Microsoft - bad for consumers and the environment?

Sian examines how the big computer companies operate. Are they bad for consumers and the environment

You probably noticed that Microsoft launched their latest operating system ‘Vista’ this week. Three years late and containing about half the promised innovations, it’s already in for criticism, not least from me and my colleague Derek Wall, Male Principal Speaker for the Greens.

We are not only disappointed Vista isn’t better, but have some serious concerns about consumer rights and its impact on the environment too. The comment I made in our press release on Tuesday that, “Future archaeologists will be able to identify a ‘Vista Upgrade Layer’ when they go through our landfill sites,” was rightly spotted as a minor exaggeration, but I was trying to illustrate something significant.

The point is that thousands of bits of hardware like graphics cards, monitors, and even whole computers, may be junked when people upgrade to the new operating system because Vista is either too memory-heavy or just too pernickety to run on perfectly good equipment that, in some cases, is practically brand new.

The main problem is the new ‘Digital Rights Management’ tools built into the system. These insist that any piece of hardware used to play high-definition music or videos formats like Super Audio CD, High-Definition DVD and Blu-Ray, must use Microsoft approved encryption codes. If monitors, sound cards and graphics cards do not, the content will not play at all.

Unfortunately, until very recently no hardware had these codes included, so even a supposedly ‘high-definition ready’ monitor bought six months ago, won’t play ‘premium’ DRM-protected songs and films and will need replacing, leading to a lot of nice equipment in skips and landfill sites.

I discussed in my previous blog, ‘Sian’s been very naughty’ how, as a consumer or creative artist, there are 'fair use' copying, viewing and recording rights we are all supposed to have in law. But these are being denied by new DRM technologies like those in Vista. As a consumer, you should have the right to back up (i.e. make a copy of) things in your library for your personal use, and you should have the right to choose which video screen or monitor you use to view it, including your old one.

In fact, DRM is not a feature that has any benefits at all for the end-user. In fact, its only reason for existing is to protect the profits of big corporations. And Microsoft isn't doing all this just to please Hollywood and the music industry - they hope to set the price for copy-protection The Microsoft Way – and make a lot of cash.

And in case you’re taking all this in and thinking of getting a Mac instead, Apple is a big culprit in the whole DRM scandal as well, through iTunes. Apple iTunes users might be beginning to sniff out the fact that their music collection is slowly being locked into a format over which they have little control. Each song bought is a 79p commitment to stick to Apple's store and iPod players, since iTunes songs cannot be legally transferred to another format. This is at last attracting the attention of some consumer protection agencies, so far in Norway, Germany, the Netherlands, Finland, Sweden and France.

And going back to landfill nightmares, how many iPods have you been through so far? It appears that many of these cute little machines are breaking down suspiciously soon after their warranty runs out, and that Apple provides precious little support for repairing them after this happens. People are therefore obliged to replace their iPod with another one when it dies (since no other brand of more reliable mp3 player will play the proprietary iTunes format) and consumer groups are starting to object. The ‘Stay Free’ group in New York, as well as setting up the iDud campaign, is making the best of the situation and asking for broken iPods to turn into art. If you have a couple tucked away, why not send them in?

None of Apple’s machines are as green as they could be either, containing more toxic chemicals than many other hardware brands, which is why Greenpeace in the USA has produced a clever skit based on the iconic American adverts featuring their Mac and PC characters (now being reprised here with newly sold-out comedians Mitchell and Webb).

This is staring to sound very depressing. If we’re all sleepwalking into a conglomerate-controlled, Blade Runner future, what’s the answer? The Greens believe that ‘Free and Open Source’ software (FOSS) is the model to look at.

We'd advocate that more technical people look at the open source Linux operating system. But even if you aren’t a techno-nerd, there are plenty of individual open source tools and programmes that will work on your current computer. You might already have the Firefox web browser installed, seeing as it had the popular ‘tabbed’ layout long before Internet Explorer 7 took it up, but there are loads more, including whole suites of useful software such as Open Office which, for businesses, schools and government, is an increasingly practical option. I'm typing this on Open Office, for instance, and it works completely fine. Why not try it? It's free!

Other FOSS programmes that might come in handy include Scribus for professional document production (it’s rather like Quark or InDesign) and the Gimp photo editor (clearly not named by a marketing guru!).

Back in the music world, independent record labels have started to experiment with unprotected mp3 downloads, deciding to trust the fans. I think it's worth betting that if you like a band, you'll want to pay for their music to keep them writing new songs.

Other artists collaborate by sharing music files under 'creative commons' licenses where they give you free access to the files, but ask you to respect their conditions – for example by giving them a credit, or not using their work for commercial projects, such as adverts.

The net could even bring us right back to the way things started by directly supporting artists, making art ourselves, and generally by-passing the commercial middle men. But not, of course, if Microsoft and their friends have their way.

Sian Berry lives in Kentish Town and was previously a principal speaker and campaigns co-ordinator for the Green Party. She was also their London mayoral candidate in 2008. She works as a writer and is a founder of the Alliance Against Urban 4x4s
Getty
Show Hide image

We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?