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April 14, 2011

Comments

Mark

' the “wrong” personalities?'

If so could this not be in part caused by inappropriate welfare incentives?

A sense of entitlement to certain things is not limited to either those on welfare or the upper middle classes, borne by expectations that what has happened in the past should continue as long it is in their interests

A1

On your point number 1 - isn't the issue not averages but at the margins. I'd be much worse off on benefits, so it isn't a choice I consider. Others are closer to the point where working a 40 hour week doesn't look so inviting.

Having never looked at the data I' don't know how your replacement ratio is calculated, but if it is a mean average, it'll be badly skewed by the top few per cent of earners. What would be more useful to look at would be the replacement ratio for an unskilled man, in a midlands or northern town, with a wife and two kids to support.

On point 2 - even in Cameron is ignoring much larger reasons for the existence of unemployment, is he not entitled to comment? The small truth thing is the same as saying road safety campaigns and laws are pointless because only a tiny fraction of people die in car accidents.

On 3, you are right, the bit of the speech quoted does ignore this point. But another bit of the speech explicitly recognises it (ok, he doesn't say 'fungible', but you wouldn't expect him to, would you?)

4. Yes. Well said. But it doesn't quite mean that there would be no effect on immigrant labour demand from welfare reform. And welfare reform may have benefits of it's own.

A1

Keith

Is it really surprising that a very rich Toryboy reveals that he hates poor people and foreigners? Does the leopard change its spots? Didn't take long for the real Nasty party to show itself. It is also not a shock to me that Tory boy is a fact free zone; you need no facts when your mental state is hate the poor and the foreigners. The class enemies agenda is surely no surprise to you Chris? Meanwhile the Coalition of Trustifarians moves on with its policies to impoverish 90 percent of the Population. While helping the wealthy to dodge more tax. Why not discuss that issue?

Lee

I doubt there are many people who actually choose to be unemployed and live on benefits.

rogerh

Point 4 identifies a fundamental reason we are in big trouble. The current economy - when it recovers - requires intelligent, skilled and well motivated people. But the laws of nature seem to indicate that 50% or fewer are capable of being sufficiently intelligent, skilled and motivated. Economics is pushing the bar higher and higher for comfy places like the UK.

So, using better training etc we might squeeze a few extra percent, or, more cheaply, we might import suitable people. In essence the next decade will become a battle to attract and utilise the cream whilst shoving the less able out of the way. Sooner or later every developed country will play this game - until resources get short and ostlers and ploughpersons make a resurgence.

Recusant

Point 1 only holds good if you can only think as an economist and believe that it is the monetary rewards alone that influence behaviour. I might well be prepared to accept a 30% pay cut (and at median levels it is probably a lot less than that) if it meant my time became exclusively my own and I didn't have to graft in a stultifying job for 40 hours a week.

Keith, shouldn't you be out selling the Socialist Worker? Or were you just having a little fun with caricatures?

Peter

Look in any bank in the City of London. To keep overall remuneration the same, they have replaced virtually every competent (but overpriced) global commodity. People are not to be equated with free trade. The very notion sickens me.

Keith

"Keith, shouldn't you be out selling the Socialist Worker? Or were you just having a little fun with caricatures?"

No. Sectarian organisations like the SWP have doubtful utility as change agents as C Dillow would put it. The prevalence of sectarianism is one of the weaknesses of the left.

I wpuld hope people would see through the Tories playing the Race card as per usual and their odious policies. No caricature could do justice to them. Or are needed. Just open eyes.

Lee T

Keith

I don't think the Tories are playing the 'race card', I think they're playing the 'it's common sense, isn't it' card. They are trying to echo pub, office and dinner party conversations.. talking about how we only want 'good immigrants'. That's exactly what all the other parties do.. and Labour proudly like to tell us that they introduced a points system.. cos it's common sense, isn't it. It's not racist to say we don't want people coming here who aren't going to contribute, is it?

Now, obviously, the idea that we should be importing skilled workers from poor countries, rather than the opposite, is.. to anyone with a vague interest in social justice, absolutely vile... But to the electorate it's common sense, and the Tories are no more guilty of playing to that than anyone, it's just that those who object seem to shout louder when they do.

Straus

I think you are ignoring the long-term effects of the benefits system on certain sections of the population. Many of them have become inured to a certain level of livelihood, which, while it may not appear desirable to the majority of us (“I doubt there are many people who actually choose to be unemployed and live on benefits”), suits them well enough.

It is true that the aggregate demand for labour is lowish at the moment, but that wasn’t the case five or six years ago, when the economy was growing at a healthy rate and jobs were on offer in virtually all sections of the economy. And, remember, many of the jobs taken by immigrants from Eastern Europe did not require great skills or high or even moderate educational attainment. They were the jobs right at the bottom of the pile – work in fish-packing plants, work on farms or cleaning jobs in hotels or in government buildings.

But because of the disincentives created by the benefits system and the character-destroying effects of years or even generations spent on the dole or other state handouts, hundreds of thousands of the unemployed in Britain disdained to take these jobs and succumbed to the debilitating effects of yet more (unnecessary) wasted years on the dole.

The benefits system needs to be fixed now so that the opportunities attendant on future economic growth do not once again go begging.

Keith

Well the Tories are obviously playing the race card and the attack benefits claimants card. It is true that people like Phil Woolas in Labour did the same i.e. they decided to get the white stupid people "angry" about immigrants and Moslems and the High court sent Mr. "get them angry" woolas packing and good riddance. The fact The Labour party decided to play to hostility against the poor and evan immigrants is deplorable and one reason I did not vote in the General Election. This sell out approach is also not unconnected to the fall in turn out and fall in left wing parties support more generally. When you keep moving right as a left wing party you become irrelevant to the needs of millions of people. Especially those who depend on redistributive policies.

As for cutting benefits for poor people I would rather argue that it is having a massive trust fund and doging tax like Gideon Osbourne that destroys character. The rich trustfund boys feel no empathy for the rest of the human race thanks to daddies millions.

"They were the jobs right at the bottom of the pile – work in fish-packing plants, work on farms or cleaning jobs in hotels or in government buildings."

Why do idiots like that commentator think doing poverty pay, low status skivvy jobs is good for the poor in some way? Like cold showers for Victorians presumably it is good for some absurd idea of moral fibre? Typical attitude of Tory reactionaries down the ages. The hewers of wood theory. Any Job better than none? We had that theory in the "good old days"; which is why people created Trade Unions and had the General strike. As I said the Nasty party soon lets the mask slip. The Tory is always wanting to turn back the clock to the good old days when we knew our place working 23 hours down the mythical pit or serving the rich man in his Castle. You can shove it mate. All in it together? No. Not by a long way.

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Straus

@Keith

It's odd that you as someone on the left see no advantages to be had from doing low-paid work. What about working-class solidarity, for instance? Indeed, for this reason, if for no other, I would have thought that you might want to encourage benefit-dependants to get off the dole.

And is there not perhaps some lurking racism or chauvinism in your comments about low-paid jobs? I am arguing that more British-born people should be encourage or even compelled to take them up. You appear to be saying that they should be left to foreigners.

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Keith

I think solidarity means we should extend the hand of friendship to people who come to our country to work, study, or enjoy sport or culture; not exploit them to get out the tory vote at the local elections.

In the real world more workers are likely to be unemployed thanks to the right wing austerian economic policy of cuts regardless of their Nationality. Polish and British, Garnaian or French or welsh or scots. Dont let the reactionary rhetoric devide the people of the world "solidarity for ever"!

Also as you know the tory party have no plans to leave the EU or repudiate its treaties. So most Migrants will still have absolute legal rights to work here and more will as the EU enlarges and extends freedom of movement. So why debate a policy the Tories and Liberals have no power to change?

Why no controls on Capital? If Labour markets require a points system where is the points system for savings and bank lending? free markets are let rip and the financial crisis is the result. Regulate the people who actually have impoverished us. And tax then effectively to fund the welfare state.

I don't believe in complelling people to work. It is contary to Liberty. Like compulsary saving. You seem to agree with Stalin if you think work should be compulsary; are you embracing communism?

Straus

I only meant "compelled" in the sense of making the receipt of benefits depedent on their accepting offers of jobs in cases where they are, by any normal criteria, fit for work. They are, of course, always free to take the option of surrendering their benefits.

I am not, by the way, arguing that all immigration is bad or that many of the immigrants who have come to the UK over the past few years have not made a valuable contribution to this country. They certainly have.

The point I am making, though, is that this has had social and economic costs - one of which has been the entrenchment of an ever-growing lumpen proletariat, who are increasingly divorced from any experience of work and the dignity and socializing effects that this brings, even when the wages are not all that great.

Alex

I might well be prepared to accept a 30% pay cut (and at median levels it is probably a lot less than that) if it meant my time became exclusively my own and I didn't have to graft in a stultifying job for 40 hours a week.

If only there was a massive national statistics organisation that collected data on this sort of thing! Then we could answer it empirically! Turns out the unemployed rarely report being happy, are usually poor, and have very high rates of mental and physical illness.

Also, if you're on benefits your time is not exclusively your own. To satisfy people like you, all sorts of things have been invented to fill the time of the unemployed, like filling in forms, queuing in government offices, doing mandatory job searches, and submitting to meaningless "life coaching" and sinister privatised cognitive-behavioural therapies!

Nobody who has lived in the UK since the 1980s can be unaware that unemployment has social consequences; nobody who reads the damn newspapers can be unaware that the unemployed are subjected to an enormous amount of harassment by the benefits system.

Paul Bivand

UK welfare policy has for many years been inclined to revert to the 'less eligible' position - where income is both lower than the lowest paid worker and has additional 'responsibilities' like looking for work and sometimes doing things that feel useless.

Under Labour some of the corner cases where benefits ended up higher than the income of the lowest paid were resolved by adding in-work benefits if you had bigger families, so you were still better off regardless of size of family.

However the 'responsibilities' or 'harassment' (choose your term) have been sufficiently strong for the unemployed (and much weaker, though increasing) for the majority on inactive benefits, that there is a risk in incurring perverse consequences. These include encouraging shadow economy activity and where you have a gradient from outright crime through to the somewhat dodgy.

There are effects from people finding a coping strategy livable - which is why the harassment by the benefits system increases over time. Equally, unemployment tends to increase depression - in the mental health sense - which is why the support includes varying amounts of cognitive behavioural therapy.

One of the main barriers is that people who live close to the minimum do not have resources to take financial risks - and the administration of Housing Benefit by local authorities has imposed very great risks on people taking the sort of short-term insecure jobs that the migrant workers have typically gone into (to start with).

This turns into an argument that the welfare system in the UK is close to the point at which it is not effective because it is too niggardly. Being a bit more generous financially (maybe back to the replacement rate of the 1980s under Thatcher) but making the administration more effective (both technically like Housing Benefit and the support/harassment) could lead to overall gains.

Straus

“This turns into an argument that the welfare system in the UK is close to the point at which it is not effective because it is too niggardly”

Sorry, not sure I follow your logic here. Surely, the idea should be not to make benefits less niggardly as such, but to reduce or eliminate the financial risks attached to the socially desirable option of taking employment when it is offered. That, as far as I can tell, is what Duncan-Smith’s reforms are designed to achieve.

Jim

I think posters are confusing 2 areas of benefits - those on JSA don't get much, and would almost undoubtedly be better off in a job, if they could find one. But factor in the other benefits available to some and the barrier to work is pretty high.

For example a single unemployed man gets JSA. Not much to live for sure. Make him live with a partner and kids and the household income from benefits rises significantly, to the point where a minimum wage job would show little or no financial reward, in return for 40 hours labour.

Labours benefit reforms targeted increasing incomes to families. An admirable intention, which unfortunately has made having children a sort of career in certain sections of society.

Keith

As a matter of fact most welfare spending goes on the elderly, disabled and sick; taking both direct money payment and spending on the NHS. Also the birth rate in developed states is quite low by historic standards. Probably too low for demographic stability; so more poor people should make babies.

If Tories are going to fill up comment sections with their fact free hate fest against the poor, immigrants etc then that devalues the point of comment sections. This Conservative mutual masturbation exercise does nothing for my education or for any casual reader who might pass by wanting to learn about economics or social policy. Try to raise the standards people!

Andy

Jim,

You state: "Labours benefit reforms targeted increasing incomes to families. An admirable intention, which unfortunately has made having children a sort of career in certain sections of society."

Actually, it was considered a career in certain sections of society well before Labour came to power in 1997 (whether or not they made it worse.)

Keith

Andy,

some rich people have large families some poor people do as well. So what are you saying here? only the well off should have children?

Glenn

Lotsa reasons why folks are unemployed, or choose not to work. Not just benefits. There is labour demand, which is pretty fundamental, and as Chris sez individual workers are not able to do any job. They specialise. There are also things like low educational attainment, low skills, health, don't know how to apply for a job, do one or keep one. There's labour mobility too.

Employers actually also make a choice who to employ. They can engage in selection bias themselves.

Also - most unemployment/employment decisions are household decisions, not individual ones.

With benefit levels being very low - I'd say that the lion's share of UE benefit claimants are doing so involuntarily.

Worth remembering that individuals are human beings and not automatons - they will suffer from degradations of skills, motivation, confidence etc over time.

Remember that economics is a behavioural science. People are not always rational.

All in all I'd say that benefits scrounging is probably the LAST thing to worry about - other things to worry about:

1) JOBS GROWTH

2) JOBS where there is EXCESS LABOUR SUPPLY - i.e. in the places where folks need 'em

3) MAINTAINING HUMAN CAPITAL AND PROXIMITY TO THE LABOUR MARKET - simply, the longer we let, say, our 1m youth unemployed stay out of work, the larger the amount of these youth will never work and therefore contribute to a large stock of disaffected workers, unable to work

Less condescension more affinity and constructive action is required too. Blaming the benefits claimants - they are probably the last people to blame. But blaming folks will not solve anything. Need positive, construction action to create jobs, create interest in work and get people into work.

Glenn

I've been reading a lot of development economics recently.

One of the key things about the welfare state and unemployment insurance etc is that it was introduced to encourage workers to specialise - thereby giving them a fallback in case of structural economic change (which has been a regular occurrence for a long time).

Otherwise worker will not specialise, but will engage in a range of low productivity activities.

So in economic terms, the welfare state is there to maintain some labour specialisation and productivity enhancement.

Sometimes we miss all this big picture stuff in the 'scroungers' vs. 'victims' debate, no?

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