Guido Fawkes’ is confused and wrong on inflation
Guido is SO confused on the latest inflation figures. Because he seems not to understand how annual inflation figures are created, he presents the first fall in the index as proof that INFLATION is settling in.
Proving my prediction in a post a few weeks back: How the Right will be screaming ‘Inflation’ as we go into deflation.
So what figures have come out? Here is a graph of the CPI index:
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What’s the problem with teenage parents?
It is funny that the Tories put out a policy document claiming that the conception rate among under-18 girls in the 10 most disadvantaged areas was 54%, when the real figure was 54 per 1,000. It is kind of a fair point, though, that focusing on this is pretty trivial, and that rather than playing ‘gotcha’ with statistical errors, politicians, the media and so on should actually be concentrating on the more important issues.
Happily, a new book has just come out about teenage pregnancy, summarising the latest research on the subject. The authors set out the conventional view of teenage parents, that mothers are ignorant and irresponsible, fathers are feckless, that teenage parenthood is a negative experience for the mothers themselves, their children and for society as a whole, and that the whole thing is a moral, social and economic problem. They then go on to say:
“There is a severe problem with this ‘public’, axiomatic, view of teenage parenting, however—the evidence does not support it. As the chapters in this book show, there is little evidence that lack of knowledge ‘causes’ pregnancy, or that increased knowledge prevents it. Teenage birth rates are much lower than in the 1960s and 1970s, and overall are continuing to decline, while few teenage mothers are under sixteen. Age at which pregnancy occurs seems to have little effect on future social outcomes (like employment and income in later life), or on current levels of disadvantage for either parents or their children. Many young mothers and fathers themselves express positive attitudes to parenthood, and mothers usually describe how motherhood makes them feel stronger, more competent, more connected, and more responsible. Many fathers seek to remain connected to their children, and provide for their new family. For many young mothers and fathers parenting seems to provide the impetus to change direction, or build on existing resources, so as to take up education, training and employment. Teenage parenting may be more of an opportunity than a catastrophe.”
They go through, point by point, research report by research report, the real facts about teenage pregnancy. I’ve put some of the key quotes on my blog, here, or you can read the introduction here (pdf). Here are six key facts:
*Teenage pregnancy rates have been falling for nearly thirty years, and are lower than in 1956, during the supposed ‘golden age’ of the family.
*There is little evidence that low levels of knowledge ’cause’ teenage pregnancy, and meta-analysis of preventative strategies focusing on sex education, and improved access to advice and contraceptive services, concluded that this did not reduce unintended pregnancies among young women aged between 11-18.
*Studies of teenage mothers showed how they made moral and thoughtful decisions about contraception, proceeding with their pregnancy, and engagement with health and welfare services. Rather than suffering ‘broken’ family circumstances, teenage parents were often embedded in networks of support, and were optimistic that parenthood would shift them onto a positive life trajectory.
*Social research in the USA, found that the social outcome effects of mother’s age at birth were ‘often essentially zero’. Indeed, by their mid/late twenties teenage mothers in the USA did better than miscarrying teenagers with regard to employment
and income.
*Research using the Milennium Cohort Study found that those children with teenage mothers are indeed born into families experiencing multiple disadvantages. However, it is not the mother’s age at first birth which is the main driver of these disadvantages — rather it is the prior disadvantages experienced by the young mothers during their own childhoods.
*Qualitative studies find that many mothers express positive attitudes to motherhood, and describe how motherhood has made them feel stronger, more competent, more connected to family and society, and more responsible. Resilience in the face of constraints and stigma, based on a belief in the moral worth of being a mother, is one overriding theme.
*
I know that actual research evidence, both quantitative and qualitative, is much less compelling to politicians that “I saw a teenage mum once and I was disgusted”, but if you want something a bit more informed than what the Conservative Party has to offer on this subject, this book is a good place to start.
Economists’ letter supporting Osborne says not much at all
Yesterday a group of economists published a letter in The Sunday Times about the deficit, which the newspaper claimed was an endorsement of Tory policy on public spending.
The newspaper is not wrong. Given that Conservative policy on public spending changes close on every hour and given that this letter says just about every contradictory thing one can say on the deficit, they are indeed very closely aligned.
This paragraph, which is the crux of the letter, is the most multi-faceted (to put it politely):
The exact timing of measures should be sensitive to developments in the economy, particularly the fragility of the recovery. However, in order to be credible, the government’s goal should be to eliminate the structural current budget deficit over the course of a parliament, and there is a compelling case, all else being equal, for the first measures beginning to take effect in the 2010-11 fiscal year.
The bulk of this fiscal consolidation should be borne by reductions in government spending, but that process should be mindful of its impact on society’s more vulnerable groups.
What precisely is this saying?
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The tale of Robin Hood, re-visited
This is the first in an occasional series, in which traditional English tales are retold by Tories. Today, the tale of Robin Hood:
“Back in the Middle Ages, there were a heroic group of sturdy Englishmen called the Barons. The Barons were responsible for making sure that the lazy peasants were kept in order and did their work.
This was tremendously hard work as even though there was no welfare state to create a dependency culture amongst the poor.
the Barons always needed to make sure that the common folk grew enough crops and produced enough wealth to allow the Royal Family to hold banquets, go on crusades and perform other such duties.
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Did a Labour ’spending splurge’ really take place?
Has the government really gone on a spending ’splurge’ since 2007 and worsened the deficit?
The thinking goes like this:
Before the recession, in 2005/6, government spending was already 41% of GDP. Then, the crisis hit. The Labour government lost all common sense and resurrected Keynesianism. This meant a spending splurge – as their own figures show (tables B13 and B14), spending leapt from 43% to 48 or 49% over the crisis. Cash spending went up from £627bn to £706bn in two years. If that ain’t a splurge, what is? So, the government used the cover of a crisis to relaunch defunct economic policies and takeover the economy, to the detriment of our long term prosperity.
Government spending is a higher ratio of GDP since 2007. It is true. But the methodology is incredibly misleading.
Keep this in mind:
* Businesses and households plan forwards. And they do so in terms of nominal cash. But we don’t base our plans on what proportion of GDP our spending is. If GDP expectations fall massively from £1.5trn to £1.2trn, so that my £1500 holiday has leapt from being 1 billionth of GDP to 1.25 billionths, I do not think I am spending more.
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Why progressives should back the Robin Hood Tax
contribution by Sargon Nissan
As you’ve probably already seen, yesterday saw the launch of a major campaign to introduce a Robin Hood tax on financial transactions by a host of organisations working on issues of global and domestic poverty, international economic reform and social justice.
The Robin Hood tax would impose a very small fee for every financial transaction between financial institutions. That means it is not a tax on the financial services you or I would use.
It is intended to make those who brought our economy to its knees, massive multi-national financial institutions, pay for the $20,000,000,000,000 (that’s twenty trillion dollars or a third of global GDP) of bailouts, guarantees and quantitative easing they have benefitted from.
Here in the UK we’ve spent more than $ 1 trillion (£635 billion) to bail out our banking sector.
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Greek financial crisis: speculators versus democracy
Thanks to the Greek financial crisis, there is now a new punch line to an ancient music hall joke. The correct response to the question ‘I say, I say, I say, what’s a Greek urn?’ is no longer ‘oh, about 50 drachmas a day, I reckon’ but rather ‘4% less than they used to, on account of the latest public sector pay cut’.
The decision, taken by socialist government of George Papandreou, comes in response to a debt crisis that might have been more easily manageable but for the actions of hedge funds, who on Friday alone took $79bn in bets on the future value of the euro.
These people have also staked huge sums of money on a fall in the value of Greek government bonds, most prominently through the use of instruments known as credit default swaps. The price of CDSs has hit record levels in recent days.
Outfits such as Paulson and Moore Global Investment, who are leading the pack on this one, are politely described in the financial press as ‘speculative investors’. The second half of that designation might conjure up connotations of solidity. In the public mind, investment equates to new plant and machinery or roads and and schools and bridges.
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Welcome to Libertopia
Wondering what “savage cuts” in public spending would actually mean in practice, or what would happen if the government got out of the way of providing basic services? The residents of Colorado Springs are about to find out:
“More than a third of the streetlights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops — dozens of police and fire positions will go unfilled.
The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter.
Neighbors are encouraged to bring their own lawn mowers to local green spaces, because parks workers will mow them only once every two weeks. If that.
Water cutbacks mean most parks will be dead, brown turf by July; the flower and fertilizer budget is zero.
City recreation centers, indoor and outdoor pools, and a handful of museums will close for good March 31 unless they find private funding to stay open. Buses no longer run on evenings and weekends. The city won’t pay for any street paving, relying instead on a regional authority that can meet only about 10 percent of the need.”
“A budget crisis caused by the recession left Colorado’s second-largest city with a $28-million shortfall in its $212-million general budget. Residents — largely conservative, anti-tax and suspicious of their elected leaders — resoundingly voted against a proposal to triple property taxes and keep the city humming. Mayor Lionel Rivera said the city has no choice but to cut fundamental services.”
Why lefties should question the role of the state
contribution by Luis Enrique
Sensible people may disagree, but they ought to agree on this
The appropriate role of government in the economy is a fundamental question, and one that should excite the interest of LC readers. In the interminable blog war between libertarians and statists, there are two polarized positions that all sensible people should disavow.
1. Government activity is generally undesirable (on one side)
2. Government programs with laudable goals should be supported (on the other)
These extreme views are paraphrased from this blog post, which was itself inspired by this blog post, in which a couple of libertarians try to persuade their fellow libertarians to embrace government.
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Why we’re taking the Treasury to court
contribution by Adam Ramsay
Today we will serve the Treasury with legal proceedings. We are trying to stop them allowing RBS to pump public money into fossil fuel projects driving us towards climate catastrophe.
As I discussed a week ago, the Royal Bank of Scotland have long been Europe’s dirtiest bank. Since the bail-out just over a year ago, they have poured billions of pounds of public money into fossil fuel extraction projects driving wars, human rights abuses and climate change around the world.
Their climate impact is so high that, according to this recent report (pdf) the government could potentially do more about global emissions through active ownership of RBS than through all UK domestic activity.
They have also funded, with our money, projects which risk: inflaming wars in central Africa, destroying pristine arctic wilderness and systematically abuse workers.
We thought there must be laws to prevent such abuses of public money. It turns out that there are.
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What exactly is Conservative economic policy?
I’m simply not clear on Conservative economic policy in relation to government debt.
Why is Cameron saying to business leaders one day that there is no need for big cuts in the first year of a Conservative government, while on the very same day one of his top MPs is going on about the ‘need to get to grips with public finances now’?
Why is there a commitment to an emergency budget if there are aren’t going to be any significant cuts?
Would such a budget simply be about reducing corporation tax and therefore increasing the deficit?
Well, there is a track record for such economic stupidity by the Tories.
Under Thatcher, cyclical borrowing costs caused by the Tory response to recession – itself largely driven by fear of how the markets might respond – continued to ensure that the structural budget deficit continued at more or less the same level for a further four years beyond the actual recession (graphs at page 7 of this IFS report).
And the Tories are trying to instill economic confidence with international investors? Gawd help us.
China is a very bad model for the left
There’s a worrying tendency emerging in some sections of the left to cite China as a positive example for the UK.
At the Progressive London” conference, Ken Livingstone gave a speech in which he declared that the proof that government investment ends recessions lies in China’s staggering rates of state spending, and enormous correlate levels of growth.
Later, John Ross of Socialist Economic Bulletin (and Ken’s former economic adviser) took some time out from claiming that Britain’s national debt didn’t need to be repaid, that the triple-A rating is meaningless, and that all spending cuts are completely a choice and not imposed by brute economic circumstances, to cite China as proof-positive that government-led investment ends recessions. He waxed lyrical about China’s 9% growth in the last quarter, and how the Chinese government simply told banks to lend and – hey presto – they lent.
Don’t get me wrong, I’m all for keeping government spending as high as possible to protect the tentative recovery. But citing China as a model for UK growth is idiotic, and deeply troubling.
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The financial chickens are coming home to roost
contribution by Adam Lent
One day we might get a proper public debate about why the UK economy remains so anemic after six quarters of shrinkage. And, more worryingly, is now starting to lag badly behind some other equivalent economies.
For me there were four big mistakes made which need close investigation and which we need to work out ways of avoiding in the future. We clearly also need to take further remedial action to address the damage done.
1) the UK economy and the public finances were over-dependent on financial services for too long even though everyone not in thrall to the efficient markets hypothesis or their bonus knew this was a notoriously volatile and unreliable sector;
2) interest rates were held too high for too long in 2008 by the Bank of England even though the TUC, business groups and David Blanchflower were warning that the threat of recession was higher than the threat of inflation;
3) the Government did not seize the chance for a bigger stimulus before the Tories and the right wing press made public borrowing the big political issue;
4) the Government have not been proactive enough in preventing people losing work through interventions such as short time working subsidies which appear to have been highly effective in countries such as Germany and Netherlands in very significantly holding down unemployment. The CBI bear a big responsibility for refusing to call for this when the BCC, EEF and TUC demanded it throughout 2009.
—————-
Adam Lent is the Head of Economic and Social Affairs at the TUC. He blogs at ToUChstone blog
Britain becoming more liberal
The 26th British Social Attitudes Survey has just been published, and has some interesting findings.
They show strong support for liberal social values, a decline in support for redistribution and traditional left-wing economic intervention to help the worse off, and overwhelming opposition to spending cuts in health and education.
It has prompted a mixture of gloating about how Britain is shifting to the right and whining about evil librulses not “tolerating” homophobia from our friends in the conservative movement, so let’s have a look at what it really says:
On social attitudes, Britain is becoming more liberal, except for when it comes to drugs:
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Where are all the ‘Nurses’ for Reform?
This morning’s guest post by Zarathustra, of the excellent Mental Nurse blog, flagged up the existence of a right-wing campaign group calling itself ‘Nurses for Reform’, and as Lib Con’s resident data hound that naturally prompted me to ask a very pertinant question:
Just exactly how many of the people behind ‘Nurses for Reform’ are actually nurses?
Is this actually a genuine organisation that can point to a significant level of support within the nursing profession or it is, like the Taxpayers’ Alliance, just another small, well funded, right-wing front organisation with a name carefully chosen to mislead the naive and unwary into taking it for something it almost certainly isn’t?
So who, exactly, are ‘Nurses for Reform’?
Well, their director and primary mouthpiece is Dr Helen Evans RGN and she is, indeed, a nurse with 20 years experience in the NHS under her belt and a PhD in health management from Brunel University. So she’s a doctor, but not in the medical sense of the term.
As for her organisation, it claims to be a ‘growing pan-European network of nurses dedicated to consumer-oriented reform of European healthcare systems’, although evidence of any links to like-minded nurses organisations or campaign groups are a bit thin on the ground.
The other noticeable feature of the NFR website is, with the exception of a page listing members of advisory board, the marked lack of reference to anyone other than Dr Helen Evans, who appears to be the site’s sole contributor, contact point and, for all anyone knows, chief cook and bottle-washer.
Not exactly a flying start then, but there is an advisory board, so maybe we’ll find a few more nurses there…
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Hasn’t the fiscal stimulus argument won the day?
At the end of 2008 a European challenge had emerged – cash injection or hands on heads.
French President Nicolas Sarkozy who voiced his aggravation with German Chancellor Angela Merkel for not implementing a measure of fiscal stimulus said, “While France is working, Germany is thinking.”
Merkel was actually remaining loyal to the “Stability and Growth Pact” (SGP), the purpose of which was to tune the euro so it would be able to compete with the US Dollar and strengthen the stability of the euro-zone.
Now, in January 2010 we might be starting to see some early signs of this European challenge. The UK has had a surprise fall in unemployment figures – which may have part-time jobs to account for.
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Shock! Global poverty and inequality falling
contribution by Nick Cowen
Via Tom Palmer and Marginal Revolution, we learn that global poverty is falling, is doing so fast, and much more so than previously expected. Equality is increasing as a consequence.
This is very cheering news, and it means far more for so many people in the world than all the news stories about bad laws, rapacious corporations, and even attacks on civil liberties. The story probably has countless more implications for human prosperity than climate change.
Yet while this is a moment of celebration for anyone who can appreciate that slowly but surely more people are having the opportunity to pursue their own happiness, news of this sort receives a rather muted response in all sides of the MSM.
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There is more on RBS to get angry about
contribution by Adam Ramsay
Billy Bragg’s refusal to pay taxes to fund RBS bonuses is the latest manifestation of the question: what is to be done with Britain’s biggest bank?
But as well as bankers yachts, we should also look at the other things RBS-NatWest are paying for with our cash.
According to this report RBS-NatWest are Europe’s biggest funders of fossil fuel extraction. This finance is so significant that this more recent report by Cass Business School fellow Nick Silver found that the government could potentially have more impact on global carbon emissions through responsible ownership of RBS-Natwest than through cutting all domestic emissions.
And it’s not just levels of emissions that we should worry about. In March last year, RBS-NatWest provided around £100 million of, essentially, our money to Irish company Tullow Oil.
Tullow are involved in an extraction project on the war struck border between the Democratic Republic of Congo and Uganda. In an area that has seen chronic violence, a resource war fueled by RBS loans is a serious prospect.
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Are banks finally losing their grip on the economy?
contribution by Adam Lent
The rather brilliant theorist of economic history, Carlota Perez, argues that after very large financial crashes, economies change their mode of operation.
Systems that have been run by and in the interests of financial speculation become far more focused on the ‘real economy’. Profits and wealth are generated less by playing around with money and more by the search for productivity and innovation in other sectors.
This process often begins with the banks and other financial bodies losing economic, political and popular credibility. Their sphere of influence and their freedom of activity becomes constrained not just by the fact that financial conditions have changed but also by a new regulatory regime and a political backlash.
That Perezian turning point may just have arrived. Darling’s bonus tax, Obama’s insurance levy, a growing campaign for a transaction tax and now, most strikingly, Obama’s new Glass-Steagall, suggest that something significant is finally happening over a year after the crash.
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Daily Telegraph: distorting debate on public sector pay
Opportunities to skive, doss, bugger about on Facebook in company time, spend three hour lunches down the pub, take multiple fag breaks and generally put in as little effort as is consistent with not being sacked are not entirely lacking in the private sector.
I make these elementary points after reading the latest bollocks in the Daily Telegraph on ‘the record gap between public and private sector pay’. The article is shockingly private sector supremacist, and built on the assumption that state and local government employees are labour market Untermenschen poncing off the soul-sustaining largesse of the wealth creation master race.
You know this guff off by heart by now:
Workers in the public sector are now being paid more than £2,000 extra a year compared with employees in the private sector, after public sector pay continued to race ahead of inflation.
The average public sector worker was paid £23,660 a year, compared with private sector workers who were paid £21,528 a year, in the three months to the end of November.
Cue the inevitable whingeing from the sort of people who often pull down 20k a month.
David Frost, director general of the British Chambers of Commerce, warns us that public sector pay has “exploded out control”.
John Philpott, the chief economist at the Chartered Institute of Personnel and Development, weighs in with the observation that “everyone knows the public sector gravy train is going to be derailed.”
Doubtless he would argue that the investment banking gravy train – a veritable Train à Grande Vitesse compared to the council white collar employee suburban stopping service – must be allowed to trundle on in the national interest. Perhaps I am missing something here?
Corin Taylor, policy director at the Institute of Directors, adds: “There will have to be a public sector pay freeze or public sector pay cuts. It will be painful but it is necessary.”
And here’s Frost again: “This just isn’t sustainable … The wealth-creating private sector is losing out to the public sector.”
Now that’s what I call a broad spectrum of opinion, ranging all the way from private sector bosses’ organisations to, well … private sector bosses’ organisations. Maybe the reporter didn’t have the number for the Unison press office.
Yes, there is a gap between public and private sector pay. There is also an obvious reason for it. Most unskilled jobs that were once in the public sector – refuse collection, hospital cleaning and that sort of stuff – have long been outsourced to private companies.
Public sectors workers are increasingly likely to be graduate professionals and expect a graduate professional’s wedge. Of course civil engineers get paid more than crew members at Burger King.
Inevitably, then, comparing mean averages is not comparing like with like. Grade for grade, any disparity remains decidedly in favour of forex traders rather than social workers.
Writer Harry Wallop and the Daily Torygraph damn well know this elementary argument. Yet they prefer to slant the debate to suit their small state ideological agenda. Opinion pieces should be labelled accordingly.
You can read articles through the front page, via Twitter or rss feeds.
» 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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