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Leveson & Niemöller

First they came for the Tabloids, and I said nothing because I read the Guardian on my iPad. Then they came for the Guardian, and I said nothing because I’d assumed it was going bust anyway. Then they came for the blogs, and I said nothing because bloggers are just hairy-handed self-abusers, aren’t they? Then they came for Twitter, which I only use to post pictures of my food, (organic, nach…) so I’ll probably be OK. Then I criticised the Government on Facebook, and there was no-one left to speak for me.

Peter Lilley yesterday said the new regulator has the potential to become an Orwellian ministry of truth, and the press should resist it. If you can’t see how the regulator will have a chilling effect on investigative journalism of the sort that exposed the expenses scandal, you’re a moron. Britain’s chaotic, anarchic, brutal free press will either resist this regulator or be tamed to death. We will see fewer exposes of powerful people doing bad things, which often have dubious sources. Is this price worth it to prevent journalists listening to someone’s voicemail.

It isn’t the News of the World that killed Millie Dowler, and there’s precious little evidence anyone from the paper even listened to her voicemail. The press is being regulated because of Labour’s desire for revenge for this headline:

Because of cheap and chippy spite, we have sleepwalked into a regulated press. Blogs and websites with News-related content will be swept up in the legislation almost by accident, because when have judges ever left anyone out of regulation, even when it’s parliament’s clear intent (for now) to do so?
The victors of this: Politicians, who will face a less powerful press scrutinising their decisions. Celebrities will find their private lives a little more private. And because of this, fewer people will buy papers and the electorate will be less informed.. And the regulation of the Blogs, who have less resources than the once-mighty press-barons, will be easier, now the rubicon’s already been crossed.
The left has long sought to tame the press. That they succeeded yesterday is not because the press were too powerful, but because they’re now so weak. One of the Glories of our democracy was the savagery with which the press dealt with our lords and masters. Not any more.

An Example of What’s Wrong with the Welfare State.

In around 2004, or 2005, I found myself between jobs. This is what the welfare state is for. I applied for Job Seekers’ Allowance and Housing Benefit, which I claimed for around 3 or 4 months, until I found another job.

If you believe the left, I’d be ‘hypocritical‘ for ever subsequently arguing in favour of welfare reform, after using it, as Iain Duncan-Smith once did. I’m not. I support a welfare state, just not one as currently structured. A welfare state is vital. Decent out of work benefits reduce the risk of temporary unemployment, and therefore increase an assortiveness labour market. It reduce the power of bosses to hold down wages or make unreasonable demands. It reduces the risk of quitting a job for a new, better one, and thereby lose protections for time served. A functioning welfare state is vital to reduce the risk of entrepreneurial activity.  A welfare state is vital therefore to a liquid, flexible labour market, which has been one of the successful things about the UK economy for the last 30 years.

Beveridge, the system’s designer however saw that there must be an eye on the incentives, to ensure the evil of idleness be combated as well as the evil of want. The welfare state’s cheerleaders in the Labour party appear to have forgotten this. Either that or they benefit from a large, permanent caste of welfare recipients who will never escape the trap. No-one wants to live on JSA. But no-one ever does. The problem is once you’re on Incapacity benefit, income support, Housing Benefit and so forth, you’ll never have to survive on JSA alone. This doesn’t stop Left-wing apologists for the current welfare state arguing that it isn’t over-generous, by citing the paltry amount of the most temporary of benefits.

Had I remained out of work for 6 months, I would have qualified for 6 month’s “run on benefits” worth at the time, several thousand pounds. I was actually advised to delay starting a job for weeks, in order to qualify. I told the Advisor in robust Anglo-Saxon to go forth and multiply. But the trap, the temptation to take the easy money must be great, especially for those for whom employment does not represent significantly more money than the welfare payments they’re turning down.

If you house people at public expense, in properties they could never afford by working, you trap them on benefits forever. Furthermore, housing benefit distorts behaviour in its recipients, who never have to plan to pay the rent. Landlords too, find themselves dealing with a stupid customer in the state, and make sure rents are the maximum the state will pay. This distorts the market all the way up from there, raising the cost of housing for all.

It is for this reason I find the Labour campaign about the “bedroom tax” abhorrent. Housing benefit needs reform. So too does every other benefit.

The hyperbole surrounding incapacity benefits from labour is likewise grotesque. Chris Mullins, Labour MP reported “scams” of people who are perfectly fit yet claiming disability benefits. John Hutton, another Labour MP, apparently told him of

“an ameteur football team, currently topping a local league, in which eight of the 11 players recently fielded were on Incapacity Benefit”. 

Yet when Iain Duncan Smith or anyone else broadly identified as “on the right”, who has made extensive research into the subject, makes the same point, the left make an appalling din about the demonsisation of the poor.

The fact is, it is quite possible to claim extensive benefits, which ensure your bills are paid, and keep a roof over your head, and work cash-in-hand thereby enjoying an acceptable lifestyle in perpetuity. Everyone knows of someone like this. Go down your local pub, and you will find one. But the left seem wilfully blind to the phenomenon. For this reason, few countries allow long-term benefits. From the vicious Americans to the cuddly Swedes, almost everywhere has found if you aggressively time-limit benefits, people suddenly become more resourceful as minds get concentrated. Long-term unemployment falls.

IDS’s plans revolve around simplifying and limiting benefits, to ensure no-one receives more than the median wage from the welfare state. This means some people in reciept of generous beneftits will get paid less. It means “the poorest” will suddenly find they have to move to a grottier part of town. You won’t find much sympathy from the tax-payers who already live there. It means Housing Benefit will be paid to the tenant, not the landlord. This means some people with chaotic lives may find themselves evicted if they cannot manage their budget. You will find little sympathy amongst tax-payers living on value spaghetti and ketchup when the money runs out at the end of the month. It means disabled people have to prove they are disabled in order to continue to receive benefits. Some people will be judged fit to work, when they’d got used to the idea they’d got it made on the “sick”. There will be little sympathy for shirkers who’re found out. The coalition’s plans would still leave the UK with one of the world’s most generous welfare states, and which asks the fewest questions of its clients. Ideological and evil it is not.

The Labour party in parliament has been parading the sob-stories of the halt and lame, some of whom are genuine victims of bureaucratic bungling by ATOS or others. All bureaucracies make mistakes, and there will be teething troubles with any new system. But many of whom are simply people who’ve become entitled to a big house provided at public expense, even though they no longer need it, and who are complaining to a Labour MP, who finds their complaint politically appealing. Labour don’t see, despite clear polling evidence, how the working public feel about their neighbours whom they’re supporting. The left needs to stop shroud waving. Labour had 13 years in power, yet sidelined the one man, Frank Field, who seemed to want to get to grips with the thicket of benefits. The conclusion that the client state it created was simply too useful is difficult to ignore. IDS’s plans aren’t demonising the poor. Some people (not all, or even most but SOME) benefits recipients are “shirkers”, which is in any case a word rarely if ever used by him.

It’s too easy for the Labour to malign the intentions of their opponents. It has the effect, psychologically of preventing them examining their record in office. I, like IDS used the welfare state for its intended purpose. A bit of support between jobs. He’s not a hypocrite, nor a monster. And nor am I.

Labour Plans for Capital Gains Tax

One idiot, Ed Balls, has asked another idiot, Sir George Cox, for ideas to tackle “short-term” thinking in British business. Or maybe I’m being harsh to Sir George. Perhaps he’s just realised there’s good money in telling lefties what they want to hear, and in doing so removing corporate oversight by shareholders. The state, big banks and corporate “business leaders” in a massive conspiracy against the rest of us.

“Short-term thinking” is one of those problems which exists more in the fevered minds of left-wing politicians looking for something to justify state planning, than in reality. And how did that work out every time it’s been tried? Even though state intervention in industrial planning is an idiotic idea, it has been successfully placed into the mouths of “almost three fifths” of “business leaders”. Wow! Just over half of “business leaders” think we should think “longer term”. I am frankly underwhelmed at the support of “business leaders”.

There are problems in some businesses that are too focussed on the next half-yearly report. This is better than the US system where quarterly earnings are the norm. To my mind, 6-months gives shareholders the right level of detail to make decisions. Any company that feels their share price is too low can buy-back shares. Any company that thinks it’s too high, can issue shares. And in practice this is what happens. And in any-case  keeping your shareholders informed of expectations through trading updates and so forth means shareholders are likely to be pretty tolerant of short-term trading problems. The outlook statement is often a more significant driver of the shareprice than the numbers.

Some businesses fail. These problems are not problems caused by “speculation”. Speculative share-buying is an issue looking for a problem. Lefties, like Ed Balls don’t like the idea that someone can buy shares and sell them at a profit. Companies sometimes don’t like the fact that shareholders can run from a company on a profits warning. Chief executives hate the fact they are overseen by thousands of unaccountable people. But good companies, with good products and high barriers to entry get bid up and trade on high multiples (which means their cost of capital is low) and bad companies who’re likely to ask their owners (the shareholders) for more money, or who are likely to go bust trade on low multiples. This means the system is working. Speculators drive this process. They don’t kill companies, they’re the canary in the mine.

Speculators also create liquidity in the market. Liquid shares trade on higher multiples, meaning lower cost of capital, meaning more business investment. If you limit the speculative money, you make markets more illiquid, reduce the price of shares, and increase the cost of equity capital.

Debt interest comes out of profits BEFORE tax and shareholders’ dividends AFTER tax, so built into the tax treatment of companies is a big tax advantage to debt finance. The beauty of  equity finance is that the shares can go down, but the company can go on regardless. Debt can rapidly spiral out of control. Both sorts of finance have their place – I like to see an appropriate level of gearing – but capital gains have, in effect already been taxed at the corporation tax line. If a company has no immediate need for capital, it can ignore shareholders and the share-price. This is not true of debt finance.

So by increasing CGT, you will increase the level of debt carried by companies. You will make companies MORE focussed on short term results, because you can bet your bottom dollar your bank is NOT thinking long-term (and especially the state-owned ones). They are at the moment absolutely focussed on their bad-debt numbers and they will pull the plug on viable businesses long before the end. This is why debt-financed businesses are riskier than equity financed businesses and equity finance better than debt for speculative, risky or long-term projects. One miss of a target, the bank pulls your loan in. Shareholders cannot do this.

Lets look at some examples: Is RBS, a government owned and operated business, whose remuneration policies and semi-annual results are the stuff of breathless news reporting more likely to be thinking for the next headline than, say ITM power, who have spent a decade on primary science and innovation around the fuel cell and electrolyser, but who only started making commercial sales recently?

The proposal to tax capital gains between 50% and 10% depending upon how long they’re held is just stupid, and will reduce the ability of ordinary people to buy into the likes of ITM power. The idea that long-term shareholders are somehow better than short-term shareholders is risible, and bears no scrutiny. Long term shareholders tied in by CGT rules will not be able to influence the company at all. Short-term shareholders vote on the company by buying and selling the stock. Liquid stocks are less volatile.

All this stupid, facile, imbecilic proposal will do is further increase debt finance over equity finance. Any influence small shareholders have will be lessened. This is just the state regulating for the benefit of big corporate bosses who prefer to deal with large institutional shareholders. This is just mindless corporatism that will worsen corporate governance, increase costs and decrease liquidity and therefore increase volatility of stock.

An aggressively tapered CGT regime will at a stroke make worse the problems it is meant to solve, and anyone thinking it’s a good idea should be sedated and kept away from sharp objects. Of all the ideas to come out of the Labour party, this is the most obviously stupid for some time.

On Rotherham Council’s Decision to Remove Children from UKIP Foster Parents

A couple, who by all reports were exemplary foster parents, had three children removed from their care because the council discovered after an anonymous tip-off that they were members of UKIP.

There is so much ‘sinister’ in that sentence, I don’t know where to start. What’s worse, rather than sacking the social worker in question, launching an immediate enquiry and issuing an immediate, grovelling apology, the Council’s head of child services, Joyce Thacker suggested UKIP’s desire to limit immigration and end multiculturalism meant that a placement of ethnic minority children with UKIP members was against their “long-term cultural needs”. She went on to say

“These children are not UK children and we were not aware of the foster parents having strong political views. There are some strong views in the UKIP party and we have to think of the future of the children.”

When in a hole, you should stop digging, but instead she went on to suggest that the Family would be able to foster white children in future. Urgh.

The Labour party nationally has distanced itself from the Labour-controlled Rotherham council. My prediction: Joyce Thacker will need to call a head-hunter on Monday morning.

The fact is, this demonstrates as if more proof were needed, of the left-wing ‘long march through the institutions’ is nearly complete. A Marxist cultural hegemony exists in some councils, and in much of state education, in which exists a contempt for the family, a loathing of anything like of traditional values, and a deep intolerance of political dissent . Anything outside the left-wing world view is deemed inappropriate. The Tories are suspect and UKIP beyond the pale. And the children are being indoctrinated.

The Joyce Thackers of the world hate you, and everything you stand for. They want to destroy the institution of the Family because they want to make everyone dependent on the state. Mass immigration is desirable BECAUSE it destabilises communities and offends the traditionalist white working class. Widespread welfare dependency is desirable, because dependence gives the state power over people. This is why the benefits system is so complicated and therefore so toxic to the maintenance of stable families. Never ascribe to malice that which can be put down to incompetence, but the ‘problems’ Iain Duncan-Smith’s benefits reforms aim to resolve – the disincentives to parental co-habitation, for example do seem to be in line with Gramscian doctrine. For in their view, there can be no loyalties but to the state. The cold war isn’t over, not while the Joyce Thackers of this world are in charge of children’s lives.

Occasionally the mask slips, when they do something so grotesque, so offending to natural justice that people take a look at what is being done in their name. They won’t like what they see. The people are not Marxist, you see, but no-doubt Joyce Thacker puts this down to false consciousness.

Starbucks, Tax and Idiocy.

On my local high-street, which leads up to a market square there is an independent coffee shop, Cafe Rouge, Thorntons, Greggs, Costa Coffee, and on the Market square there is an independent next door to Starbucks and another selling coffee from a trailer in the middle of the Square. All of these are within 300m of each other. All of them sell coffee, as do the 5 pubs and two other restaurants which you would pass were you to walk from one end of the high-street to the other. That’s before you consider the 4 sandwich shops which also sell coffee to take away. At nearly half the premises in the high-street, you can buy a coffee.

Is anyone surprised that Starbucks is not making money in the UK?

The UK’s corporation tax rate is 28%. Starbucks paid a rate of 31% globally. Surely they should be declaring profit here if they can?

Once again, the UK uncut crowd are simply wrong; but that didn’t stop MPs jumping on the bandwagon. What must be especially galling for a company making little profit in a brutally competitive market-place is being hauled in to face questioning by a new-Labour parasite like Margaret Hodge. Hodge, herself a multi-millionaire whose family business, Stemcor also pays its tax globally, at a global rate of 41%, (which suggests they need a better accountant) but pays very little of that in the UK. Hodge may not be an expenses cheat, but that’s probably because she was born into the fabulously wealthy Oppenheimer family and doesn’t need to be.

What’s really pissing me off is the reporting of tax as a proportion of revenues in order to give a low number. If your margins are low, as in food and beverage retail, you can have huge turnover, off which you’re skimming a little profit, after wages, payroll taxes, overheads, materials, property and so on. Taxes as a percentage of revenues is an utterly meaningless number, yet this is becoming the dominant ratio in the idiot left and the mainstream media.

So here’s a little guide. Revenues is the money you take from customers. Corporation Tax is NOT calculated on this number, Value Added Tax is, and no-one’s suggesting VAT is being avoided. Then there’s costs of sales, which represents all the things you do to make those sales such as employ people, buy materials and stock, rent or buy premises. You also include your central functions, such as HQ staff and buildings. Revenues less cost of sales is known as ‘operating profit’, or sometimes ‘profit before tax’ or ‘pre-tax profit’. You then apply the tax-rate to that number.

Please don’t report tax as a percentage of revenues and call it tax-dodging because that marks you out as an utter moron.

 

Save The Children & Child Poverty in the UK.

Thanks to the Unique way the BBC is funded, Save the Children got a free advert courtesy of BBC R4’s thought for the day this morning. Akhandadhi Das contrasted Save the Children’s first ever campaign about poverty in the UK with the charitable status of independent schools, explicitly suggesting the “need of independent schools to fill their places” was less worthy than Save the Children stepping way outside its remit and embarking on a party-political crusade. Let’s leave aside the left-wing obsession with private schools, and deal directly with Thought for the day acting as a party-political broadcast for the Labour party.

Child poverty in the UK is NOT caused by a lack of resources. Every child has access to the NHS, free education and the parent receives £20.30 per week for the first child and £13.40 for each subsequent one in child benefit, no questions asked. If there is no job in the household, the family will be housed at public expense, and they will be eligible for income support, a benefit rarely mentioned by welfare campaigners because it’s calculated as “the difference between the claimant’s net weekly income and the amount required to meet his or her needs”. Worklessness in the UK does NOT result in kids starving, or being unclothed, or not being able to get to school, or even being homeless, unless there is contributory negligence by the child’s parents. Yes, it’s true those kids are unlikely to have access to the latest fashions, and may not be able to afford every school trip, but the poverty is only relative to others whose parents work.
Work, of course is the route out of poverty. The state cannot and should not simply give the poor money, as this creates a moral hazard. Unfortunately, in taking up low-paid work many poor people face the loss of benefits and face a marginal effective tax rate over 100%, mainly thanks to Gordon Brown’s working & child tax-credit system. Furthermore, the Benefits system with it’s 72 separate bureaucracies makes reclaiming benefits should a job be lost an absurdly onerous process resulting in a massive disincentive to take on the low-paid, insecure “starter” job. And the low-skilled are, of course, banned from ever selling their labour at their real marginal rate of production, thanks to the Minimum wage, and will therefore never get any job and hope of improving their skills .When you factor in the cost of travel and things like work-clothes and sustenance, it simply doesn’t pay to try to get off benefits.
This is the poverty trap, Iain Duncan Smith’s Centre For Social Justice has identified and is seeking to remedy, in part through a universal credit, simplifying the benefits system.
This has not prevented the left from blaming child poverty on “the cuts”, and describing Iain Duncan Smith as a monster, intent on putting a boot on the face of the poor. Every change to the benefits system has been opposed tooth and nail by the unions, who will lose valuable jobs in the bureaucracy, and by the Labour stay-behind OPs in the Quangocracy for whom “poverty” is a meal-ticket. Poverty is being openly blamed on a recession caused by Government policy, and on “the cuts”. This simply isn’t true. Most child poverty in the UK is in the 20% or so of households where no-one works. Many of these are Multi-Generational welfare families, who are absolutely immune from the business cycle. This is also the reason it’s very hard to see correlation in crime numbers with the business cycle.
Save the Children is not an impartial organisation. It is run by a former Blair and Brown number 10 staffer, Justin Forsyth, and Brendan Cox, Director of Policy and Advocacy was a SpAd to Gordon Brown. Amongst the Trustees are a number of Labour quangocrats, including a director of “Labour’s greatest success”, SureStart, Naomi Eisenstadt. The Coalition are not convinced SureStart is worth the money. This campaign, the first by Save the Children concerning poverty in the UK – they werre silent during the winter of discontent, or during the massive rise in youth unemployment under Blair and Brown, is aimed squarely at the coalition government by a nakedly partisan, left-wing organisation.
It is Save the Children who should have its charitable status revoked, not Eton.

Professional?

What does “professional” mean? The dictionary defines it broadly as “doing something for money” but in a more narrow sense, being skilled. Even narrower is being part of a “profession” such as Doctors and Lawyers where it takes many years to acquire knowledge of the arcana. A professional is more likely to be self-employed and so have little job-security. The returns can be enormous, if they’re good, but part of professional status is the willingness to forgo employment rights.

People who have skills tend to be well paid. Their experience is vital, and they are not easily replaced. Professionals tend to find this best if they’re self-regulated. It’s in their interests to collectively policed and access to the profession restricted to keep individual rewards up. Setting high standards works for both the existing members of a profession.
Trades, on the otherhand are easier to acquire. It’s easier to find a plumber than a doctor. This means even highly skilled people can be replaced, if an employer is willing to train another hand. For this reason, Trades unions formed. Collective bargaining was the best way in the absense of any individual being vital to a company, to secure higher wages, from employers.
So. Are Teachers professional? Because they act as if they’re a trade. If you want Job protection, you can’t have high pay. You can’t go on strike, and still call yourself professional. If you want to make rubbish teachers hard to get rid of, you all pay for it with low wages. If you want us to treat you as professional, start getting rid of the lousy teachers, poisoning kids against education, and start competing with each other to deliver, and be rewarded for excellence. That’s what “professional” means.
Free schools, perhaps this Government’s most compelling policy, are a means to deliver the ideal of a professional teaching profession. They will, of course, be resisted in this by the Trades Unions, of the NAS/UWT, and NUT. As schools gain independence over hiring and firing from the collective of the Local Education Authority (or whatever these bodies are called this week), bad teachers will rapidly find it cold outside the warm embrace of a protective union, will seek out  the safer jobs in lower-achieving schools. Good teachers will thrive, and see their pay improve outside the restrictive pay-scales of local bureaucracy. I can see a situation where the worst schools employ the TUC-affiliated teachers, and the good schools’ teachers are members of Voice. No-one has any sympathy for the teachers themselves, because the focus should be entirely on the outcome for students. By all means pay reward excellence but cut the dross, and free schools have everywhere worked in the interests of students.
Trades unions used to be workers’ mutual support amongst people who were ultimately replaceable – agricultural Labourers like the Tolpuddle Martyrs or industrial workers like the miners, whose only power to better their lot could be found collectively. These jobs have largely vanished, Trades Unions having killed the profitability of Britain’s remaining mass-employment industries, and hastened their demise. So now Unions exist almost exclusively in the public sector, where they exploit the lack of commercial pressures to secure perks for their members.
Ultimately, the trades union, acting on behalf of people, Doctors, Teachers, whom we expect to be professional, upsets the public more than when trades unions act on behalf of lower skilled, and lower paid people like nurses. It feels abusive – the already well-off and powerful demanding perks with blackmail, paid for from the wages of people, most of whom earn less. 
By introducing markets, even ones in the public-sector where the state pays all the bills WILL drive up standards, and not only by the usual mechanisms of customer choice, but also by providing mechanisms to reward successful professionals.

The Brothers Unite Against Progress.

Listening to the interchangable trot (I think it was the head dinosaur at the GMB union, Paul Kenny) the BBC dredged from the 1970’s to appear on the ‘Today’ Program, I was struck by his repeated use of the words “private company”. The background is that the Blairite think-tank, Progress, whose mission is to

promote a radical and progressive politics for the 21st century…

whatever that means, is structured as a company, not a charity, and it distributes money around the labour party, and somehow this is sinister. But it’s the way the Trades Unionist apparently thought “private company” was something everyone would find as distasteful as he that I found striking.

Frankly, I couldn’t give a tinker’s cuss about how pressure groups, think-tanks and so on are structured. Many in the Libertarian world make much grunting about the fact that the Accociation of Chief Pig Officers is a private company. Of course what matters is the influence, and the quality of thought. And in progress’s case it was founded in 1996 by Peter Mandleson, now Lord Fondlebum of Rio, to come up with an answer to the conundrum: The Tories are right on more or less everything, but they make me feel all icky. How can I get Tory policies past the Unions?

Of course Tory policies delivered by people who don’t understand why they work was popular until it all blew up. The Labour party was able to win elections under Blair in a way they hadn’t been before. Of course, winning elections isn’t what the unions want, because they don’t believe power should lie in the ballot box, but at the point of production. The Unions want their party back, so they can go back to discussions about how to bring about the inevitable end of capitalism, and when to smite the hammer-blow by calling a General Strike. And to this end, they are trying to get New Labour kicked out of the party, just as the party dealt with the militant tendency in the 1980’s. Labour is moving sharply left, and towards a lumpen, municipal socialism of the 1970s. The drabness of the vision is matched only by the unpleasantness of the men who want to lead it.

The RMT’s Bob Crow: the Labour party’s soul looks like him.

Ultimately, whatever the polls say now, when the people come to look closely at the labour party in 2015, they are unlikley to like what they see. The polls are a mirage, Ed Miliband is a spineless fool, and Cameron’s the luckiest politician in History.

Alan Milburn, Tit.

Social Mobility, a ‘Motherhood & Apple Pie’ issue, but which boils down, in practice, to “what sort of school did you go to?” about which an astonishing amount of cant is spoken.

The Labour narrative is that a self-selecting caste of Public Schoolboys deny entry to the upper echelons of public and business life. Snobbery and the old-school tie represent impenetrable barriers to the working class, however talented”. While Labour accept upward social mobility happens, it is a near totemic belief in the movement that the vicious class enemy must be watched, lest they slip back to their evil ways of only hiring the sons of people with whom they play Golf / Rugger /Polo / Bloodsports (delete according to taste).

The Tories think social mobility is due to either Grammar Schools or Thatcher’s banking reforms.

There are intelligent views on social mobility, like Chris Dillow at Stumbling and Mumbling whose position on the subject can be characterised as Marxist High Tory is one worth reading.

For some reason only known to David Cameron, Alan Milburn was asked to prepare a report on Social Mobility which contains the absolutely astonishing idea that I should declare whether or not I received Free School Meals to a putative employer. the Company should then collect this information and transmit it to Government. Of couse you already disclose your education to your employer (you submitted a C.V. didn’t you?) But Alan Milburn seems to think this should then be collected, for audit by some Government authority. OfSnob? OfPosh? To what end? A maximum number of public schoolboys? A public register of people called ‘Rupert’? Quotas for same? “Naming and Shaming” for companies whose directors went to Charterhouse together?

I cannot see any sane policy which could possibly fall out from these data. So why collect the information? Just let people be. People fron similar backgrounds go into similar employment. The best predictor of what you do, is what your parents do. They’re your role models and frame your idea of ‘normal’. So this should not be seen as a problem, it’s just people prefer the company of people like them and so people from similar backgrounds tend to make similar choices. Politicians need to understand some WANT to be soldiers, nurses or builders. And thank goodness, otherwise the bayonets won’t be fixed, the patients tended or houses built. Not everyone WANTS to be a Lawyer, if they did, we’d be America. Stop putting people in little identity boxes so they can be counted. The very act of counting them will strengthen in-group bias by reinforcing trivial differences between individuals into impenetrable barriers. Stop collecting data whose only existence is so Government can homogenise society in its own image. Stop assuming that any difference in outcome between groups is down to prejudice. It might be down to choices. Stop telling people who don’t want to be Lawyers that they’re shit.

One of my political heroes, Sir John Cowperthwaite who ran Hong Kong banned officials from collecting economic data “lest some damn fool try to do something about it”. Hong Kong was the Fastest Growing economy for the second half of the 20th Century. If you leave them alone, people tend to make better choices than Government.

“A Price Worth Paying”

In Wednesday’s Prime Minister’s Questions, Ed Miliband led with the Beecroft report (anyone got a link to the final published report?) into employment law, focusing in on one phrase

“some people may be dismissed simply because their employer doesn’t like them, but that is a price worth paying…”.

Adrian Beecroft may be a successful entrepreneur and (as is spat through clenched teeth by Labour) venture capitalist, but he clearly has no comprehension of the resonance of that phrase within the Labour movement. After Margaret Thatcher said unemployment was a “price worth paying” to bring down inflation, this has been a standard debating tic you’ll hear over and over whenever you talk economics with a lefty.

Watch miliminor in the commons on Wednesday. He’s like a fifth form debater who thinks he’s won because he’s able to deploy his favourite sound-bite. Cameron deals with it well enough, but the Labour benches felt very smug and happy nonetheless – deploying “price worth paying” was like giving the pigs behind him their swill.

To me though, this line belies the immaturity at the heart of left-wing economics: a refusal to accept the existence of trade-offs. If you increase employment rights, you increase the risk and cost of hiring, therefore you increase unemployment. Taken to its extremes, you get Italy or Spain, where half the workers are generously protected insiders and everyone else is struggling to find any jobs at all. Any lever pulled by Government in the economy will have positive and negative effects. High public spending tends (the relationship appears to be small but certainly significant) to reduce growth over the long term. The higher the debt burden, the greater the effect on Growth, especially when it gets much above 100% of GDP. Is future stagnation a “price worth paying” for public spending now? Is inflation which lays waste living standards, a price worth paying for temporary full employment?

Taken to its extremes, you get the belief that if only the Government spent and borrowed more, we could avoid recessions entirely. However in open economies (like the UK is one of the most open) with high debt burdens (The UK’s debt burden is about average for a developed nation – which is to say ‘high’) and a floating currency (like the UK) “stimulus” spending doesn’t work very well. So this belief in “growth” or “austerity” as a binary choice is, of course, nonsense. Of course, every Government, anywhere and always would generate growth, if it could. You can keep inflating the balloon with debt, and eventually it goes ‘POP!’. Of course, Labour likes to pretend that you can have your high spending and job protection along with (debt financed) growth. They just hope the ‘POP!’ happens on someone else’s watch.

Adrian Beecroft is arguing for compensated no-fault dismissals, reducing the risk (and perhaps more importantly the PERCEIVED risk) of hiring, in order to stimulate the job market. At present, if you want to get rid of someone, you have to jump through a number of hoops with tribunals and so-on and as a result, borderline staff are dismissed at 11 months BEFORE they get any rights. Therefore they don’t get a second chance. Because all this costs money, management time and so on, people, at the margin are not hired. I accept that at present, firing people is pretty easy, but it still requires cost, time and unpleasantness. Rather than paying for a tribunal and lawyer, wouldn’t the person getting fired rather have the money spent compensating him?

a notice period of one week for every year of employment up to a maximum of twelve weeks together with a tax-free payment related to the employee’s salary, age and years of service, up to a maximum of £12,000. This process and level of compensation would be applied to Compensated No Fault Dismissal unless the employee’s contract of employment would give a higher payment in those circumstances. While the principle of matching the payment for redundancy (which is not the fault of the employee) might seem generous for dismissal for poor performance (which arguably is usually the fault of the employee), such generosity would reward loyalty and would make the proposal more acceptable to employees and unions.

Isn’t that better than arguing the toss in a tribunal which the employee almost always loses? And imagine winning – you return to an job in which the employer has made it perfectly clear he doesn’t want to be employing you.  Do you really want to work (especially in a small company) with someone who “simply doesn’t like you”? Better all round if companies can employ whomsoever they want. “Fairness” involving some money up front (I would actually argue for more generous terms than the above) would be better than miserable, protected, unprofitable employment?

So what of the effect on the job market as a whole? The evidence suggests the rate of people losing their jobs is rather constant over the business cycle. It is the rate of hiring that affects unemployment rates, not the number of people getting fired. Anything to help people hire will help bring down unemployment. At the margin, especially in tough economic times, every little helps. The best job protection is a tight and dynamic labour market. No fault, compensated dismissal will reduce the risk, and perceived risk especially to small employers of hiring staff. No-one should pretend this is a magic bullet, but “Nasty” it is not.

So. The question I would ask Ed Miliband is “Is unemployment a “price worth paying” for job security?”.