Tuesday, 31 May 2016

It's so slow

How long will it take politicians to realise that inequality is bad? That poverty, the measure of inequality, is making everyone poorer?

A very long time, judging by what is going on now.

In a 2007 article the prescient George Monbiot gave us a brief history of the politics of inequality - the political movement that began just after World War II and that was supported by 'American oligarchs and their foundations.' Monbiot makes clear that this movement - we now call it neoliberalism - was specifically in the interests of the rich. The combination of government austerity and the privatisation of anything that was not core government business meant a 'massive shift of wealth, not just to the top 1% [of the population] but to the top 0.1%', returning us to levels of poverty and inequality not seen since the 1920s.

In March George Kerevan, writing about the resignation of Iain Duncan Smith in The National,  wrote about the 'social upheaval' caused by the many years of austerity, of shrinking the state, and said that the 'SNP needs to press on with a radical alternative to the failed neo-liberal agenda'

And this week an article by the International Monetary Fund, highlighted in Saturday's Financial Times, admits that 'increased inequality ... hurts the level and sustainability of growth.' The article picks on two neoliberal policies - free movement of capital across borders, and government austerity. On the first, it advocates some controls to stop short-term rushes of capital into and out of countries. And on the second it says that 'austerity policies not only generate substantial welfare costs..., they also hurt demand—and thus worsen employment and unemployment.'The hot news (for the FT) is that the article uses the word 'neoliberalism' to define these politics; 'the use of the term "neoliberalism" is provocative,' storms the FT. 

How long will it take Cameron and Osborne to wake up and listen to the mood music? How much more poverty, how many more cuts, how many more people sanctioned by the 'benefits' system? How many more wars that drive millions out of their homes and into abject poverty? 

When will they learn that poverty is bad, for all of us? When?

Monday, 23 May 2016

Paper Balls

The Holyrood election is done, so the newspapers are looking for their next big story. They have the Brexit Terror Campaign, but even the Daily Mail can see that stories about quirky regulations from Brussels are hardly setting the readership alight. So we are back to the bump and grind of whose bed was shared by which politician. 

Sex sells.

But it is wholly irrelevant to the measure by which we should be judging our politicians: are they capable giving people a better life? Can they help people out of poverty, with better jobs and better benefits? Can they create a measurably more equal society, reducing the wealth gap?

This is how we should be measuring our politicians. Not by the number of people they have euphemistically 'slept' with, but by the number of people whose lives they have changed for the better.

All the rest is just balls.

Wednesday, 18 May 2016

Pain in Spain

A report just published by the Valencian Institute of Economic Research and funded, ironically, by a bank foundation shows the horrible results of the 2007-15 economic crisis.

Francisco José Goerlich Gisbert, Professor of Economic Analysis at the University of Valencia has studied the share of income for households in Spain, and the policies that the various governments (national and regional) have applied to income distribution. The results make interesting, and often awful, reading.

His report shows that:

  • Household income in Spain has dropped since 2007
  • Income inequality (the 'wealth gap') in 2013 (the latest figure available) is greater than it has been since records began. The principal cause has been the worsening situation of the job market.
  • 'The challenge for the next few years is to encourage growth and at the same time to reduce inequalities'. Professor Goerlich refers to research by various authors demonstrating that inequalities in income slow down economic growth
  • New technology is creating jobs, but only for people who are trained and qualified. Many miss out
  • State pension payments are the main route through which money is redistributed from rich to poor. Professor Goerlich underlines the vital importance of the state pension...and then reminds us that Spain will find it increasingly difficult to pay the pension as our population ages
  • Unemployment payments (benefits) are the second most important means of redistributing income.
  • The 'supply of public services in kind (education and health) is the third [most important] means by which the public sector can improve the distribution of household incomes'

That last point is important here in Catalonia and in Scotland. Both countries offer free state-paid education, and both offer free or almost free higher education. It turns out that this is an important means for redistributing money - in this case in kind - from the rich to the poor. Professor Goerlich demonstrates that including the monetary value of the public services of health 'appreciably reduces inequality' in household incomes. Drawing the parallel with my home country, Scotland's health service and its free or nearly free education are worth fighting for.

We need a 'paradigm shift in economic policy to focus on the quality of life and the wellbeing of citizens, rather than on GDP per head.' In other words we need to move to an economy that shares out the wealth and the growth more fairly; 'Growth is not social sustainable if it is not inclusive,' concludes Professor Goerlich.

Goerlich Gisbert, F.J., 2016. Distribución de la renta, crisis económica y políticas redistributivas 1st Edition., Bilbao: Fundación BBVA. Available at: http://www.ivie.es/en/actividades/noticias/2016/libro-distribucion-de-la-renta-crisis-economica-y-politicas-redistributivas.php [Accessed May 17, 2016].