How to think about social media

Why social media is part of the solution not part of the problem.

How should the use of social media be conceptualized? And how should it be regulated? Can it be regulated? One approach, which seems to be current with policy-makers and has been raised at the Leveson inquiry, is to suggest that social media is just an adjunct of the traditional mainstream media. On this view, blogging and the use of platforms such as Twitter and Facebook are entirely capable of directed regulation; the only question is how it is done.

However, such thinking may well be misconceived. It is looking at a new phenomenon and straining it to fit into categories which may no longer be valid. Although one can always over-state the novelty of any development and exaggerate its potential impact, there is a better way of thinking about social media than seeing it as just something shiny and new to regulate. It may not even be capable of specific regulation in any meaningful way.

Social media is about citizens connecting with each other instantly and casually using the internet. It does not matter where one is physically located. There is no need for elaborate telephone and video conferences. No special subscription or permission is required. As long as one has access to the internet then, in principle, there can be immediate contact and the sharing of useful or interesting information.

Most of these online discussions will be trivial in terms of politics and media issues. But social media provides the means by which clusters of like-minded individuals can easily swap ideas and scrutinise data on public matters. In this way, social media users can hold politicians and media outlets to account in a manner not possible -- or conceivable -- until a few years ago. Instead of a politician saying something forgotten the day after, or a reporter's bylined piece being in next day's fish-and-chip paper, those involved in social media can pore over details and make connections weeks and months later. Transgressions can be linked to and accumulated. A speech or a byline can now come back and haunt you long after you have "moved on".

As long as there are those willing to promote such accountability then politicians and media professionals can now be subjected to on-going and sometimes intense examination. The effect of this may be to make those with political and media power more responsible; it will certainly mean that it is more straight-forward and more likely that individuals can be called out for any wrong-doing. On this basis it is not those in power who will be regulating social media, but social media regulating those in power.

Once social media is understood as an advanced form of active citizenship then it can become part of the solution to the problem of abuses of political and media power; not part of the problem to be addressed by regulation. Regardless of the self-serving caricatures promoted by some in the media, the record of bloggers and tweeters compares rather well to tabloid excesses. In the medium- to longer- term, it is clear that those in mainstream media who work with social media will tend to produce better output.

Regulation is just not about formal "black-letter codes" with sanctions and enforcement agencies. Regulation also means simply that things are done better than they otherwise would be: for example, when one "regulates one's own conduct". Bloggers and others in social media are willing and able to call out media excesses and bad journalism. The reaction is immediate and can be brutally frank. They are sometimes wrong, as are formal regulators. But they can take time and allow the media to produce better, more well-informed stories.

The formal regulation of social media may be futile -- anyone can publish to the internet if they want to. The individuals are rightly subject to the law of the land in doing so. It is difficult to see how there could be any formal regulation of social media which would have any significant bite against a determined wrong-doer. One may as well seek to regulate everyday talk with a Conversation Regulatory Authority. But encouraging the mainstream media to constructively engage with social media users is perhaps one good route to better standards of content.

David Allen Green is legal correspondent of the New Statesman and author of the Jack of Kent blog

David Allen Green is legal correspondent of the New Statesman and author of the Jack of Kent blog.

His legal journalism has included popularising the Simon Singh libel case and discrediting the Julian Assange myths about his extradition case.  His uncovering of the Nightjack email hack by the Times was described as "masterly analysis" by Lord Justice Leveson.

David is also a solicitor and was successful in the "Twitterjoketrial" appeal at the High Court.

(Nothing on this blog constitutes legal advice.)

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation