Crises and scandals

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Two thoughts running through what might loosely be called my mind.

  1. Famously, one mantra of the Obama team in the run-up to his election in 2008 was “Never let a serious crisis go to waste”.
  2. My colleague David Runciman’s distinction between scandals and crises. Scandals happen all the time in democracies. They create a great deal of controversy, publicity and heat. But in the end they don’t lead to anything: the media caravan moves on; conversation around the water-cooler switches to other topics; life goes on. Crises are different: they have all the features of scandals, but they do in the end lead to systemic change. So the question always to ask when something blows up is “is this a scandal or a crisis?”

And the connection between these two?

Something that John Lanchester wrote at the end of his splendid piece about UBI mentioned in the previous post.

Milton Friedman wasn’t right about everything, but he knew more than anyone in modern political economics what it takes to change an intellectual climate. He worked out how to make a new idea take shape first as something thinkable, and then as a specific policy. He said that the crucial step was to be ready:

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

Lanchester sees UBI as one of those ideas that happen to be lying around.

That’s very astute, because Friedman (and his associates, notably Hayek) were consummately successful in getting their neoliberal ideas into the political bloodstream in time for politicians like Ronald Reagan and Margaret Thatcher to pick them up.

Our recent history, in a nutshell

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From John Lanchester, opening a thoughtful and informative LRB essay on the idea of Universal Basic Income. “The broad outline of 21st-century history, its first couple of decades anyway”, he writes,

is starting to become clear. A period of credit-fuelled expansion and runaway financialisation ended with an abrupt crash and an unprecedented bank bailout. The public’s reward for assuming the bankers’ losses was austerity, which crippled the recovery and led to an interminable Great Recession. At the same time, increasing automation and globalisation, and the rise of the internet, kept first-world wages stagnant and led to an increase in precarity. Elites did fine, and in the developing world, especially Asia, economies grew, but the global middle class, mainly located in the developed world, felt increasingly anxious, ignored, resentful and angry. The decades-long decline in union power made these trends worse. The UK had its longest ever peacetime squeeze on earnings.​1 In response to this the political right played one of its historically most effective cards – Blame the Immigrants – and achieved a string of successes from Brexit to Trump to Orbán to Bolsonaro to Salvini and the AfD, succeeding in normalising its new prominence to such an extent that a quasi-fascist party scored 34 per cent in the French presidential elections, which were nonetheless hailed as a triumph for the ‘centrist’ winner.

That’s a pretty good summary, IMHO. Characteristically good piece by a terrific explainer. Worth reading in full.

Microsoft 2.0

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One of the most remarkable aspects of the present is the way one tech giant has become a reformed character. Microsoft — the rapacious, bullying monster of Bill Gates’s heyday — has morphed into a good (or at least better) global citizen. It’s also insanely profitable again. In fact, just about the best thing one could have done with one’s pension fund would have been to have put a sizeable chunk of it into Microsoft stock. (The company is now worth a trillion dollars.) And every week a copy of a memo from the company’s President and Chief Legal Counsel, Brad Smith, drops into my inbox. Sometimes it contains useful and civilised ideas. No other corporate bigwig talks as much sense.

How has this transformation come about? This week the Economist has a go at identifying the things that made Gates’s creature a more tolerable behemoth. There are, it says, three lessons the other tech giants could learn from the Redmond experience under Satya Nadella’s leadership:

  1. “First, be prepared to look beyond the golden goose. Microsoft missed social networks and smartphones because of its obsession with Windows, the operating system that was its main moneyspinner. One of Mr Nadella’s most important acts after taking the helm was to deprioritise Windows. More important, he also bet big on the “cloud”—just as firms started getting comfortable with renting computing power. In the past quarter revenues at Azure, Microsoft’s cloud division, grew by 68% year on year, and it now has nearly half the market share of Amazon Web Services, the industry leader.”

  2. “Second, rapaciousness may not pay. Mr Nadella has changed Microsoft’s culture as well as its technological focus. The cult of Windows ordained that customers and partners be squeezed and rivals dispatched, often by questionable means, which led to the antitrust showdown. Mr Nadella’s predecessor called Linux and other open-source software a “cancer”. But today that rival operating system is more widely used on Azure than Windows. And many companies see Microsoft as a much less threatening technology partner than Amazon, which is always looking for new industries to enter and disrupt.”

  3. “Third, work with regulators rather than try to outwit or overwhelm them. From the start Microsoft designed Azure in such a way that it could accommodate local data-protection laws. Its president and chief legal officer, Brad Smith, has been the source of many policy proposals, such as a “Digital Geneva Convention” to protect people from cyber-attacks by nation-states. He is also behind Microsoft’s comparatively cautious use of artificial intelligence, and calls for oversight of facial recognition. The firm has been relatively untouched by the current backlash against tech firms, and is less vulnerable to new regulation.”

Facebook thinks it’s a state. US Congress disagrees

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This morning’s Observer column:

Now that Wimbledon is over, if you’re looking for something interesting to watch, can I suggest heading over to the video of last week’s interrogation by the US Senate committee on banking, housing and urban affairs of Facebook’s David Marcus? Given the astonishing incompetence of the Senate’s inquisition of Marcus’s boss, Mark Zuckerberg, some time ago, my hopes for last week’s hearing were not high. How wrong can you be?

But first a bit of background might be helpful. Facebook, currently the tech world’s most toxic company, has decided to get into the currency business. It proposes to launch a new global cryptocurrency called Libra and add more people through referrals. Marcus is the guy leading this project. He formerly worked at PayPal and then moved to Facebook, where he ran the company’s Messenger service.

At first sight, Marcus appears to be a Smooth Man from central casting. At second sight, he evokes the “uncanny valley”, defined by Wikipedia as “a hypothesised relationship between the degree of an object’s resemblance to a human being and the emotional response to such an object”. In that respect, he is not unlike his boss…

Read on

Finally, a use for a Boris Johnson

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Here’s a thought. Well, two thoughts.

  1. If Boris Johnson does indeed become Prime Minister then his photograph will be permanently on the front page of newspapers. This will be depressing for those of us who cannot stand the sight of the creep.

  2. On the other hand, the no-deal Brexit after which he lusts will result in — among many other things — a national shortage of toilet paper. Resourceful citizens will — like Leopold Bloom in Ulysses — cut up these newspapers into neat squares and hang them on hooks near their toilet bowls. Thus will the citizenry finally discover a use for their new Prime Minister.