N.B. I normally try to avoid the inclusion of personal anecdotes in my blog posts. This post does include a bit of waffle about a personal experience, for which I apologise. I shall try very hard not to do it again.
In case you’ve been living under a rock, eight badminton players have been disqualified from the Olympic games after appearing to deliberately and farcically throw a match in order to obtain a more favourable draw in the next round. Spectators booed, Lord Coe condemned it as “depressing”, and (hugely qualified commentator on sporting matters) Piers Morgan has spent most of the morning tirading about the affair on Twitter, culminating in;
@bbcnews discussing these Badminton cheats, and getting even more furious. CHUCK THEM ALL OUT NOW.
— Piers Morgan (@piersmorgan) August 1, 2012
I’m not a fan of this condemnation at all. That’s not to say I endorse their actions: I simply can’t envisage wanting to succeed through corrupt means. Slightly clichéd as this might sound, I do think success is sweeter when you know you’ve done things the right way. My problem is that it’s all so hypocritical. Firstly, let’s take Piersy. He, with no sense of his own hypocrisy, followed up his ranting about the badminton players with a barrage of rhetoric about the value of coming first and how nothing else counts, e.g.
They cost themselves a silver going all out for gold, for which I salute them.
— Piers Morgan (@piersmorgan) August 1, 2012
Morgan’s hypocrisy is much the same as the rest of the UK media. The BBC, for example, stopped showing the medal table in the TV coverage when it became evident that the UK’s lowly position of 21st wasn’t going to be vastly improved any time soon. The papers this morning were full of stories about the wait for Britain to win a gold, with everyone asking “is this the day?” every day. The media demands gold medals and success from our athletes, their coaches and support staff, and heaps inordinate amounts of pressure on them to succeed. Little surprise, then, that teams plot and scheme to optimise their chances of success.
I think it goes wider though, and here’s the awful personal stuff. It seems that as a nation, we heartily condone cheating and scheming (albeit within the rules) in order to get ahead. David Cameron famously told us that he was “very relaxed” about handing out invaluable internships to personal contacts. In the midst of the competitive application process for Graduate Entry Medicine, I repeatedly refused to use personal contacts in order to gain experience that others couldn’t access, insisting on sticking to the proper channels. I was told by friends and family alike that I was, bluntly, a fool. I remember such comments (from unnamed sources) as, “what on earth are you doing?” and “if you think you’re being noble, you’re an idiot”.
My take, thus, is that it’s really bizarre for there to be such an intense backlash against the conduct of these badminton players, undesirable as it may be. Such plotting to get ahead is the stuff of everyday life – what Cameron categorises as the essential nature of the modern world. We just don’t want to see it, so it’s unacceptable when it comes to sports people. I think this should be a cause for reflection.
Beyond that though, I want to move back to the more solid, earlier point, which should stand up regardless of how you take the point about internships, experience and such. Our media is braying for gold medals as if there’s no tomorrow, but has no hesitation in condemning those who discard propriety in pursuit of the same goals.
People in glass houses, and all…
News hit today that during Republican POTUS hopeful and erstwhile dog abuser Mitt Romney’s visit to the UK this week, he will be meeting not only our Prime Minister, but Ed Miliband in his capacity as leader of the opposition.
For me this begs the obvious question of what on earth they’re going to talk about. Ideologically, the two men have virtually nothing in common – Ed the socialist, progressive Europhile versus Mitt the ultra-conservative, marketist Eurosceptic (or maybe ‘xenosceptic’ would be more apt). At the very least, let’s hope the awkward topic of Ed’s parentage doesn’t come up. It’s much clearer what Romney and George Osborne, also set to meet, will discuss – they share a commitment to free markets, state minimalism and a gleeful passion for welfare cuts.
More seriously, though, I do wonder why Miliband is agreeing to this meeting at all. Next week, Ed will meet Francois Hollande for a cosy chat about youth unemployment – a symbolic meeting of the two strongest critics of what Miliband terms ‘Camerkozy’ economics. This is the kind of international meeting which will embellish Miliband’s position, and beyond party politics, the kind of international meeting which from a left-wing perspective it’s very important he has. Mitt Romney may well be the greatest enemy right now in what could be a global left-wing resurgence. His election over Obama – leading proponent of quasi-Keynesian economics and charismatic champion of progressive politics – in a country which still (bizarrely) seems to often act as a benchmark for UK policy would be a huge obstacle for Miliband to overcome.
The Independent believes that Cameron’s agreement to meet Romney is a diplomatic barrier to relations with Obama. Obviously, the same pressures and significance aren’t present with Miliband; the single biggest gripe Obama will have with Cameron and Romney meeting is the potential for a photo worth a thousand words – the two men shaking hands outside the black door of Number 10. No such worries with such small fry as the Labour party leader. Nonetheless, I’m sure this won’t endear him.
The only valid reason I can see for the meeting is that a snub could seem churlish, and that this is an opportunity for Miliband to look statesmanlike and to appear to engage in serious debate about future global affairs. Politically (by which I mean psephologically) that’s probably the right call – only a very small sect of lefty hacks to which I belong will have any objections to the meeting, whilst conversely a ‘snub’ might receive a lot of negative press. In terms of politics qua doing the right thing, however, Ed Miliband should be keeping far away from Mitt Romney.
Latest instalment on Cameron’s wet dream of removing housing benefits from under-25s: a survey suggests that the public believe that removing housing benefits from under-25s will “inevitably lead to more homelessness”.
The only thing I want to know is what on earth is wrong with the 35% who said that they don’t think it will lead to more homelessness. Nearly half of those polled who define as Conservative Party supporters said that they don’t believe it would lead to more homelessness. I can only imagine that the justification is that they firmly believe Cameron’s mantra that all under 25 can just easily move in with their parents if they find themselves in trouble. It seems David Cameron isn’t the only one frighteningly out of touch with reality.
“We have been encouraging working-age people to have children and not work, when we should be enabling working-age people to work and have children. So it’s time we asked some serious questions about the signals we send out through the benefits system.” (David Cameron)
“The problem then is that many men [sic] with families find themselves as well off, or in some instances better off ‘on the dole’ than they would be if they were working. The surprising thing is that, in spite of this, many of them actually prefer to work…” (Pilgrim Trust)
“it is a far cry from recognising the influence of these factors to Benjamin and Kochin’s sweeping claim” (Ormerod and Worswick, 1982)
So here we have David Cameron launching a full-on attack on the benefits system. This is significant for a number of reasons – firstly, the age-related housing benefit cap is an awful policy; secondly, as Jackie Ashley and Patrick Wintour ruminate over, this seems like a marked deviation from the coalition line; thirdly, some of the language I’m seeing is the clearest statement yet from Cameron that he is as wedded to a highly specific political theory about unemployment as suspected. I want to pick up on this last point for now. An article was written in 1979 which apparently had some considerable traction with the Tory group. I want to revisit this now because I think they’ve never grasped, even though it took mere months for academia to rubbish that article, that it’s fatally flawed.
Conservative thinkers have long been highly fond of an article by D. Benjamin and L. Kochin, entitled “Searching for an explanation of unemployment in interwar Britain”. This highly influential and widely debated article sets out the clearest articulation of a common conservative position – that unemployment originates from, or is at least exacerbated by, the existence of a generous welfare system. More specifically, Benjamin and Kochin’s claim is that there is a demonstrable correlation between unemployment data and wage:benefit ratios – such that an effective way to reduce unemployment would be to reduce available benefits. They believe thus that in that period, “the army of the unemployed… was largely a volunteer army.” This is still hugely popular as a theory. Whether that’s right or wrong is a debate that’s still going on to this day, but what we can say with some certainty is that the original paper by Benjamin and Kochin has big holes in it. I think this is an important point to make because people still casually cite their conclusion as if it’s an encyclopaedic fact, when it’s far from so.
In brief, then, I want to list some of the key points which arise from the expanse of available literature on why Benjamin and Kochin’s theory just doesn’t stand up. Note that the paper refers to the “interwar period”, taking data from the 20s and 30s.
Firstly, the thesis is grounded in what’s actually an unlikely assumption – that the decision to find employment or live off benefits is a relatively discretionary choice based on a kind of cost-benefit analysis. As Cross demonstrates, “genuinely seeking work” and means-based tests were increasingly influential throughout the period. Unemployment has also been shown to be a terrifying prospect which can induce and exacerbate depression and anxiety. We should not assume that benefit-dependence is a simple, rational choice. Even if it were, this would itself still be problematic for Benjamin and Kochin, as only 2% of adult men could receive benefits greater than 80% of their last working income. (In other words, if “should I get a job or not?” was actually analysed, free choice they describe, the likely answer would be “yes, I should”.)
Secondly, the fact that unemployment benefits were at similar levels throughout the post-war period, marked by radically low unemployment, should cast great doubt on Benjamin and Kochin’s theory.
Third, and crucially, the evidence employed by Benjamin and Kochin invites scepticism. They base their theory on three claims;
(1) that female unemployment declined when benefit entitlement for women was reduced,
(2) that juveniles (for whom low benefits were available) showed above-average employment,
(3) a regression-based analysis which they claim demonstrates a clear correlation between benefit-to-wage ratios and unemployment levels.
The first two can be easily dismissed – that the number of people in any group claiming unemployment benefits declines when regulations become stricter is evidence of nothing except the immediate impact of those regulations: we can draw no conclusions about the actual impact on female employment (those people may have just consequently starved). Further, it has been demonstrated that juvenile employment was a special case, characterised by short-term employment exploiting lax juvenile employment regulations.
With regard to their regression design, their use of a benefit-to-wage ratio is unconvincing, as a clear correlation is only evident using the highly selective and seemingly arbitrary values which they employ. When real values are substituted, the statistical relationship becomes much less clear. Furthermore, the use of a logarithm of net national product balanced against the trend value of the logarithm for the period is not convincing as a means of discounting such a broadly important factor as aggregate demand; they give no explanation which guarantees the effectiveness of this model, and it might be open to questions about delays between changes in demand and effects on unemployment.
Finally, Benjamin and Kochin’s use of regression data to explain what they claim is an individual phenomenon at a collective level is questionable and may lead to misinterpretation. Hatton demonstrates that unskilled workers were more likely to see unemployment due to structural reasons. Incidentally, this same group are also subject to lower wages and thus a higher benefit to wage ratio. At a collective level, this effect would deceptively appear to link the benefit-to-wage ratio to unemployment.
It doesn’t exactly trip off the tongue, but next time you hear Mr Cameron saying things which just assume that the unemployed are voluntarily so, you know what to say.
It’s worth adding that there are a lot of other things wrong with Cameron saying things like the quote at the top of this post. It’s offensive and propagates divisive myths about the unemployed. Much could be written about that, but I really wanted to focus here on the claim itself that unemployment is a consequence of high benefit provisions. Of course, the methodological flaws in Benjamin and Kochin’s thesis do not mean that it is definitely untrue that benefits affect unemployment. Doubtless, in some cases, it is very true that they do. The significance is that their article is some of the most important work done to try to prove something rather more doubtable – that it’s a big, widespread, highly influential factor. Given it’s flaws, that proof is still very much missing. Someone let the Prime Minister know?
If you’re interested and have the time, then I really recommend a look at some of the material I’ve listed below. There’s plenty more available, but this is a summary. The best place to go if you want more on the Benjamin and Kochin thesis is the symposium in volume 90 (number 2) of the Journal of Political Economy.
Benjamin, D. and Kochin, L. “Searching for an explanation of unemployment in Interwar Britain”, Journal of Political Economy: 87(3) (1979), pp 441-478
Broadberry, S. “The Emergence of Mass Unemployment: Explaining Macroeconomic Trends in Britain during the Trans-World War I Period”, Economic History Review 43(2) (1990), pp 271-282
Collins, M. “Unemployment in Interwar Britain”, The Journal of Political Economy 90(2) (1982), pp 369-379
Cross, R. “How much voluntary unemployment in Interwar Britain?”, The Journal of Political Economy 90(2) (1982), pp 380-385
Daunton, M. Wealth and Welfare (OUP: Oxford, 2007)
Eichengreen, B. “Unemployment in Interwar Britain”, in Digby et al, New Directions in Economic and Social History vol II (Macmillan: Basingstoke, 1992)
——. “The British Economy Between the Wars” in Floud and Johnson (eds.), The Cambridge Economic History of Modern Britain: Vol II (CUP: Cambridge, 2004)
Glynn, S. and Booth, A. “The Emergence of Mass Unemployment: Some Questions of Precision”, Economic History Review 45(4) (1992), pp 731-738
Hatton, T. “Institutional Change and Wage Rigidity in the UK”, Oxford Review of Economic Policy 4(1) (1988), pp 74-86
——. “Unemployment and the Labour Market, 1870-1939” in Floud and Johnson (eds.), The Cambridge Economic History of Modern Britain: Vol II (CUP: Cambridge, 2004)
Metcalf, D., Nickell, S. and Floros, N. “Still searching for an explanation of unemployment in interwar Britain”, The Journal of Political Economy 90(2), pp 386-399
Ormerod, P. and Worswick, G. “Unemployment in Interwar Britain”, The Journal of Political Economy 90(2) (1982), pp 400-409
Shamir, B. “Self-Esteem and the Psychological Impact of Unemployment”, Social Psychology Quarterly 49(1) (1986), pp 61-72
The Prime Minister really got me going with this latest story – in a bid to tackle the “fortune” we spend on housing benefit, anybody who is under 25 might become ineligible for it.
I think the biggest single problem with this is the ridiculously outmoded assumption that everybody who is young has a supportive, welcoming family who will accept them back into their home if things get tough. That is just nonsense, which belongs in an era we no longer live in, and it demonstrates just how out of touch Mr Cameron can be at times. After all, the one place that is still the norm is the rich, rural villages Mr Cameron hails from. The one social strata in which it is still the norm is the one he belongs to.
But what really annoys me about it is how, to be crude, politically shit it is. It’s not a policy, it’s a Mail headline. I don’t know if the alleged problem with people using HB as a default and a get-out clause is true. I suspect it’s an incredibly simplistic narrative being used to condemn a lot of people who are in difficult situations. However, that’s not the point – because even if it is true, then this is still just a really stupid way to deal with it. Rather than establishing any support, assistance or advice – rather than investigating root causes and finding solutions – we take the most simplistic solution possible: an arbitrary age below which the state no longer cares.
Step it up, Cameron – right now, it looks like you’re reading “Conservative Bigotry for Dummies” and recycling it as policy.
Following yesterday’s sandstorm over Jimmy Carr’s tax arrangements, he has apologised for a ‘terrible error of judgement’. Cool. Can we now move on to a consideration of the other estimated one thousand(!!) avoiders invested in the K2 scheme he was a part of, and the swarms of other super-rich people who are using creative accountants and lawyers to help them pay much less tax than people who earn far less than they do?
Slemrod and Yitzhaki’s 2002 paper on Tax Avoidance, Evasion and Administration includes in its conclusion a nod to public choice theorists interested in the impact of the ‘inability of compromise-seeking legislators to agree upon a well-defined law’ (2002: p. 1465). The authors of that particular paper see tax avoidance/evasion as a rational, cost-benefit analysis case – people with the resources to do so will weigh up the relative benefits they can obtain from investing in avoidance against the potential harms to themselves if the authorities come down on them. Their inference in that mention of the public choice considerations is thus presumably that politicians with conflicting interests are unable to produce suitably firm legislation to ramp up the “harms” side of that equation enough to deter evaders.
It’s interesting stuff, and it’s well worth a thought. At the moment, it appears that if you’re rich enough, HMRC are about as scary as Winnie the Pooh.
But, much in line with my post yesterday, I’m still more interested in the conflicts inherent at a cultural/ideological level in an administration with myriad links to tax avoidance attempting to legislate on the matter. There may indeed be bureaucracy/corruption related problems with trying to establish sufficient (qua ‘sufficiently intimidating’) legislation, but it all seems rather meaningless when the moral virtues of paying your taxes are being expounded to us by the Party of Tax Avoidance, with their close links to organisations like the IEA, who’s rather predictable response to the Carr story is;
We pay far too much tax on incomes in Britain and it is hardly surprising that high earners, particularly those with limited shelf life like popular comedians, want to keep as much of their income as possible.
While philanthropy is admirable (and I understand that Mr Carr donates a substantial amount to good causes), paying more tax than necessary is a foolish and undirected form of giving.
The problem here is not just legislative, and it’s not just a few rogues who won’t play by the book. The underlying problem is the pervasive neo-Thatcherite ideology rampant in the British polity which dictates that paying taxes is to be avoided wherever possible. David Cameron attempting to put out that fire is a bit like Mr Kipling delivering lectures on tackling child obesity.
Tax avoidance is the hot topic in the press right now – see here for PM David Cameron’s comments on Jimmy Carr’s avoidance.
It’s definitely true that Carr’s avoidance is terrible. It’s also immensely hypocritical that he appears on the ostensibly left-wing Ten O’Clock Live whilst engaging in this kind of thing. Further note the sheer hilarity that would be a comedian trying to make standard meritocratic arguments for deserving to keep more of their income, given the massive demonstrable contingency of their success on other people’s contributions and wider societal conditions. However, that’s not what I’m most interested in.
What I’m more interested to note is a man with a family history of tax avoidance who leads a party funded, supported and numbered by tax avoiders, criticising public figures for their tax affairs. I think what’s going on here is that there’s a strata of people who earnestly feel that they and their peers pay far too much tax and privately think they’re morally justified in not paying it. What I think is telling that there are no attempts to repeat this message to the electorate. This is perhaps because the electorate is composed of plenty of people who are acutely aware of what social unfairness really is and who would be highly amused if not repulsed by the suggestion that unfairness is the “burden” of taxation which falls on the richest thousandth of the global population.
Far be it from me to suggest that Mr Cameron isn’t entirely sincere in his public position on tax avoidance, but it certainly makes one wonder.