At first it was too weak; now it's too strong.
This problem was obvious. Setting interest rates that are suitable for both the manufacturing North of England and Southern house prices is a challenge for the Bank of England. Setting a single rate for the rapidly growing new EU entrants, Ireland's celtic tiger and the soporific Western European economies is a nightmare for the ECB. Now the politicians, particularly the French, want a greater say in Central Bank policy.
Central bank independence is important as it makes it credible that the bank will act to curb inflation, which can be politically costly. This credibility makes it much easier to keep inflation down without high interest rates. If the market believes the central bank will act to curb inflation then pay deals, for example, to secure the desired pay increase and expected inflation will result in a much lower inflationary pressure.
If the French succeed in making the ECB subject to political control then the Euro will become even more of a liability than it is right now.
Saturday, April 14, 2007
David Cameron's Labrador Conservatism, Or: Alex Deane was Right
For quite some time I've been of the opinion that Labradors play a special role in the formation and training of the British middle class. Other dogs can clearly fulfil the same function although to my mind the patience of a Labrador makes it the best suited to the job. A dog offers a child an early taste of authority. It also accustoms them to connecting authority with responsibility. The dog is dependent upon their care. Parents can monitor their child's interaction with the dog and attempt to teach them to treat it with a combination of patience, firmness and affection. This means that, while a child is still within the reach and control of their parents, they can learn the basics of the art of wielding authority and power. They can learn from the mistakes which can blight lives if made later with children, spouses, friends or colleagues. Mistakes can quickly be corrected by parents, who will not be present later on when the child first tastes real power, and the tolerant personality that characterises most dogs will leave little harm done.
Parents probably do not understand that they are doing this. They probably get the dog for companionship or to encourage themselves to take more walks. Equally, they probably only mean to encourage their child to treat the pet well and do not see the long-term benefits. I’ve met some quite pleasant people who grew up without pets or even with cats. They are socialised into healthy behaviours in other ways. I’m not advocating that one can improve families simply by distributing Labradors. A dog in an abusive family will be abused and this will teach the child nothing that should be learned.
Labradors are a part of a broad range of means by which healthy values are transmitted from one generation to the next. Others include regular meals as a family and parents directly talking to their children about what makes up good behaviour. Most important is simply that the parents maintain their own standards and set a good example. If children grow up seeing responsible adults then, all else being equal, they are likely to follow that example.
This isn’t purely a middle class phenomenon of course. The old working class were much poorer than those at the lower end of the income scale today. However, most were quite capable of training their children in the habits that ensured stable and healthy family lives. Many, probably still a majority, families on low incomes today continue to raise solid children.
However, a problem with this transmission of values is being identified by the new social conservatism which I discussed in my review of Dalrymple and Copperfield’s books. It is breaking down in large sections of the population and the costs are dire. Young women with multiple children by different partners searching in vain for a man who will prove responsible and often finding only the abusive. Huge numbers who believe that they are owed a living and the responsibility for looking after their children belongs to the state (which is not able to take their place properly).
Of course, this is somewhat different to traditional social conservatism. It is still socially conservative in that it supports traditional values and personal morality but there is no direct link to traditional social conservative themes like gay marriage and abortion. Social conservatives may argue that gay marriage, for example, undermines the tradition of marriage. It seems equally plausible that a new group’s desire for marriage validates marriage in general as a desirable thing. Any effect of gay marriage on heterosexual marriage is likely to be pretty minor compared to the effects of the vast number of failed and unhappy heterosexual marriages. These can clearly be considered as separate issues.
Almost a year ago Alex Deane wrote an article for the conservative journal the Salisbury Review*. In it he argued, to a deeply socially conservative audience, that accepting Cameron might require a hard compromise but would make conservatism more politically practical. Using his fuzzy, centrist image he could undermine the public’s belief that conservative ideas were necessarily to be distrusted. After that he could, as Nixon in China, be trusted that his motives were pure in selling socially conservative policies. I think that this prediction has proven more accurate than Deane could have hoped.
Traditional social conservative priorities such as Section 28 and opposing abortion and gay marriage are unlikely to be successful any time soon. They are too dependent upon religious values which are not widely held in today’s Britain. The problem is not just the, still small, number of atheists but the huge number of, largely non-practicing, Christians who see their religions as a vague command to ‘do good’ rather than an imperative to follow a particular, Christian, code of ethics. I am not going to argue that religious conservatives should drop these issues, telling someone who thinks children are being murdered to drop the issue is usually unhelpful, but that they should accept that the project of converting people like me to their cause will be a long-term one. The public has sympathy for many religious conservative causes but regards anyone who advances them in public as distinctly weird. No party leader can change this.
However, with accounts like that from PC David Copperfield and their everyday experience voters can see the need for the new social conservatism I have described. So many other political priorities are dependent upon a revival of a culture of responsibility. Shrinking the state when there is such huge demand from those who expect it to look after them and their children will be a political nightmare. Social mobility will continue to decline so long as it is only the middle classes who are bringing up their children responsibly. Effective public services are contingent upon a public which will not abuse them (I haven’t read Frank Chalk’s book yet but from conversations with a teacher I know what to expect). Cameron’s great service to social conservatism is to separate this from the less popular elements of the social conservative programme. This will mean that progress can be made on turning Labrador conservatism into a practical reality while social conservatives continue to attempt to advance their other, more long-term, goals.
Fiscal support for marriage, as Cameron has advanced, is important not just for its direct effect. It is more important to send the signal that marriage and stable families are valued and not just a relic of another age. Other ideas being floated, some of which Deane was already mentioning last Summer, such as a new, probably non-military, national service or freedoms at a younger age for those who demonstrate their trustworthiness are also clearly aimed at being part of a ‘Labrador Conservatism’. However, the policies themselves are not the test of Cameron’s commitment to the new social conservatism. Misconceived ideas can be improved or discarded, no policy mix will be a panacea to such a severe problem.
Cameron’s role is to be a persuasive and decontaminated spokesperson for the importance of restoring the British family. Harriet Harman’s attack on this new conservatism as ‘blaming parents’ and likely to go the way of Major’s ill-fated Back to Basics is an early indication that the British left will not give up lightly on the idea that yet more state support is what the family needs. The public goodwill towards Cameron causes Harman’s attack to ring hollow. Separating the desire for stronger communities and families from the fight against gay marriage and abortion allows for a new, broader, alliance that can start really fighting the left’s creation and embedding of a welfare class. For social conservatives to reject this as an unwanted compromise is to reject a possible alliance with other elements of the right and many in the centre. If social conservatives reject Cameron they could be rejecting their first chance at progress in decades.
*’In Defence of Cameron’, Salisbury Review, Vol. 24, No. 4. This is only available online to subscribers. I found it in the LSE Library.
Parents probably do not understand that they are doing this. They probably get the dog for companionship or to encourage themselves to take more walks. Equally, they probably only mean to encourage their child to treat the pet well and do not see the long-term benefits. I’ve met some quite pleasant people who grew up without pets or even with cats. They are socialised into healthy behaviours in other ways. I’m not advocating that one can improve families simply by distributing Labradors. A dog in an abusive family will be abused and this will teach the child nothing that should be learned.
Labradors are a part of a broad range of means by which healthy values are transmitted from one generation to the next. Others include regular meals as a family and parents directly talking to their children about what makes up good behaviour. Most important is simply that the parents maintain their own standards and set a good example. If children grow up seeing responsible adults then, all else being equal, they are likely to follow that example.
This isn’t purely a middle class phenomenon of course. The old working class were much poorer than those at the lower end of the income scale today. However, most were quite capable of training their children in the habits that ensured stable and healthy family lives. Many, probably still a majority, families on low incomes today continue to raise solid children.
However, a problem with this transmission of values is being identified by the new social conservatism which I discussed in my review of Dalrymple and Copperfield’s books. It is breaking down in large sections of the population and the costs are dire. Young women with multiple children by different partners searching in vain for a man who will prove responsible and often finding only the abusive. Huge numbers who believe that they are owed a living and the responsibility for looking after their children belongs to the state (which is not able to take their place properly).
Of course, this is somewhat different to traditional social conservatism. It is still socially conservative in that it supports traditional values and personal morality but there is no direct link to traditional social conservative themes like gay marriage and abortion. Social conservatives may argue that gay marriage, for example, undermines the tradition of marriage. It seems equally plausible that a new group’s desire for marriage validates marriage in general as a desirable thing. Any effect of gay marriage on heterosexual marriage is likely to be pretty minor compared to the effects of the vast number of failed and unhappy heterosexual marriages. These can clearly be considered as separate issues.
Almost a year ago Alex Deane wrote an article for the conservative journal the Salisbury Review*. In it he argued, to a deeply socially conservative audience, that accepting Cameron might require a hard compromise but would make conservatism more politically practical. Using his fuzzy, centrist image he could undermine the public’s belief that conservative ideas were necessarily to be distrusted. After that he could, as Nixon in China, be trusted that his motives were pure in selling socially conservative policies. I think that this prediction has proven more accurate than Deane could have hoped.
Traditional social conservative priorities such as Section 28 and opposing abortion and gay marriage are unlikely to be successful any time soon. They are too dependent upon religious values which are not widely held in today’s Britain. The problem is not just the, still small, number of atheists but the huge number of, largely non-practicing, Christians who see their religions as a vague command to ‘do good’ rather than an imperative to follow a particular, Christian, code of ethics. I am not going to argue that religious conservatives should drop these issues, telling someone who thinks children are being murdered to drop the issue is usually unhelpful, but that they should accept that the project of converting people like me to their cause will be a long-term one. The public has sympathy for many religious conservative causes but regards anyone who advances them in public as distinctly weird. No party leader can change this.
However, with accounts like that from PC David Copperfield and their everyday experience voters can see the need for the new social conservatism I have described. So many other political priorities are dependent upon a revival of a culture of responsibility. Shrinking the state when there is such huge demand from those who expect it to look after them and their children will be a political nightmare. Social mobility will continue to decline so long as it is only the middle classes who are bringing up their children responsibly. Effective public services are contingent upon a public which will not abuse them (I haven’t read Frank Chalk’s book yet but from conversations with a teacher I know what to expect). Cameron’s great service to social conservatism is to separate this from the less popular elements of the social conservative programme. This will mean that progress can be made on turning Labrador conservatism into a practical reality while social conservatives continue to attempt to advance their other, more long-term, goals.
Fiscal support for marriage, as Cameron has advanced, is important not just for its direct effect. It is more important to send the signal that marriage and stable families are valued and not just a relic of another age. Other ideas being floated, some of which Deane was already mentioning last Summer, such as a new, probably non-military, national service or freedoms at a younger age for those who demonstrate their trustworthiness are also clearly aimed at being part of a ‘Labrador Conservatism’. However, the policies themselves are not the test of Cameron’s commitment to the new social conservatism. Misconceived ideas can be improved or discarded, no policy mix will be a panacea to such a severe problem.
Cameron’s role is to be a persuasive and decontaminated spokesperson for the importance of restoring the British family. Harriet Harman’s attack on this new conservatism as ‘blaming parents’ and likely to go the way of Major’s ill-fated Back to Basics is an early indication that the British left will not give up lightly on the idea that yet more state support is what the family needs. The public goodwill towards Cameron causes Harman’s attack to ring hollow. Separating the desire for stronger communities and families from the fight against gay marriage and abortion allows for a new, broader, alliance that can start really fighting the left’s creation and embedding of a welfare class. For social conservatives to reject this as an unwanted compromise is to reject a possible alliance with other elements of the right and many in the centre. If social conservatives reject Cameron they could be rejecting their first chance at progress in decades.
*’In Defence of Cameron’, Salisbury Review, Vol. 24, No. 4. This is only available online to subscribers. I found it in the LSE Library.
Friday, April 13, 2007
The Curse of the Golden Flower
I saw the Curse of the Golden Flower earlier this evening with Gracchi and Vino.
It had the thorough visual splendour of all the recent Zhang Yimou films. Not since Barry Lyndon has there been film-making so thoroughly visually amazing. Within the palace the screen is full of colour. Battles are clashes between colours. For all the film's other flaws Yimou's sense for the visual will make it a part of cinematic history.
The first problem is the pacing. The plot doesn't advance at a steady pace but lulls with details being released sporadically. At times you feel it losing your interest in a way that never happens with Hero or House of Flying Daggers. This film fails the most important test; it doesn't tell its story well.
The second problem is the battles. This film really illustrates that an ability to film action does not mean that a director can create a cinematic war. This film falls into the classic trap of having the armies spend far too long looking like a mob instead of an army. King Arthur's Saxons behaved the same way. The Orcs in the Lord of the Rings were masters of strategy by comparison. When armies behave like mobs there isn't the sense of drama, of decisiveness, that can make cinematic battles thrilling.
These flaws are critical to the film because they make the plot development ponderous and the climax dissapointing. Some superb moments, a ninja assault from the cliffs particularly stands out, cannot rescue things. This was dissapointing although possibly still worth watching just to see such an amazing spectacle.
The Daily Show on the Hostages
I missed this at the time. Now everyone's going to be wanting British hostages. We're so nice, love our new suits and if you want to try some rough stuff you don't need to get your hands dirty. We consider Mr. Bean jokes psychological torture:
Thursday, April 12, 2007
"Our Culture, What's Left of It" by Theodore Dalrymple and "Wasting Police Time" by PC David Copperfield
I spent the weekend reading books that are compilations of articles that I could have obtained freely from the Internet. Wasting Police Time is the book of The Policeman's Blog and Theodore Dalrymple's articles can be found at his City Journal archive.
If enough people are like me and enjoy spending time reading books instead of putting in yet more hours in front of a computer then the blog book is quite a good business model. A fair amount of promotion can be done for free through the blogosphere, the popularity of the blog gives some indication that there are people who want to read what the author is saying and the book can be prepared quickly as most of the content is already written. The idea also has something of a precedent. Collections of work by prominent academics (think Friedman's Essays in Positive Economics) usually sell plenty of copies to university audiences who can get the original pieces from journals. Books are convenient and pleasant and plenty of people will pay for that convenience even if they can obtain the content elsewhere.
The two authors have very different styles. Dalrymple is a good candidate for best essayist of the modern era and his writing is impeccable. It has that magical ability to be both easy to read and thoroughly serious. Copperfield's style is colloquial which works well for an account from the front-line. They are also rather different books as one is a broad collection of very structured essays while the other is a selection from a blog.
Wasting Police Time is the funnier book. While few outside of certain public services like the police have had such sustained contact with the madness of the modern British poor all of us have suffered them at one point or other. Even at twenty three, having lived in well off, Conservative-voting areas my entire life and just emerging from university I have already, through a comprehensive education, seen more than enough to recognise the traits of many of the awful inhabitants of Newtown. These personalities have such an effect on the communities around them and exert such a pressure on beleaguered social services they demand so much of. The middle class need to be able to laugh or we’ll have a collective aneurism.
Copperfield’s book highlights the problem of monitoring bias. If we monitor the rates different police forces ‘solve crimes’ we encourage them to focus on crimes easily solved, often those that will not end in any action. Any attempt to improve police performance by more thorough monitoring of specific targets will likely just increase this bureaucracy. Direct democratic accountability for police forces seems the mechanism most likely to keep the police focussed upon genuine local priorities.
However, these and other inefficiencies are not sufficient to explain Copperfield’s account of what is going wrong with modern policing. Clearly a large part of the problem is a social decline which creates many families who are such a massively disproportionate drain on all elements of the state, as well as the police. Copperfield’s attempt to work out where families with these problems come from is limited although his fulsome praise for old people suggests that they have not been around forever.
Dalrymple’s book also has a lot of first hand evidence. Some of the stories he recounts from a life spent as a doctor in troubled communities are shocking and he sets them in the context of cultural collapse in large sections of Britain. However, his work also contains a deeper analysis of the root of Britain’s cultural problem. He asks the question of what has gone wrong to create the breakdown in so many families. His answer is that there has been a massive cultural decline in social standards as morality was written off, intellectually, as judgemental. This intellectual position rose to dominance and became accepted throughout society since the sixties. The physical and emotional cost of this decline has been felt most by the poor. Without a culture of self-reliance, hard work and committed families they fall into dreadful lifestyles. The welfare state prevents financial ruin but this may decrease the likelihood of people tackling the root of their problems. Collapsing families condemn the poor, and their children, to unhappiness and abuse.
These books are part of a revival in British social conservatism. Iain Duncan Smith has, since the end of his time as Conservative leader, been the political face of this revival. In my opinion, before this the social conservatives were far too reliant upon a religious agenda. They spent far too much of their time fighting increasing tolerance of minority activities such as homosexuality or representing religious views in the political discourse. This was always a case which was going to have a hard time in an increasingly irreligious society. It also had little appeal for someone, like me, without such a religious perspective. However, Dalrymple’s conservatism focuses on broader social and cultural concerns. It makes the case for the importance of family and taboo to the maintenance of civilised society.
It is hard, after reading Dalyrmple and Copperfield’s accounts to deny that something has gone seriously wrong in Britain’s culture. Many causes, from the libertarian desire to reduce dependence on the state to the objective of increasing social mobility, will not be achievable without addressing the problems the social conservatives identify. Tackling family breakdown is the key to reducing demand for the state. Solid families produce children capable of climbing the social ladder. This is why, I think, the new social conservative programme is likely to prove politically influential.
Both books are well worth your time if you wish to understand the degree of the problem British society faces. I do not think any political movement can point to a greater challenge to our future as a nation. They should be a wake-up call.
If enough people are like me and enjoy spending time reading books instead of putting in yet more hours in front of a computer then the blog book is quite a good business model. A fair amount of promotion can be done for free through the blogosphere, the popularity of the blog gives some indication that there are people who want to read what the author is saying and the book can be prepared quickly as most of the content is already written. The idea also has something of a precedent. Collections of work by prominent academics (think Friedman's Essays in Positive Economics) usually sell plenty of copies to university audiences who can get the original pieces from journals. Books are convenient and pleasant and plenty of people will pay for that convenience even if they can obtain the content elsewhere.
The two authors have very different styles. Dalrymple is a good candidate for best essayist of the modern era and his writing is impeccable. It has that magical ability to be both easy to read and thoroughly serious. Copperfield's style is colloquial which works well for an account from the front-line. They are also rather different books as one is a broad collection of very structured essays while the other is a selection from a blog.
Wasting Police Time is the funnier book. While few outside of certain public services like the police have had such sustained contact with the madness of the modern British poor all of us have suffered them at one point or other. Even at twenty three, having lived in well off, Conservative-voting areas my entire life and just emerging from university I have already, through a comprehensive education, seen more than enough to recognise the traits of many of the awful inhabitants of Newtown. These personalities have such an effect on the communities around them and exert such a pressure on beleaguered social services they demand so much of. The middle class need to be able to laugh or we’ll have a collective aneurism.
Copperfield’s book highlights the problem of monitoring bias. If we monitor the rates different police forces ‘solve crimes’ we encourage them to focus on crimes easily solved, often those that will not end in any action. Any attempt to improve police performance by more thorough monitoring of specific targets will likely just increase this bureaucracy. Direct democratic accountability for police forces seems the mechanism most likely to keep the police focussed upon genuine local priorities.
However, these and other inefficiencies are not sufficient to explain Copperfield’s account of what is going wrong with modern policing. Clearly a large part of the problem is a social decline which creates many families who are such a massively disproportionate drain on all elements of the state, as well as the police. Copperfield’s attempt to work out where families with these problems come from is limited although his fulsome praise for old people suggests that they have not been around forever.
Dalrymple’s book also has a lot of first hand evidence. Some of the stories he recounts from a life spent as a doctor in troubled communities are shocking and he sets them in the context of cultural collapse in large sections of Britain. However, his work also contains a deeper analysis of the root of Britain’s cultural problem. He asks the question of what has gone wrong to create the breakdown in so many families. His answer is that there has been a massive cultural decline in social standards as morality was written off, intellectually, as judgemental. This intellectual position rose to dominance and became accepted throughout society since the sixties. The physical and emotional cost of this decline has been felt most by the poor. Without a culture of self-reliance, hard work and committed families they fall into dreadful lifestyles. The welfare state prevents financial ruin but this may decrease the likelihood of people tackling the root of their problems. Collapsing families condemn the poor, and their children, to unhappiness and abuse.
These books are part of a revival in British social conservatism. Iain Duncan Smith has, since the end of his time as Conservative leader, been the political face of this revival. In my opinion, before this the social conservatives were far too reliant upon a religious agenda. They spent far too much of their time fighting increasing tolerance of minority activities such as homosexuality or representing religious views in the political discourse. This was always a case which was going to have a hard time in an increasingly irreligious society. It also had little appeal for someone, like me, without such a religious perspective. However, Dalrymple’s conservatism focuses on broader social and cultural concerns. It makes the case for the importance of family and taboo to the maintenance of civilised society.
It is hard, after reading Dalyrmple and Copperfield’s accounts to deny that something has gone seriously wrong in Britain’s culture. Many causes, from the libertarian desire to reduce dependence on the state to the objective of increasing social mobility, will not be achievable without addressing the problems the social conservatives identify. Tackling family breakdown is the key to reducing demand for the state. Solid families produce children capable of climbing the social ladder. This is why, I think, the new social conservative programme is likely to prove politically influential.
Both books are well worth your time if you wish to understand the degree of the problem British society faces. I do not think any political movement can point to a greater challenge to our future as a nation. They should be a wake-up call.
Tuesday, April 10, 2007
Neill Harvey-Smith's Scheme for Reforming Tax Credits
Neill Harvey-Smith has a plan for reforming the tax credit system. Creating such a plan is noble work as the scheme is an absolute travesty at present and more and more is being asked of it. Essentially he argues that we should use an abolition of parts of the tax credit, principally those not involving children, to pay for a reduction in business taxes. We should then raise the minimum wage. By these means business pays the money we currently pay as tax credits as wages instead of through corporate taxation which is used to pay for tax credits. His argument is that this improves simplicity, is better for a worker's feeling of self-actualisation as it shows up as money they have earned and creates fewer discincentives for a worker to endeavour to improve their condition. I don't think he has properly analysed the costs of the minimum wage and he has also aggregated 'business' in a way which glosses over his proposal's true business harms.
In discussing the efficiency of his new system Neill considers all of the costs of a tax credit system but none of the inefficiencies associated with the minimum wage. There are a number of ways the minimum wage can be avoided by businesses who do not wish to face increased costs. Undocumented immigrants who do not need to be paid this wage yield an increased return which will outweigh the costs of possible legal sanction in more and more cases. Applying the minimum wage to piece work is fraught with difficulty as there is not a clear hourly rate. This can be exploited. Finally, many businesses can simply fire a portion of their workers to keep costs the same. Workers pay for the minimum wage in the greater effort that is necessary to complete the same workload with fewer people.
Like most prohibitions of a mutually consenting activity the minimum wage is hard to enforce. Any business that wishes to remain honest and pay the new, higher than market, wages risks being put out of business by less law-abiding or foreign rivals. Restrictions like the minimum wage pervert market mechanisms. Creative destruction turns from an imperative to increase efficiency into an imperative to become a criminal. Every penny added to the minimum wage increases this effect as the advantage accorded to the criminal increases. Despite all these problems a rise in the minimum wage could still be worthwhile if it has particularly massive benefits. However, Neill has not made this case as his analysis is based upon considering the costs and failures of the tax credit system but not the costs and failures of the minimum wage. Without a proper cost-benefit analysis he cannot claim that his system is the less costly means of distributing benefits to the low paid.
His other big problem is that he aggregates 'business' in a very misleading way. A minimum wage means that businesses pay increased wages if they employ the poor. The more people you employ on the minimum wage right now the more you will pay with any increase in the minimum wage. By contrast, a cut in corporation tax will go to all businesses. This means that some firms are going to be taking a kicking from this measure while others take close to a pure tax cut.
Some employers of low-wage workers, particularly those in less competitive markets, will internalise the new costs or find that higher wages are actually better for them but the number of these cases will be limited in a relatively open economy like the UK's. Many other firms will try one of the tactics described above to avoid paying the new wages. However, a great many firms will prove unable to pay the new wages and will not have the nous or moral 'flexibility' to avoid paying. These firms will exit through bankruptcy or outsourcing. Their workers will be made unemployed. This is the classic problem created by the minimum wage.
We have an obvious objective. Put more money in the hands of those working but whose low productivity justifies only low wages. We can pay for this in a way which spreads the cost across the economy, either tax credits or something else like a citizens basic income, or we can pay for it through a minimum wage. By focussing the costs onto companies that employ the poor we would distort our economy. We would hurt our competitive position in any business that employs the low skilled. This would increase the pace of the shift in our comparative advantage towards high-skilled work. With the weaknesses in our education system this is likely to feed into further increases in income inequality.
Neill's idea addresses a serious problem but I am unconvinced he has found the first question to which 'increase the minimum wage' is the answer.
In discussing the efficiency of his new system Neill considers all of the costs of a tax credit system but none of the inefficiencies associated with the minimum wage. There are a number of ways the minimum wage can be avoided by businesses who do not wish to face increased costs. Undocumented immigrants who do not need to be paid this wage yield an increased return which will outweigh the costs of possible legal sanction in more and more cases. Applying the minimum wage to piece work is fraught with difficulty as there is not a clear hourly rate. This can be exploited. Finally, many businesses can simply fire a portion of their workers to keep costs the same. Workers pay for the minimum wage in the greater effort that is necessary to complete the same workload with fewer people.
Like most prohibitions of a mutually consenting activity the minimum wage is hard to enforce. Any business that wishes to remain honest and pay the new, higher than market, wages risks being put out of business by less law-abiding or foreign rivals. Restrictions like the minimum wage pervert market mechanisms. Creative destruction turns from an imperative to increase efficiency into an imperative to become a criminal. Every penny added to the minimum wage increases this effect as the advantage accorded to the criminal increases. Despite all these problems a rise in the minimum wage could still be worthwhile if it has particularly massive benefits. However, Neill has not made this case as his analysis is based upon considering the costs and failures of the tax credit system but not the costs and failures of the minimum wage. Without a proper cost-benefit analysis he cannot claim that his system is the less costly means of distributing benefits to the low paid.
His other big problem is that he aggregates 'business' in a very misleading way. A minimum wage means that businesses pay increased wages if they employ the poor. The more people you employ on the minimum wage right now the more you will pay with any increase in the minimum wage. By contrast, a cut in corporation tax will go to all businesses. This means that some firms are going to be taking a kicking from this measure while others take close to a pure tax cut.
Some employers of low-wage workers, particularly those in less competitive markets, will internalise the new costs or find that higher wages are actually better for them but the number of these cases will be limited in a relatively open economy like the UK's. Many other firms will try one of the tactics described above to avoid paying the new wages. However, a great many firms will prove unable to pay the new wages and will not have the nous or moral 'flexibility' to avoid paying. These firms will exit through bankruptcy or outsourcing. Their workers will be made unemployed. This is the classic problem created by the minimum wage.
We have an obvious objective. Put more money in the hands of those working but whose low productivity justifies only low wages. We can pay for this in a way which spreads the cost across the economy, either tax credits or something else like a citizens basic income, or we can pay for it through a minimum wage. By focussing the costs onto companies that employ the poor we would distort our economy. We would hurt our competitive position in any business that employs the low skilled. This would increase the pace of the shift in our comparative advantage towards high-skilled work. With the weaknesses in our education system this is likely to feed into further increases in income inequality.
Neill's idea addresses a serious problem but I am unconvinced he has found the first question to which 'increase the minimum wage' is the answer.
Monday, April 09, 2007
A ramble about a ramble...
I was back in Letchworth, my family home, this weekend. Lacking anything interesting to do I took a long walk. Starting at 7.30 I finished at 9.30 in the dark. It was terribly relaxing and I stopped every so often to continue reading Wasting Police Time (which I'll review this evening hopefully).
The phone camera dealt pretty well with the low light which is impressive. My phone is a Nokia N73 and I'm pretty pleased with it so far. It doesn't have the irritating little failures of design or reliability that have plagued every Sony Ericsson or Motorola phone I've used. The camera has the same resolution as my aging digital camera and is more than good enough for my purposes. This is the first time I've actually experienced convergence and not having to worry about bringing a camera with me is pleasant. The only alternative course of action I was really considering was getting a music phone but as the need for an MP3 player is more predictable (I don't just see things and think "I want to listen to that now") a music phone wouldn't add much value.
Here's a picture in good light which better demonstrates the camera's ability. Its subject is the new installation in the Royal Society courtyard:
I quite like the reliance of the installation on its surroundings. Alone it would just look like an Imperial War Museum mock-up of Stalingrad. In the distinctly eternal surroundings of the Royal Society courtyard it becomes a lot more interesting. It highlights just how remarkable the security and peace of the Royal Society is. This suggests to me the conservative message that the stability and civility of our society is rare and special. We should be careful of change that might, inadvertently or otherwise, endanger that achievement. I'm sure the artist himself is a dreadful socialist but undermining paradigms by interpreting art in a right-wing manner is one of the most enjoyable parts of being a thoughtful conservative.
Anyway, this post does actually have a point. Something about self-indulgent bloggers writing about their uninteresting personal lives. As I'm guilty of self-promotion I only need to become a little more self-centred and I'll have the full set.
No. The point is that in urbanised societies many do not regularly visit even semi-rural, suburban areas like Letchworth and its surroundings. There has long been a contention that cutting yourself off from the natural world in this way is a bad idea. That the human experience is inextricably linked to elements of the natural world and cutting ourselves off from them is psychologically risky. I've always been a bit dubious of this logic as it sounds like the kind of vaguely hippyish analysis that lacks data and is used as an excuse for other problems such as family breakdown. Humans, after all, adapt pretty well to new circumstances and the British countryside of today is little like the countryside we evolved in. Little chance of being eaten by a wolf for a start.
However, whenever I actually take the time to take a long walk among trees and fields it does relax me in a way the city rarely can. I think that the countryside provides perspective. In the city everyone is rushing around attending to their own obsessions. By contrast, disinterested Nature possesses an infectious calm. This view is close to the opposite of the Gaia thesis which seeks to anthropomorphize nature and turn it into one more concerned consciousness. Perhaps I'm safe from hippy status after all.
This understanding of nature's importance is my explanation for why my favourite artist is Salvator Rosa (the logo at the top-right of this blog is text superimposed on a painting of his). They aren't pure landscapes which relegate humans to being 'behind the camera'. Instead the landscapes loom over the protagonists. The background constantly draws the eye from the foreground to scenes of powerful but uncaring nature. This sends an almost Stoic message, Rosa thought of himself as a part of that school although his personal conduct was deeply unStoic, about the shallowness of our manias.
The phone camera dealt pretty well with the low light which is impressive. My phone is a Nokia N73 and I'm pretty pleased with it so far. It doesn't have the irritating little failures of design or reliability that have plagued every Sony Ericsson or Motorola phone I've used. The camera has the same resolution as my aging digital camera and is more than good enough for my purposes. This is the first time I've actually experienced convergence and not having to worry about bringing a camera with me is pleasant. The only alternative course of action I was really considering was getting a music phone but as the need for an MP3 player is more predictable (I don't just see things and think "I want to listen to that now") a music phone wouldn't add much value.
Here's a picture in good light which better demonstrates the camera's ability. Its subject is the new installation in the Royal Society courtyard:
I quite like the reliance of the installation on its surroundings. Alone it would just look like an Imperial War Museum mock-up of Stalingrad. In the distinctly eternal surroundings of the Royal Society courtyard it becomes a lot more interesting. It highlights just how remarkable the security and peace of the Royal Society is. This suggests to me the conservative message that the stability and civility of our society is rare and special. We should be careful of change that might, inadvertently or otherwise, endanger that achievement. I'm sure the artist himself is a dreadful socialist but undermining paradigms by interpreting art in a right-wing manner is one of the most enjoyable parts of being a thoughtful conservative.
Anyway, this post does actually have a point. Something about self-indulgent bloggers writing about their uninteresting personal lives. As I'm guilty of self-promotion I only need to become a little more self-centred and I'll have the full set.
No. The point is that in urbanised societies many do not regularly visit even semi-rural, suburban areas like Letchworth and its surroundings. There has long been a contention that cutting yourself off from the natural world in this way is a bad idea. That the human experience is inextricably linked to elements of the natural world and cutting ourselves off from them is psychologically risky. I've always been a bit dubious of this logic as it sounds like the kind of vaguely hippyish analysis that lacks data and is used as an excuse for other problems such as family breakdown. Humans, after all, adapt pretty well to new circumstances and the British countryside of today is little like the countryside we evolved in. Little chance of being eaten by a wolf for a start.
However, whenever I actually take the time to take a long walk among trees and fields it does relax me in a way the city rarely can. I think that the countryside provides perspective. In the city everyone is rushing around attending to their own obsessions. By contrast, disinterested Nature possesses an infectious calm. This view is close to the opposite of the Gaia thesis which seeks to anthropomorphize nature and turn it into one more concerned consciousness. Perhaps I'm safe from hippy status after all.
This understanding of nature's importance is my explanation for why my favourite artist is Salvator Rosa (the logo at the top-right of this blog is text superimposed on a painting of his). They aren't pure landscapes which relegate humans to being 'behind the camera'. Instead the landscapes loom over the protagonists. The background constantly draws the eye from the foreground to scenes of powerful but uncaring nature. This sends an almost Stoic message, Rosa thought of himself as a part of that school although his personal conduct was deeply unStoic, about the shallowness of our manias.
Sunday, April 08, 2007
John Nott
Gracchi is very impressed by John Nott but I'm not so sure. His position on Afghanistan seems to be "hasn't gone well in the past". He argues that the Russians failed, but they were fighting a far more united body of the Afghan population. He argues Britain failed but it was both facing a united Afghanistan and had none of the logistical capabilities of a modern army. All of Nott's logic relies upon the Afghans necessarily rallying to defeat the foreigners. That may happen in the future but is not happening now and assuming it necessarily will is facile.
Things are hard in Afghanistan. To generalise: things went well initially, poorly last year thanks to poor planning, a shortage of troops and a lack of proper pressure for improvement in Pakistan's border region. This year we have more troops and more resources in general. We face a great many challenges and if we get things wrong and, in particular, if a shortage of troops forces us to do too much harm to civilians things could go badly wrong. However, apart from a bizarre historical determinism there is no reason to think that a positive outcome in Afghanistan is impossible.
His opinions on other issues were equally confused. He seemed to want us to retreat from a global role but also wanted more soldiers (in case the French invade?). A retreat from a global, power projection role is a big issue that I won't address comprehensively right now but his argument for it was unconvincing. He argued that the Americans were the only ones capable of playing the 'global policeman' role.
That implies that we can't replace America, that we will usually be acting with the US. It doesn't imply any diminishment of our global role which has been based on acting as an ally of the US for quite some time. Assuming that as the US has carriers ours are useless would also imply that as America has soldiers we needed none of those. To combine his position on the carriers with a desire to keep Trident is utterly contradictory. The question is whether additional carriers are useful to the US-British alliance. Given how central carrier-based firepower has been to recent deployments abroad it seems pretty clear that additional carriers could be helpful. Whether they are more helpful than alternative ways of spending the money is a matter that requires detailed enquiry Nott does not undertake.
He argues that we should prioritise our own local security services. This implies free-riding off the US in terms of global stability. This is a coherent position although morally and, in the long term, practically a bad idea. Given that Nott was an ardent Cold Warrior, he should look to that conflict and why we made the decision not to free-ride then.
I should finally note on the carriers that last time Nott argued for getting rid of our naval power, and carriers, the Falklands were invaded. As he thinks our victory in the Falklands was a great triumph surely he should be admitting that naval power has at least some important uses to us still.
Things are hard in Afghanistan. To generalise: things went well initially, poorly last year thanks to poor planning, a shortage of troops and a lack of proper pressure for improvement in Pakistan's border region. This year we have more troops and more resources in general. We face a great many challenges and if we get things wrong and, in particular, if a shortage of troops forces us to do too much harm to civilians things could go badly wrong. However, apart from a bizarre historical determinism there is no reason to think that a positive outcome in Afghanistan is impossible.
His opinions on other issues were equally confused. He seemed to want us to retreat from a global role but also wanted more soldiers (in case the French invade?). A retreat from a global, power projection role is a big issue that I won't address comprehensively right now but his argument for it was unconvincing. He argued that the Americans were the only ones capable of playing the 'global policeman' role.
That implies that we can't replace America, that we will usually be acting with the US. It doesn't imply any diminishment of our global role which has been based on acting as an ally of the US for quite some time. Assuming that as the US has carriers ours are useless would also imply that as America has soldiers we needed none of those. To combine his position on the carriers with a desire to keep Trident is utterly contradictory. The question is whether additional carriers are useful to the US-British alliance. Given how central carrier-based firepower has been to recent deployments abroad it seems pretty clear that additional carriers could be helpful. Whether they are more helpful than alternative ways of spending the money is a matter that requires detailed enquiry Nott does not undertake.
He argues that we should prioritise our own local security services. This implies free-riding off the US in terms of global stability. This is a coherent position although morally and, in the long term, practically a bad idea. Given that Nott was an ardent Cold Warrior, he should look to that conflict and why we made the decision not to free-ride then.
I should finally note on the carriers that last time Nott argued for getting rid of our naval power, and carriers, the Falklands were invaded. As he thinks our victory in the Falklands was a great triumph surely he should be admitting that naval power has at least some important uses to us still.
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