plan to demonstrate in Two Castles (part 2).

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Buying Power

Ethics, Politics

In a recent blog post, Cat and Mouse, I discussed the frustrations of buying gas and electricity in the pseudo-market of 21st century Britain. In this post, I am looking at buying power of a different type: political power.

UK Government cabinet
Policies for sale here

The recent ludicrous vanity project by billionaire Michael Ashcroft, his unauthorised “biography” Call Me Dave, made tabloid headlines. These highlighted some ridiculous uncorroborated claim about Cameron and a pig. Like the subject of the biography, I treat the story with the contempt it deserves.

But most newspapers seemed to have missed the most shocking aspect of this story: the casual assumption by Ashcroft that, by donating vast sums to the Tory party, this assured him of a key role in Cameron’s government. The unremarked assumption that money buys political power went largely unchallenged.

From fundraising dinners during the Conservative Party Conference, through the notorious Black and White Ball each February, to the Donor Clubs on their own party website, the Tories make it clear they’re up for sale. And of course, there’s that perennial unreformed bastion of patronage, the House of Lords, where party donations and seats are often “coincidentally” linked.

So when a politician next makes the claim that Britain’s political system is one of the least corrupt in the world, think carefully before you accept their reassurances.

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Nasty, Indeed

Ethics, Politics

It’s ironic that it was Theresa May who reminded us, at their party conference, that the Conservatives are the Nasty Party. It was the same Theresa May who, a decade earlier, had issued a warning to her party that they were in danger of being so branded.

Theresa May speechThe overall tone of her speech, presumably part of the jockeying for leadership after Cameron stands down, was very ill-judged indeed. Even the Telegraph agrees! There are enough bigots, racists, xenophobes and worse in the country without the Home Secretary of the day feeding their prejudices. It was also unforgiveable to include a downright lie that immigrants do not bring economic benefits to the country, contradicting a whole range of well-researched reports on the subject.

When it comes to immigration, the Tories, of course, have form:

On the last point, I did some simple maths based upon Cameron’s cynically calibrated offer to take 4000 (of the 6 million) Syrian refugees a year. The local authority area where I live has a population of 160,000 and 76 state schools. If we took our fair share of these refugees, we would need to take just 11 Syrians a year into our population. Assuming one in four is of school age, we would need to find just one extra school place per 25 schools in the area. Hardly a threat to social cohesion!

If May is so bothered by threats to social cohesion, she might like to ponder the medium-term effects of making 3 million of our lowest paid working families £1300 a year worse off through reductions to tax credits.

Nasty, indeed.

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Not Above the Law

Ethics, Politics

Last week, the government sneaked* out, with no publicity, a change to the ministerial code of conduct. A bit boring, don’t you think? But read on…

The specific change relates to a requirement for ministers to comply with the law: the phrase deleted states “including international law and treaty obligations and to uphold the administration of justice”. Senior legal academics and the shadow lord chancellor have described the change as “shocking”, ”staggering” and “a slap to Magna Carta”.

A Cabinet Office spokesman shrugged off the change as a simplification which changes nothing. However, a Tory party policy document had promised a rewriting of the code “to remove any ambiguity … about the duty of ministers to follow the will of Parliament in the UK”.

European Court of Human RightsFollowing Tory proposals to opt out of the European Convention on Human Rights currently under consideration in the Ministry of Justice, this paints a seriously worrying picture of a government which does not wish to be bound by the standards of international law. This is made worse given that the ECHR has British – and Conservative – fingerprints all over its conception and drafting. Winston Churchill was an early proponent of the Convention, a former Conservative Home Secretary and lawyer, David Maxwell-Fyfe, was chair of the drafting committee.

The same “Britain is special” thinking applies in the continuing demand for British exceptionalism in the rules applying to member countries of the EU. When the going gets tough at home, there’s nothing David Cameron likes better than to lecture foreigners on how they should run their countries. Banging on about so-called “British Values” is part of the same mindset.

What is it about this present bunch of government ministers that makes them think Britain is so special that the rules only apply to everyone else?

I suppose if you’ve benefited from an education which instils an attitude of entitlement to boss everyone else around, this type of thinking comes all too easily. Our wonderful unwritten constitution, where the government of the day can make up the rules as it goes along, is also a contributory factor. A good recent example is Cameron adding a load of Tory peers to the House of Lords, swelling its ranks to record numbers – after stating previously there were too many members in the Lords. This was based on a new “rule” he’d just made up stating that the Lords should better reflect the composition of the Commons.

But the price paid for our government’s attitude, in terms of loss of goodwill and of any moral standing that Britain may have in the world, is huge – and very hard to win back, once lost.

Coupled with the sycophancy shown to the Chinese government, with its appalling human rights record, we can only expect to see Britain being vilified, ridiculed and simply ignored on the world stage. So much for the government’s claim about making Britain “Great”!

*It sneaked past the government’s own Attorney General, who was obviously unaware of the change at a speech he gave at an International Law Conference later the same day!

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Don’t Eat That!

Ethics, Religion

For years, I’ve enjoyed a certain wry bemusement from the dietary restrictions imposed by the world’s various religions. It seems obvious to me that the vast majority of such rules were based upon common-sense recommendations for healthy eating from a pre-refrigeration age. Some rules do seem to have passed their “best-before” date: a favourite of mine that few of us obey is the rule that it’s OK to eat locusts but not prawns (Leviticus 11:9-22).

One such rule I learnt for the first time a day or so ago, as part of reading about the ancient Greek philosophers. It concerns the followers of Pythagoras – he of right-angled triangles fame – and the absolute no-no of eating beans.

Some background may help here. It turns out that Pythagoras was not just a mathematician and geometer but also a leader of a religious and political cult. Followers believed in reincarnation and that some or all living things – animals and plants – have souls. (There seems to be some measure of disagreement among the Pythagoreans whether all animals had souls and they were even less sure about plants, although they all seemed to agree that laurel bushes did.) Strictly interpreted, about all that was safe to eat was milk and honey: that steak or bunch of olives you’re tucking into just might contain the soul of your dearly-departed granny, so best avoided, eh? These rules were frequently broken, but they were all sure about the beans.

The Pythagoreans faded away about 2400 years ago and subsequent generations of Greeks thought the practice odd and speculated wildly on the origins of the “no beans” rule. Suggestions in circulation included:

  • the flatulence beans cause disturbs our sleep and mental tranquillity
  • beans are testicle-shaped
  • they are shaped like the Gates of Hades
  • they are shaped like the universe
  • they are used in allotting political office (Pythagoreans were no democrats)
  • buried in manure, they take on human shape
  • their stems are hollow and so connect directly to the underworld.

More modern research suggests a more prosaic reason: some people get ill after eating fava beans, which were common in southern Italy where Pythagoras and his cult lived.

What struck me about this story is how easily wild rumours and speculation can gain hold and have some currency – a problem which our modern, digitally connected world can make worse for those who inhabit only those parts of cyberspace populated by like-minded people.

More beans, anyone?

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Stuck Inside of Mobile

Ethics, Politics, The economy

… with the Oxbridge Blues again

One of the enduring myths in Britain is that grammar schools aided social mobility. I will aim to demonstrate this really is a myth.

It’s undeniable that the UK has the worst record on social mobility in the western world: the graph below, taken from a just-published IMF report, shows the UK (alongside Italy) firmly at the top of the graph – which means we’re the (equal) least socially mobile country in the developed world.

Inequality and Mobility graph

So where does the myth come from? Ofsted disagrees, so it’s not them. One source is Conservative Voice, the Telegraph quoted Boris Johnson as saying so and Nigel Farage in the Express reminds us it was all Margaret Thatcher’s fault! But then, some commentators in the Telegraph disagree with others…

It’s generally agreed that social mobility was greater in the 1950s and 1960s than today and there were more grammar schools around then. But that coincidence proves nothing.

Changes in the Economy

During the 1950s and 60s, there was a major shift in working patterns, as increasing disposable income and technological progress shifted the balance of employment away from traditional working class jobs to a higher proportion of white-collar workers. Growth averaged 2.8% a year. This shift in the economy created the demand for more middle-class workers, which necessarily meant that many people from a working-class background moved up the social ladder.

By contrast, between 1980 and 2014, when growth was lower at 2.1% and most of that was grabbed by top earners as inequality increased, technology tended to destroy the middle-class jobs that were created a few decades earlier. More recently, the shift away from reliable, well-paid jobs to part-time and zero hours contracts has witnessed a halt to long-term rising productivity and standards of living. Who would have imagined forty years ago that carwash machines would be replaced by manual labour in the 21st century?

So, for social mobility, “it’s the economy, stupid” that did it – not the education system.

Other Countries

Another look at the graph above shows that, as to be expected, social mobility in the Scandinavian countries, clustered around the bottom-left of the graph, have very much higher rates of social mobility. But all these countries have some sort of comprehensive education system. So, their schools are not holding them back. It’s also striking how low inequality goes with high social mobility. This is fairly obvious if you think of mobility as a ladder. It’s much easier to climb if the ladder isn’t so long and the spaces between the rungs are closer together.

So let’s kill off the “return to grammar schools” myth once and for all.

Myth Two

And while we’re myth-busting, take a last look at the graph above and notice which country is next-highest on the graph (meaning second worst for social mobility). It’s the United States of America, the most unequal of all the western states. So the Great American Dream that, through hard work, anyone in America can make it to the top is also a myth. As Harvard Professor Michael Sandel said in a 2011 lecture broadcast on BBC4, “The American Dream is alive and well – and living in Denmark”.

So that’s two myths busted for the price of one!

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