A couple of thoughts on entitlement
The British sociologist TH Marshall famously argued that the three centuries since the enlightenment had seen the respective advance of three levels of rights: civil, political and social. These levels roughly equate to the spread of the rule of law, the widening of suffrage and the creation of the welfare state. Until very recently it was the general assumption that growing entitlements were a good thing and that national progress is measured by a combination of rising disposable incomes, growing social entitlements and enhanced public goods (infrastructure, public spaces, environment).
From the beginning, and particularly since the 1970s, the free market right has opposed this view on grounds of affordability, economic efficiency and moral hazard. The cost of growing state entitlements is seen to be a drag on enterprise, to penalise wealth creation and to foster dependency among welfare recipients. The current crisis gives this critique an extra twist. As the cuts get deeper, the economy languishes and we look with envy at the growth rates and apparent entrepreneurial drive of many developing countries (with much more limited social entitlements), the sense grows that the problem is not that there are too few entitlements but that there are too many.
One difficulty here is distinguishing arguments of expediency and principle. For example, is the reduction in public sector pension entitlements simply an unfortunate necessity to balance the books, or is it also objectionable that workers funded by tax payers should enjoy retirement benefits not available to most of those tax payers? Are cuts in benefits justified merely by austerity or also by the need to tackle dependency? Does pulling the state out of the provision of services like libraries represent a sad loss or a great opportunity for community self–help? The lazy answer in each case is ‘both’, but as I have argued before, different arguments for the same course of action must be independently valid or else the whole case gets damaged.
It is easy to avoid all hard questions if one simply reverts to attacking the privileges of the rich and implying that if only we taxed them more we could pay for everything. But even as someone who personally supports the fifty pence tax rate and abhors the way some bankers and business leaders have exploited their position to create obscene wealth, I don’t think it is realistic or honest to argue that squeezing the rich will, any time soon, enable us to return to a path of rising entitlements.
I have no easy answers or startling new perspectives (which is a bit of a problem given that I am discussing these issues on Moral Maze in a couple of hours), but two half formed lines of thought have occurred to me.
The first might be called ‘the entitlement paradox’. Rising entitlements are a sign of social progress but their maintenance and growth depends on us not treating them merely as entitlements. In other words the sustainability and social value of welfare benefits depends on the existence of a strong work ethic and the sustainability and social value of public services depends on them being seen as collaborations which involve responsibilities for citizens and communities as well as the state.
The second is the need for public debate to acknowledge the contested framing of notions of fairness. Take today’s strike: many critics on the right argue that it is both unfair and corrosive to national solidarity that many public sector workers get a better deal than most private sector workers. Fine; but once the issue of fairness is opened such critics have to answer the question: isn’t it equally unfair and socially corrosive for useless bankers to get paid a hundred times more than hard working care assistants? To which an economic liberal may reply that we should distinguish between things that happen because the state interferes (public sector pensions) and things which are the result of free choices in a free market (income differentials).
However, at the same time as the case for state entitlement has been eroded by changes in the world around us, so has the credibility of this kind of free market fundamentalism. To take one line of criticism: it might very reasonably be argued that every child – born free of sin and error – should have broadly the same life chances (indeed some measures of public opinion suggest this view is widely endorsed), yet the state uses the power of law to defend the right of the privileged to pass on their advantages to their offspring and thereby – in the context of limited absolute social mobility – generate a reduction in the comparative life chances of the offspring of the less privileged. Those who talk about fairness to try to win a specific argument are likely to find themselves embroiled in a much bigger debate.
Crises can easily become times of fear, anger and resentment but they can also act as an imperative for reflection and new ways of thinking. Yesterday’s Autumn Statement did point to a few rather random principles behind the Government’s management of these difficult times, but missing from the Coalition narrative (not to mention that of the Opposition) are deeper reflections on what austerity means for our idea of ourselves of a nation and our collective norms and aspirations. However hard, it is a debate we should choose to enter rather than avoid.
Autumn statement – some of your questions answered
The big news today seems to be the report of the Office for Budgetary Responsibility. Labour used the report to hammer the Government. Mr Balls must think it is important to be up front with people about how bad things are in this crisis?
Absolutely
But I seem to remember that when Labour’s former Chancellor, Mr Darling, warned people the crisis was going to be very bad some people got very angry. I can’t quite remember who…..
Well, let’s see, there was Mr Balls….
OK, OK, but that’s in the past. Tell me, what is the basic difference between the Government’s position and Labour’s position on public spending and the economy?
My goodness, you really are out of touch aren’t you? As any fool knows, Labour thinks the Government should borrow more to get the economy moving while the Coalition is committed to its tough programme to reduce borrowing.
Oh I see, so how much less is the Government planning to borrow in comparison to what Labour planned to borrow?
At the last election Labour said it would borrow £110bn next year but now Mr Osborne says he will borrow £120bn
So that’s less in the sense of being £10 billion more?
Yes
So the Coalition is attacking Labour’s plan to borrow more at the same time as announcing that it is borrowing more?
Yes
And Labour is attacking the Government for doing more borrowing at the same time as saying it should borrow even more?
Yes
Is anyone making any sense about the crisis?
Well, the Liberal Democrats did warn before the General Election that if cuts were too deep it would stall recovery
Ah, so are they going round telling everyone they were right?
No, now it looks as though they were right they are keen to stress that they were actually wrong
I see, I think. But at least the Government has a plan to get the economy moving. How much more growth does the Government think its new policies can generate?
This year growth will be about 0.9%. Next year the Government says it will be 0.7%
So that’s more growth in the sense of being 0.2% less?
Yes
What about the longer term?
The Government is very confident that we will get back to healthy growth by 2013
That’s a relief. Why is the Government able to be more confident now than before?
It isn’t. It was just as confident last year about its predictions for 2012, as was the previous Government about its predictions two years ago for 2011. In fact the only prediction that has always been right is the prediction that the Government will predict that things will be a lot better in two years.
I see. But why does this Government say its own predictions were wrong?
Because things that are beyond our control – in Europe – have ruined out plans
I see. So can we be more certain about the future now?
Don’t be silly
This is all a bit much for me, can I lie down?
Yes, perhaps you could lie down in one of the new nursery places for two years olds that the Government is creating
That’s a good idea. Why is it doing that?
Well, it’s mainly to encourage mothers to go out to work
Very good, and how is it being pad for?
Well, largely by cuts in tax credits
I see and will that that have any drawbacks?
It will probably reduce incentives for mothers to go out to work
…..Continued on all good news websites everywhere
The case for keeping it simple
As the UN Climate Summit opens in Durban against a background of rock bottom expectations, is it worth rethinking the message about reducing greenhouse gas emissions?
A recent article in the Financial Times made grim reading for anyone hoping to see America show leadership in international efforts to reduce greenhouse gas emissions: Referring to tar sands, shale gas and fracking, Edward Luce explained how the combination of new discoveries and new technologies are opening up major fossil fuel sources. Together these sources could enable the US to move towards energy self-sufficiency. Quite apart from the impact of these energy sources on carbon emissions, what Luce calls America’s ‘new age of plenty’ could be disastrous for the already fragile political case for action on climate change.
In the face of rampant climate change scepticism, and instinctive hostility among Americans to the federal government signing international deals on their behalf, those making the case for US action on carbon reduction (including President Obama) have relied heavily on the security of supply argument. Americans may not be willing to accept their fair share of international obligations of emissions reduction but they are open to the argument that the US should reduce its dependence on unreliable or potentially hostile oil producing nations. Now, however, the exploitation of new forms of fossil fuel makes security of supply seem less important, leaving just an unpopular and under-developed case for action on climate change.
It is always attractive to pile up reinforcing arguments for a course of action. As a Government advisor I was used to being told – often on pretty tenuous grounds – that a scheme would not only bring social benefits but would in time save a huge amount of money by preventing some ill or other (a Treasury official once said to me ‘we have a special file we use for most arguments about long term social savings; it is round and in the corner of the room’). It is assumed by a case’s proponents that even if supplementary arguments are weak they can’t do any harm. Often this assumption is wrong.
Not only can a weak argument distract attention from the strong, if one part of the case is damaged it undermines the credibility of the rest, like a wonky leg on a table. If Luce is right about the new plenty, American environmentalists may start to claim that they never needed the arguments about peak oil or security of supply to make the case for reductions in energy use and investment in renewable sources, but the question will come back: ‘why then did you make those arguments in the first place?’
In the UK many green campaigners are keen to argue that promoting sustainability will have all sorts of beneficial side effects ranging from weaning us off the consumption treadmill to promoting social justice. This may well be true, but is it good tactics? I have often heard climate change sceptics on the right argue that the green movement exaggerates the threat of climate change in order to smuggle in an anti-capitalist, anti-market agenda which would never win public support in its own terms. The more environmentalists pile up the progressive causes which will be aided by action on climate change, the more credible this charge becomes.
Which is why I advocate a much more prosaic case. It is this: nearly everyone spends a significant proportion of their income on something which rarely gives them any direct benefit, to whit various forms of insurance. The chance of our house burning down or of us dying in an accident are remote but – although we may quibble about premiums and fine print – we accept the case that we need to cover ourselves for the worst.
It is not necessary to believe that man-made climate change is proven absolutely or runaway global warming inevitable to accept that the risk of climate change is greater than the risks against which we personally insure. Is it not, therefore, reasonable to argue that society as a whole should be willing to invest proportionately as much in cost (or opportunity cost) to reduce the climate change risk as we do personally to reduce much smaller personal risks?
This is not a case which lifts the soul, challenges the culture of consumer capitalism or even fosters twenty first century enlightenment. It may seem directly to contradict the thrust of the Common Cause Alliance (Friends of the Earth, WWF, Oxfam-GB, and CPRE) whose report explicitly warned that making the case for responsible collective action using the language of selfish individualism is ultimately counter-productive. My defence is that this is an argument which is currently being lost so we environmentalists need to be pragmatic and also that there is plenty of scope for value changing discourse around who pays for the insurance policy (both nationally and internationally).
But I suspect my view will prove controversial even within the RSA, let alone further afield.
Not as good as it sounds, but a lot better than nothing
It is entirely welcome that the Government has announced the ‘Youth Contract’ to tackle unemployment among 16-24 year olds. The scheme may look a bit like an amended version of the scrapped Future Jobs Fund, along with a further attempt to replace abolished Educational Maintenance Allowances (there is £50 million a year for 16-17 year olds NEETS), but who cares? We must all hope it succeeds. Indeed, I want to suggest the possibility of a benign manipulation of the scheme that could increase its social benefit.
First, however, some slight reservations:
I agree with Gavin Kelly that there are better places to find the money for the scheme than the rumoured further cuts in working tax credits. I am sure this is not the intention, but were the rumours true it could start to look as if the Government was pursuing a strategy of social engineering, reducing work incentives for family second earners (mainly mothers) in order to increase them for the young.
I wish the Government had resisted the temptation to copy a bad habit established under Gordon Brown of rolling up several years spending into a rather misleading top line number. The broadcast news this morning featured three numbers: £1 billion pounds, 400,000 job opportunities and £2,000 for employers. In fact, as far as I can work out, it is £330 million a year and, as part of the overall package, there will actually be just over 50,000 six month paid job options per annum which is 25,000 at any given moment, or roughly 3% of the number out of work. The public finds it hard enough to understand Government figures without deliberate obfuscation.
As long as the economy continue to flat line, will employers lacking market demand want to take on young workers, even if they only cost half the minimum wage? Given the on-costs of employing someone – desk, uniform, supervision etc. – there must be a danger of low take up or substitution for existing employees.
This final concern brings me to my benign wheeze. As the Government is insistent the new jobs be in the private sector, it looks like there will be limited scope to follow the suggestion I made with my bond for hope and help fill some of the gaps left by receding and cash strapped publicly funded services.
But for businesses that want to help but don’t want the hassle of making work when there is little or no customer demand, how about expanding their philanthropic work in the community? For example, a supermarket might set up a community scheme, employ a couple of ‘Youth Contract’ workers and then donate their time to a local charity. The supermarket would cover the admin costs of the scheme while the community group would meet other in-work costs and ensure the youngster got supervision and support. This way employers who didn’t really have any need for extra staff in their core business could be seen to make a substantial contribution to community life at the relatively modest cost of half the minimum wage.
The case against this suggestion – like that against the Future Jobs Fund – is that there is no ‘real economy’ job being created, but as long as demand stays flat this is a risk with any subsidised job placement. Presumably, if the trainees worked well in the community and a starter level job in the sponsor business came up, they would be well placed to apply for it.
As for my own ‘bond for hope’ idea, apparently the economics behind it are hopelessly flawed. Just because businesses and individuals buy the bonds on low interest with a long payback time, it still counts as Government borrowing and so is like any other of the numerous suggestions that George Osborne softens his commitment to austerity. On the upside, a couple of organisations tell me they are exploring whether – instead of Government – financial institutions or cash rich corporations might underwrite the bonds.
It would be good if something could be done with the proposal. I got a lot of positive feedback from the original post about the idea of ordinary members of the public being able to do their bit to help tackle the national emergency of youth unemployment. Sadly, this dimension seems completely absent from today’s announcement.
If not now, when?
Yesterday the Prime Minister and leader of the opposition, being the clever types they are, took it in turns to put each other on the defensive. Mr Cameron attacked Mr Miliband over Labour’s stance on public sector strikes while Mr Miliband condemned Mr Cameron on youth unemployment. Business as usual in Westminster, meanwhile, out in the world the gloom deepens.
In the short term there is the unfolding European sovereign debt crisis (today saw yet another failure by European leaders to agree a credible collective strategy). Major British banks are still highly vulnerable to default so any idea that the UK will be sheltered from the collapse of the Euro is almost certainly wrong. In the medium term we have no realistic path back to the kind of growth that would enable us to manage down national, corporate and family debt without years of pain or the ever present risk of a slide back into recession. As he prepares for his autumn statement next week, George Osborne’s scope to make choices may be restricted to deciding in what order to put the bad news.
Over twenty years as a policy analyst and commentator I have tended to disagree with people who claim public services are getting worse. The problem is usually that they are not getting better as fast as we would like, or that they have fallen behind comparable services in other sectors. But now we are beginning to see genuine deterioration. This is not just in those non-statutory areas, like libraries, youth and community services which have borne the brunt of local government cuts. Monday’s EHRC report on domiciliary care was just the latest in a string of damning reports. The prospects for vulnerable older people are clearly deteriorating and there is no foreseeable reason to expect this process to stop. Whatever steps are taken to improve public service efficiency and engage volunteers in the community, further years of austerity are likely to see this decline in service levels and social outcomes spread to other core areas of provision.
In the face of the crisis and the danger that, in time, declining living standards and services will lead to social conflict and even political extremism, we desperately need national leadership on a different plane to that on offer right now. Leadership to give us hope and a sense of national purpose. Leadership to challenge us – from the self-serving overpaid company executive to the apathetic unemployed youngster and every one of us between – to be part of a national mobilisation to protect our most vulnerable citizens, keep our communities going and show the creativity, collaboration and risk taking which must be the foundation for economic success. Imagine a society in which almost everyone had a story to tell about what they were doing to help the nation pull through.
But when it comes to political rhetoric we are all so jaded that this leadership will not come from conventional oratory. Our political leaders need to go miles outside their comfort zone. In particular they need to recognise that political point scoring and playing to their own dwindling band of party loyalists is not only irrelevant but an abdication of the duty of public service. If they don’t we might eventually reach the same depressing conclusion as the Greeks and Italians and seek to replace politicians with technocrats.
Like all my blog posts this is no more than shouting in the wind. Perhaps it’s time I took my daily pill and had a nice lie down. It’s not as if I know concretely what it would take for our leaders to convince us we should respect and respond to them. But I think I would know if I saw any sign of it happening. It might start with greater humility, more recognition of the inherent uncertainty right now in all policy options, a willingness to work across party lines, the courage to appeal concretly and directly to the nation even at the risk such an appeal will initially fall on deaf ears.
Every politician I know says they came into politics to serve and to make a difference. That’s why I tend to defend the political class even when it’s friendless, like over expenses. But desperate times call for desperate measures. Over the years, I have heard so many politicians say they wish they could break out of the binds of intra-party trade-offs, inter-party adversarialism and media management and find a way of connecting with the public.
If not now, when?
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