One of the enduring habits of the news media is giving staff time off at Christmas. This is achieved mainly by padding out space with seasonal filler. Some of this is prepared weeks in advance, such as end-of-year lists and guff about new year resolutions. Some of it is artificial news, such as the honours list, which also produces more guff in turn (Q: what does Sir Wiggo say about us as a nation? A: bugger all). The shift of the start of the sales from January the 1st to Boxing Day has been a godsend in this regard, allowing the dead days of Winterval to be bloated with photos of naked greed at Harrods against a background of retail jeopardy: will shops sell enough reduced-priced goods to drag the economy over the finishing line?
In today's Guardian, Deborah Orr has got into the seasonal spirit by suggesting that capitalism make a new year's resolution to be better at providing jobs, security and fairness. Though generally an astute observer, this reveals her weakness for the sort of liberal sentimentality that lets capitalism off the hook. She claims: "After decades during which we have all been told that we must allow the market to decide, the market is making a pro-social and humane decision. It is choosing to sacrifice profits in order to save itself. This is what the sales are all about – companies slashing their profits in order to keep ticking over, providing jobs, maintaining a presence".
This sort of analysis credits capitalism, the "market", with moral agency: the making of a humane decision. Of course, no such thing is happening, nor could it ever happen. The market does not have a mind, not even in the pop-bollocks sense of a hive-mind. To believe it does is to accept the ideological premise of a supernatural force that we must accommodate: the "invisible hand" of Adam Smith's metaphor which has subsequently been apotheosised into the Old Testament deity of free enterprise. There is no reasoning with capitalism. Both worship and propitiation (the sacrifices of the "strivers") fall on deaf ears. Actually, there aren't any ears - that's just me lapsing into anthropomorphism. Some businesses will take a hit to profits if they think it will grow or maintain market share, and thereby deliver fatter profits later, but others will quite happily asset-strip or lay-off staff now if they think that will be in their best interests. The free-market ideologue may deify the profit motive, but at least he doesn't claim that businesses are primarily driven by ethical considerations. What need of the CSR fig-leaf if every decision you make is ethically-based?
Orr continues: "You could even argue that the recession is teaching businesses that people really are more important than profit (or at least that if people don't have jobs then they don't have customers). The rich are realising that they can't keep getting richer if the poor keep getting poorer". At this time of year we oscillate between extreme perspectives. Thus the Queen will habitually bore on about Christmas being a time for family but also a time for remembering those less fortunate than ourselves (that's everybody, in her case). Orr's focus on the decimation of the high street, and in particular the mismanagement of pubs by the big chains, is a paean to the "local" in all the senses of that word, but this makes her temporarily blind to a fundamental truth of capitalism: there are always more customers, always new markets, elsewhere. Starbucks have not yet exhausted the UK market but are already opening up in India. The growing global middle-class will ensure steadily increasing demand for coffee-as-lifestyle for years to come. The rich know they can keep on getting richer, even as the poor of developed nations get poorer, so long as there are populations in developing countries whose new spending power can grow the overall market.
Orr's optimism, the belief that growing poverty is ultimately bad for the rich, is based on the zero-sum fallacy. While it is true that eventually every population, from Aberdeen to Amazonia, will be incorporated into the market, thus precluding further customer growth (i.e. opening up new territories), this simply shifts the balance of activity towards technological growth. The poor of the world can see absolute growth in terms of material advancement, while experiencing relative decline in terms of the share of wealth. It's all about how the pie is shared out. As it grows, the rich are positioned to appropriate a disproportionate share of that growth, just as they have done over the last 30 years.
New year resolutions are rarely effective as they tend to focus on the aspirational rather than the achievable: losing weight or quitting smoking rather than painting the bedroom or visiting relatives. Asking for a capitalism that "promotes fairness" is just delusional. Unfairness is its very essence and there is no natural limit to its appetite.
Saturday, 29 December 2012
Thursday, 20 December 2012
Living in the Ghetto
The news that an immigrant is going to receive over £2,600 in housing benefits a week has elicited little media comment beyond wry sympathy at his inability to relocate his family to the more select parts of London. Despite the real estate challenge, Mark Carney, the new Governor of the Bank of England, will have little difficulty acclimatising to a city dominated by the global executive elite, and as an English-speaking Canadian he is already as integrated as you can be short of being born and bred in Midsomer.
For those without Carney's advantages, Ed Milliband recently proposed that steps should be taken to ensure that every Briton speaks English. This is an orthodox progressive position, arguing that integration, and therefore the life chances of immigrants themselves, would be helped by actively developing language skills. It's a win-win. In fact, it's an example of passive-aggressive intolerance. Exactly the same argument was once deployed against the public use of Welsh and Gaelic. It also gives quiet encouragement to natives who don't like the gabble of foreign tongues, but without pandering to overt racism. But the real motivation for this intervention has less to do with intolerance or prejudice, which I'm sure Milliband is largely free of, and more to do with economic utility. His plea also implies the neoliberal belief that the state should take measures to better train workers for the benefit of capital. Suggesting that immigrants should speak English is anodyne because no one is suggesting that they shouldn't, least of all immigrants themselves. You might as well advocate breathing.
Jackie Ashley supported Milliband's initiative and even broadened it to talk about the undesirability of ghettoes, that is places where English may not be spoken routinely: "But ghetto communities are always bad news. They increase suspicion on both sides. They gnaw away at common citizenship. If we've learned one thing from the politics of the last century in Europe, surely it's that". This is bad history. Ashley's implied reference is to the Jewish ghettoes of Eastern Europe, with their long experience of pogroms and legalised discrimination. But that is simply not a relevant parallel for Britain. Our ghettoes have been built by economic circumstance, both in terms of available housing and the proximity of work, not by walls and curfews. Imagine if she had claimed that the traditional Irish Catholic areas of Glasgow and Liverpool were "always bad news". This anti-ghetto rhetoric, this intolerance, is sadly reminiscent of New Labour's appallingly stupid policy of dispersing asylum seekers around the country in the early 00s.
In the modern world, ghettoes (as distinct from the housing of the poor) are essentially transient communities providing induction support and access to social and economic networks, not unlike a global corporation's relocation function. Every Polish shop is a mini-job centre and a mini-Citizen's Advice Bureau. The ghetto functions as a decompression chamber, where immigrants can be acclimatised in a hybrid milieu, like fish and chip shops on the Costa del Sol using olive oil instead of lard. Once they find their feet, they push on into the interior in waves of further and deeper integration, like the Jews of Whitechapel moving out to Gants Hill and Golders Green. In ending up in Hampstead, rather than Peckham, Ed Milliband's parents were following a well-trodden path to a particularly genteel ghetto. Of course, we don't tend to classify an area as a ghetto (other than ironically) unless there is visible poverty, or at least lots of fried chicken shops.
Ghettoes are overwhelmingly successful in their job. They do not trap people. The point about the "escape the ghetto" trope is that escape is routine. Consider how Italian-Americans migrated from the Lower East Side of New York, out to New Jersey and Connecticut, leaving "the old neighbourhood" to more recent immigrants from elsewhere. It is ghettoes, and not government diktats about language skills, that are the chief facilitators of integration. But government tends to be suspicious of them, largely because they are autonomous, and is impatient for their dissolution: don't stand out, blend in and be quick about it. Today's planning battles over mosques echo earlier conflicts over synagogues and Catholic churches. Milliband didn't use the G-word, but the negative connotations are implicit in his comments about "slum housing" and "segregated workplaces". Instead, he drew a contrast between assimilation (bad because you lose your cultural identity) and separation (bad because you retain it). Integration is the happy medium where the immigrant can operate like a true Brit (in public) while retaining the solace of her cultural heritage (in private). Diversity then becomes a set of sentimental commodities, to be put on and taken off like your football team's colours.
What is rarely acknowledged by politicians is that the specifics of integration, the "points of non-negotiable conformity", are almost wholly to do with economic utility rather than culture. This reveals the too-often elided truth that immigration policy is deliberate and well-planned, not the series of mistakes and bungles that the press paint it as. Tories berating the incompetence of the Border Agency, like Labour confessing that "we got it wrong", are both simple misdirections. All parties are quite open in their insistence on an immigration policy that facilitates the importation of skilled workers at the request of business, while simultaneously pandering to tabloid prejudices about benefit tourists and hate-preachers. Immigrants are neatly divided into good (Mark Carney) and bad (Abu Qatada). It is naive to believe that had the Tories been in power during the 00s, the influx of cheap Eastern European workers would not have occurred. It was what business wanted at the time, which is why it happened.
Insisting on a proficiency in English is an argument about the economic value of the individual, not a plea for more community singing. The reality is that the vast majority of immigrants are only too keen to learn or improve their English because they anticipate the economic benefits. It is a myth that immigrants come here determined not to learn the language. After all, an ability to read and write English would be most helpful for a career in benefit fraud. Perhaps Milliband should worry less about immigrants who can't speak English and more about an immigrant who appears to think the bankers' gravy-train is still running.
For those without Carney's advantages, Ed Milliband recently proposed that steps should be taken to ensure that every Briton speaks English. This is an orthodox progressive position, arguing that integration, and therefore the life chances of immigrants themselves, would be helped by actively developing language skills. It's a win-win. In fact, it's an example of passive-aggressive intolerance. Exactly the same argument was once deployed against the public use of Welsh and Gaelic. It also gives quiet encouragement to natives who don't like the gabble of foreign tongues, but without pandering to overt racism. But the real motivation for this intervention has less to do with intolerance or prejudice, which I'm sure Milliband is largely free of, and more to do with economic utility. His plea also implies the neoliberal belief that the state should take measures to better train workers for the benefit of capital. Suggesting that immigrants should speak English is anodyne because no one is suggesting that they shouldn't, least of all immigrants themselves. You might as well advocate breathing.
Jackie Ashley supported Milliband's initiative and even broadened it to talk about the undesirability of ghettoes, that is places where English may not be spoken routinely: "But ghetto communities are always bad news. They increase suspicion on both sides. They gnaw away at common citizenship. If we've learned one thing from the politics of the last century in Europe, surely it's that". This is bad history. Ashley's implied reference is to the Jewish ghettoes of Eastern Europe, with their long experience of pogroms and legalised discrimination. But that is simply not a relevant parallel for Britain. Our ghettoes have been built by economic circumstance, both in terms of available housing and the proximity of work, not by walls and curfews. Imagine if she had claimed that the traditional Irish Catholic areas of Glasgow and Liverpool were "always bad news". This anti-ghetto rhetoric, this intolerance, is sadly reminiscent of New Labour's appallingly stupid policy of dispersing asylum seekers around the country in the early 00s.
In the modern world, ghettoes (as distinct from the housing of the poor) are essentially transient communities providing induction support and access to social and economic networks, not unlike a global corporation's relocation function. Every Polish shop is a mini-job centre and a mini-Citizen's Advice Bureau. The ghetto functions as a decompression chamber, where immigrants can be acclimatised in a hybrid milieu, like fish and chip shops on the Costa del Sol using olive oil instead of lard. Once they find their feet, they push on into the interior in waves of further and deeper integration, like the Jews of Whitechapel moving out to Gants Hill and Golders Green. In ending up in Hampstead, rather than Peckham, Ed Milliband's parents were following a well-trodden path to a particularly genteel ghetto. Of course, we don't tend to classify an area as a ghetto (other than ironically) unless there is visible poverty, or at least lots of fried chicken shops.
Ghettoes are overwhelmingly successful in their job. They do not trap people. The point about the "escape the ghetto" trope is that escape is routine. Consider how Italian-Americans migrated from the Lower East Side of New York, out to New Jersey and Connecticut, leaving "the old neighbourhood" to more recent immigrants from elsewhere. It is ghettoes, and not government diktats about language skills, that are the chief facilitators of integration. But government tends to be suspicious of them, largely because they are autonomous, and is impatient for their dissolution: don't stand out, blend in and be quick about it. Today's planning battles over mosques echo earlier conflicts over synagogues and Catholic churches. Milliband didn't use the G-word, but the negative connotations are implicit in his comments about "slum housing" and "segregated workplaces". Instead, he drew a contrast between assimilation (bad because you lose your cultural identity) and separation (bad because you retain it). Integration is the happy medium where the immigrant can operate like a true Brit (in public) while retaining the solace of her cultural heritage (in private). Diversity then becomes a set of sentimental commodities, to be put on and taken off like your football team's colours.
What is rarely acknowledged by politicians is that the specifics of integration, the "points of non-negotiable conformity", are almost wholly to do with economic utility rather than culture. This reveals the too-often elided truth that immigration policy is deliberate and well-planned, not the series of mistakes and bungles that the press paint it as. Tories berating the incompetence of the Border Agency, like Labour confessing that "we got it wrong", are both simple misdirections. All parties are quite open in their insistence on an immigration policy that facilitates the importation of skilled workers at the request of business, while simultaneously pandering to tabloid prejudices about benefit tourists and hate-preachers. Immigrants are neatly divided into good (Mark Carney) and bad (Abu Qatada). It is naive to believe that had the Tories been in power during the 00s, the influx of cheap Eastern European workers would not have occurred. It was what business wanted at the time, which is why it happened.
Insisting on a proficiency in English is an argument about the economic value of the individual, not a plea for more community singing. The reality is that the vast majority of immigrants are only too keen to learn or improve their English because they anticipate the economic benefits. It is a myth that immigrants come here determined not to learn the language. After all, an ability to read and write English would be most helpful for a career in benefit fraud. Perhaps Milliband should worry less about immigrants who can't speak English and more about an immigrant who appears to think the bankers' gravy-train is still running.
Tuesday, 18 December 2012
Shotguns and Weddings
To tolerate something means putting up with it, enduring it. It's an act of forbearance. It does not mean acknowledging or liking something, but essentially ignoring it. It's a refusal to take sides, a "don't know" in pollster-speak. But in political discourse the word is often used to imply a positive act of engagement and acknowledgement, even of limited sanction. If intolerance is a dislike, then tolerance is treated as a qualified like.
An example of this is gay marriage, which is regularly presented in binary terms as something one must either be for or against. As Chris Dillow has noted, the debate is framed as one of equality and therefore something that affects us all, though in reality most people are either wholly indifferent or in the "I don't see why they shouldn't" camp. The Catholic writer Timothy Radcliffe recently provided a good example of how tolerance can be used to defend prejudice: "Many Christians oppose gay marriage not because we are homophobic or reject the equal dignity of gay people, but because 'gay marriage' ultimately, we believe, demeans gay people by forcing them to conform to the straight world". He goes on: "Tolerance means, literally, to engage with other people who are different. It implies an attention to the particularity of the other person, a savouring of how he or she is unlike me, in their faith, their ethnicity, their sexual orientation. A society that flees difference and pretends we are all just the same may have outlawed intolerance in one form, and yet instituted it in other ways". The argument deployed here against gay marriage is not that it is a theological impossibility (something that we cannot tolerate, even if we wished to), or a moral abomination (something that we choose not to tolerate), but that its toleration would obliterate the separateness that gays insist upon. Such sophistry makes you wonder if Father Radcliffe deserves a transfer from the Dominicans to the Jesuits.
An example of the word being used correctly is Barack Obama's insistence, in response to the Sandy Hook Elementary shootings, that: "We can't tolerate this any more. These tragedies must end. And to end them, we must change". In other words, the US can't go on ignoring the consequences of liberal gun laws. "We cannot accept events like this as routine. Are we really prepared to say we are powerless in the face of such carnage? That the violence visited on our children year after year is the price of our freedom?" Obama has already been criticised for not explicitly mentioning "guns" in his speech, as if anybody could honestly infer that he is arguing for teachers to be armed to the teeth, while others have upbraided him for his hypocrisy in tolerating the death of children as the collateral damage of drone strikes, though it is hard to see how a charge of double standards (however legitimate the charge may be) is anything other than a distraction in relation to US gun control. If Obama is open to criticism, it is that he avoided all mention of guns during the presidential election, though you can probably see the tactical logic from his perspective. In other words, he displayed tolerance of the carnage, as a relative political priority, on the hustings.
For that reason, it is doubtful that the current tragedy will lead to major reform unless there is a clear shift in the mood of the US public. For a variety of reasons, excellently outlined by Jill Lepore in the New Yorker back in April, this is likely to be a gradual change, not an overnight conversion. The roots of the gun control debate lie in the 1960s push for civil rights. The conservative reaction to this in the 1970s, the focus on liberty over equality, recast the constitutional requirement to maintain armed states militias as a right of the individual to carry a gun. Pro-gun became a badge of identification for conservatives. Though gun ownership has actually been steadily declining since then, the gun-owning minority have become fiercer in defence of their right because of its political symbolism. The recent post-election predictions of demographic irrelevance for angry white men are likely to make them even more embattled.
Gay marriage will become legal because the majority of the population simply aren't fussed, while those that are passionately in favour have strong arguments (equality, fairness) and those that are passionately against have weak arguments (theology and a too-obvious obsession with sex). The basis of our tolerance is disinterest. In contrast, US gun control is likely to inch forward at best, despite a growing majority in favour of tighter regulation. The emotion over Sandy Hook will dissipate, just as it did after Columbine and similar shootings. Occasional tragedies will be tolerated until gun-ownership goes out of fashion as an identifier of personal liberty. Given how embedded the idea is in American popular culture, and how much spadework the pro-gun lobby groups have put in over the last 40 years, that won't happen on Obama's watch.
An example of this is gay marriage, which is regularly presented in binary terms as something one must either be for or against. As Chris Dillow has noted, the debate is framed as one of equality and therefore something that affects us all, though in reality most people are either wholly indifferent or in the "I don't see why they shouldn't" camp. The Catholic writer Timothy Radcliffe recently provided a good example of how tolerance can be used to defend prejudice: "Many Christians oppose gay marriage not because we are homophobic or reject the equal dignity of gay people, but because 'gay marriage' ultimately, we believe, demeans gay people by forcing them to conform to the straight world". He goes on: "Tolerance means, literally, to engage with other people who are different. It implies an attention to the particularity of the other person, a savouring of how he or she is unlike me, in their faith, their ethnicity, their sexual orientation. A society that flees difference and pretends we are all just the same may have outlawed intolerance in one form, and yet instituted it in other ways". The argument deployed here against gay marriage is not that it is a theological impossibility (something that we cannot tolerate, even if we wished to), or a moral abomination (something that we choose not to tolerate), but that its toleration would obliterate the separateness that gays insist upon. Such sophistry makes you wonder if Father Radcliffe deserves a transfer from the Dominicans to the Jesuits.
An example of the word being used correctly is Barack Obama's insistence, in response to the Sandy Hook Elementary shootings, that: "We can't tolerate this any more. These tragedies must end. And to end them, we must change". In other words, the US can't go on ignoring the consequences of liberal gun laws. "We cannot accept events like this as routine. Are we really prepared to say we are powerless in the face of such carnage? That the violence visited on our children year after year is the price of our freedom?" Obama has already been criticised for not explicitly mentioning "guns" in his speech, as if anybody could honestly infer that he is arguing for teachers to be armed to the teeth, while others have upbraided him for his hypocrisy in tolerating the death of children as the collateral damage of drone strikes, though it is hard to see how a charge of double standards (however legitimate the charge may be) is anything other than a distraction in relation to US gun control. If Obama is open to criticism, it is that he avoided all mention of guns during the presidential election, though you can probably see the tactical logic from his perspective. In other words, he displayed tolerance of the carnage, as a relative political priority, on the hustings.
For that reason, it is doubtful that the current tragedy will lead to major reform unless there is a clear shift in the mood of the US public. For a variety of reasons, excellently outlined by Jill Lepore in the New Yorker back in April, this is likely to be a gradual change, not an overnight conversion. The roots of the gun control debate lie in the 1960s push for civil rights. The conservative reaction to this in the 1970s, the focus on liberty over equality, recast the constitutional requirement to maintain armed states militias as a right of the individual to carry a gun. Pro-gun became a badge of identification for conservatives. Though gun ownership has actually been steadily declining since then, the gun-owning minority have become fiercer in defence of their right because of its political symbolism. The recent post-election predictions of demographic irrelevance for angry white men are likely to make them even more embattled.
Gay marriage will become legal because the majority of the population simply aren't fussed, while those that are passionately in favour have strong arguments (equality, fairness) and those that are passionately against have weak arguments (theology and a too-obvious obsession with sex). The basis of our tolerance is disinterest. In contrast, US gun control is likely to inch forward at best, despite a growing majority in favour of tighter regulation. The emotion over Sandy Hook will dissipate, just as it did after Columbine and similar shootings. Occasional tragedies will be tolerated until gun-ownership goes out of fashion as an identifier of personal liberty. Given how embedded the idea is in American popular culture, and how much spadework the pro-gun lobby groups have put in over the last 40 years, that won't happen on Obama's watch.
Sunday, 16 December 2012
Ten Year Tenure Tips
The headlines greeting the decennial 2011 census have focused on changes in country of origin and religious affiliation, but these simply reflect continuing trends that are either worrying (foreign neighbours!) or thrilling (better restaurants!) depending on your general outlook on life. The ethnic mix is a feature of a world in which labour mobility and international education are increasingly common. What should worry those parts of the UK that remain overwhelmingly white is that their exclusivity is a sign of economic poverty. As for religion, the census figures have always been misleading as they reflect emotional allegiance rather than participation (do the Jedi Knights actually have harvest festivals?), which is why they will continue to gradually but inexorably decline.
The more significant news, I'd suggest, is the change in housing tenure. Even here, most media commentators have focused on the decline in home ownership as the corollary of increased renting, which is hardly news. The huge sums diverted before the 2008 unpleasantness into buy-to-let properties were not a sign that the bottom was falling out of the rental market, while the continuing under-supply of affordable housing has been conscious policy for decades. What is news is that we reached an inflexion point in home ownership ten years ago, round about the time of the last census in 2001. As the HomeOwners Alliance lobby group put it:
The decline in homeownership started well before the financial collapse and housing market crash – it started in the easy credit boom years in London in 2000, and the rest of the country followed. Homeownership levels across the UK have been declining since 2002, five years before the credit crunch of 2007. But the decline has been notably accelerated by the drying up of mortgage credit, as well as rising unemployment, with homeownership levels currently dropping by almost 1% a year.
Parallel to this decline, the number that now own their home outright has increased. Homes owned with a mortgage or loan dropped from 8.4 million (39% of all households) in 2001 to 7.6 million (33%) in 2011. Homes owned outright increased over the same period from 6.4 million (29%) to 7.2 million (31%). Some housing market experts now anticipate that non-mortgaged owners will exceed the mortgaged as soon as 2014. That date will probably also see the number of private renters exceed the number of social renters (i.e. renting from the council or a housing association). The former have increased from 1.9 million homes (9%) in 2001 to 3.6 million homes (15%) in 2011. The next couple of years will therefore witness a watershed in terms of housing tenure composition.
Does this matter? I think it does, for two reasons. First, outside of the super-rich, people who own their homes outright tend to be less willing to sell and trade on. This is largely a factor of age, i.e. that they pay off their mortgage in their 50s or early 60s. After a couple of decades of trading up (in most cases), they're probably happy to sit still once the music stops, certainly since Spanish villas went out of fashion. The problem is that these properties are then less likely to return to the market. Even on death (or when they need funds for a care home), there is now a good chance that the property will be occupied by an inheritor (the destiny of many a baby-boomer's child who could not otherwise afford a mortgage), even where the inheritance is split across multiple children (I suspect open market selling will be a third option after an inter-sibling sale of shares or an agreement to let the property and divide the rental income). In other words, such properties are likely to stay within the family. The second reason is that buy-to-let properties are less likely to to be converted to owner-occupied homes as their revenue stream is a hedge against both inflation and a potential property price crash. Baby-boomers, or even those in their 40s who were able to invest before 2008, have long seen buy-to-let as a pension fund. They are probably going to sweat their assets.
What this means is that, short of a massive housebuilding programme, the supply of properties on the open market for purchase by owner-occupiers via mortgages will remain constrained. The drop in house sale volumes since 2007 is not likely to reverse any time soon. This will keep property prices high, which will please builders (they prefer high margins to high volumes), existing homeowners, and (by extension) certain political parties. It will further limit social mobility and will reinforce the trend towards a rentier mentality. The ideological opposition to higher inheritance or property taxes is likely to grow further on the right, leading to calls for outright reduction or abolition (the freeze on council tax revaluation is a de facto real-terms reduction for the upper bands). The popularity of the mansion tax among LibDems is based on the assumption that it won't catch the majority of homeowners, just rich oligarchs in Kensington and Chipping Norton.
The more I look at the current political establishment, and its knowing acquiescence in this dynamic, the more I see a childish nostalgia for the Edwardian era (Cameron, Clegg, Osborne and Johnson could be transplanted with zero adjustment - Gove would be shown the tradesmens' entrance). The popular resonance of Downton Abbey is perhaps less about the upstairs-downstairs class boundaries and cultural snobbery and more about the attraction of unearned income. The census implies we are losing our faith in religion, but not our faith in property.
The more significant news, I'd suggest, is the change in housing tenure. Even here, most media commentators have focused on the decline in home ownership as the corollary of increased renting, which is hardly news. The huge sums diverted before the 2008 unpleasantness into buy-to-let properties were not a sign that the bottom was falling out of the rental market, while the continuing under-supply of affordable housing has been conscious policy for decades. What is news is that we reached an inflexion point in home ownership ten years ago, round about the time of the last census in 2001. As the HomeOwners Alliance lobby group put it:
The decline in homeownership started well before the financial collapse and housing market crash – it started in the easy credit boom years in London in 2000, and the rest of the country followed. Homeownership levels across the UK have been declining since 2002, five years before the credit crunch of 2007. But the decline has been notably accelerated by the drying up of mortgage credit, as well as rising unemployment, with homeownership levels currently dropping by almost 1% a year.
Parallel to this decline, the number that now own their home outright has increased. Homes owned with a mortgage or loan dropped from 8.4 million (39% of all households) in 2001 to 7.6 million (33%) in 2011. Homes owned outright increased over the same period from 6.4 million (29%) to 7.2 million (31%). Some housing market experts now anticipate that non-mortgaged owners will exceed the mortgaged as soon as 2014. That date will probably also see the number of private renters exceed the number of social renters (i.e. renting from the council or a housing association). The former have increased from 1.9 million homes (9%) in 2001 to 3.6 million homes (15%) in 2011. The next couple of years will therefore witness a watershed in terms of housing tenure composition.
Does this matter? I think it does, for two reasons. First, outside of the super-rich, people who own their homes outright tend to be less willing to sell and trade on. This is largely a factor of age, i.e. that they pay off their mortgage in their 50s or early 60s. After a couple of decades of trading up (in most cases), they're probably happy to sit still once the music stops, certainly since Spanish villas went out of fashion. The problem is that these properties are then less likely to return to the market. Even on death (or when they need funds for a care home), there is now a good chance that the property will be occupied by an inheritor (the destiny of many a baby-boomer's child who could not otherwise afford a mortgage), even where the inheritance is split across multiple children (I suspect open market selling will be a third option after an inter-sibling sale of shares or an agreement to let the property and divide the rental income). In other words, such properties are likely to stay within the family. The second reason is that buy-to-let properties are less likely to to be converted to owner-occupied homes as their revenue stream is a hedge against both inflation and a potential property price crash. Baby-boomers, or even those in their 40s who were able to invest before 2008, have long seen buy-to-let as a pension fund. They are probably going to sweat their assets.
What this means is that, short of a massive housebuilding programme, the supply of properties on the open market for purchase by owner-occupiers via mortgages will remain constrained. The drop in house sale volumes since 2007 is not likely to reverse any time soon. This will keep property prices high, which will please builders (they prefer high margins to high volumes), existing homeowners, and (by extension) certain political parties. It will further limit social mobility and will reinforce the trend towards a rentier mentality. The ideological opposition to higher inheritance or property taxes is likely to grow further on the right, leading to calls for outright reduction or abolition (the freeze on council tax revaluation is a de facto real-terms reduction for the upper bands). The popularity of the mansion tax among LibDems is based on the assumption that it won't catch the majority of homeowners, just rich oligarchs in Kensington and Chipping Norton.
The more I look at the current political establishment, and its knowing acquiescence in this dynamic, the more I see a childish nostalgia for the Edwardian era (Cameron, Clegg, Osborne and Johnson could be transplanted with zero adjustment - Gove would be shown the tradesmens' entrance). The popular resonance of Downton Abbey is perhaps less about the upstairs-downstairs class boundaries and cultural snobbery and more about the attraction of unearned income. The census implies we are losing our faith in religion, but not our faith in property.
Friday, 14 December 2012
Dark Factory
No, not a Joy Division retrospective, but the latest installment of the rise of the machines ...
The techno-pessimism meme has come in for some polite pooh-poohing of late, despite the best efforts of the usual suspects to insist that we've run out of ideas and no longer value innovation. What's prompted this has been two separate observations. First, the rise of the robots has now been given credibility by Apple's announcement that it plans to join the growing band of companies who intend to repatriate some manufacturing (onshore is the new offshore). Details are few, but the suspicion is that this means replacing labour in the Far East with even more advanced fabrication technology in the US, so it certainly doesn't promise an increase in manufacturing jobs outside of a small number of high-wage machine-minders. The second observation is the trend that sees the division of GDP between profit and wages (i.e. capital and labour) shifting in favour of the former. The link between the two is capital-biased technological change - i.e. investment is going on machines, which increase productivity and profit margins, rather than on better-educated workers (skill-biased technological change), which would increase wages.
The profit/wages split is a murky area, partly because it is affected by the other elements of GDP, such as tax and rents, and by the balance of trade. There is also the problem that the categorisation of certain economic activities is questionable and can change over time. For example, bankers' bonuses count as wages while hedge fund managers' bonuses count as profit. Similarly, the income of a contract IT bod, who works through a personal services company, is counted as profit as it is taken in the form of dividends. The rise of the PSC since the 80s has undoubtedly contributed to the growing share of GDP attributed to profit, and, by virtue of this "tax dodge" being biased towards higher-paid workers, has probably also helped depress average wages. A further problem is that an aggregate shift may simply reflect economic activity migrating from sectors with low profit margins to those with higher profit margins, such as (for most of the last 30 years) the financial sector. Even if those sectors have higher than average wages, if the comparative wage advantage is smaller than the comparative profit advantage, then profit will grow relative to wages over all.
Economists traditionally divided production into three factors: capital, labour and land. Capital here is constant capital, that is plant and equipment funded out of profit, plus finance capital, i.e. credit that can be used to create more constant capital. Land represents unimproved natural resources, aka raw materials. Rent, as a production cost, is a charge levied for access to those resources. In the twentieth century, entrepreneurship was separated out as a fourth factor, though it's worth emphasising that in this context a better word would be innovation, i.e. the ability to achieve greater production through better use of the other three factors. This extends from more efficient management techniques through to technological invention. The use of the word "innovation" in respect of financial instruments in recent decades is not mere pretension. In this context, CDOs were genuinely innovative because they allowed for the creation of more credit. The problem was that this was then spunked on existing houses rather than the expansion of production.
Though capital has had the edge over labour since the 80s, the returns to constant capital have actually been in relative decline (this in part explains the attraction of the finance sector before 2008 - i.e. too much capital chasing high yields caused a bubble in high profit debt). The chief reason for the decline is that the cost of technology has plummeted while its impact on production efficiency has been enormous (think of containerisation and ICT). Paradoxically, this fails to expand profits because it makes competition easier - i.e. the cost of entry to an industry is much lower and maintaining a de facto monopoly is that much more difficult. Offshoring can be seen as a defensive move by capital, harnessing the very technology that is driving down prices to maintain profit through wage repression.
As wages rise in China and other developing nations, profit margins are eroded once more. Onshoring is not about "bringing jobs back" but the next stage in the redundancy of labour. It's about dark factories, i.e. production facilities with little or no direct human involvement. If labour is a small factor in your production cost, then it makes sense to site your production as close to your customers as possible, as this reduces transport and storage costs. The eventual logic of this trend is the Star Trek replicator, a universal production facility in every home. Consumption then becomes a transaction in which a royalty is paid for the creation of an object. Capitalists (intellectual capitalists, if you prefer) are then people who own patents rather than the means of production. The creation of profit through competition is replaced by the extraction of rents through monopoly.
The suspicion that monopoly may already account for some of the shift between profit and wages is gaining ground, while the habitual abuse of monopoly power is now taken for granted. It is worth noting that Google and Amazon have declined to follow Starbucks's lead in "making a contribution" in respect of dodged tax. Starbucks operate in a competitive market, while the other two are near-as-damn-it monopolists and presumably feel they have little to fear from Margaret Hodge "putting away" her Kindle (not binning it, you'll note) or trying another search engine. Calling for a boycott is simply a demand that a particular company behave better; it is not an attack on monopoly power. Antitrust initiatives, such as the EU's long-running case against Microsoft, have proved to be little more than an inconvenience. The implicit acceptance of monopoly appears to have reached a watershed with the "new economy" of the last 15 years, in which a single business secures the degree of dominance that a century ago led to the forcible breakup of Standard Oil. Notable too is how often this monopoly is based on intermediation (funny how the Web was once thought to herald disintermediation), such as that of Google, Facebook and Amazon. It seems almost redundant to point out that the advocates of "open" are delivering "closed".
In the modern economy big capital struggles to find enough opportunities to invest in making stuff. Though profit margins can be maintained through automation and offshoring, turnover declines as commodities become cheaper and product cycles briefer (the impending disappearance of the Kindle will solve Margaret Hodge's ethical dilemma). Capital is then increasingly diverted to non-productive but high-yield sectors, such as finance and property, and into the service sector. Labour-intensive services are attractive precisely because they offer scope to repeat the automation and offshoring that have been almost exhausted in manufacturing, hence the neoliberal push to privatise health and education. In those sectors where automation is already high, further productivity gains become more challenging. This encourages a shift towards rent-seeking, which means that land (i.e. natural resources) becomes more dominant as a factor of production. Consider the growing significance of rare-earth metals in discussions about the price of manufactured goods. The geopolitical ramifications of the grab for agricultural land, water, energy and minerals are obvious, but the local implications are just as notable, from the ideological opposition to property, inheritance and land value taxes to disputes over wind turbines.
In such an economy, innovation becomes a more significant factor as well, not simply because it is then the only game in town as far as productivity growth is concerned, but because the patenting of techniques and inventions creates a form of resource that is equivalent to land - i.e. it produces a rent and is a tradable and inheritable asset. Recent years have seen the patenting of things we'd never previously have thought of as inventions, such as gene sequences, and now no one bats an eyelid when Apple seeks to patent a basic geometric shape. The parallel growth of the "patent troll" industry is less an issue of parasitism and more a reflection of the hospitality of the host, i.e. patent law. The recent "smartphone wars" between Apple, Google and Samsung are significant because they show both the speed at which technological advances are adopted by competitors and the determination to enforce patents and thus preserve monopoly power.
The conclusion one can draw from these trends is that labour is becoming less valued. Even if we were not suffering austerity and low growth, we would need less labour year-on-year to maintain production, so high unemployment is here to stay. Though our remaining labour needs will require increasing skills at the top-end of the income scale, the growth of educated labour forces in developing countries means that the wages premium commanded by a college degree in developed countries will erode due to global competition (this, together with increasing fees and large student debts, will return further education to being the preserve of the rich). At the bottom-end, the growing pool of the unemployed, and the erosion of the welfare state, means that wages will fall in real terms.
The winners in such a scenario will be those that already own assets and those that can secure access to rent-extracting jobs, such as government and the law. For a while, this latter camp will include the supernumeraries that occupy the corporate ecosystem, such as accountants and HR types, who are in effect extracting a form of rent as "management overhead", but sooner rather than later they will find their own roles under threat as capital moves from corporations that manage people to trusts that manage assets, and as technology continues to automate labour everywhere. We don't need Star Trek replicators to envisage a future in which HR and Accounts no longer exist. There will be little role for them in dark factories, and those are already being built.
The techno-pessimism meme has come in for some polite pooh-poohing of late, despite the best efforts of the usual suspects to insist that we've run out of ideas and no longer value innovation. What's prompted this has been two separate observations. First, the rise of the robots has now been given credibility by Apple's announcement that it plans to join the growing band of companies who intend to repatriate some manufacturing (onshore is the new offshore). Details are few, but the suspicion is that this means replacing labour in the Far East with even more advanced fabrication technology in the US, so it certainly doesn't promise an increase in manufacturing jobs outside of a small number of high-wage machine-minders. The second observation is the trend that sees the division of GDP between profit and wages (i.e. capital and labour) shifting in favour of the former. The link between the two is capital-biased technological change - i.e. investment is going on machines, which increase productivity and profit margins, rather than on better-educated workers (skill-biased technological change), which would increase wages.
The profit/wages split is a murky area, partly because it is affected by the other elements of GDP, such as tax and rents, and by the balance of trade. There is also the problem that the categorisation of certain economic activities is questionable and can change over time. For example, bankers' bonuses count as wages while hedge fund managers' bonuses count as profit. Similarly, the income of a contract IT bod, who works through a personal services company, is counted as profit as it is taken in the form of dividends. The rise of the PSC since the 80s has undoubtedly contributed to the growing share of GDP attributed to profit, and, by virtue of this "tax dodge" being biased towards higher-paid workers, has probably also helped depress average wages. A further problem is that an aggregate shift may simply reflect economic activity migrating from sectors with low profit margins to those with higher profit margins, such as (for most of the last 30 years) the financial sector. Even if those sectors have higher than average wages, if the comparative wage advantage is smaller than the comparative profit advantage, then profit will grow relative to wages over all.
Economists traditionally divided production into three factors: capital, labour and land. Capital here is constant capital, that is plant and equipment funded out of profit, plus finance capital, i.e. credit that can be used to create more constant capital. Land represents unimproved natural resources, aka raw materials. Rent, as a production cost, is a charge levied for access to those resources. In the twentieth century, entrepreneurship was separated out as a fourth factor, though it's worth emphasising that in this context a better word would be innovation, i.e. the ability to achieve greater production through better use of the other three factors. This extends from more efficient management techniques through to technological invention. The use of the word "innovation" in respect of financial instruments in recent decades is not mere pretension. In this context, CDOs were genuinely innovative because they allowed for the creation of more credit. The problem was that this was then spunked on existing houses rather than the expansion of production.
Though capital has had the edge over labour since the 80s, the returns to constant capital have actually been in relative decline (this in part explains the attraction of the finance sector before 2008 - i.e. too much capital chasing high yields caused a bubble in high profit debt). The chief reason for the decline is that the cost of technology has plummeted while its impact on production efficiency has been enormous (think of containerisation and ICT). Paradoxically, this fails to expand profits because it makes competition easier - i.e. the cost of entry to an industry is much lower and maintaining a de facto monopoly is that much more difficult. Offshoring can be seen as a defensive move by capital, harnessing the very technology that is driving down prices to maintain profit through wage repression.
As wages rise in China and other developing nations, profit margins are eroded once more. Onshoring is not about "bringing jobs back" but the next stage in the redundancy of labour. It's about dark factories, i.e. production facilities with little or no direct human involvement. If labour is a small factor in your production cost, then it makes sense to site your production as close to your customers as possible, as this reduces transport and storage costs. The eventual logic of this trend is the Star Trek replicator, a universal production facility in every home. Consumption then becomes a transaction in which a royalty is paid for the creation of an object. Capitalists (intellectual capitalists, if you prefer) are then people who own patents rather than the means of production. The creation of profit through competition is replaced by the extraction of rents through monopoly.
The suspicion that monopoly may already account for some of the shift between profit and wages is gaining ground, while the habitual abuse of monopoly power is now taken for granted. It is worth noting that Google and Amazon have declined to follow Starbucks's lead in "making a contribution" in respect of dodged tax. Starbucks operate in a competitive market, while the other two are near-as-damn-it monopolists and presumably feel they have little to fear from Margaret Hodge "putting away" her Kindle (not binning it, you'll note) or trying another search engine. Calling for a boycott is simply a demand that a particular company behave better; it is not an attack on monopoly power. Antitrust initiatives, such as the EU's long-running case against Microsoft, have proved to be little more than an inconvenience. The implicit acceptance of monopoly appears to have reached a watershed with the "new economy" of the last 15 years, in which a single business secures the degree of dominance that a century ago led to the forcible breakup of Standard Oil. Notable too is how often this monopoly is based on intermediation (funny how the Web was once thought to herald disintermediation), such as that of Google, Facebook and Amazon. It seems almost redundant to point out that the advocates of "open" are delivering "closed".
In the modern economy big capital struggles to find enough opportunities to invest in making stuff. Though profit margins can be maintained through automation and offshoring, turnover declines as commodities become cheaper and product cycles briefer (the impending disappearance of the Kindle will solve Margaret Hodge's ethical dilemma). Capital is then increasingly diverted to non-productive but high-yield sectors, such as finance and property, and into the service sector. Labour-intensive services are attractive precisely because they offer scope to repeat the automation and offshoring that have been almost exhausted in manufacturing, hence the neoliberal push to privatise health and education. In those sectors where automation is already high, further productivity gains become more challenging. This encourages a shift towards rent-seeking, which means that land (i.e. natural resources) becomes more dominant as a factor of production. Consider the growing significance of rare-earth metals in discussions about the price of manufactured goods. The geopolitical ramifications of the grab for agricultural land, water, energy and minerals are obvious, but the local implications are just as notable, from the ideological opposition to property, inheritance and land value taxes to disputes over wind turbines.
In such an economy, innovation becomes a more significant factor as well, not simply because it is then the only game in town as far as productivity growth is concerned, but because the patenting of techniques and inventions creates a form of resource that is equivalent to land - i.e. it produces a rent and is a tradable and inheritable asset. Recent years have seen the patenting of things we'd never previously have thought of as inventions, such as gene sequences, and now no one bats an eyelid when Apple seeks to patent a basic geometric shape. The parallel growth of the "patent troll" industry is less an issue of parasitism and more a reflection of the hospitality of the host, i.e. patent law. The recent "smartphone wars" between Apple, Google and Samsung are significant because they show both the speed at which technological advances are adopted by competitors and the determination to enforce patents and thus preserve monopoly power.
The conclusion one can draw from these trends is that labour is becoming less valued. Even if we were not suffering austerity and low growth, we would need less labour year-on-year to maintain production, so high unemployment is here to stay. Though our remaining labour needs will require increasing skills at the top-end of the income scale, the growth of educated labour forces in developing countries means that the wages premium commanded by a college degree in developed countries will erode due to global competition (this, together with increasing fees and large student debts, will return further education to being the preserve of the rich). At the bottom-end, the growing pool of the unemployed, and the erosion of the welfare state, means that wages will fall in real terms.
The winners in such a scenario will be those that already own assets and those that can secure access to rent-extracting jobs, such as government and the law. For a while, this latter camp will include the supernumeraries that occupy the corporate ecosystem, such as accountants and HR types, who are in effect extracting a form of rent as "management overhead", but sooner rather than later they will find their own roles under threat as capital moves from corporations that manage people to trusts that manage assets, and as technology continues to automate labour everywhere. We don't need Star Trek replicators to envisage a future in which HR and Accounts no longer exist. There will be little role for them in dark factories, and those are already being built.
Thursday, 13 December 2012
Our Night of Shame
What do Man United, Man City, Spurs and Liverpool have in common? That's right, they all failed to make it to the last eight of the League Cup. Despite this, it is Arsenal's failure to beat Bradford City in Tuesday's quarter-final that has provoked contempt in the media and angst among fans. Bradford's captain, who I suspect isn't a secret Gooner, even went so far as to belittle his own team's performance by claiming that Torquay United were tougher opponents. The fact that Arsenal had 63% possession and managed 28 shots, 12 on target, would indicate that Torquay should be romping away as leaders of Division Two, though strangely they are currently languishing in 11th. The Gunners problem was, not for the first time, wayward finishing, capped by 3 penalty misses. There was no lack of bottle, as shown by the team's attacking intent at a packed away ground and their fighting back to secure an 88th minute equaliser. What was lacking was goals.
I have always kept an eye on goal difference, as this often indicates where a team's league position may be misleading, which is useful data if you're having a bet or just picking a fantasy team. The final positions do not strictly accord with the order of the GD column, but they do roughly correspond. Man City finished last season with a GD of 64 versus United's 56. This season, they are one behind, 16 versus 17, but that obscures a much better goals-against figure of 14 versus 23. United have the edge because they have scored 40 as opposed to City's 30, but for that reason I suspect the blue half of Manchester should be the better bet for the title, particularly if they now stick with Tevez and Aguero up front. United look the more vulnerable, given that Rooney has never been a consistent scorer and van Persie is overdue an injury, not to mention their generous defence (23 conceded puts them joint 10th with Newcastle and Villa). Goal difference at the end of the season will usually throw up the odd anomaly, which can be an indicator for the season to come. For example, Newcastle finished in fifth position last season but on only a GD of 5, which would normally place them about eighth or ninth. Their relatively poor start this season was predictable.
The current anomaly in the league is our very own Arsenal. A current GD of 10 would place them comfortably in fourth, which as I've pointed out before is where their means as a club would logically put them come season's end. The reason we're in seventh is because our goals scored, 26, is only joint sixth best. In the seven games since thumping Spurs 5-2, we have scored seven goals in total during normal time, and conceded six. The defence has frequently been criticised, but their tally of 16 goals against after 16 games is bettered only by Man City on 14. Taken together with qualification for the Champions' League knockout rounds, and even reaching the League Cup last eight, the hard data does not indicate a team in terminal decline, despite that having become the media's ruling narrative. Thus the Bradford "night of shame" has led to the usual nonsense that "the fans deserve better", "the club lacks ambition", and "Wenger's lost it". You can expect every setback from here till May to trigger exactly the same claims, along with shit-stirring about the relationship between Wenger and Bould and the bizarre claim that Sagna may leave because he doesn't think his game is being improved any longer. Bacary Sagna turns 30 in February. Hmmm. If he goes, I suspect it may have more to do with improving his pension fund.
Interestingly, our goals scored at home is a decent 18, which is third best after City on 21 and United on 19. The problem is that we've only scored 8 away from home, which is mid-table form. Even QPR have scored 8 on their travels, which highlights the entertainment value of a league where the average number of goals a game so far this season has been 2.8. This is consistent with the last three seasons, which marks an all-time high in the Premier League, and a significant increase on the historic average of 2.6 since 1992-3. Including the old First Division, the long-run historic average is fractionally under 3.0, though this is obviously boosted by high-scoring seasons in the early years before centre-backs and substitutes were invented. The lowest scoring season was 1970-1, with an average of 2.36 goals per game. Arsenal (them again) won the league with 71 goals in 42 matches, an average of only 1.69. It was the 25 clean sheets that ensured ultimate victory, with only 29 goals conceded in total. The average goals scored by Arsenal per game so far this season is 1.63, and we've kept 6 clean-sheets over 16 games (which is joint second best after Stoke on 8).
Of course, all of this hard data evaporates when you are confronted by another horrendous Gervinho miss, though to be fair to the loon, Podolski and Cazorla seem to be trying hard to top the Ivorian's efforts. There is nothing to be embarrassed about in this, let alone ashamed of. Every footballer occasionally slices the ball or kicks fresh air. Those who think that failure is shameful in all circumstances need to get a life. Arsenal's strikers just need to get some composure in front of goal.
I have always kept an eye on goal difference, as this often indicates where a team's league position may be misleading, which is useful data if you're having a bet or just picking a fantasy team. The final positions do not strictly accord with the order of the GD column, but they do roughly correspond. Man City finished last season with a GD of 64 versus United's 56. This season, they are one behind, 16 versus 17, but that obscures a much better goals-against figure of 14 versus 23. United have the edge because they have scored 40 as opposed to City's 30, but for that reason I suspect the blue half of Manchester should be the better bet for the title, particularly if they now stick with Tevez and Aguero up front. United look the more vulnerable, given that Rooney has never been a consistent scorer and van Persie is overdue an injury, not to mention their generous defence (23 conceded puts them joint 10th with Newcastle and Villa). Goal difference at the end of the season will usually throw up the odd anomaly, which can be an indicator for the season to come. For example, Newcastle finished in fifth position last season but on only a GD of 5, which would normally place them about eighth or ninth. Their relatively poor start this season was predictable.
The current anomaly in the league is our very own Arsenal. A current GD of 10 would place them comfortably in fourth, which as I've pointed out before is where their means as a club would logically put them come season's end. The reason we're in seventh is because our goals scored, 26, is only joint sixth best. In the seven games since thumping Spurs 5-2, we have scored seven goals in total during normal time, and conceded six. The defence has frequently been criticised, but their tally of 16 goals against after 16 games is bettered only by Man City on 14. Taken together with qualification for the Champions' League knockout rounds, and even reaching the League Cup last eight, the hard data does not indicate a team in terminal decline, despite that having become the media's ruling narrative. Thus the Bradford "night of shame" has led to the usual nonsense that "the fans deserve better", "the club lacks ambition", and "Wenger's lost it". You can expect every setback from here till May to trigger exactly the same claims, along with shit-stirring about the relationship between Wenger and Bould and the bizarre claim that Sagna may leave because he doesn't think his game is being improved any longer. Bacary Sagna turns 30 in February. Hmmm. If he goes, I suspect it may have more to do with improving his pension fund.
Interestingly, our goals scored at home is a decent 18, which is third best after City on 21 and United on 19. The problem is that we've only scored 8 away from home, which is mid-table form. Even QPR have scored 8 on their travels, which highlights the entertainment value of a league where the average number of goals a game so far this season has been 2.8. This is consistent with the last three seasons, which marks an all-time high in the Premier League, and a significant increase on the historic average of 2.6 since 1992-3. Including the old First Division, the long-run historic average is fractionally under 3.0, though this is obviously boosted by high-scoring seasons in the early years before centre-backs and substitutes were invented. The lowest scoring season was 1970-1, with an average of 2.36 goals per game. Arsenal (them again) won the league with 71 goals in 42 matches, an average of only 1.69. It was the 25 clean sheets that ensured ultimate victory, with only 29 goals conceded in total. The average goals scored by Arsenal per game so far this season is 1.63, and we've kept 6 clean-sheets over 16 games (which is joint second best after Stoke on 8).
Of course, all of this hard data evaporates when you are confronted by another horrendous Gervinho miss, though to be fair to the loon, Podolski and Cazorla seem to be trying hard to top the Ivorian's efforts. There is nothing to be embarrassed about in this, let alone ashamed of. Every footballer occasionally slices the ball or kicks fresh air. Those who think that failure is shameful in all circumstances need to get a life. Arsenal's strikers just need to get some composure in front of goal.
Friday, 7 December 2012
The Road Not Taken, Again
The real message of the budget is that the UK is now willingly embarked on a "lost decade", much as Ray Milland willingly embarked on a massive drunk in The Lost Weekend. The phrase was first used to describe Japan in the 1990s, when the economy grew by only 11.9% over 10 years. The UK's growth between 2008 and 2017 looks like it will be only 8.7%, and that assumes the persistently over-optimistic OBR have got their predictions for the next 5 years right. It would be easy to charge the Tories with incompetence, for having failed to meet their own targets for deficit reduction and growth, or even to accuse them of heartlessness, for using austerity as a cloak to further their dismantling of the welfare state, but I think there is a more depressing explanation for what they are doing. Ultimately, a budget reflects the government's assumptions about both the current condition of the economy and its desired future state. The latter looks ugly.
The changes to income tax continue the strategy marked out during this parliament of growing both the bottom tranche of the "tax free" and increasing the number paying the higher rate. The first of these increases the population whose right to have an opinion on fiscal policy is gradually undermined, while the second grows the constituency in favour of cutting the top rate of tax. Both measures erode tax morale. Together with the "strivers" rhetoric and the persistent pressure on benefits, the impression grows that not only are we not all in it together but that there is a deliberate intent to turn the nation into two antagonistic camps. The unnecessary vote on future benefits is less an attempt to get Labour to defend the "skivers" and more an attempt to neutralise their "one nation" pitch. Osborne's calculation is that privilege is best defended by those with very little against the threat of those with nothing, hence the iconic scrapping of the petrol duty rise. The climate can go hang if it delivers the white van vote.
The cut in the rate of corporation tax, together with the continuing failure to aggressively pursue tax avoiders (and acceptance of taxpayer discretion, a la Starbucks), indicates that the UK remains not merely "open for business" but open to multinationals seeking a low tax jurisdiction. In effect, the Tory strategy for tackling tax avoidance is to push rates so low that international businesses will willingly headquarter in the UK. The Laffer Curve nonsense, the idea that tax cuts are self-financing, shows no sign of going out of fashion on the right, despite the ample evidence that the only tax rate that will ultimately be acceptable to the rich is a flat rate of zero. Together with the refusal to countenance any form of property tax, this indicates that London is now in direct competition with Luxembourg.
The extra £5.5 billion of capital spending on roads, houses and schools is paltry, and largely funded by cuts to public spending elsewhere - i.e. this is not a net stimulus. The portion earmarked for housebuilding support will add only 50,000 new houses at a time when housing experts reckon we need 233,000 new homes a year. The infrastructure projects are heavily biased towards London and the South East, notably upgrades to the M25 and an extension of the Northern Line to Battersea to service the new yuppie flats to be built around the old Power Station. The upgrade of the A30 will probably benefit second home-owners in Devon and Cornwall more than the locals.
The insulation of the South East from the worst impacts of the lost decade will continue, leading to a return of the 80s-style contempt for the poor and the northern. Over the two years of the coalition government, there has been no serious attempt to redress the regional imbalance or to make Finance less proud. If anything, the energy of the government and Bank of England has been focused on tenderly nursing Finance's wounds through cheap money and QE. The occasional photo-op in a high-end manufacturing clean-room simply reinforces the point that we cannot create millions of jobs servicing Formula 1 racing cars. The Tories have long since decided that the UK's future lies in accelerating the existing trends: making London the low-tax "offshore gateway" of Europe, and transforming the rest of the country into a low-wage reservoir of labour, able to compete on price with Slovakia and Korea.
In truth, this has been a long time coming. In both the 80s and the 90s there were windows of opportunity when the economy could have been rebalanced and the industrial base transformed. On both occasions we opted for the easier road, the get-rich-quick schemes of property speculation and financial services. This was in keeping with the chronic under-investment in industry that held the UK back in the 60s and 70s. Conservative administrations have repeatedly done what suited The City, which usually damaged industry's long-term prospects, while Labour administrations have repeatedly attempted amelioration, through nationalisation and tax-and-spend, without sufficiently radical structural reform. Osborne's claim that we are on a "hard road" is wrong. Once more we have taken the easier path. Property prices in London will be maintained, Finance will be coddled back to health, and while many will suffer as austerity continues, enough will not.
The changes to income tax continue the strategy marked out during this parliament of growing both the bottom tranche of the "tax free" and increasing the number paying the higher rate. The first of these increases the population whose right to have an opinion on fiscal policy is gradually undermined, while the second grows the constituency in favour of cutting the top rate of tax. Both measures erode tax morale. Together with the "strivers" rhetoric and the persistent pressure on benefits, the impression grows that not only are we not all in it together but that there is a deliberate intent to turn the nation into two antagonistic camps. The unnecessary vote on future benefits is less an attempt to get Labour to defend the "skivers" and more an attempt to neutralise their "one nation" pitch. Osborne's calculation is that privilege is best defended by those with very little against the threat of those with nothing, hence the iconic scrapping of the petrol duty rise. The climate can go hang if it delivers the white van vote.
The cut in the rate of corporation tax, together with the continuing failure to aggressively pursue tax avoiders (and acceptance of taxpayer discretion, a la Starbucks), indicates that the UK remains not merely "open for business" but open to multinationals seeking a low tax jurisdiction. In effect, the Tory strategy for tackling tax avoidance is to push rates so low that international businesses will willingly headquarter in the UK. The Laffer Curve nonsense, the idea that tax cuts are self-financing, shows no sign of going out of fashion on the right, despite the ample evidence that the only tax rate that will ultimately be acceptable to the rich is a flat rate of zero. Together with the refusal to countenance any form of property tax, this indicates that London is now in direct competition with Luxembourg.
The extra £5.5 billion of capital spending on roads, houses and schools is paltry, and largely funded by cuts to public spending elsewhere - i.e. this is not a net stimulus. The portion earmarked for housebuilding support will add only 50,000 new houses at a time when housing experts reckon we need 233,000 new homes a year. The infrastructure projects are heavily biased towards London and the South East, notably upgrades to the M25 and an extension of the Northern Line to Battersea to service the new yuppie flats to be built around the old Power Station. The upgrade of the A30 will probably benefit second home-owners in Devon and Cornwall more than the locals.
The insulation of the South East from the worst impacts of the lost decade will continue, leading to a return of the 80s-style contempt for the poor and the northern. Over the two years of the coalition government, there has been no serious attempt to redress the regional imbalance or to make Finance less proud. If anything, the energy of the government and Bank of England has been focused on tenderly nursing Finance's wounds through cheap money and QE. The occasional photo-op in a high-end manufacturing clean-room simply reinforces the point that we cannot create millions of jobs servicing Formula 1 racing cars. The Tories have long since decided that the UK's future lies in accelerating the existing trends: making London the low-tax "offshore gateway" of Europe, and transforming the rest of the country into a low-wage reservoir of labour, able to compete on price with Slovakia and Korea.
In truth, this has been a long time coming. In both the 80s and the 90s there were windows of opportunity when the economy could have been rebalanced and the industrial base transformed. On both occasions we opted for the easier road, the get-rich-quick schemes of property speculation and financial services. This was in keeping with the chronic under-investment in industry that held the UK back in the 60s and 70s. Conservative administrations have repeatedly done what suited The City, which usually damaged industry's long-term prospects, while Labour administrations have repeatedly attempted amelioration, through nationalisation and tax-and-spend, without sufficiently radical structural reform. Osborne's claim that we are on a "hard road" is wrong. Once more we have taken the easier path. Property prices in London will be maintained, Finance will be coddled back to health, and while many will suffer as austerity continues, enough will not.
Wednesday, 5 December 2012
Another Baby on Benefits
Simon Jenkins, the living embodiment of Whiggery, came up with a couple of corkers today in his reception of the news of the royal sprog-to-be. None of your blather about morning sickness or how Kate has found her role. Instead, Jenkins' gives his Olympian approval to the hereditary principle: "Inheritance is a security against monarchical power, since its indefensibility ensures the powerlessness of the head of state. By being random in age, merit or inclination, it detaches the head of state from all claim to influence." You have to admire his chutzpah: the defence of monarchy is its indefensibility. "Despite the paranoia of the left, the monarch has no constitutional potency. The power-grasping Stuarts brought Britain to rebellion, civil war and chaos. The power-averse Hanoverians buried themselves in their cards and their mistresses. Parliamentary freedom flourished as a result." Of course, that there left are not in the least bit paranoid about the monarchy. What they are suspicious of is the way that politicians abuse crown prerogative in return for the Royals extracting a huge rent from the public exchequer.
The left really don't think Philip is secretly pulling the strings of government, or that Charles moonlights as a Telegraph leader writer. That sort of fantasy is found on the right, usually keeping company with paranoia about Freemasons and Jews. I personally credit the two old gits with no more "potency" (in Jenkins' revealing term) or intelligence than any other pub bore. As the recent revelations over Charles's letter-writing shows, their influence appears to be largely imaginary. Indeed, you get the sense they are cut from the same cloth as those fantasists that attribute real power to the Royal Family, not least because of their interest in UFOs and homoeopathy.
Jenkins' take on history is hilariously wrong, though it was still just about clinging on as popular orthodoxy when he was in school. Fortunately, the small matter of scholarship has subsequently revealed it to be a romantic fiction. As any fule now kno', the story of the 17th century is of the inexorable wresting of power away from the monarchy by Parliament, and away from aristocratic landowners by the new gentry. The Glorious Revolution did not restore the monarchy to its Tudor position. The Stuart plot to turn free-born Englishmen into papist, frenchified slaves was an ideological invention, despite the dim-witted willingness of the Crown to play its part in the revels. Similarly, Parliamentary freedom did not flourish as a result of those nice Hanoverians deciding to be hands-off. The Germans were hired by Parliament precisely because they were willing to accept a limited role, just as Good King Billy did before them.
One of the peculiarities of the British monarchy is that from such modest beginnings, in the 18th century, it failed to evolve into a bicycling monarchy in the style of the Dutch and Scandinavians. The explanation is that the monarchy was professionalised during the 19th century as the embodiment of British prestige and the ideological icon of empire. The family's use of the term "the firm" to refer to itself is not ironic. Jenkins bemoans the expansion of the ceremonial role beyond the monarch to the wider family: "But one error, made under PR advice back in the 1960s, was to elevate the "royal family" to significance, its members adorning ceremonial and public occasions, however trivial, and drawing on a civil list in consequence. This confused the empty concept of "being in line to the throne" with actual headship of state. It set apart a collection of individuals, who could not do proper jobs and often irritated the public by their behaviour, in a cocoon of costly protection." Seduced by his Whig history, Jenkins fails to understand that the bloating of the Civil List is what the game is all about. The sprog-to-be is just another mouth to feed.
The left really don't think Philip is secretly pulling the strings of government, or that Charles moonlights as a Telegraph leader writer. That sort of fantasy is found on the right, usually keeping company with paranoia about Freemasons and Jews. I personally credit the two old gits with no more "potency" (in Jenkins' revealing term) or intelligence than any other pub bore. As the recent revelations over Charles's letter-writing shows, their influence appears to be largely imaginary. Indeed, you get the sense they are cut from the same cloth as those fantasists that attribute real power to the Royal Family, not least because of their interest in UFOs and homoeopathy.
Jenkins' take on history is hilariously wrong, though it was still just about clinging on as popular orthodoxy when he was in school. Fortunately, the small matter of scholarship has subsequently revealed it to be a romantic fiction. As any fule now kno', the story of the 17th century is of the inexorable wresting of power away from the monarchy by Parliament, and away from aristocratic landowners by the new gentry. The Glorious Revolution did not restore the monarchy to its Tudor position. The Stuart plot to turn free-born Englishmen into papist, frenchified slaves was an ideological invention, despite the dim-witted willingness of the Crown to play its part in the revels. Similarly, Parliamentary freedom did not flourish as a result of those nice Hanoverians deciding to be hands-off. The Germans were hired by Parliament precisely because they were willing to accept a limited role, just as Good King Billy did before them.
One of the peculiarities of the British monarchy is that from such modest beginnings, in the 18th century, it failed to evolve into a bicycling monarchy in the style of the Dutch and Scandinavians. The explanation is that the monarchy was professionalised during the 19th century as the embodiment of British prestige and the ideological icon of empire. The family's use of the term "the firm" to refer to itself is not ironic. Jenkins bemoans the expansion of the ceremonial role beyond the monarch to the wider family: "But one error, made under PR advice back in the 1960s, was to elevate the "royal family" to significance, its members adorning ceremonial and public occasions, however trivial, and drawing on a civil list in consequence. This confused the empty concept of "being in line to the throne" with actual headship of state. It set apart a collection of individuals, who could not do proper jobs and often irritated the public by their behaviour, in a cocoon of costly protection." Seduced by his Whig history, Jenkins fails to understand that the bloating of the Civil List is what the game is all about. The sprog-to-be is just another mouth to feed.
Monday, 3 December 2012
Danny Alexander Taxes Patience
The Commons Public Accounts Committee is reported as suggesting that companies that avoid tax should be named and shamed. Danny Alexander has ruled this out on the grounds that it would breach taxpayer confidentiality. The PAC are long-standing critics of HMRC, and in particular the way that the lack of transparency over dispute settlements can mean both that certain companies are getting away with tax dodging and that HMRC are getting away with incompetence. As they said last year, in the wake of the Vodafone scandal: "We are particularly uneasy about the blanket confidentiality applied to cases
raising governance concerns or where mistakes were made in reaching settlements,
because we are unable to scrutinise what went wrong in these cases. Details of
some of these cases only came to our attention because they appeared in the
media. It is deplorable that we received more information from the media and
from a whistleblower than from the Department itself".
Alexander's defence is only possible because taxpayer confidentiality is taken as read. Earlier this year, on the back of revelations about Bob Diamond's tax bill and questions about whether Tory ministers were personally benefiting from the cut in the top rate of income tax, there was some debate about the desirability of making everyone's tax returns public. The predictable backlash conflated this with an invasion of privacy, as if detailed bank statements were being posted online, while perhaps the most damning criticism was that this was the sort of thing they do in Scandinavia, so can safely be ignored by grown-ups.
Whether you agree with it or not, the point is that taxpayer confidentiality was always meant to protect the privacy of individuals. Alexander's use of it to defend the unscrupulous tax-planning of Starbucks and Amazon is part of a wider problem, the neoliberal tendency to demand that corporations should enjoy the rights of personhood (i.e. freedoms in the public sphere) but without the obligations of citizenship (e.g. multinationals by definition are not constrained by nationality). Tax has come to be seen as a contractual matter for large companies - something that they can freely negotiate with government beyond public scrutiny. The fact that HMRC have so internalised this attitude that they feel emboldened to defy a committee of the House of Commons is telling.
Comparing an individual's tax return with that of a company, and therefore the arguments for publication, is misleading. I'm personally not fussed about being able to see the tax returns of individuals, in part because the data would be pretty meaningless without a fuller context, which could not be provided short of a real invasion of privacy. That said, I think there would be a case for publishing a single number for total income tax and NICs, if only to allow us to spot the hypocrites who loudly criticise public expenditure as taxpayers while paying little or no direct tax themselves.
The issue with companies is less to do with how much Corporation Tax is paid, as there will be legitimate reasons for the quantum to vary (prior year losses, capital allowances etc), and you would expect HMRC to be tight on abuse in these areas, just as they are with VAT. What really matters is where revenue is generated and tax is paid. In other words, tax transparency is really an issue about multinationals who use transfer pricing and regulatory arbitrage. What we should do is insist that all company accounts provide a country breakdown of revenue, costs and tax paid. To be fair to the PAC, their review only referred to "naming and shaming" in the context of successful prosecutions for evasion (which is illegal, after all). It looks like Danny Alexander has conveniently decided that this presents a threat to taxpayer confidentiality more generally.
Alexander's defence is only possible because taxpayer confidentiality is taken as read. Earlier this year, on the back of revelations about Bob Diamond's tax bill and questions about whether Tory ministers were personally benefiting from the cut in the top rate of income tax, there was some debate about the desirability of making everyone's tax returns public. The predictable backlash conflated this with an invasion of privacy, as if detailed bank statements were being posted online, while perhaps the most damning criticism was that this was the sort of thing they do in Scandinavia, so can safely be ignored by grown-ups.
Whether you agree with it or not, the point is that taxpayer confidentiality was always meant to protect the privacy of individuals. Alexander's use of it to defend the unscrupulous tax-planning of Starbucks and Amazon is part of a wider problem, the neoliberal tendency to demand that corporations should enjoy the rights of personhood (i.e. freedoms in the public sphere) but without the obligations of citizenship (e.g. multinationals by definition are not constrained by nationality). Tax has come to be seen as a contractual matter for large companies - something that they can freely negotiate with government beyond public scrutiny. The fact that HMRC have so internalised this attitude that they feel emboldened to defy a committee of the House of Commons is telling.
Comparing an individual's tax return with that of a company, and therefore the arguments for publication, is misleading. I'm personally not fussed about being able to see the tax returns of individuals, in part because the data would be pretty meaningless without a fuller context, which could not be provided short of a real invasion of privacy. That said, I think there would be a case for publishing a single number for total income tax and NICs, if only to allow us to spot the hypocrites who loudly criticise public expenditure as taxpayers while paying little or no direct tax themselves.
The issue with companies is less to do with how much Corporation Tax is paid, as there will be legitimate reasons for the quantum to vary (prior year losses, capital allowances etc), and you would expect HMRC to be tight on abuse in these areas, just as they are with VAT. What really matters is where revenue is generated and tax is paid. In other words, tax transparency is really an issue about multinationals who use transfer pricing and regulatory arbitrage. What we should do is insist that all company accounts provide a country breakdown of revenue, costs and tax paid. To be fair to the PAC, their review only referred to "naming and shaming" in the context of successful prosecutions for evasion (which is illegal, after all). It looks like Danny Alexander has conveniently decided that this presents a threat to taxpayer confidentiality more generally.
Saturday, 1 December 2012
The Mouse that didn't Roar
As expected, Leveson has produced a timid judgement. The hyper-ventilating about press freedom and the dismay at Cameron's apparent disregard for the victims have both diverted attention from the fundamental issue of ownership, which was conspicuous by its near absence in the voluminous report. The combination of an apparent issue of principle on which the press can "campaign" and the human interest of disappointed celebrities (including those who have had unsolicited celebrity thrust upon them, such as the Dowlers) is a classic example of the brew that newspapers serve up most days: confected outrage and faux-sympathy.
To be fair to Leveson, the circumscribed nature of the inquiry meant that drawing any damning conclusions about the relationship of the press with the political class and the police was going to be difficult. The deals struck between press barons and politicians are never written down or even informally articulated. They are "understandings", after all. No one will ever find an IOU for Thatcher's decision not to block Murdoch's takeover of The Times. Similarly, Jeremy Hunt no doubt sincerely believes he was being impartial in respect of the BSkyB bid, just as he sincerely believes that what is good for News International is ultimately good for Britain. Seeking evidence of a formal conspiracy was pointless when it was clear from the evidence (all those chummy texts) that mutual self-interest had already been internalised. Likewise, the inquiry was never going to uncover evidence of a conspiracy between the Met and the press, because there isn't one. What there is instead is a long-standing ecosystem of mutual back-scratching and payments for information, which isn't going to disappear any time soon. There is a market for information because there is a market for newspapers.
The pronouncements of the Tories, as mouthpieces for the press barons, have been hysterical and often nonsensical, notably Cameron's claim that "The issue of principle is that for the first time we would have crossed the rubicon of writing elements of press regulation into the law of the land". This comes immediately after the previous cobblers about a return to 1695, when press regulation was the law of the land. Crossing the Rubicon is meant to imply both defiance and irrevocability, though it is not clear who Cameron thinks would be defied (Murdoch, perhaps?), while 1695 showed that press regulation can easily be revoked. In reality, Leveson's proposal for the statutory basis of an independent press complaints body is little different to the arrangements that already exist for other media, notably television. It is not a radical prescription.
Another form of distraction has been the bleating about the impracticality of extending press regulation to the Internet. In other words, because some knobhead with 2 followers can tweet a libel, The Daily Mail should not be subject to ethical scrutiny by an independent body guaranteed by law. This ignores the obvious truth that what distinguishes the Internet from the printing press is less to do with technology and more to do with accessibility, i.e. low barriers to entry. But while this undermines the traditional cartel of print, it does not create a level playing field. An online version of a newspaper is an extension of that brand's power to reach a mass audience. The fact that they can't make any money out of it is irrelevant. In contrast, a blog or a tweet is just grafitti. What we need protection from is abuse of that corporate power to reach a mass audience, not the ranting of individuals.
The end result will be a fudge. The press know they must deliver a complaints and review body with sufficient independence and activism to satisfy public demand, regardless of whether it is underpinned by statute or not, while the politicians are not keen on challenging the press barons' liberty. What newspaper would give a fair hearing to a party that advocated limits on ownership or insisted on owners being UK-resident taxpayers? The best they can hope for is greater support for cross-media plurality - i.e. it will be a while before News International feels sufficiently emboldened to increase their slice of the cake again.
To be fair to Leveson, the circumscribed nature of the inquiry meant that drawing any damning conclusions about the relationship of the press with the political class and the police was going to be difficult. The deals struck between press barons and politicians are never written down or even informally articulated. They are "understandings", after all. No one will ever find an IOU for Thatcher's decision not to block Murdoch's takeover of The Times. Similarly, Jeremy Hunt no doubt sincerely believes he was being impartial in respect of the BSkyB bid, just as he sincerely believes that what is good for News International is ultimately good for Britain. Seeking evidence of a formal conspiracy was pointless when it was clear from the evidence (all those chummy texts) that mutual self-interest had already been internalised. Likewise, the inquiry was never going to uncover evidence of a conspiracy between the Met and the press, because there isn't one. What there is instead is a long-standing ecosystem of mutual back-scratching and payments for information, which isn't going to disappear any time soon. There is a market for information because there is a market for newspapers.
The pronouncements of the Tories, as mouthpieces for the press barons, have been hysterical and often nonsensical, notably Cameron's claim that "The issue of principle is that for the first time we would have crossed the rubicon of writing elements of press regulation into the law of the land". This comes immediately after the previous cobblers about a return to 1695, when press regulation was the law of the land. Crossing the Rubicon is meant to imply both defiance and irrevocability, though it is not clear who Cameron thinks would be defied (Murdoch, perhaps?), while 1695 showed that press regulation can easily be revoked. In reality, Leveson's proposal for the statutory basis of an independent press complaints body is little different to the arrangements that already exist for other media, notably television. It is not a radical prescription.
Another form of distraction has been the bleating about the impracticality of extending press regulation to the Internet. In other words, because some knobhead with 2 followers can tweet a libel, The Daily Mail should not be subject to ethical scrutiny by an independent body guaranteed by law. This ignores the obvious truth that what distinguishes the Internet from the printing press is less to do with technology and more to do with accessibility, i.e. low barriers to entry. But while this undermines the traditional cartel of print, it does not create a level playing field. An online version of a newspaper is an extension of that brand's power to reach a mass audience. The fact that they can't make any money out of it is irrelevant. In contrast, a blog or a tweet is just grafitti. What we need protection from is abuse of that corporate power to reach a mass audience, not the ranting of individuals.
The end result will be a fudge. The press know they must deliver a complaints and review body with sufficient independence and activism to satisfy public demand, regardless of whether it is underpinned by statute or not, while the politicians are not keen on challenging the press barons' liberty. What newspaper would give a fair hearing to a party that advocated limits on ownership or insisted on owners being UK-resident taxpayers? The best they can hope for is greater support for cross-media plurality - i.e. it will be a while before News International feels sufficiently emboldened to increase their slice of the cake again.
Wednesday, 28 November 2012
New New Grub Street
It is possible that Brian Leveson will pull a rabbit out of the hat on Thursday, when he publishes the report of his inquiry into "the culture, practices and ethics of the press", but the widespread lobbying in advance suggests there will be few surprises, particularly as regards ownership and plurality. The battle lines have been drawn around the issue of statutory regulation. Those opposing this have adopted "no return to 1695" as their battle-cry, a reference to the date when the state licensing of newspapers ended, since when we have supposedly enjoyed a free press. It's worth delving back into the mists of time to understand what 1695 was all about, as it is relevant to the current debate, though not in the way claimed by the press freedom claque.
State licensing of the press was not abolished in 1695, it simply lapsed, which is not a pedantic point. Freedom of speech did not win a great victory, rather the state gave up a regime that had dated from the late Medieval period (largely concerned with the control of Bible printing) and adopted a new legal framework based on property rights, thereby recognising the revolutions in political theory and printing (which had become a lot cheaper) that occurred over the course of the century. It is also worth emphasising that "press" in this context meant the printing press. While the focus of the state's interest was on books and pamphlets, and what they contained, the means of production and thus control concerned the physical machinery of printing, a form of constant capital. Newspapers, in the sense of a regular publication on "matters of topical interest", did not evolve until after the end of licensing, which occurred with the expiration of the time-delimited Licensing Act of 1662, a Restoration law that replaced the earlier Licensing Order of 1643, which in turn had replaced censorship by the Crown (via the Star Chamber) with censorship by Parliament.
The lapsing of state censorship was due to a number of factors. Pre-publication control had long been an irritant in the struggle between King and Commons, particularly in relation to political and religious pamphlets, but it had also proven to be impractical and counter-productive, notably stimulating Milton's polemic in favour of free speech, Areopagitica. However, Milton's much-referenced (and little-read) work was as much a criticism of the monopoly of printing enjoyed by the Stationers' Company, who acted as sole licensors under both Crown and Parliament, as it was a plea for a fundamental right. During the late 17th century, attempts at imposing censorship, and the continuing unpopularity of the Stationers' Company among authors, led to more ill-feeling, which was exacerbated by the Bill of Rights of 1689. Though this did not establish a general right of free speech, it did insist that the debates of Parliament be free and unhindered, which set a crucial precedent.
With the end of licensing in 1695, the print market boomed. Though this was a golden period for literature, many of the leading lights of the Augustan age were motivated by an intense distaste for the hack-work it unleashed, hence Pope's Dunciad and its contempt for Grub Street, the centre of the low-end printing industry in London. Even "hacks" like Daniel Defoe were incensed by the unauthorised (and unpaid) republication of their works by unscrupulous printers. Responding to their loss of monopoly, the Stationers' Company changed tack and advocated copyright as a means of both checking unrestrained publication (and defending their members' own economic interests) and securing authors' rights in their property. This was in tune with the times, echoing the importance of property in John Locke's Second Treastise of Government. Their lobbying led to the first copyright law, the Statute of Anne of 1710. In parallel, the ability of the state to control "dangerous" material was satisfied by recourse to the law on seditious libel and by the imposition of stamp duty which further restricted the publication of newspapers to those with deep pockets. The reliance on libel also set a more general civil precedent, with the courts increasingly being used to defend the "property" of a person's reputation from damage.
Despite two centuries of change, including the huge growth of the newspaper and publishing industries following widespread literacy (described in George Gissing's New Grub Street of 1891), this framework has remained largely unchanged. While the official line has been that the British press is free, the government has always been able to prevent publication of specific items, so long as it was careful not to abuse its "advisory" privileges. Charges of seditious libel evolved into D-Notices and appeals to "national security". The rich and the famous have continued to have recourse to the libel courts, often using the mere threat of this as an effective means of pre-publication control. Meanwhile, you need even deeper pockets to publish a newspaper.
What has changed over the last decade is that the cost of a virtual printing press, in the form of electronic media, has fallen to zero. The Internet has become the New New Grub Street, where the practical absence of censorship and low barrier to entry have allowed anyone to become a hack. It has even led to the amusing sight of professional journalists indulging their bog-door-scrawling instincts as they retweet libellous rumours. While 99.999% (at least) of the material published this way will never be read by more than a handful of people, the "long tail" effect means that newspapers are losing their near-monopoly on both readers and the ears of politicians.
It's a commonplace to suggest that Hackgate is the result of the disruptive impact of technology on the print medium, but equally significant is the related calculation by Cameron and Milliband that they can now bite the hand that fed them because of this steady erosion. But that in turn may mean they believe the dilutive effects of the Internet are sufficient to avoid the need to directly confront the issue of ownership. What references to 1695 should do is remind politicians, and Brian Leveson, that the control of the press has always been a matter of property rights. A billion tiny printing presses does not fundamentally challenge the concentration of capital, any more than New Grub Street challenged Fleet Street.
State licensing of the press was not abolished in 1695, it simply lapsed, which is not a pedantic point. Freedom of speech did not win a great victory, rather the state gave up a regime that had dated from the late Medieval period (largely concerned with the control of Bible printing) and adopted a new legal framework based on property rights, thereby recognising the revolutions in political theory and printing (which had become a lot cheaper) that occurred over the course of the century. It is also worth emphasising that "press" in this context meant the printing press. While the focus of the state's interest was on books and pamphlets, and what they contained, the means of production and thus control concerned the physical machinery of printing, a form of constant capital. Newspapers, in the sense of a regular publication on "matters of topical interest", did not evolve until after the end of licensing, which occurred with the expiration of the time-delimited Licensing Act of 1662, a Restoration law that replaced the earlier Licensing Order of 1643, which in turn had replaced censorship by the Crown (via the Star Chamber) with censorship by Parliament.
The lapsing of state censorship was due to a number of factors. Pre-publication control had long been an irritant in the struggle between King and Commons, particularly in relation to political and religious pamphlets, but it had also proven to be impractical and counter-productive, notably stimulating Milton's polemic in favour of free speech, Areopagitica. However, Milton's much-referenced (and little-read) work was as much a criticism of the monopoly of printing enjoyed by the Stationers' Company, who acted as sole licensors under both Crown and Parliament, as it was a plea for a fundamental right. During the late 17th century, attempts at imposing censorship, and the continuing unpopularity of the Stationers' Company among authors, led to more ill-feeling, which was exacerbated by the Bill of Rights of 1689. Though this did not establish a general right of free speech, it did insist that the debates of Parliament be free and unhindered, which set a crucial precedent.
With the end of licensing in 1695, the print market boomed. Though this was a golden period for literature, many of the leading lights of the Augustan age were motivated by an intense distaste for the hack-work it unleashed, hence Pope's Dunciad and its contempt for Grub Street, the centre of the low-end printing industry in London. Even "hacks" like Daniel Defoe were incensed by the unauthorised (and unpaid) republication of their works by unscrupulous printers. Responding to their loss of monopoly, the Stationers' Company changed tack and advocated copyright as a means of both checking unrestrained publication (and defending their members' own economic interests) and securing authors' rights in their property. This was in tune with the times, echoing the importance of property in John Locke's Second Treastise of Government. Their lobbying led to the first copyright law, the Statute of Anne of 1710. In parallel, the ability of the state to control "dangerous" material was satisfied by recourse to the law on seditious libel and by the imposition of stamp duty which further restricted the publication of newspapers to those with deep pockets. The reliance on libel also set a more general civil precedent, with the courts increasingly being used to defend the "property" of a person's reputation from damage.
Despite two centuries of change, including the huge growth of the newspaper and publishing industries following widespread literacy (described in George Gissing's New Grub Street of 1891), this framework has remained largely unchanged. While the official line has been that the British press is free, the government has always been able to prevent publication of specific items, so long as it was careful not to abuse its "advisory" privileges. Charges of seditious libel evolved into D-Notices and appeals to "national security". The rich and the famous have continued to have recourse to the libel courts, often using the mere threat of this as an effective means of pre-publication control. Meanwhile, you need even deeper pockets to publish a newspaper.
What has changed over the last decade is that the cost of a virtual printing press, in the form of electronic media, has fallen to zero. The Internet has become the New New Grub Street, where the practical absence of censorship and low barrier to entry have allowed anyone to become a hack. It has even led to the amusing sight of professional journalists indulging their bog-door-scrawling instincts as they retweet libellous rumours. While 99.999% (at least) of the material published this way will never be read by more than a handful of people, the "long tail" effect means that newspapers are losing their near-monopoly on both readers and the ears of politicians.
It's a commonplace to suggest that Hackgate is the result of the disruptive impact of technology on the print medium, but equally significant is the related calculation by Cameron and Milliband that they can now bite the hand that fed them because of this steady erosion. But that in turn may mean they believe the dilutive effects of the Internet are sufficient to avoid the need to directly confront the issue of ownership. What references to 1695 should do is remind politicians, and Brian Leveson, that the control of the press has always been a matter of property rights. A billion tiny printing presses does not fundamentally challenge the concentration of capital, any more than New Grub Street challenged Fleet Street.
Saturday, 24 November 2012
Economics and Vagina Dentata
Discussing the "crisis" of soul-searching in the economics profession following the 2008 financial crash, Chris Dillow asks why economists lost sight of Keynes's advice to aspire to be as humble and as competent as dentists. Chris attributes the failure to the delusion of professional significance - the belief that economists could and should drive policy, rather than just deal with practicalities, which inevitably led to hubris: "What sort of reputation would dentists have if they stopped dealing with people's teeth and preferred to give the government advice on dental policy, tried to forecast the prevalence of tooth decay or called for new ways of conceptualizing mouths?"
All professions are vulnerable to the same delusion, privileging theory over practice and seeking to bask in the reflected glory of public policy, but I think economists were encouraged in the cultivation of their pretensions and we should be cautious about beating them up. Not only did some correctly predict the coming crash (though normal distribution means that a number were always going to be either spot-on or forgotten), but even cheer-leaders of the neoliberal economic order sounded a note of caution on occasions, notably Alan Greenspan's comment on "irrational exuberance".
The social and political standing of economists has little to do with their functional usefulness and everything to do with their ideological value. If the latter was close to nil, they'd have much the same standing as dentists. Talk about a "crisis in the profession" currently serves to deflect criticism of the financial order, just as the current "bishops with vaginas" kerfuffle distracts from the real crisis of the Church of England (an absurd anachronism in practice and based on a theory in inexorable decline). With little widespread support for an alternative to neoliberalism, economists must take on the role of scapegoat, despite the fact that many correctly identified the growing (and continuing) problems. The regular appearance of the Governor of the Bank of England and other economist worthies before the Treasury Select Committee thus oscillates between Moses delivering the tablets and a penitential auto da fe.
In 2008, the Queen famously asked "Why did you [economists] fail to predict this?" Many took this as an example of her sage wisdom, the equivalent of the small boy pointing out the emperor's butt-nakedness, but she was actually asking completely the wrong question. A profession so dependent on theory would always be disputatious, if only to satisfy personal ambition, so the idea that economists as a collective entity had a settled view was both naive and typical of the belief that there must be a "right" answer. A better question (and one that a small boy might well ask) would be "Why does a house in London cost a million quid?", though there are obvious reasons why such a thought would never have occurred to her, any more than she is probably troubled by being the head of a church that denies the authority of women.
All professions are vulnerable to the same delusion, privileging theory over practice and seeking to bask in the reflected glory of public policy, but I think economists were encouraged in the cultivation of their pretensions and we should be cautious about beating them up. Not only did some correctly predict the coming crash (though normal distribution means that a number were always going to be either spot-on or forgotten), but even cheer-leaders of the neoliberal economic order sounded a note of caution on occasions, notably Alan Greenspan's comment on "irrational exuberance".
The social and political standing of economists has little to do with their functional usefulness and everything to do with their ideological value. If the latter was close to nil, they'd have much the same standing as dentists. Talk about a "crisis in the profession" currently serves to deflect criticism of the financial order, just as the current "bishops with vaginas" kerfuffle distracts from the real crisis of the Church of England (an absurd anachronism in practice and based on a theory in inexorable decline). With little widespread support for an alternative to neoliberalism, economists must take on the role of scapegoat, despite the fact that many correctly identified the growing (and continuing) problems. The regular appearance of the Governor of the Bank of England and other economist worthies before the Treasury Select Committee thus oscillates between Moses delivering the tablets and a penitential auto da fe.
In 2008, the Queen famously asked "Why did you [economists] fail to predict this?" Many took this as an example of her sage wisdom, the equivalent of the small boy pointing out the emperor's butt-nakedness, but she was actually asking completely the wrong question. A profession so dependent on theory would always be disputatious, if only to satisfy personal ambition, so the idea that economists as a collective entity had a settled view was both naive and typical of the belief that there must be a "right" answer. A better question (and one that a small boy might well ask) would be "Why does a house in London cost a million quid?", though there are obvious reasons why such a thought would never have occurred to her, any more than she is probably troubled by being the head of a church that denies the authority of women.
Wednesday, 21 November 2012
Trying to get a decent drink
According to CAMRA, one pub a week is being converted into a supermarket, largely because the current planning regulations don't consider this to be a change in use (pubs being classed as retail outlets), so formal planning permission is not required. The friends of beer think this is a bad thing as it encourages viable pubs to be sold off. According to Tescos, "We are taking on derelict or vandalised pubs, not those which are still actively trading, and for all sorts of reasons those pubs were not successful. We go into communities and ask people what they want and how we can deliver that." So who is right?
I live on the fringes of Southfields in London, which lies within a triangle formed by Wandsworth, Putney and Wimbledon. It's popular recognition rests on the Tube station, which is the alighting point for the All England Club, about three-quarters of a mile down Wimbledon Park Road. For two weeks each year the station is swamped with corporate advertising and a surging tide of tennis grockles being touted by cabbies on their way in and colliding with commuters on their way out. It had a bit part in the recent BBC drama, as local resident George Enthwhistle was doorstepped pre and post-resignation. Further back, when it really was all fields round here, George Eliot lived at the Wandsworth end. Like many areas opened up by the extension of the metropolitan railways, Southfields is now part of that middle ring between inner London and the 20th century suburban expansion, which largely follows the boundary of the old London County. It's a mix of increasingly expensive family houses and yuppie flats, the latter particularly popular with Antipodeans and South Africans who've been forced south by high prices in Earls Court and Shepherd's Bush. Though there are council estates, these are physically marginal and gradually being sold off.
When the house-building began in earnest in Edwardian times, much of the land around the station was purchased from the Bishopric of London. This entailed a covenant that prevented the building of pubs for a century, despite (or perhaps because of) Young's brewery being just to the north. Until the 1990s, this meant walking down to the Merton Road, which formed the Wandsworth to Wimbledon side of the triangle, or up to The Green Man on Putney Heath, though a wine bar, Mandy's, did manage to get in under the wire in the 1980s by posing as an eatery (it's now a Starbucks). When the covenant expired, two pubs quickly opened, The Grid Inn and The Old Garage. Neither were much cop, the former being a gloomy Wetherspoons and the latter a bland Greene King. Last year Wetherspoons sold up, which means we now have a gloomy Tesco Metro instead. A Sainsbury's Local has also opened this year, replacing a Nicolas vintners, and a Waitrose has been given planning permission.
While I was no fan of The Grid Inn, it was neither derelict nor vandalised, and the suggestion that Tesco listened to the local community is tripe. Most of the shops in the immediate vicinity carried anti-Tesco posters when the change in use was announced, and some still do. While the shop owners obviously have a vested interest, this antipathy pretty accurately reflected local sentiment. The area already had two convenience stores as well as a butcher, fishmonger and greengrocer. I have no doubt that all three supermarkets will be successful, and that the other traders will gradually accomodate themselves to the new reality, simply because Southfields is a large dormitory suburb with a growing population of younger working adults who favour convenience stores. The people who use the greengrocer (more variety and cheaper) are not the target market. Restaurants and pubs have struggled simply because the customers for these have ample and better options on the boundaries of the area, particularly at Putney and Wimbledon on the District Line. For this same reason, the plan to convert the old snooker hall back to its original use as a cinema is doomed, as there are multiplexes at each corner of the triangle, not to mention a bijou Curzon in Wimbledon. I suspect we'll end up with a fitness club, a coffee shop and more flats.
That said, there is an argument for a decent pub in the centre of Southfields. Given the proximity of the Earl Spencer gastro-pub on the Merton Road, it should forget about competing on food and focus instead on quality real ale and wine. The real shame is not that pubs are being replaced by chain stores, but that so many pubs are themselves bland chains.
I live on the fringes of Southfields in London, which lies within a triangle formed by Wandsworth, Putney and Wimbledon. It's popular recognition rests on the Tube station, which is the alighting point for the All England Club, about three-quarters of a mile down Wimbledon Park Road. For two weeks each year the station is swamped with corporate advertising and a surging tide of tennis grockles being touted by cabbies on their way in and colliding with commuters on their way out. It had a bit part in the recent BBC drama, as local resident George Enthwhistle was doorstepped pre and post-resignation. Further back, when it really was all fields round here, George Eliot lived at the Wandsworth end. Like many areas opened up by the extension of the metropolitan railways, Southfields is now part of that middle ring between inner London and the 20th century suburban expansion, which largely follows the boundary of the old London County. It's a mix of increasingly expensive family houses and yuppie flats, the latter particularly popular with Antipodeans and South Africans who've been forced south by high prices in Earls Court and Shepherd's Bush. Though there are council estates, these are physically marginal and gradually being sold off.
When the house-building began in earnest in Edwardian times, much of the land around the station was purchased from the Bishopric of London. This entailed a covenant that prevented the building of pubs for a century, despite (or perhaps because of) Young's brewery being just to the north. Until the 1990s, this meant walking down to the Merton Road, which formed the Wandsworth to Wimbledon side of the triangle, or up to The Green Man on Putney Heath, though a wine bar, Mandy's, did manage to get in under the wire in the 1980s by posing as an eatery (it's now a Starbucks). When the covenant expired, two pubs quickly opened, The Grid Inn and The Old Garage. Neither were much cop, the former being a gloomy Wetherspoons and the latter a bland Greene King. Last year Wetherspoons sold up, which means we now have a gloomy Tesco Metro instead. A Sainsbury's Local has also opened this year, replacing a Nicolas vintners, and a Waitrose has been given planning permission.
While I was no fan of The Grid Inn, it was neither derelict nor vandalised, and the suggestion that Tesco listened to the local community is tripe. Most of the shops in the immediate vicinity carried anti-Tesco posters when the change in use was announced, and some still do. While the shop owners obviously have a vested interest, this antipathy pretty accurately reflected local sentiment. The area already had two convenience stores as well as a butcher, fishmonger and greengrocer. I have no doubt that all three supermarkets will be successful, and that the other traders will gradually accomodate themselves to the new reality, simply because Southfields is a large dormitory suburb with a growing population of younger working adults who favour convenience stores. The people who use the greengrocer (more variety and cheaper) are not the target market. Restaurants and pubs have struggled simply because the customers for these have ample and better options on the boundaries of the area, particularly at Putney and Wimbledon on the District Line. For this same reason, the plan to convert the old snooker hall back to its original use as a cinema is doomed, as there are multiplexes at each corner of the triangle, not to mention a bijou Curzon in Wimbledon. I suspect we'll end up with a fitness club, a coffee shop and more flats.
That said, there is an argument for a decent pub in the centre of Southfields. Given the proximity of the Earl Spencer gastro-pub on the Merton Road, it should forget about competing on food and focus instead on quality real ale and wine. The real shame is not that pubs are being replaced by chain stores, but that so many pubs are themselves bland chains.
Saturday, 17 November 2012
Zero sum nonsense
There has been another splurge of economic doom-mongering this week, following Mervyn King's prediction of weak growth. Some, such as Martin Kettle in the Guardian, believe we're facing 50 years of austerity, while others, notably the Social Market Foundation and Royal Society of Arts, see it as a shorter-term problem that will necessitate another £48bn in public spending cuts over the next 5 years. Kettle (not for the first time) is talking nonsense, and not just because predictions over such a distant horizon are worthless. The SMF/RSA crew have identified a real problem (George Osborne's predictions on growth were pants), however they have used it to justify another round of neoliberal welfare reform and (more pertinently) a bid for a government contract.
Kettle's case is based on two sources. The first is an OECD report that predicts global growth will be healthiest among developing nations (they're sticking their necks out there). The OECD's reliability in these matters has already been questioned, but in fact their prediction that UK GDP will grow at an average of 2.1% per annum over the next 50 years (1.6% per capita, due to an ageing population), is little different to the long-term historical growth rate. What's caught Kettle's attention is the continuing shift of economic power to the developing world, which is where the zero-sum fallacy comes in: "Economic power is shifting to China ... while the world will have more, we will have less of it – and maybe less in real terms, too. We are confronting scarcity of a sort we have forgotten." Given that the UK has been in relative decline since the 1880s, i.e. losing share of world output, this isn't as worrying as you might at first think. The reason why we can bear it is because we're still experiencing positive growth, even if others are growing faster (the OECD predicts global growth will average 3% over the next 50 years). It should hardly need stating that growth from a low base is always faster than growth from a high base. The wider point about growth is that it is not zero-sum, despite the tendency of politicians to cast competition between nation states in this light. Thus David Cameron recently insisted that we were in a race, which implies winners and empty-handed losers (a cynic might argue that the whole "batting for Britain" bollocks is just cover for politicians acting as salesmen for privileged industries, such as defence and The City).
The gloom does not let up: "Growth in Britain will often decline over the coming half-century. It will not resume. We can talk all we like about stimulus and investment, ... but, during the next 50 years, growth is going to be halting and uneven and will sometimes be negative." Pretty much like the last 50 years, then. There are two broad drivers for growth: a push and a pull. The push is the product of technological advance, improved labour skills and organisational efficiency, all of which increase productivity: same inputs, more outputs. This underlying trend is estimated at 1.3% p.a. You've got to be dysfunctional as a country not to be able to take advantage of it. The pull is the result of demand, which can be both external (exogenous) or internal (endogenous): more outputs requiring more inputs. For example, industrial development in China and elsewhere has led to increased demand for German machine tools (exogenous), while recovery from the 2011 tsunami in Japan is generating domestic growth (endogenous).
Kettle's ideological colours are shown when his pessimism about growth segues into pessimism about democracy: "In China ... a new leadership is seamlessly introduced for another 10-year span. In Europe, by contrast, a series of weak leaders ... struggle to assert some degree of control over a floundering currency and unification project. Meanwhile in the US, a re-elected but domestically weak president faces a series of defining political battles over spending and taxes." In trying to convince us that "austerity in some form is the context for most of the foreseeable political options in countries like Britain", he also references Thomas Byrne Edsall on the coming scarcity of resources. The resources in question are not raw materials or human capital but public money: "Although the 20th-century social democratic project may have stalled amid economic decline, the financial crisis has undoubtedly opened up a fresh opportunity to redefine the terms on which the rich and poor can coexist without social unrest in times of greater scarcity." Note the assumption about the persistence of "the rich and poor". The underlying postulate is that a real-terms increase in public spending can only be funded through the fruits of growth. In other words, it is a bonus available only in the good times, not a persistent exercise in the redistribution of wealth. This is a central neoliberal tenet that encourages the industry in doom-mongering. "We can't afford it" is the cry of the hour, despite the continuing advance in living standards (due to that 1.3% thang).
The SMF/RSA report, Fiscal Fallout, focuses its doom-mongering on the likelihood that growth will be lower than anticipated by the Chancellor, and in particular that we may face both sluggish growth in productivity and a smaller output gap than previously thought. The latter is the headroom between current output and potential output come a recovery. If this is small, because we have lost capacity for good, then the recovery will produce a correspondingly smaller bounceback in tax revenues. To hit the government's deficit targets, we may therefore need to cut public expenditure further.
The first point to make is that there are varying opinions on what has caused the drop in productivity and what this implies for a recovery, which the SMF/RSA acknowledge. They are probably right in thinking that there is a combination of factors. Labour-hoarding would imply there is spare capacity, though if it has been biased towards overhead roles this could mean that any expansion might largely be met through automation, offshoring or by new jobs at lower wages. Another factor might be the erosion of skills and a consequent decline in innovation, though you would expect this to take a good few years to have an effect. The forebearance of banks in respect of loans may be preventing the weak going to the wall, creating "zombie businesses", which is relevant as much productivity is the result of market entry/exit. One factor we know is present is constrained capital investment due to insufficient bank lending, hence QE and the funding-for-lending scheme. Though some businesses have large cash piles, those wanting to expand or retool (both of which would boost productivity) are struggling to secure finance.
Up to this point, the report is the work of the Social Market Foundation. Though a centrist think-tank (the legacy of David Owen), the SMF's analysis of the productivity decline is reasonable, and even their speculation about the output gap and the resulting deficit impact is logical. The problem with the report is the second half, the work of the RSA. This suffers from three flaws:
First is the instrumental view of welfare. Their mantra is that you can "drive productivity through public spending". This is a classic liberal concept - the idea that the role of welfare is to make labour more efficient and pliable, whether through health (minimising sick days and the avoidable death of skilled workers who have been invested in), education (providing preliminary skills of value to industry), or unemployment benefit (maintaining a reserve army of labour). This leads to the deployment of that pernicious phrase "value for money", which is (predictably) colouring current debate on welfare in the Labour party. In this light, the angst over rising health and social care costs can be seen for what it is: a distate that a growing share has to be devoted to non-productive labour, i.e. coffin-dodgers (the old), the unemployable (i.e. those on disability benefits), and people who have made "bad lifestyle choices" (the fat, smokers, alkies etc).
The second flaw is the report's lazy employment of policy nostrums that were drained of all meaning over the last 20 years, such as: "rebalance public finance away from Whitehall", implement "more collaboration and integration", focus on "prevention rather than cure", encourage "local engagement" and "devolved design", seek "negotiated autonomy". The report does not explain why these never happen in practice, so I will. Intermediaries (from management consultants to social enterprises) have a vested interest in maintaining the concentration of power, as it makes their job (i.e. interposing in spending decisions) easier.
The third flaw is a weakness for fashionable nonsense: "Flexicurity is a welfare model based on a balance between flexible labour-markets, active labour-market policies and benefits that are designed to smooth transitions between unemployment and work." In other words, welfare-to-work rebranded. Another example: "Open-source policy making" is interpreted as "there should be an open invitation to research centres, academia, think tanks and pressure groups to contribute their own data and expertise." That's not open source, that's just lobbying. Significantly, this is not open to anyone but to specific "civil society institutions", such as the RSA.
The depressing conclusion is that the self-identifying "left of centre" in British politics remains utterly committed to the neoliberal programme. There will never be a time when welfare is not under the cosh, and what little remains must be concentrated on those of most value to capital. There will always be winners, and losers. The rich man in his castle, the poor man at his gate.
Kettle's case is based on two sources. The first is an OECD report that predicts global growth will be healthiest among developing nations (they're sticking their necks out there). The OECD's reliability in these matters has already been questioned, but in fact their prediction that UK GDP will grow at an average of 2.1% per annum over the next 50 years (1.6% per capita, due to an ageing population), is little different to the long-term historical growth rate. What's caught Kettle's attention is the continuing shift of economic power to the developing world, which is where the zero-sum fallacy comes in: "Economic power is shifting to China ... while the world will have more, we will have less of it – and maybe less in real terms, too. We are confronting scarcity of a sort we have forgotten." Given that the UK has been in relative decline since the 1880s, i.e. losing share of world output, this isn't as worrying as you might at first think. The reason why we can bear it is because we're still experiencing positive growth, even if others are growing faster (the OECD predicts global growth will average 3% over the next 50 years). It should hardly need stating that growth from a low base is always faster than growth from a high base. The wider point about growth is that it is not zero-sum, despite the tendency of politicians to cast competition between nation states in this light. Thus David Cameron recently insisted that we were in a race, which implies winners and empty-handed losers (a cynic might argue that the whole "batting for Britain" bollocks is just cover for politicians acting as salesmen for privileged industries, such as defence and The City).
The gloom does not let up: "Growth in Britain will often decline over the coming half-century. It will not resume. We can talk all we like about stimulus and investment, ... but, during the next 50 years, growth is going to be halting and uneven and will sometimes be negative." Pretty much like the last 50 years, then. There are two broad drivers for growth: a push and a pull. The push is the product of technological advance, improved labour skills and organisational efficiency, all of which increase productivity: same inputs, more outputs. This underlying trend is estimated at 1.3% p.a. You've got to be dysfunctional as a country not to be able to take advantage of it. The pull is the result of demand, which can be both external (exogenous) or internal (endogenous): more outputs requiring more inputs. For example, industrial development in China and elsewhere has led to increased demand for German machine tools (exogenous), while recovery from the 2011 tsunami in Japan is generating domestic growth (endogenous).
Kettle's ideological colours are shown when his pessimism about growth segues into pessimism about democracy: "In China ... a new leadership is seamlessly introduced for another 10-year span. In Europe, by contrast, a series of weak leaders ... struggle to assert some degree of control over a floundering currency and unification project. Meanwhile in the US, a re-elected but domestically weak president faces a series of defining political battles over spending and taxes." In trying to convince us that "austerity in some form is the context for most of the foreseeable political options in countries like Britain", he also references Thomas Byrne Edsall on the coming scarcity of resources. The resources in question are not raw materials or human capital but public money: "Although the 20th-century social democratic project may have stalled amid economic decline, the financial crisis has undoubtedly opened up a fresh opportunity to redefine the terms on which the rich and poor can coexist without social unrest in times of greater scarcity." Note the assumption about the persistence of "the rich and poor". The underlying postulate is that a real-terms increase in public spending can only be funded through the fruits of growth. In other words, it is a bonus available only in the good times, not a persistent exercise in the redistribution of wealth. This is a central neoliberal tenet that encourages the industry in doom-mongering. "We can't afford it" is the cry of the hour, despite the continuing advance in living standards (due to that 1.3% thang).
The SMF/RSA report, Fiscal Fallout, focuses its doom-mongering on the likelihood that growth will be lower than anticipated by the Chancellor, and in particular that we may face both sluggish growth in productivity and a smaller output gap than previously thought. The latter is the headroom between current output and potential output come a recovery. If this is small, because we have lost capacity for good, then the recovery will produce a correspondingly smaller bounceback in tax revenues. To hit the government's deficit targets, we may therefore need to cut public expenditure further.
The first point to make is that there are varying opinions on what has caused the drop in productivity and what this implies for a recovery, which the SMF/RSA acknowledge. They are probably right in thinking that there is a combination of factors. Labour-hoarding would imply there is spare capacity, though if it has been biased towards overhead roles this could mean that any expansion might largely be met through automation, offshoring or by new jobs at lower wages. Another factor might be the erosion of skills and a consequent decline in innovation, though you would expect this to take a good few years to have an effect. The forebearance of banks in respect of loans may be preventing the weak going to the wall, creating "zombie businesses", which is relevant as much productivity is the result of market entry/exit. One factor we know is present is constrained capital investment due to insufficient bank lending, hence QE and the funding-for-lending scheme. Though some businesses have large cash piles, those wanting to expand or retool (both of which would boost productivity) are struggling to secure finance.
Up to this point, the report is the work of the Social Market Foundation. Though a centrist think-tank (the legacy of David Owen), the SMF's analysis of the productivity decline is reasonable, and even their speculation about the output gap and the resulting deficit impact is logical. The problem with the report is the second half, the work of the RSA. This suffers from three flaws:
First is the instrumental view of welfare. Their mantra is that you can "drive productivity through public spending". This is a classic liberal concept - the idea that the role of welfare is to make labour more efficient and pliable, whether through health (minimising sick days and the avoidable death of skilled workers who have been invested in), education (providing preliminary skills of value to industry), or unemployment benefit (maintaining a reserve army of labour). This leads to the deployment of that pernicious phrase "value for money", which is (predictably) colouring current debate on welfare in the Labour party. In this light, the angst over rising health and social care costs can be seen for what it is: a distate that a growing share has to be devoted to non-productive labour, i.e. coffin-dodgers (the old), the unemployable (i.e. those on disability benefits), and people who have made "bad lifestyle choices" (the fat, smokers, alkies etc).
The second flaw is the report's lazy employment of policy nostrums that were drained of all meaning over the last 20 years, such as: "rebalance public finance away from Whitehall", implement "more collaboration and integration", focus on "prevention rather than cure", encourage "local engagement" and "devolved design", seek "negotiated autonomy". The report does not explain why these never happen in practice, so I will. Intermediaries (from management consultants to social enterprises) have a vested interest in maintaining the concentration of power, as it makes their job (i.e. interposing in spending decisions) easier.
The third flaw is a weakness for fashionable nonsense: "Flexicurity is a welfare model based on a balance between flexible labour-markets, active labour-market policies and benefits that are designed to smooth transitions between unemployment and work." In other words, welfare-to-work rebranded. Another example: "Open-source policy making" is interpreted as "there should be an open invitation to research centres, academia, think tanks and pressure groups to contribute their own data and expertise." That's not open source, that's just lobbying. Significantly, this is not open to anyone but to specific "civil society institutions", such as the RSA.
The depressing conclusion is that the self-identifying "left of centre" in British politics remains utterly committed to the neoliberal programme. There will never be a time when welfare is not under the cosh, and what little remains must be concentrated on those of most value to capital. There will always be winners, and losers. The rich man in his castle, the poor man at his gate.
Thursday, 15 November 2012
The Natural History of Trust
There was a slightly Oriental tinge to George Entwhistle's resignation as Director General of the BBC, despite the absence of ostentatious bowing and crying. It was there in the prominent use of the word "honourable" by both the quondam DG and Chris Patten, Chairman of the BBC Trust (and former Governor of Hong Kong), and in the ready use of the word "shame" by the press. Since the weekend, the word that has come to the fore is "trust", as in "the BBC must restore public trust", though presumably not through seppuku. Peter Kellner of YouGov has been liberally spraying the media with opinion poll data, though his key message is that "the past decade has seen a decline in trust across the board". In relative terms the BBC remains well ahead of the likes of politicians and tabloid journalists. As Peter says, "something deeper is going on".
"Honour" and "shame" are subjective in that they rely on self-policing by the individual. If you are shameless, it doesn't matter if somebody else accuses you of being shameful. It has no effect unless you share their view on what constitutes behaviour worthy of shame. The verb to shame (i.e. "he was shamed into ...") is a form of coercion, which means you can simply resist. Trust, on the other hand, is objective to the extent that it concerns the expectation of one person about the likely behaviour of another, where that second person has previously given sufficient assurances to justify the expectation. Trust is contractual, which is why we talk of it being "betrayed" or sorrowfully say: "I expected better of you".
But does the YouGov data actually measure trust, in this sense of a social contract? In sociology, trust is taken to be "a measure of belief in the honesty, fairness, or benevolence of another party". This is distinct from "confidence", which is a measure of belief in the competence of another. The detailed YouGov data breaks down the question of trust by age and other dimensions. In respect of school teachers, it finds that 68% of the 18-24 year-old cohort are broadly trusting while this figure rises slightly to 70% among those 60 and over. All perfectly reasonable. But the figures for "don't knows" are respectively 17% and 3%, i.e. the mistrustful are 14% and a whopping 27%. Given that people over 60 generally have little contact with school teachers, while most of those in the 18-24 cohort will have had contact relatively recently, it seems odd that the older cohort are the more definite in their opinion. Perhaps they are more prone to bearing grudges over the years.
Something similar can be seen with trades union leaders. Unless you are a union member (only about 1 in 4 workers), you have no substantive trust relationship with them, i.e. no implicit contract, so what exactly are you assessing? The suspicion is that trust has become a synonym for "like" and is no more meaningful than a simple thumbs-up. The poll also shows that respondents generally trust leading politicians less than their local MP. Given that most people can't remember who their MP is (only a minority of the poll sample will even have voted for the election winner), and will have negligible dealings with them even if they can, the suspicion is that this difference in rating largely reflects exposure. Nadine Dorries can expect her popularity to plummet further.
In historical terms, trust gradually replaced the social and religious concepts of obligation that were broken down by the industrial revolution ("All that is solid melts into air, all that is holy is profaned"). This counter-movement took two main forms during the nineteenth century. The first was a reactionary revival of religion (and a related fashion for the medieval) in which a strong moral and ethical code encouraged both charitable obligation and (as a quid pro quo) an acceptance of the division of society: "The rich man in his castle, the poor man at his gate, He made them, high or lowly, and ordered their estate." The second was the development of mutuality in the form of friendly societies and trades unions, culminating in the twentieth century welfare state (the contributory principle, often merely symbolic in practice, is important in respect of the idea of mutuality). However, the cultural artefact of public trust spread well beyond the welfare state proper, encompassing the behaviour of private enterprise (through socially-responsible regulation), the state (through democratic oversight of the police etc) and autonomous public bodies such as the BBC. Come the post-modern/neoliberal era, the framework of conventions and assumptions that embedded trust, i.e. the social-democratic consensus, was attacked as "restrictive", "inefficient" and lacking in "freedom of choice". The proposed solution was (and is) the market, but this solution is noticeably quiet about the role, if any, of trust.
Trust presumes engagement, the ability to take the measure of something before investing. Trust is a "forward option" as it anticipates future, contingent behaviour. This in turn implies predictability, but more flexibly than simple "conformance to spec". It rests on the shared assumption of what will persist and what behaviours can be expected. In a true market there is no predictability because there is no constraint on the actions of the market participants beyond their willingness to agree a price. This obviates the need for any independent ethical code. Thus "my word is my bond" has been replaced by hedging. Market fundamentalists explain market-rigging as the result of a market inefficiency, e.g. a lack of transparency or liquidity (popular explanations for the LIBOR and gas market scandals). In other words, the market isn't free enough. What it needs is not more regulation but less. In such a climate, trust is reduced to a question of system integrity, which is how the word has tended to be used in the field of technology. A trusted system exhibits reliability of operation. It does not exhibit benevolence. This brings trust close to the meaning of confidence - a belief in competence and capability.
As the concept of trust is elided with the cash-nexus, it appears to become simultaneously more dilute, hence "the decline in trust", and yet more transcendent, hence the religiose investment of trust in brands such as Apple or Virgin (as an aside, in the days before health-and-safety-gone-mad, the use of the word "trust" in advertising usually referred to unadulterated goods - now it just implies reliability: from "this won't kill you" to "no surprises in the small print"). The gradual evaporation of trust is emblematic of the emptying of the public space, as nomadic power and wealth ascends to the supra-national (in another era, the behaviour of Starbucks' and Amazon's UK management over tax would have resulted in a charge of treason), and individuals retreat to the private consolation of commodities.
A peculiarity of this movement is the way in which public trust is increasingly seen through the lens of private folly. Zygmunt Bauman in Liquid Modernity noted that: "What are commonly and ever more often perceived as 'public issues' are private problems of public figures." Personal failings are nothing new, nor is their impact on public policy, but what is notable is the degree to which private behaviour now degrades public trust. Lloyd George's sale of honours did not destroy trust in the honours system, nor did the Birminghman Six miscarriage destroy trust in the judicial system, because in each case public trust was invested in a wider framework than a dodgy politician or a biased judge. Compare with modern scandals. The MPs expenses cesspit has clearly damaged the entire political class, though many individual MPs were blameless, while the behaviour of Jimmy Savile is automatically assumed to reflect badly on the BBC in its entirety.
This twist on "the personal is political" is ironic in that it sees right-wing critics of public bodies happy to employ a systemic critique even when the issue is one of personal morality. Thus if Savile could get away with sexual abuse at White City, then the entire corporation was clearly complicit (by omission if not commission) and therefore culpable, even 30 years later. Contrast with the readiness with which wrongdoing in The City is isolated as the behaviour of "rogue traders", and systemic reform plays second fiddle to the maintenance of industry strength.
It has been the BBC's good fortune that this latest kerfuffle has coincided with another of the increasingly frequent bouts of David Attenborough love. This has served to remind us that the BBC is neither rotten to the core nor unsympathetic. It remains essentially benevolent. However, the reliance on a living icon is a double-edged sword. When Saint David eventually shuffles off this mortal coil, there will be few left with the moral authority (the public trust) to counter the suggestion that the BBC, after a quarter century of marketisation and management bollocks, is now just another business that should be exposed to the bracing discipline of the private sector.
"Honour" and "shame" are subjective in that they rely on self-policing by the individual. If you are shameless, it doesn't matter if somebody else accuses you of being shameful. It has no effect unless you share their view on what constitutes behaviour worthy of shame. The verb to shame (i.e. "he was shamed into ...") is a form of coercion, which means you can simply resist. Trust, on the other hand, is objective to the extent that it concerns the expectation of one person about the likely behaviour of another, where that second person has previously given sufficient assurances to justify the expectation. Trust is contractual, which is why we talk of it being "betrayed" or sorrowfully say: "I expected better of you".
But does the YouGov data actually measure trust, in this sense of a social contract? In sociology, trust is taken to be "a measure of belief in the honesty, fairness, or benevolence of another party". This is distinct from "confidence", which is a measure of belief in the competence of another. The detailed YouGov data breaks down the question of trust by age and other dimensions. In respect of school teachers, it finds that 68% of the 18-24 year-old cohort are broadly trusting while this figure rises slightly to 70% among those 60 and over. All perfectly reasonable. But the figures for "don't knows" are respectively 17% and 3%, i.e. the mistrustful are 14% and a whopping 27%. Given that people over 60 generally have little contact with school teachers, while most of those in the 18-24 cohort will have had contact relatively recently, it seems odd that the older cohort are the more definite in their opinion. Perhaps they are more prone to bearing grudges over the years.
Something similar can be seen with trades union leaders. Unless you are a union member (only about 1 in 4 workers), you have no substantive trust relationship with them, i.e. no implicit contract, so what exactly are you assessing? The suspicion is that trust has become a synonym for "like" and is no more meaningful than a simple thumbs-up. The poll also shows that respondents generally trust leading politicians less than their local MP. Given that most people can't remember who their MP is (only a minority of the poll sample will even have voted for the election winner), and will have negligible dealings with them even if they can, the suspicion is that this difference in rating largely reflects exposure. Nadine Dorries can expect her popularity to plummet further.
In historical terms, trust gradually replaced the social and religious concepts of obligation that were broken down by the industrial revolution ("All that is solid melts into air, all that is holy is profaned"). This counter-movement took two main forms during the nineteenth century. The first was a reactionary revival of religion (and a related fashion for the medieval) in which a strong moral and ethical code encouraged both charitable obligation and (as a quid pro quo) an acceptance of the division of society: "The rich man in his castle, the poor man at his gate, He made them, high or lowly, and ordered their estate." The second was the development of mutuality in the form of friendly societies and trades unions, culminating in the twentieth century welfare state (the contributory principle, often merely symbolic in practice, is important in respect of the idea of mutuality). However, the cultural artefact of public trust spread well beyond the welfare state proper, encompassing the behaviour of private enterprise (through socially-responsible regulation), the state (through democratic oversight of the police etc) and autonomous public bodies such as the BBC. Come the post-modern/neoliberal era, the framework of conventions and assumptions that embedded trust, i.e. the social-democratic consensus, was attacked as "restrictive", "inefficient" and lacking in "freedom of choice". The proposed solution was (and is) the market, but this solution is noticeably quiet about the role, if any, of trust.
Trust presumes engagement, the ability to take the measure of something before investing. Trust is a "forward option" as it anticipates future, contingent behaviour. This in turn implies predictability, but more flexibly than simple "conformance to spec". It rests on the shared assumption of what will persist and what behaviours can be expected. In a true market there is no predictability because there is no constraint on the actions of the market participants beyond their willingness to agree a price. This obviates the need for any independent ethical code. Thus "my word is my bond" has been replaced by hedging. Market fundamentalists explain market-rigging as the result of a market inefficiency, e.g. a lack of transparency or liquidity (popular explanations for the LIBOR and gas market scandals). In other words, the market isn't free enough. What it needs is not more regulation but less. In such a climate, trust is reduced to a question of system integrity, which is how the word has tended to be used in the field of technology. A trusted system exhibits reliability of operation. It does not exhibit benevolence. This brings trust close to the meaning of confidence - a belief in competence and capability.
As the concept of trust is elided with the cash-nexus, it appears to become simultaneously more dilute, hence "the decline in trust", and yet more transcendent, hence the religiose investment of trust in brands such as Apple or Virgin (as an aside, in the days before health-and-safety-gone-mad, the use of the word "trust" in advertising usually referred to unadulterated goods - now it just implies reliability: from "this won't kill you" to "no surprises in the small print"). The gradual evaporation of trust is emblematic of the emptying of the public space, as nomadic power and wealth ascends to the supra-national (in another era, the behaviour of Starbucks' and Amazon's UK management over tax would have resulted in a charge of treason), and individuals retreat to the private consolation of commodities.
A peculiarity of this movement is the way in which public trust is increasingly seen through the lens of private folly. Zygmunt Bauman in Liquid Modernity noted that: "What are commonly and ever more often perceived as 'public issues' are private problems of public figures." Personal failings are nothing new, nor is their impact on public policy, but what is notable is the degree to which private behaviour now degrades public trust. Lloyd George's sale of honours did not destroy trust in the honours system, nor did the Birminghman Six miscarriage destroy trust in the judicial system, because in each case public trust was invested in a wider framework than a dodgy politician or a biased judge. Compare with modern scandals. The MPs expenses cesspit has clearly damaged the entire political class, though many individual MPs were blameless, while the behaviour of Jimmy Savile is automatically assumed to reflect badly on the BBC in its entirety.
This twist on "the personal is political" is ironic in that it sees right-wing critics of public bodies happy to employ a systemic critique even when the issue is one of personal morality. Thus if Savile could get away with sexual abuse at White City, then the entire corporation was clearly complicit (by omission if not commission) and therefore culpable, even 30 years later. Contrast with the readiness with which wrongdoing in The City is isolated as the behaviour of "rogue traders", and systemic reform plays second fiddle to the maintenance of industry strength.
It has been the BBC's good fortune that this latest kerfuffle has coincided with another of the increasingly frequent bouts of David Attenborough love. This has served to remind us that the BBC is neither rotten to the core nor unsympathetic. It remains essentially benevolent. However, the reliance on a living icon is a double-edged sword. When Saint David eventually shuffles off this mortal coil, there will be few left with the moral authority (the public trust) to counter the suggestion that the BBC, after a quarter century of marketisation and management bollocks, is now just another business that should be exposed to the bracing discipline of the private sector.