The government could take advantage of Brexit to do things differently. It probably won’t.

Over the course of the last 20 years, the EU has made a series of bad calls about the management of national economies, dominated by neo-liberal thinking on issues such as public spending, state based economic activity and social support.  Once the UK is no longer governed by common regulations, these restrictions no longer need to apply.  I have to accept that it is unlikely that the British government will do much about this, because if we look at where many of the EU’s most ill-judged restrictions have come from, it’s often reflected the free-market ideology  of British governments.  Here, nevertheless, are some of the things that a UK government can do after leaving, which members of the EU cannot.

  1. State enterprise.  Mariana Mazzucato has made out an overwhelming case for state enterprise: many of the  major economic developments of the post-war period have been made, not through the operation of an unrestricted private market, but through state action to identify, build and support new development.
  2. Sales tax.  The structure of tax in this area has been subject to EU rules on VAT.  VAT is not a sales tax, because it is not uniformly levied on sales – the way it works tends to focus on stages in the manufacturing process.  This hasn’t worked for financial or digital sectors, and the current controversy about a digital sales tax is taking place because there’s nothing there.  The US-based digital giants, and their defenders in the US administration, can hardly  reasonably object to ‘local’ sales taxes taken at the point of distribution, because that is just what happens in the states of the USA.
  3. Regionally managed immigration.  The Scottish Government’s proposal to do this has been met with incomprehension.  The approach of successive UK governments has been to focus on border control, whereas the bulk of management relies on different mechanisms entirely – housing, employment, education and public services.  There is no intrinsic reason why immigration cannot be differentiated regionally.
  4. The taxation of UK nationals abroad.  The USA taxes its citizens abroad, and the UK could do the same.  There is a good argument against dual taxation, but that is not an argument for advantaging people who move resources or profits from the UK to more favourable tax regimes.  Moving money off shore or to more favourable tax regimes should have no effect on a tax liability to pay any balance of liabilities within the UK.
  5. Procurement  contracts that meet social objectives.  Public procurement contracts that guarantee employment to locally unemployed people.  The general advice to local government has been than this is incompatible with European law; that should no longer apply.  The same should be true of locally negotiated minimum wages, such as the living wage – that runs directly counter to ECJ judgments.
  6. Moving work to the workers.   The process of regional development in the EU was based on different premises – encouraging market specialisation while cushioning the impact of that specialisation on the regions.   That hasn’t worked.  The UK government needs to return to the policies of the 1960s, moving the jobs rather than moving the people.  There is no hope for many British towns unless it is done.
  7. Freeing public expenditure.  The control of public expenditure is based on a myth, that it is government spending that drives the money supply.  It isn’t – private finance does that.  Local government needs to be able to raise funds through  its own bonds, as it did in the 19th century – along with the capacity to default (as local government can do in the USA).  There is no obvious economic case for setting global limits that apply only to the public sector.

None of this qualifies my disappointment with the deeply unsatisfactory settlement –  I am no less troubled by the disregard for citizen’s rights shown by both the British government and the European Union than I was three years ago.  Tonight, as Britain leaves the EU, I will be in Brussels.

HS2: the wrong project, from the wrong place, to the wrong places

I don’t claim to know anything about transport, though in a personal blog ignorance should never be considered an insuperable obstacle to inspired pontification.  I do however know a bit about regeneration, a bit more about economic development, and more about government planning failures than is healthy.

Let me offer three simple criteria.  First, all projects, minor as well as major,  have to add value.  If they duplicate facilities which are already there, any improvements they offer are marginal (in the economic sense) – not necessarily something to be dismissed, but something that needs to be compared with improvements in current provision to see whether the gain is actually worthwhile.  The London to Birmingham route already has some of the best services available in the UK, on both road and rail.  Most of our major transport links are aimed at London.  By contrast, there are large areas of the UK with poor communications and transport links.  That’s being identified with the “North”, though apparently for this purpose Birmingham (which arguably has  the best connections after London) is being treated as if it was in the “North”.

Second, projects have to serve  the largest number of people possible – that always has a massive impact on the cost-benefit analysis.  Part of that, the greatest gain,  relates to the marginal benefit.  The way to maximise the marginal benefit is to put any route into places which don’t at present have one – creating a new infrastructure, rather than developing an old one.  One of the standard objections from conservationists to new projects is that they create new demands, new traffic, and new lines of communication.  That’s exactly what we should want to happen.  As things stand,  we have been developing an infrastructure around airports – road access, car parks, transport routes, hospitality, business parks and so forth.  That is the sort of development that a high-speed rail link ought to be encouraging.

The other part, serving the largest number of people possible, implies finding a route that   will be accessible to the widest possible population.  For a high-speed rail network, that implies covering the longest distance possible, but it also applies a route that will be within a reasonably accessible distance – say 30 miles, or 90 minutes – of the largest number of people possible.  Putting these two issues together, if there is only going to be one high-speed line, that would imply a route well to the west of London.   I don’t have the information base to work out just what that would imply, but a route down the spine of the country would probably run from somewhere north of Southampton to somewhere north of Falkirk, with stops at something like 50-60 mile intervals.

Third,  avoid urban land.  That is partly because of the cost,  always a major part of any assessment of value.  Land is expensive, and land in cities costs more.  So a cost-effective high-speed route would not be running to and from the centre of cities, but  past them, using the less expensive green field sites wherever possible.  The other reason, possibly more powerful still, is that it this approach allows scope for development.  Putting in feeder routes is the next stage, for local action, but the advantage of avoiding city centes is that there is room for that kind of development.

The core problem with the HS2 project is not that its costs are increasing: that was built into the plan.  It’s the wrong development,  going the wrong way.


Sociology wanders off the path

I’ve recently read a couple of sociological works that make me wonder what people in the discipline think it’s about.  One was a collection of introductory readings by Giddens and Sutton, which seemed to be largely focused on people’s experience of life.  There’s a justification for this approach to sociology in Wright Mills’ book, The Sociological Imagination, but it’s never enough simply to say what life is like.   Now, this is in fairness an introductory collection: so how do you introduce people to a discipline?  It seems to me that any taster has to give people a sense of the approach, include something about  the analytical process involved, and perhaps convey a little  of the surprise   that comes of looking in ways that aren’t just a matter of ‘common sense’.  Descriptions of everyday life don’t cut it.  If you don’t generalise about social experience, and don’t analyse the concepts you’re using, you’re left with what Ruth Glass once called “the poor sociologist’s substitute for the novel”.

The other text was Mel Bartley’s book on Health Inequality, which had this to say about Talcott Parsons.

An influential school of sociology in the United States has long understood inequality in terms of a theory called “structural-functionalism”.  This school of thought was led by Talcott Parsons, who put forward a clear logic for social inequality.  According to Parsons, people naturally have unequal abilities.  Society needs its most able members to be attracted to the jobs that are (according to this theory) most important for its basic functions, such as law, medicine, science and senior management in industry  … Any society will offer high rewards to attract people into ‘functionally essential’ jobs.

Now, I can’t say that no-one has ever adopted such an asinine view of the world: Herbert Spencer, who was popular in the USA in the nineteenth century, argued for ‘survival of the fittest’.  But it’s certainly not true of Talcott Parsons, who as far as I know said nothing of the kind.  He was anti-racist and anti-fascist.  He may have been too favourably inclined to the US system of government as an ideal, but he argued that obstacles to equality of opportunity were dysfunctional and that the equality of citizens  was critical to social inclusion.  The view that’s being criticised here (properly understood as ‘Optimism’) has nothing at all to do with structural-functionalism.

Parsons was a terrible communicator and he’s a pain to read. Nevertheless, he did have something to say; I’d still get more entertainment value from being stuck in a lift with The social system than I did from Girl, Woman, Other.  Try this appreciation from Daniel Bell, which explains some of Parson’s central ideas in simple terms.  If you’re wondering how it relates to what Mel Bartley says about Parsons – it doesn’t.


Universalising French pensions

It’s not the first time that a French government has tried to inject a greater element of universality into its arcane system of welfare provision.  The Juppé plan, in 1995, tried to curb rising costs partly by imposing spending limits, and by trying to bring the pension rights of miners and railway workers into line with other groups.  It also proposed universal rights to health care and guaranteed access. One prominent trade unionist called that idea “the biggest rip-off in the history of the French Republic. … the end of the Sécurité Sociale.”

The current system of pensions is costly – it’s long been the case that pensioners in France are on average better off than workers.  Clearly, part of the government’s agenda over time has been to cut the cost, and that is the source of many of the protests.   If cost was all it was about, there are other things that the government could have done – raise the pension age, increase contributions, increase the number of contribution periods required, and so on.  But there are lots of other problems in the system.  The shift to precarious labour and the problems of switching between different pensions rules can shut people out. With 42 distinct pensions regimes, the system is horrendously complicated.  It takes years (literally) to work  out what someone’s pension is going to be; often the calculations begin long before a person reaches 60 and are not finished until after the person retires.   As the government plan says,

personne ne sait exactement ce à quoi il a droit. Le système est illisible, complexe, et crée de la défiance.

[Nobody knows exactly what they’re entitled to.  The system is incomprehensible, complex and it creates distrust. ]

The proposed alternative is outlined in the government plan (the link is in French). The main elements are:

  • a universal scheme for everyone – one of the principal aims is to remove inequities between people currently under different regimes
  • a points system, in place of contribution periods, to determine entitlement
  • an increased minimum pension
  • retention of retirement at 62 (that is early by European standards, but  worse than some French regimes currently offer)
  • credit for every hour for which contributions are paid  (seriously!)
  • improved protection for people whose contributions have been interrupted through care, unemployment or sickness
  • full transparency, through a personalised record of contributions and linked entitlements
  • a commitment to balance the books – the current system runs perennially in deficit
  • transitional arrangements for current workers
  • a new system of governance.  There is a commitment to consult about the value of points, but overall the new system will reduce the role of the ‘social partners’ including trades unions.

Something that isn’t explicit in the plan is the distributive element.  It’s been reported that the proposals are regressive:  the contributions required of very high paid people will be 2.8% above 120,000 Euros a year, whereas under that level the contribution will be 28%.  However, the 2.8% is purely redistributive; it will yield no benefits for the contributions.

Both sides of the argument are right.  On one hand, the government is proposing a scheme that should be less complex, fairer and  more inclusive.  On the other, the objectors will be trying to defend a scheme which, for all its irrationality and complexity, has delivered far better benefits than  a more orderly set of schemes could ever have offered.  There will, of course, be vehement protests  – it’s the French national sport, and they do it so well. But the protestors, mainly from the left and the trades unions, are  protesting against the idea of universality and state welfare, and from a British perspective, that’s a difficult position to hold.

Scotland is not ready for an independence referendum

The First Minister of Scotland has been pressing for a further independence referendum, and the UK government seems determined to refuse the request.  I am not sure that either party means what it says.   If the polls are to be believed, there is a narrow majority against independence; and in a time of great insecurity, with the difficulties of leaving another union all too apparent, many voters will be apprehensive about what a vote for independence might mean in practice.  The longer the process, the more likely the movement for independence is to gain in credibility and support.  If the UK government genuinely wishes to maintain the Union – which is uncertain – a proposal for independence is far more likely to be defeated if it takes place very soon.

On the other side, one has to ask whether the Scottish Government really is prepared for a referendum campaign that will avoid the traps that the last one fell into.  During the long campaign before the 2014 referendum, the Scottish Government presented a ‘White Paper‘ with specific plans for action.  Alex Salmond told the electorate that this is what they would be voting for.  That was a miscalculation: it meant that every detail that people disagreed with became a reason to vote against the deal.  The debate about currency was an illustration: units of exchange are not decided exclusively by governments, there was no need to commit to any specific plan, Scotland could use multiple currencies (it already trades oil in dollars)  and in practice no-one can stop people accepting trades in foreign currency.  Committing the country to a specific single policy outcome was unnecessary and destructive.

Similarly, the draft Independence Bill went off-track when it started to legislate for future policies, such as sustainability or the possession of nuclear weapons, which serve no useful purpose in a constitutional document.  None of the constitutional issues that have to be nailed down was clearly settled.  The draft Bill left gaps in terms of rules of recognition (such as delegation of authority to ministers or to local government), change (such as how to amend the constitution) and  adjudication (such as the power of the courts).  It assumed that there would be only one legislative chamber, which could not possibly have the capacity to deal with national legislation; it proposed no constitutional limitations on the power of government.  I argued at the time that Scotland’s great strength was in participative public engagement, and that what Scotland needed to have was an extended period of discussion about constitutional arrangements.   That discussion has not happened yet.

An early referendum would require the Scottish Government to go into the campaign either with another White Paper – a settled prospectus – or with a promise to have a discussion in time to come, something that would depend largely on on trust.  Neither or those is a winning proposition.

The benefit system fails people who lose their jobs

Former employees of Thomas Cook are reported as complaining that the benefit system has failed them.  This should come as no surprise.  Universal Credit is based a fundamental misunderstanding of what benefits are for, and what they are supposed to do.  Part of that misunderstanding was the assumption that benefits are all about work: most of the intended recipients are people who are not in the labour market.  But for those people who are looking for work, the next part is the assumption that those people have to be guided or pushed towards work.  The vast majority of unemployed people move back to work within a year, regardless.   What people needed, and what they didn’t get, was income smoothing to tide them over while they found new employment.  What they got instead was delay, obfuscation, confused advice and periods with no money.

I’ve argued in the past for a different approach to unemployment benefits, including provision for short-term income smoothing and a distinction in the pattern and level of benefits for shorter-term and longer-term unemployment.  The French system, based on a convention of employers and trades unions rather than state-based provision,  has both.   The British approach has long been to assume that one size fits all.

Further evidence that responsive benefits don’t work

A solid paper by Jane Millar and Peter Whiteford emphasises the problems of trying to refine means-tests by recording and responding to changes in circumstances.  The problems of managing simple changes of circumstance, unpredictable incomes and overpayments have overwhelmed a series of benefits designed to be ‘responsive’.  They cite a recommendation from the OECD:

In order to ease access barriers to social protection, policy makers should consider: … making means tests more responsive to people’s needs by shortening the reference periods for needs assessments and by putting appropriate weight on recent or current incomes of all family members.

I’ve been  banging on about this for years – you’ll find about 25 relevant entries about changes in circumstance or fluctuating incomes on this blog,  and a longer argument in my book, What’s wrong with social security benefits?  The benefits that work best, like pensions and Child Benefit, are long-term.  There is no practical way to obtain the sort of information required for responsive income-testing and deliver a system that is efficient, fair and workable.  These systems are designed by those who are convinced that the problems can always be resolved by the technology, when we all know they can’t.  We need to smooth things down, to ask only for information that makes sense to claimants, and to stabilise income.  In other words, we need to be less responsive, not more.

The realignment of UK politics

What happened last night is more than the eclipse of Labour.  The Conservatives won on a populist platform: representing the will of the people in opposition to a venal political class.  The core problem with that formulation is that the Conservatives are simultaneously seeking to appeal to both of those factions at once.

This could lead  in the long term to a new  political alignment, as a class of people with no obvious political home look for different ways to have a voice.  Our political system militates against that.  It is more likely that the vote will change the Conservatives.  In the course of the next two or three years, they will be trying to appeal to their new electorate, and recruiting new members, very different from the rural and suburban heartlands they have made their own.

In the course of the next five years, then, I think we can expect to see the redefinition of coalitions of interest into two rather different main  parties, looking rather more like the parties in the US.   On the right, there will be something more like the US Republican party: mixed, angry, uncertain whether it’s  more in favour of free markets or the pork barrel.  On the left, there will be something like the US Democrats: an uneasy combination of liberals and conservatives, with a marginalised left wing.  Neither of these combinations leaves much room for social democrats, trades unions, traditional Tories or the old political centre.

Boris Johnson: in his own words

Most of the criticisms of Boris Johnson focus on the things he says that he obviously doesn’t believe.  Here are some of the things it seems he does believe.

Greed is a valid motivator of economic progress.(Source)

The real divide is between the entire class of people now reposing their fat behinds on the green and red benches in the Palace of Westminster, and the bottom 20 per cent of society – the group that supplies us with the chavs, the losers, the burglars, the drug addicts and the 70,000 people who are lost in our prisons and learning nothing except how to become more effective criminals. (Source)

A combination of economic misfortune …  and an excessive predilection for welfarism have created a peculiar, and deeply unattractive, psyche among many Liverpudlians.(Source)

Single parents are responsible for “a generation of ill-raised, ignorant, aggressive and illegitimate children”. (Source)

It must be generally plausible that if having a baby out of wedlock meant sure-fire destitution on a Victorian scale, young girls might indeed think twice about having a baby. And yet no government – and certainly no Labour government – will have the courage to make the cuts in the safety net of the viciousness required to provide anything like such a deterrent. (Source)

Whatever you may think of the value of IQ tests, it is surely relevant to a conversation about equality that as many as 16% of our species have an IQ below 85 … while 2% have an IQ above 130 … And the harder you shake the pack, the easier it will be for some cornflakes to get to the top.(Source)

I don’t believe that economic equality is possible; indeed some measure of inequality is essential …  (Source)

Ipse dixit.

Harry Burns on mortality figures

I’ve recently joined the board of Barony Housing Association, which is part of the Wheatley Group, and consequently was invited to a institutional lecture by Prof Sir Harry Burns, who was considering mortality statistics in Scotland and the UK.  He made the case that, despite the emphasis on nutrition in much of what’s written about public health, nutrition is not at the core of the problems.  Scotland’s nutrition-related mortality follows a pattern, astonishingly, which is not much different from Finland’s.  Finland has an exemplary nutritional policy and lots of virtuous practices, and Scotland (notoriously) doesn’t.

The real difference in mortality, he argued, occurs in younger age groups; and the primary issues for the mortality of younger adults are drugs, alcohol, violence and suicide.  All of which are social.