- Making striking more difficult might be a good thing. The most controversial part of the bill is the part requiring at least 50% turnout in strikes overall (so 25% of members must vote in favour), and for public sector strikes the backing of at least 40% of those eligible to vote. This certainly does make striking less easy, but it hardly makes it impossible. If workers really feel that they need to strike, they can still do so, provided they get 25% or 40% of total members (for private and public sector workers respectively) to agree with them. This does make it harder for people like Len McCluskey and Mark Serwotka to call strikes that most union members don’t want, though.
- Most workers aren’t in a union. Only 14% of private sector workers and 54% of public sector workers – 25% overall – are in a union. That means that strikes, even if they are good for union workers, only benefit a small number of workers. And everyone else is inconvenienced by them: strikes can be costly and time-consuming for people who use the services that the striking workers provide.
- People who are in a union are generally middle-income workers. According to the ONS, “Middle-income earners were more likely to be trade union members than either high or low paid employees. About 38 per cent of employees who earned between £500 and £999 were members of a trade union, compared with 21 per cent of employees earning £1,000 or more. The proportion of employees earning less than £250 who were trade union members was 15 per cent.” Also, “Employees in professional occupations are more likely to be trade union members” (this includes jobs like nurses).
- Why shouldn’t firms be allowed to hire agency workers to fill in for striking workers? Workers who take part in official strikes (as defined here) are protected from being fired, except after 12 weeks of striking if the employer has tried to settle the dispute. This privilege is popular but if the only reason to stop firms from hiring replacement workers is that it makes strikes less powerful it’s not clear why this is a bad thing.
- Some parts of the bill do seem draconian. Making strikers wear armbands may be justifiable if there is a problem with identifying workers who are actually working and who are taking part in the strike – I don’t know if this is the case. Requiring picketers to give their names to the police seems entirely overboard, though, and David Davis is probably right that it’s unnecessary.
- Strikes do cost money, though some might have a surprising upside too. Between 2011 and 2014 (inclusive) about 3 million days worth of labour were lost directly because of strikes. That's costly and does not include the time lost from people working from home, leaving work early, coming in late, etc. (Giles Wilkes points out that over the same period 520 million days were lost to illness. With that context, 3 million doesn't sound very high.) But there may be surprising upside too – a Cambridge paper released today says that the February 2014 tube strike was a net positives in efficiency terms, because 1 in 20 people who found a new route to work stuck with it after that, and the long-term savings to them from that outweigh the daily losses to the other 19 in 20 workers. I'm not sure if that scales to other strikes, but it's quite a nifty finding either way. (NB: I haven't read the full paper yet, so I can't vouch for it.)
What should an economist make of the economic policy of Jeremy Corbyn, the new leader of the Labour Party in the United Kingdom? Among other things, Corbyn and his team have proposed not just a minimum wage but a "maximum wage" as well. That means, presumably, that firms will not be allowed to pay any employees over a certain amount. Unless that amount is set at some extremely high level – so high that it would not be considered a 'socialist' measure at all – the result is obvious. Talented people will leave in order to get higher pay elsewhere, and talented people who might have come to the UK from other places (like high-tax France, for example) won't. Likewise, companies whose business relies on world-class human resources will not be able to attract them in the UK, so will move abroad, or will not bother to come. So unless Corbyn can get the entire world to adopt the same "maximum wage", the policy won't work. And even if he could, there would then be a lot of talented people downing tools.
Another strand of Corbyn thinking is to nationalise (or is it re-nationalise) the energy companies. He might even re-open the coal mines, whose workers caused Margaret Thatcher so much annoyance. Unless the aim is to re-create a labour movement based around mining communities, the latter policy seems odd, for several reasons. First, the UK's coal resources are pretty poor. Thatcher may have had political reasons to close the mines, but the straightforward economic reasons were the low quality of the mineral resource in the UK, and the inefficiency of the UK coal-mining operations. At one point it was cheaper to land coal from Australia in the UK than to mine it ourselves. Were it feasible to mine coal efficiently in the UK, more people would be volunteering to do it. Also, deep-pit coal mining is not, and never will be, a particularly healthy occupation. In a country that is doing its best to stop people smoking cigarettes, it seems remarkable to wish to send more people into coal mines. Unless you figure the entire job can be done by robots, which on the basis of other countries' experience, seems unlikely.
As for nationalising energy companies, why bother? Will that really contribute more to the UK economy? How much more efficiently could the state run the energy sector, even on the most optimistic assumptions? Is the presumed benefit worth the upheaval?
And another point: would compensation be paid to the (millions of) shareholders of the energy companies? If so, that would be a big drain on the government budget: these are big companies so the bill would run to – who can be sure, but probably £200bn or more. What other government budgets are going to be cut to pay that bill? And if no compensation is paid, what signal does that send to potential investors in UK enterprises? Simple: the message that their money could be taken off them without notice. Better, many might think, to put their cash elsewhere. And better, many entrepreneurs might think, not to bother building up a business in Britain.
Corbyn has taken a robust anti-austerity stance. We should borrow to invest in our future prosperity, he insists. The proposition would be more widely accepted, were the UK government's borrowing not already at a record high (apart from war debts) and getting higher each year. Arguably we have not had austerity, we have just kept on borrowing, and spending, perhaps a bit slower than we might have done.
The plan is for 'People's Quantitative Easing'. The argument is, not entirely fallaciously, that the previous rounds of quantitative easing have gone into creating asset bubbles, which is fine for the people who own assets such as shares, but not for the ordinary workers whose firms are finding it hard to meet their wage bills. So how can we get new spending to do the business? Corbyn's answer is to spend it directly on things that matter, things that will improve our lives, things that will makes us prosper in the future – things like roads, housing, transport, green energy and digital projects. In other words, the Bank of England will be creating money that the government will spend on projects that the government decides fit – not to finance the projects that industry and business believe would deliver the best return. The policy certainly envisages a much larger role for the public sector in the economic life of the nation. But is public decision-making any better than private decision-making? Is Whitehall good at prioritising and managing investment projects? Probably not.
The anti-austerity call also comes at a time when the Bank of England is thinking much more about how to tighten things than to loosen them. The UK's growth is already well ahead of Europe's in general, and there are fears that this growth simply reflects the fact that interest rates have been held at 'emergency' levels for more than five years. An important job for a central bank is to dash away the punch bowl before the party gets too raucous and ends in people doing stupid things. Now might be a good time to stop pouring the punch.
How to fund all of the new expenditure envisaged by Corbyn and his team? There is talk about cutting tax reliefs and subsidies to the corporate sector, which the team estimates at £93bn. True, there are far too many little schemes to aid business, all of them squibs injected into the budget speeches of past Chancellors in order to get a cheer of approval from MPs. We would be better to scrap them and have generally lower taxes. But equally, cutting schemes such as grants for research and development might actually, in the immediate term, do more harm than good, forcing firms to cut back their research and investment activities. More thought is needed on that one. And even if the £93bn figure is accurate and not a wishfully high guess, how far does that take us towards paying for the ambitious economic programme that is envisaged?
Another ambition is to 'end' tax evasion and avoidance. A pressure group that the Corbyn team rely on puts the loss to the Exchequer of avoidance and evasion at £120bn. There is no justification for this figure. Surveys generally agree that the UK has one of the world's smallest shadow economies. Certainly, there is a fair bit of back-pocket trading, and when VAT is 20% it is not surprising that many people would prefer to pay in cash than have their transaction go through the books and suddenly grow one-fifth larger in cost. If it were possible to prevent cash transactions (and France has recently lowered the size of transactions where you are actually forbidden from paying in cash), it is entirely possible that a lot of fledgling businesses would be killed off by the tax, and perhaps by the extra regulation of doing everything by the book. But for small transactions, how can the back-pocket method ever be totally policed? The idea that there are £120bn of savings waiting there to be picked off is – well, optimistic.
Likewise with avoidance. True, the Treasury can take action against schemes whereby people are paid in rare metals or some other ruse to avoid national insurance and the like. But the point about avoidance schemes is that they are legal. They work within the existing rules. The more complex the rules are, the more possibility is there of moving money, quite legitimately, from one column to another in order to benefit from the different treatment of it and lower your tax bill. There is really only one solution to this – to have taxes that are low enough that they are not worth avoiding. But that does not seem to be on the Corbyn agenda.
So much for what is in the Corbyn economic programme. Just as revealing is what is not in it. There has been precious little mention of encouraging new start ups, helping growing companies with easier rules and regulations, and promoting entrepreneurship. There has even been ever little talked about improving the conditions for new kinds of company to grow, such as social enterprises, cooperatives or mutuals. The solution to our ills is seen as greater spending led by the state, not a revival of growth, enterprise, trade and entrepreneurship led by ordinary individuals and groups. Given the competition which the UK faces from other, dynamic, economies, this seems a worrying oversight.
We do have to admit, this could be the only thing Jezza gets right in his time at the top of the Labour Party but let us praise people doing the right thing when they do it all the same. It is entirely right, just and proper, that the Corbyn for Leader t-shirts were purchased from malodorous sweatshops in Nicaragua and Haiti.
Jeremy Corbyn swept to victory backed by cash raised from the sale of T-shirts made by factory workers earning just 49p an hour. The Socialist firebrand’s fighting fund got a £100,000 boost from the ‘Team Corbyn’ garments, which sold out on his official website. Moments after taking over the Labour leadership, Corbyn spoke of his determination to combat poverty and inequality in an impassioned victory speech.
We too believe in the combat against poverty. And so we do indeed praise Corbyn and his team for doing their bit against such poverty. Their buying their t shirts, and we apologise for our cynicism here, from the global poor will almost certainly do more for said global poor than any political policy they start to mutter about in the months and years to come.
The factories are run by Canadian clothing giant Gildan. In Nicaragua, workers are paid £101 a month for shifts that keep some workers on the factory site for more than 12 hours a day, with breaks. Based on information from workers and their union officials that most employees work 48 hours a week, that works out at 48.5p an hour.
In Haiti, workers are paid a piece rate depending on how many shirts they make – some earning as little as 39p an hour. One woman told us she earns about £20 for a six-day week.
And that's why this alleviates poverty. Because, if people are willing to work in such conditions for such pitiful wages what must the alternative jobs be like in those same economies? Quite, obviously, worse.
As Madsen Pirie of this parish has been known to point out, the best method of global poverty alleviation is for us all to purchase goods made by poor people in poor countries. And thus the purchase of some 1000 or so t shirts from those factories staffed by said global poor in poor countries contributes to the alleviation of poverty.
And so we applaud this action: more people should buy more things from sweatshops after all.
We would also note that in terms of poverty alleviation this might well be the only time that the Corbynistas and Jezzbollah will actually put their own money where their mouths are. But to point that out really would be cynical, wouldn't it?
Our attention was drawn to this quite wondrous piece by Ha Joon Chang in the Financial Times:
Bolivia isn’t the only country in Latin America that has defied the Washington Consensus and improved its economic performance. Argentina, Ecuador, Uruguay and Venezuela have all ditched Washington Consensus policies and have seen both accelerated economic growth and reduced income inequality. I am not saying everything is peachy in those Latin American countries. In particular, Venezuela has serious macroeconomic imbalances, although they have improved recently, while Argentina is haunted by its past debt crisis. More worryingly, much of their economic growth has been due to the commodity price boom — fuelled by China’s super-growth, which is coming to an end — rather than industrial development. So there is a serious question about the sustainability of their growth.
However, these countries’ experiences show how the Washington Consensus policies have failed developing countries. That most of the fastest-growing developing countries outside Latin America, such as China, Vietnam, Myanmar, Ethiopia and Uzbekistan, haven’t even adopted Washington Consensus policies in the first place corroborates this observation.
The first point to note is that there's a certain confusion there about what the Washington Consensus actually is. It is, in fact, just a list of stupid things that governments should not do. Although phrased in a positive manner, the real point is don't do the opposite:
The consensus as originally stated by Williamson included ten broad sets of relatively specific policy recommendations: Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP; Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment; Tax reform, broadening the tax base and adopting moderate marginal tax rates; Interest rates that are market determined and positive (but moderate) in real terms; Competitive exchange rates; Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs; Liberalization of inward foreign direct investment; Privatization of state enterprises; Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions; Legal security for property rights.
The idea that China hasn't followed at least most of that is ludicrous.
As is the idea that Venezuela has been doing well quite frankly.
Yes, we know, Chang has a horror of the idea that markets undirected by the bureaucracy might actually work but really, this is too much.
The election of Jeremy Corbyn as the new Labour Party leader tells us three things. First, that we have (deservedly) lost faith in the prevailing political class. Second, that the old class-and-age-based party alliances are dead. And third, that things are going to be a lot more interesting (if also a little worrying). First, Corbyn (like Donald Trump in the Republican Party election in the US) did well because he does not follow the accepted norms for politicians. For one thing, he didn't wear a suit in regulation camera-friendly plain colours or, like rival Andy Burnham, blue-grey and the regular white shirt and camera-friendly plain tie too. Indeed, there was speculation that Corbyn's minders had briefly got him to dispose of his undershirt, but this hope was soon dashed. He was neither clean-shaven nor coiffured. Unlike the others he looked like a regular person, in fact – acting his age as a mature person who does not need to dress like a mannequin to be taken seriously, but can be taken seriously on his experience alone.
Maybe that is why he used just two words when the others used ten. He had no need to exert his presence by filling the available airtime, because his presence alone was quite sufficient, and the views he was expressing were so gripping. No need to fill the airways with platitudes when you can simply drop one or two bombshells and enjoy the silence.
The reason why he gripped the debate and garnered the votes was precisely that. Whatever you might think of his positioning, he seems like the sort of person you can have an honest conversation with in the pub, rather than someone who believes nothing and spouts focus-group-tested soundbites at you. Britain, it seems – or at least the Labour side of it – is ready for such straight talking after the porage of the Blair-Cameron era. The fact is that we are fed up with identikit politicians and want leaders who will take firm views on things they believe in – even if we sometimes disagree with them.
Second, with this stance, Corbyn can attract new people to his side of politics, breaking them away from their traditional tribes (as the LibDems tried, but failed to do). Mrs Thatcher, similarly, had strong support in the working-class and Northern areas that were hardly traditional Tory heartland communities. They voted for her, even though they disagreed with much of what she did, because at least she looked like a leader, who knew where she was going, and not as a cipher that could let us drift off down the path to hell if it seemed to be less controversial. And there are a lot of potential things coming up that might split old alliances too – such as Scottish devolution and the EU referendum. The Labour Party in Scotland is dead, but might a more-left UK Labour Party be more willing to do a deal, or be more able to pick up the votes of disgruntled Scots? It all suggests that a Corbyn-led Labour Party (if it can hold together) could well pick up all kinds of new support from new places, and from non-voters who have given up on Westminster government entirely.
Third, all that is going to be interesting. The Labour (or indeed Tory) moderates who try to paint Corbyn as a dangerous nutter will seem as significant as the temperance campaigners who complained that Churchill drank too much.
With any luck the old consensus in which we drift gracefully into more and more public spending and more and more regulation and more and more intrusive legislation over our lives might suffer a shock, as it did in the Thatcher era. It probably won't last long until we are drowned in cross-party porage again, but enjoy it while it lasts, if you enjoy a white-knuckle ride that is.
This will no doubt set off the usual anguished whining among the usual suspects. But we regard this as cheering news, extremely cheering in fact:
Poor diet has emerged as the biggest contributor to early death around the world, according to new analysis from the leading authorities on the global disease, with red meat and sugar-sweetened beverages among the foods implicated in 21% of global deaths.
Smoking cigarettes still carries the highest risk factor of premature death in the UK, followed by high blood pressure and obesity. But the Institute of Health Metrics and Evaluation (IMHE) in the US says that a combination of dietary factors, from eating too few fruit and vegetables, nuts and whole grains to too much sodium and cholesterol, is taking a toll on health in the UK and across the globe.
We do rather doubt much of what we're told by these prodnoses who would control our diet. It was only last week that they were telling us that animal fats would murder us all in our beds and then after decades of saying so they've changed their minds. However, the good news is here:
Sub-Saharan Africa has a different pattern of risks from the rest of the world, with a toxic combination of childhood undernutrition, unsafe water and sanitation, unsafe sex, and alcohol use.
That is, where people are still in that absolute destitution of peasant poverty then people die from simply lack of food and sanitation. Whereas where people are not in that absolute destitution of peasant poverty they live long enough to die of something else. We regard this as an advance in human civilisation, whatever our beliefs about the accuracy of the diagnoses of those First World diseases.
For it's never going to be true that we can solve all the troubles of the world in one fell swoop: but that we do seem to be solving them, one by one, is reason for cheerfulness, no?
In light of the failure of the Assisted Dying Bill in the House of Commons today, I can't help but wonder why people are so against the idea of legalising euthanasia. Nobody's forcing you to die, so why should you be able to prevent other people from that choice? Many of the main arguments include having respect for the sanctity of life, a fear that the vulnerable will come under pressure from family or friends to use the service, and suggestions that better palliative care could negate the need for euthanasia. However, while these are all valid arguments, I do not subscribe to the thought that any of these reasons override the principal of autonomy.
The government simply should not be able to tell another individual when they should or should not be allowed to die. The bill itself had a number of pretty solid proposals to prevent any potential abuse of the system, specifically the approval of two doctors and a high court judge. In Oregon, where assisted suicide is legal, about a third of people who were prescribed the drugs necessary then decided not to take them and extend their life, illustrating that people take comfort in just being able to have the choice, although they may not necessarily take it. To take the autonomy argument even further, there are a lot of people who believe the choice to die in a clinic should be available for all people and not just the terminally ill, as we ultimately should own ourselves.
Another reason beyond autonomy as to why this bill should have passed, is compassion for those who are suffering and in pain, or even just having the ability to decide the terms on which you die, surrounded by friends and loved ones. British people are the second most frequent visitors of Dignitas in Switzerland, so there is clearly demand for legal euthanasia within the UK, yet the government's decision today has simply limited the ability of those who are less well off to make that decision. A trip to Dignitas can cost between €4,000 and €7,000, not including the cost of flights and accommodation for family members. That's something many people in the UK are not financially able to do; the legalisation of euthanasia in the UK would have made this fundamentally humane practice more accessible for people of all income levels.
Although it is estimated 1 in 5 people allow family circumstances to influence their decision, there is no reason why a person should not be allowed in their own right to not want to burden their family. Scott Alexander found that euthanasia does not disproportionately affect the elderly and that 99.8% of Dutch euthanisations were in cases where the pain was said to be “unbearable”, clearly showing that family pressure is not a primary reason behind euthanasia. The court and doctor checks suggested by the UK bill were part of a process to ensure external pressure is therefore not a reason behind the patient's decision. In addition, instances where euthanasia has been permitted for psychological reasons rather than terminal illness are minimal, with one case Belgium being the exception to this rule.
The percentage of deaths in Oregon caused by euthanasia last year was only 0.3%. The bill that failed today was not an act to encourage suicide or make it 'the norm', as it clearly is not in Oregon, but a logical and compassionate way to extend the freedoms of people in the UK. The government regulates enough already, the wishes of a terminally ill person should be one area free from their interference.
Human imperfection can be counted upon as surely as death and taxes. Despite this, study after study seems to confirm that most of us are rather decent fellows when push comes to shove. I am willing to wager that a desire to do good, whatever that may be, is an evolved trait innate in the condition of most people. Against this, our nature is certainly affected by the conditions in which we live, and resultantly subject to change for good or ill. Our natures cannot be summed up in a single phrase or formula, and any attempt to produce such a rule tends to prove intellectually awkward. Commonality of behaviour, however, suggests that on the whole we do not benefit from the kinds of societies autocrats would force upon us. The material ages of humanity, as outlined by Marx, give a clear indication of how the economic superstructure can warp our natural instincts. The licence of masters, the dehumanisation of slaves, and the mutual fear and loathing induced by this asymmetry in power does not make for moral and responsible agents.
Though the divisions of rank and legal status have been smoothed by time, the continuing divisions between property owner and unemployed tenant still shape the behaviours of both classes to some extent. The property owner has an interest in conservation and expansion of their material interests, the welfare dependent on extracting subsistence from others, both through the coercive power of the state.
Changing the behaviours of both groups will require a new phenomenon, the liberating force of popular capitalism. Universal property ownership which began with right-to-buy should be extended, with planning liberalisations to allow for more house building, and support for personal savings and retirement accounts. As with the sale of council houses in the 1980s, the right to save for old age, and support in the form of replacing National Insurance Contributions with a tax free pensions saving allowance, will change attitudes. The division between property owner, and those alienated from the capital rewards of progress will be erased, with, as its result, a concordantly greater understanding and support of the market.
The greatest role for institutions may be elsewhere. As Randolph Churchill defended constitutional traditions for their role in guiding and balancing the state and its leaders, so too must liberals champion the great pillar of the free society: the voluntary association. Tradition adds colour and a spiritual connection between generations past, present and unborn, but its true purpose is to get the best from each of us. The friendly societies, cooperatives, clubs, universities and trades unions of this country can do just that; and have evolved and sustained themselves out of the better nature of free individuals. You don't need to engineer or manipulate the individual to make them good, you simply need people to discover the essence of what it is to live well with one another. Left to our own devices, human beings will creatively find new ways to overcome our own failings, learning from the past experiences of others through the living network of societies. If institutional memory can teach us how to be good without reference to a state compelling us to live in one particular or narrow fashion, then every liberal person should celebrate. The victims of arbitrary authority reflect its character; therefore, lets make ourselves freer so we can carry on being nice.
We have, for some years now, been saying that Britain doesn't have a shortage of land to build upon but does have a shortage of land that people are allowed to build upon. That permission to build is artificially constricted by the state and any solution has to be an increase in the number of those permits granted. So, this looks encouraging:
Billions of pounds worth of public land and buildings could be sold off with planning permission already granted to solve the housing crisis, David Cameron will announce today. In a major speech ahead of the spending review the prime minister will outline plans to cut waste, sell off government assets and merge public services as Ministers attempt to save cash.
Of course, it's entirely possible for such schemes to die in a blizzard of bureaucracy. But government as a whole grants planning permission and government as a whole owns a lot of land. So, if they can manage to get their act together they could in fact achieve what would be at least a partial solution to our housing problems: the release to hte market of substantial amounts of land with planning permissions.
That government will capture the value of the granting of the planning permission is an added bonus. Government should, after all, capture the value that government creates where this is possible. But it's not the point and purpose of the scheme at all: that is simply to make available more land to build upon.
We'll have to see how well government can deal with its own bureaucracy though. One could, for example, imagine local authorities being forced to grant outline permissions but then, when the project is bought by private interests, playing silly buggers with the detailed implementation. We'll see no doubt...
That there's something wrong with the British property and land markets is entirely true. but if we're going to complain about it it does help if we manage to identify what is actually wrong with it. Which is where George Monbiot doesn't really get it:
It’s hardly surprising, given the degree of oversight. Private Eye has produced a map of British land owned by companies registered in offshore tax havens. The holdings amount to 1.2m acres, including much of the country’s prime real estate. Among those it names as beneficiaries are a cast of Russian oligarchs, oil sheikhs, British aristocrats and newspaper proprietors. These are the people for whom government policy works – and the less regulated the system that enriches them, the happier they are.
Land has great value in Britain not because it is less regulated, little regulated nor even under-regulated. It is because it is all over-regulated. Specifically, through the planning system which creates and artificial scarcity of who may build what, where. That makes having the right chitty extremely valuable. And as such, the people who currently own both land and chitty are absolutely delighted about this system of over-regulation. While the rest of us are less so as we're forced to pay for that artificial value created by the artificial scarcity.
It has been pointed out for decades, just as one example, that the existence of green belts is simply a subsidy to those who currently own land inside one. The answer to which is, of course, deregulation of those restrictive planning laws.
Or, as we have suggested more than once around here, simple demolition of the Town and Country Planning Act 1947 and all its successors.
We do agree with Monbiot that all is not right with Britain's land. But the problem is one of over-regulation, not under-.