Category: Economics

BBC, the IFS, neoliberalism, Keynesianism and political dishonesty about economics

Absolutely.

The BBC is under pressure to examine its impartiality standard. 

In this context, it was interesting to note that last night on BBC’s Question Time, it was claimed that neither the government’s nor the Labour party’s spending plans “stand up to scrutiny.” It was implied that both the Conservatives AND the Labour party were “misleading” the public. This is simply not true.

Whether the BBC failed to do some research on this issue, or whether this was a deliberate conflation of the two main parties as a result of an inbuilt bias, it points to an ongoing fundamental failure of the broadcaster to serve the public interest and deliver balanced and impartial commentary.

Yesterday in the Institute of Fiscal Study’s (IFS) analysis of the three major parties’ manifestos, it was conceded that Labour’s “vision is of a state not so dissimilar to those seen in many other successful western European economies”.  Furthermore, under a Labour government, public spending would be at a lower share of national income than Germany and many other European countries.

The BBC’s headline reporting, claiming that both Labour’s and the Conservative’s spending plans were “not credible”, does not acknowledge the IFS’s broader and more important message, following the initial analysis: that the UK faces a fundamental choice about its future direction. 

IFS director, Paul Johnson, noted that the Conservatives were offering “more of the same”(austerity) and that “there is little to say about Conservative proposals” since “they believe most aspects of public policy are just fine as they are”.

In contrast, Johnson argued that Labour has “vast ambition” and that it wants to “change everything” – but he did question whether this was achievable in the short term. That’s his job. 

It’s worth noting, however, that Labour’s economic modeling is a big shift away from neoliberalism. With a strong element of ‘mixed economy thinking’, Labour’s manifesto embraces Keynesianism, the model upon which are post-war democratic settlement was based – which gave rise to the creation of the NHS, the welfare state, legal aid, social housing among many other social gains. As such, it is difficult to judge this within a dominant neoliberal framework, since the fundamental ideological premises of the two models are poles apart.

For some context, it’s well worth reading George Monbiot’s excellent article: Neoliberalism – the ideology at the root of all our problems.

Economist John Maynard Keynes was writing at the time of the Great Depression during the 1930s, he sought to understand what went wrong. Keynes disagreed with the classical liberal model – laissez faire – in which governments did not intervene in the economy in the event of recession. Instead he advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. This approach also led to policies which emphasised the welfare of ordinary citizens as a priority.

Keynes

While Keynesian theory allows for increased government spending during recessionary times, it also calls for government restraint in a rapidly growing economy. This prevents the increase in demand that spurs inflation. It also forces the government to cut deficits and save for the next ‘down cycle’ in the economy.

The BBC’s coverage of the initial IFS report 

The BBC presented cherry-picked comments from the IFS’ initial verdict of party manifestos, and excluded any analysis from economists and academics.

To clarify, the IFS specifically criticised the Labour party’s planned increases to public investment, arguing that the public sector currently lacks the capacity to “ramp up that much, that fast”. As it stands.

That does not suggest the Labour party have been dishonest at all. 

But more importantly, the IFS appears to have accepted the central argument that Labour makes: that increasing spending and investment has a multiplier effect that would boost economic growth. This is a sharp shift away from the neoliberal framework that was put in place by Margaret Thatcher, which had a central strategy of austerity and low public spending. 

The IFS concluded that Labour’s plans, surprisingly, could boost output by £22bn, returning about half that in tax – vastly more than the £5bn assumed by Labour’s own plans. The institute say Labour’s manifesto should be seen as “a long-term prospectus for change rather than a realistic deliverable plan for a five-year parliament”.  This statement somewhat mitigates the early concern regarding the achievability of Labour’s plans in the short term.

The public and governments commonly overestimate what can be done in two years, but underestimate what can be achieved in 10. Under a Labour government, Britain would be a radically different country at the end of the 2020s than at the beginning. Under the Conservatives, nothing at all would change. Austerity would stifle growth and entrench inequality further. 

In fact the Director of the IFS said that, under Tory plans, spending on public services apart from healthcare would still be 14% lower by 2023/24 than it was in 2010/11.

Despite this, he said the Conservatives were continuing to “pretend that tax rises will never be needed to secure decent public services” – and said a pledge from the party not to raise income tax, national insurance or VAT over the next five years was “ill-advised”.

“It is highly likely that the Conservatives would end up spending more than their manifesto implies, and thus taxing or borrowing more,” Johnson added.

Many economists believe that fundamental change and investment is now needed to enable the economy to gain the required momentum to escape the stagnation in which it has been trapped for a decade. As the IFS said yesterday, the choice could not be starker. The Conservatives are only offering the UK more of the same. 

163 economists and academics wrote to the Financial Times, in support of the Labour Party’s manifesto. The economists signed a public letter offering broad support for its proposals for higher public investment to kick start growth and raise productivity. The letter lamented Britain’s poor economic performance of the past decade, and called for “a serious injection of public investment” and said Britain would benefit from greater state involvement in national economic management.

“It seems clear to us that the Labour party has not only understood the deep problems we face, but has devised serious proposals for dealing with them. We believe it deserves to form the next government,” the letter said. 

This support from economists for Labour’s proposals comes as a boost for the party at a time when the Conservatives, who have led the government since 2010, are attacking the party’s manifesto as “likely to cause an economic crisis within months.”

However, the Conservatives inherited an economy that had been taken out of recession caused by the global crash, by the last quarter of 2009. The Conservatives caused another UK recession in 2011. Furthermore, it was the Conservative government that presided over the loss of  the UK’s Fitch and Moody’s triple A international credit status. It’s remarkable that the government managed to maintain the deceit of “economic competence” as long as they have, in the face of such blatant mismanagement of UK finances. 

Michael Jacobs, professor of political economy at Sheffield university, who co-ordinated the letter, said it had been “surprisingly easy” to find economists willing to sign. Many know that fundamental change and a shift away from the neoliberal model is essential for the future prosperity of the UK. 

“The easiest thing for academic economists to do is sit on the fence,” he said, adding that “although academics generally do not go out on a limb, most had been willing to say that the UK faced a big choice and that enough of Labour’s programme accords with their own views”. This is a positive endorsement for Labour’s manifesto.

David Blanchflower was one of the signatories, he is tenured economics professor at Dartmouth College, inthe US. Others include Victoria Chick, emeritus professor of economics at University College London; Meghnad Desai, emeritus professor of economics at the London School of Economics; Stephany Griffith-Jones, emeritus professorial fellow at the Institute of Development Studies; and Simon Wren-Lewis, emeritus professor of economics at Merton College, University of Oxford.

The letter challenged the Conservative claim that it had run a “strong economy” since 2010, saying there had been: 

“10 years of near zero productivity growth”, stagnant corporate investment, low wage growth and increasingly strained public services. With business investment having fallen for most of the past two years, the authors said higher public investment would help raise growth and productivity on its own as well as “leverag[ing] private finance attracted by the expectation of higher demand”.

The IFS accepted Labour’s method of boosting the economy via investment. After a lost decade under the Tories, it’s what Britain needs.

The contrasts within the IFS analysis are highlighted by Tom Kibasi, a writer and researcher on politics and economics. Writing in the Guardian, he says:

“The Tories appear to have broken with the political consensus formed after the Brexit referendum: that the public are hungry for change. Their commitment to the status quo is both an enormous political gamble and a rebuke to working people whose wages have been stagnant for a decade, to the sick waiting for NHS treatment, the elderly suffering from a social care crisis, and more than 4 million children living in poverty.

“It is hard to view it as anything but a monument to born-to-rule entitlement: victory is assumed rather than earned. In the face of a social and economic crisis, the Tories will face the electorate with a solemn promise to do nothing.

“Yet the emptiness of the Conservative manifesto should come as no surprise: it is the logical conclusion of a lost decade for Britain. For nearly 10 years now, Conservative thinking has been defined by the presence of absence: an ideological programme of austerity to slash back the state. The IFS confirmed today that austerity was now “baked in” to Tory plans for the future. Where an active state should be, the Tories intend to leave a void.

“As a political project, Brexit merely prolongs the void, with a false promise that all the problems of the present will magically be solved. In truth, there is no substantive problem to which Brexit is the solution; instead, it nourishes and sustains the nothingness. The IFS starkly warned that Johnson’s “die in a ditch” promise to terminate the transition period by the end of 2020 risked doing serious economic damage.

“The impulse to destroy rather than to create has become the hallmark of 40 years of Tory government – wrecking our industrial base and trade unions under Margaret Thatcher, the public realm under David Cameron, and our international relationships under Theresa May and Boris Johnson.

“But perhaps the most revealing aspect of the IFS analysis was the dishonesty of the Conservatives’ stated plans. The IFS points out that the Tories “would end up spending more than their manifesto implies and thus taxing or borrowing more”, with their proposals riddled with uncosted commitments and vague aspirations.

“Perhaps it should be little surprise that the character of the Tory manifesto reflects the man who leads their party.”

After a decade of austerity, many people are conditioned to accept it was somehow ‘necessary’ rather than it being an ideologically driven choice –  one of several political choices. After a decade of austerity, many are incredulous at the idea that the sixth-largest economy in the world could afford to provide a decent standard of living for its people – that things could be better for them.

But they can be so much better.

The power of the austerity argument is, of course, reinforced by the experience of poverty.

Paul Johnson wrote: “The bigger picture with regard to Labour’s plans is that it is planning a much bigger role for the state in the running of the economy. That’s what nationalisations mean and it’s what government spending an extra 2 per cent of national income on capital projects means. The real resources — workers, raw materials, machinery — would be diverted from the private sector to the public.

“The question, then, is not so much how much all this would all cost; rather, it is how confident are we that these resources would be put to better use in public hands than in private.”

The answer is this: public money in public hands profits the public and  is ploughed back into the economy. By contrast, low public spending and investment and privatisation squeeze the public and costs us in a myriad of ways. Private profit takes money out of the economy, leaving a black hole. It drives wages and living standards down. It drives the quality of public services and utilities down, since the profit motive places profit about meeting public needs.

Labour’s manifesto promises a much needed break from the neoliberal model, which has entrenched inequality and fuelled a growth in absolute poverty within our society. As an ideology, neoliberalism in practice has demonstrated a fundamental incompatibility  with human rights and democracy, particularly evident over the last few years, with reports from the United Nations condemning government policies and the devastating impacts these have had on ordinary people, and in particular, on the violation of disabled people’s human rights, and those of the poorest citizens. 

It’s worth reading  Labour’s economic programme isn’t just radical – it’s credible, too, written by Grace Blakeley, who is the New Statesman’s economics commentator and a research fellow at IPPR. 

You can also hear the comments that Fiona Bruce made on Question Time, on political trust and the IFS report, among other things here.

 


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About the government’s claims on ‘real wages’ being ‘the highest since 2011’…


(Update: Raab has removed the original Tweet. Good job I took a screenshot of it).

 

Firstly, the graph does not show what Raab is claiming. The graph does show that after 8 years of Conservative government, real wages are lower than when the coalition took office. In fact they are lower now than they were during the Great Global Recession in 2008. This shows an appalling and shameful record.

After the global recession in 2008, consumer prices rose faster than the average wage, so the real value of wages fell. They continued to fall until 2014.

The average real wage is now actually lower than it was ten years ago.

Following the recession in 2008, average wages fell almost consistently in real terms until mid-2014. From 2014 to 2016, inflation was low and wages increased, though they’re still not back to their pre-recession levels. Now, inflation has caught up again, and real wages are levelling off a little.

Analysis by the Office for National Statistics showed that in 2014, average earnings for full-time workers grew by only 0.1%. However, the average earnings of full-time workers who had been in their job for more than a year rose by 4.1%.

So although the drop in average earnings tells us something important about the economy overall, it’s not the same as what’s happened to everybody working in the UK.

For example, the level of wages is different depending on where you live in the UK. No region’s average full-time weekly earnings is above its 2009 level.

Wages are highest in London, and the population there has also seen the biggest falls in earned income. The average full-time employee in London earned £655 a week in 2017; down from £700 in real-terms in 2009.

The smallest fall was seen in Northern Ireland, where in 2017 the average full-time weekly wage was £504 a week, down from £522 in real terms in 2009. 

People working for the public sector, such as in the NHS, state schools or the civil service, have seen pay growth being restricted in recent years as a matter of policy.

Public sector pay has grown more slowly than private sector pay for the past four years – though recently it has started to catch up, as the caps have recently started to be lifted.

But the private sector suffered large falls in pay during the post-recession years. 

To understand changes to peoples’ incomes we need to also consider tax and benefit changes as well.

Working households’ average income after taxes and benefits has fallen in real terms, from £35,100 in 2008/09 to £34,500 in 2016/17. That has been calculated by adding income to cash social security and then subtracting direct tax (e.g. income and council tax) and indirect taxes (e.g. VAT) for households where at least one person earns income from employment or self-employment. But that doesn’t include some losses such as the bedroom tax. 

The poorest fifth of households paid the most, as a proportion of their disposable income, on indirect taxes – 29.7% compared with 14.6% paid by the richest fifth of households.

Furthermore, the effects of taxes and benefits (ETB) data from the Office for National Statistics’s (ONS’s) Living Costs and Food Survey (LCF), are from a small, voluntary sample survey on which these data are calculated which comprises of around just 5,000 private households in the UK.

The ONS say themselves that the sample tends not to include the very poorest and the very wealthiest citizens. That means there is under-reporting at the top and bottom of the income distribution as well as non-response error (see The effects of taxes and benefits upon household income Quality and Methodology Information report for further details of the sources of error.

That is likely to distort the view of the extent of income inequality.

It’s also worth looking at some comparison at an international level, too.

Oh dear.

When citizens use a public service, it’s viewed as a ‘payment in kind’

‘Benefits in kind’ – education and healthcare, for example – are also added to the final amount of income that citizens are estimated to have. However, this distorts the calculation of average income levels. Citizens pay taxes and so contribute towards paying for these services, and the poorest citizens are likeliest to rely on them rather more than the wealthiest citizens.

This means that in effect, poorer citizens using public services appear to be better off than they actually are, since using public services does not increase incomes. In fact the smaller the income that citizens have, the more likely it is that they will need to use public services. That does not make them any wealthier than they are.

Consequently, the ratio of income of the richest fifth to the poorest fifth appears to fall from twelve to one, to five to one. The inclusion of indirect taxes (for example, alcohol duties, Value Added Tax (VAT) and so on) and benefits in kind (for example, education, National Health Service) further reduces this ratio to less than four to one. 

That does not present an accurate picture regarding income distribution. The poorest fifth of households received relatively larger amounts of ‘benefits in kind’ in 2017. This however, is not income. Nor is it a ‘gift’, since most people have paid into the Treasury and contributed council tax towards the services that they may need to use.

It’s almost like charging people twice for public services, which is utterly disgraceful. It would be very interesting to see the calculation of UK income distribution without this political cheat, that makes it look as though the poorest citizens are rather better off than they actually are. 

Finally, its worth remembering that despite their claims, the Conservatives inherited an economy that had escaped the impact of the global crash, and was out of recession by the last quarter of 2009. By 2011, the Conservatives put us back in recession. It’s what Conservatives do. Thatcher and Major both created recession in the UK, as did Cameron’s government. Despite pledging to keep our triple A level international Fitch and Moody credit ratings – another thing the Tories inherited – Obsorne lost them. Then in 2016, the UK was stripped of its last AAA rating as credit agency – Standard & Poor’s –  who warned of the economic, fiscal and constitutional risks the country now faces as a result of the EU referendum result.

The two-notch downgrade came with a warning that S&P could slash its rating again. It described the result of the vote as “a seminal event” that would “lead to a less predictable stable and effective policy framework in the UK”.

Yet the Conservatives claim they are the party of ‘economic competence’. You just have to laugh at that. 

Image result for a big labour boy osborne kittysjones

I’ll leave you with this comment, which made me chuckle:

Update

Wages are still worth a third less in some parts of the country than a decade ago, according to a report. Research by the Trades Union Congress (TUC) found that the average worker has lost £11,800 in real earnings since 2008.

The organisation said that the UK has suffered the worst real wage slump among leading economies

The biggest losses have been in areas including the London borough of Redbridge, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in north Wales, the studyfound.

Workers have suffered real wage losses ranging from just under £5,000 in the north-east to more than £20,000 in London, said the report.

The TUC general secretary, Frances O’Grady, said: “The government has failed to tackle Britain’s cost-of-living crisis. As a result, millions of families will be worse off this Christmas than a decade ago.

“While pay packets have recovered in most leading economies, wage growth in the UK is stuck in the slow lane.

“Ministers need to wake up and get wages rising faster. This means cranking up the pressure on businesses to pay staff more, especially at a time when many companies are sitting on large profits.”

A government spokesman said: “The UK’s jobs market has never been stronger, employment is at a record high with more people in work in every region of the UK since 2010 and wages are now rising at their fastest in a decade.

“We have cut income tax for 31 million people, and through the national living wage we have helped to deliver the fastest wage growth in 20 years for over two million of the lowest-paid workers.”

Stephen Clarke, senior economic analyst at the Resolution Foundation thinktank, said: “While wages are currently growing at their fastest rate in a decade and employment is at a record high, the sobering big picture is that inflation-adjusted pay is still almost £5,000 a year lower than when Lehman Brothers was still around.

“Stronger wage growth is needed to make 2019 a better year for living standards than this one.”

A change from the government that is utterly conservative with the truth would be a good starting point.


 

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The Financial Times are having a laugh

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I’m doing a little light reading about behavioural economics for my next article.  After following what was clearly a broken link, I had to laugh at this irregular 404 page error notification from the Financial Times:

The page you are trying to access does not exist.

Why wasn’t this page found?

We asked some leading economists.

Stagflation 
The cost of pages rose drastically, while the page production rate slowed down.

General economics
There was no market for it.

Liquidity traps
We injected some extra money into the technology team but there was little or no interest so they simply kept it, thus failing to stimulate the page economy.

Pareto inefficiency
There exists another page that will make everyone better off without making anyone worse off.

Supply and demand 
Demand increased and a shortage occurred.

Classical economics
There is no such page. We are not going to interfere.

Keynesian economics
Aggregate demand for this page did not necessarily equal the productive capacity of the website.

Malthusianism 
Unchecked, exponential page growth outstripped the pixel supply. There was a catastrophe, and now the population is at a lower, more sustainable level.

Neo-Malthusianism 
To avoid unchecked, exponential page growth outstripping the pixel supply and leading to an inevitable catastrophe, we prevented this page from being conceived.

Marxism 
The failure of this page to load is a consequence of the inherent contradictions in the capitalist mode of production.

Laissez Faire Capitalism
We know this page is needed, but we can’t force anyone to make it.

Monetarism 
The government has limited the number of pages in circulation.

Efficient Markets Hypothesis 
If you had paid enough for the page, it would have appeared.

Moral Hazard 
Showing you this page would only encourage you to want more pages.

Tragedy of the Commons 
Everyone wanted to view this page, but no-one was willing to maintain it.

Game theory 
By not viewing this page you help everyone else get better pages.

Mercantilism 
The page is hosted by a foreign web server and is therefore banned to ensure the supremacy of our own software.

Trickle-down
High taxes on content publishers prevented them hiring the person who would have written this page.

Speculative bubble
The page never actually existed and was fundamentally impossible, but everyone bought into it in a frenzy and it’s all now ending in tears.

Socialism
If you were to get the page you wanted you might get a better page than someone else, which would be unfair. This way at least everyone gets the same.

Behavioural economics 
The influence of psychological factors caused you to act in a manner that would not be expected of a purely rational actor.

Theory of the second best 
The best outcome was unachievable, so you have arrived here instead.

 

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A few words about trickle down economics

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Trickle down economics is a form of laissez-faire capitalism in general and more specifically, it is a form of supply side economics. Whereas general supply side theory favours lowering taxes overall, trickle down advocates prefer targeting the very wealthy for lower taxes. Trickle down theory is implicit in neoliberal discourse. As such, it’s become politically normalised. It’s become a form of tacit knowledge. 

However, the term trickle down originated as a joke by humorist Will Rogers and it is often used to criticise economic policies based on a justification of  ‘competitive individualism’ and ‘meritocracy’, which strongly favour and reward the wealthy and privileged, while being framed as ‘good’ for the average citizen. This of course is political hocus pocus and snake oil economics. The government has been pulling at supply side economic levers which, for some time, have been attached to nothing.

The economic ‘success’ of governments has increasingly been measured by an aggregated data set that fails to take into account actual wealth distribution, merit, social contribution, inequality, poverty, or even the welfare and health of public they claim to represent. This kind of economics has become overarching and totalising, sucking in the social realm of human relationships and transforming them into hierarchies of economic (and political) worth.

Democracy is shrinking with the economy, as more and more money, political power and influence is concentrated in fewer and fewer hands. 

The richest 1% of people in the UK own almost a quarter of the country’s wealth. The huge levels of inequality in the UK were revealed in a detailed assessment by Credit Suisse last year, that also showed the richest 5% of people in the country own 44% of all wealth. 

Commenting on the report, Sally Copley, the charity’s Head of UK Policy Programmes and Campaigns, said: “The wealthiest one percent of the population – who own nearly a quarter of all the country’s wealth – continue to do well whilst so many people in Britain are just about managing to stay above the poverty line.

“Globally, the richest one percent own more wealth than the rest of the world put together. This huge gap between rich and poor is undermining economies, destabilising societies and holding back the fight against poverty.” 

As we have recently learned, the wealth accumulated among the richest 1%, through the systematic dispossession of the rest of the population, is rather more likely to trickle offshore and to be hoarded than finding its way to the Treasury and then redistributed to ordinary citizens, rewarding them with a long awaited break from the futile, self-defeating consequences of neoliberalism: austerity, increasing poverty and inequality.

There is an expanding and gaping hole in the economy as more and more money is funnelled off by the government to hand out to the wealthy, while increasing numbers of other citizens are now teetering on the brink of the chasm without an adequate social safety net or political lifeline.

What remains of our public services are now also in private hands, serving the private interests of vulture profit seekers. 

Multiple studies have found a correlation between trickle down economics and reduced economic growth. Conservatives since Thatcher and Reagan, however, have insisted on imposing it, despite recessions, and the resulting social damage caused by rising inequality and poverty. When neoliberalism fails, the Conservative answer is to simply apply more aggressive neoliberal policies and increasing authoritarianism. 

According to the economist John Kenneth Galbraith, trickle down theory was once called the rather less elegant “horse and sparrow” theory, a couple of centuries back, which goes something like this: You feed the big horse all of the oats and the wee birds can feed in its wake.

Which is fine only if you happen to like a diet of horse sh*t. 

The US Chief Correspondent and Editor-at-Large of Mashable, tech expert, social media commentator, amateur cartoonist and robotics fan, has this to say:

Image result for @LanceUlanoff on trickle down


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Welcome to the Labour Party’s excellent Economic Advisory Committee of experts

gret deceit

Labour Press released this in September 2015:

UK has shameful but unsurprising levels of inequality

 

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Austerity was never about what works or what is needed. It’s about traditional Tory class-based prejudices. Austerity is simply a front for policies that are entirely founded on Tory ideology, which is  all about handouts to the wealthy that are funded by the poor.

David Cameron has often denied claims that his party has overseen a rapid rise in inequality. In fact last year, Cameron said that inequality is at its lowest level since 1986. I really thought I’d misheard him. 

This wasn’t the first time Cameron has used this lie. We have a government that provides disproportionate and growing returns to the already wealthy, whilst imposing austerity cuts on the very poorest. How can such a government possibly claim that inequality is falling, when inequality is so fundamental to their ideology and when social inequalities are extended and perpetuated by all of their policies? It seems that the standard measure of inequality has been used to mislead us into thinking that the economy is far more “inclusive’ than it is. Yet the UK is one of the wealthiest nations in the world.

Earlier this year a published report by the Dublin-based Foundation for the Improvement of Living and Working Conditions (Eurofound) stated that the UK has become the most unequal country in Europe, on the basis of income distribution and wages.

The report also says that the UK has the highest Gini coefficient of all European Union (EU) member states – and higher than that of the US. The coefficient is a widely used measure of the distribution of income within a nation, and is commonly used to calculate inequality.

A year ago, the Organisation for Economic Cooperation and Development (OECD) published research that confirmed what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via taxes and benefits encourages growth. That debunks one of the nastiest Tory myths. Having long been advocates and engineers of social inequality, implying a mythological  “trickle down” as a justification, and hankering after a savage, axe-wielding minarchism, chopping away at our civilising public services and institutions, they are now officially a cult of vicious cranks. The problem is that the general public don’t pay much attention to research like this. They really ought to.

Conservatism is centred around the preservation of traditional social hierarchy and inequality. Tories see this, erroneously, as an essential element for expanding national economic opportunity. But never equal opportunity.

Conservatives think that civilised society requires imposed order, control and clearly defined classes, with each person aware of their rigidly defined “place” in the social order. Conservatism is a gate-keeping exercise geared towards economic discrimination and preventing social mobility for the vast majority. Inequality is so clearly embedded in policies – which are written statements of political intent.

According to the annual Family Spending Review for 2014, published by  the Office for National Statistics (ONS), the richest 1 per cent of the population have as much wealth as the poorest 57 per cent combined.  Wealth inequality has increased since 2012. The richest 10 per cent own half the country’s wealth.

Charities have urged the government to address Britain’s shameful and growing inequality after the figures published this week show that the country’s richest 10 per cent spend as much on alcohol and cigarettes in a week as the poorest spend on gas and electricity. That turns the dominant “feckless” poor narrative in the media on its head. Poverty doesn’t happen because people have poor budgeting skills. Poverty happens because people don’t have enough money to meet their basic needs.

The richest 10 per cent of households spent more per week on furniture – an average of £43.40 – than the poorest spent on food – £30.40.

The average weekly household spend was found to be £531.30, but there was great variation of this amount between the highest and lowest earning 10 per cent – £1,143.40 and £188.50 per week respectively.

By 2011/12, the poorest fifth of households spent 29 per cent of their disposable income on indirect taxes, compared with 14 per cent paid by the richest fifth. All told, the poorest households pay 37 per cent of their gross income in direct and indirect taxes. In other words, the single biggest expenditure for people in poverty is tax. It is, at the very least, morally unjustifiable to be taxing the poor at such a rate. The most important thing the government can do to help the poor is to stop taking their money.

David Cameron did once tell a truth, though it was an inadvertent Freudian-styled slip. He said: We are raising more money for the rich. Yes. From where, I wonder?

Oh yes. The poor.

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 Pictures courtesy of Robert Livingstone

 

Corporate nudging and the graveyard shift: would a stint in a coffin inspire you to work harder?

The emergence of Nudge theory in the 2000s – generally described as a system for change/societal-management, has increasingly been used by governments to understand and alter group behaviour – reinforces the principle that governance must be driven by needs of the people being governed, not by the governing authority.

Nudge theory has found its way into the business management and corporate culture. Although Nudge was initially developed as a concept by behavioural economists, its stated aim was the improvement of society, theorists claimed it was not designed as a mechanism for commercial exploitation, or government manipulation. However, there are no safeguards in place to prevent such exploitation and manipulation in the application of Nudge theories.  

Imagine the scene. You knew office morale had been low for a while, but you never thought senior management would go to quite such lengths to try and get everyone enthusiastic about their jobs again.

You and your co-workers file slowly into the meeting room and an array of perfectly aligned coffins comes into view. As your team development manager smiles and asks you to climb into a coffin – after all, it has your name on it – you are met by a photograph of yourself taken years ago when you still were optimistic about the future: “Now hug the image of yourself” is the final instruction before the coffin’s lid is closed.

No, this is not some bizarre scene from a Philip K Dick novel but an actual motivation exercise reported to have occurred in South Korea.

Faced with high stress levels and low productivity in corporate Korea, some employers have upped the ante, trying to get employees to embrace life at work rather than seek ever more desperate forms of escape. Firms send staff to the Hyowon Healing Centre, where its president explains the rationale behind the coffin ritual: “Our company has always encouraged employees to change their old ways of thinking, but it was hard to bring about any real difference … I thought going inside a coffin would be such a shocking experience it would completely reset their minds for a completely fresh start in their attitudes.”

To get employees in the mood they are shown videos of people overcoming debilitating conditions including cancer. As one employee robotically says as he emerges from a coffin: “I’ve realised I’ve made lots of mistakes. I hope to be more passionate in all the work I do, and spend more time with my family.”

What on earth is going on here? Actually, this extreme motivational technique is symptomatic of how work has changed over the last 20 years. What some call 24/7 capitalism has seen work overtake all other social activities to become the centre of society.

This is not only down to mobile technology, as some have argued, since there is nothing inherent in a smartphone that makes us work 24/7. No, the compulsion to check email and always be “poised to work” stems from the expectation that if you are not ready for that call from the boss then you are somehow deficient, disposable and lacking important qualities. No wonder a survey found 80% of employers find it perfectly appropriate to contact workers outside of business hours.

This weird “24/7 perpetual worker” was always the ideal goal of neoliberal economists such as Friedrich Hayek and Gary Becker. Because homo economicus is considered a superior being, we are constantly encouraged to transform ourselves into tradeable “human capital” and “permanent enterprises” that never switch off in case we miss that crucial deal.

We would expect unions and anti-work lobbyist to be at the forefront of resisting this trend. And they are. But large corporations are also trying to deal with the fallout, recognising the all-too human limits of this extreme ethos. Having unleashed 24/7 capitalism – and the ideal-worker to go with it – some businesses are frantically trying to put the genie back in the bottle.

Some firms in Europe and the US, for example, now deactivate their employees’ email after business hours because they realise that the obsessive-compulsive behaviour it inspires is bad for the worker and bad for business.

A Barclays’ banker was fired after it was leaked he declared to summer interns: “I recommend bringing a pillow to the office (yoga mat works as well). It makes sleeping under your desk a lot more comfortable, in the very likely scenario that you have to do that.” In light of the tragic case of Moritz Erhardt, the intern who died of an epileptic seizure after working nonstop for 72 hours, the comment was deemed very bad taste.

No wonder South Korean employers are taking extreme measures to put work back into perspective: actually ordering workers into a coffin and reminding them that life isn’t all that bad … death is worse.

The intertwined relationship between work and dying is the dark-side of the neoliberal fantasy and ‘ideal’ worker, which probably can’t be reversed so easily. When our society is reconfigured singly around our job or search for one, then work becomes more than something we do among other things: it becomes who we are. Thus escaping our job when things go wrong becomes exceedingly difficult. For how do you escape yourself?

It seems that neoliberal capitalism wants its cake, and to eat it too: a life of nonstop work and normal, balanced individuals. But something has to give.

Indeed, we can imagine the “coffin exercise” backfiring, an employee refusing to ever return to the pettiness of office life after realising that her existence must add up to more than merely sending emails all day. Inspired by neoliberal capitalism’s own contradictions, perhaps we are on the cusp of a new workers’ movement and the coffin exercise is not so morbidly wacky after all.

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You can read the original article here.