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There’s a very interesting take on UK unemployment trends in the July NIESR Review, written by the NIESR director Jonathan Portes. One should perhaps bear in mind that he has previously worked to formulate employment policy for the Blair and Brown governments.
His essential point is that while the overall UK 16-64 employment rate has remained steady for over 30 years, this has been combined with some major changes in the patterns of that employment. This has major implications for the likely outcome of current government policy towards those out of work and their benefits.
In this post I summarise Portes’s findings and analyse more closely two points his paper overlooked: the impact of increased part-time working and the discrepancy between a rising population, a steady employment rate and falling numbers of benefit recipients. The findings suggest that the situation may be rather more serious than Portes fears, with significant implications for social welfare and cohesion. Continue reading Unemployment and Policy→
The riots that engulfed London and other cities in England began one year ago today. Just to hark back to my piece ‘Riots: Looking Deeper’ on this topic last year, written one week after they started. I think it’s fair to say that it was a reasonable analysis. In particular the Independent Panel set up to investigate their causes stated
Clearly the importance of those attributes becomes even more pronouncedwhen young people are faced with growing up in a time of austerity, a struggling job market and pervasive messaging telling them that criminality provides a fast track to achieving status among their peers. For example, while we know that most convicted rioters were not gang members, we also know that gangs operate in a large number of areas where the riots occurred. Some young people are exposed to imagery and attitudes associated with gang culture from an early age, which glamorise a life of criminality outside the system and which eschews any empathy for the victims of crime.
An article by Richard Wilkinson and Kate Pickett (of ‘The Spirit Level’ fame) on today’s Guardian CiF specifically blames inequality. You might care to look here at my general response to that thesis.
…with local authority cuts set to continue the environment will become more challenging than ever before – if we are to avoid a repeat of 2011 councils need to have the funding to invest in key intervention programmes, community development and economic growth; all things that could help to prevent future riots. As things currently stand, government policy could threaten this.
This is a response to ‘The Spirit Level’ and the response to it, with discussion of the implications to be drawn for tackling inequality. You can also download it as a pdf (67kb).
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Introduction – Selling Equality to the Rich
‘The Spirit Level’ is a book-length distillation of the work of Richard Wilkinson and Kate Pickett on the statistical relationship between standard measures of economic inequality and various social ills, such as ill-health, lack of social trust and crime. Its importance, and the controversy surrounding it, derives from its apparent ‘scientific’ justification of what might otherwise be instinctive or ‘moral’ beliefs in the desirability of equality.
The significance of the work is in the prospect it raises of a new dimension to the clash between rich and poor – clear-cut evidence showing that social factors affecting the whole population (rich and poor alike) are beneficially affected by a smaller spread between the highest and lowest incomes. These benefits come over and above the individual advantage of a higher rather than lower income.
While not necessarily disputing their conclusion, in this essay I point out the potential weaknesses that cast doubt on their particular analysis, and so render it a less than potent political weapon for egalitarians. At the same time I emphasise the importance of tackling overall inequality, not just inequality of income and wealth, for the benefit of the vast majority who would certainly gain. Continue reading Beyond ‘The Spirit Level’ – Tackling Inequality→
Whichever side of the argument you might be on, it’s worth looking at a very cogent and entertaining video talk by the late Professor G.A Cohen on some of the problems of ‘actually existing capitalism’. I found it while following up a reading of his Tanner Lecture, ‘Incentives, Inequality, and Community’, given at Stanford University in 1990-91, which contains a powerful argument against incentive justifications for income/wealth inequality.
‘We need to be clear how equality, and what kind of equality (including of what), services our notion of the good society.’
To give David Miliband some credit, he is asking the right question. It’s not clear from his New Statesman sally whether he has the right answer.
As characterised by the older brother, ‘Reassurance Labour’ believes that the state is the primary bulwark against the inequities and inefficiencies thrown up by a globalised market economy. It seems that David M. believes that empowered regions and communities should be cast in this role.
Now in general terms, I think David has a point. But there are major gaps in his thinking. As he clearly acknowledges, the state (and frequently bodies stretching their remit even wider – the EU and beyond) must set the framework for individual rights and responsibilities. This is necessary to ensure that the relationship between devolved structures is one of co-operation and constructive competition rather than the beggar-my-neighbour variety.
But there are other crucial relationships about which David says nothing. These are those between the power of business on the one side and communities and individuals on the other. If the state has been unable to resist the power of big business and finance to capture huge rewards while making the public responsible for clearing up its messes, there is no hope for smaller regions and communities. As it stands, Miliband senior’s recipe is one of surrender to the interests of money-profit. Under these conditions ‘growth’ means little more than bigger bonuses and more efficient tax-avoidance. Continue reading What Equality? – Equality of Voice→
This article was published on LabourList on Thursday 12th January 2012.
That there is ‘no money left’ is presented to us as an economic fact of life. The Conservatives have embraced it and the Liberal Democrats accepted it. Led by the authors of ‘In the black Labour’ we are at risk of falling in with the inevitability of public squalor and private misery. Yet let the fog of this delusion lift briefly and we see around us the extraordinary wealth of a modern developed nation. The imperative that apparently forces us to accept a significant reduction in the quality of life of the majority of the population is almost entirely political. We should reject it. Continue reading Austerity is political→
I’m not particularly keen on the ‘Blue Labour’ moniker, but the ideas behind Maurice Glasman’s approach bear serious examination. Interestingly, his approach bears some comparison with that recently espoused by Amartya Sen in his book ‘The Idea of Justice’. This is that it is difficult to win political arguments with abstract ideas, and that practical and localised amelioration of well-recognised wrongs is the best way forward. Glasman (in Labour as a Radical Tradition) looks back to the early days of Labour when the movement of which it was part was defined by relationships and ‘practices that strengthen an ethical life’. These practices included reciprocity, mutuality and solidarity, and they led to actions such as the formation of mutual societies, co-operatives and trades unions. These may not and need not have had an explicit or even coherent philosophical underpinning.
According to Glasman, however, ‘The founders of the labour movement understood the logic of capitalism…and the threat this posed to their lives, livelihoods and environment.’ Maybe they did, but this is somewhat in contradiction of Glasman’s narrative, since the ‘logic of capitalism’ is itself an abstract idea. And it’s not at all clear that we understand this ‘logic’ today, or if we do, whether we know how to refute its conclusions. Continue reading Blue Labour Political Economy: Equality of Voice→
My last blog claimed that equilibrium economics is a fig-leaf for the rich and powerful – because it is a justification for preserving the status quo. But it is more than that, because the conditions required for reaching any such equilibrium (the point at which prices of goods and services have adjusted so that everyone wishing to buy is partnered by someone wishing to sell) are exactly those that are likely to allow those with existing wealth to become richer.
In the theory, this can’t happen, because in equilibrium everybody pays everybody else exactly what is needed for them to provide the good or service desired – no more and no less. Extending this idea a little further, it’s still reasonable that in an economy that is developing new goods and services we might allow a firm to charge us a bit extra on the promise of working on some new and better products. But what if we knew the firm were wanting these extra funds to produce misleading advertising, to bribe officials to cover up evidence of pollution, or to cover the costs of a temporary loss while they push a competitor out of business? We would surely then refuse to pay the prices demanded. Continue reading What is economics for? Part 2→
What is economics for? It’s often characterised as being about the choice between ‘guns or butter’. This choice is one not only about which we want to consume, but also about which we want to produce. Strangely, the dominant neoclassical paradigm attempts to render this a choice that need not be made, since it proposes the possibility of an entirely voluntary and stable production and trading outcome (equilibrium) that cannot be bettered. Or at least it cannot be bettered in the sense that no change is possible without making somebody worse off.
This process was described by the ‘father’ of modern economics Adam Smith as being an ‘invisible hand’ that brought about the welfare of all through the self-interest of traders, and that this is possible with markets and a set of prices for goods has been proven mathematically. It forms the basis of an approach to economics that starts from the position that in the absence of identifiable forces shifting things in the other direction, the economy will tend toward the ‘equilibrium’ outcome. In the apparent absence of a way of establishing the relative merits of individuals’ claims against each other this outcome is the best we can or should aim for, and so provides a justification for doing everything we can to remove any forces that might prevent this equilibrium being reached and maintained. Continue reading What is economics for? Part 1→