While ECHR’s judgment as described below seemed pretty final, the Labour government still attempted a final appeal – asking for the case to be heard in the ‘Grand Chamber’ (i.e. throwing another few ECHR judges in to the pot). They didn’t have any new arguments or grounds for appeal though and so today I heard that the ECHR has refused the government request. Labour were probably trying to kick it into the long grass until after the election, knowing that it would soon be somebody else’s problem. The judgment should hopefully ensure that the shiny new coalition government’s review of civil liberties should have section 44 high on the agenda, along with the raft of other shameful laws that Labour introduced in its muddle-headed, knee-jerk reactions to  the terrorist threat. They will be getting continuing pressure from the Police and other security services to keep these easy to use laws, of course, so its still important, at any opportunity, to support the call for the return of our fundamental civil liberties. Liberty have a few ideas on how to do that; making a donation to the Civil Liberties Trust would also help.

The European Court of Human Rights today issued its judgement on the case that Penny Quinton and I have been taking against the government over section 44 of the Terrorism Act 2000. They have agreed that this piece of legislation offends against Article 8 of the European Convention on Human Rights, and does not contain sufficient safeguards for members of the public. [1]

The case stems from events in September 2003, when Penny and I were independently subject to stop and search under the Terrorism Act. We’d both been attending protests at the DSEi arms fair, myself partly for research purposes and Penny as an independent journalist. The campaigning legal firm Liberty agreed to take our cases and we spent several years going though the judicial review process, before finally taking it to the European Court last year.[2]

To finally win is fantastic news and sends a very strong signal to government about the limits to what is acceptable in combating terrorism. Section 44 is regularly abused by police who find it convenient for general policing. The problem is the legislation itself, which is screaming out to be abused. The Terrorism Act encourages police to perform stop and search ‘for the purpose of searching for articles of a kind which could be used in connection with terrorism’ (e.g. phones, maps, laptops, notepads, car keys) and ‘may be exercised whether or not the constable had grounds for suspecting the presence of articles of that kind‘ (Section 44(1)). When challenged by those seeking redress for misuse of these powers the constable should properly claim in court that he or she had no suspicion of the person they stopped and searched. Another reply might risk saying something that could be perceived as discriminatory or otherwise unreasonable, so why make your thoughts public? This is indeed how the officers reacted when we challenged their use of the Terrorism Act against protesters – we just don’t know why we stopped them. The Terrorism Act makes it easier to search people than any other police power and officers are encouraged not to disclose (or indeed use) any reasoning. So its hardly a surprise that hundreds of thousands [3] of stops under this legislation have created suspicion and fear of the state, while not one has led to an arrest on terrorism charges.

News reports are now available from the BBC, The Times, The Guardian, and quite a few more!

Notes
[1] The full judgement is available here: Gillan & Quinton vs. The United Kingdom (4158/05).
[2] Elsewhere I’ve written about why the judicial review process is blind to certain kinds of systematic misuse of police powers.
[3] 250,000 stops were made in 2008/9 and 117,278 in 2007/8.

There’s now a very public fuss about the BBC’s unfathomable decision not to air an appeal requested by the Disaster’s Emergency Committee because of reasons of  impartiality. So, I wrote the following:

Dear sir/madam,

RE: BBC decision not to air DEC Gaza appeal

I was surprised and frustrated to learn that the BBC have refused the request by the Disasters Emergency Committee to air an appeal for funds to help those in desperate need in Gaza.

The BBC response was that your concerns were about the delivery of aid to a volatile situation and about impartiality.[1] The first issue appears to be one on which the DEC is better qualified to make a decision than the BBC. If the aid agencies involved believe it is possible to deliver aid then they should be supported – especially because it is often in volatile and dangerous situations that aid is most urgently required. The second issue is clearly within the BBC’s remit. However, the DEC insists it is an apolitical organisation working on humanitarian grounds.[2] The simple fact is that thousands of people are newly impoverished and homeless, with urgent need for access to clean water, food and medical supplies. Regardless of the political situation I strongly believe that the BBC should take the small step of airing an appeal – along with all other broadcasters – to help relieve the suffering of these people. This action would fit very well with the BBC’s privileged position as a license-funded, public service organisation.

Thank you for your attention in reading this letter. I would be very grateful if you would reply with answers to the following questions:

1. Why does the BBC feel it is in a better position than DEC to decide on the dangers of delivery of aid?

2. How exactly would airing this appeal damage the BBC’s credentials for impartiality?

3. Will the BBC reconsider this decision?

Yours sincerely,

Dr Kevin Gillan

[1]BBC, ‘BBC defends Gaza appeal decision’ at: http://news.bbc.co.uk/2/hi/uk_news/7846150.stm

[2] Guardian, ‘BBC refuses airtime to Gaza aid appeal’ at: http://www.guardian.co.uk/media/2009/jan/23/bbc-refuses-gaza-appeal

It might not be the biggest surprise to learn that the presence of oil in a country has an effect on that country’s political character, but its rare to see the ‘resource curse’ described as clearly as in the graph below.

Source: Bennie, Lynn, Patrick Bernhagen, and Neil J. Mitchell. 2007. “The Logic of Transnational Action: the Good Corporation and the Global Compact.” Political Studies 55(4):733-753.

N.B. The political terror scale, originally developed by Freedom House, is based on data from Amnesty International and the US Department of State’s country reports. 1 stands for respect for human rights, 5 indicates widespread government killing, torture, political imprisonment and disappearances.

How could I better manage my finances? Couldn’t my bank help me? A first step must be to better understand how I’m actually spending my income, and it strikes me that my online banking should really have a variety of ways of interacting with my financial data by now.

For instance, a single screen that allows viewing of payments made over different timescales, organised by transaction types (ATMs, DDs etc) would be a good first step. Interest calculators and links to different financial products might be another. I’m sure there’s all sorts of personal accounting tools that could usefully, and relatively easily, be built into online banking interfaces.

So why haven’t they? There might be some obvious questions of what would make it worth it for the banks, but then it could be an advantage of paid for ‘premium’ accounts, or perhaps used by the banks to help sell their products. I suspect that one important reason is the way that banks’ IT departments have typically approached the web: i.e. to think in terms of transactions rather than data. The obvious boon to the banks is to reduce reliance on branches and increase automation – clearly a very strong trend in the banking sector overall. Because they’re not IT companies though, they don’t think about how the data itself has value to consumers. Technology is often talked about in terms of its inherent effects – we’ve all heard that the internet is revolutionising x, y or z. But what may be more important is the attitudes people bring to the technologies – not just in the sense of how people like or loath particular devices, but more fundamentally in how they think about the organizational processes too. (I’ve written more on attitudes to technology here.) Now if only Google would hurry up and get into banking…

It was a pleasure today to see Prof Joseph Stiglitz deliver the University of Manchester’s Foundation Day Lecture, titled ‘The Financial Crisis – Lessons for Economic Theory and Policy’. So, what does the Nobel prize winning economist think of the current financial climate?

In sum: Things look bleak, no doubt about it. And the US response is misdirected. Ultimately, the behaviour of lenders that has created the current mess, and the overriding response to it, are based on ideological beliefs not genuine knowledge. This may be, joked the Professor Stiglitz, because business schools’ graduate students ‘ran off to Wall Street to make a load of money, before hearing the end of the lecture’.

The most important lecture was probably the one on ‘securitization’ – that is, using the financial system to offset risks. This has clear relevance to the current crisis since the latter is founded in the creation of ‘toxic’ loans, which have invisibly circulated throughout the global financial system with three results:

1. Credit contraction has occured because, since the toxic products are hard to find, lenders can’t be sure what their own balance sheets total. Neither can they fathom what other banks and businesses balances are, so they’re unwilling to lend any money.
2. The loans themselves will continue to go bad. They were based on entirely unsustainable expectations of the US housing market and so more repossessions will occur, and those who currently own the loans will continue to find holes opening up in their balance sheets.
3. Together they will continue to produce a shrinking of the economy.

Professor Stiglitz argued that the US plan to pour $700 billion into Wall Street tried to deal with a fourth problem – confidence. But, as he rightly pointed out, confidence will only reappear if the solution is right. But the US money has been made available with little government oversite, and no garuntee for the taxpayer if thing get worse. And since the money is not going to help anyone repay their mortgages problem 2, at least, looks set to continue. One interpretation of the US decision is, to closely paraphrase Stiglitz’s words, that ‘they were seeking a non-transparent way to shift wealth from the taxpayer to the bankers’.

So is the UK situation any better? Well, an equity injection does seem to be a valuable instrument in order to deal with credit contraction, so long as government money is garunteed. That’s pretty much what was announced this morning, since preference shares offer some potential profit for the treasury in an upswing, but protection in a downswing. So far, so good. But what’s missing is any way to deal with the negative effects of falling house prices, and therefore the continuing losses to mortgate lenders. Stiglitz outlined a number of proposals for doing so, which all rested on the idea that it is necessary to assist lower income people make their repayments, whether that’s through tax credits or cheap government loans. This is especially important in the US, of course, since that’s where all the toxic debt originates.

So that’s the policy story – what about the lessons for economic theory? The overriding lesson of the current crisis is that micro-economic inefficiencies can lead to macro-economic crisis. And those inefficiencies may be created in a number of ways, importantly including problems with incentives, innovation and information.

The financial sector has, over the last decade, been taking around 30% of the profits of the whole economy in both the US and the UK. This should suggest that its been exceedingly productive in its particular area, including tasks like finding new ways to mobilise savings, managing and ultimately reducing risks of investment, and finding ways to properly allocate the capital that is available. But they’ve failed on all counts. Individual savings have been insubstantial as consumers have used easy credit for over-consumption. Risks have been created and multiplied rather than managed. Also, the bursting of US housing market bubble is evidence of a massive misallocation of resources: too many houses have been built, they’ve been too big, and they’ve been built in the wrong areas. This is not to say the financial system hasn’t been innovating. Its found innovative ways of avoiding regulation, of reducing taxation and of inflating share prices through misleading profit reporting. Such innovations are of no benefit to the 3 million Americans who have lost thier homes due to the current crisis, or to the 2 million also expected to do so. And the financial sector’s innovative activity has been irrelevant to the real lives of everyday folk because corporate incentive schemes incentivise increasing share price, rather than increasing productivity in their core business. As executives are offered share options worth millions of dollars (which, not incidentally, reduce the value of shares that other investors hold) their interest is clearly in seeing the share price increase.

Share price increases have been bought through the manipulation of relevant information, as risks are hidden on the balance sheet, or exported overseas. But not only that, the toxic lending was justified in the first place by misinformation and inappropriate incentives. It should have been obvious to mortgage lenders that they were creating bad loans. People on low and middle incomes in the US have seen their incomes falling steadily for the last 8 years. (Which is also to say that what economic growth the US has seen in that time has been to the benifit of those at the top, and only those at the top.) At the same time as incomes falling, house prices were increasing and lenders were offering as much as 105% of the asset value as a mortgage on the basis of expected increasing prices. But how could the bubble possibly be sustained without rising incomes? That is simply unanswerable, as the lenders must have realised. However, securitization offers an intriguing  possibility: if one is to sell these loans as assets to other companies without those companies knowing just how high the risk of payment defaults is, then the loans are a good way of producing profit. That is: the only way it was rational to mortgage lenders to create portfolios of very high risk loans is on the belief that ‘there’s a fool born every minute, and globalization has given American banks access to millions more fools.’ And many of those fools, it seems, work in European financial centres. Securitization, then, incentvisied the banks to create bad loans, and they did so through misinforming their lenders.

UPDATE: Audio of the lecture is now available online at Manchester University.

Not surprisingly, since it began with the ‘leader of the free world’, the idea that if you feel a bit nervous about someone you should whack ‘em straight away is now becoming an excuse for more everyday violence. Aussie rugby star Willie Mason described yesterday the exchange of abuse with Stuart Fielden on the international rugby stage after which Willie concussed his opponent with a right hook. He explained “I saw his right hand cocked and thought he was going to throw it. I thought I’d hit him first before he hit back.” Well, if that logic is good enough for international relations maybe its good enough for rugby. Mason’s brief helpfully added that his client shouldn’t be punished simply for being the better fighter – showing the kind of sharp legal mind that might, in some company, win rapid promotion. Interestingly, this court wasn’t buying it. (report)

“The conflict between Davos [the partisans of the World Economic Forum] and Porto Alegre [the partisans of the World Social Forum] is not about the virtues and vices of neo-liberal globalisation, although this is how it is often protrayed … It is not about capitalism as a world-system, since capitalism as a world system is in structural crisis and will disappear in the next 20-50 years. The conflict is about what will replace the capitalist world-economy as an historical system. It is about whether we shall move in the direction of a different system that maintains one crucial feature of capitalism – its hierarchical, inegalitarian, polarising nature – or of a new world system that is relatively democratic, relatively egalitarian.”
Immanuel Wallerstein , 2004, “The dilemmas of open space: the future of the World Social Forum” in International Social Science Journal 56(4), pp. 629-637.

It is worth noting that the next paragraph begins “This is no small question…” – no shit professor!

The most important political difference cutting across the entire [World Social] Forum concerned the role of national sovereignty. There are indeed two primary positions in the response to today’s dominant forces of globalization: either one can work to reinforce the sovereignty of nation-states as a defensive barrier against the control of foreign and global capital, or one can strive towards a non-national alternative to the present form of globalization that is equally global. The first poses neoliberalism as the primary analytical category, viewing the enemy as unrestricted global capitalist activity with weak state controls; the second is more clearly posed against capital itself, whether state-regulated or not. The first might rightly be called an anti-globalization position, in so far as national sovereignties, even if linked by international solidarity, serve to limit and regulate the forces of capitalist globalization. National liberation thus remains for this position the ultimate goal, as it was for the old anticolonial and anti-imperialist struggles. The second, in contrast, opposes any national solutions and seeks instead a democratic globalization.

Michael Hardt, 2002, “Today’s Bandung” in New Left Review 14, p.111.