Why I support a high pay commission
I’ve written a short article for the New Statesman about why the idea for a High Pay Commission, mooted by Compass this week, isn’t a bad idea. I’m expanding on some of the arguments here.
I’m going to start by noting that a ‘High Pay Commission’ isn’t necessarily about setting a maximum wage limit but about reviewing pay at the top and considering capping “excessive remuneration”.
Greed creates instability
There’s an article from the New Yorker magazine that is passed around to Bloomberg interns and employees as the article to read on the financial crisis. I can’t locate it for now. Found it, but the full version isn’t available online. But the basic gist is: you can blame the sub-prime crisis, confusing government regulation and increasingly complicated derivatives for the financial crisis, but actually it comes down to two things: excessive, unchecked greed and disregard for shareholder returns.
The financial crisis exposed the fallacy of the assumption that remuneration is closely linked to performance, especially at the top. The system not only hid deep losses in the financial sector but failed to penalise executives when their failures came to light.
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4 million unemployed if Tories win
The Sunday Times reported that one consequence of the Tory welfare plans is that if they win power, unemployment will rise to over 4 million.
Peter Hoskin at the Spectator welcomes this, because it will be achieved (at vast expense to the taxpayer) by moving people from sickness benefits to unemployment benefits which pay them less, and therefore requiring claimants to look for work.
He says, quite rightly, that this is “an ambitious plan, and far outstrips what has so far been achieved with ESA (which has seen IB claimant numbers drop by roughly 150,000 in about 10 months). Whether they’ll be able to achieve it is a different matter, of course.”
Hoskins concludes, “But, when it comes to Tory welfare policy, two words give me some hope: David Freud.”
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Churnalism that helps the Tories
The Guardian’s headline yesterday was about Tory Shadow Chancellor George Osborne attacking City bonuses. This was based on an interview by John Harris. Now, I quite like John Harris – I think he’s a good writer and has a good feel politically for a lot of the audience that he’s writing for.
But I am certain that he knows less than I do (which is very little) about different models of financial regulation and how the Tory proposals for revamping the regulation of the financial sector would enable them to prevent banks from handing out big bonuses.
Harris is also a sucker for any argument about how even the Tories are defying stereotypes and making New Labour look timid and in the pockets of the rich.
The result was a front page headline which was very favourable to the Tories – mission accomplished for the Tory spin machine.
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Why we should take Hannan-ism seriously
Here are three reasons why Hannanism matters rather more than some of its slightly more moderate supporters will want to admit last weekend.
1. The big idea:
Hannan is both the most strident and the most feted contemporary British advocate of what has been the dominant idea in the Anglo-American right for the last thirty years. The idea is: “less state equals more freedom”.
There is still every reason to think that this remains the dominant ideological belief in the Conservative Party.
Listen carefully to debates on the right and objections to Hannanism are often matters of strategy and tactics. Many Conservatives disagree with the vehemence with which Hannan expresses his views. But these are usually differences of degree, rather than differences of directionality. Few want to go as far as Hannan in taking arguments to their logical conclusion.
So the content of Hannanism – less state, less tax, less regulation, less Europe – remains the content of most Conservative public advocacy.
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Tory MP caught ignoring Minimum Wage laws?
I’ve just been alerted to a blog post on Interns Anonymous posted today.
Phillip Hammond MP is the Conservative MP for Runnymede and Weybridge and shadow chief secretary to the Treasury. He is advertising an unpaid job on the W4MP website. According to the blog:
National Minimum Wage Law states that if you work set hours, doing set tasks that other members of staff rely on and expect you to do then you should be paid basic minimum wage. Except if you are a full time student. As the role advertises for a “recent graduate” then this exception need not apply.
They contacted Hammond to ask about this. According to them, the response was:
I would regard it as an abuse of taxpayer funding to pay for something that is available for nothing and which other Members are obtaining for nothing. I therefore have no intention of changing my present arrangements.
Only two weeks ago a major report slammed social immobility and warned that increasingly only upper middle class and above children were able to enter certain professions due to the unpaid intern system. If true, then Hammond would not only be feeding into this system but actually flouting Minimum Wage Laws.
A Guardian report a few weeks old said this practice by MPs may be breaking the rules. Looks like Hammond has been caught out (if the email is true).
Why Hannan is wrong about Singapore too
So, in the last couple of days I think we’ve safely established that Daniel Hannan is a complete and utter twat.
That said, the full extent of Hannan’s outright twattery only becomes fully apparent when you examine the background to his assertion that the NHS should be replaced with a Singapore-style system of personal health accounts because…
The Singapore system produces better outcomes than ours for half the price.
Taken at face value on a comparison of key health indicators and taking into account the relative proportion of GDP spent on healthcare in the UK and Singapore that’s perfectly true but it rather ignores a very important and somewhat unusual feature of the Singaporean system, one that makes it very different from healthcare systems in both Britain and the US.
When it comes to providing healthcare to its citizens, both the supply and the price of healthcare in Singapore is actively regulation by the Singaporean government, in both the public and the private sector in order to control costs and avoid the kind of significant inflationary pressures that pretty much every other healthcare system in the world has had to deal with.
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Damn French and Germans
France and Germany have both respectively pulled out of recession, by a whopping 0.3%. Keeping in mind that these are preliminary figures, which could yet be revised in either direction, this can either prove everything or absolutely nothing.
Those predisposed (like myself) to further stimulus measures will note that both France and Germany have had far larger such packages than we have, although both also had more room for manoeuvre than we did in terms of borrowing and less personal debt to consider.
Neither was as predisposed and reliant on the financial sector as we were, although there’s certainly an argument that Germany is too reliant on its own manufacturing base, although it seems for now as if it’s just that base which has helped it pull clear. Vince Cable is also pushing this argument.
Then there’s the Conservatives (such as George Osborne) who are quite naturally crowing about how Gordon Brown was telling us all about how well placed we were and how we’d be one of the first out.
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The different ways newspapers can make money
Almost all the discussion of how newspaper should make more money has been based on the implicit assumption that the only business model available is ‘put some content behind a login that requires people to pay‘.
Up against that is the argument ‘but lots of other news is available for free, so why would anyone pay?‘
But there are actually quite a wide range of business models.
The existing model
Both the Wall Street Journal and the Financial Times have shown how paywalls can work. It hasn’t worked for some, but is there any reason to believe the current demarcation is set in stone with no scope for future changes? No. The Guardian looks to be thinking about a variant on this where the paid-for content is more like the benefits of club membership than the specialist news approach of the FT.
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The Tories don’t know their Adam Smith
On Sunday morning the Telegraph brazenly declared that “The Conservatives are studying plans to increase VAT to 20 per cent if they win power at the next election as part of an ‘emergency’ package to pull Britain out of the red”.
But within hours this was being denied. Reuters reported a Tory spokeswoman saying: “There are absolutely no plans for such a rise and there’s never been any discussion about it.”
What to make of it all? It could be that the Tories do want to put VAT up to 20%…but want to keep this possible vote-loser quiet ahead of an election. Alternatively, the Tories themselves may be divided: some want a VAT rise, some don’t.
In either case, the Conservatives should be dissuaded from putting up VAT. I’ve written before about why VAT is an undesirable regressive tax. But such arguments are likely to have less traction with those on the political right.
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So what is Tory policy on tax havens?
Left Outside recently wrote a solid deconstruction of the Conservative International Development paper, also cross-posted to LC. The conclusion? One World Conservatism is a well intentioned but fatally flawed scheme.
But I want to go further and ask what the Tory policy on tax havens is.
Tax havens – or as they are more accurately termed, secrecy jurisdictions – facilitate mass capital flight from developing nations. Capital flight is the number one reason developing nations cannot grow their economies and develop out of poverty.
It is, in turn, seconded and worsened by corruption (which tax havens also facilitate) and its effects exacerbated by a lack of secure, constant and domestically-accessible tax revenue (ditto).
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We should focus our anger on Standard & Poor’s
The slightly heady days of the initial financial crisis, when there was a naïve hope around that radical change might somehow come of its own accord, seem a long time ago now. We should still be angry at what’s happened, but what can we actually do? Where can we focus our anger in a way that actually changes things?
Well, here’s one suggestion for where we should focus our anger.
I and others recently picked upon the still startling notion that Standard & Poor’s (S&)P, the biggest international credit rating agency, should have been both instrumental in bringing about the financial crisis, but is now proceeding to throw its weight about, telling us all how we’re going to have slash spending in order to keep the country ‘creditworthy’.
Not content with playing a major part in bringing unemployment and financial pain S&P published, in March 2009, ‘Toward a Global Regulatory Framework for Credit Ratings‘. In what must be the understatement of the year, the report says:
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Shorter Taxpayer’s Alliance
Shorter Taxpayer’s Alliance report on political lobbying:
1. Taxpayer funding of lobbying and political campaigning should be entirely abolished, building on the example set by the Byrd Amendment in the United States.
2. Full transparency of all public spending should be implemented, to reassure taxpayers that none of their money is being diverted by stealth.
3. Lobbying and campaigning groups which claim to represent taxpayers should have to reveal who their funders are.
4. Campaigning by Friends of the Earth and the Local Government Association distorts the public policy process in favour of the interests and perspectives of a narrow political elite. Corporate lobbying and PR represents an actual economic interest, employers and employees who will lose out if a decision doesn’t go their way. It may improve decision making by ensuring that political decisions better reflect a balance of economic costs.
Sunny adds: More embarrassing mistakes by the TPA uncovered. Mick Fealty rightly asks:
…how did a pressure group (ie private lobbyists) get to be treated as a respectable, peer reviewed research institute by a whole swathe of the British press corps. Fairly embarrassing when the group did not bother to check the veracity of the information.
Exploitation right under our noses
Last Thursday’s Newsnight was a stunning piece of investigative journalism. Hotelcare, one of the leading agencies for hotel cleaners in the country, was caught red-handed with serious exploitation of foreign workers at some of London’s top hotels.
To say that the revelations were a surprise would be on a par with feigning shock at the recent MPs’ expenses scandal. The rumours that some London hotels are paying less than the minium wage had been circulating for a while. Indeed, back in 2005 hospitality website Caterersearch was already pointing the finger at Hotelcare’s dubious employment practices but failed to cause the stir that it should have.
Taking advantage of the foreign workers’ poor grasp of English and the fact that they’re often unaware of their rights, those workers are led to believe that they would only earn the minimum wage (£5.73 an hour) if they clean two and a half rooms per hour.
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Welcoming industrial militancy
Britain ‘could return to crippling 1970s strikes’, according to a headline in Britain’s biggest-selling rightwing broadsheet on Saturday. And note how the Daily Telegraph says that like it’s a bad thing.
My first response is not to get my hopes up too high. Newspaper commentators have been predicting an imminent rerun of the Winter of Discontent every year for at least the last two decades, and have somehow managed to get it wrong every single sodding time.
Even today, the mere mention of trade unionism can still evoke Dirty Harry-style responses from the Heir to Blair, who only days ago told one interviewer:
Mr Cameron added: “My message to union leaders who think they can take me on is simple: don’t do it.
Tories remain confused on tax credits
The Tory right is, yet again, showing its ignorance of the income distribution and tax system. The Speccie’s leader says:
Mr Cameron has been criticised for telling Mr Marr that he would remove tax credits for households which earn more than £50,000 a year. This…would hit 130,000 families immediately and unsettle many more. It is a proposal that would undoubtedly hurt Middle Britain. Considered in isolation, this would indeed be an objectionable and vindictive proposal.
The first flaw here is an albeit mild version of the middle England/Britain error – the notion that the well-off are just ordinary folk. In truth, a two parent household with two children and earnings of £50,000 a year is better off than almost two-thirds of the population.
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The Sun: a hypocrisy machine
The Sun’s exclusive on Theresa Winters, the woman from Luton who has had all thirteen of her children taken into care and is now pregnant with her fourteenth, ticks all the paper’s buttons. Broken Britain, scrounging feckless layabouts and of course the bourgeois journalists working for a “working class” newspaper sneering at their own target market.
It doesn’t really make much difference that I can’t think of anything less feckless than being perpetually pregnant, and that yet again the paper is pushing for benefit reform by finding the most extreme case it can, regardless of how the kind of reform it demands would punish those who are deserving as well as those who “aren’t”.
Combine this with the casual dehumanisation which infects all such stories, with Winters described as the “Baby Machine”, leeches and slobs and you have a classic example of a newspaper providing its readers with a target they can hate without feeling bad about doing so.
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The TPA: praising merit, talent and a juicy inheritance
The TaxPayers’ Alliance’s latest report, "Tax and entrepreneurship: How the tax system impedes the creation of new firms and decreases employment", contains four familiar ingredients:
1) A foreword by someone well-know (or at least not completely unknown)
2) A generous handful of footnotes (whether relevant or not)
3) Some elaborate formulae (to add a scientific veneer)
4) A hard-hitting press release (however flimsy the research).
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Is Attlee relevant to our economic troubles?
noticed a letter in the Guardian this weekend written by Michael Bath of Rochester, Kent, which read:
Instead of interviewing four monetarist ex-chancellors [on the subject of public spending cuts], why don’t you explain how Attlee funded his programme of nationalisation, and founded the NHS, when the country had been virtually bankrupted by the second world war?
Workplace occupations: good for the left
I am just about old enough to remember the last time the British working class had the self-confidence to occupy workplaces threatened with closure. The Upper Clyde Shipbuilders work-in of 1971 was a major news story at the time, and may have done as much as anything to reverse Ted Heath’s tentative stab at Selsdon Man premature Thatcherism.
It was only later – when I became a Trot – that I learned the history of a tactic that, by definition, challenges the rights of the employing class to ownership and control of the means of production.
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CEO contradicts Cameron on links to big business
As part of the Tory re-branding exercise, Bloomberg reported on 1st July:
David Cameron, whose Conservative Party is on course to win power in the U.K. in the next year, said he wanted the government to broaden its base of contractors away from large companies including Capita Group Plc. “At the moment in the civil service there’s a sort of mentality of ‘no one got fired for giving the contract to Capita,’” Cameron told an audience of volunteer workers in London today. “We’ve got to have a culture that’s a little bit more experimental and is prepared to take a bit of a leap sometimes with a small organization.”
Yesterday Bloomberg interviewed the CEO of Capita, who said:
“Conservative party members of a very high level have expressed considerable interest in Capita and outsourcing,” Chief Executive Officer Paul Pindar said in a telephone interview today. “If the Tories win the next election and some of the strong statements they’re making on reducing their cost base are followed through, we could see some good opportunities.”
…
“We thought Cameron’s remarks were flattering, and we’ve talked to other members of the party who thought so too,” said Pindar.
Clearly Mr Pindar failed to get the memo from Cameron to keep shtum and toe the line. Still waiting for Cameron to embrace ‘Red Toryism’ and small businesses.
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» Why don’t MPs pay back tuition fees instead of increasing ours?
» Obama is right to slam BP – and why capitalists should too
» Why does Phillip Blond see civil cohesion as a security issue?
» So what if the Labour candidates went to Oxbridge?
» Last night’s Labour hustings: will it get interesting or turn to torture?
» It’s now down to Ken to win London for Labour
» The Labour people need
» Blog Nation: what would you like to see discussed?
» The Labour leadership’s token contender.. and it’s not Diane Abbott
» In defence of these fraternal nominations
» Is this the end for the socialist left?
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