Posts Tagged ‘economics’

I mean, the science is pretty clearly in, so we know the social and economic benefits of providing everyone with a basic income would be vast. Apparently another bonus is that it makes people “more entrepreneurial“, whatever that means and whatever’s so great about it. Sounds less exciting than escaping the constant anxiety of being homeless and starving if the intrinsically fragile capitalist economy has a bit of a bad day and decides to fuck you up, but sure.

But another thing that’s actually interesting about it, is that a basic income makes sense of a bunch of other policies many economists have recommended, but which often make bleeding-heart lefty types like me bristle.

F’rinstance: charging people a flat fee to see their GP or attend A&E. All the articles I’m finding about it seem to be at least a year old, but I’m sure this cropped up again somewhere just recently.

Basic economics tells us that an increase in something’s price will reduce the volume of its consumption; an increase from free, to a nominal fee of £10 a visit, would ease the burden faced by the NHS and reduce the volume of people using its services, but only those people whose problems are worth less than a tenner would be foregoing any medical attention. Care is still available to anyone who’d really benefit from it, but those who don’t really need it won’t go along anyway on the grounds that “might as well, it’s all free”.

The point of having money, after all, is to allow people to express preferences in a meaningful, concrete way. People who wouldn’t “prefer” to see a doctor than whatever else that small nominal fee could provide – coffee with a friend in Starbucks, say – probably aren’t going to die or deteriorate abruptly based on that decision, since it can’t be bothering them that much.

The problem, as things currently stand, is that the people who’d end up “preferring” to do something else with their nominal fee wouldn’t be choosing between a hospital visit and some overpriced caffeine; they’d be choosing between a hospital visit and the gas bill for keeping their home warm. Or the food they were planning to buy for their children this week. Or the bus fare to get to the Jobcentre so the bastards don’t fucking sanction them again.

Some people are so rich they can have basically all the things they want, and the use of money as a way to express preference becomes meaningless on this scale, while some people are so screwed over by the system already that they don’t get to make choices between preferences in a way that’s remotely fair. Even if you try and means-test it, it’s another hurdle requiring poor people to prove their neediness once again before granting them access to basic medical care.

If only there was some way to make sure people didn’t face that kind of harsh, brutal, unjust, life-or-death dichotomy, and were free to make genuinely economically rational choices about how to allocate the resources available to them.

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The whole idea of a moral basis to capitalism seems inherently broken to me.

The Pope recently made his first “apostolic exhortation”, which is totally what I’m going to start calling my tweets in future in a further attempt at self-hype and aggrandisement. (“Apostles, I exhort you. Look at this picture of my cat making a derpy face. LOL. Please RT.”)

In this exhortation, he talked about poverty, and wealth inequality, and all the stuff that’s increasingly been interesting me lately. Pontiff Frankie Prime seems to genuinely give a crap about the whole poverty deal, at least by Papal standards. I get the impression he genuinely sees people suffering because of economic injustices and wants to prioritise improving this situation, even if he is only doing a minuscule fraction of what’s within his power from that massive palace of his.

Anyway, his description of the tyranny of “unfettered capitalism” got a lot of people agitated, and often with good reason. I’m not sure that his proposed improvements to the global economy are cogent, or that his statement of the problem is even internally consistent; part of what defines capitalism is the fetters, in the form of property rights and so forth.

I don’t have any especial interest in analysing the Pope’s proposed economic policies, not least because by his own admission he’s not really trying to speak in economic, academic terms. But I just listened to a Freakonomics podcast which discussed the Pope’s ideas with a number of economists, and a few things bugged me about the defenses of market systems that ensued.

Joseph Kaboski, an Economics Professor and a Catholic, argues that ethics comprise an important part of a market economy. He provides a simple example in which they come into play, of someone getting over-charged at a car dealership because they didn’t speak great English, and so weren’t in a position to fully inform themselves of the details which would have helped in their negotiations. The point he’s trying to demonstrate is that “ethics are important in markets”.

But being “important” is a vague concept – what role do ethics actually play here? It’s clear that unethical behaviour would be an option for some unscrupulous person in this situation, and that it harms some innocent bystander as a result (and arguably damages market efficiency) – but none of that needs to matter to the unethical actor. He’s just made a tidy profit off of some hapless loser, beyond what was merited by the quality of the product – and he’s strongly incentivised by the system in place to do so whenever he can get away with it. Unethical behaviour makes those doing it better off.

There’s no solution proposed to this. It’s not even recognised as a problem. Another contributor to the episode, Jeffrey Sachs, says that “our indifference, our brazenness, our hard-heartedness, is no favour to ourselves or to the functioning of our societies”. But sometimes brazen, hard-hearted, unethical behaviour is a favour to ourselves, at least in the short-term. It might screw over the functioning of society if we all act that way, but why should I care? I got mine, Jack.

Obviously I think I should care. There is a moral obligation, I’m not going full relativist here. But when people who flout that obligation flourish as a direct result, and do better than those who act more ethically, the system is inherently broken. There’s no point arguing that your system will work fine if people would just behave more ethically, when the system is designed to reward those who don’t. There needs to be something built-in to the system so that socially harmful and undesirable behaviour isn’t massively appealing to anyone with flexible morals.

On a briefer note, here’s another quote from Kaboski, amid some more detailed statistics of how much things have been improving lately:

More people have escaped extreme poverty in the past 25 years in part through the growth of China and India than in any period of human history.

There are aspects of this whole debate to take heart in. Things do get better. But I call bullshit on this limited success as a vindication of any given application of capitalist market economics in recent years. There are still billionaires collectively hiding trillions of dollars offshore, for whom sums of money equivalent to whole countries’ GDPs act like a meaningless high-score, and there are still thousands of children starving to death every day.

It might be better than it’s ever been. It’s still not fucking good enough.

Classroom discussion questions

1. Do we have any obligation to care what the Pope says about anything, given the global extent of the child abuse network he oversees?

2. What would “unfettered capitalism” actually look like? What, if any, role would the government play in such a system?

3. Shouldn’t we have figured out how to sort out all the money without being dicks about it, by this point in our civilisation?

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Society has problems that need fixing.

The people we ostensibly put in charge of fixing society’s problems have a great deal of power to enact their proposed solutions.

The perceived problems faced by society, which it’s assumed need to be addressed by those in charge, include such items as: the unjustified claiming of “free money” by those who haven’t proved themselves to deserve it; long-term unemployment; and criminal behaviour by juveniles.

Popular salves for these maladies include, respectively: imposing benefit sanctions for transparently idiotic reasons; forced placement on full-time, unpaid workfare schemes; and solitary confinement of children, a practice widely regarded as torture.

I talk semi-regularly about aspects of our society that I truly believe will be looked back on with horror, disgust, and bewilderment in a century or so, and I want to explore that in some more depth.

Even people who haven’t experienced it directly will be familiar with the racist grandparents trope. People who grew up in a different era often don’t have the same sensibilities to certain issues that we do today, and maybe they can’t be expected to. It doesn’t make them bad people, but they were raised with a certain set of attitudes being strongly normalised, and it’s not always easy to see, decades later, why the way you’ve always acted is suddenly so offensive to people, or so drastically needs altering.

It can be hard to articulate to someone behind the curve just why it’s important to adapt like this. “Just don’t be racist” doesn’t seem like it should need spelling out; and yet if something was “just the way things were” seventy years ago, it may not be obvious that the world has changed for the better.

I’d be amazed if there weren’t things that my generation’s grandkids end up being impatient for me and my peers to adapt to, but which we struggle embarrassingly with. The thing I particularly imagine them wondering about us is:

Was that really the best you could do?


All that technology and productivity and abundance and capacity to do amazing things together, and you couldn’t find any better way to induce better behaviour in kids, or deal with supposed “freeloading”, without shitting all over thousands of other people who were just trying to get by?

You really didn’t have any better ideas for how to help lift up the lowest among you, and give everyone a chance to thrive?

There was really no interest in picking a military strategy that didn’t involve the useless mass murder of random foreign civilians?

Were you guys actually, really, honestly trying as hard as you can to not totally fuck everything?

Really, though?

When they get around to asking us that, I’m not sure what our answer is going to be.

But maybe I’m just projecting, because I’ve already been asking it for so long myself.

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Something that often comes up, in discussions about providing financial aid for those on low incomes, is the idea of a “payment card“.

Rather than handing out cash, this would be something that looks and acts rather like a credit card, which is topped up every so often with a fixed amount of credit, but which can only be used to purchase a limited set of goods. Food and other essentials, for instance, but not booze and cigarettes and other things that simple cash money might be frittered away on.

This may, at first, seem like a worthwhile way to make sure that those we’re trying to help are actually being helped; that, if some people have naturally unreliable spending habits which have led them to a situation where they need help, those habits can be curbed by not giving them the chance to spend their funds unwisely.

It’s understandable if such a scheme doesn’t immediately strike you as unconscionably heartless, cruel, and dehumanising.

But it’s an idea that’s been tried before. A couple of years ago, for instance, the Azure card came into use in the case of some asylum seekers. The “countless horror stories” touched upon in that CiF article – kids going without clothes, parents having to walk miles to a supermarket which might accept the card because they aren’t allowed to buy a bus pass – speak for themselves, as well as highlighting the incompetence of the government’s implementation of the scheme.

Or, if individual tales of embarrassment and degradation don’t move you, just look at the stats. A majority of card users were unable to attend essential health appointments, were turned away from supermarkets they’d been told would accept it, and found the experience of using the card humiliating and a source of anxiety. These aren’t just teething issues or a handful of isolated problems; this is the standard result when you take disenfranchised people and further remove their autonomy and dignity.

Government has amply and repeatedly proven its complete lack of ability to run such an operation in any morally justifiable manner. Yet it persists in keeping huge swathes of the public under the thumb, and going to great lengths to make sure nobody gets a damned penny more than they’re deemed worthy of, for the sake of meagre financial savings, while imposing a tragic and needless oppression on those who’ve already had the most opportunity stolen from them.

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So the Tories are cutting benefits for the poorest people struggling hardest to support the most modest lifestyles, yadda yadda tax breaks to billionaires, you know the score.

And one of the ideas Chancellor George Osborne has often used while attempting to rationalise policies which take more money away from low-income households than the richest, is that of “making work pay”.

The terrifying bogeyman he and other Tories like to conjure is that of the feckless scrounger, probably with a Northern accent, who lounges comfortably at home with their curtains drawn all day, living the high life on benefits which your taxes paid for, and who – because of the current, unjust welfare system – has no incentive to go out and work, when they can live just as cushy a life at home on benefits.

Now, leave aside for a moment that, statistically speaking, this character is so close to fictional as to make almost no difference to any of our country’s financial troubles; ignore briefly how laughable is the idea, to thousands of people who simply can’t find work, including many with disabilities or who’ve been forced into mandatory unpaid labour, that life on benefits is the “easy” choice; disregard, for the time being, the extent to which countless legitimately struggling individuals and families are cruelly stigmatised and marginalised by such characterisations as those favoured by the Conservative party.

Even without fighting any of those points, Osborne’s premise is wrong.

The Tory plan for welfare reform depends on people being bullied into doing a job, any job, no matter how low-paying or degrading, because there is no bearable alternative. They want to make life sufficiently uncomfortable, for those people they think aren’t trying hard enough, that they’ll all just jolly well try harder. Their worst nightmare is that people without savings or property or investments might somehow be comfortable in their lives, and not feel compelled by fear of starvation or homelessness to desperately look for work.

I hope my biased and provocative use of language is making it clear how I feel about this attitude. I really do.

Because aside from being heartless, it’s simply an incorrect view of humanity.

There’s this crazy wacky idea that some crazy wacky socialists seem keen on, called the guaranteed livable income. The basic proposition is to drastically simplify whatever system the country currently has in place to carefully and cautiously redistribute wealth, offering the most basic safety net it can to those who need it while making damn sure no scroungers come along and get a penny more than they deserve… and instead just give everyone enough money to live on.

No means testing. No penalties for not following the DWP’s instruction. You just all get enough money to live on. Guaranteed.

I told you it was crazy. No doubt the obvious problems and holes in this plan, and the many reasons we’re not already doing it, are clamouring to escape your furious fingers and make themselves heard in the nearest available comments section already. But it may astound you to know that the various economists and activists who’ve been investigating and exploring and testing out this idea for some decades have probably already considered many of the objections that sprung to your mind within around fifteen seconds. Whether or not they ultimately stand up, I’m not sure, but don’t be too quick to pat yourself on the back for utterly annihilating this whole worldview simply by having the blinding insight that giving money to people costs money.

Because, like I said, the Tories were wrong. A guaranteed livable income is about as far as you could possibly exaggerate their nightmare scenario. They’d have you believe that, in such a situation, the zombie feckless scrounger virus would spread inexorably across the land. Nobody would bother doing any work when they could just slob around picking up even more free money than they get now, with no risk of approbation or penalty. Without the threat of poverty to spur people into productivity, there’d be nobody actually making the money to hand out, and the whole system would collapse.

I wouldn’t put it past them to put it in similarly apocalyptic terms, too. But it’s a conclusion that depends on a cynical and inaccurate view of humanity. (The rest of humanity, anyway. Dave and George and the rest of that crowd could live comfortably without having to work another day in their lives, and would surely claim to do what they do out of a sense of duty and service, rather than being in it for the money. They just can’t imagine a similar altruism or public-spiritedness in anybody else.)

Only an unjustified contempt for other people can be the basis for thinking that they need to be threatened and browbeaten and punished into doing useful work; the relatively little amount of data that’s been allowed to exist indicates exactly the opposite.

I say “allowed to exist”, because it’s not hard to imagine the interest that governments might have in perpetuating the idea that a power structure needs to be maintained in society. In the case of the particular experiment with a guaranteed income described in that article, in Manitoba in the 1970s, the government withheld the data after the programme was scrapped, and wouldn’t let anyone gather further evidence which might have vindicated it.

What is known, though, from the data available, is that the Conservative nightmare singularly failed to come true. People didn’t just sit at home mooching off the state when there was free money to be had. In general, they kept working their jobs. There are reasons why people work beyond earning money to avoid poverty, after all. It can be rewarding, a way to socialise with people whose company one enjoys on projects one finds worthwhile. Particularly if you have the freedom to leave a work environment you don’t enjoy, and take the time to find someplace more suitable, without having to panic over paying the rent in the meantime.

And with that extra freedom, and without the stress and worry of paycheck-to-paycheck living, people were healthier. The resulting decrease in hospital visits, if similarly expanded over the whole of Canada, would save billions of dollars. And the only people who did drop out of work to live an easier life on free government money were new mothers – who spent more time with their babies – and teenagers – who graduated high school in improved numbers and had the chance to find jobs they might actually enjoy, and feel productive in, rather than whatever came along first which would allow them to pay the bills.

It’s a crazy idea. And the idea that something this crazy might actually work thrills me like little else. This right here is the shit I read about which gets me excited for a more awesome world and makes me want to share it with everyone in rambling blog posts with overly hurried endings because it’s late and I want to finish up and get it posted before I go to bed.

It might be a pipe dream. But I don’t think it has to be. And either way, it’s preferable to whatever heinous visions occupy the minds of our politicians as they sleep.

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Serious question.

This is about the whole 47% thing, obviously. And I genuinely want to know. His thoughts: what were they?

The picture he’s painting for his audience of $50,000-a-plate party-goers is, after all, a wildly inaccurate one. Nearly half of the entire country, he tells them, are “dependent on government”, don’t pay any income tax, think they’re “entitled” to things like food and healthcare, will never “take personal responsibility” for their lives, and will vote for Obama “no matter what”.

He doesn’t use the word “moochers”, or any term so overtly provocative, but it’s clear what he’s trying to communicate. The image is one of millions of slobs and layabouts, who can’t be bothered putting down their beer and getting off the couch to do an honest day’s work, and who expect you good, hard-working people to take care of them and pay for their pampered lifestyle, which the black guy’s going to make you do if we let him stay in office.

It’s clear simply from the tone of voice what we’re meant to think about people who feel “entitled” to anything (notwithstanding the incredibly narrow definition of “entitled” within which it’s assumed to be about the worst trait a human can possess). He doesn’t call them all feckless scum, because he doesn’t need to. (In fact, a Pennsylvania legislator – unconnected to the Romney campaign, as far as I know – did recently paraphrase his speech in rather more stark language.)

And yet, it’s bullshit.

For starters, even if the 47% statistic were meaningful, the judgment he leaps to from it is ideological and severely lacking in compassion. The idea that money is a useful measure of a person’s value, or of how much they deserve to be fed and clothed and treated when they’re sick, is comical enough already – but federal income tax? Jesus wept.

But I didn’t even need to do my usual bare minimum level of research, before the internet pointed out to me that most of the 47% do pay taxes in other forms, like payroll taxes, unless they’re retired or getting paid a pittance; that these payroll-tax-payers actually contribute a greater proportion of their income than Romney does; that people who don’t pay income tax actually tend to vote Republican; that the entities most “dependent on government” in history continue to be banks and corporations; and so on, and so on.

So… does Romney just not know any of this stuff?

I mean, I’m about as connected to American politics as he is to the administration of the pension schemes of London-based multinational law firms (whee, I have a job), but even I can get my head around the evidence suggesting that every second person in the United States isn’t a good-for-nothing scrounger being courted for their vote by a socialist President while the other half effectively wait on them hand and foot. Can Mitt Romney really not have picked up any of this information himself?

I know he’s a busy man, but the internet’s even drawn him a picture:

Does he really not know this stuff? It hardly seems plausible.

And yet, if he really has ever encountered these, y’know, facts, but still chooses to use this kind of manipulative language to dismiss any concern for the well-being of 150,000,000 people as “not his job”…

…then what is it that he’s thinking, when he talks like this?

Because it looks a lot like he’s thinking that he knows the crowd he’s playing to, and they don’t much care whatever happens to those poor people so long as their own interests are being looked after, and he’s okay with that.

He’s in a room full of other rich white guys, who all seem to think they made their fortunes entirely through their own personal merits, and it’s purely a coincidence that just about every one of them happens to be white and male and had rich, well connected parents. Assuming Romney’s not entirely ignorant of basic facts, it looks like he’s thinking that he wants to keep them happy and take their money more than he wants to engage in any kind of intellectual honesty about income inequality and the injustices of capitalism.

So either he’s deeply isolated in a bubble that’s non-permeable to significant portions of reality, or he thinks lying about half of the country that he wants to rule over is worth doing to meet his own goals.

When Mitt Romney says “47% of people aren’t contributing”… does he mean “47% of people are effectively contributing to a wealthy minority, by means of not being paid the full value of their labour in the first place”?

Does he mean “47% of people find my policies completely unappealing and wouldn’t be helped by them at all, suggesting that I might not be an ideal candidate to lead the entire country as I think I should be allowed to do”?

Does he mean “47% of people’s contributions – and, by extension, their lives – seem completely worthless to the people who want to run the country”?

This turned into more of a run-of-the-mill anti-Republican rant than I was hoping for. And Obama shills for cash just as shamelessly and has murdered a lot more foreigners than Romney, so maybe this isn’t even that big a deal. Just another familiar instance of a series of systemic problems that no mainstream politician even comes close to wanting to solve. I don’t know.

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About $10,000,000,000,000 has been squirrelled away by 92,000 people.

A tiny little subsection of humanity, described appropriately by the Guardian as a “global super-rich elite”, has amassed this fortune, extracted it from various of the world’s economies, and hidden it under a metaphorical Cayman Island-shaped mattress to reduce their tax liability.

This is what happens when you encourage personal accumulation of wealth for its own sake, and sanctify those who succeed in the scramble to the top. You allow the “job-creators” to hoard unimaginably colossal piles of resources, denying their use to any of the rest of us.

What is even the point of anyone having that much money? What personal hedonistic joy are you going to derive from the second billion which you couldn’t reach with the first? It just becomes about getting a high score.

The total amount tucked away in private banks is apparently $21,000,000,000,000. And yes, it really is meant to have that many zeros. I have to keep double-checking, too. To put that in a little perspective, if you look at the cost of the NHS and scale it for population, then this off-shore stash could pay for the entire USA to have its own nationalised healthcare service, providing every single person in the country with the kind of social safety net enjoyed by every other nation in the developed world.

Twenty-six times over.

But it’s not going to. Because some successful capitalists earned that money, and now its all theirs to do what they want with it.

This is a completely fucked system.

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