It's looking increasingly likely that the RBS "computer glitch" was actually a common-or-garden human error, as per usual, and specifically a failure of change control. Banks don't tend to use beta software, so it's unlikely the direct cause of this was a problem in a CA-7 patch. The length of time taken to resolve the issue (they've been knife-and-forking it for a week now) also supports the suspicion that the rollback plan failed last Tuesday. I think it safe to assume that they had a rollback plan, but that it was probably compromised by human error. What they clearly did not have was an effective contingency plan for such a failure. This is more surprising, given that their computing system is clearly well-established. All the actions and announcements to date look like they're working it out as they go along, so their crisis management is perhaps not up to snuff either.
A suggestion being made (though with only limited circumstantial evidence as yet), is that the human error occurred in a outsourced team in India. There is no secret that outsourcing increases risk where management mistakes a process requiring tacit knowledge for a commodity that can be contracted out for the lowest price. Given the criticality of the overnight batch jobs that apply the day's transactions to customer accounts, I'd be surprised if RBS did not control this through an inhouse operations team. I'd also be surprised if their change control team wasn't inhouse. It is more likely that the software maintenance team are outsourced, but this in turn implies loose control if a failed software release caused the job schedule to be trashed.
Unless you have a particular fascination with job-scheduling software (I'm really not that sad) then you probably don't think there is much to learn from this fiasco, though there is much incidental schadenfreude to enjoy in the spectacle of RBS chief Stephen Hester admitting he doesn't really know what is going on: "It is like, I don't know, the landing path at Heathrow or something, once you get out of sequences it takes some time to get back into sequence even if the original fault is put right". Hester turned down his £1m bonus for 2011 earlier this year following outrage that a taxpayer-owned entity should be continuing with such bonuses when the bank was losing money (£2bn in the year) and laying off thousands of staff. I don't fancy his chances of getting a bonus for 2012 now.
As I mentioned at the time, there is no reason to believe that Hester is any more aware of the real risks within the banking group he manages than his predecessor Fred Goodwin. Apparently, risk and control is one of the 5 key performance dimensions used to determine his bonus, which is what you would expect of a bank, though I'm sure it was there in Goodwin's day too. If the "drains up" review he has proposed shows that the contingency plan was inadequate, then he really has nowhere to hide. The really toxic revelation though would be evidence that the "financial results" performance dimension had come into conflict with the risk and control dimension. If the human error was a consequence of outsourcing, and thus UK redundancies, then Hester will be lucky to keep his job.
Tuesday, 26 June 2012
Friday, 22 June 2012
The great tax dodge
David Cameron's comments on Jimmy Carr are problematic for two reasons, over and above the charge of hypocrisy. First, they focus the issue of tax avoidance on individuals, and specifically rich celebrities. Second, they suggest that tax avoidance is a moral issue. Both are misleading.
We haven't yet got to the point where the use of a tax avoidance scheme is seen as a must-have celebrity accoutrement, but we're not far off it. Having sat in on a pitch a few years ago by someone flogging the latest in a long line of UK film investment schemes (my presence was an oversight), I can vouch that the high-net-worth-individuals who are the target for this tax dodge get a hard-on simply at the thought that they could be "playas".
The humdrum reality is that the most egregious tax dodging (i.e. avoidance and evasion as a percentage of the potential take) is undertaken by big business. This reflects the fact that they have a lot of opportunity, dedicated corporate tax lawyers, and leverage with governments. The significance of the "deals" done by HMRC with the likes of Vodafone and Goldman Sachs was not the suggestion of corruption or leniency but the fact that big business considers its tax payments to be a matter for negotiation. HMRC colludes with this, partly because it lacks the resources to vigorously pursue maximum tax receipts, and is consequently happy to settle for half a loaf. Compare and contrast its diligence in respect of VAT fiddles.
The super-rich are certainly no slouches when it comes to tax dodging, as Philip Green and others have shown, however their unwillingness to pay tax is nothing new. What is relatively new is the wider collapse in tax morale over the last 30 years. Avoidance has spread from an elite to a large swath of the professional middle class, driven in part by privatisation and the growth in self-employment. Outsourcing and casualisation have depressed incomes for the working class. For the middle class, they have allowed incomes to be maintained (and even grown) by translating the reduction in employer costs into reduced tax revenue. Even those nice doctors are at it.
A number of right-wing commentators have already chided Cameron for introducing morality into the discussion. This is partly an ideological distaste for government commenting on private behaviour, but it is also a desire to advance the merits of a flat-tax, which would supposedly reduce the incentive for avoidance. In practice, a flat-tax is a form of avoidance in that it shifts the burden from the wealthy to the poor. It's worth remembering what "avoidance" means. If one group in society avoids tax, rates are simply increased elsewhere to make up the difference. The government still needs to achieve a set level of revenue to pay its bills. If you dodge the bullet, someone else ends up getting shot. This inevitably biases collection towards those taxes that are harder to avoid, such as VAT and excise, which means the tax burden disproportionately falls on the poorest, i.e. those with the least ability to avoid tax or to negotiate rebates with government.
The real reason why morality is not the issue is because tax avoidance is primarily the consequence of the policies of the state, not the behaviour of the individual. Evasion is an issue of public morality because you are breaking a law that encodes society's view on what is good and bad. Avoidance breaks no laws, rather it takes advantage of the system for private benefit. Tax avoidance is therefore a form of privilege. Jimmy Carr cannot have been unaware of that.
The history of tax is obviously political. The choices of what to tax reflect class interests. Up until the 17th century tax was applied arbitrarily and collected haphazardly. Its control by the Crown, and the frequent abuses occasioned by tax-farming (the privatisation of tax collection in return for an up-front fee), were factors in the buildup to the Civil War. The formation of the Inland Revenue in 1665 and the institution of a proper land tax in 1692 were key victories for the Parliamentary/Whig cause.
The increasing use of customs and excise to raise revenue thereafter, as well as more imaginative schemes such as the window tax, marked a reaction by the landed interest to push the tax burden onto the bourgeoisie. The prevalence of smuggling in the 18th century reflected the growth of these revenue streams, while the romantic celebration of smugglers reflected the unpopularity of what was seen as a drag on trade. It also led to that unfortunate business in Boston harbour.
The introduction of income tax during the Napoleonic Wars was essentially an uneasy truce between Whig and Tory. Neither liked it, but the alternative was an increase in tax on either trade or land. In the modern era, the free-trade influence of the EEC/EU and the WTO has led to further reductions in tariffs, while land tax disappeared altogether in 1963. We now predominantly rely on consumption taxes (i.e. VAT and various excise duties) and income tax (including national insurance). The former is regressive and hard to avoid. The latter is usually progressive but relatively easy to avoid, to a degree
Probably the biggest change in our policies on tax however has been development of the offshore tax industry since the 1970s. Though this operates through tax havens such as the Channel Isles and Bermuda, the heart of the operation is London. Successive UK governments have supported and privileged it as part of the Faustian pact with The City. The real hypocrisy of Cameron is not that he isn't criticising Tory-voting Gary Barlow, or even that his own father exploited offshore tax havens, but that he is the Prime Minister of a tax haven himself.
We haven't yet got to the point where the use of a tax avoidance scheme is seen as a must-have celebrity accoutrement, but we're not far off it. Having sat in on a pitch a few years ago by someone flogging the latest in a long line of UK film investment schemes (my presence was an oversight), I can vouch that the high-net-worth-individuals who are the target for this tax dodge get a hard-on simply at the thought that they could be "playas".
The humdrum reality is that the most egregious tax dodging (i.e. avoidance and evasion as a percentage of the potential take) is undertaken by big business. This reflects the fact that they have a lot of opportunity, dedicated corporate tax lawyers, and leverage with governments. The significance of the "deals" done by HMRC with the likes of Vodafone and Goldman Sachs was not the suggestion of corruption or leniency but the fact that big business considers its tax payments to be a matter for negotiation. HMRC colludes with this, partly because it lacks the resources to vigorously pursue maximum tax receipts, and is consequently happy to settle for half a loaf. Compare and contrast its diligence in respect of VAT fiddles.
The super-rich are certainly no slouches when it comes to tax dodging, as Philip Green and others have shown, however their unwillingness to pay tax is nothing new. What is relatively new is the wider collapse in tax morale over the last 30 years. Avoidance has spread from an elite to a large swath of the professional middle class, driven in part by privatisation and the growth in self-employment. Outsourcing and casualisation have depressed incomes for the working class. For the middle class, they have allowed incomes to be maintained (and even grown) by translating the reduction in employer costs into reduced tax revenue. Even those nice doctors are at it.
A number of right-wing commentators have already chided Cameron for introducing morality into the discussion. This is partly an ideological distaste for government commenting on private behaviour, but it is also a desire to advance the merits of a flat-tax, which would supposedly reduce the incentive for avoidance. In practice, a flat-tax is a form of avoidance in that it shifts the burden from the wealthy to the poor. It's worth remembering what "avoidance" means. If one group in society avoids tax, rates are simply increased elsewhere to make up the difference. The government still needs to achieve a set level of revenue to pay its bills. If you dodge the bullet, someone else ends up getting shot. This inevitably biases collection towards those taxes that are harder to avoid, such as VAT and excise, which means the tax burden disproportionately falls on the poorest, i.e. those with the least ability to avoid tax or to negotiate rebates with government.
The real reason why morality is not the issue is because tax avoidance is primarily the consequence of the policies of the state, not the behaviour of the individual. Evasion is an issue of public morality because you are breaking a law that encodes society's view on what is good and bad. Avoidance breaks no laws, rather it takes advantage of the system for private benefit. Tax avoidance is therefore a form of privilege. Jimmy Carr cannot have been unaware of that.
The history of tax is obviously political. The choices of what to tax reflect class interests. Up until the 17th century tax was applied arbitrarily and collected haphazardly. Its control by the Crown, and the frequent abuses occasioned by tax-farming (the privatisation of tax collection in return for an up-front fee), were factors in the buildup to the Civil War. The formation of the Inland Revenue in 1665 and the institution of a proper land tax in 1692 were key victories for the Parliamentary/Whig cause.
The increasing use of customs and excise to raise revenue thereafter, as well as more imaginative schemes such as the window tax, marked a reaction by the landed interest to push the tax burden onto the bourgeoisie. The prevalence of smuggling in the 18th century reflected the growth of these revenue streams, while the romantic celebration of smugglers reflected the unpopularity of what was seen as a drag on trade. It also led to that unfortunate business in Boston harbour.
The introduction of income tax during the Napoleonic Wars was essentially an uneasy truce between Whig and Tory. Neither liked it, but the alternative was an increase in tax on either trade or land. In the modern era, the free-trade influence of the EEC/EU and the WTO has led to further reductions in tariffs, while land tax disappeared altogether in 1963. We now predominantly rely on consumption taxes (i.e. VAT and various excise duties) and income tax (including national insurance). The former is regressive and hard to avoid. The latter is usually progressive but relatively easy to avoid, to a degree
Probably the biggest change in our policies on tax however has been development of the offshore tax industry since the 1970s. Though this operates through tax havens such as the Channel Isles and Bermuda, the heart of the operation is London. Successive UK governments have supported and privileged it as part of the Faustian pact with The City. The real hypocrisy of Cameron is not that he isn't criticising Tory-voting Gary Barlow, or even that his own father exploited offshore tax havens, but that he is the Prime Minister of a tax haven himself.
Wednesday, 20 June 2012
Technology crosses the line
The Ukrainian goal that wasn't awarded is being held up as evidence that UEFA's preferred 5 official solution should be shelved in place of the goal-line technology already favoured by FIFA. How could the extra official miss the fact that the ball had wholly crossed the line? Perhaps he was distracted by John Terry's balletic manoeuvre, fearing/hoping he might do himself an injury.
What this highlights is that the officials, including the one in the middle, aren't certain what is going on most of the time. The pace of the game is so fast that an involuntary blink of the eye, or being 6 inches out of optimum position, can be enough to miss a crucial moment. Even when you see something, the limited time and angle can cause you to misinterpret it. You are never, ever going to be as authoritative as Andy Townsend, which is a sobering thought. (That said, at least you won't make as many mistakes as Clive Tyldesley: "it's all square in the other match, where Sweden lead France by a goal to nil").
What TV viewers often forget, as a player dramatically hurls himself to the ground, is that this does not appear so obviously staged when viewed in real-time and at a distance. It's routine for a live spectator to say "I'd like to see that again on Match of the Day" when a penalty is given or denied. Players emphasise fouls because they fear the officials will otherwise miss them. It's like Kabuki, a form of gestural theatre, where actions must speak louder than words.
The consequence is that referees and their assistants rely on a mixture of hunches and probabilistic logic to make key decisions. In recent years I've occasionally run the line for my son's team. Despite being an experienced (if limited) player and spectator, trying to spot offside even with the sedate pace of half-interested boys on a cold day is a challenge. Mentally flipping a coin is not unknown.
Inevitably, this leads to drawing inferences from a player's prior behaviour during a game, so lots of early diving usually gets its "reward" when a legitimate penalty is denied. It can also lead to subconscious expectations based on reputation, notably with card-magnets like Joey Barton. This in turn can be biased by prejudice, as players are assumed to exhibit national characteristics. Thus in the coming quarter-final clash, England's players will be watched for over-zealous, scything tackles, while Italy will be watched for shirt-tugging and sneaky ankle-taps.
Once goal-line technology is introduced, it's hard to see the line being drawn there. The ability to check on a replay whether a foul was inside or outside the penalty area would be an obvious next step. Ultimately, the demand for better refereeing won't go away until they become robots, perhaps androids modelled on Pierluigi Collina.
As England fans are suddenly getting excited (the "footballing gods are smiling", according to Adrian Chiles), you can expect the next game to be a disaster. I'm going for 1-1 at full-time and Ashley Young to miss the crucial penalty.
What this highlights is that the officials, including the one in the middle, aren't certain what is going on most of the time. The pace of the game is so fast that an involuntary blink of the eye, or being 6 inches out of optimum position, can be enough to miss a crucial moment. Even when you see something, the limited time and angle can cause you to misinterpret it. You are never, ever going to be as authoritative as Andy Townsend, which is a sobering thought. (That said, at least you won't make as many mistakes as Clive Tyldesley: "it's all square in the other match, where Sweden lead France by a goal to nil").
What TV viewers often forget, as a player dramatically hurls himself to the ground, is that this does not appear so obviously staged when viewed in real-time and at a distance. It's routine for a live spectator to say "I'd like to see that again on Match of the Day" when a penalty is given or denied. Players emphasise fouls because they fear the officials will otherwise miss them. It's like Kabuki, a form of gestural theatre, where actions must speak louder than words.
The consequence is that referees and their assistants rely on a mixture of hunches and probabilistic logic to make key decisions. In recent years I've occasionally run the line for my son's team. Despite being an experienced (if limited) player and spectator, trying to spot offside even with the sedate pace of half-interested boys on a cold day is a challenge. Mentally flipping a coin is not unknown.
Inevitably, this leads to drawing inferences from a player's prior behaviour during a game, so lots of early diving usually gets its "reward" when a legitimate penalty is denied. It can also lead to subconscious expectations based on reputation, notably with card-magnets like Joey Barton. This in turn can be biased by prejudice, as players are assumed to exhibit national characteristics. Thus in the coming quarter-final clash, England's players will be watched for over-zealous, scything tackles, while Italy will be watched for shirt-tugging and sneaky ankle-taps.
Once goal-line technology is introduced, it's hard to see the line being drawn there. The ability to check on a replay whether a foul was inside or outside the penalty area would be an obvious next step. Ultimately, the demand for better refereeing won't go away until they become robots, perhaps androids modelled on Pierluigi Collina.
As England fans are suddenly getting excited (the "footballing gods are smiling", according to Adrian Chiles), you can expect the next game to be a disaster. I'm going for 1-1 at full-time and Ashley Young to miss the crucial penalty.
Tuesday, 19 June 2012
The search for meaning
A few weeks ago Google launched its "Knowledge Graph" product on the .com site. For certain search terms you now get a synopsis of curated information, including related topics. It is probably the closest thing yet to a common application of the long-heralded semantic web, leaving aside more specialised tools like Wolfram Alpha.
The result is modest. The underlying ontology is limited to well understood entities such as people and places where relationships are straightforward to define. Search for "Ridley Scott" and you are told that "people also search for" Noomi Rapace and Michael Fassbender (from Prometheus), but not Harvey Keitel and David Carradine (from The Duellists). In other words, the superficial hive mind familiar from Amazon is at work.
Tim Berners-Lee's vision of machine-readable metadata that would make the Web more intelligent was an important meme that helped fuel the techno-utopianism of the last decade. It also produced a backlash against techno-hubris and a warning that data about data was likely to be of no better quality that the data itself. The semantic web is an elitist ideal. It assumes that a software agent can shield you from the stupidity of the masses and winnow quality from the chaff. The irony is that those sections of the web that most benefit from metadata are the ones that want to provide fine-grained crap, such as shopping, porn and gossip. The big evolution in metadata has been the development of dynamic tagging, the folksonomies of trending hashtags. This is hardly an example of the superior intelligence envisaged, #epicfail.
Funnily enough, the imagined scenario Berners-Lee and his co-authors used to introduce the concept back in 2001 includes not only "semantic web agents" but phones that could control other devices and handheld browsers. In the event, it is these incidental props that have proved more significant, both technically and culturally. Google's Knowledge Graph looks like it has been designed as an app for a smartphone display.
I was reminded of the unpredictability of technology when I saw Prometheus recently and followed it by re-watching Alien and Aliens in strict chronological plot order (I was indulging my inner nerd). The latest film is a prequel, but is not too bothered with the continuity of technology or social mores (only one bad boy is allowed a crafty fag, despite most of the crew in Alien puffing away merrily). It also has a more profound mission objective, the search for the meaning of life, whereas the earlier (that is later) episodes were concerned with extracting minerals or blowing the crap out of the alien brood.
Like most modern SF films the ship is awash with transparent touch displays. The attraction for film-makers is that these provide great shots, with the camera able to look at the actor's pensive face through the display of illegible backward writing. In practice this technology would be pure ostentation and would probably give you a migraine. The one time a transparent 3D display made some sense was when they mapped the internal structure of the alien installation. In Aliens they had 2D plans displayed on a touch-controlled light table. This was pretty funky back in the 80s, though it turned out to be a commercial damp squib when Microsoft finally released their Surface tabletop computer in 2007.
The mining ship in Alien was called Nostromo, a reference to Joseph Conrad's 1904 novel about revolution in a fictional South American state. That centred on a silver mine, whose product leads to corruption and war. The escape shuttle in Alien is called Narcissus, a reference to Conrad's Nigger of the Narcissus, a book about the tension between human sympathy and order (and loyalty to the owner's purpose) on a ship beset by storms. There are some interesting parallels here, though it's also possible that Ridley Scott chose these names simply because he liked Conrad, having previously filmed one of his short stories as The Duellists.
Aliens, directed by James Cameron, kept the references going by naming the main ship the Sulaco, after the fictional town in the novel Nostromo. In Prometheus, the Conradian reference is more oblique. The android David watches David Lean's Lawrence of Arabia while the human crew are in suspended animation. Lean had planned to film Nostromo shortly before his death, and his lead in Lawrence, Peter O'Toole, also starred in a version of Conrad's Lord Jim.
What these subtle and ambiguous references show is that the embodiment of concepts in symbols, and the inter-relationship and harmony of different symbols, is not something that follows obvious and logical rules. I was always sceptical about the semantic web because it seemed to me that transferring the burden of intelligence from the user of data to the data itself was not only unfeasible but undesirable. Meaning is elusive and contingent, a bit like Jonesy the cat.
The result is modest. The underlying ontology is limited to well understood entities such as people and places where relationships are straightforward to define. Search for "Ridley Scott" and you are told that "people also search for" Noomi Rapace and Michael Fassbender (from Prometheus), but not Harvey Keitel and David Carradine (from The Duellists). In other words, the superficial hive mind familiar from Amazon is at work.
Tim Berners-Lee's vision of machine-readable metadata that would make the Web more intelligent was an important meme that helped fuel the techno-utopianism of the last decade. It also produced a backlash against techno-hubris and a warning that data about data was likely to be of no better quality that the data itself. The semantic web is an elitist ideal. It assumes that a software agent can shield you from the stupidity of the masses and winnow quality from the chaff. The irony is that those sections of the web that most benefit from metadata are the ones that want to provide fine-grained crap, such as shopping, porn and gossip. The big evolution in metadata has been the development of dynamic tagging, the folksonomies of trending hashtags. This is hardly an example of the superior intelligence envisaged, #epicfail.
Funnily enough, the imagined scenario Berners-Lee and his co-authors used to introduce the concept back in 2001 includes not only "semantic web agents" but phones that could control other devices and handheld browsers. In the event, it is these incidental props that have proved more significant, both technically and culturally. Google's Knowledge Graph looks like it has been designed as an app for a smartphone display.
I was reminded of the unpredictability of technology when I saw Prometheus recently and followed it by re-watching Alien and Aliens in strict chronological plot order (I was indulging my inner nerd). The latest film is a prequel, but is not too bothered with the continuity of technology or social mores (only one bad boy is allowed a crafty fag, despite most of the crew in Alien puffing away merrily). It also has a more profound mission objective, the search for the meaning of life, whereas the earlier (that is later) episodes were concerned with extracting minerals or blowing the crap out of the alien brood.
Like most modern SF films the ship is awash with transparent touch displays. The attraction for film-makers is that these provide great shots, with the camera able to look at the actor's pensive face through the display of illegible backward writing. In practice this technology would be pure ostentation and would probably give you a migraine. The one time a transparent 3D display made some sense was when they mapped the internal structure of the alien installation. In Aliens they had 2D plans displayed on a touch-controlled light table. This was pretty funky back in the 80s, though it turned out to be a commercial damp squib when Microsoft finally released their Surface tabletop computer in 2007.
The mining ship in Alien was called Nostromo, a reference to Joseph Conrad's 1904 novel about revolution in a fictional South American state. That centred on a silver mine, whose product leads to corruption and war. The escape shuttle in Alien is called Narcissus, a reference to Conrad's Nigger of the Narcissus, a book about the tension between human sympathy and order (and loyalty to the owner's purpose) on a ship beset by storms. There are some interesting parallels here, though it's also possible that Ridley Scott chose these names simply because he liked Conrad, having previously filmed one of his short stories as The Duellists.
Aliens, directed by James Cameron, kept the references going by naming the main ship the Sulaco, after the fictional town in the novel Nostromo. In Prometheus, the Conradian reference is more oblique. The android David watches David Lean's Lawrence of Arabia while the human crew are in suspended animation. Lean had planned to film Nostromo shortly before his death, and his lead in Lawrence, Peter O'Toole, also starred in a version of Conrad's Lord Jim.
What these subtle and ambiguous references show is that the embodiment of concepts in symbols, and the inter-relationship and harmony of different symbols, is not something that follows obvious and logical rules. I was always sceptical about the semantic web because it seemed to me that transferring the burden of intelligence from the user of data to the data itself was not only unfeasible but undesirable. Meaning is elusive and contingent, a bit like Jonesy the cat.
Monday, 18 June 2012
Government strengthens employer subsidy
That nice man, Ian Duncan-Smith, has announced government plans to withhold working tax credits from low-paid workers who go on strike. He says: "It is totally wrong that the current benefit system compensates workers and tops up their income when they go on strike. This is unfair to taxpayers and creates perverse incentives."
The implication is that the low-paid are encouraged to withdraw their labour because there is no financial downside. "Striking is a choice, and in future benefit claimants will have to pay the price for that choice, as under universal credit, we no longer will." There is, of course, absolutely no evidence that the low-paid are strike-happy. The loss of earnings while on strike will be greater than the top-ups in almost all cases, so the claim that there is an incentive is specious. Industrial action has always been more prevalent among better-paid, skilled workers who tend to be more unionised and less easily replaceable. The low-paid are often the most reluctant to strike as they have little leverage and no financial resilience.
The ideological bent of this announcement is indicated by the use of the terms "incentive" and "choice". IDS's contention that strikers will have to "pay the price for that choice" paints them as rational actors, weighing up the marginal utility of strike action in much the same way that they would weigh up the purchase of a new pair of shoes. This ignores the reality that most strike action is defensive and reactive in nature, prompted by employer initiatives such as cuts in real wages and lay-offs. Workers don't go on strike because they're bored.
Working tax credits exist to top up the wages of the low-paid who would otherwise be in working poverty. They have the effect of being a "perverse incentive" for employers to pay close to the minimum wage for low-skill jobs, as they know the state will make up the difference between that and a living wage. The state is thereby "topping up" the income of the employer every working day. They also perversely insulate employers from the effects of low productivity, which means they effectively undermine capital investment. Falling productivity is offset by falling real wages, which are in turn subsidised by tax credits.
The Tory proposal is not going to lead to mass starvation. The tax credit top-ups are small beer in relative terms and the number of low-paid workers that will be affected (and can afford to strike) is tiny. The significance is the ideological message that underpins this "mean-spirited" gesture. This is part of the wider programme to shift welfare from universal entitlement (a right) to personal eligibility (a reciprocal obligation).
As we saw with the threat of benefit withdrawal for the unemployed who refused unpaid work experience, the approach is inevitably prescriptive: thou shalt and thou shalt not. Your behaviour is the issue, not the lack of jobs or the prevalence of low pay. We already know the Mandatory Work Activity programme doesn't actually work, in terms of getting people into jobs, but this isn't going to cause a rethink. This latest initiative doesn't even bother to claim a desirable outcome for the affected. The ostensible goal is to protect the interests of taxpayers, a body that IDS seems to assume does not include workers on low pay.
The irony is that a party that has traditionally privileged the private over the public has found itself advocating increasing scrutiny of, and interference in, the private lives of the people. Your demand on the public purse will be judged as being worthy or unworthy based on your private behaviour, not on your social circumstances. Withdrawing your labour, which is a private contractual dispute with your employer, will result in a public penalty.
There is an argument to be made that the state should never subsidise employment, that it should always allow the labour market to achieve equilibrium, but this means it shouldn't pay working tax credits or similar subsidies under any circumstances, nor should it countenance a minimum wage. The Tories are not proposing this yet, but that leaves them arguing a case that is hypocritical. Employers who pay crap wages will continue to be subsidised, and now their employees are further discouraged from striking over pay. Meanwhile the private behaviour of the unemployed and low-paid will be subject to ever more humiliating inspection.
The implication is that the low-paid are encouraged to withdraw their labour because there is no financial downside. "Striking is a choice, and in future benefit claimants will have to pay the price for that choice, as under universal credit, we no longer will." There is, of course, absolutely no evidence that the low-paid are strike-happy. The loss of earnings while on strike will be greater than the top-ups in almost all cases, so the claim that there is an incentive is specious. Industrial action has always been more prevalent among better-paid, skilled workers who tend to be more unionised and less easily replaceable. The low-paid are often the most reluctant to strike as they have little leverage and no financial resilience.
The ideological bent of this announcement is indicated by the use of the terms "incentive" and "choice". IDS's contention that strikers will have to "pay the price for that choice" paints them as rational actors, weighing up the marginal utility of strike action in much the same way that they would weigh up the purchase of a new pair of shoes. This ignores the reality that most strike action is defensive and reactive in nature, prompted by employer initiatives such as cuts in real wages and lay-offs. Workers don't go on strike because they're bored.
Working tax credits exist to top up the wages of the low-paid who would otherwise be in working poverty. They have the effect of being a "perverse incentive" for employers to pay close to the minimum wage for low-skill jobs, as they know the state will make up the difference between that and a living wage. The state is thereby "topping up" the income of the employer every working day. They also perversely insulate employers from the effects of low productivity, which means they effectively undermine capital investment. Falling productivity is offset by falling real wages, which are in turn subsidised by tax credits.
The Tory proposal is not going to lead to mass starvation. The tax credit top-ups are small beer in relative terms and the number of low-paid workers that will be affected (and can afford to strike) is tiny. The significance is the ideological message that underpins this "mean-spirited" gesture. This is part of the wider programme to shift welfare from universal entitlement (a right) to personal eligibility (a reciprocal obligation).
As we saw with the threat of benefit withdrawal for the unemployed who refused unpaid work experience, the approach is inevitably prescriptive: thou shalt and thou shalt not. Your behaviour is the issue, not the lack of jobs or the prevalence of low pay. We already know the Mandatory Work Activity programme doesn't actually work, in terms of getting people into jobs, but this isn't going to cause a rethink. This latest initiative doesn't even bother to claim a desirable outcome for the affected. The ostensible goal is to protect the interests of taxpayers, a body that IDS seems to assume does not include workers on low pay.
The irony is that a party that has traditionally privileged the private over the public has found itself advocating increasing scrutiny of, and interference in, the private lives of the people. Your demand on the public purse will be judged as being worthy or unworthy based on your private behaviour, not on your social circumstances. Withdrawing your labour, which is a private contractual dispute with your employer, will result in a public penalty.
There is an argument to be made that the state should never subsidise employment, that it should always allow the labour market to achieve equilibrium, but this means it shouldn't pay working tax credits or similar subsidies under any circumstances, nor should it countenance a minimum wage. The Tories are not proposing this yet, but that leaves them arguing a case that is hypocritical. Employers who pay crap wages will continue to be subsidised, and now their employees are further discouraged from striking over pay. Meanwhile the private behaviour of the unemployed and low-paid will be subject to ever more humiliating inspection.
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