IPR Blog

Expert analysis, debates and comments on topical policy-relevant issues

A world collapsing

📥  The far right, Trump, US Presidential Elections, voting

The measure of Donald Trump’s victory is given by those who have been first to welcome it: Marine Le Pen, Pauline Hanson, and David Duke, the former leader of the Ku Klux Klan. Trump gave voice to deep wellsprings of racism in American society, and now stands as a global figurehead for nativist, far right movements. “Their world is collapsing. Ours is being built”, said the Front National’s Vice President, Florian Philippot. It is hard to disagree.

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Trump’s insurgency will test James Madison’s institutional firewalls to destruction; the Republicans now control Congress and the Presidency, and will add the Supreme Court to the ledger in short order. The Republican mainstream will not be in charge, however. Trump was elected largely without its support, and he drew political energy from its most vociferous right wing critics. Worse, he campaigned against the institutions of American democracy itself: its systems, norms and laws. These institutions will need all the resilience they have possessed throughout the history of the United States of America to withstand him. As the political scientist David Runciman has remarked, “What if the shock that is capable of reforming the system is also capable of destroying it?" Glib talk of “post-liberalism” will not do now. Liberalism will need all the defenders it can get.

Once again, mainstream progressive politics has been found wanting. Obama delivered a stronger economy and healthy pay rises in the last year, but it wasn’t enough. Clinton couldn’t find the voice to animate progressive America; the curse of a bloodless, calculating and hollowed out politics on the mainstream centre-left has taken another victim. There can be no Third Way when you are up against the likes of Donald Trump. There is no triangulating Trumpism.

The European Union will now face massive challenges: defending its Eastern borders against an emboldened Putin; defending an embattled global economic order against rampant protectionism; and defending itself against resurgent fascism and the break-up of its historical project. It will likely find an ally in China, which will resist protectionism and global disorder, turning the axis of world politics in a new direction. But Eurozone leaders must also now urgently ask themselves why working class voters have turned so decisively against the economic order that has prevailed in the West since the 1980s – and change path before it is too late.

Some thoughts on Article 50 and the High Court Ruling

📥  Anglosphere, Brexit, EU Referendum, Euroscepticism

There can be little doubt that the government lost its case over the exercise of prerogative power to trigger notification of Article 50 (the mechanism by which the UK begins the process of leaving the European Union) very badly in the High Court. The court’s ruling is comprehensive - and damning.

As public law experts have noted, the government’s legal case would have been stronger if it had conceded that withdrawal from the European Union is not inevitable after Article 50 has been triggered. Lord Kerr, the British diplomat who authored Article 50, has argued that the process is reversible; that the withdrawal can itself be withdrawn.  That seems to be perfectly consistent with the text of Article 50, precisely because it is notably silent on this point – it doesn’t specify anything about revoking the notification, and the history of the European Union is replete with creative political use of the silences, blank spaces and inconsistencies in European law. (Indeed, when the founders of the European Coal and Steel Community signed the Treaty of Paris in 1951, the paper itself was blank: they had been negotiating so extensively over its terms that a final text was not ready for the official signing ceremony. “Europe started as a blank page”, the Dutch political theorist Luuk Van Middelaar once wrote).

The confidence of the High Court’s ruling on this point would therefore appear misplaced. It asserted that the notification of Article 50 would trigger the irreversible loss of the claimants’ rights. But that interpretation can be challenged in law, and in practice it cannot be certain that Article 50 is irrevocable, given the political contingencies. Yet for obvious political reasons, the government considered it untenable to concede that Article 50, once invoked, could be reversed.

It seems unlikely that the government will change its stance and decide to argue that Article 50 is revocable when the case comes before the Supreme Court in December. In addition to the political hit it would take, the government would then be in disagreement with the claimants over the interpretation of Article 50, which is a piece of EU law. And in that instance, the Supreme Court would have to refer the case to the European Court of Justice. As one leading European law expert, George Peretz QC put it, "if there is a question of European Union law [in a Supreme Court case] they have to refer it to the ECJ, unless the answer is obvious. That's a basic principle of EU law."

So the government will be back to arguing that prerogative power does indeed apply to Article 50, on which the High Court’s ruling was clear and decisive. It will likely lose. Then the focus will shift back to Parliament.

If legislation, rather than a substantive motion, is required to give effect to the courts’ ruling, then it will be a very short bill, as Hannah White at the Institute for Government has argued. The government will not want a Christmas tree on which pro-Europeans can hang all sorts of amendments. Instead, the opposition parties, and Remain Conservatives, are likely to try to amend the legislation, as White notes, “to place conditions on the Government before it can trigger Article 50. These could take the form of timing or process requirements – for example, a requirement on the Government to provide Parliament with information about its negotiating position before triggering Article 50.”  This also makes it very unlikely that MPs will be able to insert a clause in the Bill requiring a second referendum on the terms of Brexit, as Owen Smith MP wants to do. Parliamentary clerks would rule such amendments inadmissible. But it is not obvious that the legislation will take such a long time to get through Parliament that the timetable for triggering Article 50 before the end of March 2017 will slip. Governments can strip the legislative barnacles off the boat and clear the path for an emergency bill relatively easily if they need to, and this legislation will take precedence over everything else. Pro-European MPs will extract a price from the government, but they will not vote to stop Article 50 being triggered.

Nicola Sturgeon has given notice, however, that the SNP will use the legal opening provided by the High Court to open up new flanks of attack on the government. This will bring the tensions between the constituent nations of the UK, and an emerging soft federalist vs unionist hard Brexit, fully into view.

A detour into history may help explain this. One of Lord Kerr’s namesakes is Philip Kerr, later Lord Lothian. Each man was once the UK’s ambassador to the USA  - the latter during the early days of World War Two, when he gathered support in Washington for the British war effort, before dying of exhaustion. He was also, earlier in his life, a leading figure in Milner’s Kindergarten, a group of young men who served Lord Milner as High Commissioner in South Africa at the turn of the twentieth century. They would become ardent imperialists and advocates of Imperial Federation between Great Britain and its settler colonies. In their writings, one can trace the antecedents of the Eurosceptic idea of the Anglosphere that figures such as Dan Hannan have done so much to popularize. And yet towards the ends of their careers, Kerr and his peers, like the tireless Lionel Curtis, would come to favour Western European federation, as a step towards a larger, multinational federation of the liberal democracies. Federation was vital to the prevention of war, and they had seen too much war in their lives.

This federalist tradition was lost after World War Two, but it was influential on continental thinkers framing the emerging European Union. It has resurfaced as the United Kingdom grapples with its own internal relations, as well as its place in the world, as a consequence of Brexit. Gordon Brown has made the case for a federalist Brexit in forceful terms today, and if the United Kingdom pursues a flexible Brexit – or “flexit” - it will be a federalist one.  MPs from the SNP and SDLP, and some Liberal Democrat and Labour MPs, are likely to support distinct arrangements for the constituent nations of the UK. The legislation to authorize the notification of Article 50 will give them an opportunity to make their case. This will enlarge our democracy, not diminish it.

 

Citizen's Income: the long history of an inevitable idea

📥  Economy, Finland, future, living wage, policymaking, political parties, research, Switzerland, universal basic income, Welfare

Dr Malcolm Torry is Director of the Citizen's Income Trust and a prolific author on the subject of Citizen's Income.

On Tuesday 11 October the Institute for Policy Research hosted a seminar on the desirability and feasibility of a Citizen’s or Basic Income: an unconditional and nonwithdrawable income for every individual. An account of the seminar is available on the IPR’s website. I shall not here repeat what was said at that seminar: instead, I shall begin with a different seminar.

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Following the publication of its report on Citizen’s Income, the Royal Society of Arts hosted a seminar on the history and prospects of the Citizen’s Income debate. In his presentation Karl Widerquist, Co-chair of BIEN, the Citizen’s Income international umbrella group, recounted the history of the idea from the 18th Century onwards, and made suggestions as to the different ways in which the debate might now develop.

The subsequent discussion recognised that the more intense debate of the past two or three years has a variety of causes: think tank engagement with the issue, represented by the RSA’s and Compass’s reports, and interest at the Adam Smith Institute; successful pilot projects in Namibia and India; planned pilot projects in Finland and Holland; a referendum in Switzerland; political party interest in the UK (with the Green Party and the Scottish National Party supporting the idea, and Labour interested) and in other countries too; new trade union interest; and perhaps even the Citizen’s Income Trust’s 30 years of research and publications.

The current debate already has its own history, constituted by three phases: discussion of whether giving everyone a Citizen’s Income would be desirable, interest in whether it would be feasible, and discussion of which would be the best way to implement the policy. There are no firm boundaries between these three phases (if a Citizen’s Income could not be implemented, for example, then it would not be feasible – and if it wasn’t felt to be desirable then it wouldn’t be feasible either), and each new phase has been in addition to a previous phase or phases, rather than being a replacement – but the progression is significant because it is evidence for the increasingly serious nature of the current debate. The think tank reports listed above belong to the ‘feasibility’ phase, as does my own recent Institute for Social and Economic Research Euromod working paper and recent book. A significant contribution to the new focus on implementation will be an Institute for Chartered Accountants consultation on the subject in November.

Where will the debate go now?

Luke Martinelli’s recent Institute for Policy Research blog discusses the diversity of the current debate in terms of, firstly, the diverse political ideologies of some of the players, and secondly the diversity of Citizen’s Income schemes discussed. A Citizen’s or Basic Income is always the same thing. It is always an unconditional and nonwithdrawable income for every individual. But there are of course a wide diversity of different schemes, with each scheme specifying the levels of Citizen’s Income for different age groups, and the changes that will be made to the existing tax and benefits systems when the Citizen’s Income is implemented. Compass called a scheme that retains means-tested benefits a ‘modified’ scheme. It is not. The Citizen’s Income is a genuine Citizen’s Income, so the scheme is a genuine Citizen’s Income scheme.

There is a history to this diversity. As with the three phases of the current debate, so the longer-term debate has evolved by addition rather than by replacement. Thomas Paine’s suggestion, that those who no longer have access to expropriated commons should be paid compensation, has been a continuing theme, represented today by Guy Standing’s campaigning scholarship. Today’s most high-profile representative of the libertarian argument for a Citizen’s Income is Philippe Van Parijs, and Charles Murray represents well the extreme version of this tendency, which would like to scrap all other welfare provision on the implementation of a Citizen’s Income. But this is to suggest – as Martinelli’s blog post does – that arguments for Citizen’s Income, and accompanying preferred Citizen’s Income schemes, can be located in clear ideological categories. I suspect that this is less and less the case. There are no longer clear categories, and there are no reliable spectra on which positions can be located. Our age is increasingly one of radical diversity. My first book on Citizen’s Income, Money for Everyone, discussed political feasibility in terms of identifiable political ideologies. The following book, 101 Reasons for a Citizen’s Income, simply offers 101 different reasons, recognising that for each individual a particular bundle of reasons might be significant. A handful of the reasons offered are framed in terms of political ideologies, because for many people those are still salient – but most of the reasons are simply listed in such broad categories as ‘economy’, ‘society’, ‘administration’, etc. My most recent book, Citizen’s Basic Income: A Christian Social Policy, recognises that we are a community of communities, and that particular communities might have their own distinctive reasons for supporting or rejecting Citizen’s Income. As the Citizen’s Income debate becomes increasingly mainstream, we shall find the same tendency that we find with other current issues: that they will become political footballs – that is, they will be pushed around by political considerations, rather than in relation to their own characteristics. The Shadow Chancellor, John McDonnell, has for a long time recognised that we shall one day need a Citizen’s Income, and that the idea needs to be carefully studied by government. He spoke at the Citizen’s Income Trust’s conference in 2014, invited the Trust to organise one of his People’s Parliament events, and since becoming Shadow Chancellor has reiterated his interest. Jeremy Corbyn, Leader of the Labour Party, has also been clear about his support. During the recent Labour Party leadership campaign, Corbyn’s opponent Owen Smith stated his view that Citizen’s Income wasn’t credible. Whether he had read any of the research I don’t know – but it certainly appeared that the motive for his objection was that his opponent had supported it. It is regrettable when positions are taken for reasons proceeding from a personal political career, or for factional advantage, rather than on the basis of evidenced and reasoned argument – but incidents such as this are useful because they signal the fact that an idea is understood, and that it is understood to be significant. What is then required is a sustained emphasis on the idea’s feasibility.

The Feasibility of Citizen’s Income understands feasibility as multifaceted, and recognises that specifically political feasibility is just one aspect of feasibility. In order to be implemented, a Citizen’s Income scheme would need to pass two kinds of financial feasibility test, with regard to both the feasibility of paying for it and the need to avoid imposing losses on low-income households at the point of implementation; it would need to pass psychological, behavioural, and administrative feasibility tests; and it would need to be able to negotiate the complex policy process from idea to implementation. The book concludes that there are Citizen’s Income schemes that could achieve all of that. A conclusion that might have been more explicit is that conformity of the scheme to a political ideology or ideologies might be fairly unimportant. A conclusion that is drawn matches one that Martinelli draws: that deeply embedded convictions, relating to reciprocity, deservedness, and so on, will need to be recognised at the implementation stage, because only those implementation methods that could achieve public approval can be regarded as feasible. The popularity of both the NHS and Child Benefit suggest that unconditional benefits fit the British psyche just as much as ideas of reciprocity and deservedness do; so as long as age groups generally felt to be ‘deserving’ are the first to receive Citizen’s Incomes, psychological feasibility should not be too difficult to achieve. Governments can move ahead of public opinion if they are moving in the same direction – recent examples are the ban on smoking in workplaces and public places, and the legalisation of same-sex marriage – and legislation can sometimes shape public opinion (as equalities legislation has done). This suggests that any government that saw good reason for implementing a Citizen’s Income scheme would be able to do so, as long as it started with age groups generally believed to be deserving – that is, children, retired people, the pre-retired, and the 16+ age group.

Martinelli suggests that the Citizen’s Income debate will exhibit a variety of different Citizen’s Income schemes, with each kind relating to a different set of political convictions. I’m not so sure. It is a reasonable assumption that for the foreseeable future any initial Citizen’s Income scheme in a developed country will need to be revenue neutral, and possibly strictly revenue neutral (in the sense that only tax allowances related to earnings would be reduced to help to pay for the Citizen’s Income). Microsimulation research at the Institute for Social and Economic Research has shown that a revenue-neutral Citizen’s Income scheme can only avoid imposing unacceptable losses on low-income households if current means-tested benefits are left in place and are recalculated to take account of each household’s Citizen’s Income and changes in net earnings. Recently updated figures show that a working-age adult Citizen’s Income of £60 per week could be paid for on this basis. This is not large, but neither is it insignificant. Compass’s recent report takes a similar approach. The RSA report does not – but neither has it tested its proposed scheme for low-income household losses at the point of implementation. We look forward to the results of current IPR microsimulation research. We are now more aware than before that although it is possible to construct a wide variety of Citizen’s Income schemes in theory, in practice only a narrow range of that diversity could ever be financially feasible in both senses of that term. If the debate about Citizen’s Income remains mainstream, and if it becomes increasingly so, then any infeasible scheme will be put under considerable pressure (as the Green Party’s proposed scheme was before the 2015 General Election) – and the result will be convergence on a narrow range of revenue-neutral schemes that would not impose losses on low-income households at the point of implementation.

The increasingly flexible and diverse nature of the employment market, family structures, and society and the economy generally, and the way in which the proceeds of production will continue to accrue to capital rather than to labour, mean that sooner or later we shall need a Citizen’s Income – and that we shall need to find some means of paying for it. But that could still be a very long process. Maybe by this time next year everybody will have lost interest, and the idea will have to await another upsurge in interest in a generation’s time; or maybe there will be both developing and developed countries taking the first steps towards implementation. More likely, we shall experience a situation somewhere between those two. Whatever the debate is like next year, it will have been important for high-quality research to have facilitated it. For this reason it is a pleasure to see the Institute for Policy Research contributing to the research that we shall need, and to the widespread debate that is now required.

This blog post develops on themes discussed by Dr Torry in a recent IPR Seminar. You can view the seminar and slides in full on our online lectures page, or listen to the podcast on our Soundcloud playlist.

Cooperating for Africa: two challenges to meeting development goals

📥  development, Economy, Foreign aid, International relations

Seung-Jin Baek is an Economist at the Renewal of Planning Section of the United Nations Economic Commission for Africa (ECA), based in Addis Ababa, Ethiopia, and is studying on the IPR's Professional Doctorate programme.

Currently, Africa faces a great challenge, in that the considerable development objectives that the continent must meet are being tackled through addressing two separate agendas. At the regional level, Africa has her own long-term development framework – Agenda 2063 – that aims to achieve an integrated, prosperous and peaceful Africa. Then, at the global level, the 2030 Agenda for Sustainable Development – adopted in September 2015 – sets out Sustainable Development Goals (SDGs) that are comprehensive and promise to rally global partners in support of Africa’s development.

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Under these two agendas, Africa is now confronted with a dual transition: the global-level transition from the Millennium Development Goals (MDGs) to the SDGs, and the continent-wide implementation of Agenda 2063. The numbers of goals, targets and indicators involved in each plan reflects just how complex this dual transition is: Agenda 2063 has 7 aspirations, 20 goals and 34 priority areas, 171 national targets, 85 continental targets and approximately 246 indicators, while the SDGs comprise 17 goals, 169 targets and 230 indicators. Implementation will be no easy task for African countries.

These two agendas will provide a foundation for Africa’s inclusive growth and structural transformation. To achieve this, both African countries and development partners need to scale up their commitments to the implementation of the plans by leveraging synergies among them. Two factors are critical in this regard: engagement on Africa’s part with emerging partners, and a commitment from Africa and its partners to prioritise KID – knowing, integrating and domesticating both agendas – to make its goals achievable.

Africa’s engagement with development partners

The first area to be addressed is emerging partnerships, which will provide the financial framework within which development agendas can be achieved. Undoubtedly, global partnerships have been playing an important role in Africa’s development during the MDG implementation era, through bridging financing gaps for development and building policymaking and technology capacities. There is, however, still a considerable gap in addressing the special needs of African countries – such as the promotion of inter- and intra-continental trade, infrastructure development, and governance improvement as well as environmental management.

The most effective channel of such partnerships is trade, which has been a major commitment from development partners. Recent World Trade Organization international trade statistics, however, show that the share of Africa’s exports declined from 3.3 per cent in 2013 to 3.0 per cent in 2014 and 2.4 per cent in 2015. This is partly due to unfavourable movement in global commodity prices, which have a significant impact on investment and economic growth on Africa, given its heavy dependence on natural resource products for export.

Another essential channel is official development assistance, or ODA. Based on analysis of the OECD development statistics, Africa has maintained its position as the largest recipient of ODA over the past three decades with regional share of about 43 per cent – meaning that almost half of world ODA was injected into Africa. It should be noted, however, that most OECD-DAC countries do not meet their ODA commitments to provide 0.7 per cent of their countries’ GNI. In fact, the total ODA from the DAC group reached only 0.29 per cent of the combined GNI – implying a delivery gap of 0.41 per cent. Because this huge gap is unlikely to narrow in the near future, the quality of ODA and its use have to be seriously taken into consideration.

Role of emerging economies in Africa’s development

In the light of these global partnership trends, there are a number of action points for both Africa and development partners. First of all, it is imperative that African governments strengthen macroeconomic sustainability and public management of natural resource revenues, and leverage such funds for the transformation of their economies.

Given the substantial delivery gap in ODA commitments, it is also extremely important for Africa to develop and strengthen partnerships with emerging economies such as the BRICS (Brazil, Russia, India, China and South Africa) as an alternative, but very important, source of financing, learning and technology. For instance, according to Oxfam International’s Africa-China Dialogue Platform, China has emerged as the largest trading partner to Africa over the past five years: Africa’s trade volume with China reached US$225 billion, which is twice that the continent shares with the United States. Furthermore, Chinese foreign direct investment and other forms of development assistance to Africa are substantially increasing.

With this growing role of emerging partners, in addition to that of traditional development partners, the international community all together should work closely with African governments to strengthen capacities for domestic resource mobilisation and particularly to curb illicit financial outflows. According to the ECA’s study on illicit financial flows, Africa is currently losing more than US$50bn annually – almost double the foreign aid flowing into Africa – from aggressive tax avoidance practices by multinational companies.

Africa’s dual transition to the SDGs and Agenda 2063

The second point to which I refer is the dual transition that Africa must undertake to address both the SDGs and Agenda 2063. Despite the challenges identified above, recent developments at the regional and global levels point to an increasingly supportive financial environment for Africa. The question now is: what are the challenges associated with dual transition, and which areas of development should both Africa and development partners focus and how? For this, the MDGs to Agenda 2063/SDGs Transition Report 2016 clearly identified challenges and opportunities.

Implementation of both agendas requires advocacy for and sensitisation to the details of both frameworks to ensure awareness of their mutual relevance to national development and the relationship and synergies between them. In this context, the 2030 Agenda for Sustainable Development should be understood as an attempt to respond to the global dimensions of Africa’s development challenges, while Agenda 2063 should be viewed as a response to continent-specific development challenges and aspirations, many of which overlap.

With the sheer volume of goals, targets and indicators embodied in each of the agendas, there is inevitably significant convergence between them. In this regard, an integrated set of goals, targets and indicators – along with a harmonised review and reporting platform to develop a core set of continental indicators – is required to effectively track progress on both agendas. Such arrangements need to take into account the levels of development of individual countries.

While convergence between the two agendas is significant, integrated and coherent implementation of both agendas into national planning systems will be an operational challenge as significant as it is vital. In recognition of this challenge, the ECA has developed a draft toolkit that maps the 2030 Agenda for Sustainable Development and Agenda 2063 at the goal, target and indicator levels and provides a diagnostic tool for integrating both agendas in national planning frameworks.

Capacity matters most

In effect, successful implementation requires strengthened capacities for policymaking and the analysis of inter- and intra-sectoral impacts of policy initiatives. Even with the adoption of the SDGs alone, countries will require an integrated approach that simultaneously addresses the economic, social and environmental dimensions of sustainability in a balanced way. This is an area where evidence-based analysis of the structural effects (tradeoffs and synergies) of key policies is needed.

In the past there has been a tendency to consider immediate benefits above all else; the economic benefits of increased oil production, for example, were not adequately weighed against the possible negative environmental and social costs. Therefore, there should be a significant effort to identify the most appropriate institutional architecture that individual countries can use to facilitate effective implementation of the two agendas. Invariably, the role of planning agencies will be paramount in ensuring that the economic, social and environmental dimensions of policy decisions are reflected in a balanced manner in all aspects of programme and project execution.

In this new age of Africa’s development, multi-stakeholder partnerships remain one of the most critical means of mobilising internal and external resources. Furthermore, the active participation of emerging partners is required to address Africa’s challenges of dual transition and to support its operationalisation. In this regard, traditional partners and emerging nations need to establish ways of partnering and cooperating with each other towards supporting Africa in realising its development aspiration, particularly for the areas of KID:

[K]nowing about both agendas to simultaneously address the three dimensions of sustainability with strengthened evidenced-based policymaking capacities

[I]ntegrating both agendas to harmonise frameworks and establish common mechanisms of implementation and follow-up architecture

[D]omesticating both agendas in national planning frameworks with strengthened institutional capacities for effective institutional coordination and arrangements

 

 

This blog is mainly derived from Seung-Jin’s presentation during the Oxfam International Conference, which took place in Addis Ababa on 28 September 2016, and from the MDGs to Agenda 2063/SDGs Transition Report 2016, a joint publication by the ECA, African Union Commission, African Development Bank and United Nations Development Programme which was launched in the United Nations General Assembly on 21 September 2016. The views expressed in the blog are his own, and do not necessarily reflect the views of the United Nations.

 

Exposing a fragile coalition: The state of the basic income debate

📥  Economy, employment, living wage, political parties, universal basic income

Dr Luke Martinelli is Research Associate on the IPR's universal basic income project.

Is it time to move beyond the polarised views that characterise the basic income debate? Universal basic income (UBI) may be an attractive solution to a host of policy problems – but advocates must recognise that moving from abstract concept to reality will involve significant trade-offs and political barriers.

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Gaining traction, growing support

In recent weeks, there have been a number of developments which appear to demonstrate the movement of UBI towards the political mainstream: in the UK, the influential Trades Union Congress (TUC) has endorsed social security reform that embodies the principles of basic income; in Canada, the Government is moving forward with concrete plans for a basic income pilot, adding to those upcoming in Finland and the Netherlands; the French region of Aquitaine is consulting on the idea; and in Germany, the single issue party Bündnis Grundeinkommen (Basic Income League) has just been established. These trends seem to suggest that UBI is gaining traction that will lead inexorably to widespread implementation.

After all, UBI is not just a good idea; it is an increasingly good idea in a world in which the nature of work, family and society is rapidly changing.  Automation of production processes, both in manufacturing and, increasingly, services; large and growing wage gaps between ‘lousy’ and ‘lovely’ jobs (Goos and Manning, 2007); the growth of zero-hour and temporary contractual arrangements; and long-term unemployment among disadvantaged groups are all problems which urgently need addressing. Nuclear families have given way to the emergence of complex and unstable family structures, and the ‘new social risks’ of lone parenthood and gaps in the provision of care for children and the elderly threaten vulnerable sectors of society.

All of these factors are feeding into the widespread failure of existing social security systems to achieve equitable and efficient settlements for growing numbers of people – exactly what UBI claims to be able to provide.

Yet despite (or perhaps because of) intensified interest in basic income, the debate has become more polarised than ever. It is an elegant balance of justice and liberty; it is the worst of all possible worlds. It is the saviour of the welfare state; it will destroy it. It can be implemented tomorrow; it is a vague and distant utopia.

All things to all people

When considering these polarised views on basic income, it is worth noting that UBI is best considered as a family of proposals, rather than a specific policy per se.

The core characteristics of UBI as an idea are that payments should cover the entire population, and eligibility cannot be conditional on income, work history, or behavioural requirements. Beyond this, there is a great deal of variation between plans in terms of a number of important aspects  – including, crucially, the level at which payments should be made, and how the basic income fits into the wider constellation of welfare and tax policies.

These design features vary in relation to the precise goals that basic income is intended to achieve, which themselves are contested. Although it can be seen as a prosaic way to simplify a complex welfare system, alleviating administrative costs and bureaucratic intrusion while reducing marginal tax rates – and thus eliminating the poverty and unemployment traps that pervade means-tested systems – it has also been touted as having the potential to fundamentally alter how we think about ‘work’. Releasing individuals from the compulsion to enter paid employment – and the exploitation and domination this entails – in order to survive, and liberating them to pursue a variety of socially valuable and creative activities, UBI has been mooted in radical terms as “a capitalist road to communism” (Van Der Veen and Van Parijs, 1986).

Multi-partisan support

The protean nature of basic income helps to ensure that the concept appeals across traditional party lines. One of the striking things about this idea is the wealth of favourable theoretical arguments which appeal across the political spectrum, leading to the popular description of UBI as 'not right or left, but forward'. In isolation, these arguments apply to other ways of organising social security – but few if any such systems so effectively marry the priorities of the social democratic left (equality, solidarity and redistribution) with those of the libertarian right (small government, freedom and efficiency). By both left- and right-wing proponents, UBI is viewed as the saviour of a broken welfare system which is stigmatising and intrusive yet unfit for purpose.

For basic income advocates on the left, the focus is on the failure of the system to provide security for all in an adequate and dignified fashion, as socio-economic conditions have made the Beveridgean system increasingly untenable. Gone are the days – if they ever existed – when male breadwinners provided for their families with stable, well-paid jobs. The Trente Glorieuses, that period of yet unmatched growth and prosperity following WWII, gave way to deindustrialisation, structural unemployment, rising wage inequality, and the increasing prevalence of precarious employment.

For the right, the welfare system is seen as the cause of dependency and societal breakdown, as the complex array of means-tested benefits reduces work incentives and discourages family formation. The bloated government bureaucracy which administers the intrusive work tests and financial conditions creates higher taxes, which act as a drag on the efficiency of the economy as a whole.

Basic income, perhaps miraculously, seeks to balance these competing goals and priorities. But does this congregation of political views mean that it is universally and normatively desirable? Clearly not.

Cross-party opposition

There is an equivalent (and possibly more significant) meeting of minds across the political spectrum that finds basic income a deeply discomfiting notion. Social democrats believe that welfare should be generously available for all, and those on the right that it should be a residual safety net – but both agree that the right to an income comes with a responsibility to work (however this responsibility is actualised). Notwithstanding the claims of political philosophers such as Philippe Van Parijs that “even surfers should be fed”, Bowles and Gintis (2000) demonstrate that people “support the welfare state because it conforms to deeply-held norms of reciprocity and conditional obligations to others”. Of course, this goes beyond the simplistic equality of contributions and receipts – but the belief that everyone has an obligation to contribute to society if they can, and that only those unable to work through incapacity, involuntary unemployment or caring responsibilities are deserving of state support, provides a philosophical foil to the arguments of basic income advocates (Anderson, 1999). Bay and Pedersen (2006) show that support for universal welfare drops when respondents consider the possibility of foreign immigration. Data on attitudes to welfare, which have hardened in recent years, appear to uphold these insights – as analysis of the British Social Attitudes Survey by Eleanor Taylor and IPR Director Professor Nick Pearce serves to demonstrate.

For progressive opponents of UBI, welfare should be restricted to those most in need, since the wealthy do not need it; if you are going to spend more on welfare, why not make payments more generous for the poor? Thus, basic income is likely to be seen as ineffectual by the progressive left, as demonstrated by reactions to Compass’ UBI proposals stating that “a powerful new tax engine will pull along a tiny cart”, and that feasible UBI schemes are “not generous enough to achieve the aim of replacing wages in an increasingly automated world; or they are not funded properly; or both”. The concept of uniform benefits also appears to conflict with the principle that levels of support should correspond to the needs of claimants – which are complex and varied, and therefore might be seen to justify an equally complex range of benefits.

At the same time, conservative opponents argue that UBI would be prohibitively expensive, require huge tax rises, and significantly damage work incentives. Although the unconditional nature of UBI leads to lower marginal effective tax rates (as the benefit is not withdrawn as income rises), if payments were pitched at subsistence level or higher, there would be a significant negative labour market response as individuals opt for more leisure.

Thus, while basic income has supporters across the political landscape, it also has detractors – and the large family of basic income proposals provides a wide target at which to direct criticism.

A fragile coalition

The multifaceted nature of basic income enables detractors to criticise the least desirable type of basic income (from their particular perspective). Thus, basic income’s association with ‘undesirable’ political views permits left-wing opponents of basic income to attack UBI as an alternative to decent public services and a project to dismantle the welfare state, while simultaneously allowing right-wingers to criticise it for inflating the role of government in welfare provision and dampening incentives for self-provision.

Exacerbating the political challenge of UBI is what De Wispelaere (2015) calls the “problem of persistent political division” among supporters. While agreed on the general principle, UBI advocates on each side of the political divide have different ideas about the key parameters. When UBI is operationalised in a specific scheme, divisions appear; as De Wispelaere observes, a residual scheme such as that proposed by Murray (2006) is “entirely unacceptable to anyone supporting basic income on progressive grounds”. At the same time, libertarian UBI advocates would only support basic income schemes that sought to replace the entire welfare system. Thus, support from the ‘opposite’ political side may taint the concept of basic income by association: progressives cannot get behind a policy supported by right-wingers, and vice versa.

Although steps to realise basic income show signs of progress, therefore, this ultimately hinges on the extent to which meaningful coalitions of interests can be built and sustained around concrete proposals. This prospect is a lot more distant than appears at first glance; the apparent unity of the basic income movement masks a multitude of deeply divided actors, and a highly fragile coalition.

To end on a more positive note, these political difficulties are not necessarily intractable – but it may be that advocates have to sacrifice their broad coalition in favour of congregation around specific schemes. This would give lie to the idea that basic income is ‘all things to all people’, but it might garner new and more enthusiastic supporters as well.

 

References

Anderson, Elizabeth S. (1999). "What Is the Point of Equality?" Ethics, 109(2): 287-337.

Bay, Ann-Helén, and Axel West Pedersen. "The limits of social solidarity basic income, immigration and the legitimacy of the universal welfare state." Acta Sociologica 49(4): 419-436.

Bowles, Samuel, and Herbert Gintis (2000). "Reciprocity, self-interest, and the welfare state." Nordic Journal of Political Economy, 26(1): 33-53.

De Wispelaere, Jurgen (2015). "The struggle for strategy: On the politics of the basic income proposal." Politics (2015): 1467-9256.

Goos, Maarten, and Alan Manning (2007). "Lousy and lovely jobs: The rising polarization of work in Britain." The review of economics and statistics, 89(1): 118-133.

Murray, Charles. (2006). In Our Hands: A Plan to Replace the Welfare State. Washington, DC: American Enterprise Institute Press.

Van Der Veen, Robert J. and Philippe Van Parijs (1986). "A capitalist road to communism." Theory and Society, 15(5): 635-655.

Van Parijs, Philippe (1991). "Why surfers should be fed. The liberal case for an unconditional basic income." Philosophy and Public Affairs, 20: 101-131.

Who will shape the future of the data society?

📥  big data, data science, future, open data, technology

Dr Jonathan Gray is Prize Fellow at the IPR

The contemporary world is held together by a vast and overlapping fabric of information systems. These information systems do not only tell us things about the world around us. They also play a central role in organising many different aspects of our lives. They are not only instruments of knowledge, but also engines of change. But what kind of change will they bring?

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Contemporary data infrastructures are the result of hundreds of years of work and thought. In charting the development of these infrastructures we can learn about the rise and fall not only of the different methods, technologies and standards implicated in the making of data, but also about the articulation of different kinds of social, political, economic and cultural worlds: different kinds of “data worlds”.

Beyond the rows and columns of data tables, the development of data infrastructures tells tales of the emergence of the world economy and global institutions; different ways of classifying populations; different ways of managing finances and evaluating performance; different programmes to reform and restructure public institutions; and how all kinds of issues and concerns are rendered into quantitative portraits in relation to which progress can be charted – from gender equality to child mortality, biodiversity to broadband access, unemployment to urban ecology.

The transnational network that assembled last week in Madrid for the International Open Data Conference has the opportunity to play a significant role in shaping the future of these data worlds. Many of those who were present have made huge contributions towards an agenda of opening up datasets and developing capacities to use them. Thanks to these efforts there is now global momentum around open data amongst international organisations, national governments, local administrations and civil society groups – which will have an enduring impact on how data is made public.

Perhaps, around a decade after the first stirrings of interest in what we know know as “open data”, it is time to have a broader conversation around not only the opening up and use of datasets, but also the making of data infrastructures: of what issues are rendered into data and how, and the kinds of dynamics of collective life that these infrastructures give rise to. How might we increase public deliberation around the calibration and direction of these engines of change?

Anyone involved with the creation of official data will be well aware that this is not a trivial proposition. Not least because of the huge amount of effort and expense that can be incurred in everything from developing standards, commissioning IT systems, organising consultation processes and running the social, technical and administrative systems which can be required to create and maintain even the smallest and simplest of datasets. Reshaping data worlds can be slow and painstaking work. But unless we instate processes to ensure alignment between data infrastructures and the concerns of their various publics, we risk sustaining systems which are at best disconnected from and at worst damaging towards those whom they are intended to benefit.

What might such social shaping of data infrastructures look like? Luckily there is no shortage of recent examples – from civil society groups campaigning for changes in existing information systems (such as advocacy around the UK’s company register), to cases of citizen and civil society data leading to changes in official data collection practices, to the emergence of new tools and methods to work with, challenge and articulate alternatives to official data. Official data can also be augmented by “born digital” data derived from a variety of different platforms, sources and devices which can be creatively repurposed in the service of studying and securing progress around different issues.

While there is a great deal of experimentation with data infrastructures “in the wild”, how might institutions learn from these initiatives in order to make public data infrastructures more responsive to their publics? How can we open up new spaces for participation and deliberation around official information systems at the same time as building on the processes and standards which have developed over decades to ensure the quality, integrity and comparability of official data? How might participatory design methods be applied to involve different publics in the making of public data? How might official data be layered with other “born digital” data sources to develop a richer picture around issues that matter? How do we develop the social, technical and methodological capacities required to enable more people to take part not just in using datasets, but also reshaping data worlds?

Addressing these questions will be crucial to the development of a new phase of the open data movement – from the opening up of datasets to the opening up of data infrastructures. Public institutions may find they have not only new users, but new potential contributors and collaborators as the sites where public data is made begin to multiply and extend outside of the public sector – raising new issues and challenges related to the design, governance and political economics of public information systems.

The development of new institutional processes, policies and practices to increase democratic engagement around data infrastructures may be more time consuming than some of the comparatively simpler steps that institutions can take to open up their datasets. But further work in this area is vital to secure progress on a wide range of issues – from tackling tax base erosion to tracking progress towards commitments made at the recent Paris climate negotiations.

As a modest contribution to advancing research and practice around these issues, a new initiative called the Public Data Lab is forming to convene researchers, institutions and civil society groups with an interest in the making of data infrastructures, as well as the development of capacities that are required for more people to not only take part in the data society, but also to more meaningfully participate in shaping its future.

This piece originally appeared on the IODC16 website.

Have you been in a Jobcentre lately?

📥  employment, future, political parties, Welfare

Dr Rita Griffiths is Research Programme Lead for the IPR.

“Anyone who thinks Jobcentres are like [those in The Full Monty] … would be pleasantly surprised by visiting [one today],” quipped Damian Green, Secretary of State for Work and Pensions in his address to the Conservative Party Conference last week; “no screens, no queues … no sense of sullen despair.” He is right in his observation that Jobcentre Plus offices today look very different from how they did in the 1980s and 1990s, when The Full Monty – along with films like Billy Elliot and Brassed Off – depicted the humiliation and shame wrought on working class men forced to sign-on after being made redundant from jobs in mining, steel and other heavy industries.

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It is true that the metal security screens have gone, and dole queues no longer snake out of the doors of benefit offices – which have long since disappeared, along with the traditional industries and breadwinning jobs these men were once employed in. However, it is debatable whether, as claimed by Green, this is down to the transformative power of a modernised and rebranded Jobcentre Plus better equipped to meet the employment needs of ‘ordinary working-class people’ in the post-industrial era. Some would argue it says more about the depersonalised, contracted-out and digitised nature of today’s benefit and employment services – director Ken Loach, for example. His latest offering I, Daniel Blake, for which he won the 2016 Cannes Film Festival’s Palme d’Or, sits uncomfortably alongside Green’s resolutely upbeat account of the changing landscape of government employment support. The protagonist of Loach’s drama, a skilled man in his 50s whose working career is curtailed after he suffers a heart attack, finds himself cut adrift amidst the faceless, ‘digital by design’ bureaucracy of Jobcentre Plus call centres, online benefit processing and the impersonal, one-size-fits-all responses of government-funded advisers. So who is right?

In their own way, both are. Today’s Jobcentre Plus may have upholstered seats, carpets and jaunty, modern graphics – but just try getting past one of those burly security guards if you want help to get a job, or secure better-paid work. Austerity-driven civil service staffing cuts mean that, unless you are an existing benefit claimant required to attend a mandatory appointment with an adviser as a part of your ‘Claimant Commitment’[1], you will likely be turned away – told instead to search for jobs online, or to contact a call centre (using your own mobile and, until recent lobbying persuaded the DWP to change its stance, at a premium call rate). If the security guard allows you entry, you will be directed to a Jobpoint, a touchscreen monitor for online job-hunting – that’s if they haven’t already been removed, along with the free-to-use telephones, as Jobcentre Plus moves inexorably towards full digitisation. In fact, you may be hard-pressed to find a Jobcentre in your local area; in the last five years, scores of them have been closed – including many in rural areas where the nearest alternative may be over an hour’s travel away.

Reduced Jobcentre footfall is of course an undeniable product of the changed nature of work, and online recruitment methods now used by most employers and applicants. However, research is beginning to show that another important factor in the decline of Jobcentre use is the increasingly punitive way in which ‘jobseekers’ and other benefit claimants are dealt with, and a corresponding rise in the incidence of benefit disentitlement and sanctioning.[2] Arrive late for a mandatory appointment, or apply for fewer jobs than is stipulated in your ‘Claimant Commitment’, and you risk being sanctioned. Too many sanctions and you risk losing your benefits altogether, potentially for up to three years.[3] The government claims that sanctions are used infrequently and only as a last resort, but the evidence tells a different story. Research by David Webster from the University of Glasgow found that between 2007 and 2012, one fifth (19%) of all JSA claimants – equivalent to almost a million and a half people – had been subject to sanctions or disallowances.[4] In the context of an increasingly stringent, parsimonious and punitive welfare system, some eligible groups are simply not bothering to claim, further reducing the claimant count.

This brings us to another reason that Jobcentres may seem less desperate places these days: increasing localisation and discretion in the delivery and payment of welfare. In what Frank Field describes as “the most radical departure in welfare since the Atlee government"[5], emergency financial help and other discretionary support intended to prevent the poorest and most vulnerable people in society from falling through the safety net has been devolved from central government to local authorities. This has occurred, it should be noted, with limited public debate about the issues and implications localisation raises. So the queues, over-crowded waiting rooms and sense of despair have not gone away, they have simply relocated – into the burgeoning network of council ‘one-stop shops’ and food banks, where cash-strapped local authorities and volunteer workers struggle to help the growing numbers of claimants and families whose benefits or tax credits have been reduced, stopped or failed to reach their bank accounts for whatever reason.

Even if Green’s rosy vision of the contemporary Jobcentre is right, changes are afoot which may yet see a return to Jobcentre queues and sense of frustration.  Under the most radical and contentious welfare reform measure proposed to date, working people and families claiming Universal Credit means-tested financial help with housing, childcare and living costs will be drawn into a system of conditionality and sanctioning similar to that which currently applies to unemployed and economically inactive claimants. Untried anywhere in the world, a large-scale randomised control trial involving 15,000 low-paid Universal Credit claimants is piloting a new Jobcentre Plus-delivered ‘in-work progression’ service[6] targeted at an entirely new category of customer: low-paid workers and their partners. If rolled out nationally, an additional one million UC claimants will become subject to work conditionality. But here’s the most controversial part: these people will already have jobs. What is more, unless the family contains children under the age of 13, work conditionality requiring regular face-to-face meetings with a Jobcentre adviser will continue until household earnings reach a minimum threshold equivalent to both adults in a couple working 35 hours per week at the national minimum wage. Only parents with authorised caring responsibilities for younger children and other officially exempted groups, such as those with a serious health condition, will have the option to work part-time.

Encouraging low-paid workers to increase their earnings is a laudable policy goal, but when earning more means working longer hours, even in families with young children – and when working for longer is the only way of meeting mandatory conditions for UC receipt – the role of Jobcentre Plus advisers in supporting individuals to progress in work becomes somewhat compromised. Tailored, one-to-one, personalised support from a work coach which underpins the in-work progression service is similarly to be applauded, but progression implies improvement – not just in earnings, which could be achieved simply by getting another low-paid job - but in rates of pay and job prospects. Will customers be helped to access training to improve their earnings potential and jobs offering better terms and conditions, or will they simply be obliged to find more low-paid work? This raises another important question: in whose interests will this employment advice be offered? These already ‘hard working’ customers, employers proffering zero hour contracts, or a government intent on reducing social security expenditure?

Empathetic, individualised support to encourage employment progression runs counter to the work-first culture and general direction of travel that Jobcentre Plus has been moving in for more than a decade. What seems to be missing too is any acknowledgement that, although low earners eligible for means-tested help may represent a new category of customer for Jobcentre Plus, they are not necessarily a different group of people; it is well known that people in poverty and at the bottom end of the earnings distribution often cycle between work and benefits. How realistic is it to think that low-paid workers will be willing to trust the very same advisers who may have imposed a sanction on them during a previous spell of unemployment?

Not simply a cultural and logistical challenge for resource-strapped Jobcentres, through eroding the distinction between being in work and out of work and potentially extending negative representations of benefit claimants to those who already have a job, in-work conditionality also risks obscuring the hitherto strictly demarcated political dividing line between Theresa May’s ‘just managing’ families and welfare-dependent ‘scroungers.’ Hampered by the incremental and chronically delayed rollout of Universal Credit, and a paucity of up-to-date government-commissioned and academic research, only time will tell whether this new vision for Jobcentre Plus will ever be realised.

Notes

[1] Originally designed as part of Universal Credit, with a rollout that has been much slower than anticipated, the ‘Claimant Commitment’ – with its requirement for 35 hours of evidenced job search as a mandatory condition of benefit receipt – also now applies to claimants of jobseekers allowance (JSA) and employment support allowance.
[2] See ESRC-funded research entitled ‘Welfare conditionality: sanctioning, support and behaviour change’ led by the University of York.
[3] A third failure to comply with the most important jobseeking requirements will result in a sanction of 156 weeks.
[4] See D Webster, University of Glasgow
[5] http://www.publications.parliament.uk/pa/cm201516/cmselect/cmworpen/373/37302.htm
[6] http://www.publications.parliament.uk/pa/cm201516/cmselect/cmworpen/549/549.pdf

The rise of Bristol, success but not yet shared growth — notes for a new mayor

📥  cities, Economy, education, employment, labour market, Welfare, young people

Gavin Kelly is Chief Executive of the Resolution Trust, and former Deputy Chief of Staff at 10 Downing Street.

Any outsider asked to comment on Bristol’s prospects should, of course, tread fairly carefully. I love coming to the city but claim no special knowledge of it. I like to think I’ve been here enough to see past the standard cliché that it’s a city made of hipsters and hills, balloons and bridges. But I have no granular understanding of the different communities within the city, the twists and turns of its economy, and how its politics have ebbed and flowed.

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So I’m going to rely instead on some arid statistics to form a dispassionate external impression. Statistics are, of course, always partial and quite often misleading. They never tell the whole story  – they’re just dots on a chart. But if you join the dots you form a picture, even if it’s a sketchy one. And pictures can be very revealing. As I’ll explain, the image that emerges for me is a city that has rare strengths as well as major challenges.

What’s happened in Bristol should, I think, be of interest across the country. That’s because to some degree Bristol’s story reflects the received wisdom about the correct recipe for urban economic success. Mix physical regeneration of a city-centre with a successful and growing university, a large pool of high-skilled labour and strong transport links. Sprinkle in some cultural-cool and a high quality of life. And then sit back and watch a place thrive. On this basis, Bristol has the lot.

Given these ingredients, how does the city perform? Like most things, it’s a mixed story. Its strengths are very real: simply put, it has high employment levels, above-average pay for those working in the city, and a remarkably high share of graduates in the workforce. These are big assets. Some cities have lots of jobs but weak pay; others have decent pay but fewer jobs. To do well on both fronts is impressive. And being a magnet for graduates is more vital than ever. Every city that wants to succeed in high-knowledge, high-value sectors will always require a critical mass of highly-educated workers. Outside of London, Bristol outperforms every other city in the UK on this front with 4 in 10 of those in Bristol’s workforce holding a degree.

So far so good. Why, then, do I say the city faces deep problems? For me, three challenges stand out.

First, it is something of an understatement to say that the benefits of the city’s success have not been evenly shared. It is a city of deep inequalities. If we look at child poverty across the city we find a gigantic poverty gap with 5% of children in poverty in some wards and just under half in others. That’s a far more pronounced difference between affluent and deprived communities within a city than we see in places like Glasgow or Nottingham.

But to really get a sense of the challenge facing Bristol look at educational inequality. GCSE attainment for state schools in the city is slightly below the national average and this is mostly due to the low attainment of the poorest children. 25% of pupils on free school meals in Bristol reach the usual benchmark of 5 good GCSEs including English and Maths, compared to 62% of non-poor pupils. That’s a big, ugly, 37% gap between the poor and the rest: only nine local authorities in the country have a larger one. Put simply, non-poor pupils in Bristol do better than the national average, whereas the poor do worse.

This inequality at age 16 is maintained as young people progress. Just 13% of those on free-school meals in Bristol at GCSE progress onto higher education (and the gap between the poor and the rest in this regard has been getting larger in Bristol over time while it shrinks nationally). To put this in context, compare it to the London story. In Inner London half of the poorest kids achieved five good GCSEs including English and Maths. That’s not much lower than the overall score for all pupils in Bristol. And 42% of the poorest pupils in inner London go on to university. That’s three times as many as in Bristol. Let me repeat that: a poor child in London is three times more likely to progress to higher education than their counterpart in Bristol. And, no, it’s not just London: the 13% of poor children progressing to university compares to 30% in Birmingham and 25% in Manchester. Until this is turned around then any talk of improving social mobility in the city will be a pipe dream.

Even on wages  –  where Bristol performs better than average –  there is still a lot of poverty-pay: one in five workers earn less than the (real) Living Wage. Moreover, like everywhere else in the UK, it has been a lost decade for workers. After the financial crisis average pay in Bristol collapsed all the way back to the level it was at in 2001. As of today it has climbed back to 2005 levels. It would be very surprising if pay returns to its 2009 peak before 2020.

If the first big challenge facing the city concerns inequality then I’d argue that a second issue concerns productivity. Bristol has its very own productivity puzzle  –  and it’s a worrying one. Now, in some ways that’s an odd thing to say. Bristol  – and the South West region  – performs better than large parts of the UK on this score and, historically at least, the city looked like a strong performer outside London. The puzzle is that since the financial crash Bristol’s productivity has been sliding backwards. It now stands at just 93% of the UK average (and bear in mind that this has occurred while national productivity has itself flat-lined).

The conundrum grows when we consider that Bristol very nearly matches London in terms of the high share of graduates in the workforce. Yet it resembles places like Darlington or North Lincolnshire in terms of productivity. That’s an odd combination. It should cause pause for thought within the city’s business community and invite questions about the utilisation of skills, along with the quality of infrastructure in the city.

Finally, there is  –  of course –  the housing challenge. Again, Bristol is hardly alone in facing acute affordability issues. But the problem is particularly severe and getting worse. The average house price in Bristol has now passed £250,000. According to the ONS it has jumped 15% in the past year alone, 50% since 2010 and 255% since 2000. You don’t need me to tell you that this isn’t sustainable. To see why look at the ratio of house prices to average earnings. It leapt from around 5:1 in the early 2000s to over 9:1 today. Or to put it another way, house prices have grown more than 3 times faster than earnings in Bristol since 2002. And things are just as bad for renters. A household on a modest income in the private sector will typically spend at least a third of their total income on rent. That is what housing experts call ‘unaffordable’. And it puts Bristol in the top quarter of the most expensive places to rent in England.

Let me finish by saying that being a mayor of an incredible city like Bristol must be a remarkable privilege. But being a new mayor has to be both a luxury and a burden. It’s the former because you have the joy of being able to speak freely about the city’s challenges. And it’s the latter because you know that moment is a fleeting one and that soon all the city’s shortcomings will be hung around your neck if they aren’t addressed.

I hope and expect the new mayor will prioritise an agenda of ‘shared growth’. Doubtless he’ll already be familiar with the received views on the right recipe for a successful city. My argument is that some extra ingredients are required. I hope he won’t hold back in being candid about the scale of the challenge if the ‘shared’ part of the equation is to be made real. And he’ll need to be ambitious and innovative in his agenda for putting it right.

This piece was the basis of remarks made in response to the Inaugural Address of the Mayor of Bristol, Marvin Rees. It first appeared on Gavin Kelly's personal blog.

Brexit and the bread ration: a story of everyday farming subsidies

📥  Agriculture, Brexit, Economy, EU membership

Professor Stuart Reynolds is Emeritus Professor of Biology in the Department of Biology and Biochemistry at the University of Bath, and former President of the Royal Entomological Society. 

In the 18th Century economist Adam Smith identified the “invisible hand” of the marketplace as the true, efficient regulator of prices. This is now conventional wisdom, and the idea that free trade is best is so pervasive that the diplomats and politicians of every country seem to exert themselves ceaselessly to abolish or minimise the barriers in its way; globalisation appears an unstoppable trend, opposed only by the fringe protesters of the anarchist left.

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There’s no more important commodity than food. So do we practice free trade in food? Of course not.

The truth is that today almost no country on earth is prepared to allow a laissez-faire agricultural system. A secure supply of food is so central to public contentment that no politician can risk endangering it, and almost every government fiddles with the food chain through subsidies on prices or other kinds of payments to domestic food producers. In this way, farmers are encouraged to grow more crops, raise more animals. This intervention results in food that is more expensive than it would otherwise be (although part of the price may be concealed as taxes).

There’s a long tradition of such fiddling with food prices that stretches back at least to ancient Rome, in which the cura annonae - a grain dole to registered heads of households - was used at first to hold down prices to a set level, and later on became a totally free handout of bread to citizens of the Imperial city. It’s notable that it was introduced when Rome was a republic and citizens held at least a semblance of democratic power. Electors were wooed by rich candidates with low food prices. The grain dole imposed costs on the empire (and therefore on taxes) and must have been a nightmare to administer. It caused endless political problems, but nevertheless it worked well enough to endure from the grain laws of Gaius Gracchus in 123 BC through to the Empire and at least the late 3rd Century CE.

Today, such fiddling with food prices continues on a previously unimaginable scale. The world’s largest producer of food, the United States of America, up until 2014 regulated the market through price support not only of cereals but also of numerous other commodities. Responding to criticism of this market-distorting expenditure, the Farm Bill of that year phased out direct payments to farmers (some of those previously available did not require the recipient to grow any crop at all), but despite this change the USA’s food market is still regulated by a hand that is far from invisible. The US Department of Agriculture’s budget is so large (the total outlay for 2016 is estimated at US$148bn) and so complicated that it’s difficult to say exactly how large is the total direct and indirect subsidy actually paid to US farmers - but some idea of the scale of intervention can be seen from the 2016 USDA budget estimates. According to the OECD, the benefits to farmers in 2015 totalled $38.7bn. Despite the 2014 Farm Bill, support payments for particular commodities are still made as “agricultural risk/price loss coverage” (the total for 2016 is estimated to be $7.1bn). Moreover, there are numerous other billion-dollar-scale benefits to farmers, such as crop insurance to the value of $8.2bn (effectively providing a guaranteed income from a planted field) and environmental payments such as the “conservation reserve program” (a $1.8bn fund similar to the EU’s stewardship programme).

The EU is another big subsidiser of food production. According to the EU itself, from 2016 it will spend €42bn per year on direct payments to producers based on land area (the so-called “first pillar” of support to farmers). A further €13.6bn is provided for rural development (“second pillar”) funding. Again, it’s difficult to track every actual subsidy, and the OECD reckons that the total subsidy in 2015 was much more than this, at €81.1bn.

Launched in 1962 (before the UK was a member), the EU’s Common Agricultural Policy (CAP) initially caused various kinds of food prices to be supported by interventionist purchase of surplus harvest, and had the desired effect of increasing production. It was so successful that it quickly resulted in the notorious “mountains” of butter, sugar and grain, and “lakes” of wine and olive oil that in the 1980s were almost daily excoriated as a scandal by British tabloid headline writers. The EU is typically represented by its critics as exceptionally unresponsive to media pressure of this kind, but - by 1992 - the Commission was obliged to reform the policy by reducing price supports and paying farmers not to grow crops at all (“set-aside”). Subsequently, in 2003, the EU’s agri-food policy was modified again, so that subsidies for particular crops were withdrawn altogether, while maintaining much the same level of total support for farmers through area-based “single farm payments” which now account for most CAP spending. The idea is to make farmers more responsive to agricultural product markets, and less strongly driven by the level of subsidy. Does that mean that Europe has at last achieved an Adam Smith-style laissez-faire agricultural policy? Hardly. The level of payments to farmers is still massive, representing around 40% of the whole EU budget.

The OECD gives figures for subsidies as a percentage of total farm income. The 2015 figure for the 28 countries of the EU is 28%, while that for the USA is only one third of that at 9.4% - and both these superstates are far from the top of the subsidy list. The biggest spenders are small, rich states. In both Norway and Switzerland, for example, subsidies represent more than 60% of total farm income. In fact price supports and other interventionist instruments are alive and well in the agricultural systems of almost all the countries listed in the OECD table. Although at the World Trade Organization talks of 2001, the rapidly developing BRIIC countries (Brazil, Russia, India, Indonesia and China) opposed the distorting effects of the agricultural subsidies of the developed world (especially the USA and the EU), the strategy of the former has since been to emulate the policies of the latter. China’s total payments to farmers ($160bn per year in 2012, representing 21% of farm income), in point of fact, now dwarf those of the USA, both in total and proportionally.

Although globalisation is nominally all about tearing down barriers to free trade, there’s little sign that the interventionist policies of the biggest food producers are about to change. Evidently free trade is thought to be a good idea as long as it’s not free trade in food. One reason for this is simple but scandalous: the farm payments that are the core of these policies go overwhelmingly to the biggest landowners. The recent press reports identifying the top 100 recipients of EU farm subsidies as a roll call of the very rich make interesting but horrifying reading. In the USA the picture is similar with three quarters of the money going to only one tenth of recipients. These big landowners are of course prominent among the people who bankroll politicians (in some cases they are actually the same people), and they make it clear that they want the farm payments to continue. Viewed in this way, farm subsidies look like politically sanctioned schemes to transfer wealth from poor to rich.

But inequitable political power is volatile, and meddling with food prices comes at a political cost - at least where democracy is practised. Populist politicians don’t have to work hard to persuade electors of the merits of cheap food policies. Direct payments to farmers that aren’t tied to food production are particularly hard to justify. And it’s difficult to keep corruption from creeping in when very large sums of money are sloshing around. Although farmers are effective lobbyists in many countries, it’s hard work to defend payments to plutocrat landowners. And how come the biggest landowners receive larger proportional subsidies than small ones?

The result of these conflicting pressures is a trade-off between laissez-faire policies that yield cheap food (popular with voters) and intervening to ensure a consistent supply (popular with farmers). Evidently the enhanced security of the food supply makes higher prices palatable to the electorate at least some of the time.

Farm payments don’t only affect farmers at home. Direct payments to farmers can also lead to price distortions on world markets that amount to the dumping of surplus food at low prices, effectively hindering access to the agricultural products of less-developed countries and generating food insecurity. The EU and the USA have also both been accused of dumping their own surpluses as food aid to regions suffering food shortages; this feeds those who are starving, but has the disastrous effect of impoverishing local food producers. Responding to criticism of this kind, in the last twenty years donors have increasingly chosen to purchase food aid locally instead of sending aid from stores in the donor country - but this is still a controversial area.

There are also arguments other than economic ones to be made against political intervention in agricultural markets. One of these is that price supports not only boost the incomes of farmers, but also determine what kinds of crops farmers grow, regardless of whether they are actually needed. It isn’t an accident that maize (corn) is the US’s biggest crop – it’s also the most heavily subsidised. Almost all of the maize grown is not for human consumption, and most is destined to be eaten by cattle. It is the availability of cheap corn that has enabled the vastly increased production of feedlot beef cattle, and hence the growth of the burger industry.

But there aren’t enough cows to eat all the maize that is produced, and something else must be done with it. In recent years, with awareness of climate change and the need to limit fossil fuel consumption, there has been enthusiasm for turning it into alcohol for use as fuel - and in 2009 some 29% of US corn production was used in this way. But there are now serious doubts about the environmental benefits of ethanol-based fuels, and official enthusiasm for biofuel has waned. The other main non-cattle use for maize is the production of corn syrup, a commodity that is actively looking for both food and non-food uses, despite the fact that it probably isn’t a very healthy choice as a food. Low-cost sugary drinks are a direct consequence of growing all that corn. The knock-on consequences of growing the wrong kinds of food are serious, being directly relevant to the state of public health and the (huge) costs of healthcare systems. Too many burgers, too many sugary drinks? It won’t do simply to blame the people who follow such a diet. The fact is that that these are the cheap foods that many poor people are obliged to consume. The modern epidemic of obesity is at least in part due to agricultural policies followed by the US and other developed nations.

Green activists have also finally realised that many kinds of farm subsidy are very bad for the rural environment. Any system that promotes bringing as much land as possible under the plough is bound to diminish biodiversity. The whole point of agriculture is to promote the growth of a single kind of crop at the expense of whatever would be there otherwise. The more efficient is the agriculture, the fewer other species will be able to live alongside it. The 2016 State of Nature report, which was produced by a consortium of green NGOs and pressure groups, concluded that in the UK “policy-driven agricultural change [is] by far the most significant driver of [biodiversity] declines”. It’s true that the EU has in the past made a portion of payments to producers (currently about 20% of the total) contingent on negotiated plans for environmental stewardship, but the complex bureaucracy involved is formidable and unpopular with many farmers.

What are the prospects for a world-wide reduction in the scale of agricultural subsidies?

It’s notable that interventionist policies tend to be implemented when memories of shocks to the food supply chain are still strong. The notorious British Corn Laws (tariffs on wheat imports designed to maintain a minimum price for the domestic product) were introduced in 1815, just after the battle of Waterloo brought the Napoleonic wars to a close. US farm payments began in the 1920s, following a period of volatility in farm gate prices, and were consolidated in the depression years. The European Union’s Common Agricultural Policy (CAP) was negotiated over a decade of wrangling in the 1950s, less than 10 years after World War II’s food rationing. The idea in all these cases was to ensure food security. This suggests that when politicians who never experienced the nutritional deprivation associated with war or other food price shocks, rationing, or even starvation, finally come to power, they will fret much more about high food prices than did the previous generation, and worry much less about continuity of supply. Perhaps this is what’s happening now; perhaps we can expect a rapid change in food policy as the baby boomers of the late 1940s retire from the political scene.

Reducing or eliminating farm subsidies makes most sense for countries with secure domestic food supplies that are also net exporters of food. Today, the states that intervene least in food pricing by some way are New Zealand and Vietnam, both of which have subsidies less than 1% of farm income. These are both countries with large farming sectors occupying particularly favourable geographic positions from the point of view of agriculture-friendly climates combined with closeness to the emerging market of China. There are other nations (like Australia, Brazil, Chile and South Africa) that have low levels of subsidy (all less than 5% of farm income), but they don’t come close to these two.

New Zealand is particularly interesting, because it took the decision to deregulate its highly developed and previously highly subsidised agricultural industry only in 1984, and has since prospered. The country’s animal industry is particularly successful, exporting grass-grown beef, lamb and dairy goods. Enthusiasts for deregulated agriculture argue that the abolition of price intervention and other supports in 1984 has allowed New Zealand farmers to innovate and become successful exporters. This is a remarkable achievement given that New Zealand farmers don’t sell into an unfettered supply-and-demand market, because most international competitors operate under interventionist conditions and many of their customers impose tariff barriers to imports. Surely, it is argued, this kind of success is what every country should aim to emulate? But the period since 1984 has coincided with the unprecedentedly rapid growth of the Chinese economy and a concomitant huge increase in exports of New Zealand agricultural products to China. This was consolidated in the 2008 zero-tariff free trade agreement with China. Would New Zealand’s non-interventionist food policy stance have been possible in a time of less impressive market growth? Will its success continue? The questions have at least to be asked.

Here in the UK there is already widespread discussion about what will happen to UK food and agriculture policy after Brexit, when we in the UK can in principle decide to do as we like?

British politicians have never been happy about Europe’s interventionist CAP, perhaps being influenced by long-lasting memories of the problems caused by the 1815 Corn Laws, which enriched big farmers but inflated grain prices and caused misery for the poor. A parliament stuffed with landowners was reluctant to forego the profits, but it was only too obvious that eventually the Corn Laws would have to go. Only the disaster of the Irish Potato Famine caused their repeal in 1846, and British statesmen have been suspicious of food price intervention ever since. However, it is ironic that during the years of EU membership, British politicians have evidently become so accustomed to the EU’s system of agricultural support payments that in the recent past, far from demanding to scrap it, they have featured among its fiercest proponents. In the latest iteration of the CAP, provision is made for national governments to impose a ceiling on payments; unlike most EU countries, the UK government has chosen not to do so. It’s quite difficult to explain this, but it’s hard to avoid the conclusion that the continuing preference of the landed classes for the Conservative party may have had something to do with it.

Some kind of reform seems at least desirable. Vested interests, such as the big landowners and perhaps the politicians whom they support, will doubtless argue that what is needed is simply to institute a local version of the CAP, which will continue to intervene in various ways to support farmers’ incomes (perhaps especially those of big landowners). But the press has already smelled blood over the level of payments to the very rich, and popular sentiment for a redistribution of payments in favour of small farmers seems certain to grow. Politicians don’t like populist campaigns like this (remember the fuss about MP’s expenses?) but inevitably they are obliged to respond when votes are at stake.

A further shift towards green farming also seems likely. NGOs such as the National Trust are already arguing that Brexit offers an opportunity to enact a policy that will do more to protect the countryside from the undesirable environmental effects of intensive farming. It is uncertain to what extent, however, these campaigns will be successful in a time of austerity.

It isn’t hard to predict that politicians will be most concerned to respond to electors’ worries about the cost of feeding their families. For this reason, a reduction in the total extent of farm subsidies now looks inevitable. Farmers, whether plutocrats or crofters, will doubtless squeal, and the National Farmers’ Union will campaign to maintain direct payments at pre-Brexit levels. Perhaps there will even be French-style protests involving invasions of tractors in central London. But there can be little doubt that much of the referendum support for Brexit came from those who feel neglected by the existing political system, and who have little sympathy with farmers and farm workers, who are now so few in number that they can exert little political leverage except through lobbying at the highest levels. The success of the Brexit campaign rested at least in part on promises to repatriate the UK's payments to the EU and to redirect them to popular worthy causes such as the National Health Service. There are high expectations that at least something of this kind will be delivered. But given that maintaining direct farm payments until 2020, as already promised by the Government, will consume almost half of this money, the political pressure to reduce agricultural subsidies after that date will be very hard to resist.

 

Legacies and long shadows: will Theresa May succeed where Chamberlain failed?

📥  Anglosphere, Brexit, future, political parties

Birmingham has a square named after Joseph Chamberlain, its most famous politician, through which visitors to the Conservative Party conference will pass on their way up from rebuilt New Street station this week. Although the square is home only to a lacklustre memorial fountain, and not his statue, Chamberlain will still loom large over proceedings at the conference. He will be celebrated by Theresa May and her colleagues as a champion of the manufacturing industry and a great social reformer, the radical who campaigned for municipal education, decent housing and civic improvements for the Victorian working class.

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Chamberlain was also an apostle of imperial unity between Great Britain and her settler colonies – what today’s Brexiteers call the “Anglosphere”. As Colonial Secretary, he sought closer economic and political ties between Great Britain and Canada, South Africa, Australia and New Zealand. His passion for this cause would eventually lead him out of government, the better to campaign for tariff reform that would give preference to colonial goods and shelter British industry from international competition. It was a lost cause. Free trade was too deeply embedded in the political economy of Edwardian Britain for Chamberlain to dislodge it. Birmingham’s manufacturers were no match for the financial, commercial and shipping interests that had the deepest stakes in the liberal British world order, while the free traders’ “big loaf” beat Chamberlain’s “little loaf” for the loyalty of the working class. Unionist imperialism plus social reform lost out to a new progressive alliance of Liberal and Labour interests.

Theresa May wants to succeed where Chamberlain failed in uniting working-class voters with the British industrial interest. She has created a new department for industrial strategy and promised to prioritise “just managing” households. Housing policy is to be refocused from subsidising home ownership, to building homes and supporting private renters. Fiscal policy will be relaxed, easing planned cuts to services and benefits. The electoral coalition that delivered Brexit – of struggling working-class voters and middle-class older voters (or the “excluded and the insulated”, as David Willetts recently put it) – will form the ballast of a new Conservative hegemony.

But the Prime Minister’s chosen path to Brexit – of prioritising immigration control over the single market, and “sovereignty” over the jurisdiction of the European Court of Justice – will bring her into conflict with Britain’s existing political economic interests, just as much as Chamberlain’s campaign for tariff reform did. Britain’s leading-edge manufacturers – in the automotive and aerospace sectors, for example – are deeply integrated into the European single market. They do not simply make products in the UK, and sell them to the rest of Europe, tariff free, as Brexiteers suppose: they have complex supply chains and move parts and people across plants in the EU. Imposing custom checks, slowing down supply chains, and limiting the movement of workers will matter as much as tariffs to their operations. And what goes for manufacturing is doubly true for services.

Decisions about new investment will often be taken in global HQs, not national branch offices. The growth of foreign direct investment in the UK since the 1980s means that much of Britain’s industrial capital is no longer national in any meaningful sense. Economic patriotism will hold little sway over multinational investors or global bankers.

Some political economists argue that the advanced sectors of the economy are not subject to partisan division, since their centrality to national prosperity is such that political parties agree on the policies needed to secure their interests. If so, that may be about to change. The City of London and the leading export sectors – trade unions and employers – have yet properly to flex their muscles in the Brexit debate. Although they cannot currently turn to an electorally credible Labour opposition to make their case, they will have advocacy routes of their own, not least through the Mayor of London and the Scottish government. Hard Brexit will stretch Theresa May’s unionism and the unity of the country, as much as that of her own party, to the limit (and that is before the status of Northern Ireland’s border is factored into the equation).

Few peacetime prime ministers have confronted a set of challenges like those facing Theresa May: holding together the United Kingdom, revitalising British industry, delivering shared prosperity to working people, and renegotiating Britain’s place in Europe and the world. It is a formidable list. Lesser ones defeated Joe Chamberlain and his generation. Theresa May will hope that she isn’t memorialised by failure.