Category: Blog

If you open up any financial news outlet these days you can see that one of the headlines is that the euro area growth has considerably slowed down with projections being slashed by 1 percent. That’s a whole deal in the world of economics translating into more than 100 billion euros of productivity losses. In “normal” times, this would have been still bad but now it is potentially catastrophical.

The economic environment in which businesses operate today in the euro area is flooded with liquidity from the Asset Purchase Programme run by the Eurosystem. Think of it as a life support for companies that would otherwise not be existent. It is like a safeguard that things are still running as smoothly as possible until we have cleared the economic and political hurdles we are facing. The APP has ended last year, mostly because the signs of an economic recovery were there and also because there was a clear political pressure on the ECB to end it. But about this in a different story.

Today, following the monetary policy meeting, the ECB has signaled clearly that the probability of a downturn can be serious and it has introduced a new series of longer-term refinancing operations to help maintain the liquidity conditions in the market. My take is that this is pretty much unprecedented in Draghi’s term. It shows that the political pressure has convinced him to give up the idea that stimulus is still needed. In fact, the ECB hasn’t reached its inflation target before it withdrew stimulus and as it looks now, things could be potentially damaging.

 

 

 

Perhaps the biggest tech scandals of this decade brought the quasi anonymous political consultancy Cambridge Analytica (CA) into the spotlight. It wasn’t the publicity they wanted but it revealed the extent of businesses involvement in changing political behaviour.

It is not surprising anymore that manipulation is often used in political campaigns. In the end, the political setup of the modern democracy revolves around power plays between coalitions and struggles to gain power. The focus on achieving political control overshadows the means through which this is achieved.

So, what’s the deal with CA? Is CA the only company that got too close to the Sun? The political machinery of campaigning and political control is definitely supported by the private sector since… ever. From how campaigns are financed in the US with private capital to the informal practices of some businesses “suggesting” voting options to their employees in Eastern Europe, businesses have always been a crucial part of the political machinery.

However, what made CA such a hot topic of discussion is the nature of the intrusion and manipulation they’ve perfected. Moreover, the scale and precision is unprecedented. While speeches broadcast on TV and printed in some newspapers could mobilize the voting base of a candidate and while rallies and employers telling their employees how to vote might bring some votes to a political party, targeting systematically a large amount of a population based on their psychological characteristics that you’ve profiled is definitely an unprecedented act of social engineering.

CA didn’t limit itself to profiling and targeting with content people to change their preferences. CA also attempted to disenfranchise certain ethnic groups.

The scandal revealed that our fears that technology is used to sway elections and manipulate people were true. Technology has a dark side that many of us ignore. We take for granted the liberties we’ve gained in the past century and minimize the consequences of straying away from a liberal democracy.

 

About 2 years ago, I was packing my bags to move from Bristol (that has been my home for 2 years), to Frankfurt (my current home for nearly 2 years). One month after my move, Brexit happened. Needless to say, I was shocked and disappointed by the results of the vote partly because, within the academic community I lived in, Brexit was something unfathomable. I, for the first time, realized that my own bubble made me be myopic to the true state of the British society.

Two years on I look at Brexit and try to understand more about the factors that determined it?

Of course, if you read the media, British or non-British, there is a common rhetoric that Brexit happened because (shortly) prior to the vote there was a vitriolic campaign against the EU that was full of manipulation. That’s actually true, the campaign was a show of populism, faulty logic and arguments based on anything but facts.

But was there a deeper sentiment within the British society against the EU? Yes. A very deeply entrenched anti-EU sentiment that was brewing for a long time and it has been left unaddressed by politicians and in general, by media. Sure, this is more or less my opinion that there wasn’t a true debate in the past 10 years about the real benefits of the EU.

I also think that people are sensitive to economic issues and base their vote and opinion on how they feel in general about the state of the economy (e.g. if they have a good job and can eat well and have shelter the propensity to ask for change decreases). The UK economy has been doing pretty well. But how about the sentiment regarding the EU?

There is one big difference between satisfying your needs and having secure employment and thinking that this is the case. Reality and perception are two different thing that might not have any common ground. So, to cut to the chase, what did the British think about the EU? Did they think that they have benefited or not from the UK being a member of the EU?

Let’s have a look at the data and at how the citizens of the UK answered when asked about whether their country has benefited from being a member of the EU (source European Barometer)

 

 

Looking at the data, we see that from 2001 onward, the sentiments that the UK doesn’t benefit from the EU has increased, I would say, considerably. While before 2001 the opinions were split, the data after 2001 shows that the percentage of people who didn’t know what their opinion was on this matter shrunk. While we don’t know how the swing was, we can perhaps assume that the increase in the percentage of people who thought that they didn’t benefit from the EU was at the expense of  the “don’t knows”.

This proves that the perceived utility of memberships declined. What were the factors that determined? I assume they are many and their intersection made it difficult for anybody to predict it. When  you look at the chart above it may seem so obvious that there was a deeper divide between opinions and that someone should have predicted it. But the truth is that this chart alone doesn’t tell much. It just a mere reflection of societal attitudes that are influenced by a plethora of other factors, including how media has portrayed the EU.

It is advisable though for anybody interested in predicting future political and social outcomes to keep a watchful eye on such indicators. They might mirror greater issues in the society.

Another week, another reading list. Let’s keep it short this time, too.

1. The Socio-Economic Review never disappoints. A paper by Natalia Besedovsky on the financialization as calculative practice. A critical study of rating agencies on how the innovations in rating model do not only entail a statistical change but also an epistemological one. It changes the perceptions and expectations on calculability and predictability.
2. Fresh from the digital printer, a Guardian article on the coop economy. A look at Finland that it is a “natural” example of how this type of economy can work. The big question is whether this can be replicated at a larger scale or in countries that are highly embedded into the capitalist logic (i.e. USA) or post-communist countries that have an allergy to the word “cooperative” due to their political past.
3. Another sad story on poverty and businesses. No need for much introduction. I recommend it!

 

What have I been up to?

Gearing up for the holiday season means that I have less time for reading.

This week, some interesting stuff going on and the Internet, obviously, picked all these up.

1. A very good piece on Uber. You know already that I am a follower of this company and I wrote several pieces on it (here, here and here). I am still on the fence with categorizing this entity, but what I am sure of is that it offers a glimpse into the future of work. Work as we know it might disappear. Just think about how some jobs looked like 30 years ago and how they transformed.
2. Open science: An article on how technology firms shape political communication, an overview of how social media platforms changed the course of the Presidential election in the US.
3. Is this real life? China to move towards technological control of its citizens, something that reminds me of Black Mirror. We might not even need autocracy for such a societal paradigm to exist. Technology and the peer validation system is already so embedded into our daily life that it seems that an end-point as described in this article is feasible.
4. A Bloomberg piece on Romania warning that our political class jeopardizes the progress that the country has hardly achieved. The paradox is that a majority government is so unstable. Do you want to know why? I wrote here and here about it.

What I am up to this week? 

Reading  Eeva Houtbeckers’ doctoral thesis on mundane social entrepreneurship. I must say, I am skeptical when it comes to the “social” motivations of these start-ups, but this long piece goes into the depths of the day to day activities of social entrepreneurship to question the categorization of what is social and what is not.