Wednesday, 29 March 2017

The End of Welfare

The recent prominence given to rationalisations of xenophobia, such as David Goodhart's dichotomy of "somewheres" and "anywheres", looks like another regrettable byproduct of Brexit and Trump, but perhaps this has less to do with the new nationalism and more to do with the long-running neoliberal assault on the welfare state. In evidence, I offer a recent two-part essay by Branko Milanovic. In his first post, the former World Bank economist offers a fairly uncontroversial reading of the growth in income inequality since the 1970s, attributing it to the weakening of "four pillars" of social democracy: strong trade unions, mass education, high taxes and large government transfers. His solution is a combination of capital diffusion - to be achieved through tax policies favouring smaller shareholders, more employee share schemes and much steeper inheritance taxes - and the levelling of schools - through increased investment in the public sector and the removal of tax advantages for the private sector - in order to equalise the returns to education. In brief, a shareholder democracy plus education, education, education. Or, in other words, the messianic visions of Thatcher and Blair.

In his second post, Milanovic suggests that the welfare state may no longer be politically sustainable because it depends on two things: a "commonality of behavior or, differently put, cultural and often ethnic homogeneity" and "mass participation". Globalisation has led to income polarisation, which encourages the rich to opt-out of the welfare state, thereby undermining mass participation, while economic migration has increased the "people with actual or perceived differences in social norms or lifecycle experiences", thereby undermining cultural homogeneity. There are two problems with this history. First, the welfare state did not commence with mass participation. Early schemes, such as those of Bismarck and the British Liberals, were selective rather than universal. It took decades to achieve universal schemes and even then private provision still persisted. In other words, mass participation was a long-term goal rather than a precondition. Milanovic also fails to explain why states with restricted franchises before 1918 (which therefore disproportionately reflected the interests of the better-off) decided to introduce welfare systems that benefited the non-enfranchised. What he ignores is the possibility that the welfare state suited capital as much as labour.

The second problem is that if cultural or ethnic homogeneity were necessary to the development of welfare states we'd expect to see a correlation: countries with strong cultural and ethnic homogeneity would be more likely to have highly-developed welfare systems. But this isn't so. For example, Sweden in the 1930s had the most advanced welfare state of its time but the country was not noticeably more homogeneous than its near neighbours Finland and Norway. In contrast, Spain was a highly homogeneous society, particularly after the forced homogenisation of Franco, but it was not noted for the quality of its welfare state during the postwar era. The UK had relatively high cultural and ethnic heterogeneity, compared to other Western European nations, long before the Empire Windrush docked, thanks to historic Irish and Jewish immigration. Far from being a product of homogeneity, the welfare state helped create a British identity across the four nations of the UK. If Milanovic's argument were true, we'd have expected the NHS to have appeared in Spain before the UK. The evidence suggests that politics matters far more than cultural or ethnic homogeneity, and you could even flip the argument: welfare states promote solidarity and under-funding promotes division.

Milanovic presents a story, straight out of the neoclassical synthesis, that combines intertemporality, aggregate demand and rational choice: "the origin of social democracy and the welfare state is in the realization (and financial ability to deal with it) that all people in their lives go through periods where they are not earning anything, but have to consume: this applies to the young (hence children’s benefits), to the sick (health care and sick pay), to those who had a misfortune to get injured at work (worker’s accident insurance), to mothers when they give birth (parental leave), to people who lose jobs (unemployment benefits), and to the elderly (pensions). ... Trade globalization has led to the well-documented decline in the share of the middle class in most western countries and income polarization. With income polarization the rich realize that they are better off creating their own private systems because sharing the systems with those who are substantially poorer implies sizeable income transfers. This leads to 'social separatism' of the rich, reflected in the growing importance of private health plans, private pensions, and private education."

This doesn't tally with the history, at least not in the UK. The modern growth of private provision starts in the early 1980s, well before the major impact of globalisation in the late 1990s. The income polarisation that gave rise to "social separatism" began with tax cuts for the rich in 1979. It was first of all a conscious political choice rather than the irresistible consequence of technological advance or the opening up of developing economies. Though the major dynamic of globalisation and the erosion of welfare states has been the mobility of capital, Milanovic places far greater explanatory emphasis on the mobility of labour: "Economic migration to which most of the rich societies have been newly exposed in the past fifty years (especially so in Europe) also undercuts the support for the welfare state. This happens through inclusion of people with actual or perceived differences in social norms or lifecycle experiences. ... [for example,] the underlying fact that migrants are likely to have more children than the natives might lead to the curtailment of children’s benefits. In any case, the difference in expected lifetime experiences undermines the homogeneity necessary for a sustainable welfare state."

If people's "lifetime experiences" are notably varied today, compared to the social democratic era, this is surely a reflection of changes in the economy and wider society after 1980, such as deindustrialisation, the growth of portfolio careers and the gig economy, and increased social diversity in terms of household formation and female workforce participation. Immigration may also have played a part, but I doubt it is anywhere near the most significant factor. It's also worth noting that public attitudes have been pretty constant over time, despite these many changes in lifetime experiences: health, education and pensions remain popular while we've always been ambivalent about benefits for the unemployed. As if angling for a consultancy on the next series of Benefits Street, Milanovic then suggests that "in the era of globalization more developed welfare states might experience a perverse effect of attracting less skilled or less ambitious migrants". This "adverse selection" theory (for which he offers no supporting evidence) requires us to assume that potential welfare plays a more important role than potential earnings (or family ties) in a typical migrant's decision on where to go. This suggests that while natives value cultural homogeneity, migrants don't, which is close to Goodhart's crude dichotomy. Just as traditional anti-Semitism imagined Jews to be simultaneously refined and verminous, so modern xenophobia accuses immigrants of both an unwillingness to integrate and an instrumental disregard for community.

Milanovic ends oddly: "There is no easy solution to the vicious circle faced by developed welfare states in the era of globalization. This is why I argued in my previous blog for (1) policies that would lead toward equalization of endowments so that eventually taxation of current income can be reduced and the size of the welfare state be brought down, and (2) that the nature of migration be changed so that it be much more akin to temporary labor without automatic access to citizenship and the entire gamut of welfare benefits." I say oddly because his first post didn't mention changing the nature of migration, though he notes he did address the topic in his recent book, Global Inequality. It sounds like Milanovic is attempting to rehabilitate the Gastarbeiter system. This would implicitly bar immigrants not only from much welfare but from the "equalisation of endowments" that he proposes as the fruits of full citizenship. I think it is safe to assume that a basic income does not figure in his thinking, even as a restricted perk of full citizenship, given that the stated purpose of equalisation is to reduce tax on current income and shrink the welfare state. In other words, everyone should have enough capital to provide for their own periodic needs. Though this idea has a respectable pedigree in Tom Paine, it is wholly unrealistic in a modern economy geared to the concentration of capital.

It is at this point that we can clearly see Milanovic's neoliberal intent. While his concern for inequality is no doubt genuine, his solution is more and better capitalism. He does not consider the possibility that capital has played anything more than an incidental role in undermining cultural homogeneity or in promoting social separatism. Despite his attempts to cast the decline of the welfare state as historically inevitable, and thus a counterpart to the eclipse of social democracy, I suspect that if he were transported back to the late 1940s he would still be advocating a reduced role for the state and a larger role for markets. What is depressing is the way that such a pure and sincere neoliberal case (whatever you might think of its merits) is being justified by a grubby appeal to fashionable ethno-nationalism and the employment of bigoted tropes (over-breeding immigrants jeopardising child benefits, benefit tourism etc). Branko Milanovic may not be motivated by the reactionary hatred that seeps through the words of David Goodhart, but his attempt to rationalise what have come to be inaccurately termed "legitimate concerns" will have the same effect of coarsening public debate.

Friday, 24 March 2017

They Took Our Jobs

According to a report by PWC, millions of UK workers are at risk of being replaced by George Osborne. Sorry, by robots. This is a rehash of the Oxford University study from 2013 that suggested almost half of US jobs might be automated by 2030, with the addition of the OECD study from last year that suggested a more conservative estimate of only 10% of jobs at high risk of full automation. The great minds of PWC think the correct figure may be somewhere in the middle, say 30%. This latest report is little more than a marketing exercise to keep the mega-consultancy in the news, and the usual suspects have obliged by regurgitating suitably juicy gobbets, notably the headline figure of 10 million jobs at risk. Given that the Bank of England was warning in 2015 that the figure could be 15 million, you might think a more positive spin would be in order: "Robots to take fewer jobs than first thought", or similar. But this would be as naïve as wondering why Nigel Farage and Katie Hopkins foretell a race war because a bloke from Kent called Adrian went postal.

The PWC report opens with the now obligatory Luddite Fallacy Fallacy: "a backlash by skilled handloom weavers against the mechanisation of the British textile industry ... But, in the long run, not only were there still many (if, on average, less skilled) jobs in the new textile factories but, more importantly, the productivity gains from mechanisation created huge new wealth". The Luddites were complaining about the decline in skill, not the loss of jobs, which resulted in falling wages. The new wealth that accrued from increased productivity was captured overwhelmingly by capital, not by labour, while the subsequent expansion of the industry and creation of more jobs in the UK during the nineteenth century was dependent on the dismantling or degrading of textile manufacturing in India and other parts of the British Empire. As usual, the Luddites are deployed as a strawman to insist that technological change creates new jobs, and just as usual, the PWC report suggests that automation will free up labour for more human-centred work.

The heart of the analysis is a comparison between the Oxford and OECD studies, employing PWC's "own machine learning algorithm for identifying automation risk". This turns out to be nothing more than a weighted model applied to a merged dataset incorporating the two studies plus publicly-available census data. This is not "machine learning". The difference between the two studies is that Oxford assumed that manual or routine jobs with low educational requirements were highly automatable, while the OECD assumed automation would be task-oriented. The former biased towards substitution - workers replaced in whole by robots or AI - while the latter biased towards complementarity - parts of a job being automated but workers still having a role. To give a real world example of this from history, containers substituted for some dock workers by replacing their role in the transfer of goods from ship to shore, but fork-lifts and cranes complemented other dock workers in the packing and onward distribution of those goods.

The problem with the genre of job-stealing robot studies is the ideological emphasis on "technological revolution", which has been repackaged since the millennium as "disruption". While the pace of change certainly speeds up and slows down, the long-term reality is incremental and steady progress, often over decades. This is obvious enough from history - dock workers did not disappear overnight - but the nature of tech-boosting and the appetite of the media means that sudden lurches are always more prominent in popular debate, hence the current predictions of an "economic tsunami" as truck-drivers are replaced by autonomous vehicles. In reality, the impact of technology on work is heavily-mediated by existing institutions (state regulation, employment rights etc) and by social absorption - i.e. the way we informally accommodate new tools and the cultural norms this gives rise to. For example, the mass adoption of email has undoubtedly led to productivity gains, but it has also produced productivity losses through distraction and poor practice.

Many of these studies reflect historic social assumptions and give insufficient weight to political imperatives. For example, they usually assume that education will remain a sector at low risk of automation because of its traditional human-centred nature, despite the obvious manufacturing paradigm that has been evident in its organisation since the late 19th century. However, the political drive in the UK and elsewhere is towards the further commoditisation of mass education, which drives both automation (greater reliance on online tools) and deskilling (classroom assistants). It is possible that qualified teachers will increasingly take on more of a pastoral than pedagogic role in the future, reflecting how state concerns about value formation have shifted from the preparation of workers (learning self-discipline and obedience) to the moulding of conformant citizens (countering "radicalisation" and facilitating the emergence of sanctioned identities). Mr Chips would be proud.

One of the more amusing assumptions in the PWC study emerges when it compares the difference in the number of jobs that might be automated by sector between different countries, noting that finance and insurance scores 61% at risk in the US but only 32% in the UK. "[T]he key difference is related to the average education levels of finance professionals being significantly higher in the UK than the US. This may reflect the greater weight in the UK of City of London finance professionals working in international markets, whereas in the US there is more focus on the domestic retail market and many more workers who do not need to have the same educational levels". A more honest comparison of the two countries is that the UK has a lopsided finance sector, dominated by rent-seeking rather than particularly sophisticated services, in which education (where you went as much as what you learnt) serves the purpose of social sorting (along with the right kind of shoes). As a business consultancy, PWC is part of the same social milieu and thus subject to the same norms and biases.

Likewise, construction in the UK is seen to be less at risk of automation than the same sector in Germany because "there is a greater proportion of time spent on management tasks in the UK, such as planning and consulting others, and those that require social skills such as negotiating". The implication that restrictive planning laws impose a greater burden should be resisted: Germany doesn't have a planning free-for-all, its builders are simply more efficient than their British counterparts. Another way of putting this is that we don't actually build enough houses in the UK, with the result that the industry can support greater levels of rent-seeking and the distribution of profits via supernumerary roles. This obliviousness to actual social and political factors in the analysis of job automation means that little reliance can be placed on speculative estimates. It also means that we should stop thinking of automation as an irresistible force of nature and recognise that it is a political matter.

The PWC analysis does address the social and political dimension, but in predictably abstract and biased ways. Thus we are told that "the government, working with employers and education providers, should invest more in the types of education and training that will be most useful to people in this increasingly automated world". Substitute "capital" for "people" and you reveal the true thinking. The hoary old 'climate for business growth' also gets a shout-out: "Central and local government bodies also needs to support digital sectors that can generate new jobs, for example through place-based strategies centred around university research centres, science parks and other enablers of business growth". To show they're up with the zeitgeist, the report authors even suggest the need to consider a basic income, but they promptly disavow it in terms that will please the government: "For the moment, the need to reduce the UK budget deficit may be a significant barrier to any such scheme on a national level, as well as concerns about the social acceptability of giving people ‘money for nothing’", proving that the language of self-interest and class contempt has not changed much since the days of the Luddites.

Sunday, 19 March 2017

In Defence of George Osborne

The Evening Standard is not a tough gig for an editor, so we shouldn't be too surprised at the appointment of the neophyte George Osborne to the job. It is a free-sheet that is mostly made up of property advertising. The specialist sections - sport, arts, "going out" etc. - have their own editors, while the "local" news is largely the preserve of journalists with local knowledge, requiring little editorial intervention. The "national" news element doesn't usually amount to more than half a dozen pages, while the editorial and comment is mainly anodyne puff-pieces and by-the-numbers wittering that falls short of what you'd expect in a national tabloid let alone a broadsheet. It hasn't had a notable (or handle-with-care) columnist since Brian Sewell, the waspish art critic, who died a couple of years ago. Maybe George will try his hand at covering the Turner Prize. The political significance of the Evening Standard is down to its timing, appearing in the afternoon, and its location, being the local paper of Westminster. It became a free-sheet in 2009, propped up by a Russian oligarch's cash, because fewer people were prepared to buy it once they could access free news and listings online. It is at the heart of the real metropolitan elite - rich conservatives - hence its commitment to luxury and star-fucking. George Osborne looks like a perfect fit.

The incongruity of a former Chancellor of the Exchequer in the job only arises because we still imagine the role of an editor as being somewhere between the fictions of Walter Burns and Lou Grant and the self-serving myths of Harold Evans and Kelvin Mackenzie. In reality, putting a newspaper together has been a lot simpler since Wapping and the introduction of digital technology in the 1980s. Ironically, it is IT that has allowed newspapers to survive, essentially by allowing them to radically reduce their cost base, even as the Internet continues to erode advertising revenues. While it is fun to imagine Osborne getting to grips with hot metal, modern editors are increasingly corporate executives rather than hands-on journalists, something that became obvious during the Leveson Inquiry as the former editor of the News of the World admitted she barely knew what was going on (the point is not that she was probably dishonest but that her excuse was plausible). Under the proprietorship of Evgeny Lebedev, the job of the Evening Standard's editor has shifted away from journalism to acting as an MC for "metropolitan society".

For some, the old ideal of the omnipotent editor has become a form of performance in which labour-saving technology is rejected and Stakhanovite effort is the norm. According to a new book on Daily Mail editors past and present, the current incumbent, Paul Dacre, has turned Northcliffe House into a twentieth century safe space: "Dacre emerges from this book as an isolated and, above all, angry figure with a hatred of the new. He never types at a computer – an assistant sends his emails and his staff’s journalism reaches him on paper rather than on screen – and while the Mail prides itself on having its finger on the pulse of present day “Middle England”, Dacre himself rarely sees anywhere that could be so defined. A chauffeured car takes him to and from the Mail’s offices in Kensington, where he spends between 14 and 18 hours a day on most weekdays, normally leaving only after the first edition has gone to press around 10pm". Objectively, this is the behaviour of a person with a tenuous grasp on reality, akin to late-stage Howard Hughes. In comparison, George Osborne appears the epitome of the well-adjusted and worldly.

The idea that MPs shouldn't have second jobs is not the same as the idea that they shouldn't have interests. What really matters is partiality, not availability. Osborne can be criticised for being a part-time advisor to BlackRock, on the grounds that this might influence his vote or encourage other MPs to be congenial towards the financial services industry in the hope of a similar "reward" in future, but there would be no grounds for criticism if he decided to become a part-time French polisher, assuming this didn't cause him to neglect his duties as an MP. Ultimately, the only people who can decide whether he is neglectful are his constituents. At a certain rarefied level, work is simply existence: chatting, wandering through well-appointed rooms, pontificating from behind a lectern. Having 4 jobs doesn't mean working 4 times longer or 4 times faster than most people, it simply means being able to command a higher price for an ever-smaller fraction of your attention. This is why others in the same milieu, such as Tony Blair, can dismiss criticism of Osborne's decision with an airy appeal to calibre: he's a "highly capable guy".

One argument for multi-tasking MPs has been the value of a hinterland - being exposed to the wider world and a variety of social experience - though this is mostly self-serving cant. Few MPs think they would have a better insight into the gig economy if they became Uber drivers, though I'm sure plenty would be happy to become a non-executive director of the UK arm of the business. While being a practising barrister or other professional is now rarer among MPs, company directorships have become more common in the neoliberal era while many more have side jobs as newspaper columnists or TV and online pundits, reflecting the profusion of media and consequently increased demand for content. Unless the columns are ghost-written, I'd suggest that knocking out 1,000 words is likely to be as much of an incursion into their working day as Osborne chairing a couple of meetings while skimming through emails on his phone. Clearly constituents are being short-changed by MPs who do take second jobs, but so are those who find their elected representative keener to appear on Have I Got News for You? than down the local pub.

Osborne's new day-job is significant for reasons beyond his personal cupidity. The newspaper industry has long been dominated by the "Tory press", but that bias has become more pronounced in recent decades as notionally progressive outlets have cleaved to neoliberal centrism. The ideological spectrum of national newspapers now runs from the "dead centre" to the far right of the Conservative Party (i.e. UKIP, as represented by the Express). This is historically unprecedented. When the Daily Mail occasionally said nice things about Fascism in the 1930s, that was a conventional position (like mild anti-Semitism and virulent anti-Bolshevism) echoed by other papers on the right such as the Times and the Telegraph. This was mirrored by a variety of newspapers on the left, ranging from the Labour-affiliated Daily Herald, which welcomed the Russian revolutions of 1917, to liberal papers, such as the News Chronicle and Manchester Guardian, that were hostile to Fascism. The range of attitudes in the British press was brought into sharp relief by the Spanish Civil War, with many taking partisan positions (see page 116). Today, a partisan stance by the liberal press means Nick Cohen haranguing Corbyn supporters.

This ideological range gradually narrowed after 1940, not because public opinion consolidated on the political spectrum but because left-oriented papers were squeezed by the combination of falling profits, under-investment and a puritanical style increasingly at odds with a consumer society (the trades union-funded Daily Herald eventually became Murdoch's Sun). The changes to the media landscape since the 1980s have resulted in publishers becoming more self-conscious as generators of content rather than as distributors. At the same time, the increased competition for eyeballs brought about by the Internet and multi-channel TV has encouraged traditional press outlets to rely more on shock and outrage to grab attention, which has applied to political commentary as much as general news or celebrity. This has led to right-wing views that go beyond what would be considered merely contentious and are knowingly offensive. In this regard the Daily Mail's indulgence of Katie Hopkins is arguably worse than its jejune "Fascist flirtation" in the 1930s.

Instrumental trolling is pernicious because it provides space for more articulate views that can smuggle in some very nasty ideas while avoiding inflammatory language. This isn't a novel development - for example, there are disturbing parallels between the Times publishing Melanie Philips' crackpot history and its lending credibility to The Protocols of the Learned Elders of Zion in 1920 - but it does appear to have become more common as the political spectrum has shifted to the right since 2010. When liberal organs like the Financial Times and Newsnight give David Goodhart space to advocate the merits of "racial self-interest" and attack cosmopolitans ("anywheres"), you begin to wonder where they imagine the centre of politics is. Liberals bleat about "fake news" and insist that they need better "stories" or "champions" to counter the right, but what they don't do is suggest we need newspapers willing to take a robust line from the left. Insisting on balance between the right and the centre simply shifts the fulcrum to the right, which in turn normalises views that in previous decades you would not have expected to see outside the pages of neo-Nazi rags like Bulldog and Spearhead.

The liberal cry that "democracy requires a free press" is wrong. Democracy predated the invention of the printing press and it has happily survived periods of formal state censorship, from the temporary interruptions of wartime (there were contested by-elections in the UK during WW2, some won by independents standing against government policy) to the long-standing system of D-notices. What democracy requires is free speech, which is not the same thing. You and I enjoy free speech; Rupert Murdoch enjoys a free press. I don't expect George Osborne to value the interests of ordinary citizens over those of media barons, but I do expect his new job to highlight that the role of editor on any modern newspaper is essentially political not technical. The more Paul Dacre has become an active politician, condemning the judiciary and insisting that he commands greater legitimacy as a tribune of the people, the more he has sought to deny this reality by emphasising the unique demands and expertise of editorship. He must be spitting feathers that Osborne has revealed the truth.

Saturday, 18 March 2017

End Game

Arsene Wenger is clearly the product of another era, specifically that of the super-manager who moulds a club identity. A peculiarity of history is that this era opened at Arsenal under Herbert Chapman in the 1930s and looks likely to close at the same club. There are no other managers of this type in top-flight football today, and even those who started in this mode, such as Fabio Capello at Milan or Pep Guardiola at Barcelona, have accommodated themselves to the role of itinerant technician. The break between old and new styles reflects the impact of TV money around the millennium. New club owners since then, whether motivated by share-value or glory, have seen coaches as simply specialist employees, brought in for a relatively short term to impose a new tactical formation, with less involvement in player acquisition and often no involvement in the wider management of the club, such as the youth policy or facilities. In contrast, Wenger is a micro-manager whose influence is felt in every nook and cranny. He could not expect a similar scope at any other top club, so you can understand why he might be reluctant to leave.

The pressure for quick results, given the short tenure of managers, has placed a premium on off-the-shelf structures and drills with the result that top teams are increasingly similar, their players interchangeable and their training standardised. Paradoxically, the more modular nature of the modern coaching and playing staff has raised the value of managers. Where once clubs would look to a marquee signing to act as a catalyst on the pitch, today they are more likely to look to a coach to effect transformative change, but on the training pitch rather than through the replenishment of the squad. The downside to this is vulnerability. Should the change not occur, or should the effects wear off (e.g. at Leicester City), the coach can expect to be quickly sacked. In other words, a modern coach must either find a reliably portable scheme or reinvent himself every few years. This has led to greater stress on managers, hence both the more obvious emotionalism (see Jurgen Klopp) and burn-out (see Luis Enrique). As short tenures and volatility have become the norm, the media have routinely anticipated rifts and departures, creating an environment that is increasingly hostile to an atypical manager like Wenger.

A manager like Jose Mourinho is a hybrid, inheriting the attitude of the super-manager but exhibiting the brief tenures, emphasis on intense drills and claustrophobic structures of the new coaching style. The tension between his desire for greater domination and the constraints of the modern club leads to his control-freakery being diverted towards the media and officials. It also leads to him falling-out with players and the club hierarchy with predictable regularity. His personal animosity towards Wenger seems to owe something to his resentment at not having himself become a super-manager. Though some Arsenal fans have called for Wenger's departure, the overall loyalty of supporters towards the manager, despite repeated frustrations over the last decade, is telling. Compare and contrast the "You're not special any more" chant of Chelsea fans to Mourinho during the recent FA Cup quarter-final against Man Utd. However Wenger departs, I suspect he would always receive a warm welcome should he return to the Emirates Stadium as an opposition manager.

Where once football jargon focused on "channels" and "POMO", i.e. maximising chances, it's now more about "turnovers" and "transitions", i.e. limiting uncertain periods of play. This more controlling approach, reinforced by biometrics and data analytics, has led to greater pressure on players to stick to rigid structures and set-plays. Though we still praise the "game-changers" for moments of skill and vision, the reality is that much of the game is geared to limiting their opportunities, hence the eclipse of both the traditional number 9 and the number 10. In persisting with Giroud and Ozil, the one relatively static and the other given freedom to roam, Wenger is clearly adhering to a template that owed it origins to the great French national sides of the early 1980s when he was starting his managerial career at Cannes and Nancy. That isn't a bad template - most "new" formations are just variations on old themes (e.g. Barcelona's reinvention of Dutch total football) - but it is one that modern teams find it easier to counter, essentially by compressing play and not allowing the spaces that Michel Platini famously exploited to open up.

For most of the 1990s, Arsenal were essentially a counter-attacking team. Under George Graham, this meant a solid defence, a functional midfield and quick balls to fast strikers such as Ian Wright. Wenger preserved most of this structure but added craft to the midfield and varied the points of attack, with players such as Pires and Ljungberg augmenting Bergkamp and Henry. The last decade has seen the emergence of the caricature Arsenal, a team locked into a syndrome of excessive passing on the edge of the opposition's penalty area, largely because opponents have become better drilled and are more confident in defending deep. Wenger's attempts to counter this - usually by playing more mobile false strikers in the middle, such as van Persie or Sanchez - have been successful, hence Arsenal have usually been a high-scoring team in most seasons, but too often games have been drawn or lost because of weaknesses at the back. We still need a better goalkeeper - Cech has started his inevitable decline - and we need to be better at covering for our full-backs when they push forward, hence the exploratory move towards a midfield three. We also need to be better at defending crosses.

Wenger's ethos centres on getting players to maximise what they are best at, which can mean first discovering what that is by challenging assumptions - e.g. converting Thierry Henry from a winger to a striker or Lauren from a midfielder to a full-back. This assumes the luxury of time and experimentation, which is not something modern managers have, hence there are few others who have done likewise in recent years. He doesn't emphasise drills or positioning (though equally he doesn't neglect them altogether, as some critics maintain), preferring to encourage the players' adaptability. This can bear fruit by making Arsenal unpredictable, but it can also prove an Achilles heel when the team fail to adapt to changing circumstances on the pitch because they lack a default. Though some have talked of Arsenal lacking a plan B in attack, what they've actually lacked is a plan B in defence, which has led to occasional thumpings. We have lost the knack of nicking a goal and closing down a game.

Arsenal clearly need a change and it is hard to believe it won't come (or at least be announced) at the end of this season. Following the recent bad run of form (up to today's defeat at West Brom), finishing in the top four looks to be at serious risk, not because of the gap in points (we've made up worse before) but because of the evident lack of confidence within the squad, which is leading to a lack of effort and imagination on the pitch. In the past, injuries and decisions going against us have helped instil determination and even obduracy over the final third. Now, they tend to depress spirits and encourage lassitude. Too many players seem to wish the season was over, which suggests that our usual late push for the glory of Champions' League qualification and finishing above Spurs may be beyond us for once. An increasing number of fans beyond the vocal minority seem to have decided that a temporary failure to achieve those two perennial objectives would be an acceptable price to pay if it leads to managerial change.

It is worth emphasising that finishing fifth (or worse) and getting to an FA Cup semi-final (at least) is hardly embarrassing in such a competitive league. Our usual exit at the last-16 stage of the Champions' League was predictable, but I think that our rotten luck in the competition since 2006 has led to a self-fulfilling fatalism among too many of the players and fans. Leicester City's contrasting good fortune in the competition, while they've simultaneously declined in the league, has simply rubbed this in. Arsenal could do with a break from Europe, though I imagine we'll still qualify for the Europa League if we miss out on a top-four place, which means the dubious pleasure of Thursday night games. Some fans will optimistically talk about winning a new competition, but the real value will simply be to change habits and expectations. Personally I'd opt to skip Europe altogether, if that were possible, simply to clear our heads. As Leicester and Chelsea have shown in successive seasons, a focus on the Premier League is easier to achieve without the distraction of the Champion's League.

There is a sense of an era coming to a close, but an era that started long before "Arsene Who?" flew in from Japan. Wenger has become the last of the super-managers not because of his successes or relative youth, but because of the willingness of "Silent" Stan Kroenke to be a sleeping partner. It is the businessman Wenger, as much as the football manager, who built the modern Arsenal. No doubt there will be crocodile tears among some pundits, suggesting that Wenger's legacy has somehow been tarnished by staying on too long and only winning the FA Cup in recent years. Twice. But this ignores that Wenger's legacy is the Emirates Stadium and a club that can justifiably claim to be in the global top 10, despite the disappointments in the league and in Europe. I suspect his post-Arsenal future (he won't retire) will be as a general manager, rather than a coach, possibly at PSG, or perhaps as a national manager with a broad remit, probably for France. I suspect he struggles to imagine what Arsenal would be like without him, but he's going to have to find out eventually, along with the rest of us.

Friday, 10 March 2017

An Incredibly Simple Idea

Since Thomas More's Utopia, basic income has often been advanced as part of a wider scheme of social transformation. This hasn't done the concept any favours as it has found itself either twisted to fit a particular frame or dismissed as redundant when the larger scheme has been marginalised by history. Up to the late nineteenth century, these programmes usually centred on the redistribution of land, often through homesteading grants, or the payment of dividends arising from ground rents (e.g. Henry George's Land Value Tax). During the twentieth century, basic income was largely superseded by the debate on social insurance, which was a programmatic response to urbanisation and the vagaries of industrial capitalism, though its ethical dimension lived on in the idea of the social dividend, which was a product of the spread of democracy and the concept of human rights. The revival of interest in basic income in the twenty-first century owes much to the anticipated social transformation of two dystopian developments: environmental degradation and the rise of the robots.

This shift from a utopian to a dystopian register can be seen in the confused debates in the media, with sceptics deploying late twentieth century arguments ("we can't afford it") against twenty-first century imperatives ("we can't afford not to"). It has also led to a revival of early nineteenth or even eighteenth century rhetoric, notably the tropes of "birthright" and "commons". This has baffled establishment neoliberals who ironically remain wedded to the no less venerable language of nineteenth century marginalists. In the context of the environment, the nostalgia for a pre-industrial age is often explicit. For example, the anthropologist Jason Hickel recently advocated basic income in these terms: "The beauty of this approach is that it functions as a kind of de-enclosure. It’s like bringing back the ancient Charter of the Forest and the right of access to the commons. It restores the right to livelihood – the right of habitation. Critics of basic income often get hung up on how to fund it. But once we come to see it as linked to the commons, that problem becomes more tractable."

Hickel brings the story up to date with Alaska's Permanent Fund, a sovereign wealth fund derived from oil revenues that produces a variable dividend, typically between $1,000 and $2,000 for each state resident per annum: "The Alaska model is popular and effective, and scholars have pointed out that the same approach could be applied to other natural resources, such as forests and fisheries. It could even be applied to the air, with a carbon tax whose yields would be distributed as a dividend to all. And the upshot is that this approach helps protect commons against overuse, giving our planet some room to regenerate." One problem the Alaska model highlights is the question of eligibility: who should benefit from which resources? As Hickel puts it, "Some worry that a basic income will only increase the nativism that is spreading across the world right now. Who will qualify for the transfers? People won’t want to share with immigrants". His solution is to universalise the problem: "If the commons know no borders, why should a commons-linked income? Indeed, why should people in resource-rich nations get more than their neighbours in resource-poor ones?"

This might be morally just but it is politically impractical precisely because of variable endowment. The citizens of regions with rich natural resources have no necessary incentive to share with those inhabiting poorer regions. Why would Alaskans vote to dilute their dividend in return for a share in a negligible Arizona fund? Nation states can and do effect inter-regional monetary transfers, but this assumes a quid pro quo in the form of national public goods and benefits, from defence to welfare. Short of a world state providing common benefits to all mankind, this isn't going to happen. Even if it did, the results might well be counter-productive. Alaskans face a trade-off between the exploitation of a resource and the negative externalities this may produce locally, such as pollution. This becomes more acute the closer you are to the resource, so conversely it becomes less acute the further away you are. Local populations could find themselves over-ruled on the rate and manner of exploitation in the interests of a distant majority (e.g. as when Tories dependent on the votes of the South commit to fracking across the North). You don't have to buy the "tragedy of the commons" theory to recognise that protecting a resource from over-use is made more difficult if sovereignty is dispersed.

The risk of nativism arises because of the association of income with land, which in turn harks back to the old idea of land as the source of all value. A better approach is to treat basic income as a social dividend, not a sovereign dividend, which means that it should derive from the total output of the economy and thus primarily from the activity of the people (there are multiple factors of production but labour is ethically dominant), not from natural resources. There are four advantages to this: it reduces the likelihood of a conflict of interest with environmental protection; it means that immigrants as well as natives are contributors; it can have a progressive impact on incomes if the benefit of productivity growth accrues mainly to labour; and finally, you avoid the perversity that can arise with a hypothecated tax on a social "bad", where success in limiting use results in declining revenue and thus reduced dividends, which would hit the poorest hardest.

Among some green-tinged thinkers, the land value tax (LVT) is seen as way of both improving the stewardship of the land and of funding a basic income in the manner of Tom Paine's "agrarian justice". While this might address the problem of progressive uprating - LVT revenues should grow in line with GDP - it doesn't necessarily help the environment. Bringing vacant land into use may be a social good, but it won't necessarily reduce carbon emissions and may well increase them. It makes more sense to use an LVT to fund environmental goods in the broadest sense, which would include infrastructure, many council services (so partially or even wholly replacing business rates and the community charge) and green energy, as well as environmental protection. In other words, the LVT should reflect both the improvements to the land's value provided by public goods, such as roads and clean water, and the social costs generated by the taxpayer's use of the land, such as pollution and waste management.

The problem with schemes that link basic income to the land is that they usually hanker after a zero-growth economic order. Few green advocates see the potential of basic income in improving competition and innovation, and they often wrongly assume that industrial society is inimical to openness and generosity. For example, according to Hickel: "a basic income might defeat the scarcity mindset that has seeped so deep into our culture, freeing us from the imperatives of competition and allowing us to be more open and generous people. If extended universally, across borders, it might help instil a sense of solidarity – that we’re all in this together, and all have an equal right to the planet. It might ease the anxieties that gave us Brexit and Trump, and take the wind out of the fascist tendencies rising elsewhere in nativism that is spreading across much of the world." A radical redistribution of wealth might confirm that we "all have an equal right to the planet", but a dole that does not address existing private concentrations of capital will not. As for defeating Fascism, that may depend more on the expansion of public goods than a guaranteed income.

As basic income has become popular it has inevitably found itself being taken up by popularisers. Typical of the breed is the Dutch journalist Rutger Bregman, who combines Silicon Valley utopianism (he unselfconsciously calls basic income "an incredibly simple idea") with the listicle-sociology of Malcolm Gladwell and Freakonomics. His book, Utopia for Realists, advocates not only a basic income but a 15-hour work week and open borders, but it is coy on the mechanics of how this will come about, leaving others to fill in the gaps. For example, Andrew Anthony makes the link to automation via Elon Musk: "One reason why Musk supports a basic income is that work is likely to become much more scarce in the near future of advanced robotics and artificial intelligence – and that’s also a reason for a much reduced working week. In a way Bregman has less of a hard sell with shorter working hours. History is moving that way and has been for some time. It’s just a question of when and how we’re going to acknowledge the inevitable".

In fact, history shows that the general move towards shorter working hours in developed economies actually ran out of steam decades ago as the state (with the notable exception of France) shied away from progressive regulation. The "flexibility" of modern labour markets has instead led to greater variety (i.e. inequality), with some people struggling to secure enough hours through casual work or having to work longer hours to make ends meet. The question should be why aren't we already enjoying the 15-hour week that Keynes imagined would have arrived by now? One answer, which Bregman alludes to, is that productivity gains due to technology since the 80s have been offset by a growth in what David Graeber calls "Bullshit Jobs". A variant on this is the idea that new technologies, such as email and databases, have allowed clerical and professional workers to pad out their hours with increased "management & admin" activities. A combination of the two would go some way to explain poor productivity growth in the services sector, not to mention the wall-to-wall coverage accorded "studies" (i.e. speculation) that half of all jobs could be automated within 20 years and that white-collar roles will be particularly vulnerable as artificial intelligence matures.

Like the linking of land and basic income, the linking of basic income and technological unemployment is dubious because it tends to characterise the former as a compensation for existing social relations, not as a substitute. The issue that remains off-stage is the ownership of the capital represented by the robots and AI. This has led to Bill Gates proposing that income tax should be levied on robots as a means of ameliorating both job losses and falling tax revenues. While most orthodox economists have criticised this as a counter-productive tax on innovation, few have thought to comment on Gates's assumption that future value will arise from constant capital itself. The suggested alternatives include increased taxes on capital gains and using current tax revenues to build a sovereign wealth fund for future dividends, which takes us all the way back to Paine but with capital now occupying the role of land. The ideological continuity is a refusal to consider labour as the source of value, which allows Gates to ignore the conventional idea that technology destroys old jobs but create new ones in equal or greater number and simply accept the future redundancy of most of humanity.

The utopias of the past can be read as reversed dystopias: attempts to envisage what the world would look like shorn of contemporary ills, just as most dystopias were an extrapolation of those ills. In contrast, the current era of basic income speculation is marked by a lack of imagination, and not because contemporary ills are fewer, less damaging or without the potential for catastrophe. Given the risks associated with global warming, it is notable that today's utopias are either nostalgic forays into a pre-industrial past or ameliorative schemes that are essentially postwar social democracy without the heavy industry or excessive consumption. In other words, they seek to imagine the problem away rather than to address it. The belief seems to be that "this one simple trick" will allow us to sidestep politics altogether. The uncertainty of these schemes in their execution - what establishment pundits call their "lack of realism" - reflects an unwillingness to address social relations and in particular the ownership of historically accumulated wealth. Similarly, the idea of basic income as a compensation for redundancy is pernicious because it divorces historic labour (i.e. capital) from contemporary society. Basic income then becomes a dole at the discretion of the wealthy. What could be simpler than that?

Saturday, 4 March 2017

From Nationalism to Nationalisation

Last month, Hugo Evans asked what I would suggest as a programme to get us from nationalism to nationalisation. The short answer is that I'd focus on what he described as "functional finance state investment targeted at future energy". To explain the rationale for this choice I need to outline the relationship of nationalism and neoliberalism, as I see it, and to do that I first need to explain the difference between nationalism and nationalisation. That might appear like a category error, comparing a political and cultural construct with a method for organising and managing parts of the economy, but in fact they both represent fundamental attitudes about who constitutes "the people". Historically, nationalism and nationalisation haven't been mutually exclusive, but they have been inversely correlated in industrial societies. Nationalism tends to prosper in eras when the needs of the people are heavily subject to the market, whereas it declines in eras when more of those needs are met by services that are owned and managed for universal benefit rather than private profit.

The key then is public goods, most of which were a consequence of industrial modernity - e.g. municipal utilities, national transport and communication networks, and the capitalist demand for the state regulation of labour (public health, housing and education). The impact of modernity explains the difference between the liberal nationalism of the early to mid-19th century, which projected the nation as in opposition to supra-national monarchies and whose socio-economic premise was the primacy of private property and the superiority of the market, and the nationalism of the period between the late-19th century and WW2, which sought to re-establish an organic sense of the national community in an era distinguished by rapid urbanisation and thus the profusion of public goods. Nationalisation, as a method of socialism, argued for the primacy of common ownership and the superiority of planning over the market, however this wasn't simply a continuation of the old argument from the Diggers onwards for the common ownership of the means of production but an expanded argument for the common ownership of public goods. In other words, both nationalism and nationalisation are responses to industrial capitalism and the growth of those goods.

The essential antipathy of the two stems from the fact that public goods are non-excludable (i.e. open to all) and non-rivalrous (i.e. one person's use doesn't limit another's access). This doesn't imply abundance or ease of access, as anyone who experienced the 70s or early 80s would confirm, but the absence of discrimination on the basis of personal attributes. In contrast, nationalism believes that rights and entitlements should be dependent on personal qualifications, whether that be in the form of a passport or a yellow star. Some public goods, such as roads, may be publicly owned under nationalist regimes, but the use of nationalisation as a policy to promote nationalism is rare outside of the short-term expropriation of foreign-owned assets. In practice, nationalist regimes prefer to privatise state industries and develop a clientelistic relationship with domestic capitalists. In other words, the focus of state interference by nationalists is on moulding the people rather than adjusting the relations of production.

The nationalisation of strategic industries, many of which had little direct impact on the public, and the reliance on central planning directed by the state were features of actually-existing nationalisation in Western Europe during les trente glorieuses, however these were often contingent (e.g. the demands of postwar reconstruction or industrial consolidation that the market failed to provide) or the result of a conservative apparatus being absorbed by a state wary of workers' control (e.g. the persistence of old management in the NCB). The neoliberal drive for privatisation in the 1980s initially focused on these tactical nationalisations, not only because they were more vulnerable to the charges of inefficiency and under-investment but because they offered an easier route to normalising the idea of private provision ahead of the more fraught privatisation of public goods. The shift of focus to the latter in the 1990s marks the point at which modern nationalism gains political traction. This is not mere coincidence but reflects the promotion of national integrity and scarcity in political rhetoric.

The cost of effectively policing entitlement to public goods is high. For example, the NHS drive to bill foreign users will almost certainly be a failure relative to its ambitions, and could even cost more than it recoups, while trying to reclaim public subsidies for transport use by foreigners is a non-starter. This difficulty encourages policing of the perimeter instead, hence nationalism in the era of the welfare state has become increasingly obsessed with border security and residency rights. Where once nationalism was aggressive in expanding territory to absorb communities that included both claimed members of the "volk" and others, today it tends to be defensive and even willing to countenance the exclusion of areas within the heart of the nation state. The contemporary trope of the "no-go area", popularised by right-wing media outlets such as Fox News, riffs on traditional ideas of segregation, from the medieval ghetto to Apartheid, in which specific areas are defined not just by their inhabitants but by the withdrawal or limited provision of public goods. The initial political demand is not that these areas should be reclaimed or cleansed but that they should be denied public subsidy. Though "blood and soil" still motivates the ethno-nationalist core, it is not what gives political nationalism its modern prominence.

The nation is becoming an increasingly virtual concept, rather than one strictly co-terminus with a land, which reflects not only the diversity and dispersal produced by modern migration and integration but also the normative impact of the US right, with its history of segregation through zoning and its rhetoric of "welfare queens" and "government handouts" to favoured minorities. The history of the European right over the last 70 years can be thought of as a shift from warfare nationalism to welfare nationalism under American influence. The integrity of the nation is no longer simply a matter of ethnic or cultural homogeneity, despite the attempts by ethno-nationalists to construct a supreme antagonist out of Islam, but a question of entitlements in respect of the provision of public goods. This has produced an ideological cleavage on the right between conservatives contemptuous of all welfare and nationalists insisting on the prioritisation of certain types of welfare for the "decent people" who constitute the nation. This has an obvious class bias, so schools and health are good while unemployment benefits are bad, which allows conservatives and nationalists to find some common ground berating the lumpen elements of the "white working class".

The increased international movement of people obviously plays a part in this growing concern with security and national integrity, but so too does the growing importance of public goods in an advanced society. This is the result of three developments: advances in technology that create new public goods (or expectations that they should be public goods), such as broadband access or new medical treatments; the increased utilisation of existing public goods (more years in education, more years in hospital or care); and the secular increase in the dependency ratio (those not working versus those who are), which means a larger percentage of the population conscious of its reliance on public goods such as the NHS. Since the 1980s, the neoliberal state has insisted that public goods are in limited supply. This is a claim that was first justified by "crowding out" (we must curtail public services to allow private enterprise to thrive), then by the need for market optimality (New Labour's "what works") and now by the need for permanent austerity. The persistent message is that we, the atomised public, are in competition for scarce resources.

This is most obvious in the area of healthcare, not just because of the sharp increase in dependency (more elderly and more chronically ill) but because the NHS has always been characterised by two features: its national scope and its implicit rationing (the rightwing media's obsession with expensive cancer treatments leverages this to promote rivalry and thus competition). That this gives rise to contempt for the disabled or those assumed to be guilty of self-indulgence (e.g. the over-weight) is repellent but rational within the confines of a narrative of scarcity: the disabled and morbidly obese will place proportionately greater demands on the NHS. What isn't rational within this narrative is xenophobic resentment: the belief that immigrants get more than their fair share and are therefore denying resources to natives (on average, they are net contributors because they are more likely to be working and not chronically ill). This irrationality is not just about the convenience of "the other" as a scapegoat but about the growing identification of beleaguered public goods as attributes of nationality during an era when traditional characteristics (ethnicity, religion) have become less salient.

It is for this reason that we can say that nationalism is a product of neoliberalism and not just of austerity. More specifically, it is a product of the assault on public goods rather than any more general promotion of the market. This means that reversing the growth of nationalism does not require the wholesale dismantling of the neoliberal state or reform of the broader economy, it simply requires the reconstitution of public goods as non-excludable and non-rivalrous, thus making national integrity and scarcity less relevant to people's everyday lives. This doesn't just mean ensuring adequate capacity to avoid divisiveness, but advocating universal provision as being in everyone's interest for reasons of effectiveness and efficiency. To this end, we should be selective in our priorities for nationalisation. Most people's leading candidate would be health and social care (i.e. integrate, reverse privatisation, adequately fund), however I'd suggest that another area should take the lead for psychological reasons.

The biggest public good of all is the environment and it faces a clear and present danger in the form of climate change, the largest contributor to which is fossil fuels used in energy production. We know that climate change cannot be adequately tackled by the free market, even when heavily regulated by the state. Profit will incentivise destructive commercial activity beyond any safe limit while resistance to regulation will ensure that negative externalities continue to be subsidised. Practically, switching to a low or zero-carbon energy production system requires central planning and thus comprehensive nationalisation of power generation and supply. The psychological value of this would be threefold: the expression of the power of nationalisation through the dramatic reordering of an entire industry for the common good; the universal impact, because the vast majority of us pay energy bills; and the high probability of tangible benefits, e.g. demonstrable reductions in CO2 emissions. A focus on the environment has the advantage of defining the scope of public provision as the whole land, thereby undermining the narrative of internal segregation, and it also emphasises quality over quantity, so scarcity becomes a second order issue. For this reason I'd recommend introducing a land value tax as an explicit environmental charge that could cross-subsidise energy bills during transition.

Renationalising health and social care should be done, but we ought to recognise that this would be less dramatic (given the limited privatisation accomplished to date and that fixing PFI is an accounting exercise), less evident to many (i.e. it is the sick and elderly who would disproportionately realise the benefits), and less likely to deliver demonstrable gains because of an ageing society and the structural inefficiencies of a labour-intensive service. For similar reasons I'd also pursue rail re-nationalisation with less urgency than the reordering of the energy sector. Rail doesn't offer the same potential for success because the fundamental challenges are to do with capacity versus a spatially-imbalanced economy, so optimising the railways will take longer than converting to green energy, plus the major beneficiaries would be middle-class commuters. What I would recommend, as a side-order, is the nationalisation of car insurance, not only because it would be relatively easy to do and would deliver immediate cost savings, but because it would be a dramatic demonstration of the power of nationalisation that would affect most people.

Liberals tend to frame the contemporary growth of nationalism as the aggregate of individual responses to economic stress since 2008, often citing the parallels with the 1930s. While an economic crash can provide nationalists with a narrative opportunity (elites, traitors etc), it tends to amplify an existing trend rather than create an inflexion point. Thus the nationalist revanche of the 1930s is inconceivable without the nationalism of the first two decades of the century, while contemporary nationalism starts its ascent in the late-80s / early-90s and owes more to globalisation and neoliberal hegemony than Lehman Brothers. The liberal attitude is rooted in religious tropes about individual weakness and temptation in the face of adversity, which reduces social formation to the madness of crowds. It ignores the communal dimension: that popular nationalism (as opposed to the minority interest of programmatic racism) is a product of how we envisage ourselves cooperating with others, hence the importance of public goods. To defeat xenophobic nationalism you need to talk the language of community, but in terms of our common interests and basic human rights rather than our cultural heritage or exclusivity. The solution to nationalism is nationalisation.