The blog:
February 22nd, 2012 by Patrick Armshaw
Tesco has so far born the brunt of the public oucry
By now we’ve all heard about the workfare scandal: as part of a reform of jobless benefits, tens of thousands of job seekers have been forced to work for organisations (non- and for-profit) for free or lose their Job Seekers Allowance. The backlash has been intense, to put it mildly. While the scheme does have its defenders, both inside and outside the government, the outcry has been vigorous enough that several companies and charities, including Waterstones, Sainsbury’s and Marie Curie Cancer Care, have pulled out, Tesco (who have so far born the brunt of the public fury) has asked the government to alter the scheme to make it voluntary, and the British Chambers of Commerce have warned that the furore may ‘undermine‘ work placement schemes. Defenders argue that this scheme, and others like it, is essential for getting work experience to the unemployed, making them more employable when hiring eventually recovers; critics argue that it amounts to slave labour on the public dime. So how should we be thinking about his brouhaha? Is this really a battle between Economics and Justice?
Actually, it isn’t! Workfare is not simply unethical, it is a fantastically counterproductive programme if our goal is to help the unemployed. To see why, we need to talk about what economists call the substitution effect. The general idea is simple, and lies at the heart of market behaviour. Consider tea and coffee. They both are hot drinks that provide a nice little pick-me-up when you drink them. They are also substitutes for each other: if your local Prêt is out of tea you might buy a coffee, and vice-à-versa. If the price of coffee suddenly drops (because of a massive increase in the world’s coffee supply) you would expect the price of tea to drop as well, as consumers drink more coffee and less tea. This is also how market competition is supposed to keep prices low: if you and I both sell the same shoes, consumers will most likely buy the ones that cost them less. And this effect also occurs in labour markets – employers will pay the lowest wages they can that still allow them to attract enough workers. And if companies can choose to hire people to work for nothing, there is no earthly reason why they would choose to pay them instead – unless, that is, the PR damage is so great as to make ‘free’ labour unattractive.
But lower wages and higher unemployment are not the only problems with his scheme. After all, the shelf-stockers a Tescos still have to eat, and someone has to pay them. Under the Workfare scheme, that someone is the rest of us. ‘But’, you might argue, ‘we’re paying them anyway! Why not make them work for it?’ An excellent question, you clever reader! In fact, that’s exactly what the government should be doing – only instead of subsidising free unskilled labour for corporations, how about actually giving jobs to job seekers? We could hire the unemployed to build infrastructure, such as railroads and bridges, or to teach our children, or police our streets, or do any of the things that the coalition is eliminating via cuts and misguided austerity. It is one of the bigger ironies of austerity that every government worker thrown out of work ends up on unemployment – Workfare compounds the problem by replacing hired workers in the private sector with forced labour, and all at cost to the taxpayer.
So what of the claim by defenders of Workfare that it’s better for the unemployed to have experience on their CVs, even if only for 6 weeks at a time? Won’t Workfare make the unemployed more employable, or a least keep their skills and work ethic from deteriorating? There is some force to this argument – the ‘scarring’ effect of long term unemployment is real, and has been widely studied. The problem is that lack of experience isn’t what’s preventing people from working – it’s the lack of jobs! If companies were having trouble finding experienced workers we’d expect to see wages being bid up as businesses compete for workers – but this is precisely what is not occurring. Wage growth is well below the rate of inflation, meaning that in real terms wages are shrinking. In an economy where there are plenty of jobs but not enough experienced workers, this programme might make sense. But in Britain today it amounts to little more than a modern workhouse.
At heart, the effect of the Workfare programme is to use taxpayer money to pay private sector wages – a gift from all of us to Tesco and other major employers. Companies don’t hire out of charity – they are in business to make money – and the jobs they are staffing with ‘free’ labour would have to be done anyway. Workfare undercuts actual job seekers, redistributes wealth from the middle classes to corporations, and offers little benefit to those caught up in it. The protesters are right – this is a bad policy on the merits and should be scrapped. It’s time for the government to focus on increasing demand and putting people back to work – after all, the only way to end an unemployment crisis is to end unemployment.
February 22nd, 2012 by Sam Hargreaves
Where the Action Happens ©UK Parliament
When you start writing round up blogs about the weekly contest in the House of Commons, known as Prime Ministers Questions, you expect to be writing about a variety of topics from defence to transport policy.
Unfortunately PMQs has been dominated by the health reforms for yet another week, leaving little in the way of policy to be examined.
This week however did bring something new to the debate, a dominant Ed Miliband.
Once the tributes to fallen service personnel and to the Times Journalist who had lost her life in Homs had been made, the Commons reverted to it’s rowdy confrontational nature.
Miliband, when he first came to PMQs, was completely dominated by Cameron who could bully him over the dispatch box, many Labour members were openly wondering whether they should have picked the more experienced brother.
The health reforms have seen Miliband grow in confidence and ability and he has managed to keep Cameron on the back foot, forcing him to re-use answers. This may not seem important to the casual viewer but for a prime minister eager to get positive quotes in the papers, it is highly frustrating.
Labour shouldn’t be popping the champagne corks, or a suitable left wing celebratory drink just yet. Miliband may be dominating the Prime Minister over health reform but he is yet to prove himself on other issues. Cameron faces a double handicap when health is debated, the first is appalling media job that the Health Secretary, Andrew Lansley, has done. Secondly the Conservative party has for years attempted to shake the idea that they ‘can’t be trusted’ with the NHS. When the debate finally moves on from health we will see.
The highlights of the half hour:
The Speaker, John Bercow, continuing his run of keeping balance with dry humour pleading with MP’s to act ‘tranquil and statesman like’ he may have to apply a firmer hand if he wants to bring the commons into line.
Peter Bone MP has yet again referred to a discussion he was having with ‘Mrs Bone’ in one of his ‘story like’ questions. It concluded with his 11 year old son, who it seems has an interest in counter-terrorism policy, asking whether Nick Clegg was a ‘Goody or a Baddy’. The Bone family must have very interesting discussions over breakfast.
Follow @catch21p every week for our #PMQs tweets.
February 21st, 2012 by Saira Khan
Mark Zuckerberg's original Facebook profile, niallkennedy ©
Want your fair share of Facebook? Think twice.
Earlier this month, Mark Zuckerberg, CEO of Facebook, announced the social network’s Initial Public Offering. Facebook is to issue shares to the public with a valuation of $75-$100 billion. However, this valuation is based upon an optimistic growth path. Many people may jump into this investment purely because it is Facebook. However, it is important to consider whether public ownership of Facebook will negatively impact its success and whether it is, in actuality, a profitable investment.
Will Facebook continue to grow?
At first glance, the IPO looks to be successful, with Facebook seeking 27 times revenue, or 100 times earnings, and generating $3.7 billion last year — 88% up from the year before. But this growth is unsustainable. In developed countries, such as here and the USA, everyone who has the potential or will to be on Facebook is already on it. Facebook has 845 million monthly active users, worth approximately $4.39 each, but could see a decline in new users. The company has reached its peak in these regions and its growth will soon become negatively exponential. Furthermore, any growth it is experiencing is coming from developing countries where other companies are less keen to advertise due to consumers’ lower spending power. No advertisements means no revenue growth, regardless of any increase in users.
Will other up-coming social networking websites be a threat?
There is increasing competition from companies such as Google +, who now seek to ride the social media wave. Some countries have created their own versions of Facebook which are more popular locally, such as Russia’s Vkontakte and Japan’s Mixi. New platforms are trying to tempt away potential Facebook users, limiting its ability to extend its popularity globally. Moreover, Google created a more efficient form of advertising with its targeted search innovation, earning itself $9.7 billion just 15 years after its founding – we have yet to see such a financially beneficial innovation in Facebook of late. Half of its users operate the social network on mobile devices, which creates zero revenue for the company. Facebook needs to keep up with the innovate ideas of other companies.
Will this affect Facebook users’ privacy?
Of concern is that it is in advertisers’ interests that users have less privacy in order to target specific people with advertisements relevant to their interests. The majority of the public is against such information being shared with companies. But should it really bother people that they are, for example, one of a hundred thousand IP addresses with similar characteristics – from a certain age group, interested in engineering developments? Should it bother them that engineering-related advertisements get sent their way as opposed to something they are uninterested in? An individual is practically anonymous as regards their relative importance in the volume of information companies are collecting and a company’s actual interest in knowing about a person’s personal life. Of course, there is the argument that information or names may be passed on to third parties. But those who are so greatly concerned about their privacy should abstain from using or putting information on Facebook to begin with.
Will Facebook change due to a new corporate culture?
With a relatively small percentage of the company being sold, shares are more likely to go to institutions than ordinary members of the public. There is apprehension over whether an addition of possible multi-millionaires into the company may dilute Zuckerberg’s management into a more corporate culture. Mark Zuckerberg is known for placing his users above advertisers and his initial low regard for making money. In contrast, institutions have a view to make profit and may seek aggressive means to achieve this. However, public market shareholders will, in actuality, have very limited control and Zuckerberg essentially has veto power over investors, controlling 57% of Facebook. Moreover, he has thus far proved his financial prowess so investors should have little impetus to seek change in the company. Zuckerberg and employee shareholders also want to see a growth in the value of their shares and are far from likely to take shareholder money and use it for their own purposes. Nonetheless, there are new pressures to continue its high growth path with Facebook no longer being a private company, and Zuckerberg may find himself compromising Facebook’s essence for the interests of his investors.
For this resolution to be worthwhile and share values to grow, Zuckerberg must either realise higher advertising sales and risk disillusioning users by changing the user-friendliness of Facebook, fundamentally innovate Facebook to thwart up-coming competitors, or extend Facebook’s reach beyond its own platform, as Google has done in the past. One thing is for sure; Facebook needs a breakthrough at some point in its lifetime for this IPO to meet expectations further down the line.
February 20th, 2012 by Glenn Coleman-Cooke
Head of the Student Loans Company Ed Lester
I must admit that at first glance, it does seem a bit cheeky. Many of us, myself included, were probably not aware that as a senior public servant, you could simply register yourself as a company and drastically reduce your tax liability, and there is certainly something unpleasantly contrarian about people like Ed Lester, head of the student loans company, who are almost certainly fighting for more taxpayers money for their department year on year without contributing as much to those funds as others who earn the same do.
Attempts at damage control on this, to put it mildly, controversial story have been less than convincing. The best that Chief secretary to the treasury Danny Alexander could come up with was that he was “not made aware” of the tax implications of the contract agreed with Mr Lester, one of several public servants implicated. This plea of ignorance is however a rather self-defeating strategy, as it does somewhat beg the question of why we have a man lacking in basic knowledge of the taxation system as second-in-command of our nations finances.
Much of the public frustration with this policy seems to come not from the notion that it is inherently bad to try and reduce ones tax bill ,after all, how many people do you know who pay more tax than they are legally obliged to, and how can someone be fairly criticised for working within the rules? Instead it stems from the fact that most of us do not have the luxury of such an option ourselves. Be it for political reasons- such as a belief that it is unfair that individuals must contribute such a large chunk of their income to for state spending, most of the results of which they don’t benefit from- or simply for financial reasons- such as a belief that coping with the recession might be easier if someone from the exchequer didn’t figuratively come round, pick you up and shake you by the ankles to see what falls out every time you make or spend any money- virtually all of us would like to reduce our burden if we could, but having to take our money as it comes, we cannot.
While this is galling enough for those in normal jobs who have their taxes deducted from their wages without any opportunity for “efficiencies”, it seems to be more so for those who find themselves in a situation in many ways similar to that of these public sector bosses. Genuine freelance consultants have drawn attention to the fact that when they attempt the same perfectly reasonable tax arrangement, they often have special legislation, known as IR35, used against them, which states that if their skills are provided “in a way deemed to be the same as employment” then they must pay a higher tax rate.
Those who criticise anyone who wishes to pay less tax constantly use the phrase “fair share”, knowing full well that it is one of those loaded political phrases that it is near impossible to argue against if you accept it’s prima facie meaning, like “progressive” on the left and “common sense” on the right. They always use this phrase however under the blithe assumption that paying ones fair share always means paying more, never less, and that no matter how much one contributes to the national coffers, even if it is many times the sum of the value of the services and facilities received from the state in return, it is not a fair share unless ones pipsqueak. The issue with Mr Lester, in my view, is not that he is failing to pay his fair share, for, while I do not have exact figures, I feel confident that has paid far more money than the average into the public purse, but rather that only a small group of people like him are able to ensure that they do not pay (too much) more than their fair share.
In light of this story then, I would suggest that the rallying cry of young people everywhere, in the face of a system under which most get far less out than they put in, should not be “more tax good, less tax bad”, but rather the truly liberal and democratic “equal tax avoidance for all”.
February 20th, 2012 by David Christie
The European Court of Human Rights in Strasbourg. Image from thethrillstheyyield's photostream
Home Secretary Theresa May is set to travel to Jordan to continue talks on the deportation of the extremist cleric Abu Qatada. The Home Secretary aims to obtain guarantees that evidence extracted through torture will not be used in any retrial of Qatada, who was convicted in absentia by a court in Jordan in 1999, on a charge of conspiracy to carry out bomb attacks. Much of the media commentary surrounding this case has focused on the issue of British versus European sovereignty, and has expressed exasperation at the fact that the European Court of Human Rights is preventing us from deporting Qatada. The debate is being framed as one about European institutions interfering in our affairs (with the ECHR frequently being confused with EU institutions, when it is in fact an institution of the Council of Europe, which is completely separate from the EU). However, the central issue in this case, which is opposition to torture, has frequently been sidelined or ignored.
Much of the media commentary has barely mentioned any concern about the dire human rights situation in Jordan, instead expressing a view on Qatada’s case which goes along the lines of ‘deport him anyway, and to hell with the consquences’. However, this view has a sinister implication. If you are happy to deport Qatada, and are not bothered about the fact that evidence obtained through torture might be used in his trial, you are effectively saying that we should not care when torture is used to obtain the conviction of a suspect. This way of thinking is potentially totalitarian, or at least amounts to collaboration with totalitarian methods.
The ECHR now appears to be backtracking slightly, as Thomas Hammarberg, the Council of Europe’s commissioner for human rights, recently said that Qatada could be deported to Jordan as long as the ECHR is given ‘watertight guarantees‘ that evidence extracted through torture will not be used in his trial. However, it is unlikely that the Jordanian government will be able to offer guarantees which can truly be considered ‘watertight’. This is because the fact that a government tortures people in the first place is a strong sign that it is unscrupulous, which further suggests that it is also untrustworthy. There is also no mention of a guarantee that Qatada will not be tortured himself, which is also a possibility.
When thinking about this case we should not have any illusions about the kind of person Abu Qatada is. He used to be described as Bin Laden’s right hand man in Europe. He is a dangerous and obnoxious extremist, and the best place for him is a prison cell. Therefore the ideal solution would be one in which he can be imprisoned, but only after a fair trial, and in a country which has a respectable human rights record.
However, if there is not enough evidence to charge him with a criminal offence, secure a conviction and send him back to prison in the UK, and if it is not possible to deport him to another democratic state instead (according to this Observer article from 2002, he is wanted by police in numerous countries including the US, France, Germany and Belgium), then there is still a question mark over what to do with him. Should we still let him stay here, in full knowledge of how dangerous he is? If one accepts that no human being should ever be subjected to torture, the answer is yes. Opposition to torture is one of the most fundamental principles of liberal democracy. We should not be willing to collaborate with torturers, even if we reduce our own security in doing so. Furthermore, the media should recognise that this is a genuinely difficult case which involves fundamental moral principles, and stop trying to turn it into an opportunity for making a cheap Eurosceptic point.
February 19th, 2012 by Ryan Austin
Religion, state and society. Three elements that have never quite meshed in the constantly adapting modern 21st century. But Baroness Warsi’s statement for Britain to stand proud in its faith, poses the question ‘has secularisation gone too far’?
As the Muslim Conservative Party Chairman, Baroness Warsi, visits the Vatican for a historic meeting where both Europe and Britain have been reminded to become “more confident and comfortable in its Christianity” Specifically, Warsi states that religion is being “sidelined, marginalised and downgraded in the public sphere.” She goes further by declaring “”You cannot and should not extract these Christian foundations from the evolution of our nations any more than you can or should erase the spires from our landscapes.” She states that Christian roots “shine through our politics, our public life, our culture, our economics, our language and our architecture”
As Britain faces a sinking social depression, a deepening economic recession and further austerity, Britain’s need for religion has grown only further. But I’m not talking about the carefully packaged PR ploys of glistening cathedrals, polished services and the robed Priests, I’m talking about the sense of purpose, hope and identity that comes with religion.
Religion is not an entity because it’s always been there, rather it’s there because the people are there: the faithful. Whether you class yourself as religious, Christian, secular or humanist, Britain is Christian. From our head of state the Queen being Supreme Governor of the Church of England, to the Bishops that sit in the House of Lords, Christianity is saturated in both our society and state. But recently it’s become wrong and almost strange to admit that. As secular organisations protest against such customs as swearing oath before God in court, things have undoubtedly gotten out of hand.
Religion is necessary. Not the tradition, the customs or the tourism. But rather the pragmatic togetherness, unity and sense of hope it enables. When the state stop caring the Church will throw their hand out, when the homeless lay helpless the Church will bring hope and when the feeble crawl hungry the church will feed them. The church has been the beacon of hope to many in times of difficulties and even in the 21st century this has proven unchangeable.
However, rather than unproven rhetoric, the Cabinet Minister’s concerns have not gone untested. Recently, the High Court has ruled that Devon Town Council was acting unlawfully after designating a prayer slot prior to council meetings. However, the most striking aspect of this case is not the stripping of council tradition, but rather the fact than even so the council voted by a majority two consecutive times to keep the prayers, the High Court ruled against it and instead favouring the views of the National Secular Society.
70% of people in Britain identify themselves as Christian. And it’s clear that these people and the extending majority even if not exclusively aligned with Christianity, such as Baroness Warsi, want Britain’s Christian, cultural and religious heritage to stay. However the point made by Councillor Clive Bone that “freedom from religion is also an absolute right” is one where controversy arises over where the beliefs of the majority are abandoned purely for the minority. But the point is also highly subjective. It leads to the question of what does a nation free from religion look like? Could we see the demolition of churches? Stopping the teaching of Christmas in schools? Or removing the phrase ‘God save’ from the national anthem? The issue is where does it stop, and how far will it go.
Often a battle between faith and secularism, both government and society find it hard to discover a line that both satisfies those whom wish for a non-secular society and those who fundamentally believe that religion should influence society from government protocol.
What secularists must learn is that they do have freedom; the freedom to ignore. What harm could possibly arise from pre-meeting prayers? What harm could arise from an individual publicly expressing their loyalty to Gods truth before a court? And what harm could possibly arise from a society that is rich in religious identity, united in difference and faithful in hope? Religion shouldn’t be something people are ashamed of. Whether its the cross or the burka, they are all an expression of faith. They are physical manifestions of one’s faithful mind. And as much as secualrists will aim to strip both public life and the state of all signs of religion, one thing remains that can nenver be moved, ignored or forgotten: the faithful. Even in a Britain that has no churches, council prayers or court oaths, the religious will still stand. Secularists will try and fail in ignroing the cross around the checkout girls neck, the bible wrapped proudly under the early commuters arm and the sweet sound of carol singers in winter.
The fact remains that Britain is democratic and through democracy the many are represented. At present ‘the many’ are religious. But we also live in a democracy that draws the line between enforced Christian tradition and liberal followings of faith. Although there can not be any confusion in Warsi’s message. She aims not to see the authoritarian enforcement of religion but rather a re-patronage of faith in public life. She wants religion to be granted the respect to represent the views of the many at the governments top-table, not to directly manipulate nor enforce faith based legislation.
I’m proud of my religion. And most importantly I’m proud of Britain being religious. Not only in Christianity but in a multitude of faiths. Because faith brings hope and hope brings common purpose, unity and an identity that no one can destroy.
February 18th, 2012 by Natalie Hodgson
On the 15th of February the Office for National Statistics (ONS) released its latest figures for the labour market and with it a couple of Guardian articles spreading doom and gloom over the state of the labour market. What do the statistics say and do we really need all the doom and gloom?
A mini foreword; all the statistics I will be using are coming from this list of data, which is part of the latest figures, and the data will be from October to December 2011 and percentage shall be rounded up to 2 decimal places. I’ll try not to make this dull but I can’t promise anything, there will be a lot of numbers to read.
So, we have 40.184 million people between 16 and 64 years old – of this 2.644 million are unemployed, which is 6.58% of the working population. While this may see like a large percentage, this is much smaller compared to the number of the working population who are inactive 9.286 million. Now where do those in the 16 to 24 year old category fit into this? Well 3.631 million – 12.85% are employed, 1.038 million – 39.28% are unemployed and 2.632 million – 28.34% are inactive. So yes, the 16 to 24 age category are bearing the worst of the unemployment since we alone count for almost 40% of the unemployed working population.
Not the prettiest of pictures, but if it helps only 14.22% of the 16-24s are unemployed, 36.05% are inactive and the rest at 49.73% are employed. Though you might be wondering why most of us are considered economically inactive, well one reason for this inactivity is full time education – 3.057 million are in full time education such as college and university though some will be working at the same time. Even so, unemployment has risen from 12.48% back in October to December 2009 and the inactivity has dropped from 36.15% in October to December 2009.
Overall though there is a reason for doom and gloom because even with further education getting a job is still rather difficult, being stuck between a rock and hard place – needing experience to get a job but needing a job to get experience. There are apprenticeships – though I’ve not heard a glowing review about it, seems like they don’t lead to jobs and are things like stacking shelves (please correct me if I’m wrong). I’ve heard from a friend some jobs advertised on job websites don’t exist – she applied for a job and the same job came up again after closing, and another friend is considering working for free for a year in order to get the experience required to get a job.
On a brighter note there are jobs out there; 476,000 between November and January 2012, though they may not be the ones you would like.
February 18th, 2012 by Patrick Armshaw
Wolfgang Schaeuble, German Finance Minister
With the Greek economy continuing its freefall and violence and destitution overtaking Greek society, it may be time to ask what they could be doing differently. After all, if there’s one thing we hear repeatedly from the sages and wise men running the European economy, it’s that Greece simply has not done enough to gain the trust of the capital markets and of the Troika. German Finance Minister Wolfgang Schaeuble expressed this sentiment pungently by declaring that Greece must “do its own homework to become competitive” – although clearly he and I had very different forms of homework in school. I, for instance, had to revise maths and write essays. Apparently, Schaeuble’s teachers preferred that he sell all his pens and notebooks before preparing for exams, but who am I to argue with German educational practices? Greece, it is clear, is a terrible student of Neoliberal orthodoxy, its people simply too obsessed with things like eating and educating their children to focus on what’s truly important – making sure that French and German banks get their money back with interest.
So if Greece is the class dullard, who are the star pupils? If Greece’s problem is that they are unwilling to suffer enough to restore competitiveness, then who among the European periphery has done things right? There are three main candidates for this honour – Ireland, Portugal and Latvia. In all three cases, austerity has been enforced without respite – taxes have been hiked, spending curtailed and debt payments made on time in order to please the Troika and get their economies back on a sound footing. Unfortunately the main lesson these countries seem to have been learning is that they (and their peoples) are simply not poor enough.
Take Ireland. After the collapse of the real estate market many Irish banks found themselves in a double bind: home-owners couldn’t afford to repay their mortgages, which meant the banks couldn’t afford to repay their debts to financial institutions on the continent. The previous Fianna Fáil government then effectively nationalised these debts – putting Irish taxpayers on the hook for bailing out the banks. This led to an IMF bailout in November of 2010, internal devaluation, high unemployment, and the loss of almost 20% of GDP between 2008 and 2010. And how is Ireland doing these days? Its economy is growing at a rate of around 2% per year – a rate at which it should only take a decade or so before Ireland is back where it started. And that assumes that exports, the source of this growth, keep growing – a very dicey proposition as Europe looks set to enter another recession.
Or take Portugal, whose Neoliberal studies have been dedicated and exacting. Again, massive austerity has been applied in an attempt to decrease the deficit and pay off debts, and yet the situation keeps deteriorating. The ratio of government debt to GDP – the primary measure for whether a state is able to repay its loans – has actually risen under austerity, from 107% to an expected 118% next year. This is not because the government has been borrowing ever more money as much as because austerity is making the economy shrink: unemployment recently (and unexpectedly) jumped by over 10% (from 12.4% to 14%), meaning that an extra 90,000 people are not working, increasing spending on unemployment benefits and decreasing tax revenues. Even the Portuguese government’s estimate that the economy will contract by 3% this year looks increasingly optimistic, and fears are growing that Portugal too will need another bailout.
Finally, we have Latvia. Unlike Ireland and Portugal, Latvia is not a member of the Eurozone; however, it does peg its currency to the Euro, and it is committed to not letting its currency depreciate. Since this precludes regaining competitiveness via a weaker Lat, Latvia is similarly forced to take a hatchet to its economy to drive down wages and prices. The results have been as striking as they have been terrifying. After losing almost 24% of its GDP between 2008 and 2010, Latvia has seen unemployment jump to 20% before falling back to a less-horrifying 14.4%. The improvement is less impressive when you consider that part of that reduction is due to an “exodus of biblical proportions” where about 10% of the workforce has fled the country. The lesson? If you want to bring down unemployment, just get rid of the unemployed.
What’s often lost in the Sturm und Drang about Greece’s failure to do everything that the Troika has demanded is that it hasn’t been for lack of trying. The depression in Greece is now on track to become one of the worst in modern history – GDP is already down over 16%, and Uri Dadush, a former World Bank official now with the Carnegie Endowment, predicts that that figure may rise to 25 or 30% in the next few years. Greece is rapidly approaching the point where there is simply nothing left to cut – and the social consequences are increasing to the point that suicide rates jumped 40% in the last year, 21% of the country is threatened by poverty, and political radicalisation has led to a resurgence of far-right and far-left parties before the upcoming April elections. If Greece had a lesson to learn, surely it’s learned it by now?
The problem is that it’s not Greece which has failed to do its homework – it’s the Troika itself. If it had, it might have recognised that austerity in a recession is a recipe for disaster: it failed in 1997 during the Asian Financial Crisis (as even the IMF realised), it failed in Argentina in the 2000s, and most of all it brought the collapse of the global economy in the 1930s. Perhaps the biggest lesson that the Troika has forgotten comes from the history of Germany itself: after all, it wasn’t the hyperinflation of 1919-1923 but the austerity and deflation of 1930-1932 that brought Hitler to power. Then, as now, the emphasis on austerity, the rise in unemployment, the cutbacks on wages and social spending, and the determination of technocrats to circumvent democracy ended up eroding political support for centrist and mainstream parties. Schaeuble might want to study a bit harder himself before handing out lessons to the rest of us.
February 17th, 2012 by Annie Tippell
Stop me if you’ve heard this one: student walks into a bar in 2011. Student owes government roughly £24k after taking out full tuition and maintenance loans. Student walks into bar in 2015. Student owes around £27k in tuition alone, and about £45k with maintenance.
Myriad accounts of the tuition fee changes are floating around the interwebs, and you’d have to have spent the last few years on Mars not to know that from this September, universities will be allowed to charge up to £9000 a year for their courses.
I don’t want to re-hash the same old arguments and counter arguments. We’re all aware that one side (Conservatives, redbrick universities, the Student Loans Company) sees the changes as a pretty sweet deal. There are three clear principles to the new system:
- students will not have to pay back their loans until they’re earning £21k
- payments will be made at a rate of 9%
- after 30 years, loan will be written off
Just go with me on this for a minute. If you are a student whose course commences in 2012 under the new £9k fee boundary, and end up earning the national average wage, over your working life you’ll pay back around £33000 and the remaining sum will be written off. Clear? Crystal.
Here’s where my conviction starts to waver. In this instance, we’re basing the repayment on the value of the pound and the levels of inflation in 2011. So the £27000 in tuition fees is subject to a top-up of £6000 in real interest, which accumulates once the student hits the earning threshold. But if the same student enters a profession like, say, teaching, over the course of their employment they will have paid back £36000 over the course of 23 years (7 still to go – they’re only 43 years old at this point). Have a look at the BBC’s calculator for some massively flawed sums and incomplete information.
David Cameron himself has suggested that students simply ‘do not understand’ the altered system. Let’s not play silly buggers, DC. When did not agreeing become synonymous with not understanding? As per usual, the PM leaves us stuck between a rock and a crazy place.
The bottom line, and the massive counter argument to the Coalition’s education reforms, is that it is not as though the course that once cost £3000 in 2008 has undergone any radical alterations. Your ethics class isn’t suddenly going to be taught by the re-animated corpse of Ghandi. Thomas Pynchon hasn’t been hired to teach Creative Writing. Steven Hawking hasn’t yet discovered how to harness a worm hole and jump between all the physics departments in Britain without losing any sleep (why am I now thinking about Quantum Leap..?).
On a hilarious side note, the New College of the Humanities, the warped brainchild of A.C. Grayling, attempted to draw in students clamouring to be taught by the modern media darlings (read: attention whores) of the Arts. Unfortunately, Grayling was busted for pilfering the syllabi of Royal Holloway, University of London. RHUL’s Principal was less than amused.
Funnily enough, the powers that be are not suggesting that you get what you pay for. Fees have been raised to subsidise the crippling cuts to education across the board, and graduates have been told by David Willetts (so-called Skills Minister) that they ‘need to make a contribution’. This, from a man to whom expenses calculations are things done by other people, in a country that spends £900m on about two weeks of sport. But I’m still going by the old adage that if a dog can do it, it’s not a real sport.
So far, so mind-numbingly ridiculous. On Thursday, Downing Street announced that it would abandon the LibDem initiative that would levy a 5% charge against any early repayments. When you’re down, you stay down. If you are in debt, you stay in debt. It’s also unclear whether universities are planning to penalise any students circumventing the loan scheme entirely. Students from well-off households that can afford to pay the fees upfront can happily slip into the 2012 UCAS stream while application numbers fall.
On that note, let’s hear it for Callum Hurley and Katy Moore, the 17 year old students who took the government to the high court with the claim that the rise in fees constitutes a breech of the human rights act for the aforementioned reasons. Unfortunately they lost their case, but ‘they are pleased with the recognition that the government failed in its duties to properly think through the equality implications of its decision’.
The entire fiasco has been rephrased, recycled and regurgitated for well over a year, and any final, optimistic rallying cry from me will sound largely redundant. But take Callum and Katy’s tenacity as the standard against which all those sitting at home, looking at the computer and grumbling about fees and living costs and unfairness and depravity, should measure themselves. Two students make a stand. The only joke is our apathy, should we fail to follow their lead.
Tags: A.C. Grayling, bbc, Callum Hurley, David Cameron, David Willetts, Downing Street, Education, Evening Standard, fee calculator, Guardian, high court, Katy Moore, RHUL, Royal Holloway, telegraph, Tuition fees, UCAS, University, University of London / 7 Comments »
February 17th, 2012 by Jack N W Ellis
© Scott Bauer USDA
In a sense, we all cast votes on the issues that matter to us in ways that go beyond putting our mark on a ballot paper. In addition to the formalised process of elections, we make moral, political and economic choices all the time during the course of our everyday lives.
One example is brand loyalty. Any brand that continually underestimates the power that its consumers hold over it does so at its peril.
Apple, one of the world’s leading brands, got a warning of this recently when it emerged that workers at one of its Chinese suppliers’ factories had been poisoned while assembling its products. This followed a spate of apparent suicides of factory workers at another supplier’s plants in 2010, as well as allegations of using child labour. Consumers were moved to action and 155,000 of them signed an online petition, calling for Apple to do more to make sure that workers throughout its supply chain were treated better. No doubt fearing the impact on sales, Apple reacted to this and other criticism by clarifying its policy on working conditions and sending the president of the Fair Labor Association to the factories in question.
Apple is an interesting case in point because its huge success stems in large part from its perception as a lifestyle brand. People buy into its products because of the qualities they associate with its logos and hallmark sleek designs; Apple products are fashionable, cutting-edge and ‘different’ from their competitor’s offerings. Other things we may consider before deciding which brand to buy are practical considerations, like functionality, compatibility or value for money.
However, if any of these consumer conceptions is damaged in any way, we will stop buying. A business that doesn’t make money is unsustainable and will quickly cease to exist.
A similar situation can be seen in our political choices as well as our consumer choices. In our country, the past two administrations (New Labour and the current Tory-led coalition) have been helmed by parties that, generally speaking, have shifted towards the centre in order to attract votes from beyond their traditional support base. While in government they have reneged on manifesto promises and introduced surprise policies at odds with the respective parties’ grassroots ideologies. It’s all done in an effort to stay ahead in the opinion polls in preparation for when the next general election comes. Parties are thus forced to strike a balance between pleasing their loyal supporters, and striving to make themselves a viable option for the rest of the electorate.
Much like those Apple fans upset by the iPhone manufacturer’s ethical shortcomings, voters have the power to affect a change in the direction that political parties take. But the difference with politics is that this ‘people power’ only works if we actually use our votes. 35% of us didn’t vote in the last general election, and less than half of us turned out for the same year’s AV referendum; that’s certainly enough unused votes that could have totally changed the results of both.
Brands have to understand that they rely on the continued support of their consumers, and when they get a warning like Apple did they should be quick to try and set things straight (or, at least, to make it look like they are). Politicians have a lot more leeway – once they’re voted in, they’re normally safe to stay in power for some set period of time, scandals notwithstanding – and if only a few members of the public vote in an election, it is their opinion that will matter and nobody else’s. And that means that politicians don’t have to work as hard to keep themselves in power.
The expression of our values and morals goes a lot further than which sector of the political spectrum we choose to plunk ourselves into. If anything, individual politics might feel like one of the lesser considerations when we think about what is right and wrong and how to exercise those principles day-to-day. However, politicians exert a large influence on our lives – and in parts of the world where we are fortunately able to choose our rulers, we should pay as much attention to that choice as we do to our decisions over the products and services we part with our money for.
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