Things I don’t get No.3

 

  1. Linked In – I will be convinced that this is of any use if I hear of a friend, acquaintance, countryman or resident of the Universe who has actually made a useful contact, let alone got a job, out of this. Until then, I can live without the weekly e-mail that asks me to validate a friend’s skills.
  2. Vampire and zombie movies. Yes, I know I’m in a tiny minority here, but vampires and zombies, er, actually don’t exist and never have done.  It would be interesting to know what proportion of the movie industries output (or, more crucial I guess, revenues) are devoted to this endless tosh. Resources that could have been devoted to films about how life is, how it got to be as it is, or how it might be.
  3. Superhero movies. See above.
  4. TV coverage of the practice day of Grand Prix races. Now, sport is an individual choice.  GP is a bore.  Fast cars chase each other round a track, and that’s that.  The best car wins, and it is usually the car that won the last race.  But I’ll let people watch it if they want.  But practice ?  I love cricket, play a bit of golf but can’t see the point of basketball, but I am sure that there are people who legitimately feel the reverse.  But, come on, none of us spend hours of TV time showing practice, do we ?  How about four hours of England in the nets, two hours of Tiger Woods on the driving range or putting green, or half a day watching Magic Johnson practicing lay-up shots ?  Well, actually less tedious than the first day of practice from Dubai, in my view.
  5. Extra gears for cars. My first car had four forward gears, and I could see it was an improvement on the three gears that were normal before then.  In the 70s and 80s I had cars – like Volkswagen Polo and Talbot Horizon – that were just fine on four gears.  Then  five gears arrived, mostly with a fifth gear for motorway cruising, what the oldsters would call ‘overdrive’: that was doable.  Then we had five evenly spaced gears that we had to use all the time.  My present car has six forward gears, providing constant choices I don’t need (no, Mr Cameron, choice is not always a good thing) and I am grateful there is an indicator on the dash to tell me which one I am in, even if it takes my eye of the children crossing the zebra ahead.  I now read that the latest Porsche has seven forward gears. The idea that such a car is sold as a contribution to driving pleasure …
  6. Notices that forbid the chaining of bikes to these railings. Why ?  To avoid terrorist exploding bikes ?  To preserve the beauty of the façade of a 1960s office building ? To prevent the Chief Exec having to look at Lycra shorts ?  Why ?
  7. Why French supermarkets have Fishermen’s Friends on every checkout. A friend tells me that they have uses in sex.  Bloody French, I could have guessed.  I lead a sheltered life, obviously.

The money runs out, allegedly

Interesting discussion on Newsnight recently about the prospects for a new Labour Government, with the debate centred around the unchallenged proposition that ’the money has run out’.  This was followed in a day or so by a column in the Times by Philip Collins (the journalist, Blair speechwriter and think-tanker, not the singer from Genesis) giving the same line.  The collapse of Lehman Bros established a new world, we are told, that means that radical parties can no longer provide entitlements for the poor.

Seems to me those pushing this line need to answer two simple questions.  Firstly, will the British GNP ever return to the levels of 2007 ?  If the answer to this is ‘yes’, as it must be, even with the incompetent stewardship of Osborne, then a second question comes.  When that happens, why can’t we have a society with the same levels of welfare entitlement as in 2007 ?

I suspect that Cameron blew the gaff when giving his Lord Mayor’s Banquet speech last week arguing that permanent austerity was a good thing.  So even if we return to a booming GNP, we’re not going to have decent public services or a supportive welfare system.  Yep, we guessed that’s what you were thinking, Dave, but up until now it has been covered with a blanket of “gosh, we’re sorry, we’d like to help the poor and unemployed, but the money has run out and we all have to make economies”.  One of the best comments on this was made by someone who attended the banquet, not as a banker or diplomat but as a waitress.

Remembrance

On a brief break in Brittany at the moment. Today I attended the Remembrance Ceremony at our local town. Yes, today. In France, Remembrance Day always happens on November 11th, which is a public holiday. Maybe that’s because France suffered much greater losses than anyone else in the First World War. Each village, each hamlet has a memorial with a roll call of ‘nos enfants’ (our children) who died for France. We have had a house in this village long enough to recognise the surnames on the granite slabs, the Duchenes and Perrochets whose ancestors and families still work the land hereabouts. And then there are the multiple names, brothers or cousins none of whom returned. After the mayor had said a few words in front of the war memorial, and laid the wreaths, we walked across the square to the other side of the parish church and a different memorial. Here we remembered the deportees, members of the local township who were taken away as slave labour or as hostages, and who died in Mathausen concentration camp.

The British attitude to the day is worth discussing. Over here in France, the emigré Brits turn out with poppies and bared heads in some numbers, but in the UK one wonders. There things are always arranged on a Sunday, so as not to interfere with economic activity. There was an attempt a few years ago to have a moment’s silence in shops at 11.00 am, but it came to nothing. My worry is that the whole thing is melting into a bog of sentimentality and jingoism. When an old man died alone in a home in Lancashire this week, publicity brought hundreds to his funeral, because he was a technician who serviced the planes of the Dambusters. The press call him a forgotten hero. I am sure he was as patriotic as you or me, but heroism requires more than screwing up a carburettor. Any serviceman who dies, young or old, is now a hero, just as any youngster killed in a fight or accident is a brilliant student. In reality, life is more complex and sad than that and it is the sadness and the complexity that we should remember as we stand in the soft Breton rain.

What will happen next year, on the 100th anniversary of the outbreak of the Great War ? Graham Greene said patriotism lost its appeal at Passchendaele, but not, one fears, for politicians and jingoes.  Cameron has brainlessly compared the anniversary of the start of the First World War (UK deaths – 880,000; world deaths 21 millions) as an event that the nation can celebrate like the Queen’s Jubilee.

A footnote: in a world in which almost everyone is called a hero, how can we reclaim the word ? What does heroism involve ? I would propose three criteria. Firstly, it must be voluntary. A hero has the chance to keep their head down and avoid trouble, and chooses not to. Jean Moulin could have lived through the German occupation of France as a comfortable civil servant, but he made the choice to resist. Rosa Parks could have sat, quiet but angry, in the back of the bus. Secondly, there must be danger and risk. This need not necessarily be physical danger – it could be someone who risks their career or prosperity or public respect in order to do good things. An example might be Semmelweis, fighting the medical establishment to make childbirth safe, and losing. But a wartime hero (see above) must risk injury. The third criterion involves moral worth. A hero must be undertaking actions to make a better world. U-boat crews were all volunteers (criterion 1) and more than half of them died (criterion 2), but they did so in an effort to starve into submission the last democracy in Europe. Not heroes then. Nor, on a much more common level, would I include people like Evel Knievel who willingly undertake dangerous things (criteria 1 & 2) but for commercial or self-publicising reasons.

Hope that’s clear now.

Autumn Statement 2013

It is pleasing to report that, after the Autumn Statement by George Osborne, the public ratings of the Conservatives have fallen 3 points.  And an enormous relief.  I had an awful fear that the nonsense about tough but fair measures saving the nation might have a resonance with the masochistic side of the British voter (“It is thoroughly unpleasant, so it must be doing us good”).

Can we just go over the facts ?

Borrowing: Osborne is borrowing more than he predicted when coming to power. The budget deficit is falling, often due to luck and arithmetical fiddles, but not by much, and the National Debt is decisively bigger than when Labour were in power.  His endless claims to be cutting down on tax evasion turn out to be flim-flam.

Growth.  The UK may be predicted to recover a little, but the overall growth since the Coalition came to power has been  below other countries, including the USA and many in the Eurozone. And Iceland, which correctly saw the recovery of the economy not the bribery of banks as the main task in hand.  Our economy is 13% smaller than it would have been if the general trends from 1950 to 2007 had carried forward.  There was in fact a modest recovery under way when Osborne took power, but he managed to choke that off pdq, as the New York Times makes clear:

“… after Osborne introduced his austerity drive, economic growth slowed down rather than speeding up. For 2010, the economy outperformed the official forecast, growing by 1.7 per cent, reflecting the fact that it had quite a big momentum when the new government took over. But in 2011, growth dropped to 1.1 per cent, and last year it fell to 0.2 per cent, leaving inflation-adjusted G.D.P. below the level it reached in 2007.  How much of this dramatic shortfall in growth was due to Osborne’s policies, and how much was caused by other factors, such as the crisis in the Eurozone, Britain’s biggest trading partner? As always in economics, it’s hard to know for sure. A recent study by Òscar Jordà and Alan Taylor, two economists at the University of California at Davis, which employed some sophisticated statistical techniques, concluded that the shift to austerity was the main culprit, accounting for sixty per cent of the fall-off. “Without austerity,” Taylor wrote in an article presenting their results, “U.K. real output would now be steadily climbing above its 2007 peak, rather than being stuck two per cent below.”

Balance.  Such recovery as exists is due, not to a revival in exports or investment but to a rise in consumption.  Personal indebtedness is now approaching the levels of 2007.  The New Economic Foundation said it straight:
“Rather than a recovery driven by business investment, household spending is largely responsible for our rising GDP. Household spending, as a share of all spending, has increased from 46.2% in 2011 to 46.9% today.
This is worrying because, as we know, average real earnings have fallen sharply. So the only way to explain the increase in household spending (given the decrease in household earnings) is that households must, in aggregate, be running down their savings, and borrowing more. And this is precisely what the data shows. Household savings are falling at their fast rate in forty years. After falling since the crash, unsecured lending – borrowing on credit cards and so on – has picked up consistently over the last year.”  Little social housing is being built, and private house prices are taking off.

Employment has held up better than would be expected – maybe because people will take wage cuts rather than unemployment.  But the claim to have raised private sector jobs is deceptive.  All governments since the war have been able to make that claim, because the population is growing and, as a result, we need more haircuts and filing cabinets and paint and all the other stuff.  And at least some of the ‘growth’ in private sector employment is statistical: for example, employees of technical and sixth form colleges have been recategorised from public to private sector.

Living standards.  The average living standard is falling in a manner that has not happened since Victorian days.  Since, in fact, the last experiment in utopian neo-liberalism the disastrous impact of which was described by Karl Polanyi’s masterpiece.

Productivity, the key to rising living standards is actually falling by 3%. For all the talk of austerity, we are not getting fit and lean.  And the hopes of the future – scientific research and vocational skills – are both being cut to fill a void in the budget of the Department of Business and Skills, a title that brings a sad sigh. Education capital spending will be cut by 60%, funding for adults in further education by 40%.

Research credibility  The idea that economies would be damaged unless the government cut back on spending was apparently backed by a research paper by Kenneth Rogoff and Carmen Reinhart.  Osborne even referred to Rogoff as ‘Ken’ (obviously his mate) when explaining how it was the reason behind his policies.  Except that a graduate student looked into the paper and found that it was full of mathematical errors, spreadsheet problems and bizarre choices of data.  Once that is taken into account, the evidence does not back the claimed conclusions at all.

As the days pass, more of the facts come out.  Even the Sunday Times, which has had a rather discreditable record in pushing the pro-austerity line, had to lead with a front page story this week saying that consumers would bear the brunt of the continued obsessive austerity.  It’s easy for politicians to stand up in the House, make extravagant claims, jeer those who disagree (especially women who disagree), and then disappear to their clubs for a convivial evening that we may be sure does not involve food banks or disability tests.   But as time passes, as the forecasts unravel, one hopes that the truth will make us all free of this rabble in the not so distant future.

Education and evidence

I used to work in education, and nowadays tend to avoid any discussion about it if at all possible.  Rush to the radio to switch off any phone in, refuse to buy the Guardian on Tuesday because it’s the day of the education supplement, switch over when Newsnight decides to delve into education.  The reason is not so much painful memories – I enjoyed my work, was moderately successful, and left at a time of my own choosing.  Nor that the important bits (like vocational training) are completely ignored.  Nor that the ‘experts’ they interview tend to be public school heads with four times the money of state schools to educate privileged and well-supported kids (see Radio 5 this week).  No, my difficulty is listening to the vast amount of nonsense that is spoken and written on the issue.  The problem is that almost everyone has been to school, so everyone thinks they have a right to an opinion.  Education becomes an area where evidence is not apparently needed to support policy, and where gut feeling and nostalgia trump calm assessment of the facts.

Not only no, or flaky, evidence.  You can be sure that no actual numbers will be attached to any policy change.  We are told that we must be more like business in our planning and management of the public sector, but no business would surely make an investment without saying how and when the pay-back will come.  But what is the planned pass rate for free schools ?  How will academies raise the staying on rate, by how much, and when ?  What are the anticipated trajectories of pass rates for the new GCSE (=”O” levels) that Gove is introducing?

I wrote about this at length in one of my consultancy reports.  You can also add the problem of what has become known as ‘policy tourism’ – picking on one currently successful education system somewhere in the world, without any consideration of context or cost, and insisting that it shows what we in Britain need to do.  No matter that your proud hosts do not show you the failing bits of their system, or introduce you to those that dropped out.  Under Thatcher the Tories introduced TVEI, a pretty expensive scheme, on the basis of what Lord Young saw on a visit to Israel.  A Labour scheme was supported by evidence from Nova Scotia, or was it New Brunswick. Policy tourism, of course, does not take on elements which are ideologically unacceptable to the party in power.  You may admire the achievements of the Finns, but please don’t ascribe it to their well-paid teachers, no inspectorate or neighbourhood comprehensives.  Oh no, it must be free schools.  Interestingly, a recent example of the perils of taking policy from abroad is shown by the stumbling of the Swedish system after introducing free schools.  We no sooner decide they’re marvellous than they go bust or otherwise start to cock up. Reminds me of when Japanese economic policy and management techniques were the future of capitalism; you remember that, it was just before their twenty year slump.

And then there are academies.  Stephen Twigg MP, when Education shadow, described their success as ‘incredible’, and it was the first time that word had been honestly used in the House of Commons for a long time.  The claims are pretty unbelievable, yet both parties think they’re the bee’s knees and cat’s pyjamas. In fact, there is precious little unbiased evidence for the success of academies: they do about as well as other schools, and remember they cost more.  Of course, if you close a crap school, bring in a capable new head teacher in modernised buildings, things improve.  But, as the young people say, “no shit, Sherlock !”.  Once again, the basic problem is ideology – and a bizarre admiration for the US charter school system that (given its very flaky record) has as many critics as friends.

And as for selection … well, don’t get me started.  The sure way to get a round of applause on the vacuous discussion programmes on TV is to call for the return of grammar schools.  The man at the back with a blue sweater, no, not you sir, the man behind you, assures us that doing so will raise standards and increase social mobility for the bright poor student.  The problem here is that we have years of evidence on this topic, and grammar schools do not do either.  That radical journal the Financial Times recently showed that overall performance in those areas which retain selection – Kent, Hertfordshire etc – remains very average.  And the impact on those who do not get sent to grammar schools is particularly poor: for all the nonsense about how these students would do better with a technical education, NIESR research quoted in our CfBT report showed selective areas have a worse rate of qualification in vocational courses for this group than counties with the excoriated bog-standard comprehensives, and markedly worse than those with tertiary colleges for those over 16. Recently, Germany and Poland have decided to reduce the selective elements in their education systems.

You may say “well, we need something to reform our schools – after all, we are falling down the international comparisons”.  In fact, international comparisons are very flaky, and PISA is useful but no exception.  The Finns have realised that what you absolutely do not do is chase the latest international fad, least of all the idea of atomistic competing schools.  Interestingly, some UK research recently suggested that the older generation had better maths and literacy skills than recent school graduates – i.e. those who had bog-standard local authority school education did better before the days of autonomy, Ofsted and the national bloody curriculum.  Maybe we need less urgent reform, not more.

There is a point behind all this, which is that schools should be part of a local system.  The moves we have at the moment – academies, free schools – decouple institutions from their colleagues, from their local communities.  I know of one academy which refused to work with the careers service because their pupil information was ‘commercial in confidence’.  The danger is that when you become isolated and atomistic, and are judged by results, you start to select those pupils who will make you look good.  Church schools have done this for years, and now others are following.  It’s certainly easier than working to raise standards with better teaching and learning, but it helps no-one to cherry-pick kids who would do well anyway.  The main cause of educational under-achievement is inequality and poverty, and one thing that you can guarantee with a whole lot more academies and free schools is that they will take no account of that.

So – “I know what you area against, what are you in  favour of ?”.  The answer is a national drive to raise the quality of teaching and learning, alongside an end to structural reform.  When this approach was tried in the Success For All initiative for further education at the turn of the century, it was triumphantly successful.  Success rates for students increased by 50%, drop out plummeted.  But that makes no headlines, and it was pretty soon replaced by another dose of, you’ve guessed it, choice and competition.

Right and … er … wrong

I’ve written before about the slowing of blog output.  I gather I’m doing better than the normal, which is to give up after a couple of posts.  As the joke has it “I’m writing a blog” “Really ?  Neither am I”.  For the moment, I’m trying to concentrate on some articles that are getting quite long.  One is about the need for greater productivity in the economy, which is the only way for one group of people to get better off without taking the money from another group of people.  The other is about the state of the education system, and the extraordinary (to the non-specialist) information that state schools do very well, and rather better than private schools.  I’m also being nudged by a friend to write something about the current religion that is neo-liberal capitalism, but I’m not sure I can do better than Michael Sandel or Ha-Joon Chang.

Having revealed my views on everything, it requires a burst of anger to get me writing.  This week was propelled by an article in the Times by Tim Montgomerie claiming that we were wrong to think of the political right as being the stupid party, as it had been shown to be correct so often recently.  My facial control is pretty good, and so I can tell you that my jaw did not hit the floor at such an article being published in the week of the privatised gas men appearing before the House of Commons, and more revelations about bank misdeeds.  I like the definition of a conservative as someone who believes reform is a good thing as long as it takes place 150 years ago.  There’s a good summary of their general wrong-headedness in this US link, but it is true over here, too.  Let us remember who it was who voted against limiting the hours children could work in a factory (contrary to free enterprise – would reduce family incomes and destroy the British economy), against the abolition of slavery (an intolerable intrusion into property rights), against votes for working men and any women (mob rule, of course), against retirement pensions (the King had to threaten to create many new peers to persuade the Lords to accept a measure that would raise income tax to 8p in the £), against standing up to Hitler (after he demanded  chunk of Czechoslovakia, ‘a far away country of which we know little’), against gay relationships (which threatened family values).   The sad litany continues today, with the brainless austerity programmes that are simultaneously reducing the quality of our public life whilst slowing the economy’s recovery.

I once had a girl-friend who refused to go out with right-wing men, not because they had views that disagreed with hers, but because they tended to be dim.  Too right, Joanna, too right.

Shortening the war

Just so that you know why we are not still fighting the Second World War, I thought I would share with you all the things that shortened the war.  Most of them, according to their advocates, shortened the war by two years.  Shortening the war by two years is the current form of historical measurement – a bit like an area of rain-forest the size of Wales being destroyed each year, or a quantity of radioactive waste big enough to fill an Olympic swimming pool.  Anyway, off we go:

  • A BBC documentary on transatlantic liners paid tribute to their work as troopships, moving thousands of American troops to Europe and North Africa, and, ‘according to Winston Churchill’, shortening the way by two years.
  • Sir Harry Hinsley, official historian of British Intelligence in World War II, made a similar assessment about Ultra, the decoding by experts in Bletchley Park of the German Enigma coding machine. He claimed that it shortened the war “by not less than two years and probably by four years”.  How much was added to the length of the war by the fact that German and Japanese boffins were reading British and American naval signals is not on record.
  • The North American P-51 Mustang was a single seat fighter that, in its later versions, could escort allied bombers all the way to Berlin and back, reducing casualties and increasing the effectiveness of the bombing. The USC web-site claims that ‘its superior capabilities shortened the war incomprehensibly, if they did not in fact turn what would have been a brutal stalemate into victory for the Allies’.
  • Whilst we’re at fighter planes, lets give a nod towards the tubby little Grumman Wildcat, the only plane that could stand up to Japan’s Mitsubishi Zero as the Empire conquered the Pacific in 1941/2. Without it, the allies would have lost the Battles of Midway and Coral Sea, which would have, to say the least, extended the war by a couple of years.
  • The Mustang might have freed up the bomber force to deliver Lord Trenchard’s prediction: “if we decide to use it (bombing) in concentration and with determination we can not only save millions of lives but we can shorten the war perhaps by years.”
  • General Dwight Eisenhower felt that the designer of the landing craft used in allied invasions in France, Africa and the Pacific made a crucial contribution. He is quoted as saying, “Andrew Higgins … is the man who won the war for us. … If Higgins had not designed and built those LCVPs, we never could have landed over an open beach. The whole strategy of the war would have been different.” Even Hitler recognized his heroic war efforts in ship production and bitterly called him the “New Noah.”[1]
  • Against his critics – and there were many in after years – Harry S. Truman took the responsibility for the atomic havoc inflicted on Hiroshima and Nagasaki because the bombs, he maintained, did shorten the war and save millions of American and Japanese battlefield casualties. Actually, it saved many more Japanese (and, I guess Chinese) from starvation, which was the major killer of civilians in that conflict.
  • General Douglas MacArthur’s Chief of Staff for Military Intelligence, Major General Charles Willoughby said, “The Nisei (Japanese/American code breakers) shortened the Pacific War by two years and saved possibly a million American lives and saved probably billions of dollars.”
  • YouTube pages pay tribute to the men of Britain’s elite Pathfinder Squadrons, who flew night-time missions over Germany and dropped flares onto strategically important targets, enabling bombers to find them more easily. “It was due to their efforts that Hitler’s military-industrial complex on the Ruhr sustained major damage in 1943, halving Nazi weapon production and effectively shortening the war”. Footnote: I thought today’s historians had established that Nazi weapons production actually rose throughout the war, even 1944, despite a strategic bombing campaign that cost so many allied lives.
  • The proximity fuse, which made land and especially naval artillery gunfire more deadly by exploding when near a target, so eliminating the need for a direct hit, “shortened the war drastically”.  This was indeed a major contribution to victory.  In Europe, it saved London from massive damage from V1 flying bombs, just as D-Day was being launched: on one day, 86% of V1s were shot down before reaching the capital.  In the Pacific, it radically reduced the impact of kamikaze attacks on allied warships.  But … two years ?
  • Operation Mincemeat – which involved placing false documents on a dead body in naval uniform, and letting the Germans believe they showed the allies were about to invade Sardinia, not Sicily, also shortened the war by two years (https://en.wikipedia.org/wiki/Ewen_Montagu).
  • YouTube tells us that the Bailey Bridge, in enabling allied forces to cross rivers despite Axis forces destroying bridges, (you guessed it) shortened the war considerably.  It’s actually a fiendishly clever piece of engineering, as you can confirm here.

This is a cursory survey, leaving out the Avro Lancaster, the Vickers Wellington (‘Without it the course of the Second World War might have taken a different turn’), radar, the Rolls-Royce Merlin (“the engine that won the war”), the M15 carbine, Hedgehog, HF/DF (‘huffduff’) and ASDIC anti-submarine devices and anything – T34 tanks, Sturmovik attack bombers – from the Russian side.  I don’t deny the importance of the devices and tactics above – for what it’s worth, I think Enigma and the deployment of the A-bomb did shorten the war considerably – but I do ask for a slightly less clichéd approach to military history.

It is a moral issue

If you are old enough, you can remember the Profumo affair of the 1960s.  A junior Minister of Defence was discovered to have had an extra-marital affair with a young woman who had also been involved with a Russian naval attaché.  It caused a tremendous furore, of course, as it had all the elements loved by the media and the public – pretty girls, politicians caught in flagrante, a touch of spy mania and the red menace.  Macaulay had written many years before that there was “no spectacle so ridiculous as the British public in one of its periodical fits of morality.  Richard Davenport-Hines wrote the central work on the affair, An English Affair: Sex, Class and Power in the Age of Profumo, and spoke of 1963 as a year when “the soapy scum flowed after the sluices of self-righteous scurrility were opened”.  However, my memory was that there was little talk of morality involved.  Quintin Hogg, then Lord Hailsham, was regarded as rather old-fashioned when he insisted that “this is a moral issue”.  People said that they were not interested in the sex, dear me no, people should lead their own private lives, no, we’re terribly modern here, not a moral issue at all, what mattered was the security issues. That, and he lied to Parliament. But not the bonking, we’re relaxed about that. Really.  But “wrong” – what does that mean ?

Cut to the present.  What we have is something infinitely more important than a minor politician being caught in the wrong bed.  We have societies all over the western world fracturing under greater pressure of inequality.  The share of national income going to the top 1%, and the top 0.1% has doubled between 1979 and 2007.  In the USA, top executive remuneration has risen by 37% since 2009.  In 1975, it was just 20 times Chief executives at America’s 350 biggest companies were paid 20 times as much as the average worker: in 2011, 231 times as much. These are astonishing figures, and Deborah Hargreaves of the High Pay Commission shows that they are replicated here.  The trend for very high executive pay started in the USA, but has spread (you may say infected) the UK and other economies.  This is all going on at a time when the incomes of the mass of people are static or falling.  The question  is – why is it happening ?

There are two competing schools of thought.   One explanation is simply greed, that top executives have found out they can grab a larger amount of the wealth that comes through their hands, and they are tucking in enthusiastically.  This is technically known as ‘rent-seeking’, but you and I might introduce similes about snouts and troughs.  David Marotta’s article in Forbes compares rent-seeking behaviour, ever so gently, to piracy.  He nevertheless points out that “rent-seeking never encourages productivity. The production of valuable goods and services is maximized with strong property rights when little is wasted in efforts to seize the surplus of others or to prevent others from seizing our surplus. During a strong economy there are fewer incentives for rent-seeking because production is highly rewarded. But when economic times make it more difficult to produce, it becomes more attractive to rent-seek someone else’s surplus”.

There is a rival theory, one that claims we are experiencing a long term change in the nature of the economy, which has become ‘hourglass shaped’ – there is a demand for jobs at the very high skilled end of the market, and jobs at the low skill end, but the demand for semi-skilled and skilled manufacturing and administrative jobs in the middle has declined.  This is said to be due to various factors – computerization of administrative tasks, globalization of manufacturing, and so on.  This argument also claims that the high pay of top executives represents their extraordinary abilities, abilities that are scarce and have to be bid for.  It’s worth a few millions to keep on board an employee who can add billions to a company’s value.

Why do I find the first theory more attractive than the second ?  Well, a number of reasons.  The argument that top executives have extraordinary abilities that must be rewarded seems at odds with common stories of executive performance – where men (and it’s almost always men) get paid very large sums of money to ruin a company or a bank.  An example from today’s paper: the chief exec who dragged Serco through the mire of allegations of lying to maximise government contracts has just been paid off with £7m.  Think what he would have got had he raised the company’s reputation.  The timid rebellions that have happened (“shareholders’ spring” indeed !) have usually occurred when  investors have reached their wit’s end about executives enriching themselves whilst their business fails. As Nils Pratley pointed out in the Guardian, the company AGMs may have provided more entertainment:

  • the Barclays‘ board was told it was “a disgrace to capitalism”.
  • the directors of insurance giant Aviva were accused of being “more concerned about their remuneration packages than growing our business”.
  • at Man Group, the hedge fund manager with a shrivelled share price, the highly paid chief executive was asked, witheringly: “Sir, does it really feel like a $7m year to you?”

but whilst investor revolts have claimed some scalps, radical reforms to how companies are managed and directors paid is years off.

I would also wonder how a social movement on the scale – a 30% hike in two or three years – can possibly be the result of long-term economic factors.  It’s simply too quick for that to be true.  And weren’t firms in the 1970s in need of exceptional individuals to run them well ?

Another reason I’m sceptical is that the behaviour has bled into the public and charitable sectors.  Head teachers used to earn about twice what their average staff member earned.  It would now be, I guess, four or five times as much.  I can remember being recruited as a Principal for £47,000 in 1992 and retiring on a salary of £110,000 ten years later*.  The news from the BBC, from local authorities confirms the same stories.  Last year, at least 30 charity heads enjoyed six figure salaries.  I suppose you could say that the public and charitable sector has to compete with the private sector for the extraordinary talent (see above), but I was not aware that Private Colleges PLC was scouting for my services, and I’m damned sure start-up media companies won’t be employing the BBC’s dumped head of Human Resources for £320,000 any time soon.   And being head of a charity or working for a public body used to be a position of respect, not another rent-seeking opportunity.

And then one must ask why the downward pressure on wages is happening in areas – like hospital cleaning or social care visits – where there is no competition from the Far East nor possibility of computerisation.  The Guardian reported this week that many care homes are trying to pay less than the minimum wag for staff involved in the care of the old.  The reason that those workers are squeezed is not due to secular movement of labour demand, but simply because they are powerless.

You can argue that sorting this injustice out would be good for society, and good for the economy. There are certainly powerful arguments on that side.  However, what’s wrong with saying that it is a moral issue ?  People are behaving in an unacceptably ruthless way.  A recent book draws attention to the problem of people behaving like assholes.  In other areas of our life we use the law to restrain the selfishness of individuals.  We should do so here.  The study of the benefits of more equality The Spirit Level has been attacked (of course) by those wanting to avoid any action against the rich, but still seems to hold up pretty well to me.  Interestingly it points to countries that have made the choice of greater equality, which is now including some surprising names such as South Korea.  A look at other countries shows more decisive action against executive pay abuses: in Australia, a board that resists the wishes of shareholders to review executive pay has to put itself up for re-election.  The Swiss (!!) too have taken action.  The US government forbade executives from companies rescued by the state from having incomes over $500,000, though the tide is going out there as the economy recovers.  If you agree with me, inequality is not inevitable, it is, as Nobel Laureate Joseph Stiglitz recently showed in the New York Times, a choice.

The Archbishop of Canterbury has got it right.  To go back to 1963, it is a moral issue.

* Later on, much later on, Liz Truss proposed tax reductions for those earning above £180,000 a year, on the grounds that these were the successful people who were creating wealth. I was at the top of my profession – head of the fourth largest college in the country, Ofsted Grade 1, OBE, all that stuff – and was paid nothing like that. Life as a beta male, though, wasn’t that bad.

Footnote: one galling part of the rip-off culture is that forms are now aware we think badly of them, and so pretend to enormous concern about social issues.  Eat enough chocolate bars, and the company will give sports equipment to schools.  TV advertisements are full of green claims, of pretty children and winsome old folk being helped by our corporate friends.  Firms keep claiming the high ground – a commitment to care, to community, to what matters to you and your family as they do ever more shitty things

Conference season 2013

It’s the time of year for the party political conferences, and what a sad time for those who are interested in the political health of our nation.  Conferences were never the most uplifting of events, but in the last, what, twenty years they have become ever more depressing.  This was a result of British politicos visiting the USA, and noticing that the parties there were not engines for developing ideas or transmitting values, but support organisations, machines for raising money for the political elite.  It used to be said that politics was show business for ugly people, and political parties had become fan clubs for the tone deaf.  As a result, conferences no longer have any role in forming policy and so become a tribal gathering at which ritual dances are danced, and ritual songs sung, with little content except that our opponents are awful people.   To be fair, the Liberals had a few motions that might have embarrassed the leadership, but that might have been related to their leaders’ abandonment of liberal values and the related collapse of public support.

What happens is that the conference is a build up to the speech of the leader, featuring a succession of nonentities who stand up and fill their moment of glory by saying “I’ve got a message for David Cameron/Nick Clegg/Red Ed Miliband” and then adding a few inane insults. Their opponents are without exception, rogues or idiots.  The leader appears on stage in a nice suit, makes a lot of vacuous statements generally involving change.  Change, it appears, is a good thing, except when your opponents do it, when it is a bad thing (see my blog of last April).  The great man then announces a trifling reform that will make Britain Great again, and ends with uproarious applause. His wife then strides adoringly towards him in a dress that is neither too cheap or too costly, and embraces her hero.  The TV and press then analyse how good the speech is, with the aid of an opponent (“he just hasn’t answered any of the vital questions”), a supporter (“I think he answered all the questions”) and a tired cynic (“Did you notice how his tie know slipped down whenever he mentioned the economy ”).   All is swiftly forgotten and we the go on to the next conference to repeat the awful business.

Ed Miliband came out with a nice phrase during his conference speech – “Britain can do better than this”.   The political parties can certainly do better.  Where we should start, I think, is an analysis of the main issues facing the country.  These are not the state of marriage or unemployed shirkers or for that matter energy prices or school meals.  Once you get away from foreign policy matters, about which the parties tend not to disagree (apart from Syria, where I think Miliband played a blinder), there are three crucial matters.  Firstly, the low productivity of the UK economy, private and public sectors alike; secondly, the living standards of the majority or our people, with static or falling real incomes and increasing inequality; and lastly the power and effective management of the corporate sector.  All three are interlinked and intertwined, and none are simple.  The party conferences should be a think tank, where experts and party members confront proper, evidenced research and policies that will make a difference (horrible phrase, I know, but it has its uses) to these issues.

What we emphatically do not want is a parade of politicians and their acolytes finding the most miserable views from a focus group – the poor are idle, foreigners are untrustworthy, educational standards are falling – or from rich people – taxes are wasteful, only the private sector is efficient – and trying to win votes by getting us to turn inwards against our neighbours and against the disadvantaged.  This appears to be the line that the Tories want to follow, following the US Republican example, and with the appalling encouragement of Linton Crosby.  One moderately encouraging result of the last few weeks has been the lack of success the press has had in depicting Miliband as a dangerous radical for proposing price restraint, more houses and action on training for young people.  To my mind the most damaging accusation against the Labour proposals is not “this will paralyse the economy” but to ask “why didn’t you do this when you were in charge ?”.

There’s a very good analysis of the organised hypocrisy of the conference speech here.  But if you would prefer a funnier and more cynical approach – almost as good as the famous Peter Sellers track – follow this link.

Chutzpah

Today, it’s just me pointing to some good stuff in other people’s writing, blogs and tweets.  Firstly, there is the extraordinary sight of people responsible for the financial melt-down of 2008 denying they had a part in it, and saying that state intervention (which saved their respective asses) is not a good thing.  Here’s Paul Krugman open mouthed at the chutzpa of Alan Greenspan, revered in the days of light-touch and deregulation as a financial genius, but now revealed as the worst ex-central banker in the world.  And then there is George Monbiot gasping at a new book by Matt Ridley, who was the chairman of Northern Rock when it became all but insolvent, who begged the government for help, now saying that the state is a flea sucking the life out of the economy.  Oh, and adding some climate change skepticism to enrich the mixture.  Jeez.

And for those of you expressing your own amazement at the behaviour of utility companies, an article telling of the historic struggle to take the control of water – a “dangerous monopoly” – out of the hands of greedy capitalists.   Amongst those engaged in this campaign were leading Conservatives of the day