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November 09, 2015

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Metatone

Bingo. This is the fundamental problem politics needs to face. Because if you can't link outcomes at least partially to hard work & talent, then people will stop supporting the system.

Matt Moore

Imagine, pre-birth, you are behind the Rawlsian veil of ignorance. Would you rather be born in 1970s Britain or 1990s Britain?

From Arse To Elbow

The best we can tell our children is: "become rentiers". While some juniors doctors will emigrate or strike, others will realise that they are set to inherit a BtL portfolio from their babyboomer parents and can downshift in a few years time.

History teaches us that society does not in fact need to "offer much to even the brightest and most hard-working of its young people". So long as a handful of "success stories" can be promoted, the social order can be maintained: ambitious kids recognise that social mobility is declining but assume that they will be among the exceptions; the unmabitious have already given up.

The revolutionary moment is when general expectations are rising, not falling. As social mobility ossifies, and as people worry about hanging on to what they've got, the status quo becomes easier to defend.

Luis Enrique

if house prices in London were half what they are, how much substance would the rest of this post have? I am presuming you are not really that concerned by upper middle class jobs being a bit less cushy per se.

Matt Moore

"become rentiers" - what barrier to entry maintains the rent, do we think?

Luke Thomas

I think the protestant 'work hard, be successful' trope is almost entirely illusory for a couple of reasons.

Firstly, one's pay tends to be down to the amount of money that rests on you doing your job, rather than the effort you expend doing it. The very highest earners are usually responsible for millions of pounds, even though they are not directly responsible for the earning of it. In part, high pay for executives is a reward for years of work, but doesn't have anything to do with the number of hours those executives work. We know that average FTSE 100 chief executive pay is 183 times higher than the average worker. Do they work 183 times as hard? Do they work 6405 hour weeks? Of course they don't, but the discourse around work and pay would make you believe they do, or that they are party to some exclusive well of skill and intellect.

Secondly, there's a limit to the number of people who can do any one particular job. We can't all be FTSE 100 CEOs, or high flying lawyers because there aren't the positions out there, and nor would our economy and society function if we were. We need the cleaners, carers, secretaries, factory workers, labourers, car mechanics and so on, as much as we need the highest paid jobs.

Remuneration really should reflect the reality of the employment landscape in a society, rather than simply acting as a mirage oasis for the majority of us to stumble towards.

George Carty

"what barrier to entry maintains the rent, do we think?"

The Town and Country Planning Act 1947 (and its successors) of course...

Ben

Do well at school so you can get out. The UK is a rentier paradise. It's starting to eat itself now.

Ben

Also this is just so far behind the curve it's incredible. The social contract between young and old has been getting worse since 1997, when house prices started to rocket.

The UK is going down. The boomers are at the front of the queue in a bank run. You know how you nail on a bank run? You stop paying out to people at the front.

It's pretty sad really that you even post this now. We've had a decade of this.

There is no point working hard in the UK. We have dentists queuing up for "starter homes" who are nearly 40. Boomer bin men live in better houses.

I think I'd sooner have the usual boomer response of all but laughing in my face instead of this too-little-too-late squeak.

Bob

"what barrier to entry maintains the rent, do we think?"
Land is a monopoly. Monopoly is exclusion. So remove the the exclusion. Anyone can live in your house. Or people pay for the externality - 100% land value taxation.

Peter K.

"And if Frey and Osborne are right, things could get even worse as some of these jobs are replaced (pdf) by AI and robots."

I believe it's mostly a function of macro policy, not tech or globalization. Tighter labor markets and the ability to strike among other things, strengthen workers' bargaining power.

The rightwing are more more willing to squander productive capacity in order to keep Marx's reserve army of unemployed filled.

Larry Summers who was once an American version of a Blairite when he was Treasury Secretary under Clinton and advisor to Obama just wrote:

"...U.S. output is now about 10 percent below a trend estimated through 2007. If one attributes even half of this figure to the effects of recession and assumes no catch up on this component until 2030, the cost of the financial crisis in the U.S. is about one year’s gross domestic product. And matters are worse in the rest of the industrial world."

Phil

I did my MA while working in computing. When I told one of my tutors that I wanted to become a lecturer he tried to put me off - "It's not like it used to be, you know. We have *annual reviews*!" He practically shuddered as he said the words. I forbore to point out that database administrators also had annual reviews.

(Happy ending: I'm now a lecturer. We have peer observation, student surveys, disciplinary procedures, capability procedures and two separate annual reviews. We also have quite a strong union, though; the pay and conditions are still pretty good, touch wood.)

aragon

The right wing are discussing this issue.

http://www.wsj.com/articles/has-the-world-lost-faith-in-capitalism-1446833869

http://www.capx.co/a-little-too-much-freedom-has-led-to-socialism-for-the-rich/

https://en.wikipedia.org/wiki/Tim_Montgomerie

http://www.telegraph.co.uk/finance/property/11917816/The-real-ticking-time-bomb-for-the-Tories-is-home-ownership.html

https://en.wikipedia.org/wiki/Allister_Heath

Good jobs like manufacturing e.g Steel, to be replaced by minimum wage retail or zero hour contracts. This has been happening since Thatcher, especially outside London.

George Osbourne is damaging the fabric of society, with his obsession with reducing the size of Government.

I don't know how he can successfully achieve fifty pence aggregate cuts in unprotected departments, the cuts in council budgets, not to mention the ten billion absolute surplus, which would crash the economy.

I have a different vision of the future, nearer to Robert Reich in the US and Fordism, and MMT.

This is not a view shared by the shadow chancellor who believes in balancing the books, with the possible exception of capital investment.

Jeremy Corbyn does not have any answers.

Carlos

I don't mind peer reviews and annual reviews if I'm free to ignore bogus feedback or walk out the and get a new job if the expectations are impossible to meet.

When the corporation is laying of the bottom 5% and there is no chance of another job at your age and pay grade. Annual reviews become cruel and unusual punishment, with months of anxiety, work performance suffers as staff are wracked with fear of making a mistake.

aragon

Ben clearly is too young to have lived through the 70's Oil shocks, people queuing for petrol. The Three day week, the power cuts, the winter of discontent, Thacherism and the miners strike, Denationalisation and deregulation.

https://en.wikipedia.org/wiki/1973_oil_crisis

Or the Three Day Week.

https://en.wikipedia.org/wiki/Three-Day_Week

Not to mention the power cuts.

http://news.bbc.co.uk/1/hi/magazine/6729683.stm

"I remember the three-day week; going to school in groups, all wearing luminous yellow bands on our coat sleeves so that we could be seen in the dark. Then coming home and huddling round the gas cooker for heat. Then there was the heatwave in '76 when we had severe thunder storms, and water shortages. I developed my love of ice cream that year! The winter of discontent caused a lot of disruption through all the strike action but to a teenager who cared for little else but music, fashion and boys, most of the politics just passed me by! I do have fond memories of the seventies, but then I didn't have any worries or responsibilities......
Gillian, Edinburgh, Scotland"

https://en.wikipedia.org/wiki/Winter_of_Discontent

Then the Miners Strike.

https://en.wikipedia.org/wiki/UK_miners'_strike_%281984%E2%80%9385%29

Thatcherism, and the destruction of industries like the Coal, Steel Industry, Cars, with well paid jobs, for the working class.


See the Golden Age of Economics
https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion

Neoliberalism (Washington Consensus) as the dominant political meme, is the problem. There is an alternative.

The consequences was destroying the working class from the eighties. Now the middle class is been eroded, especially if you don't own property.

The regions and the working class suffered long before the middle class.
http://www.telegraph.co.uk/lifestyle/10377807/Well-never-have-it-so-good-again.html

(linked from link from the link by Rick"

"The answer, I think, is this: what is happening to the middle class is happening to 99 per cent of the rest of the population, too. Anyone outside the gilded 1 per cent is seeing their relative position decline. That’s an awful lot of people looking ahead and seeing less, rather than more, on the horizon. And, no matter what class you belong to, that’s not a healthy prospect for anyone..."

It is the 0.1% or even 0.01% who are doing well.

http://www.economist.com/news/finance-and-economics/21631129-it-001-who-are-really-getting-ahead-america-forget-1

"Because the bottom half of all families almost always has no net wealth, the share of wealth held by the bottom 90% is an effective measure of “middle class” wealth, or that held by those from the 50th to the 90th percentile."

[...]

"From the early 1980s, however, these trends have reversed. The ratio of household wealth to national income has risen back toward the level of the 1920s, but the share in the hands of middle-class families has tumbled (see chart)."

Ben

The three day week - which lasted for .... 2 months! And the inflationary period wasn't that long either.

Try 15 years of working for nothing my friend, other than to keep boomers in cruises.

Most of them are looking pretty chubby and happy now. Wish someone would make me walk around for 8 weeks with an armband then a promise of unfunded pensions at the expense of the kids.

George Carty

Bob, while LVT is a good idea, it won't make an unaffordable city affordable as demonstrated by Hong Kong.

In Hong Kong all land is owned by the government (functionally equivalent to a 100% LVT) but it is still one of the world's most unaffordable cities.

The only real route to housing affordability (short of going the Singapore route of putting more than half the population in social housing -- the UK historically maxed out at about a third) is unrestrained sprawl, as practised by most non-coastal American cities.

Incidentally, why does red-state America still have big problems with poverty and racism, despite being less afflicted by land rent than almost anywhere else in the developed world?

aragon

Ben,

If you are in the bottom 50% welcome to your life, as the economist article makes clear, you will never have any net assets.

Some have done well out of Housing, but not the bottom 50%. It's not the go on cruises, but the have Yachts, that are the issue, the 0.1%.

The Economic consensus changed in the early 70's. so that is 45 years of relative decline for the poor in the West.

George Carty
A LVT is not a magic wand, but it does have the potential to distribute wealth more evenly.

Of course we need something that addresses the issues more quickly, and no building more houses, while necessary is not the solution. But the Government deliberately inflates house prices to benefit the top (currently) 63% of people who are home owners, and has done for decades.

Yes, Ben this does favor the older generation who tend to be home owners, only about half of them.

Like Hong Kong, many people already live in shoe boxes in the UK. (Half the floor area of the Netherlands on average).

It's the distribution of wealth that is the issue, and London and the South East, have much more nominal wealth than the regions.

George Carty

Incidentally, I wonder how much the post-1970 "rise of the rentiers" has been enabled by the gradual environmentalist hijacking of left-of-centre politics?

Restricting the supply of building land by Green Belts and restrictive planning laws is the biggest example, as is the anti-car campaign (which increases the price of property in locations well-served by public transport) but the green craze for renewable energy also benefits three groups of rentiers at the expense of the general public:

1) Rural landowners, who are paid to erect wind turbines or solar panels on their land
2) Oil companies, which sell the gas which has to provide "back-up" (at least 70% of the time) for the unreliable wind and solar power
3) Commodity speculators in the City, who benefit from the increased volatility of energy generation.

Perhaps the strength of the North-South divide is also rooted in the Town and Country Planning Act, as the actual productive industries in the North inherently needed actual space in which to operate, and were thus far more vulnerable to high land prices than the essentially parasitic financial and bureaucratic activities in which London and the South East specialized, and which have minimal land requirements.

Ben

aragon - you are wrong. For the young even if you earn a top 10% wage you are stuffed. Like I said a dentist queuing for a starter home aged 40.

Only the rentiers are living it up along with boomers on unfunded pensions.

gastro george

I'm sure that the 1% are rubbing their hands with glee at the last two comments. Yes, let's blame it all on the greens and old people.

George Carty

My argument is that the LEADERS of environmentalist organizations wanted to be lifestyle protesters rather than getting productive jobs, so they got the 1% to pay them for pushing policies ostensibly to "save the planet" (but really to enrich the 1% further).

And if house prices hadn't inflated so much due to urban containment, the boomers would have had a lot less equity to withdraw in the first place, wouldn't they?

gastro george

I think that you and Ben are confusing correlation and causation. Yes, some landowners are getting rich on green subsidies, and there's no doubt that *some* boomers have profited as house owners. But "the system", or whatever you want to call it, will always reward asset owners, because that's what the 1% have the most of and seek to preserve.

You need to look at each issue on its own merits. Green policies are good for other reasons. Housing as a complete mess for myriad reasons.

Pointing fingers at greens and the old does nothing in that context, apart from providing a media circus that the 1% will be quite happy to see continue, as it distracts people from more important things.

George Carty

Protecting the environment is certainly a good idea, but it seems to me that the big green NGOs push a lot of policies that are far more effective at enriching rentiers than they are at protecting the environment.

For example , if we were really serious about fighting car dependency we'd essentially have to reconfigure our towns and cities along more-or-less Japanese lines, with most people living in flats clustered around train stations. And the only way such flats could be built affordably would be either as part of New Towns built on rural land acquired at rural prices, or by the government compulsorily purchasing appropriate sites (ie not peripheral sites with poor public transport access, which far too often were those actually used for council flats) at far below market rates in order to build tower blocks on them.

Instead we get Green Belts and other measures which do not make carless living easier, but which do massively drive up the price of housing. Perhaps those greens who were not on the take were still lying about the mechanism by which they expected their policies to work? Maybe their real aim was not to reduce vehicle miles travelled but to price people out of having families (but they couldn't mention a eugenic aim of this kind in public)...

And as for energy policy, landowners pocketing subsidies are actually small beer compared to the oil companies and City speculators. The corruption of environmentalism by oil money has a long history -- it started in California when the Sierra Club (up to that point an aesthetically-motivated organization similar to to today's anti-wind-turbine campaigners) was bankrolled by oil interests to fight hydroelectric dams and thus clear the way to sell natural gas as a fuel for electricity generation.

Mandating that utilities take wind or solar electricity whether they want to or not (and thus forcing other generators to shut down until the weather is no longer playing ball) is probably the most effective policy that Big Oil/Gas has to kill competition from baseload generators such as coal and nuclear.

Ben

George - I agree, I want to hang the boomers and the rentiers out to dry. And *not* in that order.

Dain

It seems denouncing inequality and critiquing the Horatio Alger myth is in vogue. At the same time, complaining about your OWN lot signals "I'm a loser" and is very much unfashionable. At least in the US.

I'm not sure how to square this circle.

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