Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 24 December 2015

The unique blindness of some commentators on the right

Janan Ganesh of the FT talks about the unique moral arrogance of the left. They have too often “impugned the motives of Conservatives”. He says that “the reality of politics in a rich, modern country is that parties are squabbling over marginalia”. He is wrong, and should get out more.

For example, take the issue of benefit sanctions. No doubt he might say that sanctions existed, and indeed the regime was tightened, during the Labour government. But the reality is that something very horrible, and morally shameful, is currently going on. The number of sanctions per claimant remained below 4% from 2000 to 2010. In 2013 it peaked at above 7%, and in 2014 was between 5% and 6%. Behind these statistics are a wealth of examples of where sanctions have been applied for minor infringements, and have ignored excellent reasons like the death of a spouse, or the long que at the jobcentre. Frances Coppola gives these and more examples here.

She points out that Department of Work and Pension (DWP) guidance states “It would be usual for a normal healthy adult to suffer some deterioration in their health if they were without essential items, such as food, clothing, heating and accommodation or sufficient money to buy essential items for a period of two weeks…” Sanctions often operate for 4 weeks or even longer. It is causing people to become homeless, and children to go hungry. This is not “marginalia”.

The current sanctions regime is one of the main causes of the increased use of food banks in the UK. Yet Ganesh instead likes to focus on inaccurate use of foodbank data. The DWP says that the sanctions regime is important in providing incentives to get people back to work. But is there any evidence that it does this? You would think that the department would have produced some evidence by now, although one of the comments on Frances’s post (and yes, we cannot know it is genuine) suggests why we have not. Yet this did not deter the department. They put out on their website (now unsurprisingly withdrawn) quotes and a picture from ‘Sarah’ who had been sanctioned and as a result had been encouraged to produce a CV. The only problem was that Sarah was completely fictitious.

There is widespread talk of jobcentre staff being put under pressure to sanction. The relevant select committee of MPs has asked for an inquiry, but this has been refused. Benefit sanctions are just one of a range of policy mistakes by this department that is causing real harm to the disadvantaged, and will continue to do so. All these problems were quite clear before the election, but the Prime Minister has kept Iain Duncan Smith in post. George Osborne has been happy to feed off the stigmatisation of benefit claimants stoked by the tabloids.

So please, Mr. Ganesh, no more lectures about moral arrogance on the left. Not, at least, until you have recognised what is actually happening to many of those who are unfortunate enough to be claiming benefits administered under this government, and the government’s apparent indifference to that.



21 comments:

  1. You'd be amazed, or maybe not, how many FT readers submitted comments agreeing with Janan's article. Usually the FT comments are fairly balanced, but this one struck a chord with the more right wing readers / commenters. Mine was one of the few, and one of the first, to dissent. I hate being patronised by actually giving a hoot about how lots of people are in poverty in a rich country and how anyone who seems to care is ridiculed and labelled as a keftie or a luvvie.

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  2. Linking this post to your previous one, I remain uncomfortable with your line that removing the idea of a housing bubble in the UK 1997-2006 somehow helps to put UK-based investment banks in proper focus.

    I remain with Shiller that the US housing bubbles starting from 1997 began in John Major's London in 1996 through feedback loops.

    The cheaper the American homes sold in those boom areas the greater the size of the bubble (p36 for San Francisco home prices 1987-2008, Robert Shiller, The Subprime Solution (2008)).

    Your last post was too open to having UK buyers of cheaper-end homes put against American buyers of cheaper-end homes, whereas both have been failed by investment banks and commercial banks buying the investment banks' products sanctioned by the three rating agencies.

    I think the failure to connect that core of the 2008 crash ends up producing Ian Duncan-Smith, a man whose party is essentially not a Tory but a City Party, whose followers like Ganesh have always been very at home with Samuel Smiles' self-help rather than state action to expose and hunt down predatory behaviour.

    "The spirit of self-help is the root of all genuine growth in the individual; and, exhibited in the lives of many, it constitutes the true source of national vigour and strength. Help from without is often enfeebling in its effects, but help from within invariably invigorates. Whatever is done for men or classes, to a certain extent takes away the stimulus and necessity of doing for themselves; and where men are subjected to over-guidance and over-government, the inevitable tendency is to render them comparatively helpless."

    Straight from Smiles to the UK's currently misnamed welfare department.




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  3. Simon,

    I am not sure if you have read many of Mr Ganesh's columns in the FT, but they are well below the standard of that paper.

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  4. It's polite and conventional to describe these disasters as "policy mistakes". But at some point the volume of stupidity needed to ignore the shudderingly obvious is just too implausible and other explanations are required. Some government policies start to make sense if they really do believe that all of us have a trust fund and a wealthy, supportive family to fall back on; or alternatively, if it doesn't matter whether some of us live or die. I don't understand why some journalists and voters find this remotely acceptable.

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  5. Remember Hayak like Keynes observed the dying of starvation in Austria,Keynes decided something could & should be done,Hayak that nothing could or should be done!

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  6. Simon, I have a cunning plan. Basically, it involves shutting down welfare payments to the rich and diverting it to welfare payments to the poor.

    The government currently has some £1600 billion of Gilts outstanding. These are basically risk free savings certificates for people with large private pension funds; currently yielding in aggregate circa 3%. Hence, the government pays out, gross, circa £47 billion in interest payments on these Gilts. About £12 billion, the government pays to itself, via its own Bank, the BoE; that being the interest on the Gilts the APF is holding; about 25% of Gilt stock (depending how you add it up).

    These interest payments are mostly being saved in pension and insurance funds; are therefore "leakage" of fiscal stimulus from the economy. (Taxes; savings and imports are leakages of fiscal assets (spending power), from the non-government sector of the economy.)

    So, the government stops issuing Gilts altogether, and transfers the interest it would have paid on new replacement Gilts, as the old ones redeem, to the DWP, for the little people, who will spend it and increase aggregate demand in the economy.

    Remember that issuing Gilts, has nothing to do with the government "borrowing" money to spend. A sovereign fiat currency issuing government, does not have to borrow its own money from anybody; it is the currency issuer.

    Discuss over Christmas dinner with the mother-in-law. All the best to you and yours prof'.

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  7. Thanks for this post. Given all of this, why do you think that the government are pursuing a tougher sanctions regime? I can think of a number of options

    (1) They are ignorant
    (2) They are optimistic about the incentive effects of a tougher sanctions regime (unemployment has fallen a lot, but this is just a correlation)
    (3) They are incompetent (e.g. they don't mean to impose such harsh penalties, but they misjudge how powerful the incentives for DWP to sanction claimants are)
    (4) They are simply a way to save money (hard to believe that this saves that much money - raising the sanctions rate from 4 to 6%)

    Francis' examples are very moving. But I wonder if her statistics (e.g. 100000 children affected) can be scaled by the number of sanctions. Or have the extra sanctions recently been particularly punative relative to the previous system?

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  8. But benefit sanctions etc. are not "policy mistakes", they are very popular political moves.

    A large number of property-rich Southern voters are outraged about benefits: they think that the benefit claimants in the North live in lazy luxury in mansions with many spare bedrooms, on benefits will above average wages, and that sanctioning them means that they will at worst have to got out to a posh restaurant one less evening in the week.

    Or else they know that 2-3 million immigrants found jobs by trying hard to win the race the bottom, by being eager to work 12 hour days 6 days week for way less than minimum wage while sleeping 4 per room in decaying slumhouses, and that this proves that there are plenty of very low paid jobs and expensive bunk bed places if the unemployed are willing to compete with the immigrants in the race to the bottom. As a New Labour big name ("Work and Pensions Secretary John Hutton") said as much several years ago:

    http://www.yorkshirepost.co.uk/news/main-topics/local-stories/crackdown-on-benefits-scroungers-1-2412296
    «He said that benefit claimants needed to compete for jobs with migrant workers, many from Eastern Europe. He went on: “We cannot reasonably ask hard-working families to pay for the unwillingness of some to take responsibility to engage in the labour market.”»

    The same voters who bitterly resent that several billions spent on a few millions of poor losers are very happy that just a few hundreds of billions have been spent to secure the jobs and bonuses of as many as dozens of thousands of affluent winners in the City, because the latter are the "best and brightest", and they are instrumental in pushing up property prices.

    The tories are just democratically carrying out the will of the voters who returned a parliamentary majority and those voters are full of spite for the poor.

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    1. Blissex look at this diabolical "postcode lottery"

      http://www.independent.co.uk/news/uk/politics/iain-duncan-smiths-universal-credit-postcode-lottery-will-make-some-families-3000-worse-off-than-a6774911.html

      "Owen Smith, the Shadow Work and Pensions Secretary, accused Mr Duncan Smith of creating a discriminatory welfare system.

      “The net result of Osborne’s decision to fund his backtrack on tax credits through a raid on Universal Credit has been to create an unfair, postcode lottery in support for low and middle-waged families," he told The Independent.

      "When the cuts start to bite next April some families on Universal Credit will be up to £3,000 worse off than their neighbours in exactly the same circumstances but still on Tax Credits. And by 2020 as many as 2.6 million families will be an average of £1,600 worse off than they would have been before the cuts."

      "The region that will be hit hardest by the disparity will be the North West, with more than half of Universal Credit claimants living there. "

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  9. good post in a sense , as you have given some interesting stats .
    well done for that .
    on the other hand you argue that an increase from 4 % to 5 - 7 % is not " marginalia " .
    you would expect of course , left wing activists to ferret out adverse stories during a tory govt .
    this sadly , is the play book , and has been since the 1980 s .
    the financial backers of the labour party want a moral rejection of thatcherism , as oppose to a credible [ in the eyes of voters ]economic alternative .
    a future labour govt will then have more scope to develop policy after a general election , as oppose to before it .
    voters are continuously asked to reject Thatcherism , on a moral basis . and continuously refuse to do so .
    you could argue they are rejecting labour , and possible unknown future policies , rather than endorsing thatcherite morality .
    its a repetitive process , with predictable outcomes .
    when will the process end ?
    well either the trade unions , and their little theory , will one day be proved right . the working class / ordinary people will reject Thatcherism , and in doing so support a radical left wing alternative .
    the docile sheep , when they come back to the labour party , may even apologise for voting tory in 1979 . the last 36 years can then be forgotten , and a new utopia occur .
    democratically accountable public investment . trade union influence in respect of national decision making .
    its not completely impossible .
    on the other hand the tories could privatize the nhs , and the bbc , and then fight a general election against Jeremy corbyn and his idea of applying radical socialism to every possible area of govt policy .
    the tories might win .
    how then would the trade unions react ?
    carry on , or look back at 41 years of failure ?
    as Keynes said , in the long term we are all dead .
    the trade union strategy to defeat Thatcherism , is still well and truly alive .
    and continuing to receive support .

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  10. Another thought. Given all of what you say, you'd have thought the top priority for the Labour Party membership would be winning the next election and stopping the tough sanctions regime you describe above.

    But the Labour membership have just elected someone from the hard left of the party as leader, who the Conservatives aren't worried about in the least at the next election.

    What's more, the YouGov polling of the Labour membership indicated that Andy Burnham was seen as substantially more electable than Corbyn (this poll forecast the actual leadership result very closely). See https://yougov.co.uk/news/2015/08/10/corbyn-pull-ahead/

    But instead the Labour membership chose purity over electability, and many Corbynites minimise the differences between the Tories and the Blairites. Little wonder that the Conservative commentariat has a hard time taking this type of analysis seriously when the Labour Party base doesn't seem to.

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    1. If you think about it, your last sentence makes no sense whatsoever.

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  11. There are many people out there that believe the Tories intended to cause both hardship and deaths. This may sound extreme to some people but in fact people looked at the proposed policies and just used cold logic to predict what would happen. All it takes is an understanding of those people who be the most vulnerable. Put people with mental health issues in a harsh environment with the threat of sanctions, knowing that employers don't want to give jobs to them, then it doesn't take a genius to work out that there will an increase in the number of suicides.

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  12. The conservatives are not worried for many other reasons, than Corbyn.
    Boundary redrawing and seat-reduction means they will increase their seats by around 12-15.
    Their, or rather their backers/donors/paymasters, have almost total control of the print media, and going by the amount of twitter trolls, the digital media.
    Reductions in the amount unions give to labour are going to bite soon..
    Underfunding local [other party] councils will have a blame-event effect on a general election.
    Reduction in those registered to vote (around 3-5 million fewer voters)
    And many more...

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  13. Getting claimants off welfare rolls and into productive employment would surely seem to be an unequivocally good thing on every level, and I don't see how this can be achieved without the imposition of some sort of sanctions-based deterrent against rule-breaking or the making of fraudulent claims.

    And given the numbers of welfare claimants involved (>6 million), it's surely inevitable that there will be numerous instances of rules being applied harshly, inconsistently, or unfairly. When this occurs there is a fairly well-established and reasonably fair appeals process for those who feel hard done by, and apart from some fiddling around the edges of this process, I'm not sure what more reasonably can be done.

    So I'm not really clear about where SW-L is going with this article, and what he thinks is the answer to the problem (if problem there is). Presumably he just feels that the DWP (and perhaps HMRC too), should loosen up a bit when people break the rules, and we all just wear the extra cost.

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    1. "I don't see how this can be achieved without the imposition of some sort of sanctions-based deterrent against rule-breaking or the making of fraudulent claims"

      How about boosting aggregate demand to make sure these "productive employment" opportunities actually exist?

      There will always be fraud in the system, but at some point the cost of "false positives" due to fraud detection far outweighs the savings from extra fraudsters caught.

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  14. A liberal, a libertarian, and a conservative are walking down a street, when they see a homeless man outside with nothing but a ratty blanket to protect him from the winter cold.

    The liberal says "Surely there is something we can do to help him?"
    The libertarian says "No, if we give him money today, he will just be poor again tomorrow. He must learn to help himself, and nothing we can do will motivate him."
    The conservative says "Nonsense. We could take away the blanket."

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    1. A cute political parable that neatly sums things up. Thanks for sharing.

      S

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  15. The Left has every reason to be proud and righteous in standing up to Conservatives.

    Some things are evil. Some things are disgusting. The greed and short-sighted stupidity of modern "conservatism" are both.

    If they don't want to be despised, right-wing psychopaths should improve their behaviour, not presume to lecture their betters.

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  16. "incentivise the rich by cutting their taxes & the poor by cutting their benefits"

    that about sums up the Conservatives, everyone knows this yet a large minority of the Ds and Es voted Tory

    bizarre, is there any other group that knowingly votes against their own interest in this way?

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