Are you one of the Lidl People?

The Sun ran an article penned by David Cameron today headlined “How I’ll help the Lidl People” (the article is paywalled so I won’t link to it). I’m not sure whether that’s Cameron’s phrase or the Sun’s, but it seems to mean a person who shuns the leading brands to find the best deal. The Sun thinks these people are the key to winning the election. I’m an Aldi man myself, but are you one of the Lidl people?

This got me thinking about other lazy, borderline insulting terms politicians and the media have come up with to label large groups of people. There was Tony Blair’s “Mondeo Man“, Nick Clegg’s execrable phrase “Alarm Clock Britain” and of course Miliband’s “Squeezed Middle“. Have I missed any good ones? I think this phenomenon just highlights how detached the people who want to represent us are from the real world. They can’t grasp what people might want unless they can segment voters into stupid stereotypes, and aim particular messages at those groups. I don’t like it. It’s infantile.

Nick Clegg talking some sense

Not five words I thought I’d ever write adjacent to each other, but here’s Nick Clegg talking some sense about yesterday’s massacre in Paris (starts around 28:30). I say sense, but he’s actually only stating the obvious for those who may be a little hard of thinking.

Chronic Kraftwerk tribute act blows starting whistle on boring battle of spending plans.

Meh. Labour and the Tories launched their election campaigns today, marking the start of what promises to be the longest – and on today’s evidence – the most boring campaigns in living memory. Oh and Nick Clegg said something about why coalitions are so great so don’t forget the Lib Dems. Yawn. Five members of the Empire launched a laughably awful ‘dossier’ on Labour’s spending plans. Here they are:

The dossier is about ‘Labour’s unfunded spending plans’, which is literally what every single governing party does with their opponents plans at every election. I was watching a discussion on Channel 4 News tonight between world’s most boring drone Matthew Hancock and Labour’s Chris Leslie, and incredibly, Labour seemed to be rattled by this piss weak attack, so to compensate, Ed Balls made it clear that Labour is definitely not on the side of the people with most reason to despise the Coalition. “Vote Labour! – You’ll get nothing from us.” Not the best election slogan.

I want to know what big ideas the parties have for the country, and what specific policies they have for the country that will improve all our lives and address some of the very real problems we face, but instead we’re just getting sums that politicians have plucked out of their arses. “We’ll spend an extra 50p on the NHS, but before we can do that, we must tax an extra 50p from the banks”, or “We’re going to take £27bn out of the welfare budget, so we can cut taxes for people who probably don’t need them cutting. Oh and the deficit”. “Unfunded spending commitments!” “Black holes!” “How are you going to pay for it!” Somebody make it stop.

And it’s only day 1… roll on May!

Which Lib Dem Ministers are most likely to lose in May?

Many people think the Lib Dems face being wiped out in May as voters punish them for their part in the Coalition since 2010. After looking at the current odds for the 59 Scottish seats in this recent post, I thought I’d have a look at the odds for the 16 Lib Dem MPs who are currently Government Ministers. This table display the current odds from Ladbrokes as of 4th January, and the probabilities of victory these odds imply.Screenshot 2015-01-04 at 11.25.54 AM

Of the 16, 8 seem pretty safe at the moment, including Nick Clegg, Vince Cable, and Pensions Minister Steve Webb. 4 are favourites to retain their seats, but have a less than 75% chance of doing so. These are Energy Secretary Ed Davey and DEFRA Minister Dan Rogerson, who are facing challenges from the Tories, and Simon Hughes (Justice) and Stephen Williams (Local Government) who are in relatively close fights with Labour.

That leaves 4 Lib Dem Ministers who are highlighted red in the table above. They have a less than 50% chance of winning in May. Three of them are women. Lorely Burt (Whip) looks likely to lose to the Tories in Solihull. Labour look likely to take Lynne Featherstone’s (Home Office) Hornsey and Wood Green seat, and Jo Swinson (Equalities) faces the fight of her life against the SNP in East Dunbartonshire. Finally, and leaving the best till last, it’s looking increasingly likely that Danny Alexander will lose his Inverness seat to the SNP. Ladbrokes estimate he has only a 33% chance of victory at present. If any Lib Dem deserves to lose, it’s him. Fingers crossed.

In defense of Lord Freud (sort of)

Comments made by Welfare Minister Lord Freud have created a bit of a storm today after being raised at Prime Minister’s Questions by Labour leader Ed Miliband. Freud was recorded saying:

“You make a really good point about the disabled. There is a group where actually, as you say, they’re not worth the full wage.”

At the risk of incurring the wrath of my fellow lefties, I’m going to defend Lord Freud’s remarks while still disagreeing with the argument I think he was trying to make. I say think because what he actually said was pretty clumsy, and could easily be interpreted as offensive when viewed a certain way. So what do I think he was saying then?

It seems to me he was making a case argued by most opponents of the minimum wage. The argument uses what economists call marginal productivity of labour. This goes that firms will hire additional workers up to the point where the costs of paying the worker a wage is equal to the additional output they will achieve by hiring the worker. So if a worker can produce 5 widgets an hour, but only costs the equivalent of 4 widgets an hour, they will be hired, but a worker who costs 4 widgets but can only produce 3 won’t be. If the workers was willing to work for the monetary equivalent of 2 widgets though, the firm would hire them. If the minimum wage is set at the equivalent of 4 widgets however, this worker who can only produce 3 widgets an hour will be left unemployed.

So Freud is saying some people (in this case some disabled people) are not productive enough to produce enough to be ‘worth’ the minimum wage. This is probably true in many jobs, and I’m not just talking about seriously disabled people here, but also those who have been unemployed long term and/or are recovering from drug or alcohol problems. In economic terms this seems a rather uncontroversial thing to say and one that – despite what they may say today – most Conservative MPs  would agree with. So where I would defend Lord Freud is to the extent that he was only (rather clumsily) expressing a very commonly held belief.

But is he right though? I’ve already said that I agree there are some people who employers will view as not worth paying the minimum wage to. They could be right or wrong about this, but there is no doubt employers do not like to hire the long term unemployed, and discrimination on the grounds of disability remains a real thing. But those in agreement would argue that if there were no minimum wage restrictions, employers would hire those workers if they were willing to accept a low enough wage. This is where I disagree quite strongly. People with more business experience than me may say I’m wrong here, but I don’t believe employers make hiring decisions based on the marginal productivity of labour. I think they will always try to hire the best candidate at whatever is the prevailing wage rate. For evidence I would cite the almost total failure of Nick Clegg’s Youth Contract, which provided a wage subsidy to firms hiring an unemployed young person. Take up was atrocious.

Freud’s instinct (which he half expressed) was to favour an exemption from the minimum wage for certain groups, and to top up their wages with universal credit. To the extent that it was limited to certain groups, it would likely be ineffective as the Youth Contract demonstrated. I would also be suspicious that that was just the start, and that a complete removal of the minimum wage would be on the cards leading to a race to the bottom.

A further objection would be Freud’s implicit assumption that because the private sector won’t hire certain people at the current wage, it’s OK for them to pay those people whatever they think they are worth. But businesses are there to serve us, not the other way around. The floor on wages should be the amount at which a person is able to afford a decent standard of living. If the private sector cannot or will not hire everybody for at least that wage, then the government should act as an employer of last resort and tailor make jobs to each individuals talents.

For disabled people, previous governments have felt the need to create organisations like Remploy to create employment for those who struggle to find private sector work. This government scrapped a lot of Remploy factories, and few of those losing their jobs managed to find another one. It seems to me organisations like Remploy are more likely to be more at providing decent jobs for disabled people than scrapping the minimum wage ever would.

Nick Clegg responds to Ed Miliband’s memory loss

I’m often quite critical of the Labour Party, but Ed Miliband ‘forgetting’ to mention the deficit in his conference speech earlier this week, isn’t something I’d have a go at him about. As Chris Dillow rather succinctly put yesterday, the deficit just doesn’t really matter that much, and the point at which it might matter is so far away from where we are now, it’s really not worth spending any time worrying about.

Nick Clegg though disagrees. He thinks Ed Miliband not mentioning the deficit in his speech was a really bid deal, and said as much in what I’m going to call a torrent of gibberish. The Guardian quotes him as saying:

“For Ed Miliband or the Labour party to claim that a budget of £110bn annually will be solved magically by spending £2.5bn extra, it will not.

If you do not know how to pay things for in the first place you cannot support the public services.”

Clegg seems to think Labour’s announcement of a small increase in NHS spending was their solution to the budget deficit (whatever solution means in Clegg’s world). Either that or he thinks we’re all idiots. The second sentence just exposes Clegg’s ignorance. He believes government has to collect tax before it has any money to spend rather than the other way round which would be more accurate.

With someone like Ed Balls, you get the feeling that he knows better, but pretends otherwise because he thinks that’s what people want to hear. With Clegg, I think he genuinely believes the rubbish he comes out with. It’s a little embarrassing sometimes.

Picard

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

 

How strong is the case for staying in the EU?

As we approach the EU elections on 22nd May, I’m planning to do a couple of posts over the next few weeks on the topic of the EU. As a good leftie, I should be wholeheartedly in favour of Britain’s membership of the EU right? Well not really. Being anti-EU or eurosceptic is seen as very much the preserve of the right in Britain. We like to think of those holding anti-EU views as being either UKIP ‘little Englanders’ or ‘rabid right’ Tories, but I want to set out some good reasons why those of us on the left should also have some pretty significant issues with the EU, at least as it is currently operating.

To kick off then, I’m not going to lay out my argument straight away, but just simply make an observation about the style of argument those on the pro-EU side often make. It’s a style that I find somewhat irritating. I’m going to use Nick Clegg as an example because he’s been in the news recently making the case for the EU (and in a pretty annoying way too). Below are Clegg’s opening speeches from his recent TV debates with Nigel Farage of UKIP. I often feel as though Nick Clegg is insulting my intelligence and these clips are no exception. He basically has two arguments:

1. Trade with EU means jobs.

2. By being part of the EU, Britain has more ‘clout’ in the world.

That’s pretty much it. In the debates he didn’t really expand much beyond this. It seems to me Clegg thinks the case for staying in the EU is so self-evident, he can’t actually bring himself to rise above the level of mouthing simplistic platitudes. This style is typical among those who are pro-EU. They sort of think you are a bit strange if you express doubts, but often can’t raise their game above the level of “of course we’re better off in the EU”. In subsequent posts I will take a look at some of the pro-EU camp’s arguments and see if they actually stack up. First though, here’s the promised vids. Each speech lasts for about a minute. The first one starts around 2m13s, and the second around 2m51s.

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

I just noticed today (because there was no publicity), that the DWP have published some data and research on the Government’s ‘Youth Contract’. This was the Government’s response to youth unemployment, launched to huge fanfare by Nick Clegg in early 2012. The program has been running for nearly two years now, so this latest from DWP gives us a good idea how it’s been working – not well.

The idea was to offer up to 160,000 wage incentives of up to £2,275 for employers taking on an 18-24 year old unemployed person. In addition, the Youth Contract was to provide for an additional 250,000 unpaid work experience places. The program runs until 2015. So what has been achieved to date?

This document gives the outputs for the first 18 months (up to Dec 2013). It says that there have been 65,000 ‘wage incentive job starts’ (remember the target was 160,000) since April 2012, but actual full subsidy payments made (i.e. a young person has worked for an employer for 6 months) only total 4,140 so far. That is horrendously bad. Why the 65,000 starts hasn’t been converted into more final payments isn’t clear.

They did a little better at getting people into unpaid work experience. 100,000 young people have been subjected to that since April 2012.

So those are the raw numbers, but how effective has the program been in terms of creating jobs and getting young people into work? The DWP published two pieces of research at the same time as the data above, one surveying employers involved in the wage incentive scheme, and one surveying participants on the work experience element of the Youth Contact.

The employers survey showed that just 19% of job vacancies were extra vacancies that wouldn’t have existed without the subsidy and another 15% were influenced in their choice of candidate (i.e. they hired a young unemployed person so they could claim the subsidy). This represents a huge ‘deadweight loss’. 81% of the job vacancies would have existed anyway without the Youth Contract, and employers probably would have hired a young unemployed person regardless in 85% of cases.

So we have a program that (on the wage subsidy element) has only paid full subsidy for 4,000 jobs (against a target of 160,000) and of those 4,000 jobs, only about 800 were brand new jobs that wouldn’t have existed but for the Youth Contract. Not very impressive Mr Clegg.

But why has the program been so unsuccessful? In contrast, the last Labour Government’s ‘Future Jobs Fund’ managed to create over 100,000 temporary jobs in about 18 months. These were overwhelmingly in the public and third sectors and the subsidy was over double the Youth Contract subsidy (about £6,000 from memory). So why hasn’t the Youth Contract achieved the same results? Is is because the subsidy wasn’t high enough to cover all the costs of employing a young person? Is it because the subsidy isn’t paid until the person has been working with an employer for 6 months? Is it just that employers won’t take someone on unless they really need someone, even at a reduced cost? I think the fact the Government have tried to do this on the cheap goes some way to explaining it, but why it’s failed so spectacularly, I’m not quite sure though.

These results should give the Labour Party pause for thought though. Their idea is for a compulsory job guarantee which would place long term unemployed people in paid employment in the private sector. The private sector hasn’t responded that positively to the Youth Contract, so why would it to Labour’s scheme? And most of the jobs created under the Youth Contract can not be called ‘new’ so is it really a good idea to subsidise private sector employers to do what they were already going to do anyway? At best you would get a small pack-shuffling effect, when what’s needed is an increase in the total number of jobs. Time for a rethink?

A Look Back at some of Nick Clegg’s Economic Clangers

In this post I will be making fun of Nick Clegg for his gross misunderstanding of the way the economy works, but it contains a very serious point.

The Lib Dems, through their coalition with the Conservatives, are facilitating the systematic trashing of the UK economy, including many of the things we had to be proud of about our country like the NHS. This is being done, we are told, because the problems in our economy are so serious, if the Government did not take the action it is taking, the results would be catastrophic.

There are many reasons why this story is false (which I have tried to outline elsewhere), but Nick Clegg seems to have swallowed it whole. When you listen to him talk about the economy though, it quickly becomes clear that he is very confused. He has made a lot of statements that are just flat out wrong, and in another time, the general response to these statements would be ridicule. Clegg’s lack of understanding is a danger to the well-being of the public at large, because as the Lib Dems blunder on in support of the Coalition, more and more long term damage is being done.

Here then are 4 of Clegg’s greatest hits from the last year.

1. “…we must never forget that tackling the deficit is a means to an end and the end we all seek is growth. Our goal isn’t balancing the books for the sake of it, but doing so to meet our real aim: jobs; businesses investing; entrepreneurs getting off the ground.” – Speech on the economy, 8th May 2012

The clanger here is the unspoken assumption that balanced budgets are some sort of panacea – that only then can we get back on our feet. But balanced budgets are not an appropriate economic aim. Find out why here.

2. Because of our action on the deficit we have kept the markets at bay while our neighbours have been picked off one by one. We’ve kept interest rates at record lows. Because we have stuck to our plan, the UK – the country which had the biggest budget deficit in any advanced economy, bigger than Greece, Portugal, Spain – will, by the end of this Parliament, have a deficit lower than the G7 average.” – Speech to the IoD, 25th April 2012

This is a clanger for a couple of reasons. First, he is comparing the UK’s fortunes to those of the Eurozone countries. This is stupid because the UK has its own currency, while the Eurozone countries gave up theirs to join the Euro. This means the two just can’t be compared. Find out why here. The second reason is that he is claiming the UK’s low interest rates can be attributed to the action taken by the Government. This is highly dubious. Find out why here.

3. I think we have a moral duty to the next generation, to our children and our grandchildren, to wipe the slate clean for them. We set out a plan, it lasts for about six or seven years, to wipe the slate clean.” At same event as No. 1 above, 8 May 2012

This is a pretty unforgivable clanger. Clegg is confusing the deficit with the debt here. The Government’s plan is to shrink the deficit, but the overall debt pile will increase year on year. In no sense can this be called wiping the slate clean. The children and grandchildren stuff is bullshit too as I outline here.

4. “So to those who ask, incredulously, what we – the Liberal Democrats – are doing cutting public spending, I simply say this: Who suffers most when governments go bust? When they can no longer pay salaries, benefits and pensions? Not the bankers and the hedge fund managers, that’s for sure. No, it would be the poor, the old, the infirm; those with the least to fall back on.”  Lib Dem Conference speech, 25th September, 2012

Here, Nick Clegg is talking about the possibility of the UK government actually going bankrupt. This is incredibly stupid. He should have been laughed out of the conference for saying this. Here’s a good take-down of Clegg’s conference speech and why it was so idiotic.

You would think after two and a half years in government, Clegg would have picked up some understanding of the economy, but the above suggests he remains dangerously ignorant. I guess Upton Sinclair was right: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” This sums up  Clegg and the Lib Dems pretty well. Finally given the chance to be part of government, their political survival now depends upon going along with the very worst policies the Tory Party have to offer, in the vain hope that it will all turn out for the best before 2015. That is looking more and more delusional by the day. Happy New Year everyone!