We need economic growth, regardless of climate change; and we need to rethink how to respond to climate change while maintaining growth..

I was invited yesterday to talk at a student-led conference on alternative paradigms in economics, part of the movement for Rethinking Economics.  My main subject was Basic Income, but I also had the opportunity in a panel discussion to say things about economic growth and climate change.  Half of that argument concerns growth.  I put the case that, while there is both good and bad development, development had had substantial effects in improving welfare, by tests  such as infant mortality.  Growth matters in three ways: because growth goes hand in hand with development; because large parts of local economies are concerned with primary production, and they need growth to live; and because, as Crosland argued,  it’s not politically possible to redistribute resources in a shrinking economy.

The other half concerns climate change.  I don’t claim to have any special insight into the science, but I think I know something about policy responses, and I think we can state with confidence that the way into a problem is rarely the way out of it.  The argument for ‘mitigation’ – stopping humans from generating climate change –  assumes we can reverse all trends and change all behaviours.  I see no evidence that we can.  What matters is ‘adaptation’.  If, for example, we’re going to need to relocate hundreds of millions of people, we need to start now.  And even if we don’t need to, there’s a message to be drawn from the hundreds of thousands of people currently struggling to move from unliveable environments.

 

 

 

Where the 2019 General Election is heading

There are lots of contradictory predictions being made about the forthcoming election.  Electoral Calculus interprets current polls to indicate a thumping great majority for the Conservatives, largely based on the collapse of support for Labour. They put the Conservatives on 363 seats and Labour on 186. John Curtice has commented that the numbers of seats going neither to Conservatives nor to Labour is going to be over 100, and that on that basis it’s unlikely that either Conservative or Labour will have an overall majority.

The indications are that both Conservative and Labour are going to lose seats to the SNP and the Liberal Democrats.  The implication from that is that the Conservatives can only win an absolute majority by taking seats directly from Labour.  They will need at least twenty to make up for the seats they’re going to lose to smaller parties; the Electoral Calculus figures seem to assume that the Conservatives will take a further 50 seats or so directly from Labour.  That is hard to credit.

An illuminating analysis of polls by Yougov points to a different outcome.  The Leave vote from 2016 will mainly go to the Conservatives.  The Remain vote is more fractured, and mainly split between Labour and Liberal Democrat.  The trend becomes even stronger when the base figures are taken from the 2017 election.

It is difficult to see what could shake this picture.  Labour has failed to make any inroads in several months, but even to head a minority government it would have to hold its current marginals, and then take more than forty seats directly from the Conservatives.   That would be hard to achieve even with a change of leadership.

 

The EU Withdrawal Agreement Bill

I should forbear to comment on a piece of legislation which I’ve only skimmed through and can’t claim to understand, but the European Union (Withdrawal Agreement) Bill 2019-20 ascends dizzying heights of incomprehensibility. Every page is packed with cross-references to other clauses or legislation, and following the threads through the labyrinth would take me rather more than the three days the Commons is supposed to have for the whole process.

Some things are apparent, however.  There are going to be lots of problems and snags, and the government’s answer to most of the complexities is to say: leave it to the discretion of Ministers to sort them out.  (Where there are issues relating to devolution, the same trust doesn’t extend: the standard answer seems to be that Ministers will have to consent to anything that’s being proposed.)  There are liberal references to the steps that the Minister “considers appropriate”, and to the resolution of any “matters arising” from any issue – a phrase which is loose enough to mean that almost anything the government decides to do in those areas will be fair game.   There’s a clause, for example, about social security coordination, but what’s going to happen about pensions and medical treatment for UK citizens living in the EU?  As far as I can see, the answer is that there’ll be regulations passed on this as necessary: the responsible agency will  sort something out.

It follows that the Bill represents a major transfer of power to the government.  Did ‘take back control’ really mean ‘leave it all to HM Government’?  And even if one trusts this government, would the same apply if a different government came to power?  I think Parliament needs to consider whether this kind of blanket delegation to the executive is the sort of legislation they would ever want to pass.

Further note, 26th October:  There is a superb critical analysis of the Bill by barrister Anneli Howard.  She points in particular to

  • the Bill’s complex cross-referencing to other legislation
  • the extensive ‘Henry VIII’ powers being granted to ministers, and
  • the reduction in Parliamentary scrutiny that would follow from passage of the Bill in this form.

The pitfalls of comparative analysis: does the welfare state lead to wealth inequality?

A blog from the right-wing Cato Institute caught my eye.  It claims, on the basis of an article published last year, that poorer households have less personal wealth in countries with higher welfare state expenditure.  Apparently, this is because people in welfare states don’t need to provide for the same contingencies that others might have to.  The headline claims: “Welfare State Causes Wealth Inequality”.

The original article , by Fessler and Schürz, is complex and careful, and it’s capable of being interpreted in several ways.  The article is behind a paywall, so here’s a link to a slide show with key details.  Wealth holding is very strongly reflects the pattern of inheritance, and the people this most affects aren’t the poorest.   The authors explore a range of interpretations, most notably the apparent paradox that

social services provided by the state are substitutes for private wealth accumulation and partly explain observed differences in levels of household net wealth across European countries. …  This implies that an increase in welfare state spending goes along with an increase — rather than a decrease — of observed wealth inequality.

I’m not convinced that we can treat social expenditure as a unified element – the way countries treat pensions is not necessarily how they treat people with disabilities – and if there is a generative relationship, it’s not at all clear what affects what.  In my own published work, more generally, I’ve been critical of analysing country effects in this way.

The paper where I make the arguments is on open access here.  What matters is not the number of data points within the countries, because those points are interdependent, but the number of policy units (that is,  governments).   There just aren’t enough countries to be able to do this analysis sensibly, and this paper is no exception.  direction  Here is a graph from Fessler and  Schürz‘s paper, showing some of the key information.

The data in the article are based on 13 countries; this graph has eleven.  One of them is Luxembourg, a notorious outlier – not just because it’s small, but because it’s distinctive.  Remove Luxembourg from the analysis, and the line in the graph goes clearly and strongly in the opposite direction.  (That reversal of direction, which contrasts with the apparent pattern for people with less wealth, actually makes the findings more interesting.)

This doesn’t mean that the interpretation in the article is wrong.  The hypothesis is intriguing and plausible,  and it could still be true.  The problem is that we can’t tell.

A Nobel prize for using RCTs?

Economics as a discipline doesn’t always connect with the real world, but at least the Nobel laureates with an interest in development economics are working on something that matters.  The new laureates have apparently been selected on the basis of their ‘experimental’ approach.  I gave the subject a brief mention in my forthcoming book, The Poverty of Nations, but you’ll have to wait to next March before you can read it.  Here, as a spoiler, are the sentences in the typescript I gave over to their evidence on Randomised Control Trials.  The reference is to A Banerjee, E Duflo, 2011, Poor economics, published by Penguin.

Banerji and Duflo advocate a greater use of RCTs, but their own examples show cases where this fails. In one study they mention, it appeared that textbooks did not help education; that was misleading. In another, the evaluation was supposed to identify the influence of contraception on family size; it overlooked the importance for parental decisions of the  prospects of children surviving to adulthood. Experiments and RCTs work by screening out extraneous information; the gaps that are left are only to be expected.

 

On the stigma of council housing

A notice on Twitter, advertising a radio appearance, drew my attention to a paper published last year on the stigma of council housing by Tom Slater. The paper is here; there’s an earlier version, for those who can’t get past the paywall, here.  Slater claims to be paying attention to

“a term that was invented by journalists, subsequently amplified and canonised by think tanks and then converted into doxa by politicians: the sink estate. “

That’s not right.

The stigma of council housing is long-standing.  It dates back at least to the people rehoused from slum clearance in the 1930s (disreputable areas had been identified before that, but  they weren’t council estates).  Many council developments were designed deliberately to be held at a distance from respectable housing: that is the subject of The Cutteslowe Walls, published in 1958 (the walls were built in 1934).  To take another example, the primary school I went to in Newcastle had different entrances for kids from the council estate and private estate.  Tucker’s 1966 book , Honourable estates, outlined the problems.

Within that system, however, some council tenancies were always seen as worse than others.  Harry Simpson, a former director of housing in the 1960s, commented that “ghettoes developed because councils, when allocating accommodation, graded families according to their deserts instead of their needs”.  In the 1970s, the leading text on housing management, Macey and Baker, advised agencies to rate the type of accommodation a person should receive by their personal suitability, including cleanliness and tidiness; that was how things were done when I started  letting houses in Hartlepool, where prospective tenants were rated on such things and got a house that matched their rating.   (I was carpeted at the time for writing an internal memo which said that this was leading to a concentration of people with problems in undesirable areas; later I included a comment on grading in my first report for Shelter in 1983.)   Macey and Baker did, at least, reject the idea of segregating ‘problem families’ deliberately.  I have the 1973 edition:

“All these problem families exhibit one common factor, namely, their inability to cope …. in some few instances, one or both of the parents may be physically well and of average intelligence, but of a type which the ordinary man in the street would classify as ‘bone idle’.  … (but) it is difficult to believe that such a background of coercion, coupled with the fact that the families are thrown into association with other sub-standard families, is likely to be a good atmosphere in which to raise any family’s standard …”

Bad areas were variously known as ‘difficult to let’, ‘ghettos’, or (in a 1975 Scottish report) ‘depressed schemes’.  ‘Ghetto’ estates were seen “as a form of punishment, a device for disciplining and the social control of tenants”.   So the term “sink estates” was not a new, or a particularly influential, invention; it was just another way of referring to a widely observed set of problems.

Poverty is killing babies in England

An article in the British Medical Journal shows a clear and strong relationship between the increasing number of deaths of children under 1 and the distribution of poverty in England.  The authors write:

The sustained and unprecedented rise in infant mortality in England from 2014 to 2017 was not experienced evenly across the population. In the most deprived local authorities, the previously declining trend in infant mortality reversed and mortality rose, leading to an additional 24 infant deaths per 100 000 live births per year …  There was no significant change from the pre-existing trend in the most affluent local authorities.  …  Overall from 2014 to 2017, there were a total of 572 excess infant deaths …   The findings suggest that about a third of the increases in infant mortality between 2014 and 2017 can be attributed to rising child poverty.

This is a conservative estimate, because the figures are area-based, not individual; the association with poverty might be much stronger.

This is what the UN Special Rapporteur had to say about poverty in Britain:

14 million people live in poverty, and 1.5 million experienced destitution in 2017 …. Food banks have proliferated; homelessness and rough sleeping have increased greatly; tens of thousands of poor families must live in accommodation far from their schools, jobs and community networks; life expectancy is falling for certain groups; and the legal aid system has been decimated. … Following drastic changes in government economic policy beginning in 2010, the two preceding decades of progress in tackling child and pensioner poverty have begun to unravel and poverty is again on the rise. Relative child poverty rates are expected to increase by 7 per cent between 2015 and 2021 and overall child poverty rates to reach close to 40 per cent.  For almost one in every two children to be poor in twenty-first century Britain would not just be a disgrace, but a social calamity and an economic disaster rolled into one.

The increase in poverty is the result of deliberate policy.  That policy is killing people.

Brexit: there are two parties to any relationship breakdown

There is no prospect of a deal being agreed between Britain and the EU before 31 October; any deal has to be agreed by the UK Parliament, the Council and the European Parliament, and there simply isn’t time.  That leaves only two options: delay or no deal.

It is easy to see the faults of the British governments, but the failures of EU diplomacy are just as strong.  The British position has been arrived at through a series of blunders:

  • giving notice without even having developed a negotiating position;
  • treating the negotiation as a question of government prerogative, rather than something subject to parliamentary scrutiny;
  • failing to engage all interested parties, and especially the political opposition;
  • establishing ‘red lines’ on immigration and trade relationships that were not part of or integral to the referendum decision
  • after the rejection of the proposed withdrawal agreement, failing to develop any other position for several months.

The problems created by the European Union, however, are no less important.  They include

  • specifying a two-stage process, when there was no time in the negotiating period to cover both stages;
  • insisting, in consequence, on a ‘backstop’ arrangement which could only have been removed by the resolution of the second stage;
  • treating the Withdrawal Agreement as if was a treaty that had been agreed, after it had been manifestly rejected;
  • refusing, despite its treaty obligations, to provide a position on the future relationship;
  • refusing to consider any arrangement when trading with the UK as a third party, that would not apply to all goods and services  – anything else was dismissed as ‘cherry picking’, when selection is in the nature of all negotiated settlements; and
  • failing to take any action relating to its declared priority – or ‘red line’ – of protecting European citizens.

The result is a shambles.  Neither party can hope to come out of this with any of the outcomes they wanted to achieve.

How Labour might rethink its social security policy

I’ve just received a copy of a book I’ve contributed to, which reviews Labour party policy on a range of topics.  The book is edited by David Scott, and called Manifestos, policies and practices: an equalities agenda; the contributors include Richard Murphy, David Blanchflower, Rebecca Tunstall and Graham Scambler.  I wrote the chapter on social security.

I’ve previously written that “Labour needs to think rather more thoroughly and deeply about what social security is for and how it might be changed.” I’ve been critical about Labour’s policy for some time – it was the Labour government that launched ‘welfare reform’, with its emphasis on work at all costs.  In this chapter, I’ve outlined a set of rather different proposals and approaches that Labour might consider:

  • Re-emphasise Labour’s previous commitments to security, meeting need and social justice.
  • Reconsider what people need benefits for, providing services rather than cash where appropriate.
  • Offer a wider range of benefits to meet social objectives.
  • Move away from means-testing, with greater reliance on contributory benefits and universal allowances.
  • Rethink how things are done: aim to have benefits with simpler rules, fewer conditions, fewer personal adjustments and longer time scales.
  • Secure benefits for disability to secure their financial status and their dignity.
  • Protect the position of children in disrupted families by directing benefits to the child
  • Improve provision for the oldest pensioners.
  • Reform occupational pensions, to secure the future of pension entitlements and to ensure that pensions funds are invested in the British economy.
  • Protect people better during the interruption of earnings caused by sickness and unemployment.
  • Separate benefits and employability provision; they are doing different things.
  • Provide more public sector jobs, to do the things that we want to have done.

Somewhere, in a world quite unlike our own, Universal Credit is working brilliantly

Universal Credit has its defenders, and the Daily Express has come out fighting:

“disruptive” proposals could hammer 30 million Britons, cost tens of billions of pounds and send taxes soaring.

The middle bit of this could be true, because all major reforms have a price tag; introducing Universal Credit had cost more than £2bn by last year, though that figure ignores the false start and ‘reset’.  The very belated Final Business Case claimed that UC will gain £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, and £9.1 billion in reduced fraud and error.  The National Audit Office has told us that “We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces”; their 2018 report said that

 the extended timescales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.

We now know that the figure on fraud and error is wrong, and that Universal Credit has made fraud and error  much worse; and ‘distributional improvements’ don’t save money, they move it to a different place.  So the only possible saving could be by encouraging people into work, and given that only a very small proportion of claimants are continuously unemployed – the majority of claimants are too ill to work, carers, short-term unemployed or already working on low incomes –  it isn’t going to be anything like £24.5bn.  If I had to guess, I would estimate the net gain, by comparison with the previous system, at something closer to zero.

That leaves us with the extraordinary claim that 30 million benefit claimants will be affected.  Yes, that really is what the Express article says:

It would immediately impact around one million people currently on Universal Credit, but it would likely also have an impact on the 30 million-plus people receiving some form of benefits.

To get anywhere near 30m, that has to include all pensioners, and every child where the families receive Child Benefit.  It seems that the lives of children and pensioners have been turned around by the prospect of a benefit that neither group gets, and they can all look forward to a brighter future, if only this benefit remains in place.  But perhaps I  mistake the argument, and the Britons in question are the occupants of a parallel dimension, like the Man in the High Castle, where everything is subtly different.  Suddenly, everything in the Express starts to make sense.