As a wearer of glasses since childhood, it comes as no surprise to me that human beings generally are shortsighted. I mean that not in the sense that we all need to wear glasses (though statistics on the way that our phone-obsessed indoor lives appear to be driving an epidemic of myopia mean that we may be headed that way), but in the sense that we avoid overloading our brains by only paying attention to what is near at hand.
We tend to ignore the distant, geographically, in terms of time, culturally, socially or emotionally, and we have to work hard if we want to lean against that natural tendency. We pay more attention to the near-at-hand, to people who look and sound like us and people who coincide with us geographically and timeously. This is a natural response: it is one of our common heuristics, methods of avoiding informational and other overloads. “human kind/Cannot bear very much reality,” as TS Eliot has it in his extraordinary Burnt Norton, one of his Four Quartets.
But that shortsighted, narrow-minded view means we miss much that matters. When we are facing global risks, parochialism is a dangerous mindset. Among other things, it seems increasingly that this human tendency continues to hamper our response to very real global health challenges.
Take mpox (the rebrand from monkey pox was perhaps an attempt to make it seem like less of a distant issue). There has been dramatically greater UK media coverage of a household of 4 mpox patients suffering from the more infectious and more potent Clade Ib version (a clade is an individual branch on the genetic family tree) of the virus, first revealed at the end of October, than there has of the almost 50,000 cases, and over 1000 deaths, in an outbreak in Africa, particularly in the Democratic Republic of Congo, over the last several months. A more still recent single case in Leeds alone has also gained greater coverage. The same is true in the US: a single case in California revealed in the late November has received notably more attention than the global situation.
The World Health Organisation declared mpox a public health emergency of international concern back in August, and reconfirmed that view at the end of November. Despite that, only a couple of days ago did WHO authorise the first vaccine for children against it – young children are particularly susceptible given it passes through close contact. Happily, in its farsighted wisdom Japan is funding 3 million doses of this new vaccine, developed by KM Biologics. As an aside, it’s worth recognising suggestions that the upsurge of mpox may be related to a health success: the eradication of smallpox has led to the vaccination programme against that disease ending, removing its suppressive effect on other poxes.
It’s as if we’ve learned nothing from the Covid pandemic: that in a global world there is no such thing as a localised virus outbreak, no such thing as a disease that will not travel. Even a virus that needs close contact like mpox will travel, though clearly much more slowly than airborne Covid and the like. And viruses adapt – just as bird flu has seemed to, leading to an infection of a Canadian teen who had no known contact with wild birds. It took that revelation for the Canadian government to invest significantly in bird flu research, something that it announced just the day after the teen’s infection was revealed. Outbreaks that may seem containable can rapidly become something more. Our response always seems to be a belated one, only when the danger is very near at hand.
Fairness argues that we should care about outbreaks of viruses that affect other communities in our shared world, but so does selfish good sense. We need not be so shortsighted.
I am happy to confirm as ever that the Sense of Fairness blog is a wholly personal endeavour.
I am once again grateful to the investment world’s Jiminy Cricket, Raj Thamotheram, for continuing to nudge me on matters of health and fairness.
There’s an interesting article in this weekend’s Financial Times, about the emotional side of vote decision-making and how we fool ourselves if we believe that we vote wholly rationally.
This paragraph referencing #Fairness stood out in particular for this blog. Even if the term rogue rage seems a little manufactured, what is discussed does seem a fair description of the mindset of some members of the electorate, and a tendency that some politicians seek to benefit from.
I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour
Being poor brings many disadvantages. A lack of money squeezes options and reduces opportunity. It hampers health and makes ambition harder. But the effects aren’t just direct and physical. They are psychological too. Researchers are beginning to uncover just how debilitating being poor is for effective thinking.
The answer to the question posed in the title Do Financial Concerns Make Workers Less Productive? was a resounding yes. Not only did poor workers whose money troubles were temporarily alleviated produce more, they also made fewer mistakes in production, despite operating more quickly. There is a clear business productivity benefit from this poverty alleviation; and in work that pays piece rates – where workers are paid for their useful output in numbers of products – this alleviation of worry also enabled them to earn more.
In a world of unfairness in which many are kept poor, these are significant findings. In a world seeking greater growth, where growth has been held back by stagnant productivity, they are still more important.
The increase in productivity shown was much greater than that brought about by an increase in the piece rate paid (which in a control experiment was done alongside a cut in base pay so that overall earnings were steady). There was a small increase in output following the piece rate increase, but it was less than a tenth of the change brought about by removing money worries – and there was no discernable increase in the quality of production, meaning this piece rate change delivered much less than a twentieth of the improvement in productivity that alleviating poverty did.
It’s worth noting that the researchers were able to discard alternative explanations of why these workers become more productive. In particular, they specifically discounted the possibility that improved nutrition of the poverty-relieved workers was the cause, because of the speed of the effect of the early payments and the lack of difference in nutritional intake in that short period. The effect is a psychological one: workers who don’t need to worry constantly about money are more productive.
This means that our economies are being held back by workers who are less productive than they could be, simply because they do worry about money on an ongoing basis. GDP growth is being artificially depressed and poverty alleviation could help it recover. This represents a business, investment and economic opportunity.
These findings are depressing. But it’s worse to find that growing up in poverty also has debilitating effects on children.
A recent study finds that poor students underperform their usual standard on maths tests that use real-world scenarios involving money, food or social interactions. It’s not a small effect, either: their performance is on average 18% lower than it is on questions overall – and, the researchers note, it would look even worse if they compared performance against just those questions that are more neutral.
These results were surprising to the researchers, who were expecting to see outperformance in these more practical questions, revealing hidden talent among poor students (they use the jargon low SES, socioeconomic status) that may be untapped by traditional education. That’s the reason why such questions have increasingly been used in modern testing: they are thought to be more accessible to all students. But the result of this study indicates that accessibility comes at the price of triggering distracting thoughts for poorer young people. As the chart shows, performance is worst with regard to questions that refer to money specifically.
Another recent study also found evidence of underperformance on money-linked questions by poor students. It puts this down to ‘attention capture’ as the researcher identified an effect not only on the specifically money-linked questions but also underperformance on more neutral questions asked subsequent to them. It seems as though the question reminds the students to worry about money, and they then can’t shake off the concerns.
These results amount to another example of apparent meritocracy in fact acting to limit the opportunity of those who start with less. As the Fictional Money, Real Costs paper states:
“Examinations are an efficient mechanism to benchmark and rank a population based on a specific set of skills. The notion that they are fair, however, has increasingly been questioned. A significant concern is that performance differences reflect inequities in the testing process itself, rather than differences in underlying skills, and thus may contribute to the intergenerational transmission of existing inequality.”
“We need a major repair that is not going to be found in the traditional economic models that consider the social impact of our decisions as something to be fixed ex post through social policies and redistribution. It needs a major change in the economic narrative, that brings equality and sustainability objectives on an equal footing with productivity and growth when measuring success. And it needs to bring in the private and the financial sector to change the way they define and measure their objectives and actions ex ante.”
Ramos went on to express the hope that the TISFD disclosure framework “will encourage organisations to consider the broader impact of their operations in an ex ante manner and make the social implications of business models transparent … We need to integrate the private sector and the financial sector in the solution because with that we can drive meaningful change that aligns economic progress with positive social impact.”
One of her fellow co-chairs, Arunma Oteh, former World Bank Vice President and Treasurer, and former Director General of Nigeria’s Securities and Exchange Commission, took the opportunity of the launch webinar to invite the investment and business communities to take part in the development of the TISFD standards: “By participating in this process businesses and financial institutions in my view will gain a deeper understanding of how social and inequality issues contribute to systemic risks that can affect financial markets and the global economy.”
Her aspiration is clear: “By standardising how organisations report on social-related issues we can also empower all stakeholders to hold businesses and financial institutions accountable for their social impact.”
These are not small ambitions. It’s clear that the new Taskforce will throw down a gauntlet for both business and the investment community, to think more deeply about the negative implications of business models and investment for society, and particularly the danger that the current approaches further foster inequality. In the language of this blog, the ambition is to instil a greater sense of fairness in business and investment.
Fortunately, there are a few voices from the world of business talking about these issues. Professor Scott Galloway, a successful tech entrepreneur – with an unusual humility for someone with that background – turned educator, is typically excoriating in a recent blog on the US minimum wage: “We have epidemics in the US — depression, anxiety, high blood pressure, homelessness, obesity, and poverty — among young people, particularly men. (Though it’s worth noting here that the majority of people making the minimum wage in the US are women.) The most powerful means of addressing these ills, and the ‘deaths of despair’ that follow, is a good job at a fair wage that acknowledges the nobility of work. In addition, a good job creates incentives and illuminates a path to wealth creation and economic security.” He is clearly referencing the work of economist Angus Deaton, and in doing so highlights the opportunity for investors: economies with fairer pay will prosper more. But Galloway is an unusual figure, in multiple different ways.
Peter Bakker, CEO of World Business Council for Sustainable Development (WBCSD), and former CEO of Dutch logistics firm TNT, talked about the creation of the TISFD arising out of earlier work of the Business Commission to Tackle Inequality: “One of the key conclusions out of that work is that the way that business makes decisions today, the way that businesses are managed, the way that capital markets look and value businesses, does not incorporate the social- and inequality-related risks, the dependencies and the impacts that business actually has on society and on people in it.”
This image from the Business Commission to Tackle Inequality’s flagship publication shows the breadth of what that group sought to encompass. If anything, the breadth of the challenges that TISFD is intending to cover is still greater. The inclusive – even eclectic – nature of the issues covered by the new group readily demonstrated by the failure (at least so far) to find a streamlined name for the Taskforce. It represents the combination of separate groups, one considering inequalities and the other social issues. Of course there are multiple cross-overs between these areas but clearly neither group felt able to compromise over the name.
As well as the spread of its ambitions, the inclusive nature of the TISFD is also shown by the breadth of the backgrounds of the co-chairs. The fourth co-chair is Sharan Burrow, the redoubtable former General Secretary of the International Trade Union Confederation. She noted that TISFD’s aim goes far beyond disclosure: “If we think about it as an end process which is just disclosure then we’re not actually considering what the recommendations must do, which is actually to put up front the sorts of issues that ought to be taken into the business model, the externalities, the risks that must be accounted for in planning.”
Bakker agreed: “Do not make the mistake that TISFD is about disclosures or reporting, because that’s the mistake that everybody always makes in the sustainability world. The reporting bit is the end of a process in which better decisions are made and that’s how you influence the social impacts towards a more positive outcome.”
Bakker went on, and laid down the crucial challenge particularly for the investment world:
“It is partly corporate decision making, partly corporate disclosures, but it’s also about how financial markets will then pick up this decision-useful information and provide incentives for a much fairer and more equal and inclusive world.”
We will see if investors are ready to rise to this challenge.
Powerful stuff – and for this blog, a particularly interesting use of #SenseOfFairness language – from journalist Ash Sarkar (of Novara Media) on this week’s News Quiz on BBC Radio 4, on the societal downsides of imprisoning women.
She did go on to apologise for not being funny on what is intended to be a comedy programme…
Power does strange things to the mind. It increases confidence that you are right. It also makes you less likely to be. It generates a sense of entitlement, which may mean you pay less attention to those with less power. This leads to failures of fairness.
This seems to be some part of what went wrong in recent scandals in the UK: Infected Blood, the Post Office, and at Grenfell Tower. I’ve written in depth about the first two. With yesterday’s publication of the report of the Inquiry into Grenfell, I’m reflecting on that and the wider lessons that those with power should learn, for fairness’s sake.
The horror of the fire at Grenfell Tower, where 72 people died after a series of failures and abuses, was bad enough in itself. But it sits within a much broader context. Ed Daffarn, one of the Grenfell Tower residents to survive the fire, has talked about it being the second act in a three act tragedy. I’d suggest that the other two acts (the ignoring of the views and concerns of residents prior the the fire, and their shocking treatment afterwards) were all about the effect of power, even limited power, and how it leads to errors.
The authorities’ response to Daffarn himself shows this in practice: as an articulate resident willing to express his views, prior to the fire and as the Tower was being refurbished, he was often the one who expressed concerns others were feeling. Rather than being seen as providing a channel for broader insights, the Tenant Management Organisation that ran the Tower on behalf of landlord, the London Borough of Kensington & Chelsea, clearly tended to regard him as a troublemaker. Remarkably, on his Grenfell Action Group blog, Daffarn specifically highlighted the risk of fire in the Tower six months before it occurred, in KCTMO – Playing with fire! (since withdrawn), and others. Daffarn would dearly love to have been proved wrong.
The final Inquiry Report is clear in its criticisms of the Tenant Management Organisation (TMO). These two quotations, the first on an insubstantial and insufficient review initiated to respond to a tenant petition setting out concerns about the refurbishment of the Tower, and the second part of the overall conclusions, will need to stand for the breadth of the damning findings:
“Given the history of the matter and the lack of trust between the residents of Grenfell Tower and the TMO, the board should have realised that only an independent review of the management of the project with particular reference to the residents’ complaints could fairly satisfy the requirements of the moment. As it was, the review was superficial and the group conducting it failed to carry out its investigation in a sufficiently thorough and robust manner. The report lacked balance.” (Para 33.63)
“The TMO lost sight of the fact that the residents were people who depended on it for a safe and decent home and the privacy and dignity that a home should provide. That dependence created an unequal relationship and a corresponding need for the TMO to ensure that, whatever the difficulties, the residents were treated with understanding and respect. We regret to say the TMO failed to recognise that need and therefore failed to take the steps necessary to ensure that it was met.” (Para 33.68)
This response by the Tenant Management Organisation and the Council – and the response by all of those with power in relation to the scandals mentioned – reflects long-standing literature about the poor decision-making and failures of judgement that come from power. In some senses, we shouldn’t be surprised when people in positions of power do act in ways that harm the interests of others, fail to listen to the less powerful, have a tendency to close ranks and deny prior errors. Those failures of fairness are built into power structures. Studies have for years told us that to be powerful is to be prone to overconfidence and error, particularly in interactions with others, and especially in interactions with the less powerful.
Power leads both to over-confidence and to errors. That is, psychological studies show that powerful people – even just those primed to feel powerful by artificial prompts – are more likely to be sure that they are right, and at the same time they are less likely to be correct. Many of those errors are around misreading social situations because powerful individuals have a tendency to imagine everyone should see things the same way as them, and don’t pay enough attention to others to learn that they are wrong.
Power leads us astray.
Power also reduces our inhibitions, so the powerful are more likely to take risks and transgress. The cold power that comes from money affects judgement too, in particular it seems to generate a sense of entitlement. Among the striking outcomes of a series of studies for a paper entitled, strikingly, Higher social class predicts increased unethical behaviour – it’s only slightly less striking when you realise that by social class the researchers intend socioeconomic standing rather than class, at least as that term is understood in the UK – are the tendencies of the wealthier to misbehave in terms of their driving styles. The drivers of more expensive cars are more likely to fail to stop for pedestrians crossing the road, and to cut off other vehicles, in both cases in breach of local traffic law. Those with higher socio-economic status are also more likely to nick sweets from children and to lie about the results of dice throws to their own small financial benefit, the study found.
Perhaps it is not surprising in the face of these sundry negative impacts of power, even of a limited form of power, that authorities in the scandals failed to respond to warning signs from those impacted, and tended to deny that anything had gone wrong or that they had a responsibility to try to put right what could be put right.
As Daffarn suggests, the response of the authorities after the fire was as poor as what came before, in many cases exacerbating the suffering of the survivors. One small example stands for the casual carelessness of those with power, and their failures of fairness:
“When official communications were eventually released, they were in English. That included communications sent to those who had been placed in hotels. People described feeling at a disadvantage because they could not read English well and had significant difficulty in gaining access to services, which they felt created unfairness…In some cases interpreters were provided, but not always in the right language.” (Para 100.60)
The council simply didn’t prepare well enough to carry out some of its key duties, the Report concludes:
“the wider evidence reveals a culture of neglect at RBKC over a number of years towards planning for humanitarian assistance. The existence of an effective plan for providing such assistance would probably have made a material difference to its response to the Grenfell Tower fire” (Para 101.73)
As Keltner, Gruenfeld and Anderson point out, there are many countervailing influences to the negative impacts of power: “many social values and practices, from conceptions of virtuous leaders to institutionalized checks and balances, have as their very purpose the placing of constraints on those with power”. For fairness to succeed, other players with power need to exert it in more positive ways, driving accountability and delivering those checks and balances.
As the evidence emerged in the Inquiry about the shocking misbehaviour of the insulation manufacturers Kingspan and Celotex, part of France’s Saint Gobain (whose illustrious history began with creating one of the greatest symbols of inequality, the mirrors for the Galerie des Glaces in the Palace of Versailles) in gaming fire safety regulations, I worked to encourage investors to seek to hold these businesses to account. Some did make some efforts, but the work had limited bite and ebbed quickly. There were a smattering of votes against individuals one year but these dissipated by the following year, even though the scandalous failures had not changed or been atoned for. That too was a failure of accountability and of fairness. US company Arconic, which supplied the cladding itself (material that sandwiched highly combustible hydrocarbons between thin sheets of aluminium), has escaped with even less holding to account by its shareholders.
The Report’s conclusions regarding each of these companies are as clear as they are damning. The fact that these blunt findings are highlighted in the executive summary itself shows how central the abuses of power by these businesses were to what went wrong:
“One very significant reason why Grenfell Tower came to be clad in combustible materials was systematic dishonesty on the part of those who made and sold the rainscreen cladding panels and insulation products.” (Para 2.19)
“From 2005 until after this Inquiry had begun, Kingspan knowingly created a false market in insulation for use on buildings over 18 metres in height by claiming that K15 had been part of a system successfully tested under BS 8414 and could therefore be used in the external wall of any building over 18 metres in height regardless of its design or other components. That was a false claim, as it well knew” (Para 2.32)
“In an attempt to break into the market for insulation suitable for use on high-rise buildings, created and then dominated by Kingspan K15, Celotex embarked on a dishonest scheme to mislead its customers and the wider market.” (Para 2.28)
“By late 2007 Arconic had become aware that there was serious concern in the construction industry about the safety of ACM panels and had itself recognised the danger they posed. By the summer of 2011 it was well aware that Reynobond 55 PE in cassette form performed much worse in a fire and was considerably more dangerous than in riveted form. Nonetheless, it was determined to exploit what it saw as weak regulatory regimes in certain countries (including the UK) to sell Reynobond 55 PE in cassette form, including for use on residential buildings.” (Para 2.23)
The lawyers representing victims at the Inquiry alleged that these appalling actions by the companies amounted to a fraud on the market, corruption with the most terrible consequences. The Grenfell United survivor campaign group is now calling for criminal charges. I’m not sure that power generally always corrupts, at least the power of those some far distances below the level of absolute power. But power, even of a limited sort, certainly does lead us astray, it does lead to misunderstandings and misreadings of situations. By its nature, it leads to a heedlessness of those with less power. Fairness requires those with power, even if they regard it as only a small degree of power, to lean hard against these natural tendencies. Fairness requires the powerful to temper their power and to listen harder to those who see themselves as without power. Fairness also requires others with different sources of power to exert it and hold them effectively to account. It requires all of us to consider the power that we have, and to keep asking how wisely we are using it.
The Report’s recommendations provide precise specifications of how these checks and balances and added protections should be put in place, but the lessons we need to learn are broader. Let us hope that these fairness lessons of Grenfell (and of the Post Office and Infected Blood scandals and, sadly, others) are learned.
Grenfell: Building a Disaster, BBC podcast, August 2024 The three-act tragedy quote from Ed Daffarn referenced here occurs at the start of the 10th episode, The Final Act, though the whole podcast series is highly recommended
Grenfell: In the Words of Survivors, National Theatre production, July 2023 A stunning play using survivors’ words verbatim, highly recommended: recording available on National Theatre at Home
Power and overconfident decision-making, Nathanael Fast, Niro Sivanathan, Nicole Mayer, Adam Galinsky, Organizational Behavior and Human Decision Processes, Vol 117, Issue 2, March 2012
Power, Approach and Inhibition, Dacher Keltner, Deborah Gruenfeld, Cameron Anderson, Psychological Review 2003, Vol 110 No 2
Higher social class predicts increased unethical behaviour, Paul Piff, Daniel Stancato, Stephane Cote, Rodolfo Mendoza-Duggan, Dacher Keltner, PNAS vol 109 no 11, March 2012 Note that while the title (and the article overall) references social class, this is actually a discussion of socio-economic standing
I am happy to confirm as ever that the Sense of Fairness blog remains a wholly personal endeavour.
In a small (a very small) way, I collect 18th and 19th century company tokens. These symbolise for me the worst of the financial exploitation of the industrial revolution. It was not enough for the industrialists to ruthlessly exploit the excess availability of labour and pay badly the new industrial workforces of their dark satanic mills*. In many cases they also paid not in money that could be spent anywhere, but in scrip – tokens that could only be spent at the company’s own store. Prices there reflected the guaranteed market, so workers were exploited over again. These practices were progressively abolished in England from 1831 onwards by the oddly-named (at least to modern ears) Truck Acts. There is similar legislation to bar such abuses elsewhere in the world – though not everywhere.
As we know, this financial exploitation sat alongside brutal working conditions where injuries and even death were common, accepted outcomes of the industrial process. That was a lack of health and safety gone mad.
We’ve known for a while that the AI revolution depends on a similar exploitation of the health and safety of workers. The stories of the employees of Sama in Kenya, who helped train ChatGPT, are disturbing. The human training of these supposedly ‘artificial’ intelligence systems (ChatGPT is no worse in this regard than its rivals) involves individual people being exposed to the worst things that the draft forms of AI machines produce. As the machines’ training materials are the entire internet, this replicates the biases of the present and prejudices of the past, and includes all the filth that humankind has produced in recent years. The human job is to tell the AI not to produce further paedophilia, repeat racist incitement, and so on – but in order to do that, people need to read and look at truly horrific material.
Sadly, the people who did this work are not treated well. Their mental health disorders are the equivalents of the fingers on the floors of cotton mills. These seem not to trouble those who are making epoch-making amounts of money, and little enters the public discourse so that it has minimal impacts on consumer use of these products.
But it turns out that such physical exploitation of people’s health isn’t all that’s going on in the current technological revolution. Amazon has revived the company scrip model. It pays some of its MTurk workforce in Amazon gift cards, and severely constrains how those gift cards can be spent so that the workers are unable to get full value from them. MTurk – mechanical Turk in full – is the name for the distributed self-employed workers who perform tasks that help test and train much modern IT and so ensure its smooth working. The name aptly reflects the 18th century supposedly mechanical chess board, called the Turk, that toured Europe playing matches. Instead of being an automaton, the Turk actually only worked because in place of a machine there was a skilled human chess player crammed uncomfortably into the space under the board.
In the same way, the human work that is necessary to help train current supposedly ‘artificial’ intelligence technologies suggests there is some artifice in calling them artificial.
The DAIR Institute (Distributed AI Research Institute in full) – the grouping formed by the authors of the Stochastic Parrots paper – have launched a Data Workers’ Inquiry trying to bring forward the stories of the people who are directly involved in facilitating the current technology revolution, and who all too often are its unhappy victims. Consistent with the DAIR philosophy, this includes putting the voices of the individual workers themselves at the heart of the work, and facilitating them in telling their stories in the forms they find most comfortable and appropriate.
One of the stories discussed on the launch webinar, and on which the Inquiry has published a short paper, highlights this issue. Though its author, Alexis Chávez, is from Venezuela, the use of gift cards as payment isn’t restricted to countries where currency or sanctions issues might limit payments in real money: Chávez shows that the practice applies in (at least) Brazil, Colombia, India, Kenya, Mexico, Pakistan, and the Philippines. The paper details the convoluted processes needed for these individuals to gain value from their gift card payments, which mean that they are in effect forced to take discounts of 20-30% in order to extract value. It’s like the mark-up in the company store.
And it’s hard to argue with Chávez: “Even though Amazon does not see them as employees but as independent contractors, it’s our right to be paid fairly and in a useful manner.” We fondly thought the worst of the financial practices of the industrial revolution were far behind us – they should be – but unfairness clearly persists in the very human side of the supposedly ‘artificial’ intelligence business.
All participants in society have a right to make their views known, and to seek to influence politicians and other decision-makers. In fact, in many ways it is hard to see how politicians and regulators can fairly balance the interests of affected parties without hearing their perspectives. But that need for fair balance is crucial: those reaching key decisions need to hear all perspectives, and they need to be active in thinking whether they are actually doing so, or whether in practice they are hearing only from those with the loudest voices (often a function of having the greatest financial resources) or the most vested of interests – who will always be the ones with the greatest incentive to use all available powers of persuasion.
And decision-makers need to listen thoughtfully and actively to all perspectives in the full knowledge that there is a human tendency to give greater weight to the views expressed by the already powerful and successful. The wealthy have excess influence, through the greater resourcing they put behind expressing their views, but also because their apparent success (let’s remember, it may only be apparent success) lends them greater standing. The voices of ordinary citizens, who may be more fundamentally affected by political or regulatory decisions, are always relatively downgraded. And that’s even before we consider the recent phenomenon of fake grass-roots organisations that purport to represent ordinary folk but instead again promote the interests of the wealthy who fund them – so-called astroturf initiatives.
Even before an assassination attempt, it was clear that we faced oddly febrile times politically, with polarisation and starkly angry social media noise. That surely raises the stakes for all political lobbying, and should require caution by the powerful. It doesn’t seem to have done so far.
These are the reflections inspired by applying fairness considerations to some remarkable analysis of corporate lobbying by the good people at ACCR (the Australasian Centre for Corporate Responsibility). ACCR specifically invited me to think about their analysis of Shell’s lobbying activities – and the apparent gaps in that company’s transparency about it – which came out in March. Forgive me that it’s taken a while to think this one through.
Recent elections may have been fair, perhaps sometimes in spite of their electoral systems. But not all democracy is as well-established or transparent – and even long-standing democracies are not clean of allegations of impropriety (think of the UK’s pandemic era PPE-purchasing scandal, party funding from Kremlin-adjacent oligarchs or the grubbiness of minister Robert Jenrick signing off a housing development shortly after sitting next to its promoter at a Conservative fundraising dinner – in doing so overruling the planning process and the day before a new regime came into force that would have required the developers to pay the local authority £30-50 million to help fund local schools, community centres and other amenities).
Particularly where democracy and transparency are weaker, the powerful have additional influence, and perhaps excess influence. Fairness ought to dictate that they should wield that greater influence with greater circumspection. They should also be more transparent in their activities. Where they do not and are not, they will inevitably create concerns about the propriety and fairness of their actions. Any limit on full transparency may also invite concerns about whether their lobbying efforts are in fact in line with their stated policies.
That’s why ACCR’s findings on Shell are so troubling to an investor, and citizen: the research and shareholder advocacy NGO identifies multiple developing economies where the oil major has been active in lobbying organisations without being fully transparent about it – the title of the research says it all, really: In the dark: gaps in Shell’s climate lobbying disclosures. Given that such a high proportion of the oil company’s future activity will be in these developing economies, this failure to be fairly transparent represents a particular gap.
As the chart shows, the research identifies at least 80 associations of which Shell is a member which conduct climate or energy lobbying which the company does not itself disclose. 45 of these are in emerging economies, and in many of them Shell takes a leading role. The 80 undisclosed memberships are in addition to 98 on which the company does make some disclosure.
The ACCR research identifies ways in which Shell’s emerging economy lobbying has influence both on the demand-side for fossil fuels and on the supply-side. This may be unsurprising given ACCR’s broader analysis of Shell’s strategy and capex indicates the scale of the company’s gamble on gas as a transition fuel. The lobbying includes support for increases in long-term LNG demand in southeast Asia; opposing transition from fossil fuels in China, Mexico and South Africa; expanding production across emerging economies including Brazil, Kazakhstan, Malaysia, Nigeria and Tanzania; and arguing for new exploration as a driver of economic development in Columbia and Namibia. As the study shows, the money spent on this is not visible to shareholders and other stakeholders:
This invisibility bars shareholders from holding the company to account for this expenditure of money and raising questions about its consistency with stated policies. The invisibility also bars citizens from questioning the influence that corporations generally may be having on political and regulatory decision-making.
This company-specific analysis sits within a broader context regarding corporate lobbying and political influence – and I am not in any way intending to imply that Shell is worse than other companies. Investors want more transparency: it’s been notable this year how many shareholder proposals there have been at companies, from the US and elsewhere, seeking further visibility of corporate lobbying activities (some specifically regarding climate change, some lobbying more generally). For example, 41% of the non-founders of Alphabet supported such a proposal, as did 28% of Nippon Steel’s shareholders, 40% of those at Goldman Sachs and 45% of those at Morgan Stanley (once the holdings of Japan’s MUFG are set to one side). Again, I am not intending to imply that Alphabet, Goldman, Morgan Stanley or Nippon Steel are in any way particularly extreme offenders in this regard.
The issue of lobbying and political influence is most notably an issue in the US. Corporate governance guru Bob Monks has long railed at the negative influence of large companies on that country’s politics, and the commensurate limited constraints on corporate power exerted by politicians. He did so in his 2007 book Corpocracy, spectacularly subtitled How CEOs and the Business Roundtable Hijacked the World’s Greatest Wealth Machine – and How to Get It Back. This focuses ire on a US Supreme Court decision, First National Bank of Boston v Belotti, that enabled companies to engage in campaigns on state legislative ballot initiatives – the first step opening the door to full involvement in the political process by businesses. He writes: “today even the political process is largely in the control of corporate masters who fund campaigns, back “debates,” and stymie in every way conceivable their own regulation.”
In the book, Bob further said: “the Belotti decision appears on its face sufficiently absurd as to suggest that reversal is just a matter of time.” For once, Bob’s general prescience failed him, as Belotti was not only not reversed, it was in fact moved further onwards, this time in a federal law context, in the Supreme Court’s later decision in Citizens United v Federal Election Commission. And that case predates the latest successful corporate attack on regulation, facilitated by the Supreme Court: last month’s decision to overturn the 1984 precedent of Chevron v Natural Resources Defense Council, in effect removing the right of regulators to regulate without express Congressional authority.
Bob railed more strongly in 2022’s The Emperor’s Nightmare, a book that is subtitled Saving American Democracy in the Age of Citizens United. Citizens United was the 2010 Supreme Court decision that fully extended the right to free speech assured by the First Amendment to the US Constitution to corporate entities, in effect removing all limits on corporate spending on lobbying and political campaigns. It’s a fundamental human right, but corporations are not humans, only enjoying the benefit of legal personality, so it seems an odd decision to extend the First Amendment right to companies. As the dissenting opinion in the case, written by Justice John Paul Stevens, states: “A democracy cannot function effectively when its constituent members believe laws are being bought and sold.”
Bob spoke even more bluntly in his speech this week to the International Corporate Governance Network (read on his behalf in his absence by CEO of ValueEdge Advisors, Rick Bennett) accepting his Lifetime Achievement Award from that organisation. Entitled ‘American oligarchs prevail’, the speech began “American exceptionalism has been lost…” and identified the decisions in Belotti and Citizens United as the moments at which that loss started and accelerated.
Politics is about finding a fair balance between different interests. The powerful will always want influence – and power and wealth are automatically accorded respect and given extra weight in the way the balance is struck. But fairness requires that the balance is not struck in a way that is biased towards those corporate interests. Fairness further requires visibility and honesty from corporate actors about their activities – and their shareholders are asking for it. Bob Monks argues that bias is now firmly established in the US, and he calls to action investors to lean against this; perhaps that bias, and its pernicious effects, are less well established elsewhere, but without transparency it’s hard to tell.
At the very least, we need visibility on lobbying and the ability to hold it to account, and so limit its influence – probably both as investors and as citizens. Sadly, ACCR’s analysis suggests that such transparency is far from universal. That’s far from fair, and it risks propagating further fundamental unfairness in policy-making.
A member of my family has just discovered that the UK’s first-past-the-post election system brings anomalous results for small parties – at least it does if you compare votes cast nationally with the number of seats won. It may be no coincidence that this individual has gone from supporting one of the main parties – which benefit from first-past-the-post – to backing a much smaller party, which lose out from it. Notwithstanding that, the question they raise is, was this election result fair?
Certainly, the raw comparison between the seat share and vote share percentages suggest that the outcome isn’t fair (note that I have included here only the non-Northern Ireland seats as the unusual politics of that place would add confusion, not least because the listed parties mostly do not campaign there; the Speaker of the House of Commons, whose seat is traditionally not contested by other parties – though no one seems to have told the Greens – is included here as an Independent):
Seats
Seat share
Votes
Vote share
Votes per seat
Labour
411
65.0%
9,704,655
34.5%
23,612
Conservative
121
19.1%
6,826,758
24.3%
56,419
LibDems
72
11.4%
3,519,199
12.5%
48,878
SNP
9
1.4%
724,758
2.6%
80,529
Reform UK
5
0.8%
4,117,221
14.6%
823,444
Green
4
0.6%
1,943,265
6.9%
485,816
Plaid Cymru
4
0.6%
194,811
0.7%
48,703
Independent
6
0.9%
564,243
2.0%
94,041
The votes per seat numbers are perhaps the most striking statistic, what might be called ‘vote efficiency’. Labour clearly benefited disproportionately on this measure, and Reform and the Greens (whose manifesto was happily leavened generously with the language of fairness) were the parties that most lost out. There’s no doubt though that both of those parties were delighted by their tally of MPs and will certainly rate that level of parliamentary representation a major success.
But considering votes on a national basis mistakes what’s going on in a first-past-the-post constituency system – and it’s worth remembering that the form of British elections long predates the invention of national political parties, let alone their regimented form of more recent years. First-past-the-post is all about delivering the single MP chosen by the constituency, and that means localised voting strength is rewarded and national performance isn’t.
That’s why it’s worth considering the Scottish National Party (SNP) and Plaid Cymru performance, whose results strongly outperform those of the other small parties – true even though it was a very poor election result for the SNP. Each of these parties benefit from fighting elections not on a UK-nationwide basis but within their own nations – Scotland and Wales respectively. Plaid’s votes were shared across only the 32 Welsh constituencies, the SNP’s across the 57 Scottish ones. The parties with the lowest ‘vote efficiency’ – votes per seat gained – are the two parties that stood candidates nationally but really had only a very limited number of constituencies where they were realistically competing to win.
Local concentration is why, for once, first-past-the-post seems to have suited the Liberal Democrats – traditionally a smaller party that has fared badly under it, and has argued strongly for proportional representation (arguing that it was needed for fairness reasons, not for their own political advantage). Again, the LibDems happily headlined their manifesto For a Fair Deal – though the fairness language is slightly less universal across their document than it is in the Greens’. The LibDems had a vote efficiency remarkably similar to Plaid Cymru’s, because its votes too were largely concentrated in constituencies where they were competing to win (particularly in the Southwest of England). A large part of that effect was because of tactical voting, with both Labour and LibDem supporters lending the other party their votes in constituencies where the other had the best chance of beating the Conservatives. Labour too was therefore a beneficiary of votes cast tactically in reflection of the apparently widespread desire to oust the Conservatives.
And that’s really the story of this election: it was more about voting against rather than voting for. Just as with the French election a few days later, the clearest message from the electorate was what they did not want rather than what they did. In France, opinion pollsters were shocked when the National Rally (the rebadged, and perhaps reformed, National Front) was beaten into third place – having placed first in the first round a week before, and in the prior European election. Some in the country will no doubt complain at unfairness through manipulation of the candidates left standing following the first round (more three-party contests than usual survived that first round as high turnout made it more likely that third placed individuals met the required threshold of 12.5% electoral support; there were then 48 hours in which candidates could choose to stay and compete in the second round, and many were withdrawn), so that there was a decision simply between the National Rally and a not-the-National-Rally candidate. Yet in many ways, this seems simply to have been an adjustment making the tactical voting decision more clear. The turnout, 66%, and the strength of the support for the not-the-National-Rally candidates, is suggestive that actually the electorate welcomed this clarity and were very willing to vote tactically and oppose the National Rally, voting against something rather than voting for.
Voting against, as well as helping Labour in its contest with the Conservatives – both directly and in the way Reform votes were mainly taken direct from Conservative candidates – also harmed them. In a number of constituencies there was clearly a strong protest vote in relation to the Labour leadership’s stance on the conflict in Gaza. Setting aside the unusual situation of former party leader Jeremy Corbyn retaining his seat against the official Labour candidate, there were four seats won from Labour by Independents, apparently all related to concerns about the approach to the issue of Palestine. In still further seats, independents took votes from Labour, in some cases clearly allowing incumbent Conservatives to survive (not that Sir Iain Duncan Smith, for example, seemed willing to acknowledge that on the night).
It would be welcome of course to have a politics where people are inspired to vote for something rather than simply to vote against. But it does seem that voters understand their electoral systems pretty well and know how to deploy them to get the results they want – even if those results are more about what they don’t want.
That seems fair.
But perhaps it is fair in spite of the electoral system, not because of it. The election results, particularly the vote efficiency statistics, suggest that something isn’t right, and that something will need to be addressed over time. Proponents of proportional representation will need to find a response to the importance placed on genuine constituency representation by the many who continue to favour first-past-the-post, the personal connection between MPs and their locality, and their individual constituents. That’s why something like the modified d’Honte system seems most likely to gain traction (there was an odd moment sometime in the night’s coverage when a Reform representative referenced modified d’Honte and was told by the presenter it wasn’t a good time of night to start discussing such things). It’s already used in the UK – for the Scottish parliament, the Welsh Senedd and the London Assembly – and seems to lead to reasonably fair outcomes, with constituencies electing candidates on a first-past-the-post basis and then other seats filled in a way that ensures the whole elected body is more fully and fairly representative of the weight of votes overall.
For fairness’s sake, something needs to change – and change is also needed because the mindset and approach of the electorate has changed. It seems that mindset can no longer be crammed into the tight election box of first-past-the-post.
Historically one benefit of the UK’s first-past-the-post system has been seen to be the clarity of the results it gives. It’s hard to say that isn’t true of this result, given Labour’s huge majority. But historically that clarity tends to have arisen because of the small number of realistic options between which the electorate could choose. It wasn’t quite a binary choice, but it did sometimes seem that way. The real lesson of this election has to be that the electorate is now much more open-minded about its choices and that five parties that campaign nationally have a genuine chance of winning seats, and a further two are competitive in the 10% and 5% of seats in which they respectively fight. If even independents can win seats, and upset the results in other seats, it’s clear that the electorate’s perceptions of the election process have changed. The electorate’s desires have fragmented, and even with first-past-the-post strongly favouring the larger parties, the electorate has rallied effectively behind other options in many cases.
That fragmentation of desires will need at some point to be reflected in some change to the electoral system. The current system will find itself less able over time to respond to the actual wishes of the electorate, which are clearly very different from the more binary world of the past. While this does seem a result that fairly reflects the wishes of the electorate – for removal of the incumbents, a vote against rather than a whole-hearted vote for – it does seem that soon only some proportional system will be able to capture fairly the wishes of the British people.
I am happy to confirm as ever that the Sense of Fairness blog is a wholly personal endeavour.
“When citizens have concerns that something has gone seriously wrong, fairness should mean that they get answers.”
The report (all 7 volumes and 2500 pages of it) have the words unethical, unconscionable and wrong echoing throughout – sometimes in the same sentence. This is the devastating report of the Infected Blood Inquiry, released last week, and it is a tough read from which few in authority emerge well. Particularly tough is Volume 2, which relentlessly relays individuals’ stories, mostly in their own words. Unethical, unconscionable, and wrong; in many cases, actions were simply inhumane, indeed cruel.
I had the privilege of being at the launch of the report. Though I am not a core participant in the scandal, being neither infected nor affected in the way the Inquiry’s terms have been drawn, I have followed it closely and witnessed both its start in 2018 and this closure. A good friend at university was one of the 380 haemophiliac children infected with HIV along with their Factor VIII treatment. Thanks to the miracle of antiretrovirals, he survived to 30 but the threat of death – and the stigma attaching to HIV and Aids through crucial years of his life – blighted Dave’s time with us.
The launch a week ago today certainly did provide some closure. As I said to the Inquiry staff, it was clear from the mood in Westminster Central Hall that afternoon that people felt they have been heard and that the truth has now been fully revealed – though, sadly, in both cases this was for the first time.
“The failure of clinicians to tell people of the risks of infection from blood or blood products; the failure to tell people of the availability of alternative treatments; the failure to tell them that they were being tested for HIV or Hepatitis C; and sometimes, the failure even to tell them, or to tell them promptly, that they had been infected with HIV or Hepatitis by their treatment; the failure to explain these devastating diagnoses privately, in person and with sensitivity; these failures were widespread, they were wrong, they were unethical.
“The failures in decision-making that led to the original infections were then compounded by institutional defensiveness, and that’s a pattern of institutional defensiveness that must stop.
“When citizens have concerns that something has gone seriously wrong, fairness should mean that they get answers. People infected with blood and blood products did not. Instead, their trauma has been compounded by the lack of recognition of what happened to them and by a lack of accountability.”
Sadly, too often we have found in recent times that ordinary citizens have had serious wrong done to them and that rather than getting the answers that fairness demands, they have faced assertions that nothing was wrong and a closing of ranks by those with power. I have previously discussed the Post Office/Horizon IT scandal; similar failures of candour have become apparent in other cases. There is a natural human tendency to support and protect your own, both people and organisation. There is a natural human tendency to believe that your organisation has done the right things and not the wrong – perhaps particularly so when the consequences of those wrongs are so devastating. It is these human tendencies that lead to the institutional defensiveness that Sir Brian refers to. For organisations with such power over the lives of ordinary people, such institutional defensiveness must be wrong. Fairness requires that we have systems and leadership that leans against these human tendencies.
I don’t underplay the recommendations that Sir Brian makes with regard to future monitoring and treatment of those still suffering from their infections, for memorials to those who have suffered and in particular on reinforcing the safety culture in health services, notably through the duty of candour and by giving patients greater voice. But the apparent general problem means that his recommendations regarding the defensive culture in the Civil Service and government are perhaps of broad urgency and could have the widest impacts. In essence, though put in careful and lawyerly language, Sir Brian is pressing for statutory duties on both Civil Servants and politicians in government, specifically a statutory duty of candour. His relevant recommendations in full are:
The Government should reconsider whether, in the light of the facts revealed by this Inquiry, it is sufficient to continue to rely on the current non-statutory duties in the Civil Service and Ministerial Codes, coupled with those legal duties which occur on the occasions when civil servants and ministers interact with courts, inquests and inquiries, as securing candour.
If, on review, the Government considers that it is sufficient to rely on the current non-statutory duties in the Civil Service Code, it should nonetheless introduce a statutory duty of accountability on senior civil servants for the candour and completeness of advice given to Permanent Secretaries and Ministers, and the candour and completeness of their response to concerns raised by members of the public and staff.
The Government should consider the extent to which Ministers should be subject to a duty beyond their current duty to Parliament under the Ministerial Code.
I do not think it an accident that the chapter of the report that discusses the government response over decades to the concerns of those infected is called ‘Lines to Take’. The words ‘lines’ is remarkably close to the word ‘lies’, which is what the three key lines proved to be (that the infected had received the best treatment available, that infections were inadvertent, and that screening was introduced as soon as possible). When Sir Brian said at the launch that “all of those claims were untrue” (just following the segment quoted at length above) he received one of the longer of many periods of applause. These lines – lies – were pursued for years even after they had been proven wrong, and the long delay in setting up the public inquiry re-emphasised the institutional defensiveness (Sir Brian makes helpful recommendations on that too).
The memorial sculpture as created at the opening of the Inquiry; by the report launch, it had doubled in size as more individuals had added vials containing their own messages over the years of the Inquiry process.
He doesn’t quite say it explicitly in his recommendations, but it is clear that Sir Brian himself believes that there should be a statutory duty of candour on all civil servants and ministers, that they should not simply be expected to tell the truth but the whole truth, and to flag up the chain where they believe this hasn’t been done. Leadership must welcome such challenge, and not blame those who raise concerns (even if wrong) but rather blame those who know of a matter of concern and do not raise it. He accepts that in some circumstances telling the whole truth may have to be constrained by the public interest, but he expects this to be limited and he believes all those involved need to help “ensure that Government as a whole is candid”.
It’s terribly sad that this needs to be said – that a Civil Service and Government need to face calls and requirements to be candid in their dealings with ordinary citizens. But it is very clear, from this scandal and others, that it does indeed need to be said. And, as Sir Brian says, it is clear that fairness requires nothing less.
Sir Brian Langstaff’s speech, 20 May 2024 I am told that there is no plan to publish a written form of Sir Brian’s remarks, but this is the YouTube recording; the section I quote in detail appears from around minute 51.
The Sense of Fairness blog 