Thursday, 17 February 2011

Why Workfare Doesn't Work

American academic Lawrence Mead could easily be a character from a Dickens novel. He appeared on BBC's Newsnight on Tuesday, advocating 'tough love' for unemployed welfare claimants. His emphasis does seem rather more pronounced on the 'tough' part, as there was not much 'love' in evidence in his policy recommendations. Mead was the architect of the 'Workfare' programme in the US, beginning in the 1980s. In the 90s, his policy of removing benefit entitlements from claimants gradually over time was enacted by Bill Clinton's administration. It seemed to work at first: as the US economy boomed, unemployment fell, and neo-liberals liked to think that this was partly due to the more draconian attitude towards welfare claimants.

Since the credit crunch, however, the truth has been revealed. Despite three decades of tough love, US unemployment has soared to 9.8% and stands higher than that in the UK or most of Europe, where welfare systems are vastly more generous and less coercive. In the mythology of right wing libertarians and British Conservatives, the unemployed are simply feckless layabouts, so presumably this rise in US unemployment was due to a sudden epidemic of laziness sweeping the nation, and definitely not anything to do with a recession caused by a financial crisis in turn caused by the greed and misjudgements of hard-working bankers.

I wish Lawrence Mead could meet my mother; they'd probably agree on most things. She's retired now, but was the most hard-working and honest person anyone could possibly have imagined. As an orphaned child in Hong Kong, she laboured night and day for rich families. She married and came to the UK in the 60s, then worked all her adult life, slaving and saving, paying her taxes all the while. When her husband's alcoholism was no longer bearable, she divorced, becoming a single parent. At times, she had to work two or three menial jobs at once, in order to raise me - whilst continuing to pay her taxes and vote Tory - despite all the tabloid jibes about 'feckless' single mothers. She worked as a chamber maid, cleaner and launderette attendant as well as her main job of accounts clerk. She simply didn't believe in taking handouts. Then suddenly, at the age of 55, she was made redundant in a company take-over. She never worked again; not because she didn't want to but simply because no one would offer her a job ever again.

Being Chinese probably didn't help my mother in the job market, but being over 55 must have sealed her fate. She was consigned to the scrapheap by the society she had slaved for. Finally forced to exist on state welfare, she was now condescended to and treated like vermin in the queue for her measly dole cheque, despite the fact that she had paid far more in taxes than she would ever receive in welfare. Now condemned to the ranks of the long-term unemployed and branded a 'scrounger', politicians, tabloid editors and academics like Dr Mead would tut-tut over her assumed indolence and lack of self-respect: I'd like to know if Dr Mead or a tabloid editor ever had to do a second job as a cleaner in order to make ends meet, as a single parent? I suspect not.

My mother is not an unusual case. Most people desperately want to work. This can be proved using simple arithmetic. Unemployment is cyclical, as this graph shows for the UK. The UK unemployment rate is now 7.9%, up from a recent low of 4.6% in 2004. So we know that at least 42% of the unemployed have recently worked. But a closer look at the official figures reveals that only 210,000 people - of the 2.49 million claiming Jobseeker's Allowance - have been out of work for more than two years (as my mother was). So at least 92% of 'dole scroungers' have proved that they actually want to work - inasmuch as anybody really 'wants to work' - by the simple act of having done it. Granted, if you were to win the lottery, your desire to work seven days a week at McDonald's might diminish. Dr Mead is very keen on the moral and spiritual benefits of working for your living. I find it strange, therefore, that he does not advocate taking money away from those idle rich who live off unearned income from investments, so that they too can benefit from the discipline of a hard-working life - but that's an aside.

Still, what about the 8% who have been unemployed for over two years? This does indicate a problem, but it has more to do with chronic medical problems and discrimination than with pure laziness, as my mother's case illustrates. I don't doubt that there are a few genuine scroungers or malingerers out there, some of them criminals, who just want to milk the system for a free ride. That's inevitable, but my experience and the figures suggest that they are a tiny minority. Maybe there is a case for treating some benefit claimants differently; if they have never ever worked or only worked occasionally whilst relying on benefits for years at a time, for example. However, I find it deeply offensive that people who have worked and paid taxes for most of their lives should be labelled as 'scroungers' and treated like scum. That's totally unacceptable: if you have worked and paid into the system, then you are entitled to a bit of help in times of dire need. That's part of our social contract. There is no such thing as a 'benefits culture': there is cyclical unemployment, disabled people and only a tiny proportion of actual freeloaders.

Just to ram the point home, a look around Europe makes it glaringly obvious that coercive welfare systems do not lead to lower unemployment. The Netherlands has one of the lowest unemployment rates in the EU, at 4.4% and yet their welfare system is much more generous than ours, with unemployment benefit paid at 70% of your previous salary (capped at 185 Euro per day). Denmark has long had one of the most generous welfare support systems in the world, yet their unemployment rates have historically been well below those of the UK. The Danish rate has shot up to 8.2% due entirely to the recession, but was as low as 3.1% just two years ago. Swedish unemployment was only 1.4% in 1990, at a time when their welfare system was as generous as Denmark's. Since then they started implementing right-wing policies and their unemployment rate is now the same as the UK's, although their welfare system remains much more generous than ours.

All the evidence points the same way: people cannot be coerced into work. Why should this be surprising? Anyone who has ever had to live on unemployment benefits knows that it's nowhere near enough to pay the bills. The unemployed, and even people in low-paid work, have to struggle with a combination of benefits, credit cards, pawnbrokers and charity or savings, if they're lucky. I know this truth from first hand experience as an unemployed graduate in the 90s, when I was absolutely desperate to find a job - preferably one that paid enough to cover my rent, food, clothes, bills and travel costs. I was so desperate I worked for nothing, as a volunteer for the Red Cross, among others - and loved it. In fact, young people are keener than anyone to work: their naive dreams have yet to be shattered and spat on by a soulless capitalist machine which sees them as nothing but fresh meat for grinding - but I digress. Sadly, voluntary work is frowned upon by our government, since if you do too much of it, they cut your benefits! So much for the 'Big Society'.

So, what's the real solution to unemployment, if it isn't the 'stick' of coercion, tough talk and threats? It's the opposite: the 'carrot' of job opportunities, flexible working and not yanking people's benefits away as soon as they do a day's work. The irony is that we need to make our benefits system more generous, not less so, just like those of the Netherlands and Denmark. The Dutch, for example have many more people in part time work than we do, because in the Netherlands, it pays. Iain Duncan Smith does show some signs of understanding this, with his promise to 'make work pay' but he still spouts the rhetoric of coercion. People like him and Lawrence Mead will never know what it's like to be dependent on benefits, so they will never truly understand the solutions.

Friday, 11 February 2011

The Paxman Rap

I simply must share this wonderful mashup, created by my clever and adorable girlfriend, @sliderulesyou (on Twitter), with a video put together by her highly talented friend, @divaschematic. It features Jeremy Paxman dropping a C-bomb on BBC's Newsnight programme, whilst introducing an item about anti-cuts protests by the group, UK Uncut, in which I also participate:

In addition to that, I would also like to share my little re-write of a verse from the famous Eton Boating Song. To those going on the upcoming UK Uncut protests (on 19th and 26th Feb) against bankers' bonuses, feel free to take this up and sing it:

Jolly banking weather,
though the country is on its knees.
We're not in this together;
with bail-outs on top of their fees,
they'll run hell for leather
with their bonuses overseas,
and run hell for leather
to a tax haven overseas.

Better still, add a few more verses!

So long, Hosni. What now?

The regime is dead! Long live .. er .. the regime? There are scenes of great jubilation in Cairo and across Egypt today, as Hosni Mubarak, president for 30 years, finally accepted reality and stepped down. His earlier refusal to go had stunned everyone, as he seemed to be clinging to the hope - like a drunken imbecile chatting up his pretty ex-girlfriend in a bar - that Egypt might let him have his wicked way with her for at least a few more months. 

"It's over, Hosni, can't you see that?" she tells him, firmly.

"Oh, come aaaahhhhn, we were good together - hic!" he implores, sliding off his stool. "Juz gimme one more chance. I promise it'll be better this time. I'll give up the corruption, the torture, the deceit and all my foreign mistresses. Come on, whaddya say, huh?"

"Forget it, Hosni. You're all washed up. I've got a new boyfriend now. He's handsome and his name is Freedom. He also has a friend called Democracy and we're going to live together in a ménage-à-trois. I've had enough of your lies and your tyranny. We're through!"

Of course, there was no way Mubarak was going to stay. His bluff had been called two weeks ago, when he failed to quell the demonstrations in the beginning. Egypt's people finally got a little taste of freedom and found the regime powerless to stop them. There was no way they were just going to slink off back home after that. It's a heart-warming story and I extend my congratulations to the people of Egypt. I really hope that they can begin to live in genuine freedom, but without wanting to sound like a party pooper, I still have my doubts.

The army, as in most countries of the world, still holds all the cards. Nasser, Sadat and then Mubarak all came from the ranks of the army. There is no guarantee that the army will allow democracy to take root in Egypt; they could just install another dictator, under the guise of democratic reform. Nevertheless, it will be much harder for any future Egyptian leader to ignore the people's will and their demands for real freedom. That genie is now out of the bottle. If Egyptians are denied a multi-party pluralist democracy, they may take to the streets again, in the knowledge that they wield more power than they ever dared think. Dictators everywhere should quake at that thought.

However, there remains the danger of a brutal backlash. I am reminded of the student protests in China's Tiananmen Square, which were eventually crushed by military force. That way lies either an even harsher Western backed military dictatorship, or possibly a revolutionary theocracy, as in Iran. Western governments can help to ensure that doesn't happen, by maintaining strong pressure for democracy.

Western governments may find it difficult to champion democracy in Egypt, given their history of backing dictators, of course. Egypt only serves to highlight the utter hypocrisy of US policy in particular: whilst advocating 'regime change' in Iraq, the US bolstered tyrants across the Arab world and still does, whilst our media always dutifully reported Mubarak's phony 'election victories', as if he were a popular leader with a democratic mandate. Maybe it's about time we ditched supposed expediency in favour of the principles we pretend to espouse? Maybe that would actually be in everyone's long term interests.

Tuesday, 8 February 2011

Economics: the Dismal Pseudo-science

It was Thomas Carlyle in 1849 who called economics 'the dismal science'. I think he was too kind. Economics could be a very important discipline, if only economists could figure out what it's meant to be about. You may detect that I have an antipathy towards most economists and you'd be right, although some - a minority - are very charming and well-meaning. Part of this antipathy stems from the fact that I am a mathematician, also trained in psychology. From what I can make out, economics appears to be a sort of unpalatable pizza, consisting of a base made from psychology and social science which is 50 years past its sell-by date, topped with high school maths. This would probably not irritate me so much, as long as people understood the limitations of economic theories and did not accord them such great reverence. Unfortunately, we often hear phrases such as 'economic inevitability' or 'economic realities', as if these were immutable laws of nature, like gravity. They are not.

From Adam Curtis' wonderful film, The Trap (2007)

My antipathy is also tinged with jealousy because there is no Nobel Prize for mathematics, but there is one for the highly prestigious subject of 'economic sciences'. Mathematicians make do with something called the Fields Medal, which only mathematicians have heard of, so there's really no point having one. Try telling your mother you've just won a Fields Medal and she will most likely inquire as to when you took up the pentathlon. My righteous and envious anger does not end there. Being a mathematician, I can see that it is possible to obtain a Nobel Prize in economics merely by re-packaging the simple (trust me, it is) mathematical idea of a logarithmic random walk and using this to work out the price of a fancy schmanzy financial derivative called an 'option'. This is the Black-Merton-Scholes option pricing model (1973), for which Messrs Merton and Scholes received their Nobel laureates in 1997. (Mr Black did not get a prize because he committed the faux pas of dying first - possibly of embarrassment). The fact that most people will not know what the hell I'm talking about only serves to illustrate perfectly why there is no Nobel Prize in mathematics. Meanwhile, economists are hailed as the gurus of our age, whom no power can ignore. Mathematicians, by contrast, are viewed as irrelevant egg-heads or potential serial killers with poor personal hygiene. They may well be, but so are economists.

The different esteem in which society holds mathematicians and economists is perhaps a good example of one of the many things which is wrong with mainstream (i.e. 'free market') economic theory. "What's aught but as 'tis valued", says Troilus in Shakespeare's Troilus and Cressida (act 2, scene 2), when Hector expresses his doubts that Helen is worth all the hardship and carnage of the Trojan War. Troilus was the first economist. I'm certainly not suggesting that we should entrust our happiness to mathematical technocrats; I couldn't imagine anything more dystopian, in fact. It just puzzles me that we do seem to allow economists to tell us how we should arrange our societies, and this has led to an equally dystopian outcome. The reasons are easy to divine:

Robert Kennedy is famous for having said that Gross National Product "measures everything ... except that which makes life worthwhile." In truth, it measures even less than that. A vast amount of worthwhile, even 'economic' activity is not counted in GNP figures, because it is unpaid work, much of it done by women. Most child-rearing doesn't count, for example. Neither does housework, many leisure activities or random acts of kindness.  Everything without a price tag is deemed to be bad. As Kennedy pointed out, GNP does include things like advertising, footballers' salaries, bankers' bonuses, the costs of pollution, crime and road accidents, tabloid newspaper sales and Justin Bieber.  These are all deemed good. If someone (male or female) were to give up their job in advertising, in order to take care of their children and paint in their spare time, an economist would see this as a contraction in the economy, soon to be followed by the end of civilization. If we were to bother thinking about it, we'd understand that this is nonsense, but we don't think about it. We just continue to worship the god of GNP. In a developing country, there may be some point to this, but in a rich country, the continued obsession with GNP growth is as dysfunctional as an addiction to junk food. 

If you stuff your face with burgers every day, your waistline will grow pretty fast, until you inevitably drop dead from a heart attack or bowel cancer. Just before that happens, you'll probably wish you'd spent less time in the office, wasting your life to enrich someone else, and a bit more time doing something genuinely worthwhile.

And another thing: I haven't even touched on the basic assumption underlying almost all economic theory, that we are all just rational actors, motivated purely by self-interest in the pursuit of 'utility', which in practice means 'money'. This was only ever an approximation to the truth and its limits have been recognised in recent research on behavioural economics. More pointedly, if we hold economic theories up to the same standards as scientific theories, we find them severely wanting: considered as a science, economics is dismal indeed; more so than psychology or even sociology. 

Scientific theories are supposed to make fairly precise predictions, at least in statistical terms. The predictions of economic models tend to be woefully inaccurate. A scientist confronted with such a failure would question the assumptions of the model and change it. Neo-liberal economists don't do this, as far as I can see. They just keep spouting the same old dogma and applying the same failed policies ad nauseam: ever lower taxes, more privatisation, less regulation. Well, as long as the rich keep getting richer, who cares?

For more on this, see Adam Curtis' brilliant documentary series, The Trap: Whatever Happened to our Dream of Freedom (2007).

Tuesday, 1 February 2011

'Criminal Damage' and Direct Over-reaction

On Sunday, Jed, a friend of mine, had to go to hospital for treatment after getting a faceful of CS spray, courtesy of a Metropolitan police officer. I am resisting the temptation to indulge in schadenfreude, given that the officer also managed to spray himself in the face, which underlines the rather indiscriminate effects of a spray weapon in a crowded area. In any case, there was no justification whatsoever for such an aggressive action against a totally peaceful group of protesters. I would have been among them myself  were it not for other commitments, so I cannot give a first hand account, but one can be found here and another here. There are also numerous newspaper reports, such as this, as well as video footage.

Having been on other UK Uncut protests against corporate tax avoidance in the past two months, I can vouch that we are a pretty mild-mannered bunch of people. I'm sure that even Jed would not object if I told you that in a fight between Jed and a baby possum, my money would be on the possum. (Sorry, Jed). Not that Jed would want to fight a baby possum, mind you; he'd more likely make friends with it and gently convince it of the adverse effects of Tory education policy on the social mobility of possums (among other creatures). 

No one seems to understand exactly why officer cw2440 felt it necessary to use CS spray on people who were clearly no threat to anyone and who were not committing any offence, since none of those admitted to hospital were arrested or accused of any crime. The incident seems to have been sparked by the arrest of a female protester - who was not sprayed - supposedly on suspicion of 'criminal damage'. She was pushing leaflets through the door of a Boots store, to highlight the fact that Boots have reduced their UK tax liability to only 3% by moving their HQ to Switzerland. You can judge for yourself the extent of any damage caused by the protester and compare it to the damage caused by public spending cuts, necessitated by the avoidance of tax by massive corporations like Boots:

A rubber seal has been slightly dislodged, clearly by accident. I don't know how long it might take to repair this damage and at what cost, but I'm guessing 'not long' and 'not much compared to the amount of tax avoided by Boots'. So perhaps I would suggest that 'criminal damage' is a slight exaggeration. Whatever you may think about this, there is still no justification for the use of CS spray against peaceful protesters, even if they were attempting to support a colleague who had been arrested.

I had already mentioned
the tendency of one or two officers towards over-zealous policing in my blog report on the previous UK Uncut action in Oxford Street on 15th January. It is difficult to be sure, but having seen photos of officer cw2440, he does look very like the officer who started pushing me and others on that day. We should not be surprised that a few police officers do seem to want to respond with violence and treat decent people with contempt, when one of their chief officers, Sir Hugh Orde, says things like this:
"It is not good enough to throw our hands up in the air and say 'Oh, we can't negotiate because there is no one to negotiate with,'" he told Prospect magazine in an interview published today. "There are lots of people we can talk to, but they need to stand up and lead their people too. If they don't, we must be clear that the people who wish to demonstrate won't engage, communicate or share what they intend to do with us, and so our policing tactics will have to be different ... slightly more extreme."
I find these remarks puzzling, since the activities of UK Uncut are entirely open for all to see, unlike the tax affairs of large corporations. That's because we have nothing to hide. Sir Hugh could simply join our Facebook group, follow our Twitter feed or look at the website, if he wants to know what we're up to. Alternatively, if he feels like wasting a lot of public money, he could send undercover officers to infiltrate us. In contrast, ACPO (the Association of Chief Police Officers), of which Sir Hugh is President, is a private company and not subject to Freedom of Information legislation. They are literally the UK's secret policemen; an affront to democracy.

Secrecy lies at the heart of the issue of tax justice too. It is the secrecy of tax havens and Swiss bank accounts, among other things, which allows Boots to get away with paying only 3% on profits made in the UK. That's what I would call 'criminal damage', especially when you realise that a small independent pharmacy would have no way of escaping the 20% small business tax rate. Even George Osborne should be concerned, as small businesses are driven to the wall by the tax avoidance antics of their transnational competitors.