How the right tricked people into supporting rampant inequality

An LSE study has traced how we have come to swallow the meritocracy myth. This narrative needs to change writes Polly Toynbee in The Guardian

  

‘Talking to people using food banks and too often you hear people absorbing the blame. “I should have tried harder at school,” is a frequent refrain.’ Photograph: Murdo Macleod for the Guardian


Why don’t people rebel? The wonder of decades of rising inequality across the west is how placidly people put up with it. UK wages are still below 2008 levels, a growing sector of jobs are nasty – non-unionised, achingly hard, with workers treated worse, the boot on the employer’s foot despite low unemployment. You might call Brexit a kind of protest – but that can be overdone: the vote was swung largely by comfortable older Tory voters in the shires, led – or misled – by privileged ideologues.

Those on the progressive left have been perplexed that rising social injustice hasn’t led to much sign of the oppressed rising up, either in the ballot box or in protest. New research out on Wednesday from the London School of Economics suggests some explanations – though these will be of precious little comfort. Looking at surveys across the OECD’s 23 developed western countries since the 1980s, Dr Jonathan Mijs of the London School of Economics International Inequalities Institute monitors how, as countries become less equal, attitudes of the majority shift in the wrong direction.


Both rich and poor delude themselves they are ordinary

People come to believe more strongly that their country is a meritocracy where hard work and talent take people to the top. They are less likely to think structural inequalities or birth help or hinder people’s rise. The US, home of the American Dream – the myth that everyone has an equal chance to rise from log cabin to White House – is the most unequal, yet 95% now firmly believe in meritocracy, fewer in structural injustice. The UK, Australia and New Zealand are not far behind, sharing this Anglophone disease, a societal “body dysmorphia”: other European countries are less inclined to justify inequality, though the movement has been in that direction. This is the neoliberal triumph over hearts and minds.

The meritocracy myth comes with other tropes, especially placing the blame on the poor, with decreasing social empathy. Believing people sink through their own fault is the necessary adjunct for proving the mega-wealthy got there by merit alone.

In Britain, where inequality shot through the roof in the mid-80s and has stayed there ever since, we have seen how despising inequality’s losers has been deliberately fostered by governments. The Public and Commercial Services Union representing job centre staff, published a pamphlet this week outlining the decline in support for social security, and those who receive it. Remember the sheer spite of Peter Lilley, Tory social security secretary, in 1992 singing to his party conference a Mikado pastiche of a “little list” of people to be despised: “young ladies who get pregnant just to jump the housing queue” and “benefits offenders” making “bogus claims”. From then on the rightwing press and Benefits Street mockery set the tone of public contempt for anyone in need. Iain Duncan Smith used to send out juicy examples of benefit cheats to selected rightwing newspapers, without government figures showing fraud at just 1.1% of the benefits budget. In 2013, Ipsos Mori found that the public think £24 in every £100 is fraudulently claimed.

Politically, the mystery is why politicians got away with making things unfairer after the lid blew off top earning in the 80s. Now there’s less chance of owning a home, fewer savings, more debt and public services deteriorating. Cedric Brown, the first fat-cat shocker to catch the public eye, rewarded in 1995 for privatising British Gas with a salary of £475,000 (47 times that of his average employee), and a £600,000 incentive deal, comes from more innocent days. FTSE 100 CEOs now earn £4m.

Yet riots are extraordinarily rare – the French have always done it: it’s in their founding revolutionary DNA, and it helps to keep them less unequal than the Anglophones. Fear of revolution in cold war years kept unions strong and boardrooms wary of excess: the mid-70s, famed for union militancy, were the most equal years in British history.

This research suggests that as countries get more unequal people live in greater social isolation, locked within a narrow income group. Their friends and family share the same incomes, segregated by neighbourhood and marry similar partners. Children mix less in socially segregated schools. People no longer see over the high social fences so they don’t know how the other half lives, Mijs finds.

Ignorant of the facts, everyone wrongly places themselves on the income scale closer to the middle. Both rich and poor delude themselves they are ordinary. But telling people the facts doesn’t change their attitudes: increasingly they cling to a moral belief that people rise by merit, sinking for lack of it. Spend time talking to people using food banks or in Citizens Advice Bureaus knocked down by benefit sanctions, and too often you hear people absorbing the blame. “I should have tried harder at school,” is a frequent refrain, as if no other forces were at play. Talk to the mega-rich – I once conducted focus groups of earners up to £10m – and they are wilfully ignorant about their super-privilege, unshakable in believing their superior merit.

The right captured the story, the emotions, the moral framing: social democrats need to seize it back with a narrative of immorality that is more compelling. The British Social Attitudes survey suggests a swing back towards empathy with the swelling numbers of poor – more than £4m children. But still inheritance tax remains the most reviled of all taxes. The right forever try to prove the poor are stupider by nature than the rich, but Professor Steve Jones, celebrated geneticist, when asked about the heritability of intelligence, replies deftly that the most important heritable trait, by miles, is wealth.

Why do people care more about benefit ‘scroungers’ than billions lost to the rich?

Robert De Vries and Aaron Reeves in The Guardian


The Paradise Papers have once again revealed the ingenuity and energy the super-rich are willing to deploy to keep their money away from the taxman. By illuminating the scale of this injustice, journalists have provided an invaluable service. And yet the revelations do not seem to have generated the level of public outrage that might have been expected.

At a time of staggering global inequality, it is perhaps surprising that people are not more animated by the determination of the ultra-rich to avoid their obligations to support our roads, hospitals, soldiers and schools – when regular citizens are unable to take advantage of such arrangements. However, this relative lack of concern is consistent with research on people’s attitudes towards tax avoidance.

Last year’s British Social Attitudes survey asked Britons about their feelings on this issue. Our analysis of this data (with Ben Baumberg Geiger of the University of Kent) revealed that the British public believes tax avoidance to be commonplace (around one third of taxpayers are assumed to have exploited a tax loophole). In moral terms, people seem rather ambivalent; less than half (48%) thought that legal tax avoidance was “usually or always wrong”.

By contrast, more than 60% of Britons believe it is “usually or always wrong” for poorer people to use legal loopholes to claim more benefits. In other words, people are significantly more likely to condemn poor people for using legal means to obtain more benefits than they are to condemn rich people for avoiding tax. This is a consistent finding across many different studies. For example, detailed interviews conducted by the Joseph Rowntree Foundation in the wake of the 2008 financial crisis found that people “tended to be far more exercised by the prospect of low-income groups exploiting the system than they were about high-income groups doing the same”.

This discrepancy is reflected in government priorities. Deep public antipathy towards benefit “scroungers” has been the rock upon which successive Conservative-led parliaments have built the case for austerity. Throughout his premiership, David Cameron, along with his chancellor, George Osborne, kept the opposition between “hardworking people” and lazy benefit claimants right at the centre of their messaging on spending cuts. Though gestures have been made towards addressing widespread tax avoidance by the wealthy, very little has actually been achieved. This stands in stark contrast to the scale and speed with which changes have been made to welfare legislation.

Will the Paradise Papers shift the public’s focus? The leaks alone are seemingly not enough. The 2016 British Social Attitudes survey was conducted just four months after the release of the Panama Papers. Even then, the British public remained more concerned about benefit claimants than tax avoiders.

Fundamentally, the Paradise Papers are about numbers – vast sums of money disappearing offshore that could be spent on public services here in the UK. However, as the former chair of the UK Statistics Authority, Andrew Dilnot, has often pointed out, people are bad at dealing with numbers on this scale. Unless you are an economist or a statistician, numbers in the millions and billions are just not particularly meaningful.

The key is to link these numbers to their consequences. The money we lose because people like Lewis Hamilton don’t pay some VAT on their private jet means thousands more visits to food banks. The budget cuts leading to rising homelessness might not have been necessary if Apple had paid more tax. Fewer people might have killed themselves after a work-capability assessment if companies like Alphabet (Google) had not registered their offices in Bermuda, and the downward pressure on benefits payments was not so intense. 

The causal chains connecting these events are complex and often opaque, but that does not make their consequences any less real, especially for those who have felt the hard edge of austerity.

The Paradise Papers have dragged the murky world of offshore finance into the spotlight. However, calls for change may founder against the British public’s persistent focus on the perceived crimes of the poor. That is, unless we – as academics, politicians, journalists and others – can articulate how the decisions of the very rich contribute to the expulsion of the vulnerable from the protection of state-funded public services. Quite simply, people get hurt when the rich don’t pay their taxes.

After the Grenfell fire, the church got it right where the council failed

Giles Fraser in The Guardian

We are an “unsuccessful church”, the exhausted Rev Alan Everett told me, as I persuaded him to take a break and have some lunch. He meant that they only get 30 to 60 people in the pews on a Sunday morning and that it wasn’t one of those whizzy Alpha course churches beloved by London bishops and their growth spreadsheets. Next to us in the church’s sunny courtyard, an extended Muslim family talked openly about their escape from the fire. “Our lungs are full of smoke but at least, thank God, we are all alive.” A church worker told them where to find new shoes and clothes. It felt like a refugee camp. Perhaps it was a refugee camp. And hanging over the whole scene, Grenfell Tower, black and enormous. It stands as a biblical-scale condemnation to a whole society.

In the days after the fire, the church of St Clement’s, Notting Dale, became a hub for grieving families, generous donations of clothes and food – and camera-ready politicians. First Jeremy Corbyn came. Then a furtive Theresa May met a few residents in the church. Then Sadiq Khan was at mass on Sunday morning. I wanted to know from Everett how the church was able to respond so quickly in a way that the council didn’t. “I was woken up at 3am by a priest who lives in the tower, and so I came down to the church, opened the doors and turned the lights on,” he said. It all began from there. People started coming in out of the dark – often passersby looking to help. First they sorted out tea and coffee. By 7am, they had a fully stocked breakfast bar, with volunteers organising themselves into teams. Within hours, local restaurants were delivering food; clothes began to pile high in the church sanctuary – about 40 Transit vans’ worth, the vicar estimates. The place looked like a warehouse.

Listening to Everett, it struck me that “opening the doors and turning the lights on” was precisely the difference between the church and a local authority that had become arms’ length from its residents, continually dealing with local people only through intermediary organisations such as the locally much-hated Kensington and Chelsea Tenant Management Organisation. The nicest thing I heard about the royal borough from local people was that it had outsourced its care for the poor as a cost efficiency. The worst, that it was deliberately running down its stock of social housing so that they could eventually bring in the developers.

Donations inside the church of St Clement’s, Notting Dale. Photograph: Matthew Barrett

In his Sunday morning sermon, Fr Robert Thompson, an assistant priest in the parish and also a local Labour councillor, channelled his anger. Contrasting the good communication of the local volunteers with the bad communication of the authorities, he said: “The people on the lowest incomes of this parish simply do not feel listened to, either this week or in previous years, by those in power. Worse than that, what the whole issue of the cladding and the lack of sprinklers may well highlight is that some people in our society have simply become excess and debris on our neoliberal, unregulated, individualistic, capitalist and consumerist society.” The churchy way of saying “I agree” with all this is “amen”. The church of St Clement was built and paid for in 1867 by Alfred Dalgarno, a philanthropist vicar with deep pockets and a compassion for the poor. Thompson is a councillor for the Dalgarno ward, named after him. “This parish was built pre-welfare state and it is going to be needed as we now enter the post-welfare state,” he told me, chillingly.

Of course, parishes like St Clement are only superficially unsuccessful. Its secularised charity arm, the Clement James centre, helps thousands of local people every year, into work, into university. That’s why the parish is so trusted locally. “We are called to share in the brokenness and the forgottenness of the people we serve,” the vicar explained. In poor parishes, the job is to keep the doors open and the lights on. And this being permanently present is no small thing. Not least because, as Christians believe, the light will always beckon people out of the darkness.

Legal aid is a national institution like the NHS, so why is it not properly funded?

John Briant in The Guardian


The media jump on high-profile cases of criminals like Ben Butler and Jennie Gray receiving huge amounts in legal aid. The real outrage is successive governments’ policy to limit access to it

 

‘Even if we have done something wrong, or criminal, or stupid, we should still have someone who understands the law fighting on our behalf.’ Photograph: Andrew Cowie/AFP/Getty Images


It is with a mixture of intense frustration and sadness that I read the reports about the amount of legal aid that Ben Butler, convicted of murdering his six-year-old daughter, and his partner Jennie Gray, guilty of child cruelty, received. The figure is quoted at approximately £1.5m over a 15-year period, with £1.2m in civil legal aid.

Legal aid cuts have led to surge in DIY defence, says charity



It’s frustrating for a number of reasons. Of the £1.5m, approximately £300,000 went towards legal aid for criminal proceedings, and accounted for a month-long trial involving complex medical evidence for an original child cruelty and GBH trial, Gray’s case involving perverting the course of justice, and Butler’s murder trial. One would hope that in all of these cases, the legal aid lawyers were working to the best of their ability using the highest quality lawyers willing to conduct work at legal aid rates.

What is also true, is that the lawyers involved will have undertaken an immense amount of work that they weren’t paid for. Had they been privately funded, the fees would have been many multiples higher.

As a criminal practitioner of more than 20 years, I know the workloads that are undertaken daily by legal aid lawyers. In London, the going yearly salary for a duty solicitor is about £30,000 but may reach £40,000 with experience. Barristers’ chambers are paid £50 for sending a barrister to a hearing. This covers travelling time, the two hours waiting to get into court and the actual time spent representing a client in court – and the barristers will only get a cut of that money.

If you attend the police station, the firm is paid £150-£250 per case, which includes the initial attendance, plus any further bails to return to the station on other days – which might include ID parades or second or third interviews. Those who freelance at the police station are paid less than £100 per visit, which can mean a couple of hours travelling as well as up to 12 hours of waiting and advising. Police station advisers’ fees therefore range from an hourly rate of £30 down to £7 – it doesn’t vary with bank holidays or the fact that most of this advising occurs at ungodly hours of the night or weekends.

Legal aid solicitors have similar qualification periods to doctors: after completing a first degree they undergo a year of practical qualifications, then two years of on-the-job training. The qualification for barristers is a year shorter – but the cost of this in London has been estimated by the Bar Council as more than £120,000. Graduate salaries in legal aid firms are usually at the Law Society’s minimum of £18,590 pa for London. Of the respondents surveyed by Young Legal Aid Lawyers(whose membership consists of those within 10 years of qualification), 50% had salaries under £20,000 in 2013.

A well-known London plumbing firm is delighted to share its call-out rates with the public – they are “100% transparent charges and we have a clear, upfront, open and honest pricing system”. These charges range from a weekday daytime rate of £95 per hour at a minimum of one-hour call-out and 15 minute increments after this, to a 12am-7am rate of £200 per hour. Trust me – legal aid firms would kill for these rates.

Legal aid is a national institution, like the NHS. We all hope that we will never need it, that we won’t have unfounded rumours triggering a social services investigation or family proceedings; that we won’t be falsely accused of a crime. Even if we have done something wrong, or criminal or stupid, we should still have someone who understands the law fighting on our behalf to put our side of the story and explain our circumstances. This is part of what has separated us as a “civilised society”, these rights and freedoms and the privilege to be served by those who choose to sacrifice massive incomes to do relatively poorly paid legal aid work.

The unfortunate thing is that it is the abnormal cases like this (which are often the only things that allow a legal aid practice to survive the otherwise dreadful legal aid rates), and the abnormal earnings of barristers with huge experience dealing with the most serious cases and working insane hours, that get reported. Legal aid is not a vote winner; it doesn’t fall into the category of being tough on crime, and it always seems to be paid to people we like to blame – immigrants, good-for-nothings, so-called scroungers. It’s just your money being spent on someone else.

The difficulty comes when that someone else is you. Teacher, doctor, police officer, journalist, city trader, engineer, labourer, English, Scottish, white, black, depressed, addicted, sober: I have represented all of you, without judgment, to the best of my abilities, 24 hours a day for over 20 years.

Ellie Butler's grandfather: 'The devastation is complete and utter'

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What makes me sad is this. Ellie Butler’s grandparents were not entitled to legal aid. Despite spending their life savings and working extra jobs, they could not fight for custody of their grandchild, whom they were concerned may be at risk. They couldn’t afford to pay their private legal fees and had to represent themselves and lost. This is the tragedy: not that £1.5m went on legal aid, but that Neal and Linda Gray didn’t get any help to fight for their granddaughter.

Mexico cuts poverty at a stroke – by changing the way it measures earnings

Change in methodology by national statistics institute provokes scepticism after it shows Mexico’s poor are richer by a third compared with last year

 

A girl stands in a slum in Mexico City. Mexico’s poor may not be feeling better off despite the latest report from the national statistics institute. Photograph: Alamy Stock Photo


David Agren in The Guardian


Mexico’s impoverished masses were up to 33.6% richer in 2015 than the previous year, according to the state-run statistics service.

But the change owes less to a sudden increase in actual wealth and wellbeing for the country’s poor than to unannounced changes in the methodology for measuring household earnings.

The changes make comparing poverty rates from one year to the next impossible – something acknowledged by the National Geography and Statistics Institute (Inegi).

But the tweak will allow image-conscious politicians to claim success in their anti-poverty programs and economic stewardship, even though public discontent over stagnant wages and rising prices remains widespread.



Pope's focus on violence and poor likely to make for 'uncomfortable' Mexico visit



“Basically what the Inegi is saying is: we’ve been overestimating poverty levels,” said Jonathan Heath, an independent economist in Mexico City.

“The way that they did this” – without public consultation – “raises suspicion,” he added.

“The new poverty numbers are certainly going to fall by a significant amount and it’s not due to improvements, it’s not due to government action, it’s not due to anything. It’s due to the way Inegi has carried out this survey,” he said.


The methodological changes were revealed on Friday with the release of the 2015 edition of the Survey of Socioeconomic Conditions, which showed an overall real increase of 11.9% in household earnings. In some states, the increase was more than 30%, while the poorest Mexicans saw the biggest gain in earnings, according to Inegi.


The changes came as a complete surprise to social scientists and non-governmental groups, but were justified by Inegi as an attempt at obtaining a truer measure of poverty – a notoriously tricky undertaking as people tend to underreport their incomes.


Inegi said in a statement that it applied new criteria in the collection and review of field data, which allows it to “offer society and the State a more precise measure of household earnings”.


Measuring poverty has proved controversial in Mexico, where social programs are often criticized as vote-buying exercises and beneficiaries in some states are told erroneously that their benefits are conditional on supporting the party in power.

Mexico used to measure poverty based on income, but changed its methodology in 2008 to take a “multidimensional” measure based on six social necessities, according to Heath.

The information collected by Inegi is provided to the National Council for the Evaluation of Social Development Policy (Coneval), an agency responsible for measuring poverty rates and the performance of social programs. Coneval put the poverty rate at 46.2% of the population in 2014, an increase of 0.7% points from 2012.


“[The] changes lack public technical documents to justify them,” Coneval said in a statement. It added the increase in household earnings “is not congruent with the trend that has been shown in other Inegi documents and with other economic variables”.

In this Brexit vote, the poor turned on an elite who ignored them

Ian Jack in The Guardian


 

Shipbuilders in Sunderland in the 1980s. Photograph: Sally and Richard Greenhill / Al/Alamy


Just as the pound was reaching its peak, Iain Duncan Smith said: “Turnout in the council estates is very high.” It was about quarter past ten. When he added a few minutes later that he’d been in politics for 24 years and couldn’t remember seeing an equivalent council-estate turnout before, David Dimbleby wondered about its significance: was it good news for the Brexit campaign? Duncan Smith said piously that he couldn’t possibly say, but we knew that he thought it was. By midnight, the pound had begun its fall.

My wife and I grew up on council estates – small, well-gardened ones, a hundred miles from each other across the border of Scotland and England. Almost everyone we knew lived similarly. People of our parents’ generation thought of public housing as a blessing, compared to the shabby and cramped homes they had lived in before. “They talk about council estates as though they’re slums,” my wife said as we watched the coverage. Or native reservations, I thought. Earlier that day on our London high street, a canvasser for remain told me how they divided the work: the Greens got the tube stations, Lib Dems did the shoppers, Labour went “round the estates”.

And, outside Scotland and London, they were mostly ignored. “A large constituency of working-class voters feel that not only has the economy left them behind, but so has the culture,” the American political philosopher Michael Sandel said in a recent interview. “The sources of their dignity, the dignity of labour, have been eroded and mocked by … globalisation, the rise of finance, the attention that is lavished by parties across the political spectrum on economic and financial elites, [and] the technocratic emphasis of the established political parties.” A lot of the energy animating Brexit, said Sandel, had been “born of this failure of elites”.

Sandel refers to a failure common to the western world. But when did the elites begin to fail Britain in particular? An economic historian might point to a period in the late 19th century when Germany overtook Britain in chemical research and technical education and, together with America, began to replace it as the world’s supreme industrial nation. But that was an unconscious failure; active betrayal has come within living memory. As a journalist working in the 1960s and 1970s, I grew used to the story of the factory closure, but only in the 1980s did these apparently random events accumulate to become known by a word, deindustrialisation, that implied a process governments either couldn’t stop, chose not to stop, or took steps to encourage.

The effects across large parts of Britain were spectacular. The big industrial cities had stored up enough capital in terms of public institutions and professional jobs to survive and sometimes prosper as regional capitals. But their hinterlands – the settlements strung along smoky valleys and perched on the oily river’s edge – began to look as abandoned as goldrush towns. Coatbridge, Consett, Hartlepool, Merthyr, Sunderland, Burnley, Greenock, Accrington: unless a senior football team played or a murder took place, they dropped from the national consciousness.

The depth of their oblivion was exemplified when, in a referendum debate on Sky TV, Michael Gove spoke of how his father’s fish business in Aberdeen had been “destroyed by the European Union”, which had “hollowed out” communities across Britain. In fact, a report in the Guardian showed that the senior Gove had sold his business rather than closed it, and that factors other than the EU were then shrinking Aberdeen’s fishing industry, including over-fishing.

What nobody remarked on was the absurdity of Gove calling the EU a job destroyer, when far heavier destruction was inflicted by British government policy during those years. When Mrs Thatcher came to office in 1979, manufacturing accounted for almost 30% of Britain’s national income and employed 6.8 million people; by 2010, it accounted for 11% and employed 2.5 million. And, unlike Mr Gove, a welder who was thrown out of work by a closing Sunderland shipyard had no business to sell.

In no other major economy was industrial collapse so quick. For a time, well-meaning journalists reported the catastrophe, and then gradually the sight of empty towns and shuttered shops became normalised or forgotten.

It seemed there was nothing to be done. At one time, the country’s prosperity had been underpinned by the spinning, weaving, stitching, hammering, banging, welding and smelting that went on in the manufacturing towns; much of the country’s former character was also owed to them – non-conformist chapels, brass bands, giant vegetable championships, self-improvement, association football. Surely nothing as significant to the nation’s economy, culture or politics would ever emerge from them again? And then it did: grievance. Actually, more than that: the sudden discovery that in certain and perhaps unrepeatable circumstances, the poor could use their grievance about all kinds of things to change at least one.

It first became apparent in the Scottish referendum of 2014. Only four local voting areas out of 32 returned a majority for independence and all of them bore the scars of vanished industries. The SNP had broken through years of eroding Labour tradition to capture the loyalty of people in the big housing schemes, for whom the leap in the dark of constitutional change offered promise rather than threat (after all, what else had worked?). By the time of last year’s general election, thousands of underprivileged local authority tenants felt themselves for the first time to be part of a political movement. I noticed the paradox after Nicola Sturgeon addressed an anti-Trident rally in Glasgow, and wrote: “Only now, with the west of Scotland nearly expunged as an economic force, does the political will of its people keep the rest of the country awake.”

On Thursday, much of northern England went to vote in a similar mood. Immigration, actual or potential, mattered too. There may also have been Spitfire enthusiasts. But betrayal, grievance, dispossession: these were surely what counted for most. I feel sorrow that the British story should have such an unexpected end – murdered by the poor and neglected English who were already inside the keep.

Bengaluru's silent majority - The underbelly of India’s silicon valley

T. M. VEERARAGHAV in The Hindu



Brewing discontent: “The garment workers have proved that there is a vast, angry India outside swanky offices.” The workers protest on Tumkur road in Bengaluru. — Photo: By Special Arrangement


What happened in Bengaluru this week has a lesson for every Indian city. It’s a warning that growing disparities must be addressed urgently.

They don’t work in cubicles and are not constantly on social media sites protesting against bad roads, traffic, power cuts or water shortage. They don’t grandstand on political ideologies and discuss India as a global power, for their realities are harshly local; it’s about everyday survival.

They are Dalits, Other Backward Classes (OBCs), some even from forward castes and different religions, but united by a common economic plight. And they proved they can come out in their thousands to protest, suddenly, without any concrete effort at mobilisation. When they did, they paralysed a city, one portrayed to the world as India’s silicon valley, its IT powerhouse.

What happened in Bengaluru this week has a lesson for every Indian city. There is a giant underbelly of disparity and discontent that exists and it can erupt, suddenly. It can challenge the myths of economic progress and images that governments have cautiously projected before the world. Images laced in terms like ‘investor confidence’ and ‘ease of doing business’.

A spontaneous peoples’ protest

There is still an air of confusion over how protests by garment factory workers erupted and galvanised, which crippled normal life in Bengaluru for two days and turning ‘extremely violent’ by the city’s standards. It started at one factory, where photocopies of a newspaper report stating that workers cannot withdraw employer’s contribution to their provident fund (PF) till 58 years of age were circulated. A rage erupted, and workers, predominantly women, took to the roads in what was described by the police force as a “flash strike” on Monday.

Word spread like wildfire to other garment factories in the area: there are about 8-10 in the cluster. In under an hour, workers from all the factories poured out, paralysing Hosur Road. Ironically, the road is the arterial highway that leads to Electronics City, which houses campuses of several IT majors and is the showcase for a new India or ‘surging economy’.

No high-tech device could have predicted the event or how it would galvanise the next day. Garment factory workers in several other parts of the city, again where factories exist in clusters, came out to the streets. Corporate offices and police stations were attacked, buses set on fire and roads blocked for hours.

Trade union leaders were clueless — they were planning a protest, but no one anticipated a sudden burst of anger, of this nature. The police were equally clueless, as one officer was reported as saying, “When we wanted to talk to their leader, they were clueless and so were we.” This protest had no one leader or negotiator for demands, it was a sudden burst of pent-up anger, triggered by the new PF ‘reform’.

These factories exist in clusters and hence workers in garment manufacturing units could mobilise themselves instantly. There are an estimated 5,00,000 people working in garment factories in the city. Predominantly women (estimated to be around 85 per cent) and for them, usually with salaries of around Rs. 6,500 a month, the few hundred rupees they save as PF is the only social security.

Symptom of a larger angst

This is where the crux of the issue lies. The PF law was just a trigger and the garment industry is just one small section. As we build and showcase a new economy, there is little forward movement in ensuring social security for the millions in the lower-to-middle income groups.

For instance, quality health care and education remain a pipe dream, and survival in a ‘booming economy’ is a daily battle. Unionisation is restricted in garment units and hence workers have little or no grievance-redressal mechanism or collective bargaining. Against this backdrop, amendments to labour laws proposed for enactment in Karnataka, like in many other States, increase work hours for workers and arguably shifts the balance in favour of factory owners.

Such policies have ensured that even a basic level of trust in the system is eroded. In this situation, when savings like PF, which for decades the working class in India has taken as the ultimate security, can become inaccessible at a time of need, it shakes the workers’ faith completely. It’s not anger but desperation to save the little they have.

To date, Union governments have been extremely cautious in even altering PF interest rates. Did the illusion that India has changed allow the Centre to try changing PF laws?

It is important to address the difference in the way PF is looked at by those surging with a booming corporate economy and workers, like those in garment factories — PF is not the only saving mechanism for the young manager or techie, for many it’s just a mandatory contribution that one has to make.

The garment workers have proved that there is a vast, angry India outside swanky offices. And their protest is a strong message to the government and the ‘booming economy’ not to tamper with the little they have. Elections in States, including Kerala and West Bengal where the Left has a strong presence, may have ensured immediate withdrawal of the controversial PF rule by the Union government, but the real test is to see whether the intent will be to understand the concerns of the labour and lower income classes.

It’s time to focus on building systems and policies that offer them a larger stake in economic and social progress. The PF law was just a trigger to one set of a large population that works in semi-organised industries. And there are millions, like taxi drivers and construction labourers, who do not even have a shot at a provident fund. The trigger for each of these sections could be different, but their frustrations are the same and the impact they could have if they galvanise in protest could be enormous.

What Bengaluru witnessed is just a symptom, labour led by no union that had the potential to bring parts of a city to a standstill and forced the Union government to take note.

Iain Duncan Smith will do anything for Brexit – even tell the truth

Polly Toynbee in The Guardian

There’s only one question about Iain Duncan Smith: is he a “bastard”, as described by his former prime minister John Major, or a “shit” – as reportedly described by his current leader, David Cameron? For hypocrisy and outright dishonesty do you howl in indignation, or roar with crazed laughter at his new compassion? How has this architect of so much torment for so many, justifier of injustice, scourge of the poor and the sick, become the champion of underdogs? How can this Nosferatu say he never had a taste for blood?

As for David Cameron’s riposte yesterday – improving life chances, rebuilding sink estates? – reviving his old pretence of “modern compassionate Conservatism”, that deserves the same raspberries of ridicule. But he does it well, for those who hear the words and never see the facts on the ground. And now he is forced to abandon extra cuts.

What is the former welfare secretary up to? Look at the backers who defend him: all are Brexiteers, mostly on the right, not friends of the poor. He was always the pre-referendum ticking time bomb, and now he has pulled the pin to inflict maximum damage to the authority of the prime minister. As the Daily Express headline gloats: “Tory split helps fight to free us from Brussels.” The IDS backer and Europhobe Owen Paterson has never knowingly objected to cuts for the poor, nor has Bernard Jenkin: his wife, Baroness Jenkin, presented a Church of England report on 4 million people going hungry, saying: “Poor people don’t know how to cook. I had a large bowl of porridge today, which cost 4p.” In their world, poverty is always due to fecklessness: IDS never acknowledges that most of the poor are in work.

Worse than cuts has been this government’s relentless anti-poor propaganda, with George Osborne’s sneers at households sleeping on with blinds closed; or IDS’s attacks on the “something for nothing culture” as he warned those on benefits: “This is not an easy life any more, chum. I think you’re a slacker.”

The invention of “compassionate conservatism” came in 2002 when Duncan Smith staged a public epiphany with photographers in Glasgow’s Easterhouse estate: he said he was shocked by the wretchedness he saw. Cameron seized on this to detoxify the party. When I retraced Duncan Smith’s steps, I found those in the Easterhouse community centre he visited who had warmly welcomed his conversion now distraught at the effects of his policies. Many had been cut off benefits, one man with acute psychosis, another who was barely literate and failed to claim correctly. Food banks everywhere are filled with victims of sanctions: abolishing the emergency social fund – handing out £5 a day to the truly desperate – was emblematic.

Iain Duncan Smith rapped by watchdog for misusing benefits cap statistics


It’s hard to exaggerate the cruelty of his cuts, boasting of the £30bn “saved”. Not a croaky whisper of protest came from him at £12bn more cuts in the manifesto. The bedroom tax left most people unable to downsize, their income massively depleted. The benefits cap poleaxed families in the south-east. Universal credit has a 50-page online form, leaving many with learning difficulties or mental health problems unable to apply. Billed as a modest technical tidying up, universal credit has wasted billions with failed IT systems; it is years late and doesn’t do what he says it does: incentives to work are no better, its recipientslosing 65p or more in any extra pound they earn. It disincentivises partners from working, losing earnings in withdrawn credits.

IDS ignored warnings, claiming magical solutions to eternal welfare conundrums: how do you give the needy enough for a decent life without damaging the impulse to work? How do you taper benefits gently so that earning more doesn’t lose them money? At first he plainly didn’t understand the complexity: later he just denied it, claiming that putting six benefits together was “simplifying”. But each of those still has to be recalculated monthly.

His successor inherits a morass of expensive bungles and needless viciousness. IDS’s reign of terror extended to every jobcentre, though he denied there were targets for staff to knock claimants off benefits. The word “target” is replaced with euphemisms like “spinning plates”. One unhappy jobcentre adviser told me: “You park your conscience when you work here.” Advisers tell of orders to apply sanctions for tiny infractions, closing the claims of those who fail to follow the “50 steps to work” so they vanish from statistics. Every month managers check “sanction-raising figures”: low sanctioners are “managed out” of their jobs.

Duncan Smith’s numerical jiggery-pokery became legendary, undeterred by stern rebukes from the public accounts committee, the National Audit Office and the UK Statistics Authority. As few understand benefits, he felt free to make any claim and distort any figure. He, like Cameron and Osborne, is a serial user of factoids: the UK has 1% of the world’s population but spends 7% of the world’s welfare. True, but meaningless to compare ourselves with Sudan and other nations with no welfare.

Like Cameron yesterday, IDS denied cuts by pointing to the still rising total welfare bill. But rises in the population and numbers of pensioners, or in soaring housing benefit, are no comfort to those whose benefits certainly have been brutally cut. One legacy will be hundreds of thousands more children projected by the Institute for Fiscal Studies to fall into poverty by 2020. His answer was to change the measurement – until the Lords rebelled.

All this makes his sudden fit of truth-telling such a culture shock. He is entirely right: the budget was “deeply unfair”, extra money for the rich taken from poor and disabled people. How startlingly honest when he says his party ignores the poor because they don’t vote Tory. But what’s new?

Duncan Smith has always had a pious way, followed by irritability if challenged. The man’s psyche hardly matters, but he has a stock of self-belief and self-deceit that lets him utter sorrowful words of tough love towards the poor. Little is genuine – not his name, his qualifications, his repeated epiphanies. It’s the third time he has inflicted near-mortal damage on his party – against John Major, then as worst ever leader, now as would-be assassin of a winning leader.

In other times all this would be joy for Labour. But even they must realise this man’s only intent is to get Britain out of the EU. So gripping is the Brexit virus that its victims will sacrifice all other beliefs to pursue it. Here his chosen weapon is truth.

Why are corrupt politicians popular in India

This is an excerpt from a speech by India’s Reserve Bank of India chairman Raghuram Rajan. The full text is available here.


Even as our democracy and our economy have become more vibrant, an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians.

By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. And by substituting special interests for the public interest, it is harmful to democratic expression. If there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. Why do they vote for the venal politician who perpetuates it?

A hypothesis on the persistence of crony capitalism

One widely held hypothesis is that our country suffers from want of a “few good men” in politics. This view is unfair to the many upstanding people in politics. But even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. But when these “good” people stand for election, they tend to lose their deposits. Does the electorate really not want squeaky clean government?

Apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. In a speech I made before the Bombay Chamber of Commerce in 2008, I argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. This may be why he survives.

Let me explain. Our provision of public goods is unfortunately biased against access by the poor. In a number of states, ration shops do not supply what is due, even if one has a ration card – and too many amongst the poor do not have a ration card or a BPL card; Teachers do not show up at schools to teach; The police do not register crimes, or encroachments, especially if committed by the rich and powerful; Public hospitals are not adequately staffed and ostensibly free medicines are not available at the dispensary; …I can go on, but you know the all-too-familiar picture.

This is where the crooked but savvy politician fits in. While the poor do not have the money to “purchase” public services that are their right, they have a vote that the politician wants. The politician does a little bit to make life a little more tolerable for his poor constituents – a government job here, an FIR registered there, a land right honoured somewhere else. For this, he gets the gratitude of his voters, and more important, their vote. Of course, there are many politicians who are honest and genuinely want to improve the lot of their voters. But perhaps the system tolerates corruption because the street smart politician is better at making the wheels of the bureaucracy creak, however slowly, in favour of his constituents. And such a system is self-sustaining. An idealist who is unwilling to “work” the system can promise to reform it, but the voters know there is little one person can do. Moreover, who will provide the patronage while the idealist is fighting the system? So why not stay with the fixer you know even if it means the reformist loses his deposit?

So the circle is complete. The poor and the under-privileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the underprivileged. Every constituency is tied to the other in a cycle of dependence, which ensures that the status quo prevails. Well-meaning political leaders and governments have tried, and are trying, to break this vicious cycle. How do we get more politicians to move from “fixing” the system to reforming the system? The obvious answer is to either improve the quality of public services or reduce the public’s dependence on them. Both approaches are necessary. But then how does one improve the quality of public services? The typical answer has been to increase the resources devoted to the service, and to change how it is managed. A number of worthwhile efforts are underway to improve the quality of public education and healthcare. But if resources leak or public servants are not motivated, which is likely in the worst governed states, these interventions are not very effective.

Some have argued that making a public service a right can change delivery. It is hard to imagine that simply legislating rights and creating a public expectation of delivery will, in fact, ensure delivery. After all, is there not an expectation that a ration card holder will get decent grain from the fair price shop, yet all too frequently grain is not available or is of poor quality. Information decentralization can help. Knowing how many medicines the local public dispensary received, or how much money the local school is getting for mid-day meals, can help the public monitor delivery and alert higher-ups when the benefits are not delivered. But the public delivery system is usually most apathetic where the public is poorly educated, of low social status, and disorganized, so monitoring by the poor is also unlikely to be effective.

Some argue that this is why the middle class should enjoy public benefits along with the poor, so that the former can protest against poor delivery, which will ensure high quality for all. But making benefits universal is costly, and may still lead to indifferent delivery for the poor. The middle class may live in different areas from the poor. Indeed, even when located in the same area, the poor may not even patronize facilities frequented by the middle class because they feel out of place. And even when all patronize the same facility, providers may be able to discriminate between the voluble middle class and the uncomplaining poor. So if more resources or better management are inadequate answers, what might work?

The answer may partly lie in reducing the public’s dependence on government-provided jobs or public services. A good private sector job, for example, may give a household the money to get private healthcare, education, and supplies, and reduce their need for public services. Income could increase an individual’s status and increase the respect they are accorded by the teacher, the policeman or the bureaucrat. But how does a poor man get a good job if he has not benefited from good healthcare and education in the first place? In this modern world where good skills are critical to a good job, the unskilled have little recourse but to take a poorly-paying job or to look for the patronage that will get them a good job. So do we not arrive at a contradiction: the good delivery of public services is essential to escape the dependence on bad public services?

Money liberates and Empowers…
We need to go back to the drawing board. There is a way out of this contradiction, developing the idea that money liberates. Could we not give poor households cash instead of promising them public services? A poor household with cash can patronize whomsoever it wants, and not just the monopolistic government provider. Because the poor can pay for their medicines or their food, they will command respect from the private provider. Not only will a corrupt fair price shop owner not be able to divert the grain he gets since he has to sell at market price, but because he has to compete with the shop across the street, he cannot afford to be surly or lazy.

The government can add to the effects of empowering the poor by instilling a genuine cost to being uncompetitive – by shutting down parts of the public delivery systems that do not generate enough custom. Much of what we need to do is already possible. The government intends to announce a scheme for full financial inclusion on Independence Day. It includes identifying the poor, creating unique biometric identifiers for them, opening linked bank accounts, and making government transfers into those accounts. When fully rolled out, I believe it will give the poor the choice and respect as well as the services they had to beg for in the past. It can break a link between poor public service, patronage, and corruption that is growing more worrisome over time.

Wait for a bus and then tell me the market knows best

Deregulation of buses in 1986 was a disaster for those unable to afford a car. Municipalisation is the key to a fairer system

Owen Jones in The Guardian


 
Liverpool’s Queen’s Square bus station. Since 1986, ‘bus trips in big cities outside London have collapsed from 2bn to 1bn a year’. Photograph: Christopher Thomond for the Guardian


Of the issues differentiating the metropolitan mindset in the capital from opinions voiced elsewhere, the starkest is probably transport. We hear much about the overcrowded rail network in London and the south east, where fares are among the most expensive in Europe. Of course we do: much of the national media works from London. And we have warm words for the buses in the capital, where since Ken Livingstone’s first mayoral administration, starting in 2000, the mayoralty and Transport for London have assumed regulatory powers, determining prices and frequency with dramatic success.

Travel outside London, however, and Britain’s deregulated bus system reveals itself as the source of widespread, justified disgruntlement – an overpriced, inefficient, poor-quality mess. According to a report to be published this week, since deregulation in 1986 – unleashed with the promise that “more people would travel” – bus trips in big cities outside London have collapsed from 2bn to 1bn a year. In London, on the other hand, where everything from how much we pay to which routes exist is decided by the mayor and Transport for London, bus use since the 1980s has gone in the opposite direction: from around 1bn to more than 2bn trips a year. Britain’s bus privatisation disaster is a story of profit before need, and a discomfiting tale for those who believe the private sector automatically trumps the public realm.

I asked Twitter for bad experiences of buses, and turned my feed into one long howl of anguish. Chronic delays, “virtually no evening travel”, old “clapped-out buses”, infrequency, poor punctuality, extortionate prices: these were common complaints. “No evening and barely a weekend bus service in Helmsley, North Yorks,” complained one. “Need a car to live here.” Another cry of frustration: “Costly, cash only, fragmented among several providers, no unified ticketing, virtually ends at 1800 hours, v[ery] poor on Sunday.”

It is the less well-off who suffer most. Fewer than one in three of the poorest tenth of the population own their own car. With our bus system in such a state, it is unsurprising that those with the least money are three times more likely to use a cab than the richest.

Our journey towards the great British bus disaster is uncovered in meticulous detail in the report, by Ian Taylor and Lynn Sloman. “Bus users in Britain inhabit different worlds,” they note, ranging from London’s centrally regulated bus system to rural dwellers who “live in a third world with a skeletal service or, in some places, no service at all”. Whatever Margaret Thatcher’s programme of deregulation in the 1980s offered, the opposite happened: fares rose, services worsened and bus use fell.

Private bus companies have one motive, after all: making profit, rather than catering to the needs of their users. Between 2003 and 2013, £2.8bn ended up as dividend payments in the bank balances of shareholders, rather than invested in improving bus services. About 40p in every pound of their total revenues comes directly from the taxpayer: yet another example of Britain’s publicly subsidised “free market” economy.

Bus services are a hopelessly confused patchwork of provision. Some tickets you can use with different providers, some you can’t. You may find enough buses at peak hours but struggle to catch one at other times. If you live in a rural area, you may struggle to find any buses to catch at all. Local authorities can pay for services deemed crucial for local communities, but they do so at great expense. Often the buses themselves are from another age: cold, noisy, rickety vehicles driven by woefully underpaid drivers. Those who can afford to insulate themselves by using their own vehicles can minimise the inconvenience, but that’s not an option for the less fortunate.

Our rail system, we debate. We know that a decisive majority of Britons want to see our railways publicly owned. But where is the debate about rescuing Britain’s bus services?

Bringing buses into accountable, municipal ownership would transform the system. Consider France, or Germany where apparently 88% of local public transport trips are on publicly owned trams, trains or buses, but also look closer to home. In 2013, after running a £8m surplus, municipally owned Lothian Buses in Edinburgh reported satisfaction rates of 96%, beating all competition in Britain. Nottingham City Transport – majority shareholder the city council – has satisfaction rates of 92% in “one of the least car-dependent cities” in Britain.


Here’s what municipalisation can achieve, say Taylor and Sloman. A “comprehensive network” for all communities, without allowing private companies to cherrypick the most profitable routes or obliging local authorities to intervene at “disproportionate cost”. Rather than having a bewildering array of fares, there could be “simple, area-wide fares” that – as in London – could be used across all transport services, from trains to buses, with daily costs capped. Instead of passengers being stuck for the best part of an hour at a freezing bus stop after changing buses, timetables could be coordinated, and public money be spent improving services, not frittered away as shareholder dividends.

We hear so little about buses, undoubtedly, because in London they are good enough for the middle classes to use, while outside the capital those with sharper elbows often avoid them. But here is surely an issue for Labour to champion. Those who suffer the most are often in areas where Labour could do well to try to win support, such as Cornwall, and in many Tory-dominated rural communities. Municipal ownership, with bus passengers encouraged to help run services, would improve the lives of many poorer citizens. There would also be fewer cars on the road. Whether or not Lady Lindsay of Dowhill ever really said “Anybody seen in a bus over the age of 30 has been a failure in life”, the stigma could be overcome for the public good.

Putting the great bus privatisation disaster on the agenda would be another reminder that the inherent superiority of the market is not a foregone conclusion. This is a rich country. If we cannot even produce a decently functioning bus service for our citizens, we need to start asking ourselves some serious questions.

To Beef or not to Beef - A Personal View on the Beef Crisis in India

 By Girish Menon



Photo courtesy: Berkeley Graduate School of Journalism

I come from a Hindu family from Kerala. Our diet used to be pre-dominantly vegetarian by tradition and choice, though some men folk indulged in the pleasures of animal flesh whenever they wished to give themselves 'a treat' (usually accompanied by alcohol). I studied in a Catholic school in Mumbai with UP Brahmins as my teachers of Sanskritised Hindi. My first conflict with beef arose when Mr. Tiwari mentioned in class that Hindus do not eat beef while only a few days earlier my father had cooked some beef at home for the two of us to eat.

Historically, beef eating has been used as a primary ritual in the conversion of a Hindu to Islam. I'm not sure if the early Christian missionaries indulged in similar Hindu iconoclasm? Hence, I can understand why banning beef has become a major issue in the first predominantly upper class Hindu Indian government.

In Britain where animal meat is the staple food of most residents there was recently a great display of revulsion when horse meat was found to enter the food supply. Britons have also been critical of the Koreans who love to eat dog meat. And human meat is still frowned upon. Using the market mantra isn't this totalitarian view depriving lovers of unusual meats a chance to improve their own welfare?

In my view, beef will become the next Babri Masjid of modern India. Its ban will be essential for Hindus to prove that they have exorcised yet another ghost from the past (how many more ghosts do they wish to exorcise?). 

So, what will happen to the Taslima's orphaned cows and to beef lovers like me? The orphaned cows will meet the same fate as the Indian poor - who cares!. As for beef loving Hindus like me, I could get a permit to eat beef for health reasons (the Dubai model). For those who cannot afford the high price of a permit, the Gujarat model on alcohol could be also be successfully replicated. Go to the police station for a portion of beef!

Teaching the poor to behave

G Sampath in The Hindu

By shifting the burden of poverty alleviation from the state onto the poor themselves, behavioural economists are ignoring the structural causes of poverty. They are also erasing the behaviour of the owners of capital from the poverty debate

The World Bank’s World Development Report (WDR) 2014 was about ‘Risk and Opportunity’. The 2013 WDR is simply named ‘Jobs’. The 2012 WDR is titled ‘Gender Equality and Development’.

Other WDR themes in the recent past include ‘Agriculture for Development’ (2008), ‘Equity and Development’ (2006), and ‘Building Institutions for Markets’ (2002). They all have an overt economic dimension. Naturally — for it’s a bank, after all. But the World Bank’s 2015 WDR is titled ‘Mind, Society and Behaviour’. That’s right. Now, what would a bank — or, if you prefer, a multilateral development finance institution — want with mind, society and behaviour?

There is a two-word answer to this question: behavioural economics. In its 2015 WDR, the World Bank makes a strong pitch to governments for applying behavioural economics to development policy.

As the report notes in its opening chapter, “The analytical foundations of public policy have traditionally come from standard economic theory.” Standard economic theory assumes that individuals are rational economic agents acting in their best self-interest.

But in the real world, people often behave irrationally, and not always in their own best economic interest. For instance, they might splurge when they could save, or give excessive weight to the immediate present as opposed to the distant future.

Is poverty a mindset?

Behavioural economics uses insights from psychology, anthropology, sociology and the cognitive sciences to come up with more realistic models of how people think and make decisions. Where these decisions tend to be flawed from an economic point of view, governments can intervene with policies aimed at ‘nudging’ the targeted citizens towards the right decision.

All this seems fairly unobjectionable. However, things change when behavioural economists focus their attention exclusively on the behaviour of the poor. Till date, there is no evidence that monitoring and ‘nudging’ the behaviour of the world’s poor is a better route to alleviate poverty than, say, monitoring and ‘nudging’ the behaviour of the financial elite. Surely the latter cannot be deemed as altogether rational economic agents — not after the 2008 crisis?

The second assumption of behavioural economics — presented as a new ‘finding’ based on research, and regurgitated wholesale by the 2015 WDR — is that the poor are less intelligent than the rich. It is an obnoxious idea, and also politically incorrect. Of course, this is not stated in as many words.

The correct way to say it, then, is to state that “the context of poverty” depletes a person’s “bandwidth” — the mental resources necessary to think properly — as a result of which he or she is, well, a poor decision-maker, especially compared to those who are not in “the context of poverty”, such as the rich and the middle classes.

Lest anyone misunderstand, the authors of the report hasten to add that it’s not just the poor but anyone — even the wealthy — who, when placed in a “context” of poverty, would make wrong decisions. (For the record, it must be noted that the poor are — all else being equal — more likely to be in “the context of poverty” than the rich.)

To support these assumptions, a number of research studies are trotted out. One such study, mentioned in the report, was conducted on Indian sugarcane farmers, who typically receive their income once a year, at the time of harvest.

It was found that the farmers’ IQ was ten points lower before they received their harvest income than afterward (when they were flush with cash and were comparatively richer). So ideally, they should not take major financial decisions before harvest time. Such an insight into how poverty affects behaviour could have policy implications for, say, cash transfers — which can be timed, or made conditional, on displaying certain behaviours pre-determined by the state as ‘rational’.

The report states in all earnestness that poverty “shapes mindsets”. From here, it is a hop, skip, and jump to holding, as the leading behavioural economists of the day do, that the poor are poor because their poverty prevents them from thinking and acting in ways that can take them out of poverty.

Thus the focus as well as the burden/responsibility of poverty-alleviation would shift from the state — from macroeconomic policy, from having to provide employment, health and education — to changing the behaviour of the poor. The structural causes of poverty — rising inequality and unemployment — as well as the behaviour of the owners of capital are evicted from the poverty debate, and no longer need be the focus of public policy.

Behavioural economics

In this context, it might be pertinent to note that the rise of behavioural economics as a discipline parallels the rise of neoliberalism, starting from the 1980s and rapidly gaining respectability and funding from the 1990s. All the leading lights of the field such as Daniel Kahneman, Amos Tversky, Robert Shiller, Senthil Mullainathan, Richard Thaler and Cass Sunstein made their mark in this period, and are heavily referenced in this report.

A fundamental principle of neoliberal thought is to find market-led solutions to socio-economic problems. No matter that poverty is often a symptom of market failure. Free market ideologues attribute poverty and all socio-economic ills to market distortions caused by state interference. The economists who get to shape the World Bank’s WDRs are chosen for their ability to toe this line.

On the odd occasion that the lead author of a WDR made a bid for intellectual independence, he had to make an untimely exit. For the 2000-01 WDR, titled ‘Attacking Poverty’, the original draft prepared by the distinguished development economist Ravi Kanbur — incidentally brought in by Joseph Stiglitz — spoke of the need to build effective safety nets for the poor before the introduction of free market reforms.

Both Mr. Kanbur and Mr. Stiglitz were out of the World Bank before the report was. As the economist Robert Wade points out in an essay on this episode, titled ‘Showdown at the World Bank’, the version eventually published no longer spoke of creating prior safety nets for the poor. It instead called for putting them in place “simultaneously with labour-shedding reforms”.

The point of this detour into WDR history is that — to borrow the jargon of behavioural economics — the overarching necessity to conform to free market ideology may be said to impose a ‘cognitive tax’ on World Bank economists, as a result of which their ‘mental models’ do not permit the ‘framing’ of poverty in ways that may contradict this ideology.

The Keynesian formula of safety nets from the free market may well be permanently banished from the policy agenda. But that still leaves unresolved the problem of how to manage the social and political consequences of the widening income gap between the 1 per cent and the 99 per cent. This is critical because growing discontent could lead to political instability. After all, in order for markets to function, and commodities to flow freely and predictably, the excluded masses must be taught to behave. This is where behavioural economics comes in.

Action and behaviour

In order to change the behaviour of the poor, one must first understand it. It is this understanding that behavioural economics promises to codify into knowledge. To be sure, the WDR readily acknowledges that even the rich, the economists, and the World Bank staff themselves, might be subject to cognitive biases.

But nowhere in its 230-odd pages does the report present an instance, or even a hypothetical example, of a behavioural economics-inspired policy intervention whose target is, say, a class of billionaire investors, despite the fact that today, compared to the poor, this is a group that wields far more influence, per capita, on a nation’s economic destiny. Changing their behaviour — for instance, manipulating them into deploying their billions on productive rather than speculative investments — could generate more beneficial, and more effective, outcomes than micro-manipulating the financial decisions of a poor peasant.

A major confusion that dogs this report is the conflation of ‘action’ and ‘behaviour’. The term ‘behaviour’ comes with the baggage of the empirical sciences. It is typically used with reference to animals and objects under scientific observation. Behaviours can be studied for patterns. To the extent that human beings are also animals, they can also be said to exhibit behaviours. But what makes them human is precisely their capacity to transcend behaviour patterns — in other words, to act.

The political theorist Hannah Arendt, in The Human Condition, speaks of three kinds of human activity: labour, work and action. Of the three, what distinguishes action is its political nature. When behaviourist economics speaks of poverty as a “cognitive tax”, it writes ‘action’ — the political agency of the poor — out of the equation.

As democratic nation states reorient themselves to being accountable to global financial markets, non-democratic bodies such as the World Trade Organization, and trade agreements such as General Agreement on Tariffs and Trade and Trade in Services Agreement , they will necessarily become less responsive to the aspirations of their own citizens. With overt repression not always the most felicitous or cost-effective policy option, it has become imperative to find ways and means to ideologically tame the economically excluded. Hence the new focus on the minds and behaviour of the poor.

Behavioural economics, insofar as it is concerned with the behaviour of people in poverty — and it is this stream which dominates this year’s WDR — is simply the latest addition to the neo-liberal toolkit of political management.

‘Wealth creators’ are robbing our most productive people

George Monbiot in The Guardian

There is an inverse relationship between utility and reward. The most lucrative, prestigious jobs tend to cause the greatest harm. The most useful workers tend to be paid least and treated worst.

I was reminded of this while listening last week to a care worker describing her job. Carole’s company gives her a rota of, er, three half-hour visits an hour. It takes no account of the time required to travel between jobs, and doesn’t pay her for it either, which means she makes less than the minimum wage. During the few minutes she spends with a client, she may have to get them out of bed, help them on the toilet, wash them, dress them, make breakfast and give them their medicines. If she ever gets a break, she told the BBC radio programme You and Yours, she spends it with her clients. For some, she is the only person they see all day.

Is there more difficult or worthwhile employment? Yet she is paid in criticism and insults as well as pennies. She is shouted at by family members for being late and not spending enough time with each client, then upbraided by the company because of the complaints it receives. Her profession is assailed in the media as the problems created by the corporate model are blamed on the workers. “I love going to people; I love helping them, but the constant criticism is depressing,” she says. “It’s like always being in the wrong.”

Her experience is unexceptional. A report by the Resolution Foundation reveals that two-thirds of frontline care workers receive less than the living wage. Ten percent, like Carole, are illegally paid less than the minimum wage. This abuse is not confined to the UK: in the US, 27% of care workers who make home visits are paid less than the legal minimum.

Let’s imagine the lives of those who own or run the company. We have to imagine it because, for good reasons, neither the care worker’s real name nor the company she works for were revealed. The more costs and corners they cut, the more profitable their business will be. In other words, the less they care, the better they will do. The perfect chief executive, from the point of view of shareholders, is a fully fledged sociopath.

Such people will soon become very rich. They will be praised by the government as wealth creators. If they donate enough money to party funds, they have a high chance of becoming peers of the realm. Gushing profiles in the press will commend their entrepreneurial chutzpah and flair.

They’ll acquire a wide investment portfolio, perhaps including a few properties, so that – even if they cease to do anything resembling work – they can continue living off the labour of people such as Carole as she struggles to pay extortionate rents. Their descendants, perhaps for many generations, need never take a job of the kind she does.

Care workers function as a human loom, shuttling from one home to another, stitching the social fabric back together while many of their employers and shareholders, and government ministers, slash blindly at the cloth, downsizing, outsourcing and deregulating in the cause of profit.
It doesn’t matter how many times the myth of meritocracy is debunked. It keeps re-emerging, as you can see in the current election campaign. How else, after all, can the government justify stupendous inequality?

One of the most painful lessons a young adult learns is that the wrong traits are rewarded. We celebrate originality and courage, but those who rise to the top are often conformists and sycophants. We are taught that cheats never prosper, yet the country is run by spivs. A study testing British senior managers and chief executives found that on certain indicators of psychopathy their scores exceeded those of patients diagnosed with psychopathic personality disorders in the Broadmoor special hospital.

If you possess the one indispensable skill – battering and blustering your way to the top – incompetence in other areas is no impediment. The former Hewlett-Packard chief executive Carly Fiorina features prominently on lists of the worst US bosses: quite an achievement when you consider the competition. She fired 30,000 workers in the name of efficiency yet oversaw a halving of the company’s stock price. Morale and communication became so bad that she was booed at company meetings. She was forced out, with a $42m severance package. Where is she now? About to launch her campaign as presidential candidate for the Republican party, where, apparently, she is considered a serious contender. It’s the Mitt Romney story all over again.

At university I watched in horror as the grand plans of my ambitious friends dissolved. It took them about a minute, on walking into the corporate recruitment fair, to see that the careers they had pictured – working for Oxfam, becoming a photographer, defending the living world – paid about one fiftieth of what they might earn in the City. They all swore they would leave to follow their dreams after two or three years of making money; none did. They soon adjusted their morality to their circumstances. One, a firebrand who wanted to nationalise the banks and overthrow capitalism, plunged first into banking, then into politics. Claire Perry now sits on the frontbench of the Conservative party. Flinch once, at the beginning of your career, and they will have you for life. The world is wrecked by clever young people making apparently sensible choices.

The inverse relationship doesn’t always hold. There are plenty of useless, badly paid jobs, and a few useful, well-paid jobs. But surgeons and film directors are greatly outnumbered by corporate lawyers, lobbyists, advertisers, management consultants, financiers and parasitic bosses consuming the utility their workers provide. As the pay gap widens – chief executives in the UK took 60 times as much as the average worker in the 1990s and 180 times as much today – the uselessness ratio is going through the roof I propose a name for this phenomenon: klepto-remuneration.

There is no end to this theft except robust government intervention: a redistribution of wages through maximum ratios and enhanced taxation. But this won’t happen until we challenge the infrastructure of justification, built so carefully by politicians and the press. Our lives are damaged not by the undeserving poor but by the undeserving rich.

Why don’t abused women just leave their partners? Why don’t poor people just spend less? Why do people in positions of power ask so many stupid questions?

Lucy Mangan in The Guardian

Last week, I took part in a comedy night to raise money for the charity Refuge, which supports women and children who have experienced domestic violence. It was a great night: partly because it raised several thousands of pounds for the cause; partly because it was sponsored by Benefit cosmetics, and the idea of a benefit being sponsored by Benefit pleased me greatly; and partly because standup comedian Bridget Christie finished her act with a plea for all laydeez to stop waxing, spraying, deodorising, strimming and surgically trimming their – well, let’s call it “that part of ourselves historically judged to be the seat of all our femininity and womanly powers” – and instead celebrate our individuality by thinking of those parts as “unique, special – like snowflakes. Made of gammon”, which was both a new thought and a new image, neither of which has left my mind since.

Less uplifting, however, was the number of times I heard, when I mentioned Refuge to people, some variant of: “But what I don’t understand is – why don’t these women just leave?”

We don’t need, I think – I hope – to detail too extensively here the exact answer to that question. Bullet points: an immediate fear of being punched, kicked, bitten, gouged or killed, and of the same happening to your children, preceded by months or years of exploitation of the weakest points in your psyche by a master of the art; an erosion of your self-confidence, liberty, agency and financial independence (if you had any to begin with), coupled with a sense of shame and stigma and a lack of practical options; no money, no supportive family or friends, nowhere to run.

So, let’s concentrate instead on the lack of imagination, the lack of empathy inherent in that question. Because it shapes a lot of questions, and particularly those that animate government policy and the political discourse that will start filling the airwaves more and more as we move towards the election.

Politicians, for example, are apparently completely baffled by Poor People’s propensity to do harmful things, often expensively, to themselves. (That’s politicians of all stripes – it’s just that the left wing wrings its hands and feels helplessly sorry for Them, while Tories are pretty sure They are just animals in need of better training.) The underclass eats fast food, drinks and smokes, and some of its more unruly members even take drugs. Why? Why?

Listen, I always want to say, if you’re genuinely mystified, answer me this: have you never had a really bad day and really wanted – nay, needed – an extra glass of Montrachet on the roof terrace in the evening? Or such a chaotic, miserable week that you’ve ended up with a takeaway five nights out of seven instead of delving into Nigella’s latest?

You have? Why, splendid. Now imagine if your whole life were not just like that one bad day, but even worse. All the time. No let-up. No end in sight. No, you can’t go on holiday. No, you can’t cash anything in and retire. No. How would you react? No, you’ve not got a marketable skills set. You don’t know anyone who can give you a job. No. No.

And on we’d go. “Why do the poor not always take the very cheapest option – in food, travel, rent, utilities or a hundred other things you can find if you or an obliging Spad or unpaid intern trawl and filter case studies for long enough – and stop being so, y’know, poor that way?” someone will ask. And some kind soul – not me, I’d be off for a lie down and some pills by this time – would ask if the questioner had ever been under so much pressure that he’d had to throw money at a problem to secure an immediate answer, to get something rather than nothing, even if it meant paying over the odds, perhaps because someone was exploiting your desperation?

Oh, you have? Well, that bond issue you missed because you had a cashflow crisis after buying the villa in Amalfi, and that box at Glyndebourne for your parents’ wedding anniversary you forgot about till almost too late, have their parallels with furniture for a council flat or with a child’s present bought on punitively interest-rated credit … and so on, until somewhere along the line our boy would have to admit that he shared the same irrational impulses as people all along the socioeconomic scale, differing only in degree of consequences, not in kind.

I don’t understand how the people in charge of us all don’t understand. If you are genuinely unable to apply your imagination and extend your empathy far enough – and you don’t have to do it all at once; little by little will suffice, but you must get there – then you are a sociopath, and we should all be protected from your actions. If you are in fact able and choose not to, then you’re something quite a lot worse.

So, these are the questions I’d like to see pursued once the televised prime ministerial debates begin (if enough speakers agree to turn up, natch): have you ever had a bad day? Have you ever been really, really tired? Have you ever been alone, or frightened, or not had a choice about something? If yes, was your response unique among man? If no, are you a madman or a liar? Do tell. Do tell.