Month: July 2014

“This is now deemed a radical economic plan in this age of neo-liberal Groupthink”

Pre-empting the release of today’s growth figures (which showed GDP is now above its 2008 peak*), Ed Balls penned and article for The Guardian in which he warned against complacency and made the case for Labour’s own ‘radical’ economic plans. Here’s economist Bill Mitchell’s response to Balls’ article. He’s not too impressed:

This is now deemed a radical economic plan in this age of neo-liberal Groupthink

After berating the Conservatives for failing to deliver rising living standards given that “working people are worse off with wages after inflation down by more than £1,600 a year since 2010″ and “business investment is lagging behind our competitors, apprenticeships for young people are falling, and our export growth since 2010 is sixth in the G7″, Balls rejects what he calls the ‘trickle down’ tax cuts for the rich Tory strategy.

Balls concluded that:

“While the Tories claim all we need is one more heave of the same old policies, Labour’s radical and credible economic plan is the only way to make Britain better off and fairer for the future.”

Radical and credible!

Which means in his own words:

“And we must also get the deficit down. Labour will balance the books and get the national debt falling as soon as possible in the next parliament … But we will do so in a fairer way …”

Phew!

That’s what radical means in this day and age.

The moronic recital of the neo-liberal balanced budget mantra without any sign that he understands the problems he outlined earlier in the article (stagnant economy, fall real wages, lack of jobs growth etc) are all due to the fiscal deficit being too small.

What does he think will happen if he continues to cut the deficit? With no hope that the external sector will contribute to British growth, the only option then is for the private domestic sector to go even further into debt – the ‘back on the merry-go-round to crisis’ approach.

Further, so-called progressives are always on about fairness. Sure enough the composition of a particular fiscal position can be altered to benefit different income groups, which can deliver more net benefits to low income groups. Is that fair?

Well it all depends. If the level of the deficit is, however, inadequate to fill the spending gap left by the non-government sector then unemployment will remain high and growth in incomes will lag.

Who do you think is disproportionately represented in the unemployment queue? Not high income, well-educated cohorts, that is for sure.

The point is that changing the composition of government spending might be a desirable aim but the government has to initially ensure there is enough deficit spending overall.

* While GDP is now 0.2% above the previous peak of 2008, GDP per capita (or per person) remains significantly below its 2008 peak.  See this chart from the ONS:

UK GDP per capita

Failing youth jobs scheme championed by Nick Clegg scrapped

From the FT (subscription required):

“The coalition’s flagship programme to tackle youth unemployment is to be wound up early, amid claims that it has been an abject failure.

The £1bn youth contract wage incentive scheme was championed by Nick Clegg, the Liberal Democrat deputy prime minister, at the height of the recession as a way to help tackle youth unemployment. But with the jobs market rapidly improving and take-up of the programme falling substantially below projected levels, it is to be cut short next month.

Under the scheme employers were offered £2,275 if they provided a six-month “job start” for someone aged under 25.

But in the first year of the scheme up to May 2013 only 4,690 recruits completed their placements, against a target of 160,000 for the entire programme.

The scheme was supposed to last for three years from April 2012. But the Department for Work and Pensions has written to companies to warn that no claims will be accepted for any placements that start after August 6 this year – a month earlier than planned.”

This scheme relied on the private sector to employ unemployed young people and then claim back a wage subsidy from the government. The subsidy could be claimed on existing vacancies (not vacancies specially created) which was a flaw from the start, but despite this offer of a bung to the private sector for taking on young unemployed people, take-up has been woeful. While unemployment has fallen steadily over the last 12 months, youth unemployment remains high. There is still a need for more job opportunities for young people, and there is massive scope for being much more proactive in this sphere. Here are some other posts I’ve written on this subject:

The Youth Contract – Giving public money to private firms in return for?

The failure of the Youth Contract should be a lesson for Labour

The Future Jobs Fund: One of the most ineffective job schemes there’s been?

Achieving full employment with a job guarantee

 

The Commonwealth Games – How Is This Still A Thing?

The opening ceremony for the 20th Commonwealth Games took place in Glasgow yesterday. Here’s British comedian John Oliver explaining the Games to his US audience on his show “Last Week Tonight”. I’m struggling to feel any enthusiasm for the events. They do seem to belong to a different time, but this vid is a pretty good antidote.

Hamas rockets and the Israeli response

I blogged earlier about the hot water Lib Dem MP David Ward got himself into yesterday and today by suggesting if he were a Palestinian in Gaza, he may himself resort to drastic measures. He said:

“What it is doing is understanding the state of mind of people who are absolutely desperate and are looking to the world to help them.”

“If you lived in Gaza and you saw people being blown to pieces by one of the world’s most powerful military forces and no-one was doing anything about it, save for platitudes about calling for a ceasefire, what would you do?

“Well, I don’t know what I would do but I can imagine I would be in a pretty desperate state and would then do things I wouldn’t normally do.”

I don’t know what I would do either, but if I knew that by firing rockets on Israel, it would give Israel an invitation to respond forcefully, risking the lives of my loved ones, would I still do it? I’m not sure I would. The vast majority of Palestinians don’t respond that way either. So why are Hamas doing it?

I spent a bit of time searching for answers to this question from a Palestinian perspective. While it’s very easy to find Israeli talking points from the likes of Mark Regev and Benjamin Netanyahu, finding more than quick soundbites from Palestinian voices is less easy (if anyone has any good links, please share below). I did however find this Telegraph interview with Hamas leader Khaled Meshaal. Asked why Hamas were firing rockets onto the civilian population in Israel, he explained that the strategy is “not about the impact of each rocket” but the political effect they have in Israel, and that they are a symbol of the Palestinian’s will to resist “occupation”. If this is true, it’s a strategy that is failing badly, as the Israeli public comes out in support of the Israeli Government’s attack on Gaza. It could be perceived from the outside that the action of Hamas is designed purely to provoke a harsh response from Israel that will generate sympathy for the Palestinian cause around the world. This may have been partially successful, although Western Governments who have influence seem to be firmly on the side of the Israelis, and the cost of this strategy has been heavy civilian casualties. Two whole generations of Palestinians have lived their whole lives under Israeli occupation or blockade, so it should not be surprising that some try to resist the occupation, but doing so by targeting civilians in Israel is unlikely to gain sympathy for the legitimate cause of ending the occupation.

We hear that 90% of rockets fired into Israel are destroyed by their “Iron Dome” defense system, and so casualties on the Israeli side have been light, but the question from the Israeli’s will always be “what would you do if faced with these constant rocket attacks?”. It’s a good question, and I don’t know the answer to that, but I’d hope I wouldn’t do what Israel appears to be doing now which is engaging in an indiscriminate act of collective punishment against the people of Gaza, shelling small children from naval vessels, shooting up ambulances and hospitals and using snipers to fire on civilians. The Israelis say they take great care to warn civilians to leave areas they are about to attack, but where are they supposed to go?

Hollywood conditions us to believe there is always a battle of good versus evil, but reality is never like that. Both sides are doing great damage, it’s just that one side is fighting with pea shooters and human shields, while the other is fighting with bazookas and highly effective anti-pea shooter shields. Our support should be with the ordinary people on both sides who are suffering, for an end to the violence, and support for genuine negotiations towards a long-term solution.

Hysterical reaction to David Ward tweet amounts to an attempt to stifle free speech

This tweet by Lib Dem MP caused a bit of controversy last night and today. The Israeli Ambassador to the UK wrote to Nick Clegg imploring him to “take forceful and immediate action to make clear beyond any doubt that views such as those of Mr Ward have no place in your party.” Tory Party Chairman Grant Shapps said “No MP should tweet what’s essentially incitement to violence” and Tory MP Nadhim Zahawi has now (unbelievably) reported the tweet to the police, asking them to investigate Ward for “the offence of encouragement of terrorism”. Hopefully Zahawi will be getting a visit from the police himself soon for the offence of wasting police time.

So what are David Ward’s views? Before the now infamous tweet was published, he said this in Parliament yesterday:

“There are 1.8 million or so Gazans who cannot flee from Gaza today. They are hemmed in by air, sea and land by what many regard to be a brutal and powerful military force, and they are at the mercy of that force. Our thoughts must be with them, as they should be with innocent Israelis who are caught up in this and are under threat from rocket fire in retaliation—others would deny this—for the suppression. Either way, whatever the reason, it must be condemned. Hopefully, more and more innocent Israelis will see that the way to their security is not through military or other suppression of the Palestinians.”

After the storm caused by his tweet, Ward added context to his comment saying:

“What it is doing is understanding the state of mind of people who are absolutely desperate and are looking to the world to help them.”

“If you lived in Gaza and you saw people being blown to pieces by one of the world’s most powerful military forces and no-one was doing anything about it, save for platitudes about calling for a ceasefire, what would you do?

“Well, I don’t know what I would do but I can imagine I would be in a pretty desperate state and would then do things I wouldn’t normally do.”

David Ward, under threat of disciplinary action by the Lib Dems has now given a classic politician’s apology (“I’m sorry if anyone misunderstood what I was saying”), and the a Lib Dem spokesman said:

“This is a categorical apology from David Ward [Me: It’s not really though is it?]. In light of this apology, the party and the whips will decide in due course if further disciplinary action should be taken.”

The mistake Ward made was to use Twitter – not the best place to state a nuanced argument – to make a statement that could obviously be stripped of all context and jumped all over. He should have written up his views on his website and the tweeted a link. Nevertheless, the reaction to what is a perfectly rational point of view to hold (whether you agree with it or not), amounts to an attempt to stifle any views outside of the ‘consensus’. For the Israelis to react in this way is probably to be expected, but for the Lib Dems to agree with them undermines their ‘liberal’ values. If Ward had said something like:

“The big question is – if I lived in Israel would I join the IDF? – probably yes.”

no one would have batted an eyelid. The other day, David Cameron – having no doubt heard the reports of hospitals being bombed, civilians being killed by snipers and kids being blown up on beaches – said he supported Israel’s right to defend itself. This sort of public statement is much more likely to incite violence than anything David Ward could say. It says to the Israeli Government loud and clear – “We support what you’re doing”.

It seems to me the only permitted opinions a politician in the UK is allowed to express on Israel-Palestine is the following:

1. Condemn Hamas terrorists

2. Support Israel’s right to defend itself

3. Express mild concern about civilian casualties in Gaza, while holding Hamas equally culpable.

Anything outside of this is forbidden. When discussing complex and seemingly intractable problems, condemning those who stray even mildly outside the agreed talking points, stifles debate and makes a solution to those problems even less likely. I think it’s quite dangerous, and more than a little worrying.

Union members £4,000-a-year better off, government report suggests

This story is a couple of months old now, but I’ve just come across it. From the Telegraph:

An average trade union member earns £4,000-a-year more than non-unionised workers, many of whom have suffered wage freezes or pay cuts in the last year, a government report suggests.

This would seem a pretty clear cut case for joining a union, but the Tory MP the Telegraph found to comment on the story saw things slightly differently:

Conservative MP Alok Sharma said the potential for some employees to gain a financial advantage of others by joining a trade union was “extremely unfair”.

He said: “Employees with similar experience should be paid the same, for doing the same job, by the same employer and many will find it extremely unfair if some employees are being paid a premium just because they happen to be members of a trade union.”

He thinks it’s “extemely unfair” that workers are able to join together and negotiate collectively to secure a better deal for themselves. On the side of “hardworking people”?

Another reason Labour don’t deserve your vote

From The Guardian:

“In a speech intended to address Tory claims that Labour cannot be trusted with the economy, the Labour leader will stress that balancing the books will be a key element of the party’s plans for the five years after 2015.”

The article goes on to quote extracts of Miliband’s speech which contains this passage:

“You and I know we won’t have the money. For all of the cuts, for all of the pain under this government, Britain still has a deficit to deal with and a debt to pay down. That’s why our programme starts with a binding commitment to balancing the books in the next government.”

You might ‘know’ that Ed, but I and an increasing number of people know that is bullshit. There is always as much money as is needed. That’s not to say Labour should go mad, but the money will never run out. It’s stuff – people, physical resources and our ability to innovate and create new technologies – which sets the bounds of the possible, never money.

Britain has a deficit, but the things it has to ‘deal with’ are its unemployment problem, its low wage problem, its housing problem. Miliband’s focus on things that are irrelevant, but which undermine attempts to deal with things are relevant, doesn’t inspire a lot of confidence in what a Labour Government under his leadership could achieve.

The Tories deserve to lose next year and the Lib Dems deserve to be wiped out, it’s just that Labour don’t deserve to win. Expect low turnout records to be broken again next May!

Rising employment figures hide some worrying trends

The employment figures came out yesterday which showed the employment rate rising to pre-recession heights and unemployment falling to 2.12 million. At the same time though, the figures showed that wage growth continues to be outstripped by inflation, while productivity continues to fall. Rising employment = good; falling real wages and productivity = bad, so what’s going on?

Some of this puzzle appears to be explained by some recent labour market trends, namely the rapid rise in self-employment. There’s a very interesting post up at Piera today by FlipChart Rick. It contains some nice charts which I will repost here.

The first chart shows the changes in employment since the 2008 crash, split between employees and self-employed. The Coalition likes to shout about the increase in jobs since they came to power, but since 2008, the rise in employment is almost entirely accounted for by the growth in self-employment. As Rick says in his Piera post:

“Take out self employment and the figures would be rubbish. The government wouldn’t have had much to boast about until the back end of last year.”

4-trends-in-self-employment-5-638

Source: ONS Trends in Self-Employment

The next chart shows the mean and median weekly earnings for employees and self-employed workers. Both median and mean weekly wages for employees have barely moved since 2001 (in real terms), which is pretty dire, but when compared the the weekly wages of self-employed workers, it looks pretty rosy:

Screen Shot 2014-07-10 at 162927

This third chart comes from the ONS rather than Rick’s blog and shows whether those who are self-employed employ other people or not. It shows that while the number of “one-man bands” has risen by around 750,000 since 2007 (with most of the increase happening since 2010), the number of self-employed people with their own employees has actually fallen. It’s been argued that rising self-employment is a good thing because it demonstrates a increase in entrepreneurship and “wealth creators”, but this chart shows there is little evidence of that:

As Rick says in the post linked to above:

“More self-employed people, not much extra work, so falling productivity, under-employment and collapsing pay.”

 

The best #IDS #reshuffle Tweets

Despite rumours last week (repeated here) that Iain Duncan Smith was to be moved in David Cameron’s reshuffle, he seems to have clung on. Many on Twitter reacted with disbelief. Here are some of the best Tweets I found on the subject: