from the archives: Money

In a press conference in January 2015, the then President of the European Central Bank, Mario Draghi, was asked whether the ECB's programme of quantitative easing ("QE"), intended to boost the ailing eurozone, might eventually lead to damaging price inflation. His response:

I think the best way to answer to this is, have we seen lots of inflation since QE programmes started? Have we seen that? And now it's been quite a few years since they started [...] And somehow this runaway inflation [predicted by some] hasn't come yet.
   What I'm saying is that certainly the jury's still out. But there must be a statute of limitations. Also for the people who say that there will be inflation, yes, when, please? Tell me, within what? *

Mr Draghi was correct to point out that there had at that time been negligible impact on reported inflation numbers from American, British and Japanese QE programmes. Five years later, there is still little sign that the implementation and subsequent reversal of QE has generated long-term problems for financial markets — though there were rumblings last year about possible trouble in the repo markets.
   Whether there is a period of time after which it is safe to assume the risks have disappeared, thus making it legitimate for governments to try similarly dramatic remedies again, is more debatable.
   If one looks at the Great Inflation of the 1970s, one could argue that the associated expansion of the money supply began in the 1960s. It required the trigger of a specific exogenous shock, in the form of the 1973 oil crisis, to turn the fuel of excess money into the fire of an inflationary spiral.
   In the absence of such exogenous shocks, and while global demand remains relatively depressed (the prices of many key commodities are still well below their pre- and post-meltdown highs), the fuel of excess money may be capable of remaining in a prolonged state of dormancy.

This is an edited version of a post published in 2015 and reproduced in The Ideology of the Elites.
* Mario Draghi, 'Introductory statement to press conference', 22 January 2015.

censorship in the arts

An ideology becomes dominant, not just by its adherents sounding passionate and persuasive, but via the suppression of dissent. Suppressing dissent is of course incompatible with other values such as freedom of speech, but such values seem to be being de-emphasised by Western cultural elites.
   The arts world has for many years given the appearance of being unified in its support for leftist-interventionist ideology, and of being unified in its contempt for conservatism. What wasn't clear was whether every individual within that world was committed to this approach, or whether there were potential dissenters but they were simply not promoted or given financial support.
   A recent survey on freedom of expression within the arts, carried out by ArtsProfessional, suggests the latter explanation is the correct one:

[The survey] indicates the openness, risk and rebellion that many believe characterises the sector is being eroded. [More than 80% of respondents] thought that "workers in the arts and cultural sector who share controversial opinions risk being professionally ostracised". [...]

Pressure to keep quiet was most likely to come from colleagues, according to two-thirds of respondents. However, the survey also revealed examples of retribution from organisations against arts workers who spoke their minds, from marginalisation and isolation to lost commissions [and] cancelled contracts [...].

The research indicates the arts and cultural sector is intolerant of viewpoints outside of the dominant norms. Anything that might be considered "politically incorrect" to the liberal-leaning sector — including expressing support or sympathy for Brexit, the Conservatives or other right-wing political parties — was felt to be risky territory.

One of the survey's respondents seems to have summed up the overall position fairly succinctly:

Our arts, culture, and indeed education sectors are supposed to be fearlessly freethinking and open to a wide range of challenging views. However, they are now dominated by a monolithic politically correct class (mostly of privileged white middle class people, by the way), who impose their intolerant views across those sectors.

The respondent adds that this is driving people who disagree away, and risks increasing support for the very things the politically correct class professes to stand against.

Meaningful critique of a dominant ideology can only happen if dissident individuals and organisations are given financial support.

BBC — ITV — Channel 4

It is absurd that viewers cannot watch ITV or Channel 4, or any of Sky's own channels, without paying a tax to the BBC and having to endure adverts (or pay the Sky subscription). It is not only absurd, it is inefficient.
   Consider the class of viewers who only want to watch ITV and Channel 4, and consider the marginal consumer in this class. He only just regards:
(A) access to programmes
as preferable to:
(B) saving the licence fee and avoiding adverts.
If he did not have to pay the fee, this marginal consumer would be willing to endure more adverts. The consumers below him in keenness, who were not quite willing to endure fee-plus-ads, would now be willing to watch output with ads but no fee — which would imply a rise in possible charge per ad. Either way, the potential revenue of independent TV companies would increase, implying that these companies are currently operating at a suboptimal level of programming output.
   The fact that viewers of commercial TV have to endure both adverts and a licence fee means independent TV companies are effectively subsidising the BBC.
   Where it is readily possible to separate BBC viewing from non-BBC, as in online streaming, any BBC-related charge should be restricted to BBC viewing only. This should be done now, regardless of the ultimate future of the TV licence or its replacement. The fact that this may be inconsistent with the current charging system for traditional TV viewing seems irrelevant — the system as a whole is in any case scarcely coherent as it stands.

financing the BBC

The UK's TV tax — now also applied to watching television output on other devices — makes little sense in the digital age. Should we therefore rush to abolish it? Not necessarily, but it does mean we should be thinking about switching to a new system in the not-too-distant future.
   A key question, obviously, is whether there should be state subsidy of public broadcasting at all. Even in the digital age, a few areas of media market failure remain (e.g. radio, because of the free rider issue) so there is certainly an argument for limited subsidy. The larger question of whether, beyond this, BBC output — or indeed culture in general — should be subsidised by the state is a more complex one.
   Let's assume subsidy of BBC output continues to be appropriate, given that a large number of UK voters seem to endorse this. The efficient way to achieve this is no longer via licensing. Ultimately, once online modes of viewing have become dominant, a scheme of the following type may be appropriate:
• charge for some parts of BBC output delivered online, in ways analogous to those already used by Amazon, Netflix et al.;
• leave other parts of online output available for free (including perhaps some of the things BBC Chairman David Clementi recently referred to as "bringing the country together": e.g. Strictly Come Dancing finals, Christmas specials, war anniversaries, Royal jubilees);
• give up charging for terrestrially broadcast output, which could be restricted to lower image quality;
• agree a top-up subsidy with the government.

Russian cinema

To understand the Russian psyche, you could try reading Turgenev and Tolstoy, sit through plays by Gogol or Chekhov, or watch the Tchaikovsky/Petipa ballet of Swan Lake.
   A simpler method might be to see a film by Andrei Tarkovsky, a director of quintessentially Russian cinema and particularly Russian sci-fi. The original movie version of Solaris, made by Tarkovsky in 1972, is currently available on channel4.com.
   The 2010 remake by Steven Soderbergh, with George Clooney and Natascha McElhone, was compellingly eerie in its own way but its brand of strangeness was quite different from Tarkovsky's, which is subtle, slow-moving and hard to define. For one thing, it is more willing to play with the conventions of narrative. In this, and in its sense of detachment, it seems to echo Kubrick's 2001, made four years before Solaris — though Tarkovsky was contemptuous of 2001 and clearly hoped to do better. Solaris has not aged as well as 2001 but remains the more psychologically interesting film.
   Similar as they are in tone, the contrast between these two movies from the hippie era — Kubrick's and Tarkovsky's — could be said to highlight differences between American and Russian mentality. (One can throw in a third film from the same genre/era to provide the French perspective: Jean-Luc Godard's Alphaville.)
   Even better than Solaris is Tarkovsky's 1979 sci-fi movie Stalker (the title is somewhat misleading), in which the director shows his genius for generating atmosphere and philosophical reflection, in spite of there being relatively little dialogue or plot.

TV tax

Gary Lineker is right to remind us that the UK's TV licence fee — which funds the BBC — is a tax. Although not officially described as a tax until 2006, it was effectively one long before that.
   My district council charges for providing and emptying a brown bin used for garden waste. This is analogous to a commercial fee: I choose whether to pay the charge, in exchange for a specific service. The TV licence fee may have had a similar character when it was introduced in 1946, but after non-BBC channels arrived in the 1950s, so that the revenue raised by the charge became disconnected from the services used, it effectively became a tax on TV sets.
   Whatever the pros and cons of using taxes to finance a public broadcaster, the administration of a tax should be managed by the state or an agency of the state. Control of TV licensing should never have passed to the BBC, as it did in 1991.
   The debate over free licences for the over-75s is embroiling the BBC still further in matters that should be the province of the state. The government should not have withdrawn funding for this in the expectation that the BBC would work out its own concessionary schemes. If the BBC becomes responsible for means-testing, it risks taking on even more quasi-governmental functions.
   If the license fee is retained, it should be as a conventional tax, as for vehicle licensing, and it should be administered by the state. The people who call at your home to quiz you, or attempt to prosecute you, should be members of the state apparatus — not employees of the BBC or one of its subcontractors.

denial

Further to the previous post, the article by Matthew Goodwin about the 2010s is revealing, both about political changes during the decade and about the intelligentsia's reaction to them.
   In one passage, Professor Goodwin exploits the ambiguity of the term liberalism to make some familiar complaints about capitalism:

Liberalism gave us individual rights and protected those rights through the rule of law. But it also attached itself to the most dynamic and successful economic system the world has ever known and which an ascendant middle class came to love: capitalism.

The events of the past decade revealed how these two in-built advantages had come unstuck. Liberalism has won many important battles, but it also crafted societies in which millions of people today no longer feel recognised or rewarded.

   Unpacking this quote deserves more space than I am able to give it, but one may for example wish to take issue with the idea that the liberalism that gave us the rule of law is the same liberalism that is now allegedly under attack from the reaction against socialism. Goodwin's attempt to reduce the counter-revolution to alleged popular unease about capitalism seems like an inversion.
   Socialism has always had two strands:
   (1) concern for the less advantaged
   (2) the desire to run the world on supposedly rational and just principles.
   The second strand came to the fore in the scientific planning utopias of the 1920s that were popular with intellectuals such as H.G. Wells, and which eventually manifested in extreme forms such as Nazism and Stalinism. In a milder form, this strand has become a ubiquitous feature of Western societies, with medicine, education, childcare and the universities all subject to intervention in the cause of 'rationality' and 'fairness'.
   The counter-revolution may well be a reaction to strand 2, but if the Left were to acknowledge this, it might require a retreat from their ambition to manage everything in accordance with leftist ideology.

hegemony

Politics professor Matthew Goodwin produced an interesting review of the 2010s decade for The Times. Commenting on the apparent shift to the right, he criticises leftists for responding to it by

retreating to their gated communities and bunkering down, self-selecting their activist base, echo chambers and social networks in which everybody looks and sounds like them.

   Like many in his profession, however, Professor Goodwin overstates the significance of the shift. He suggests that the decade represented the end of liberal hegemony (he uses "liberal" in the American sense of leftist-interventionist).
   There are two reasons why recent changes in America and Britain would be better described in terms of a mild counter-revolution than a change in hegemony. First, we have to separate style from substance. The rhetoric of Donald Trump is very different from that of previous US presidents; and the current UK government feels like a significant departure from the ideological complacency of the Blair and Cameron eras. In terms of actual policy changes, however, little happened during the 2010s that could be described as deviating from the leftist-interventionist paradigm.
   The second reason why references to change of hegemony are premature is that commentators fail to distinguish between political and cultural hegemony. Political theory appears not to have caught up with a phenomenon dating from the 1980s: governments being notionally right-wing, while the cultural establishment remains firmly left-leaning and is openly rejecting of moves to the right, however democratically based. The hostility of the cultural elites towards Margaret Thatcher and Ronald Reagan provided a good illustration. We saw the phenomenon repeated more recently with Donald Trump, and may well experience the same with Boris Johnson (we had a possible foretaste with the Supreme Court's ruling on prorogation). Until there is some definite change in the politics of the cultural establishment — say, a clear sign of the BBC renouncing its programme of excess political correctness — reports about the demise of 'liberal' hegemony are likely to be exaggerated.
   We have to remember, of course, that the concept of hegemony is charged with significance for a Marx-inspired Left, since in terms of their ideology it is normally something to be criticised rather than endorsed. Hence complaining that the hegemony is right-wing (and thus to be opposed) will generally be preferable for them, compared to having to acknowledge that it is they who are hegemonic.