There are reasons to be wary of Iain Duncan Smith’s proposed universal credit. There’s much that we don’t yet know about the details. It might be a way of cutting the incomes of some workers. It’s founded on the mistaken belief that people choose to live on benefits. And the idea that we can incentivize our way towards fuller employment is silly.
Despite all this, there’s something to be said for the idea. It is, as Tyler says, a step towards a citizens’ basic income. There are three moves from IDS’s scheme towards a CBI:
1. If unemployment benefits and tax credits are to be rolled together, why not throw in the personal tax allowance as well?
2. We could abandon rules about looking for work. After all, if work always pays - as IDS intends - we don’t need an expensive bureaucracy to chivvy claimants into looking for work. (There would, though, remain a case for genuine active labour market policies, of helping people into work.)
3. If work does pay, and if people are getting the credit - the move away from the ideologically-laden word "benefits" is to be welcomed - whether they are in work or not, and if the personal allowance is part of the universal credit, then public hostility to paying benefits will decline. This should allow the universal credit to increase over time.
Miliband, autonomy & the Left
David Miliband’s decision to leave the shadow cabinet to gain some much-needed inexperience has led some people to bid a cheery farewell to the torture-hiding careerist. I'm uncomfortable with such a sentiment coming from the left.
No, I’m not going to come over all Eustonite on you. I’m thinking instead about individual autonomy.
Many of us - me at least - are on the left because we believe that whilst capitalism might give us formal, legal, freedom it does not give us real freedom. The worst-off can be trapped by poverty, a bad upbringing, bad genes, or a lack of opportunity, and rightists’ talk about people being able to raise themselves if they work hard enough is, in many cases, spiteful nonsense.
But it is not just the poor who are trapped. So are the rich and “powerful“. As Marx pointed out, capitalists exploit workers not because they are bad individuals, but because the forces of competition compel them to do so. Similarly, politicians are constrained to act badly by the pressures of office; when I wrote this piece, I had David in mind. Yes, David might have stood up to pressure from the US and from the security services and denounced the torture of Binyam Mohamed. But this would have been mere Lennonism - an empty egotistical emoting posture. It would not have stopped torture, but merely encouraged the torturers to keep politicians in the dark about it. I’m not comfortable with blaming David for not taking the egotistical route here.
Another thing. I am not denying a role for autonomy altogether; there’s a spectrum here, not a simple yes-no dichotomy. Rightists will of course object to all this this, but this post is not aimed at them.
And another thing. Like Mil, I hope David returns. But if he doesn’t, it would be a nice end if the last thing he did as a frontbencher would be to show Harriet Harman to be a sanctimonious power-fucking hypocrite.
Yet another thing. The question of how far people respond is incentives is a separate one from the question of how much real autonomy they have. A sunflower responds to incentives by turning itself to the sun. But do we call it autonomous?
.Miliband on immigration
Should Labour pursue the preferences of the working class, or their interests? Of course, if people were rational and well-informed, there wouldn’t be a distinction between the two. But as Marx and Kahneman have shown, in the presence of ideology/cognitive biases, the two do diverge.
I’m prompted to ask by Ed Miliband’s remarks on immigration.
The significant thing is that he has made any at all. In his acceptance speech, he said:
We didn’t listen enough to people’s concerns about immigration. We should have done more to protect people’s wages and conditions.
And in his leadership speech, he said:
All of us heard it on the doorsteps about immigration. Like the man I met in my constituency who told me he had seen his mates' wages driven down by the consequences of migration.
If we don't understand why he would feel angry - and it wasn't about prejudice - then we are failing to serve those who we are in politics to represent.
But here’s my problem. Even if we concede that immigration has worsened the labour market conditions of the worst off, we must - surely - accept that it is only one factor of many doing so. The emergence of a reserve army (pdf) of labour in India and China, the technical change that allows jobs to be offshored, skill-biased (pdf) technical change and power-biased technical change all have the same effect - and probably more so.
But Miliband did not mention any of these. And yet any serious concern about the interests of workers would probably give them higher priority than immigration. Which suggests that Miliband - as you’d expect from a democratic politician - is more interested in people’s expressed preferences than in their objective interests.There's more...
A few years ago, Mike and Bernie Winters were playing the Glasgow Empire. Mike went on alone to do his schtick, and after a few minutes Bernie stuck his head through the curtain. “Aww shite” shouted an audience member, “There are two of the fuckers”.
Well, there’s two of this fucker too. In the top right, I’ve put some links to some of the stuff I do in my day job. I'll be updating this regularly. Yes, I’ve decided to stop flogging the dead horse that is my book.
My latest take:
Companies' financial surplus - the excess of retained profits over investment - is close to a record high…Firms are still hoarding cash, despite the improved economic outlook…The public finances will improve significantly if - and probably only if - the corporate surplus falls…
Firms were net savers long before the financial crisis hit us - which is one reason why the government ran a deficit before then. This was because, as Federal Reserve chairman Ben Bernanke said, there was a structural dearth of investment opportunities in the western world even in the "good" times. Nothing has significantly changed. If anything, the emergence of widespread spare capacity and the reduction in trend growth as a result of the recession might have reduced investment opportunities even further.
And herein lies the risk of real trouble. If the government cuts spending whilst firms are still unwilling to invest, aggregate demand could fall which in turn would reduce tax revenues, thus keeping the deficit high.
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