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World Bank rankings promote deregulation at the expense of Working People
by Leo Baunach
Through its annual Doing Business rankings, the World Bank promotes blindly deregulatory measures, including a race to the bottom on taxes and fewer protections for workers.
In the recently released 2020 edition, countries get high marks if they demonstrate a commitment to slashing regulations rather than policies that support sustainable development, poverty elimination, and inequality reduction. Both the World Bank and the International Monetary Fund have used the report’s indicators to pressure countries to reduce regulations, sometimes through loan conditions.
Doing Business has long been dogged by controversy. In 2018, World Bank chief economist Paul Romer sharply criticized the report, noting that methodological changes — not reforms — had led to dramatic swings in Chile’s ranking. Romer speculated that staff could have manipulated the rankings for political purposes, an overreach that distracted from his valid criticisms of the methodology.
As the Center for Global Development pointed out, Doing Business does not require political manipulation because “the index starts from an extreme ideological premise.” The creation of Doing Business in the early 2000s drew inspiration from the right-wing Heritage Foundation’s Index of Economic Freedom.
For decades, Chile pursued the neoliberal policies championed by Doing Business and the World Bank. Under dictator Augusto Pinochet, Chile privatized its pension system. The Bank held up Chile as a model and promoted pension privatization across the world, an experiment that ended in failure.
In Chile, the pension system is in crisis, wages are low, jobs are insecure, and public services including water are privatized. In recent weeks a mass movement has risen up to demand a new model that benefits everyone.
Nonetheless, supply-side ideology may have gained new life at the World Bank. President David Malpass, selected this year by the Trump administration, described how financial deregulation in Kenya enabled an explosion of short-term microloans via mobile phones.
“It’s the kind of liberalization process we need to unleash across the developing world,” Malpass said. This deregulation gave Kenya a significant boost in its Doing Business score from the “Getting Credit” indicator, where it ranks 4th globally.
While the Bank hypes mobile lending as a tool for entrepreneurship and development, there is a much darker side. Mobile lenders in Kenya aggressively market high-interest loans that trap people in unaffordable debt. These loans are not fueling business or investment either: only 10 percent of mobile borrowers in Kenya used a loan for that purpose. Most borrowers use loans for consumption, medical needs, and school fees.
Bridge Academies, which received funding from the World Bank’s private sector lending arm, is among the sources of school fees in Kenya. The World Bank Group is under pressure to divest from Bridge, which has been scrutinized for evading regulations on education standards and providing untrained teachers with poor working conditions.
In Kenya and around the world, the solution is not predatory finance and private education. People need quality jobs with living wages, a goal that Doing Business undermines.
The World Bank suspended the Employing Workers Indicator (originally Hiring and Firing Workers) from the ranking calculations in 2009, after criticism that it degraded labor standards. However, Doing Business continues to gather the data, and the 2020 report devotes a chapter to the subject.
Countries are lauded for “making employment regulation more business-friendly” through flexibility measures including higher caps on overtime hours, reducing extra pay for working at night or on rest days, longer probationary periods before workers become permanent, and expanding the allowability of temporary and fixed-term employment relationships.
Doing Business justifies these flexibility measures in the name of letting workers “choose their jobs and working hours more freely.” Workers do need a genuine measure of control over their time and input in scheduling, especially to balance care responsibilities. This can be achieved through negotiations between employers, trade unions, and governments to balance the needs of everyone.
The ILO Global Commission on the Future of Work highlighted the need to address both insecure under-employment and excessive hours. The Commission recommended “the adoption of appropriate regulatory measures that provide workers with a guaranteed and predictable minimum number of hours” and actions to ensure that on-call work is dignified and “the choice for greater flexibility is a real one.” They suggest additional pay for work that is not guaranteed and compensation for the waiting time of on-call workers.
The changes promoted by Doing Business give employers even more power, allowing them to threaten non-renewal of employment contracts and keep workers insecure with unpredictable scheduling.
Doing Business 2020 states that Serbian “authorities could benefit from the experience of Hungary where employers have the freedom to use fixed-term contracts of up to five years for tasks of a permanent nature.” The interest here is only in the “freedom” of business to do whatever it pleases, without considering the effect on working people.
Another justification is that flexibility will improve the ability of women and youth to participate in the workforce. The citation for one such claim is a decade-old study from Simeon Djankov, a central figure in the founding and survival of Doing Business. Evidence from the real world contradicts these claims.
In reviewing the effects of labour market flexibility measures in Europe, researchers found “no support for the notion that lowering restrictions on the use of temporary employment relations can help reduce youth unemployment.”
The discredited Employing Workers Indicator recently made an appearance in a World Bank white paper on social protection. It is no surprise that the indicator is used in a paper that calls for fewer labor regulations and a social protection system built around individual savings, reduced employer contributions, and narrowly targeted social safety nets. A full analysis of the World Bank’s proposals on social protection and labour is available here: http://bit.ly/2oQYlmZ
In India, trade unions will hold a nationwide general strike in January 2020 to oppose the policies of Prime Minister Modi, including the reduction of employer contributions to pension funds and social insurance. India has aggressively pursued higher rankings in Doing Business, lobbying the Bank for favourable methodology changes and letting the pursuit of a higher ranking guide policy-making.
“The Government boasts that India’s ranking is going up,” the Indian unions note. However, “All this is being done at the expense of the working people.”
* Leo Baunach is the Director of the International Trade Union Confederation and Global Unions Office in Washington: http://inequality.org/research/world-bank-deregulation/
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Facebook proves once again its complete inability to regulate itself for the public good
by Karin Pettersson
IPS-Journal, Social Europe, agencies
Last week, Facebook gave the go-ahead to Donald Trump to base his whole re-election campaign on massive, micro-targeted, straight-out lies.
Here’s the problem with that. Serious politicians can argue about polices to combat inequality and the climate crises all they want. But if liars are allowed to steal elections in democratic countries, why does all that even matter?
The background is that the US president, under mounting pressure from the impeachment inquiry in Congress, needed to change the conversation. Trump’s campaign therefore published on Facebook an advertisement, claiming that his political opponent Joe Biden had used the threat of withholding $1 billion to Ukraine to quash an investigation of a company of which his son is a board member.
This claim has been debunked several times and in no ambiguous terms by news organisations. Or, to speak in straighter terms, it is a lie.
That politicians use smears and aggressive opposition research in election campaigns is nothing new. But the combination of habitual and careless lying in politics and the possibilities of personalised and micro-targeted campaigns on a network with two billion users is unique, and uniquely dangerous.
Standards not applied
Since the last US election, when Russia used Facebook to try to influence the outcome, the platform has spent a lot of money on trying to restore public confidence, through collaboration with fact-checking organisations. But it’s hard to see the point of any of that when those standards do not apply to the central players.
The new Facebook policy is that it will not fact-check ‘direct speech’ by politicians. ‘Our approach is grounded in Facebook’s fundamental belief in free expression, respect for the democratic process, and the belief that, in mature democracies with a free press, political speech is already arguably the most scrutinized speech there is,’ Katie Harbath, its public policy director for global elections—and former digital strategist for Republican political committees and the 2008 presidential campaign of Trump’s personal lawyer, Rudolph W Giuliani—wrote to Biden campaign officials, according to the Washington Post.
Let me interpret this for you: to ‘respect the democratic process’ in the world of Facebook means leading politicians should be allowed to cook up whatever lies they can come up with about their opponents while Facebook, unashamedly, makes a lot of money out of falsehoods it knows could sway an election.
Add to this the fact that the company boss, Mark Zuckerberg, privately told staff in July that the presidential candidate now leading the Democratic field, Elizabeth Warren, was an ‘existential threat’ to Facebook, due to her anti-monopoly policy proposals. She has called for the break-up of Big Tech, arguing that the leading companies in the sector have been allowed to grow so much they are threatening innovation, fair competition and democracy.
When Zuckerberg’s comments and the new Facebook advertising position became known, Warren called him out on Twitter, demanding accountability and accusing the corporation of ‘taking deliberate steps to help one candidate intentionally misleading the American people wile painting the candidacy of others (specifically: mine) as an “existential threat”’. She also trolled the company by publishing an ad with falsehoods about Facebook, to prove her point.
On a more fundamental level, Facebook’s advertising model already favours aggressive lying and fear-mongering. As Charlie Warzel recently wrote in the New York Times, its business practices skew the arena decisively towards political movements for whom lying is a central tenet. Provocative content gets more reach, which means more effective campaign ads; more effective campaign ads mean more money to Facebook—and that feeds back into politics:
A natural Facebook candidate both dominates the news cycle and stokes emotions—which, in turn, increases that person’s ability to raise money. Once campaigns realize that divisive rhetoric pays, the incentive to up the ante with hyperpartisan ads and misinformation grows.
To sum up: Warren is right that allowing for lies is not a ‘neutral’ move by Facebook. It plays into the hands of politicians who feed on rage.
The Facebook co-founder Chris Hughes wrote on Twitter: ‘I have a feeling that many people in tech will see Warren’s thread implying FB empowers Trump over Warren as unfair. But Mark, by deciding to allow outright lies in political ads to travel on Facebook, is embracing the philosophy behind Trumpism and thereby tipping the scales.’
Perversion and misuse
Everybody who cares about decency and truth-based politics should worry about what that means, and how the perversion and misuse of the term ‘free speech’ is now threatening to kill free and fair elections—or, as we used to call them, democracy.
Nick Clegg, formerly a serious UK politician, now a PR executive for Facebook, used a bizarre and faulty metaphor to defend the decision. ‘Our job is to make sure the court is ready—the surface is flat, the lines painted, the net at the correct height,’ Clegg said. ‘But we don’t pick up a racket and start playing. How the players play the game is up to them, not us.’
Really? Your job is to make sure that the game played actually is ‘tennis’—that both players use a racket and one doesn’t come armed with a machine gun.
Facebook has unwittingly proven once again its complete inability to regulate itself for the public good. This should surprise no one. Facebook is a private company and its incentive will always be, first and foremost, to maximise profits for its shareholders.
Democratic processes, the rules of the game need to be protected by more robust systems than the goodwill of tech entrepreneurs. Open societies need rules and laws which protect free and fair elections and our basic rights as citizens.
Online networks come with many advantages for their users. But the fundamental lack of transparency, the potential for microtargeting and manipulation, is a bad fit with political advertising.
The last election cycles in the US and Europe showed how vulnerable our societies are to propaganda, lies and manipulation. Maybe it’s time to simply ban political advertising on ‘social media’.
That would lead to fairer elections. It could even be a boon for battered trust and reputations in Silicon Valley.
* Karin Pettersson is director of public policy at Schibsted Media Group and chair of WAN-IFRA Media Freedom Board. She is a 2017 Nieman-Berkman Klein Fellow at Harvard. Formerly she was political editor-in-chief at Aftonbladet, Scandinavia’s biggest daily newspaper.
http://www.socialeurope.eu/is-it-time-to-ban-political-advertising-on-facebook http://elizabethwarren.com/plans/break-up-big-tech http://www.theverge.com/2019/10/15/20916729/democratic-debate-elizabeth-warren-big-tech-break-up-facebook-google-amazon-twitter http://theconversation.com/twitter-is-banning-political-ads-but-the-real-battle-for-democracy-is-with-facebook-and-google-126260 http://freedomhouse.org/report/freedom-net/freedom-net-2018
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