Friday, 23 January 2015

For Richer, for Poorer. And a Tartan Trident.

If you take a bus down Ferry Road in Edinburgh you will move from wealth to poverty as you head west. Or you can just stand in Stewart's Melville (private) College's playing fields and chuck a stone west to Pilton. You will be throwing your stone from an area ranked as amongst the least deprived into an area that is the most deprived, according to the Scottish Index of Multiple Deprivation.

Edinburgh, deprived

This week two reports have talked about poverty.

What Do We Know about In-Work Poverty? [1] shows that most poor people (52%) in Scotland live in homes where at least one person has a job.  Worse, the proportion of poor children in homes with an adult in work has increased from 40% in 1999 to almost two thirds today.

What is going on? Doesn't a job give you an income? Well yes, and poverty is of course related to work (the rate of poverty amongst households where no-one is in paid work is of course higher.) But people in low-paid jobs - earning less than £7.40 an hour - have double the poverty risk of all workers. Low-paid women are especially vulnerable; mothers returning to work are more likely to end up in low-paid jobs, says the report, which highlights the almost 20% difference in wages paid to men versus women in the private sector.

Scotland comes off badly in the low-pay stakes compared to other countries: 19.5% of employees in Scotland were low-paid in 2011 compared to say 14% in New Zealand or 15% in Spain.

Low-wage work is a dead end - workers are less likely to be offered training, and more low-paid workers become unemployed than their better paid colleagues. So families are juggling low-pay, no-pay and benefits and it is, above all, the children who suffer.

Meanwhile, Oxfam has shown in Wealth: Having It All and Wanting More [2] - published this week in time for Davos - the link between wealth, business and tax. The richest 1% own 48% of global wealth - and the trend is upwards, for the rich. The pyramid is skewed so the richest fifth of the population own more than nine-tenths of the wealth, meaning that the rest of humanity, the 80%, scrabble over just 5.5% of global wealth.

Cleverly, Oxfam shows that the businesses that our wealthiest people invest in are the same businesses that spend the most on lobbying on budget issues, particularly lobbying to reduce taxation. Thus there is a vicious circle in which wealth is held by a very few, who ensure via their businesses that taxes…for those few rich…remain low. This explains why David Cameron and Giddy Gordon Osborne have been so reluctant to do the obvious thing - tax wealth, to reduce the poverty gap.

This is stupid economics. As the Child Poverty Action Group (CPAG) has shown [3], a child growing up in a poor household is likely to have a poor outcome - to become a poor adult - because of a range of issues including stress and poor health. CPAG has calculated the cost - to all of us - of allowing poverty to take hold. The cost of allowing 110,000 children in Scotland to be affected by in-work poverty could be £1.1 billion

£1.1 billion! We could almost afford to buy our own Tartan Trident for that…

1 What Do We Know about In-Work Poverty? A Summary of the Evidence (Social Research Series. Edinburgh: The Scottish Government, January 21, 2015.

2 Hardoon, Deborah. Wealth: Having It All and Wanting More. Cowley, UK: Oxfam International, January 19, 2015.

3  Farthing, Rys. Local Authorities and Child Poverty: Balancing Threats and Opportunities. London: Child Poverty Action Group, July 2013.

Monday, 12 January 2015

It’s the economists, stupid

What is the cost of deploying 80,000 French police officers over two days? What is the cost of 17 lives cut short? When will economists include these costs in the balance sheet on poverty?

There are many, many reasons behind terror attacks, some of them delusions in the heads of the individuals who carry them out. But there is one clear reason behind the war that is currently being waged from Baghdad to the banlieue; poverty.  People with nothing, with nothing to lose, excluded from a society that appears wealthy and comfortable. Imagine if Afghanistan were a prosperous country, or if Syria were Norway, full of people engaged economically, emotionally, socially with their society, and whose growing prosperity depended on that society. In that world people would have no need to create terror.

But Afghanistan, Syria and the Levant, and most of North Africa are not like that. Nor is the banlieu. In all of these places there is poverty, defined as people having an income that is under 50% of the median income in the place they live. In all of these places people have emerged who are able to gather and organise the poor and the dispossessed and turn a few of them into bombers and fighters. A few, but enough to cause death and destruction in the rest of the world.

We, the rest of the world, have allowed these places to get poor or to stay poor. We have allowed some suburbs to rot while others, often only a few kilometres away, enjoy all the fruits of wealth. Through our trade rules and our geopolitics we have allowed North Africa to grind along in poverty while we sun ourselves across the water on the Riviera or the Costa del Sol.

According to normal economics, that’s all fine. We measure ourselves, economically, as having prosperous lives and economies. The World Bank says that Afghanistan has a GDP of $20 billion, while that of France is $2.8 trillion, more than 100 times greater. This is the wealth gap – and to underline that, the World Bank says that 35% of the Afghan population live in poverty.

But “normal economics” is wrong, stupid.

France is now paying the economic cost of allowing other parts of the world, including its own banlieue, to fall into poverty.  So are all of us in the rich countries.  These costs of poverty should feature in our accounts. From France’s GDP we should deduct some cost for the fact that she (alongside all of us in the West) has allowed other places to fall into poverty. Some cost reflecting the 80,000 police officers and the 17 lives lost. Some cost reflecting the hundreds of thousands of life-opportunities lost to the people who live in her banlieue. Some cost reflecting the ways we all pay for poverty.

That would be real-world economics. A world in which we could not balance our books without taxing ourselves heavily for the true cost of poverty.

Thursday, 8 January 2015

Je suis Charlie

We appear to be at war. Al Qaeda, and ISIS in Iraq and the Levant, have sent their emissaries into our homes and offices – yesterday those of Charlie Hebdo in Paris – to kill, maim and frighten. We, or at least Washington, Westminster and to a lesser degree Paris, have sent back drones, planes and bombs that kill soldiers and civilians.

The newspapers here in Catalonia are predicting that yesterday’s killings in Paris will strengthen the extremists (Marine le Pen et ses plusieurs amies) in France, just as drone strikes must radicalise the populations of Pakistan, Afghanistan or the Yemen. UKIP and the slightly more barmy BNP in the UK are likely to benefit too.

This feels like war. 

There are deaths. There is the cry that these deaths, here, are wrong. There is propaganda, and the involvement of secret services, drones and a Fifth Column (a term devised in Spain).

How should Scotland react?

Scotland could join the war. Send troops, arms, bombs into the Levant.

No. That is not going to stop the killing. Our young men and women, and those living in the Levant, would all lose out from such a policy.

Scotland should do the reverse. We already have active, peaceful, friendly Muslim communities in our cities and towns. We should multiply our efforts to make friends in the Muslim world, to build bridges, to offer people a route out of the poverty and injustice that are part of the background to this stupid, tragic, murderous conflict. Each of us can do that.

We will resolve this conflict, like all conflicts, by listening to the other side, understanding her or him, and then learning that her struggle is our struggle – her call for justice, peace, and an end to poverty is ours too.

I hope that Scotland can do that before the barriers slam down.