I actually completely agree with directing social housing to people in work first and foremost.

Labour’s biggest flaw (in my opinion, obviously) in the last years of government was that it spoke too much about poverty. It spoke of those in need and it talked of deprivation. Most working people don’t think that means them – so they felt Labour offered them nothing as they struggled to find a stable home and pay their bills.

And it is fundementally right that we help people who can’t afford a stable home despite working for a living (social housing still offers a stable home, but not to people with jobs – at least not in London)

That said, the recent Ashcroft poll suggests Labour should carry on on its existing path – to some extent. Labour seems to be well up on tories in marginal seats under Ed M. So although he has flaws, his direction of travel is not so bad.

The problem is that one person`s solution is another`s problem. It is, let us say , screamingly obvious that we need much better rewards for economically productive activity and far less for providing social support.Teaching ,Policing .. bureaucratising
This knowledge will not get the Byzantine management structure of local authorities and schools into the lean shape of their competitively judged private sector peers because people in the Public Sector will kick.They own Ed they can strike and anyway there are easier targets. What about the people who do not and cannot strike Ed?
What we need is supply side reform and above all cuts to desirable but inefficient and unaffordable non jobs used by New Labour to spread wealth and employment not to provide services to tax payers . That is an solution
It is not a solution to the vast numbers sailing through this turbulence on guaranteed income , guaranteed jobs and a final salary pension
Ed had to take on the Unions and he signalled to them as a weak dog signals to the Alpha Male , whining crawling on his belly in public submission

“But in Newham alone, there are 70,000 people on the waiting list for social housing”

The problem is though that virtually anyone can apply, regardless of need so it is likely that many of these 70,000 do not have a high priority need. From the Newham website of who cannot apply:

“If you are subject to immigration control and your status specifically excludes you from public housing assistance, or you are not habitually resident in the UK, you will not be able to register for a home from the Council.
You can be excluded from joining the Housing Register if, in the past, your behaviour as a tenant, or the behaviour of a member of your household, has not been acceptable (for example, if you were evicted from accommodation in the past because of serious anti-social behaviour).”

It seems that appart from this as long as you have some sort of connection to Newham you can apply no matter what your circumstances.

The rent is too damn high!

The problem I have with Ed M’s speech was this concept of “moral” choices. All well and good if it is call for us all to make morality a more central part of our own lives. But I fear this will lead us to the over-eager hand of government. I see a unwelcome return to the days when if you needed a council home you visited councillor Ron and had to prove what a hardworking, god-fearing, do-gooding person you were. If councillor Ron’s decision were objective it might be acceptable but of course it can only ever be subjective.

As a more eloquent bard than I once said:

“Theirs is a land with a wall around it, and mine is a faith in my fellow man”

The housing issue , of course, was a dog whilst to the anti immigrant white working class vote. Margaret Hodge was the one who pioneered it under pressure from the BNP.

The answer is to reduce immigration .

Why can`t he say that ?

The same problem which I think added to labour getting kicked out, people on waiting list saw Immigrants getting houses or Migrants of course this may well mean it’s not true, but it was in the press and labour did little to stop it.

Now of course we have moved on from Immigrants to the unemployed being the baddies within Newer Labour, we have less jobs now and sadly labour will tell you a teacher or a Police officer or a social worker will need these houses, well not one nurse lives on my 260 council houses, not one single police man and not a single social worker. The rent of a council house in my area £98 a week in the private sector including old council houses which were sold to a private firm it’s £225 a week. Now then if your on state hand out which one would you think suit the government.

But what you have done now is piss off those who are genuinely out of work for a few years, you have pissed off the sick the disabled, OK we know they are all cheats anyway, and you have made the middle class feel better on paying tax, but they will still be paying the same tax and more will be going to find the unemployed a private home.

But I suspect labour will soon run out of voters, I’ll not be voting labour again and I suspect many will be the same, so labour is counting on those swing voters again, good luck

Of course the shortage of social housing is nothing to do with selling as many off as possible.

The system as is seems to favour the rich and those that could not affordto survive any other way – as the only people i know who have comfortably lived at the same address for over 10 years are either very well off and won their homes, or are on benefits with children and have been therefore prioritised for social housing. People i know who are in low paid jobs (most of us in Cornwall) often feel obliged to have children sooner to be in with a chance of getting their own home. Surely this isnt what we want to encourage?

@8 By far the most significant factor is the restrictive planning regulations which successive governments have failed to relax. Get rid of a large part of the restrictive regulation and you will see a boom in housing construction and falling property prices as supply increases. However, this hasn’t happened yet because those who already have a house don’t want to see prices fall, this wont stop them complaining that their children can’t afford a house of course.

@10. That’s tosh. Builders are sitting on land banks and have a vested interest in keeping supply low as it keeps prices up.

And regarding social housing, the short supply would, of course, have nothing to do with central government banning local government from re-investing the income from sales in new housing.

Gastro George @11
Spot on.
As someone who has reluctantly had to deal with several ‘developers’ over the last twenty years, I know of scores of ‘building/development’ sites, where outline planning exists but no work started, where outline planning exists for ‘brown field’ sites, where old industrial buildings still stand and sites where the groundwork has started then the building work has stopped.
Developers are waiting for house prices to increase before building – fact.
Shops and leisure developments are allowed to happen here, when the developer is prepared to build ‘social housing’ as part of the ‘deal’.
Example:
Small ‘well known’ supermarket on ground floor – housing benefit tenants in flats over.

gastro george,

@10. That’s tosh. Builders are sitting on land banks and have a vested interest in keeping supply low as it keeps prices up.

Estimates are the landbanks will support about five years of building (not sure at current or 2007 rates). Which if you think about it is simply sensible business planning – ensure you have sites for five years in advance to ensure you have something to sell. After all, if you only have the site you work on now, you will not have anything to produce next. So not having landbanks would mean builders would have the ability to charge higher prices – because the supply of new houses would be more limited as they could not build.

That landbanks need to strech five years forward or so reflects the lags imposed by the planning system incidentally – if the process was quicker and more efficient, it would be pointless to hold on to too much undeveloped land for too long, as the costs would not be worth it.

As a basic rule, before criticising any ‘evil capitalist’ behaviour, it might be worth considering why they do it. In a free market, hoarding to drive up prices will not work after all, so either the building market is over regulated (it appears to be – never tried getting planning permission myself) or the market is in the hands of a cartel excluding all newcomers (which needs government action – but not government control, which creates cartels more effectively).

Thank you Watchman. I would also add that as a matter of logic; that builders are sitting on land banks does not mean that restrictive planning regulations are not the problem.

As a side issue, one of the things that upsets people most about new developments is that they are very samey, very large and tend to be ugly. Part of the reason for this is that gaining planning permission is such a trial that it is really only worth doing on larger scales. Therefore not only will smaller developers be crowded out but larger ones will tend to clone designs to avoid much higher costs.

Disappointing, this really does smack of the ‘deserving and undeserving poor’, what next, – the workhouse?

@ steveb – its always confused me that one. Are you saying that there are no people who are poor who are undeserving? Really none? Not even extreme cases?

@16 – And for a small number of idlers, you’d condemn millions?

@11 – Right. Social housing building fell off very rapidly to almost nothing over a few years. And the private sector’s building rates have barely changed at all.

We need rent controls, and we need to tax unused land and empty houses. With a cumulative portion to it, so holding onto land for a decade or more and not using it will be prohibitively expensive for even large companies…

“As a basic rule, before criticising any ‘evil capitalist’ behaviour, it might be worth considering why they do it. In a free market, hoarding to drive up prices will not work after all.”

If it were a “free market”, which it isn’t. As a basic rule you should also try to understand capitalist behaviour, which is to maximise profits, and to avoid operating in a free market that might drive their prices and profits down.

@18: “As a basic rule you should also try to understand capitalist behaviour, which is to maximise profits, and to avoid operating in a free market that might drive their prices and profits down.”

OTOH compare Schumpeter on the driving forces of capitalism:
http://transcriptions.english.ucsb.edu/archive/courses/liu/english25/materials/schumpeter.html

@17 No, I would however condemn some. That no condemnation should be possible under any circumstances seems peculiar and wrong to me, that’s why I was asking more about it.

Re rent control you still haven’t replied to my comment on the “five suggestions for Ed Balls” article reproduced here:

“Have you looked into rent control? It has significant downsides on a practical level and that’s before you address the “seizing control of people’s property without compensation” aspect that I suspect would run bang into an HRA challenge.”

An LVT may be a great idea depending on implementation and assuming that other taxes are reduced rather than this just being another burden. Rent control is a very bad idea indeed.

@16

its always confused me that one. Are you saying that there are no people who are poor who are undeserving? Really none? Not even extreme cases?

Generally speaking the “deserving and undeserving poor” were assessed by arbitrary and varying standards, I doubt that quality has changed much over the years, especially with what we can observe from the whole ATOS debacle.

Evidently, the distinction between the “deserving” and “undeserving” poor goes back to Elizabethan poor law:
http://economistsview.typepad.com/economistsview/2007/03/the_1601_elizab.html

@17. Leon Wolfson: @We need rent controls…”

We currently have two forms of rent control:
1. There is a cap on housing benefit
2. Citizens who wish to buy or rent housing without benefits are constrained by market prices

Neither of the above is good and the only solution is to build more homes.

“…and we need to tax unused land and empty houses.”

Land and building owners may have good reason to use their property as they see fit. As a city dweller, I am privileged to live next to a nature reserve. When I walk to work, I pass by privately owned wilderness land within 1.5 miles of the city centre. There is as at least as much nature on the wilderness land as on the defined nature reserve.

I don’t wish to make choices for other people about how their unused land and buildings are developed. We make exceptions for unique historical or environmental circumstances, but those cases should define “exception”.

But we can build more houses. There are people who wish to sell land without compunction. We need a sensible debate that provides more land for housing and an honest political culture that acknowledges that when we build more houses, the value of existing properties will fall.

I think it’s fair to say though that even if such assessment has been abused, (and I’m not doubting that it has), it can remain a useful distinction. People tend to be altruistic but only to those who they believe deserve such altruism. By lumping the bad in with the good you make people question whether they should support anyone.

Is it not better to say “X doesn’t deserve support but Y does” than “X may spend all day eating tadpoles and singing rule Britannia but he deserves support just as much as severely disabled Y”?

Readers may find the sections on house building and housing illuminating in this brief prepared by the HoC Library:
http://www.parliament.uk/documents/commons/lib/research/rp99/rp99-111.pdf

@24. Falco: “Is it not better to say “X doesn’t deserve support but Y does” than “X may spend all day eating tadpoles and singing rule Britannia but he deserves support just as much as severely disabled Y”?”

It is wiser to present realistic examples. Hypothetical Fred has no legs but works online as a volunteer fund raiser for a couple of charities. Fred has work skills but cannot find an employer. Hypothetical Doris is the daughter of a couple who were made redundant 25 years ago. The parents have never worked again and Doris, never having a job apart from her paper round, is caring for two young children.

The easy, lazy way is to dish out benefits to Fred and Doris.

But isn’t that shit to the both of them?

Hypothetical Fred has aspirations to get into the world of work. Hypothetical Doris understands the limitations of her situation — children who require care — and her lack of work experience. Doris knows how far you can spend a wage packet.

I don’t think that Ed, Nick and Dave understand Doris and Fred.

16
Don’t you think that the term ‘undeserving and deserving’ requires subjective value judgements
@22 points out that those judgements go back to the old Poor Law and were generally made on religious/cultural grounds, so as long as you conformed with the administrator’s idea of the norm, you were okay. But we now expect the administration of our laws to be neutral, don’t we?
24
Altruism doesn’t come into it, people pay taxes because they are obliged to, many complain that there are ‘deserving and non-deserving’, fortunately for all of us, the law should, in theory, remain neutral.
21
Unfortunately, even so, the administration of our laws do reveal some prejudice (note the sentencing of those involved with the recent riots)

@24 Depends on why he eats tadpoles and singing rule Britannia all day really doesn’t it. I mean if it’s the result of a head injury or similar mental impairment the obvious answer is yes, because he IS severely disabled.

If your example was just meant to be a lazy shiftless git tossing it off, then he’s either committing benefit fraud, or not claiming the same level of support as Y.

@28. Cylux: “If your example was just meant to be a lazy shiftless git tossing it off..”

Is there a difference between “tossing off” and “tossing it off”?

Should Cylux throw an anvil towards my head, I will duck and not try to toss it off.

@29 Dunno actually, I figured “tossing it off” was more akin to having one off at the wrist. To relax in a gentleman’s way, so to speak. To be one whose attempts to web-search for gainful employment always unfortunately end at websites stuffed to the gills with hardcore grumble.

27. steveb

Don’t you think that the term ‘undeserving and deserving’ requires subjective value judgements

I don’t know but I would think that the off spring of billionaire property developers probably don’t fall into the category of deserving.

@22 points out that those judgements go back to the old Poor Law and were generally made on religious/cultural grounds, so as long as you conformed with the administrator’s idea of the norm, you were okay. But we now expect the administration of our laws to be neutral, don’t we?

No, of course we don’t. We just don’t make them on a religious basis that most of our population agrees with. The Racial Vilification laws are not neutral, nor are they objective. They are made specifically on political/cultural grounds. Whether they are in line with what most people think is an interesting question.

Altruism doesn’t come into it, people pay taxes because they are obliged to, many complain that there are ‘deserving and non-deserving’, fortunately for all of us, the law should, in theory, remain neutral.

Ultimately, like the rest of the law, the taxation laws are not obligatory. In theory, sure. But in practice, there are too many of us and too few of them. They cannot hope to check a reasonable number of returns. You could go an entire lifetime without being audited. We pay because we are altruistic. If that trust breaks down like Greece or Brazil, there’s not a lot they can do about it. Why should the law remain neutral? If someone can work, why shouldn’t the law specifically and clearly say they must?

Unfortunately, even so, the administration of our laws do reveal some prejudice (note the sentencing of those involved with the recent riots)

Not to mention the joys of what a “family life” consists of.

Don, what did you have in mind by this?

, how they are disadvantaged by the asset strippers who are killing jobs.

Afaik, asset strippers take businesses that have fallen on bad times, buy them, and sell their constituent parts for more than they paid. Aside from the fact that this may sometimes be a perfectly sensible thing to do, how could it disadvantage good businesses? Good businesses may buy the assets, they may lose a competitor, but I cant see why you think asset strippers generally act to the disadvantage of good businesses.

Imho, the problem with that bit of the speech is that asset strippers are a silly made up villain, since when did the UK have a problem with predatory asset strippers? I’m sure there are some examples, but think in the search for a good slogan Ed has managed to make himself sound like he doesn’t know what he’s on about.

@23 – What? Don’t try and play me for a fool. That is not rent control. That is a limit on *where people are allowed to live*.

“Neither of the above is good and the only solution is to build more homes.”

What utter ROT. You can use rent boards to set rent caps for various sorts of houses, and limit the increases such that they don’t spiral above the benefit rates. This is widely used even in socialist-fearing America.

You’ve just agreed that the coalition’s social cleansing is acceptable by agreeing with the concept that ever-reducing proportions of houses in this country affordable to those on housing benefit. You may wish to rethink your position.

Moreover, allowing land and houses to be empty pushes up rents for everyone else and causes more greenfield development. A nature reserve is not “unused”. It’s used as a nature reserve. An empty plot of land, or a house where nobody lives? They’re unused. And if you have rent controls without that, people will stop renting. That’s undesirable, again, so…

@20 – Again, nonsense. It’s no more illegal than land zoning. A LVT punishes the poor and owners of massive estates, it’s a suggestion which would effectively abolish council tax relief, remove flats above shops from the market and have all sorts of other highly undesirable effects.

You’re standing by telling poor people, again, that social clensing is acceptable. That they can expect to be forced to move again and again to places with cheaper rents in absolute terms, forced out of areas with jobs, forced away from town centres, and into cheap sink estates.

This is urgent – once people have been forced out, they won’t be able to afford to move back.

I agree, a policy that pretends homes can be allocated on basis of social do-gooding sounds impractical. Providing housing for ‘key workers’ as a priority is a different matter, as without aiding these people to stay in the community, the social system – nurses, teachers etc – in those communities breaks down. Also, whatever the behaviour – good citizen or feckless – we can’t be penalising children because of the behaviour of their parents. Unless of course we want to suggest that any severely criminal or feckless people should be sterilised of their fertily too….I hate to mention the slippery slope where this kind of logic leads.

The talk of good and bad businesses did chime with me. Of course businesses can be good and bad, and it is very easy to measure this I think: e.g through measure of board room gender equality, lack of Employment Tribunal awards against them, good health and safety records, recognition of unions and so on. These should be the criteria for awarding all public works contracts. The Elephant in the room is that Labour’s policy of ‘free trade’ rather than ‘fair trade’ means good employers are undercut by the very worst employers around the world: – i when instead we should be ratcheting up standards internationally by requiring those who want to trade freely with us to be moving toward having similar standards of worker rights, environmental protection etc

Phil, in South Wales

@ Leon “Again, nonsense. It’s no more illegal than land zoning”

Possibly, I still think that there could be challenges made but perhaps there are ways round it.

“A LVT punishes the poor and owners of massive estates, it’s a suggestion which would effectively abolish council tax relief, remove flats above shops from the market and have all sorts of other highly undesirable effects.”

Possibly in your mind, not however on planet earth. If you honestly believe that a LVT would prevent people living above shops then you have no idea what you are on about.

You also fail to address in any way, the practical problems with rent control.

@Philbuts – The problem is that while not producing a land of milk and honey from the get go, free trade does have massive benefits. Shut that down and you hit this sort of situation:

http://www.thedailymash.co.uk/index.php?option=com_content&task=view&id=1042&Itemid=59

34. Philbuts

I agree, a policy that pretends homes can be allocated on basis of social do-gooding sounds impractical. Providing housing for ‘key workers’ as a priority is a different matter

Is there any policy that is more social do-gooding than providing key housing?

as without aiding these people to stay in the community, the social system – nurses, teachers etc – in those communities breaks down.

Sorry, but what is it about key workers that make the non-key workers around them less feral merely by their presence? What is it about, say, coal miners that means they cannot be trusted to live on their own?

Also, whatever the behaviour – good citizen or feckless – we can’t be penalising children because of the behaviour of their parents.

Why not? Nor would we. We just wouldn’t reward bad behaviour. Social housing is not a right. If people do not behave well, they should lose their benefits. Regardless of consequences for children who are probably better off being adopted anyway.

Unless of course we want to suggest that any severely criminal or feckless people should be sterilised of their fertily too….I hate to mention the slippery slope where this kind of logic leads.

That’s like saying reserving key housing leads to famine as in the Ukraine. But we can stop rewarding them for having children even if we don’t punish them.

The talk of good and bad businesses did chime with me. Of course businesses can be good and bad, and it is very easy to measure this I think: e.g through measure of board room gender equality, lack of Employment Tribunal awards against them, good health and safety records, recognition of unions and so on.

So people who do things you approve of are good and people who don’t are bad? Your test is purely ideological? Amazing. We have long since given up on religious tests in this country. Why bring them back?

These should be the criteria for awarding all public works contracts.

And none for Catholics too?

The Elephant in the room is that Labour’s policy of ‘free trade’ rather than ‘fair trade’ means good employers are undercut by the very worst employers around the world:

Where is the evidence for this?

i when instead we should be ratcheting up standards internationally by requiring those who want to trade freely with us to be moving toward having similar standards of worker rights, environmental protection etc

So protection?

“Is there any policy that is more social do-gooding than providing key housing?”

Is there no policy to help the poor which you won’t condemn?

Thatcher was right, she was right to stop the closed shop get ballots, yes OK so why are you looking back Mr Miliband, New labour was right it had good things yes OK Mr Miliband why are you looking backward.

Then he said a lot of the Thatcher period was correct great your right she gave me the biggest benefit rises, she gave me DLA, she gave me IB, the things you wanted to take away.

Teachers would not live in the houses around me, it nice it’s clean it won the best garden in Wales twice, but the homes are falling to bits they are old very old, build in the 1950/1960 and maintenance has not been a priority.

Labour will live within it’s means, well yes but you also say PFI was a great idea, is that living within your means.

Sorry but this just looks more and more like another labour leader trying to get the Thacterites on board if they are still living or can remember, he’s trying to keep the Blairites on board after telling people he was not Blair, which many will say what a pity. I think he will be gone before the next election

31
So you think that you are not a particular race, so if you started to become discriminated against and intimidated on the basis that you are white? you would not expect the racial villification law to be neutral and act on your behalf.
Paying taxes is not altruism, I pay mine every month and it’s not voluntary.
And despite my politics, I would expect the law to deal with all in a neutral way, including billionaires, the fault of social inequality is down to the system not the individual.
34
Well said
35
I’m not sure what point you are trying to make, but it wasn’t free-trade that took children in the UK out of mining, factories and, not least, chimneys.
36
So you really do believe in neutraility then.

@39 “I’m not sure what point you are trying to make, but it wasn’t free-trade that took children in the UK out of mining, factories and, not least, chimneys.”

It is at least arguable that it was free trade what won it. The free trade area of the Empire, (for such is the time we’re talking about when discussing children no longer going up chimneys), created vast wealth. It was this surplus that allowed us the luxury, (not luxury in the sense of “be a devil have a jammy dodger” but in the sense that raw survival no longer required it), to take children out of the workforce.

When you try to force emerging economies to put in place protection against child workers from the get go, you do not improve their situation. Their advantage is being cheap, this attracts investment that generates wealth, only once that wealth is generated can you put in restrictions designed to protect against exploitation without making peoples’ lives worse. The options for many children in the 3rd world are not exploitation in a factory or well run schools with free meals but exploitation in a factory or prostitution on the street.

Do you have a plan that will replace the benefits of free trade or are you, with no doubt the best of intentions, just trying to make the lives of very poor people worse?

40
I’m the first to argue that many of the acts passed in the 19th century actually did not assist the working-class, because child labour was often the difference between survival and death for many families.
However, industrialization and modernisation brought with it the demand for education and the ‘mess’ that this rapid expansion caused to health. No producer emerged to address this need other than the odd few churches and benevolent industrialists.
What we need to remember is that we saw rapid expansion without any outside interference, what we have now is the west exploiting the third world, would our outcome have been the same if we had been exploited by an outside force?
Empire and free-trade is an oxymoron. – as in no free entry and exit.

The sorry state of British politics is shown by Miliband’s speech being portrayed as left-wing. Its the same anodyne pap that the Tories shovelled when they were in opposition. What Labour should do next is what John Smith did: oppose everything, doesn’t matter if they agree with the broad thrust of a policy, there’s always a detail that can be criticised. Every time a Tory or his LibDem servant flaps his wobbling chops there should be an instant rebuttal from Labour. Labour should be fighting tooth and nail to preserve what little remains of the welfare state, the blame for the economic disaster should be squarely placed on the reckless rich and supine politicians that didn’t make them behave. Labour should admit thirty years of right wing voodoo economics have ruined the economy and society. Labour should tell the twitching corpses of New Labour to fit in or fuck off. Labour should put their gutless leader on notice: do your job or make way for someone who can.

What Labour will do is what it has done for the past year. Sod all except occasionally jumping on a passing bandwagon. It will sit there enjoying the peace and quiet of opposition instead of fighting to sort out the mess the country’s in. Its policies will be pitched at the 100,000 or so middle class floating voters who decide the outcome of general elections. It will wait for the to Tories lose an election

“Empire and free-trade is an oxymoron. – as in no free entry and exit.”

It was the worlds largest ever free trade area. By your definition the EU is not a free trade area which is an odd way to look at things.

“What we need to remember is that we saw rapid expansion without any outside interference, what we have now is the west exploiting the third world, would our outcome have been the same if we had been exploited by an outside force?”

I’ll just check my alternate history book. What we can say is that free trade does bring benefits, very significant ones. If you want to block people’s ability to trade as they wish, (which is what all interference is free trade is), then you should have a good reason to do so and something to make up for the loss. As for “exploiting the third world”, in what sense? We’re hardly going there with pith helmets to show Jonny foreigner what for, we’re buying their produce and locating manufacturing there. How is that bad? While we’re at it more free trade would be helpful, the EU limits imports that would otherwise generate wealth for some of the planets poorest.

The ideological significance of the long series of factory acts in the 19th century to clamp down on the exploitation of children and women is that showed Parliament increasingly recognised that laissez-faire with self-regulation of the labour market could lead to unacceptable social consequences.
http://en.wikipedia.org/wiki/Factory_Acts

The education act of 1870, which established administrative systems to provide for universal primary education, came from a recognition by Parliament that education standards were lagging in Britain, as compared with mainland Europe, by leaving schooling to the churches and charities.

In the face of that hard evidence, it is curious that some are still calling for the “free market capitalism” that Parliaments in the 19th century had come to reject because of the consequences.

@ Bob B – you have an argument to make but that politicians did something is not “hard evidence” of anything.

My contention is that it was free and unregulated trade that generated the wealth that allowed social reform to become possible. The richer you become the more regulation can be borne, (although with ever diminishing return on cost), but the wealth has to come first. Free trade is a very effective wealth generator, what mechanism would you replace it with given that no alternative appears to work?

@ 45 Falco

“Free trade is a very effective wealth generator, what mechanism would you replace it with given that no alternative appears to work?”

Free trade doesn’t have to be all-or-nothing. We can accept provisionally that in general free trade is good for the long-term development of emerging nations, and recommend that they generally use a very open trade system, without saying that this has to be an absolute rule. It would be better for the development of the country if young children were in schools rather than work.

“It would be better for the development of the country if young children were in schools rather than work.”

I certainly don’t disagree with that but it is also better for everyone if the children are working in a factory than starving to death or doing more dangerous, more damaging work. This is the choice they face and in ignoring that people advocate solutions that only makes these peoples’ lives worse but hey, at least they believe they have the moral high ground and that’s clearly what matters most.

We are dealing with what the wonks describe as a sub-optimal situation. There is no wonderful solution that gives everyone a western lifestyle overnight, attempts to force the impossible tend to make matters worse.

@43 Exploiting the third world? How we procure coltan for the production of smart phones is a good first place to take a long hard look at.

@ 47 Falco

Tend to agree with you there. We don’t want to remove people’s livelihoods as a result of not considering the consequences of our actions.

@45: “My contention is that it was free and unregulated trade that generated the wealth that allowed social reform to become possible”

Not so. America industrialised under the protection of high tariff barriers to proect against competition from foreign imports. With that America eventually overtook Britain to become the leading industrial power with higher levels of mechanisation.

At the beginning of the 19th century, America was importing farm machinery from Britain – by the end of the century it was exporting farm machinery to Britain. America had no comparable factory acts: the constraint upon industrialists exploiting labour – until the Great Depression post 1929 – was that workers would job hop or go back to homesteading.

Note that Henry Ford introduced high “efficiency wages” in 1914 at $5 a day – which more than doubled the pay of many of his workers – because of the continuing problems of recruiting and retaining assembly line workers. Try the Wikipedia entry for “efficiency wages”.

Real history is seldom quite as simple as it seems to be.

@ Bob B – You do know that even as tariffs were being raised, transport costs were reducing faster than that? In other words the total barriers to trade were progressively lowering throughout this period.

“Real history is seldom quite as simple as it seems to be.” all too true!

@48 Cylux – So we should invade the Congo and enforce environmental standards? What do you suggest that would actually help?

@49 Chaise – Thanks, that’s exactly the point.

@32 Luis

I think you’re being a bit naive and/or optimistic here. There is a long tradition of asset strippers in this country that goes back to the 60s or before.

But I think Ed is also using the term asset stripper as it is more recognisable and understandable by the public, when he is attacking the darker sides of financialisation. Which is partly what Southern Cross was about.

You can also see it in the pubcos, who transformed what was a leisure industry into a property and securities industry. OK, pubs are under a certain pressure everywhere, but you can see the difference between free houses and tenanted pubs in which the owners have little interest in developing the business, just in finding a series of mugs to pay the rent for a couple of years before going bankrupt.

George,

you are right: some firms discover ways to profit that are detrimental in some meaningful way or other. And Southern Cross is an example of a financing manoeuvre that made money for some parties, that subsequently went bad. And perhaps “asset stripping” isn’t such a bad way of communicating that idea, although strictly speaking asset stripping is something else and is not something I think the UK has a particular problem with. But this idea of extracting profit to the general detriment is too vague to ever be operational as a policy. Perhaps better addressed by identifying specific bad practises and legislating against them on a case by case, than suggesting we might be able to tax “bad” companies differently.

@53 & 54 – As I understand the Southern Cross debacle, the firm went bust, investors lost their shirts and the homes have carried on with new investors, under new management and in what they hope will be a better structure.

If that’s asset stripping then I don’t see the problem.

@48 Cylux – So we should invade the Congo and enforce environmental standards? What do you suggest that would actually help?

Well I imagine not making statements like

As for “exploiting the third world”, in what sense? We’re hardly going there with pith helmets to show Jonny foreigner what for, we’re buying their produce and locating manufacturing there.

when we’re buying gizmos made from resources that were mined at the end of a gun, would probably be a good first step.

Falco,
I think it went bust because the owners (private equity?) put together an overly aggressive sale and leaseback deal, in order to extract profit from the assets. The subsequent selling of the assets, once bust, was, as you point out, not the problem.

@56 Cylux – then don’t buy them, free trade doesn’t mean that you are unable to refrain from purchase.

@57 Luis – my point was that there was no cost on society that could possibly justify a punitive tax. Those people who put their money at risk lost it, otherwise things carry on. I still don’t understand why Southern Cross should be a poster boy for an asset strippers tax.

IIRC Southern Cross were originally private equity. They stripped out the property into other vehicles they owned with, as Luis says, very aggressive leaseback agreements. The core business was then sold on and it was the secondary owners that went bankrupt.

So, as usual, the asset strippers made a tidy sum and few losses – apart from any negotiated rent reduction.

This is the model for asset strippers down the years, particularly in manufacturing in the 60s and 70s. Identify a company with some “fat”. Make a leveraged buyout. Strip out the “fat” (a lot of beneficial things like R&D …) and the assets (like property) to get some good bottom line figures for a couple of years. Then sell on at a fine profit. A couple of years down the line and, without any R&D and other “non-productive” parts of the business, it goes tits up. Quite a few decent businesses were destroyed that way.

@ Gastro George – The obvious question is who was doing the buying? When purchasing a business you would want the books for the last several years and any divestment of assets should be very obvious and therefore reduce the value of the business. So what went on here? Were the purchasers just stupid, or unlucky, was some sort of fraud perpetrated or is it all rather more complicated?

This is why it’s a daft policy idea. Take the Southern Cross example, exactly the same deal but with a more sensible sale and lease back contract where rents could fall if custom did. Probably would have sold for less, but would have been fine. But policy can’t differentiate between safe and rash contracts like that. Sometime people are going to put together crappy deals that turn out to wreck what could otherwise have been viable businesses. But I don’t see how you can legislate against that. As a rule though, you don’t make money by wrecking things.

@58

then don’t buy them, free trade doesn’t mean that you are unable to refrain from purchase.

Oh yes, I’m sure me not buying a new smartphone is sure to prevent forced labour down the mines in the Congo. Yer see, this is where the complete powerlessness of the myth of free trade comes tumbling down hard on it’s arse, or as steveb has already said

I’m not sure what point you are trying to make, but it wasn’t free-trade that took children in the UK out of mining, factories and, not least, chimneys.

43
You weren’t joking about the alternative history book, obviously relates to the parallel universe you seem to live in.
‘It was the world’s largest free trade area’ talking of Empire -
Free trade means free entry and exit to whatever market, it also means the freedom not to enter. Possibly you are unaware of how the British Empire was acquired but between 1875 and the beginning of WW1, various parts of Africa were divided between western imperial powers through military action. It caused WW1 and subsequently WW2.
How you can compare the forced production and labour of military imperialism with the EU, in which countries actually have to apply for entry, is a total mystery.

One thing that almost all economists are firm on is that free trade is mutually beneficial – although JS Mill, a committed free-trader, allowed for two exceptions: (a) the (temporary) infant industry justification to enable a new national industry to get started in the face of competition from established foreign producers; (b) the optimum tariff case where a country could improve its terms of trade – meaning to raise the going price of its exports relative to the price of its imports – when the country is a sufficiently large producer of some exported product relative to world supply, or a sufficiently large buyer of some imported product.

The Ricardian principle of potential gains from specialisation according to comparative advantage holds.

This is the idea: Suppose in country A, one car exchanges for 20,000 TV sets, while in country B, a car exchanges for 25,000 TV sets before trade. An exporter from A exporting a car to B can sell the car and buy 25,000 TV sets and then import those back to A making a net gain of 5,000 TV sets less the transport costs. With competitive markets, the price of cars tends to fall in B and the price of TV sets to rise. Note that this gain depends on the difference in relative prices between the two countries. There is no reference to differences in absolute prices at prevailing exchange rates.

Certainly, there are potential losers from free trade – such as the TV producers in country A and car producers in country B. But, in principle, they could be compensated and in country A resources would have an incentive to move into car production, and into TV production in country B.

Since WW2, there have been 8 completed international trade rounds which, through negotiations, have reduced mutual trade barriers – the last completed round being the Uruguay Round, which lasted from 1986-1994. The present Doha Trade Round, which started in 2001, has stalled.

@ steveb

“Free trade means free entry and exit to whatever market, it also means the freedom not to enter.”

Free trade means no barriers to trade being imposed, no more no less. I think you’re conflating it with freedom of determination which while very important is not the same thing.

“Possibly you are unaware of how the British Empire was acquired but between 1875 and the beginning of WW1, various parts of Africa were divided between western imperial powers through military action. It caused WW1 and subsequently WW2.”

It caused the world wars? I don’t think so. I’d accept “contributing factor” but it would be pretty far down the list.

“How you can compare the forced production and labour of military imperialism with the EU, in which countries actually have to apply for entry, is a total mystery.”

The free entry and exit you were on about, (I did say something like “by your definition”). The mechanism is entirely different but you can’t in either case just troll up and say “I’m part of this” and then later “Now I’m not”. If that were the case we wouldn’t have all those stupid trade barriers the EU emplaces against Africa and China.

@ Cylux – Might be of interest:

http://en.wikipedia.org/wiki/Coltan#Ethics_of_Coltan_mining_in_the_Democratic_Republic_of_Congo

Of course it is wikipedia and Hari is cited but it does suggest that it is very difficult indeed for “resources that were mined at the end of a gun” to reach sale. Not bad for the “complete powerlessness of the myth of free trade”.

65
Nope free-trade means freedom to choose, y’know Milton Friedman’s sacred cow, and it means freedom to choose not to enter, that’s why free trade and Empire is an oxymoron (but not in your universe)
There aren’t many historians who don’t attribute the scramble for Africa as the main cause of WW1, but obviously not in you world.

48. Cylux

Exploiting the third world? How we procure coltan for the production of smart phones is a good first place to take a long hard look at.

We buy it from Australia and Canada. Coltan production in Congo, in so far as we can tell, goes more or less exclusively to East and South-East Asia.

66. steveb

Nope free-trade means freedom to choose, y’know Milton Friedman’s sacred cow, and it means freedom to choose not to enter, that’s why free trade and Empire is an oxymoron (but not in your universe)

Free trade does mean freedom to choose. But freedom for individuals, not for states. If the state does not allow its citizens the freedom to choose to buy goods from overseas, it is not free trade.

Which is precisely why the British Empire was the largest experiment in free trade up to the WTO. Because it enabled people from all over the world to choose to buy what they liked. Or not. As they saw fit.

And notice by your definition, the EU does not have free trade. As the British government is not legally allowed to deny other European countries access to the market.

There aren’t many historians who don’t attribute the scramble for Africa as the main cause of WW1, but obviously not in you world.

Name three. There was an obvious problem of the Germans being locked out of the Third World by declining Empires, but that is a matter of perception – mainly by British historians who imagine that what is important to them must also be important to Germans. Main cause? I don’t think so.

steve b – I’d answer in detail but I think SMFS has covered it. Your definition of free trade is not one that is commonly used, certainly different to that used by Milton Friedman and your studies of the First World War have clearly been unusual.

http://www.firstworldwar.com/origins/causes.htm

@50 – And more importantly cut his worker’s hours. There’s been plenty of data since that that was the significant point in cutting his worker turnover per-year from 300% to negligible, and slashing his accident rates.

And yet the government turns a blind eye to the economic *damage* done by overtired workers, and the costs to the NHS of treating the damage to their health…

68
Of course ‘freedom to choose’ refers to individuals, my point is that those individuals in countries dictated by imperial forces did not choose to trade in any market, they were forced. Btw, trading in markets is not some kind of default position.
I have never stated that the EU was a free-trade area, my point was that the countries in the EU chose to join.

@67 And where precisely do you think the vast, overwhelming majority of electronic goods come from these days? (Clue – roughly round the east to south east Asia area)
It’s a bit like trying to get toothpaste that hasn’t had glaxosmithkline involved in it’s manufacture at some point.

72
I would suggest that it is very difficult to consume goods, within a capitalist system, that have not been produced by the exploitation of millions of people. Some are forced by economic need and others by military force.
It is the system which needs changing.

@73: “I would suggest that it is very difficult to consume goods, within a capitalist system, that have not been produced by the exploitation of millions of people. Some are forced by economic need and others by military force. It is the system which needs changing.”

This has become a circular argument: by definition, capitalism exploits.

There are many varieties of market capitalism but, so far, other systems haven’t been as successful in raising living standards – or in being able to allow a great deal of personal freedom. By the 1970s, the Soviets had about learned that executing dissidents or putting them in gulags were bad PR in international relations so they switched to diagnosing dissidents as suffering from mental health issues and consigned them to secure mental hospitals instead.

@73 Steveb

Being forced be economic need is somehow exploitation? Me being ‘forced’ to work to earn a living is being exploited? How do you work that one out?

74,75
All wage labour is exploited within capitalism some more than others, and economic need has been met for the human race for hundreds and thousands of years without capitalism.
So, our living standards increase, or do they? well materially. But why is it that depression and suicide become more prevalant in courntries where materialism has increased significantly?
Never mind, we’ve got a new moblie phone

Also, I think everyone would agree that capitalism is now in deep trouble, let’s see how much happiness it spreads in the next few years.

@ 76

“So, our living standards increase, or do they? well materially. But why is it that depression and suicide become more prevalant in courntries where materialism has increased significantly?”

Firstly, I’m not sure how you’re measuring rates of materialism. If you meant that material wealth had increased, I’d say: Probably because we judge our success by comparison to our peers. 50 years ago, owning a small TV was a sign of affluence; now, a much bigger 20” TV will make you look positively hard-done-by if the Joneses next door have a 50” plasma.

In defense of materialism, it seems likely that high material wealth is closely correlated with relatively safe places to live (people in stable societies with good infrastructure tend to be richer) so it’s possible that suicide rates are being partly pushed up by the fact that fewer people are dying in conflict, from hunger, of preventable illnesses etc.

“But why is it that depression and suicide become more prevalant in courntries where materialism has increased significantly?”

That doesn’t appear to be borne out here:

http://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate

“economic need has been met for the human race for hundreds and thousands of years without capitalism.”

and a very low life expectancy, a much lower population and no civilisation. You may not think those details are important but I can assure you that you are very much in the minority.

“I think everyone would agree that capitalism is now in deep trouble, let’s see how much happiness it spreads in the next few years.”

It does constantly bemuse me that politicians interfering in the market and the problems that causes, (you can argue that there would be different problems in a free market but not these ones), is held to be an abject failure of capitalism and free markets. What should have been allowed to happen is a faster, shallower cycle but no, someone believed that there would be no more boom and bust.

78
Not sure if there is a correlation between material wealth and safetly. London is one of the wealthiest cities in the world but crime is increasing, similarly suicide rates are also increasing.
Of course a lot of this is to do with rising unemployment, for example in the 1950s and 1960s unemployment was approx 3%. and crime statistics were much lower.
IMO, crime is correlated with inequal distribution of wealth and a culture which highly values material wealth., similar to you point really.

79
You’ll not find me arguing for state intervention, what I object to is the labelling of actual state intervention in terms of ‘free, laissez-faire, neo-classical liberalism’, when it is no such thing
Thank you for the list of countries by suicide levels, unfortunately, the actual figures needed to illustrate my argument are figures relative to each country over time and increasing GDP levels.
Of course, we do not know if life-expectancy would not have increased anyway, knowledge is an evolutionary process and much of the technology used today is based on science and knowledge gained many centuries ago.

@81 I would have thought that the mix of high and low GDP countries with some bias towards low at the top of the list spoke well enough for itself without you needing to be walked through it. There is no evidence whatsoever for your assertion that “highly materialistic” societies have higher suicide rates.

“You’ll not find me arguing for state intervention, what I object to is the labelling of actual state intervention in terms of ‘free, laissez-faire, neo-classical liberalism’, when it is no such thing”

Certainly agree with you there.

82
The best source of suicide trends come from WHO, I’m not into recommending sites because, like anyone else, I would be likely to seek out the ones that uphold my argument, but a general Google of suicide trends will come up with many sites.
According to WHO,countries where societies have started to compete (markets) are showing significant increases in suicide, Japan’s rates and patterns are very much like our own.

@ 83 – You may not tend to suggest sites but if you are going to make some fairly strong and extraordinary claims then you should back them up with evidence. I don’t find you claiming that you wont provide this because you may be biased in supporting your own opinion very convincing.

———————

Had a look:

http://www.who.int/mental_health/prevention/suicide_rates/en/

also

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1414751/table/T1/

Neither appears to support your position and I did simply look for the best WHO figures I could find with a quick google.

So, evidence or withdrawal of hypothesis please.

Steveb – You can’t just make extraordinary claims and then say you’re not going to present any evidence in favour of your own argument because you may be biased! Well, you can but not and have your argument taken seriously at the same time. Just picking a country or two does suggest cherry picking – ah – you haven’t taken this idea from the nonsense that is the Spirit Level have you?

http://www.who.int/mental_health/prevention/suicide_rates/en/

No correlation obvious there – could you show some evidence or withdraw your hypothesis please.

Sorry about the repeat post. Didn’t show up at all when I checked it earlier.

84
‘You can’t just make extraordinary claims and then say that you aren’t going to present any evidence in favour..could you show some evidence or withdraw your hypothesis please’
Actually it isn’t my hypothesis, I am quoting from academic research which I studied several years ago. I hardly ever suggest evidence unless it’s a simple quote and I then I always reference it, unless I am asked specifically for the references from which I am taking my arguments.
The two threads you give show data which is totally meaningless on it’s own, unless you have some kind of analysis. Anyway as you’ve asked for evidence here goes;-
The classical academic text used for first and second year social studies students is Emile Durkheims ‘Suicide’ (1897) which shows differing suicide rates for different societies. Durkheim shows that in protestant societies, the division of labour (in industrial societies) creates anomie and the suicide rate is highest in those societies.
Of course, there are many more recent texts which show a trend between economic development and suicide, just a few for you to wade through (there are hundreds btw)
‘Suicide: the hidden side of Modernity’ Christian Baudelot
‘The New Spirit of Capitalism’ Luc Boltanski
‘Zero Confidence’ Steven Lukes in the New Humanist.
‘Making a Killing: Suicide under Capitalism’ The Commune June 2011
‘Suicide, Homicide and Economic Developlment’ Richard Quinney
‘Stress brought on by Economic growth blamed for South Korea’s Suicide Purge’
Burt Herman 2007 in Health & Behaviour.
I’m sure that if you do a literature search you might want to choose your own reading.

@steveb – “The two threads you give show data which is totally meaningless on it’s own, unless you have some kind of analysis.”

This and the examples you have given explain rather more of what you meant earlier. Where you see meaningless data, I see raw evidence for you to examine. Where you see thorough analysis, I see random polemics that I have no trust in because I can’t see the data.

I will look into it but I suspect that what we have here is a lack of meeting of minds.

@ 80 steveb

“Not sure if there is a correlation between material wealth and safetly. London is one of the wealthiest cities in the world but crime is increasing, similarly suicide rates are also increasing.”

Crime increasing isn’t the same thing… you’d have to compare absolute crime rates (NOT reported figures) between London and a much poorer city.

If crime and suicide rates are increasing, that probably just means London is going through a bad patch. Which we know to be true, as it happens. Whole Western world is going through a bad patch ATM.

“Of course a lot of this is to do with rising unemployment, for example in the 1950s and 1960s unemployment was approx 3%. and crime statistics were much lower.
IMO, crime is correlated with inequal distribution of wealth and a culture which highly values material wealth., similar to you point really.”

Well, I think all big societies highly value material wealth. You get the odd commune that doesn’t, but they’re too small to test properly, and there would be too many other variables (membership of these communes is generally optional, for a start). I can’t think of any trend that you couldn’t associate with societies that value material wealth.

Inequality as a cause of crime is probably true up to a point, but I reckon absolute wellbeing is far stronger: you’re more likely to get a lot of food theft in a society where most people don’t have enough to eat.

Unemployment is probably a huge factor in crime rates. You’ve got a reduced (or zero) income, plus the feeling that society has failed you. That seems like something that would make people turn to crime.

Falco @#45: ‘My contention is that it was free and unregulated trade that generated the wealth that allowed social reform to become possible.’

‘Falco’s law: the very thing that results from your success brings your downfall.’ (!)

His own logic recognises that his own arguments have, in reality, been rejected for over a century. Yet he continues to prattle on… and on.

89
Agree, and more to the point, how people feel subjectively about safety, media bias in reporting tends to emphasize violent crime. However, suiciide rates significantly increase when traditonal societies have changed to industrial societies, crime is a different phenomona, not least because more things are invented whitch attracts new statutes so comparison is less easy.
88
All raw data requires analysis, I have given you a few examples of analysis, if they don’t meet with your approval, a literature search will give you many more for you to choose from.
All academic articles will reference the research and data behind any amalysis.

@90 – That one state of affairs can be a necessary condition for another, even one that is very different, is hardly a crazy claim. Do you have an argument or do you just like making random assertions and being rude?

Falco @#92: ‘Do you have an argument or do you just like making random assertions and being rude?’

Evidently you need it spelled out to you: on the one hand, you assert that free trade brings wealth which enables a society to moderate the excesses of free trade through political reform – presumably something that has tangible social benefits or else it would not be pursued; and yet on the other, you argue that the benefits borne from social reform, i.e. those generated through wealth production and favoured by the society that has implemented them, serve to undermine that society and, therefore, should be opposed.

It is the kind of circular logic that befits a Greek historical tragedy. Moreover, it leaves you between a rock and a hard place: if social reform, in this case in the form of economic regulation, is a product of wealth and success, a tangible benefit of it, then the erosion of these reforms becomes a rather irrational attempt to negate a by-product that you hold is a natural result of the processes at play. It is the equivalent of wanting boiled water without the steam: you want a modern economy but with an archaic social welfare system.

Libertarian free market economics is a dogma, one that does not accord with concrete reality and is workable only in abstracted theoretical models. That its advocates cannot see it for what it is, a utopian creed, in no way distracts from the fact that ‘neo-liberal’ government have created even more bloated and parasitic states than their ‘Keynesian’ counterparts. When theory is put into practice, concrete reality will always prevail over the wishes of ideologues – whatever their stripe.

The small ‘watchmen’ state has always been a fantasy in men’s minds, even during the heyday of the British Empire. Which is part of the reason why your view of the British free trade zone, underpinned as it was by a strong, interventionist state that dictated the terms of trade, is historical revisionism of the most self-serving and vulgar kind. Never mind the rather curious argument on your part that the exploitation of the periphery in favour of the core is an example of ‘free trade’. Do you not find it funny that the countries that broke with the British Empire and managed to have significant control over the direction of their own economy (the prime example being the US and its tariffs), ended up in a much better position than those that remained subjugated under its heel, exploited with impunity (e.g. most of Africa)?