Mon, Oct 05, 2009 page9

• Flagrant cheating is undermining society’s interests

  Humanity’s natural instinct for fairness has been undermined by a society and a government unwilling to punish cheaters

  • By Will Hutton / THE GUARDIAN
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  Cheating is ubiquitous. Three sports — rugby, football and Formula One — are on the rack as coaches, players and drivers are discovered flagrantly flouting the rules. The world’s top banks have hidden trillions of dollars of near-valueless securities in offshore tax havens, deceiving taxpayers, regulators and investors. The consensus is that next year’s rise in the top tax rate in the UK to 50 percent will raise hardly any extra revenue, for high earners will successfully cheat on their obligations.

  MG Rover directors cheated on their employees and the firm. Top UK sports retailers such as JJB Sport have been fined for price fixing. BBC’s Panorama program claimed an executive from Lloyds bank advised a tax evasion scheme to a wealthy client. A hundred building firms, including the top names in the industry, have been fined £130 million (US$206 million) for price rigging. The attorney general for England and Wales, Baroness Scotland, calmly paid a £5,000 fine rather than resign for not complying with her own legislation on employing illegal migrant workers. When Liberal Democrat Vincent Cable announced his well-judged “mansion tax”, the howl went up at the very idea of a new tax which could not be avoided (part of its virtue). And that is all in the last three weeks.

  Behavioral psychologists tell us that human beings come down disproportionately hard on those who cheat on the agreed rules for their own advantage. Marc Hauser, Harvard professor and director of the Cognitive Evolution Laboratory, is one of the world’s leading experts on fairness. After setting standard tests for quarter of a million people from 120 countries he believes that human beings everywhere are born with an innate disposition not to intend harm. It is a result common to Amazonian Indians or pensioners in South Korea.

  This instinct broadens into wanting not to cheat, and instead to cooperate. It is a capacity the species once needed for its survival. If a stranger could not be trusted to keep to the group’s rules when humans lived in caves as hunter-gatherers, it was a matter of life and death. Yet increasingly people shrug off this most basic of instincts, central to any conception of human association and fairness. So what’s going on?

  What is dangerous is that when cheating reaches a certain mass, it becomes impossible to contain. Rules become there to be broken. Those who dive on the football field will hardly think an annulled suspension for a couple of matches for Arsenal soccer club’s Eduardo sufficient deterrent not to try it themselves — and the football authorities have to be careful in their sanctions, because diving is so rife. Equally, governments find it hard to challenge the accounting industry, along with much of the financial services’ so-called structured (cheating) investment operations, built around advising the rich how to avoid (and even evade) tax.

  Too many people have been allowed for too long to build a career on advising others how to cheat. The lack of vengeance is an explicit signal to everybody else. Meeting one’s obligations under the rules is for somebody else — the little people. Almost nobody gets found out and when they do the penalties are trivial. Join the crowd and cheat. Dive in the box. Don’t pay tax. Have your racing driver crash. Try to rig the market or bend the rules to win the game.

  There is a change in society that has driven the growth of cheating — from sportsmanship to business ethics — over the last generation. It is not that there was some cheat-free golden age. Back in the 1960s and 1970s there were sports cheats and some businesses bent the rules. However, most chief executive officers (CEOs) of public companies were like Courtaulds’ Sir Arthur Knight, punctiliously filing every penny of his income and refusing “tax efficiency” schemes on principle as dodges to help the rich avoid their civic responsibilities. He strongly believed he was a privileged member of a community whose rules he wanted to respect. I know a few CEOs like him now, but it is a culture that is fast disappearing.

  The problem is that the social sanctions against cheating are becoming ever harder to operate as communities disintegrate. The Premier League, like Formula One, is populated by extravagantly paid mercenaries transiently moving from team to team. Love of the sport may remain but rules depend upon everyone acknowledging that keeping to them is best for all — and that those in the community should both uphold them and join in any sanction. But super-rich football mercenaries cannot feel the sanction of poorer players in leagues that they have long since left behind. They are paid to win — and they had better deliver. They may not intend harm, but the social bonds that make them feel the intended harm have dissolved.

  The outstripping of the top 0.1 percent from the rest – in sport and business alike — has undermined the core belief in reciprocity on which association and rule-keeping depends. If the top does not need the approval of others — because the distance between us in income, wealth and status has grown so vast — then we cannot make them feel the harm that they do. They do not feel the consequences of not paying tax, rigging markets or bending the rules. They can behave unfairly without consequence. The leaders set the tone; the rest follow and so cheating becomes the norm.

  But the inequality which has caused all this has needed a justification, supplied by the pushers of market fundamentalism and neoconservatism. So, for a generation, a line has been peddled that the number one value is individual freedom unbounded by society or state. This, they said, is the route to human happiness and economic efficiency. States and regulations are coercive and inefficient. Taxation is confiscation. There should be no upper limit to what one can earn and no interference in market processes, unless the markets have demonstrably failed. The raw political power that allowed a financial oligarchy to rig western finance to create personal fortunes exceeding the great aristocratic dynasties went unchallenged. And so, we witness the consequences.

  Doubtless Baroness Scotland feels her mistake was one that anyone employing a migrant worker could make. She is half-right, but she is a leader, and her job is to be responsible for the law. It is not enough that she pays her fine and gets on with her job, any more than it’s right that sports-governing bodies just slap cheaters’ wrists or bank boards connive in running tax avoidance schemes. Civil society needs to fight back, but the political avenues have closed.

  Neither of our main political parties appears capable of challenging the great neoconservative story, nor of expressing our collective wish to punish cheats and cry for fairness. Labour in power ignored the opportunity, even if now there is a deathbed repentance. Philosophically, the Tories do not object to great inequality and distrust deploying public power to punish cheats. So cheating becomes standard — and, depressingly, everyone knows it.
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