Should we subsidise the arts?
Should there really be tax breaks for donations to the arts, as Paul Myners and Nicholas Serota demand here? The Pigovian case for such tax breaks is well-known; without them, there’d be an under-supply of such public goods. However, the egalitarian case for such breaks is very shaky, as this recent paper discusses.
It argues that donations to the arts can actually increase inequalities of well-being in two ways – even leaving aside the possibility that such donations are really intended to boost the ego of the donor.
First, because the rich gain from donations by other rich people; if I donate to an art gallery, others’ donations will benefit me by improving the gallery, and by attracting attention towards my generosity. Second, because some of the non-rich go to art galleries more than others, inequalities between the non-rich might rise.
It’s possible, therefore, that such gifts actually increase inequalities. In such cases, philanthropy isn’t a substitute for redistribution, but actually strengthens the case for it. There are of course many arguments against redistributive taxes. However, the claim that they stop the rich giving to the arts is not one that should concince egalitarians.
This doesn’t mean there should be no tax breaks for charitable donations. What it means is that the case for such breaks lies in efficiency, not equality, and that there’s a big difference between the sort of philanthropy that benefits the poor directly and the sort, like art donations, that do not.
Having your cake and eating it
Once upon a time I was in secondary school and had to do cookery lessons with everyone else as part of a revolving door scheme of design and technology work. This meant that cooking was only taught for a fraction of the year but it was potentially valuable experience.
I feel that this is the reality for many going through “food technology” lessons, so I have to welcome the news today about cookery being made compulsory with mixed emotions.
It is, in an objective sense, great news. The idea that kids will be learning about basic ingredients, how to cook basic meals, how to keep a nutritionally balanced diet and do it in a fun and tasty way…all of these things need to be taught to people. But herein lies my concerns.
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Socialism and supermarket choice
Dalston has just got a new branch of Tesco. It only opened today, and as I was passing anyway, I stepped inside to take a look. It’s only one of the convenience store format versions, rather than a full-on superstore; but it’s handy and it’s open late, so I’ll probably be doing my mid-week fresh fruit and veg top-up shop there from now on.
For many years, anyone in this part of London without a car – and that’s most people around here – has pretty much been dependent on the large Sainsbury in Kingsland shopping centre. Grumbling about the place is a staple of local bus-stop small talk.
The stock control seriously sucks. Go in there with twelve items or more on your shopping list, and it is almost certain you will not be able to tick them all off. It remains shabby, even after a recent refit. And for those of us who work irregular hours and need to fit the purchase of groceries around such a schedule, the opening times are not particularly convenient.
Tesco will remain open after five o’clock on a Sunday, offering an alternative to the manky fresh produce and ramped up prices on offer from what I think is technically known as the independent retail sector.
Maybe – I even mused to myself as I picked up a packet of new potatoes, a pint of milk, Tesco own brand bog cleaner and some anti-sceptic wipes – Sainsbury will even get its act together as a result of the competition. As the guy on the till handed me change from a fiver, it occured to me that would once have been considered a heretical thought for a socialist.
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Konnie Huq and dodgy welfare claimants
Alice Miles deplores Gordon Brown’s message for Konnie Huq on her leaving Blue Peter. Ms Miles is right, but for the wrong reasons. Mr Brown shouldn’t be thanking Konnie. He should be decrying the adverse effect she’s had upon the British economy.
The reason for this is simple. Anything that makes being out of work more pleasant encourages people to linger on benefits. And the sight of Ms Huq on daytime TV has just this effect. Why bother going out to work when you can stay home and look at her? (Of course, you could record her whilst you work – but how will you find time to watch her amid all those episodes of CSI?)
In this sense, Ms Huq’s influence upon the economy has been massively pernicious. Let’s do some sums. There are 5.2 million people of working age claiming state benefits. Let’s assume that Konnie’s appearance on Blue Peter caused – at the margin – 5% of these to stay out of work. That’s 260,000 people. If we assume these would have earnt £15,000 a year, then the economy lost £3.9bn a year.
This means that, over the 10 years Konnie’s presented Blue Peter, we’ve lost the equivalent of a year’s spending on the defence budget. Her leaving the programme could therefore be a positive supply shock. It’ll encourage some people to find work, which in turn will raise output and reduce the inflationary pressures Mervyn King warned about last night. I suspect, however, that this effect will only partially offset the effect Carol Vorderman’s boob job has had in curtailing labour supply. Never mind the credit crunch – that’s been the biggest economic disaster of recent years.
The point: does this seem absurd? It shouldn’t. It’s merely the logical consequence of the assumption that people on benefits could work if they want to. Perhaps it’s this premise that’s wonky.
* Cross-posted from Stumbling and Mumbling
Markets, gone postal
A trip to the postbox to return the execrable Black Dahlia to LoveFilm reminded me why marketizing public services will always fail. It’s that little slot on there that tells me when the next pickup’s due. Today it read SAT. Those Next Collection signs are very useful. It wasn’t so long ago that they were trustworthy. Not any more: they’re often days out of date at my local box.
The reason’s simple: whoever changes the signs doesn’t have the incentive to bother. Nobody’s checking every little detail of his job – nobody could. And these little extras – what we used to call public service – aren’t Big Picture stuff. (You could have said the same about clean hospital toilets until a couple of years back.) By turning my postman from a public servant into a rational economic actor, we’ve destroyed the small parts of his job that used to connect him with our lives in all their complexity. Marketization can only put incentives (targets, bonuses, competition) in place for a proportion of what he does, or did. The rest is deemed worthless, history. Or it’s left up to his own integrity, which we still expect him to display in his new daily life being pushed around by capitalists.
Now I’m not saying that I oppose the market running public goods; nor do I know whether this ‘public servant’ ever really existed, or even if s/he did, whether we could re-energize the corpse. But deciding where markets can be successful needs to be an empirical judgement: they appear to be better at running airlines than train networks; better at holiday camps than prisons.
And marketization isn’t a process we should be celebrating. When markets need to take over, it’s a sign of human failure, a necessary second-best option, not something anyone should be proud of, Left or Right. Smith, like Worstall on a good day, teaches us that self-interest can be useful, not admirable.
Also published here.
Is “progressive” a word worth fighting for?
David Cameron is nothing if not audacious. He is after all, the Conservative leader who set out to be the “heir to Blair,” who tried to steal the Lib Dems’ long-held mantle as the party of the environment, and who even attempted to convince us that the Tories are now the party that cares most about “society.”
So it should come as no great surprise that Mr Cameron, in his call for a Tory-Lib alliance to topple Gordon Brown, is now trying to purloin the label “progressive,” which has, in British politics at least, traditionally belonged to the centre-left.
I seem to recall there was some discussion about using the word “progressive” in the title of this blog, but the common consensus was that it’s a word that’s more readily abused even than “liberal.” If so, Mr Cameron’s initiative seems to show we probably made the right decision.
Dictionary definitions are no great help. Among those listed by the Free Dictionary are:
- Moving forward; advancing.
- Proceeding in steps; continuing steadily by increments: progressive change.
- Promoting or favoring progress toward better conditions or new policies, ideas, or methods: a progressive politician; progressive business leadership.
By this token, “progressive” is about as meaningful as that irritating and vacuous piece of management consultancy jargon that is now heard in offices up and down the land – “going forward.”
The dictionary also lists definition for “progressive” in the context of taxation, namely:
- A tax that takes a larger percentage from the income of high-income people than it does from low-income people.
This is more helpful in terms of defining a centre-left agenda, but then again David Cameron probably claims he believes in this as well, in the sense that we already have a progressive taxation system, and he isn’t seeking to make it any less progressive.
Is progressive a word worth fighting over – or should its definition forthwith be restricted to a form of rock music involving long guitar solos, mellotrons and metaphysical imagery?
The lump of indignation fallacy
Once more, Polly Toynbee steps in to protect the helpless state against the bullying individual:
The Porter view has become fashionable because it allows the middle classes to pretend to be victims, too. But it is decadence for mainly privileged people to obsess over imaginary Big Brother attacks on themselves, when others all around them are suffering badly from neglect by the state – or sometimes from real aggression by government. Indignation is precious, not to be squandered on illusory threats, but saved for real injustices.
Blimey: how to unpick this lot? I like the idea that there’s a finite lump of indignation which has to be saved for special occasions, non-renewable and somehow outside the self. The lump of indignation fallacy, you might say. I like the idea as well that you’re supposed to balance your income against your freedom.
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Cameron and the Chigley ideology
At the end of every episode of the children’s programme Chigley, workers and bosses from the biscuit factory would stop work and go to the 6 o’clock dance, where the local lord played the organ.
This seems to be David Cameron’s model economy – one in which all conflict can be eradicated simply by bosses and the rich being a bit nicer:
[Cameron] wants to see the banking industry reduce the risk of financial distress by giving advice to mortgage-holders and increasing repayments gradually rather than imposing a sudden hike.
“This is what I mean by social responsibility: companies operating in an enlightened way that is good for them, and good for society as a whole.”
What this misses is that the current the problems in the banking system – their reluctance to lend to each other – is the result of fears about future profits. A big reason why the Bank of England and the Fed have cut rates is precisely to raise banks’ profit expectations. Expecting banks to sacrifice profits by subsidizing borrowers is pie-in-the-sky at the best of times. It’s downright barking now.
This isn’t all that Cameron misses. He should be asking: why do ordinary borrowers have to take on interest rate risk? Why aren’t longer-term fixed rate mortgages more available? What can be done to improve competition between mortgage lenders to drive rates down? In the short-term, this would mean increasing price transparency; in the longer-term, perhaps. reducing barriers to entry. In short, Cameron could show signs of having read the Miles Review.
But he hasn’t. Either he’s just engaging in cheap grandstanding, or we’re getting an insight into his true ideology – a belief that the economy doesn’t need reforming, but merely needs the rich and powerful to pretend to care about the lower orders.
Kidneys, coming soon to a high street near you
Consider this:
A kidney patient who travelled to the Philippines to search for a live donor has defended his decision to become a so-called “transplant tourist”.
Stories like this hit the bullseye of the inherent tension between ‘liberal’ and ‘left’ ways of looking at the world.
A liberal (even ‘libertarian’) solution would be simple: we should be allowed to sell a kidney. It’s our body, and we should be free to do what we want with it. The borders of the state must stop at the dermis. Liberty is that simple. Or simplistic.
A left analysis would first point out that the burdens of this ‘freedom’ would fall disproportionately on the poor. Should they need a kidney, they won’t be able to afford one. A rich person is unlikely to need to sell his; a poor person, the opposite. Kidney sellers will be poor; purchasers usually rich. A freedom isn’t a freedom unless its universal; it’s more like a privilege. Just like my freedom (or ‘right’) to buy a Porsche. In a system that relies on exploitation, what we call capitalism, words like ‘freedom’ are sometimes meaningless. (There’s an analogy here with smoking in pubs, but that’s another story.)
There’s really no ‘left-liberal’ solution to this, not in the philosophical sense anyhow. There’s also no place for supporting or condemning one man’s attempt to prolong his life. Perhaps the place to start is with common sense. Support for the BMA’s position on presumed consent is little more than acknowledging the existence of a market failure that can be corrected. Easily and liberally.
Do temps deserve extra rights?
Britain’s estimated 1.3 million temp workers may be legally entitled to the same pay and workplace conditions as permanent staff, if an EU law gets pushed through. Quelle surprise, the CBI doesn’t like it and says up to a quarter of million jobs may be lost. (via Tim Worstall). It is obviously in the interests of business to resist anything that pushes up their wage bills so the CBI’s position is unsurprising. I’d like to see the research backing up the figure they quote.
The question is, is it in the interests of temp workers? Will they better off? Resident economist Chris Dillow last year wrote why he was against the minimum wage, finishing with:
The real way to help the poor is not to raise the minimum wage but to introduce an unconditional basic income. This would give people the choice of whether to accept low-paid jobs or not, and so genuinely empower them. But then, New Labour’s mission is to harrass and manage the poor, not to liberate them, isn’t it?
I’m in favour of an unconditional basic income too… but won’t it be financed through taxing companies higher anyway?
Should liberal-lefties be for temp-worker rights because it affords them equal awards and protection, or opposed because it reduces their employment opportunities?
Swedes and Greens
I’ve never been much of a joiner. Even though I’ve worked as a writer/journalist for a few years, I only sent my form off to the NUJ last month. The Union, the Tartan Army, the Tufty Club… and, er, that’s about it. Still, I have given recent thought to joining my local Green Party – so I read Dave Osler’s recent piece: Green Party: vehicle for the British left? (and there), with interest.
Like Dave, I doubt the Greens can build a systematic left-wing alternative to Labour, now properly classified as a ‘centre-right’ not a ‘left’ party. But I do believe the popularity of mainstream greenish politics offers something. A ‘moment’, perhaps, for slipping something with a progressive flavour in with the recycling. A reasonable place to look for inspiration is Sweden.
Sweden’s Green Party have just finished 8 years as junior coalition partners in a red-green government. Top of their list of achievements was the inauguration, in January 2005, of a so-called Alternation Leave policy. Under this scheme, 12,000 Swedes have the annual opportunity to take a government subsidized sabbatical from work (similar to parental leave, but without a baby). Three main conditions apply: employer consent is required; the vacancy may only be covered by recruiting from the pool of current unemployed; you may not work while on leave, except to start a new business.
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What about Northern Rock’s boss?
Northern Rock shares are now suspended from trading. With all the questions being posed about its future, why isn’t more being said about how its boss has benefitted from his extremely bad performance? According to this report Adam Applegarth may, “gain access to a pension with a transfer value of more than £2m and a possible pay-off worth nearly £800,000.”
I’ll let Steve say the rest:
Over the last year he has been quietly selling his shares in the company, which enriched him by £2.6 million, and drawing £1.3 million in salaries and bonuses. All while he was urging people to invest in the bank yet, at the same time, steering it towards financial collapse.
This is robber-baron capitalism at its worst. His extravagant lifestyle has been funded at the expense of investors and now of the taxpayer too. Proof yet again that, once you make it into the upper class, there really is no such thing as failure any more. Whatever you do, the money will just continue to roll in and someone else will pay.
Indeed.
What is the problem with liberal economics?
I’m an economic liberal. I think that some regulation is necessary, but that we have more regulation than we presently need, and that this tends to act in favour of the large corporations who can most easily absorb the costs of this regulation. I think that the government wastes enough money at present that it has the scope to their cut taxes or redistribute money in a far more straightforward and direct way.
I believe in the ability of people to have their own values and decide, as much as possible, how best to spend money in pursuit of those values. I believe that diversity and competition are important both in their practical effect of raising standards and in their liberal principled effect of giving people choice and freedom.
I also believe that people should pay fairly for the costs of their actions and their unearned benefits. They should pay for the pollution that they cause, and they should pay for wealth that they have received purely through the acts of others.
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Unemployment: myth vs fact
For years, one of the great rhetorical tricks of the right has been to blame the victim. This is especially true of their attitude to the unemployed, as I’ve just seen.
I pointed out yesterday that immigration is high partly because of a mismatch between the skills the unemployed have and the skills employers want. I got this response from A Very British Dude:
The skill in question is the willingness to turn up for work, work for a full day, then turn up again the next day, sober…It is this “skill” that the British long-term unemployed and NEETs (or less euphemistically “Fucking bone idle chavs”) lack.
And Matthew Sinclair added that the problem is “social breakdown”: the unemployed “lack basic social and mental skills.”
Now, this is probably true in some cases – but then anything is true of some people. But it is only a very partial truth.
What it glosses over is that the bone idle and deeply unskilled are only a minority of the unemployed.
Shall we look at some numbers?
1. Of the 1.67 million officially unemployed, over 1 million have been out of work for less than six months and a further 269,000 for less than a year (table 9 of this pdf). These are not idle or unemployable; they can’t be, because they were (for the large part) in work recently.
2. Of the 178,000 unemployed for over two years, only 33,000 were under 25 – the age likely to be chavs or the product of social breakdown. Almost twice as many of the long-term unemployed are over 50.
3. Unemployment is not a “pool” but rather the difference between two quite fast-flowing rivers. In any one month, almost a quarter of the claimant count measure of unemployed leave or join the count (table 10). If they’re so idle, how come so many of the unemployed leave the register so quickly?
4. Of the 8 million economically inactive, over half are students or home-makers (table 13). Only 199,000 – one in 40 – are men under 25 (table 14). For every one young man who’s economically inactive, there are three people who took early retirement.
The facts, then, tell a different story from the right-wing talk. They show that the majority of the unemployed are not unemployable idle young people. Instead, they are victims of low demand (not necessarily low aggregate demand), genuine losers from the creative destruction that is inevitable in a market economy, and those who have been discarded by bosses after years of work.
Isn’t it about time the Left challenged the lies of the right, and faced the facts about unemployment?
And isn’t it disgusting that the Boss Party (I refuse to dignify Brownites with the name “Labour”) has for years collaborated with the right by perpetuating their mythology?
Your money for nothing
[The first part in this series on trade union issues is here.]
It is 1pm on a crisp afternoon in North London’s Burnt Oak, and a hundred or so Fremantle Trust carehome workers and supporters have gathered in the St Alphage church hall on Playfield Road, where they’re waiting to be addressed by various lefty speakers and political worthies.
There’s a bit of a buzz in the hall this afternoon: the carehome workers have just finished a very noisy (whistles, horns, hooting, honking, yelling, etc) protest march through the town centre, where they again aired their grievance about the harsh cuts that the Fremantle Trust has made to their sick pay, holiday allowances and salaries.
Most of the workers here are middle-aged women, and they are from a variety of – charming term – ethnic groups. They say they have no intention of abandoning their fight to win back the salaries and working terms that the Fremantle Trust forced them to sign away in April this year.
Longtime Barnet carehome worker Breege Kelly is one of these women. She’s worked in the laundries and kitchens of Barnet Council and Fremantle carehomes for about 18 years. She says that she got her letter telling her to agree to the new terms and conditions just before Christmas 2006.
“Yep,” she says. “It was saying that we had to sign the new terms and conditions by the 31st of March (2007). A lot of people put it off for as long as they could, but in the end, we had to sign it, or we would be sacked.”
Indeed, Unison says that some members of staff who refused to sign were sacked. “They (Fremantle) work on putting pure fear [into everybody],” Kelly says. “I had to sign the new contract. I’ve got a mortgage and people got a mortgage, you know. They made it so that we had to stay and take it, what they were giving out.”
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The boss illusion
Maybe I move in the wrong circles, but I get the impression that the Left doesn’t spend much time thinking about Jensen’s alpha. But it should, because this simple measure shatters the illusion of our age – that bosses deserve big salaries because they add value to a company.
The Left is, rightly, angry at the $30m pay-off Charles Prince got from Citigroup this week and the $159m raked in by Stan O’Neal for leaving Merrill Lynch.
What they miss is that such payments are not only unjust, but inefficient. Jensen’s alpha measures this. It shows the return company shareholders get which can’t be explained by the tendency for the share price to rise and fall as the general market rises and falls.
I estimate that whilst Charles Prince was CEO (from September 2002), Citigroup’s alpha was minus 0.2% a month. That meant Citigroup shareholders lost an average of $300m every month Prince was boss. And they paid him $2m a month for this. Merrill’s alpha under O’Neal was minus 0.8% a month – again, a loss to shareholders of $300m a month.
Now, one objection here is that share prices are volatile, and so these alphas are measured with uncertainty. But this uncertainty works both ways. There are prodigiously few bosses who can point to statistically significant alpha under their management – which is why you hear so little about it.
Which shows that the claim that bosses deserve big salaries because they add value to a company is just a myth. It’s an ideological illusion which functions to justify inequalities in income and power.
Instead, what bosses are good at is rent-seeking, extracting cash from workers and shareholders.
And this is where the right are wholly hypocritical. They whine (sometimes rightly) about rent-seeking in government, but are blase about it in companies, claiming that the market will solve the problem.
But it doesn’t. As the pay-offs to Prince and O’Neal show, the market doesn’t punish failure. It’s far better to be a rubbish boss than a great worker.
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» Obama is right to slam BP – and why capitalists should too
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» So what if the Labour candidates went to Oxbridge?
» Last night’s Labour hustings: will it get interesting or turn to torture?
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» The Labour leadership’s token contender.. and it’s not Diane Abbott
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» Is this the end for the socialist left?
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