Policing by consent has become policing by crisis

Who would have thought that the supposed party of law and order, the Conservative Party, would have allowed the morale of the Police Service to sink so low.

And all on the basis of dogma.

That is why military help after the recent Manchester massacre should really never have been required. It would have been not only ironic but a step change in attitude if a principle reason for Britain having an accountable and basically non military and unarmed police, set into stone at the time of the Peterloo Massacre, was transformed by an event less than a couple of miles away in the Manchester arena. Yet up to 31 March 2015 Greater Manchester Police experienced the largest decrease in police numbers of any Police Service in the UK for that year (the last for which figures are available).

Continue reading “Policing by consent has become policing by crisis”

The best of times, the worst of times – back to the ’70s?

Regardless of the power cuts, stagflation, the IMF loan, the sick man of Europe, the question, Do you want to go back to ’70s? is as ridiculous now, as asking someone in the ’70s if they want to go back to the ’30s. Even if we wanted to, we cannot turn back time – ignoring all the medical and scientific advances that have improved our lives since. The consistent story of economic history is that thanks to advances in knowledge, we have been getting gradually richer and richer as the graph below shows.

Plotted in the top graph is the average UK weekly income since 1765 adjusted for inflation based on data from the Bank of England.* The dark shaded areas indicate the World Wars, the light shaded regions financial crises. Unsurprisingly, the graph shows that – despite a few bumps along the way – we are richer now than in the ’70s, just like we were richer in the ’70s than we were in the ’30s or the 1870s! More importantly, and what matters in terms of policy, is the rate at which we get richer, i.e., where is the steepest part of the graph?

To find out, below the main graph I have plotted the slope or rate of wages growth per year (grey dots). This fluctuates wildly from year to year so I have added a decadal average (large black squares with a vertical bar to represent the scale of the fluctuations). Each of the black squares is centred on the turn of decade from 1770 to 2010. Some things of note are that in terms of income growth:

1. The best decade was 1965-75.

2. The worst decade was 1785-95. **

3. The second worst was 2005-15.

In terms of recent history, the interesting question is why was 1965-75 so good and 2005-15 so bad? Let’s consider 1965-75 first. Was it just that we were paying ourselves too much. No! This would show up as a hangover, and 1975-85 was pretty good too. The reason that income growth was so high around  1970 is because this era coincided with peak productivity growth and as any economist will tell you:

prosperity = productivity

The economist Paul Krugman – winner of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2008 – put it like this in 1994:

Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.

The Bank of England data set also includes productivity so below I plot income growth (top graph) together with productivity growth (bottom graph).

The wage growth plot is the same as before but for productivity growth (which is very volatile) I have used a moving average. Roughly the ups and downs in the income growth and productivity growth match just as Krugman said they should. In particular, it is clear that peak income growth around 1970 correlates with peak productivity growth also in 1970.

A puzzle is why productivity growth started to decline after 1980, dropped off a cliff in 2008, and has not recovered since causing the stagnation in wages that we see now.*** One argument is that all the easy gains had been made, another is that financialisation has crowded out real production as I discussed previously.

Yes we are richer now, but if we want to get back to the productivity gains of the past we should look at what worked well in the ’70s – e.g. the higher income share of labour (see Chart 15 in this speech by the Chief Economist of the Bank of England) – and what is not working now – e.g. lack of investment.

And while we are on the subject of the best of times, have a listen to this!

*  For those that care about such things I have used a logarithmic scale on the vertical axis such that each factor of ten takes up the same amount of space. If I use a linear scale, the graph hovers around bottom until 1950 and then shoots up.

** Adam Smith died in 1790. A tale of two cities was set around 1780.

*** The situation in the US since 1970 is even worse because average growth has not kept pace with productivity growth.

Reclaiming the debate on poverty

In reading articles about economic poverty I am struck by the fact that most discussion focuses on the ways that spending power and material choice are limited for people with low incomes. In this paper I want to focus on the effects of poverty on the individual. I have not approached this as an academic subject, but have drawn on my experience of working in mental health, and the experiences of members of my family who work in public services. I feel this is a very relevant discussion for our times, and one which fits well with the aims of Progressive Pulse, with its commitment to a society that benefits the many not the few, the equal value of all children, objective truth and new thinking.

During the 1980s I noticed something had changed among the students who I supervised on placement. In case discussions about the problems faced by our clients the students no longer mentioned poverty, which was in fact a huge factor in most cases. When questioned, they said that poverty was not something covered on their courses. Perhaps this began as a well-intentioned change made to avoid stigmatising poorer people; or a deliberate move to seize the narrative, for whatever reason, poverty dropped out of the training curriculum, and with it went much understanding of people’s daily lives and the factors affecting people’s health and resilience. Things have moved on apace; the belief that poverty is a self-inflicted choice and that poor people can choose to help themselves has been largely assimilated into our culture.1 A new discussion of poverty is well overdue.

The material effects of poverty are multiple, interlinked and self-reinforcing, creating a whole range of outcomes in which poorer families are disadvantaged. From birth, with babies in poorer households having a lower birth weight and higher mortality, children born into poverty are disadvantaged. Low food quality and lack of facilities to prepare food, for example in homeless accommodation, can lead to poorer health. Substandard housing conditions, such as damp rooms, affect health as children develop, and poorer families tend to be placed in areas where there are few community facilities and shops, increasing their isolation and limiting their choices. Such areas are also less safe, and children in poorer families have more accidents. Poor families may be exploited by loan sharks, targeted by gangs and subject to friction in the community, creating constant stress.

Due to lack of money, their home environment, for children in low-income families, is likely to have fewer age-appropriate toys, books and sources of stimulation. Parents may be preoccupied with working long hours, or with the stresses caused by their situation, and have less time to spend with children. These factors lead to delays in reaching milestones for the developing child, for example in fine motor skills and language development. Poor children are not any less loved than children in well-off families, but this does not compensate for the range of disadvantages caused by poverty. The effects can be seen in school, with young children from poorer backgrounds showing more behavioural issues and attention-seeking, having a shorter attention span, being less able to motivate themselves, showing anger rather than problem-solving when confronted with difficulties, and having a narrow range of personal experience to draw on compared to their peers. All of this is likely to contribute to lower attainment, and also to a lack of resilience, self- confidence and personal resourcefulness.

Poverty is so much more than lack of money; it encompasses the resulting poverty of choice, experience, personal development and opportunity. Poor children internalise a sense of being worth less than others, as they quickly realise they do not have the same advantages or ‘things’ as their peers. Among teenagers considering career choices, for example, those from low-income families are less likely to have given thought to a career and the steps to be taken towards it, and more likely to reject suggestions from professionals because they feel they are ‘not clever enough.’ They may say it’s not worth studying a particular subject because they’re not good at it, which they tend to put down to the teacher not liking them; they are fearful of taking the risk of personal responsibility and aiming high. They have narrower horizons than their better-off peers and fewer positive role models; where they have made a career choice – often the same as that of another family member – they can be very fixed on that and will not consider other options. This kind of poverty among individuals results in a huge waste of potential talent for society.

Young people affected by poverty enter adulthood often with a pervading feeling of emptiness stemming from a lack of self-worth, sometimes expressed in anger or disaffection. Marketing knows that sense of emptiness well, and aims to exploit it with things we are told will make us happy. However it is a bottomless pit, and the treats we all like to motivate ourselves with are followed in poorer households by crippling debt as poorer consumers are always unable to sustain the things that society tells us we must have to be successful. More and more time is spent on the minutiae of daily life, as ways of surviving have to be found; leaving little time for aspirations and ambitions. The accumulated factors mentioned above also create a poverty of resilience, with those affected less able to overcome problems in their lives because they have fewer personal resources and limited experience of success.

‘A history of poverty, with its timeless social stigmas, can be one of the hardest things to overcome that an individual will encounter in their lifetime. The psychological and spiritual repercussions of poverty are exacting and insidious in ways people don’t perceive. Our ability to recognize the iron grip of internalized shame that poverty creates, is a difficult process of denial and reluctant hard-won acceptance. . . . The pain and survivors’ guilt many of us feel, of the mental illness that seized several of our siblings is currently one very real aspect of the price some of us were forced to pay. A price that levelled its impact on the struggles that a life of poverty inflicted on us.’ 2

Poverty can be cyclical, with children limited in their turn by the deficits experienced by their parents and no way of breaking out of their situation, so the effects can become entrenched and quite extreme: for example, families where the children have not attended school because the parents do not know how to use an alarm clock or public transport; where children are undernourished because the parents have no experience of preparing a meal other than a sandwich or breakfast cereal. It is hard to imagine what life is like for people who have not had the opportunity to learn the most basic of skills which most of us take for granted; or the shame they feel and the lengths they go to to try to hide these deficits.

Of course, not everyone who has experienced poverty is affected in the same way, and many people make good lives for themselves even with the odds stacked against them, at least until they hit a crisis. However, safety nets and helping hands for those in difficulty have become increasingly scarce, particularly in the past 7 years, with the withdrawal of youth and community centres, family support centres, Sure Start, Connexions, and so many other sources of support. Along with local charities, many of these offered early intervention in a way which was non-stigmatising and open to everyone, so that help could be offered before families and individuals descended into crisis. The cost of this loss of support is huge, for society as well as for the individuals involved, as the UK spends far more than its European neighbours on preventable problems such as crime, family breakdown, mental ill-health and drug abuse.3

To break this spiral, which wastes the lives of increasing numbers of people in our society, we need to:

  • reclaim the discussion about poverty, its costs to our society, and what can be done to address it
  • reject the notion that poverty is a choice, and promote proper understanding
  • assert the value and the need to support or reinstate measures that help individuals and families to change their lives: for example, fair and adequate wages and and welfare benefits; free school meals; children’s centres which are free of charge; community support facilities; credit unions; student grants; careers services.

Further reading

http://www.ips-journal.eu/opinion/article/show/the-neoliberal-road-to-autocracy-2046/

‘A woman, who had survived a childhood landscape of terror and the despair of being shuttled between relatives as a foster child, unloved and unwanted. A woman who wanted nothing more than to create a happy sprawling family, to cancel out her own lonely history as an abused and neglected only child but of a mentally ill mother. In my efforts to save my dignity, my pride, and any semblance of future ambition I might entertain, I would remember only the happy times of our family.’4

Geoff Plant
Edited by Dory Dickson
with contributions from :-
Michelle Plant – Careers Service Brent Taylor – Primary School Teacher

1 Much of this change can be attributed to the seeds sown by the American theorist Charles Murray, who argued that dependency on welfare benefits is a lifestyle choice associated with laziness, drug and alcohol abuse, criminality, etc. Whilst having no basis in fact, this theme has been constantly expounded by the popular right-wing press and media.

2 Theresa G Kennedy – Essay on Poverty, 2006

3 A detailed analysis is found in Action for Children and the New Economic Foundation, Backing the Future: why investing in children is good for us all, 2009

4 Because the reality was too painful to recall. Kennedy, 2006

Lowering the tone but telling the truth: a price for austerity

A noticeboard in Gravesend is worth sharing (click to enlarge):

Meanwhile after four or five days of long periods of driving I have become far too closely acquainted with the condition of our road system. Inadequate would be a summary – both in capacity and surface. Outside the motorways and dual carriageways the incidence of potholes is remarkable and often they are unavoidable because you cannot spot them as you come round the bend or the lorry coming the other way makes avoiding action impossible, or sometimes just because it is dark.

And so it came to pass that doing the mandatory 30 mph or so, I heard a loud bang and seemed to lose steering control. On stopping I saw that I’d had a blowout – but there was no sign of any obvious cause.  When I tried to remove the tyre I couldn’t – because it seemed to have something wedged in it. When breakdown help arrived we were able to establish that a front coil spring had sheared and in breaking had plunged itself into the sidewall of the front tyre. Freak accident or what? Oh no, said the breakdown man, it’s quite common these days – since they stopped repairing the roads.

So £330 and six hours later I resumed my journey. My individual price of austerity was timewasting and painful but of course much less than for many others. Still, surely this sort of thing happens to Conservatives too? Or are they unable to link cause and effect? Perhaps they just smile serenely and think that they are enduring the inconveniences for the good of the country? I wish I knew.

Graph of the day

The Institute of Fiscal Studies has helpfully done an analysis of the manifesto proposals of the main parties (see here). The graph below is their analysis of how current Conservative plans will influence the income of people in different parts of the income distribution. It shows, the richest 10% just about managing, while the poorest 10% loose 9% of their income.

The manifesto does nothing to address this – not what you might expect from the claim on page 9 to “abhor social division, injustice, unfairness, and inequality.” But then, what politicians say is one thing, what they do is another.

In the interest of balance, I should add that the next page of the IFS report shows that Labour is better but could have gone much further (see here). The case for a progressive spend and tax policy is strong. For evidence, have a look at Sweden.

Economics 101

One of the core aims of  Progressive Pulse is to increase economic literacy and in particular macroeconomic literacy. To help in this you may have noticed that some posts are being labelled “Economics 101”. you simply need to click on the “Economics 101” tag at the top left of this post (under my mugshot and date) to get the full list of posts. Eventually the hope is to put an Economics 101 tag on the main menu.

Many years ago I was very interested in economics and an avid reader of for example books by John Kenneth Galbraith and thought Keynesian economics made very good sense.

Around the time I was finishing my PhD however neoliberalism somehow took over. I was in the US at the time at the Harvard Smithsonian Centre for Astrophysics, desperately hoping Ronald Regan would not get elected. He seemed to me at least a complete fraud and would put corporations ahead of people. I gave “Trickle down Economics” for example almost zero chance of working. Sadly Regan got elected as president  and indeed Thatcher became PM in the UK. Between them they brought about a neoliberal revolution. Countries are like supertankers and I can’t help but worry that the rudder has been trimmed incorrectly over much of the last 40 years in both the US and UK.   Indeed I pretty much lost interest in neoliberal economics  and economics in general as it felt somehow repellent.

Thatcher and others however have been very adept at pushing for example the “household model” which is completely inappropriate for a macro economy.  Indeed the level of economic literacy (and in particular macroeconomic literacy) seems to have decreased rather than increased over the past 40 years. Someone of a suspicious mind would be forgiven for thinking this “dumbing down” was deliberate.

If the economy were doing well possibly the specific economic theory in use would not matter so much. Since 2008 however the UK economy has been growing very slowly (growth rate is the neoliberal benchmark)  well below its 3%  trend. It would be interesting to calculate that if you removed the effect of immigration (a very strong positive) and the top 1%, whether there has been any growth at all.

Thomas  Clark of the blogspot Another Angry Voice identifies ten questions to put to the general public:

  1. What is a fiat currency?
  2. How is money created?
  3. What is the difference between a debt and a deficit?
  4. What is the difference between fiscal and monetary policy?
  5. What are capital controls?
  6. What is a transfer pricing strategy?
  7. What does fiscal multiplication mean?
  8. What is a derivative?
  9. What is a “naked” trade?
  10. What is Quantitative Easing?

He is of the opinion that less than 5% of the UK population could answer four of these with any depth of knowledge, let alone all ten of them. Sadly I can’t say he is wrong.

I’m not sure I fully understand Quantitative Easing for example. There seems to be a bit too much “smoke and mirrors”.

How many of these do you understand fully?  Are the other questions which are equally or more important?

We intend to answer these and other questions over the next few months. Indeed some of these have been already addressed but possibly it is worth addressing these questions directly?

 

 

Wonders to Perform

It must have started with Adam Smith’s ‘invisible hand’.

As Conventional religion has gradually declined, the Economy seems to have risen to a greater and greater importance and taken its place.

Fortunately, most of us can still feel good because the Economy has most of the ingredients of a religion: jargon, ‘high priest’ specialists, holy books which people argue about, splits and non conformists, orthodoxy, prophesies, ideas about money, and of course it contains a value system.

Continue reading “Wonders to Perform”

Follow the money

There is one simple rule that most economists agree on:

prosperity = productivity

The Chancellor understands this – productivity was mentioned 10 times in his recent Spring Budget speech. He said:

Simply put, higher productivity means higher pay.

and went on to say that Britain’s problem is a productivity problem

We are 35% behind Germany and 18% behind the G7 average. And the gap is not closing.

So what is going wrong and who is to blame? Is it the 99% or the 0.1%? I would say the latter. Let me explain why.

Continue reading “Follow the money”

Los Lobos -‘The Wolves’

The Tories have recently come out with two ‘ideas’ that involve financialisation packaged as ‘social benefit.’  These two bits of financial engineering will, no doubt, increase private debt and encourage more bubbling of housing. The first is their intention to build more council housing that is paid for by the future sale of the houses based on anticipation of their increase in value.  The second is the funding of social care through the use of assets above £100,000.  For most people this will be in the form of a house which will have to be re-mortgaged via a ‘financial product’ (hold crucifixes aloft), then, when the owner has died, the family or relatives will have to sell the house and pay the costs with interest.  In short:  more wealth extraction from the community.  Given present household debt is at 130% of GDP this does not look good.

Continue reading “Los Lobos -‘The Wolves’”