In Urdu.
Saturday, 29 October 2016
If economists want to be useful again they need to redeem themselves
Allister Heath in The Telegraph
Imagine that you kept getting it wrong, not just a little, but completely and utterly.
When times were bad you thought they were good, and when they were good you thought they were bad. You argued against successful solutions, and in favour of failed ones. You predicted a rise when in fact a fall materialised; to add insult to injury, you clung to your old ways of thinking, refusing to change apart from in the most trivial of ways. In normal industries you would be finished: your collection of P45s would fill half a drawer, and you would long since have been forced to retrain into somebody of more value to society.
But not in one profession. Yes, dear readers, I’m referring to the systemic, cultural problems of modern, applied macroeconomics, in the public as well as private sectors, where failure continues to be rewarded.
Economists who make all the wrong calls keep their jobs and big paychecks, as long as their faulty views echo the mainstream, received wisdom of the moment. I spent five years studying economics, and I still love the subject. At its best, economics is the answer to myriad problems, the prism through which to view the vast majority of decisions.
But I’m deeply frustrated with some of its practitioners: all those folk who predicted that the third quarter would see very little or negative growth, when in fact the economy grew by a remarkable 0.5pc, the most important statistic of recent times.
For political and psychological reasons, one small and rather unreliable snapshot had become all-important. Had that (preliminary and approximate number) been in negative territory, or close to zero, the outcry would have been deafening and reverberated around the world. The markets would either have slumped or more likely, bounced back, on the assumption that Brexit would be reversed. Yet the opposite happened, and the economy did well (France grew by just 0.2pc during the same time).
Combined with the news that Nissan will be sticking with the UK, it was a great week for Brexit, made all the better by the announcement of Heathrow expansion. Brexit won the referendum, lost the immediate aftermath, won the next few months and has now won again.
Of course, the war continues, and will do so for years. There are huge challenges looming. But this was the week that the economics profession was further discredited. The forecasts were not just completely wrong – my guess is that they were actually downright harmful, shaving growth in areas where elites that are most likely to be swayed by economists decisions.
Economists have form: most backed the euro, failed to see the financial crisis coming, missed the dot.com bubble and the Asian crisis, loved the European Exchange Rate Mechanism and never understood the Thatcherite revolution.
Previous generations failed just as badly: the vast majority loved Keynesian economics during the 1970s, read and recommended a textbook that thought that the USSR would eventually overtake America, backed corporatism, failed to predict the 1929 crash and provided all of the wrong answers in the 1930s.
One problem is groupthink, another is the inability to be objective. But the biggest problem is a faulty paradigm: a fundamental flaw at the heart of the models and assumptions of the economic mainstream, aided and abated by an academic establishment which excludes dissenters from its journals and top faculties.
So if economists want to be useful again, they should do two things.
First, we need a proper Parliamentary inquiry into the failures of the Treasury model and official forecasting before and after Brexit. There is an argument for this to be extended to the Bank of England and even to the private sector. Economists need to cooperate, if even anonymously: are some under pressure to toe various lines? If not, what is the real reason for such a succession of flawed consensuses?
Second, the real threat to the economy is absurd decisions such as the ruling that Uber drivers should be treated like employees (on the basis that the US firm exerts too much control and direction over drivers, even though they are free to choose their hours and commitment).
If not reversed, this judicial activism will destroy jobs and push up prices; it is a shame that such a good week ended on such a sour note. The Government may need to legislate to make it clear that Uber and other similar enterprises are platforms, not employers. If economists want to redeem themselves, they should explain why flexible markets are good and why it would be a genuine disaster if we kill off the sharing economy with red tape.
Imagine that you kept getting it wrong, not just a little, but completely and utterly.
When times were bad you thought they were good, and when they were good you thought they were bad. You argued against successful solutions, and in favour of failed ones. You predicted a rise when in fact a fall materialised; to add insult to injury, you clung to your old ways of thinking, refusing to change apart from in the most trivial of ways. In normal industries you would be finished: your collection of P45s would fill half a drawer, and you would long since have been forced to retrain into somebody of more value to society.
But not in one profession. Yes, dear readers, I’m referring to the systemic, cultural problems of modern, applied macroeconomics, in the public as well as private sectors, where failure continues to be rewarded.
Economists who make all the wrong calls keep their jobs and big paychecks, as long as their faulty views echo the mainstream, received wisdom of the moment. I spent five years studying economics, and I still love the subject. At its best, economics is the answer to myriad problems, the prism through which to view the vast majority of decisions.
But I’m deeply frustrated with some of its practitioners: all those folk who predicted that the third quarter would see very little or negative growth, when in fact the economy grew by a remarkable 0.5pc, the most important statistic of recent times.
For political and psychological reasons, one small and rather unreliable snapshot had become all-important. Had that (preliminary and approximate number) been in negative territory, or close to zero, the outcry would have been deafening and reverberated around the world. The markets would either have slumped or more likely, bounced back, on the assumption that Brexit would be reversed. Yet the opposite happened, and the economy did well (France grew by just 0.2pc during the same time).
Combined with the news that Nissan will be sticking with the UK, it was a great week for Brexit, made all the better by the announcement of Heathrow expansion. Brexit won the referendum, lost the immediate aftermath, won the next few months and has now won again.
Of course, the war continues, and will do so for years. There are huge challenges looming. But this was the week that the economics profession was further discredited. The forecasts were not just completely wrong – my guess is that they were actually downright harmful, shaving growth in areas where elites that are most likely to be swayed by economists decisions.
Economists have form: most backed the euro, failed to see the financial crisis coming, missed the dot.com bubble and the Asian crisis, loved the European Exchange Rate Mechanism and never understood the Thatcherite revolution.
Previous generations failed just as badly: the vast majority loved Keynesian economics during the 1970s, read and recommended a textbook that thought that the USSR would eventually overtake America, backed corporatism, failed to predict the 1929 crash and provided all of the wrong answers in the 1930s.
One problem is groupthink, another is the inability to be objective. But the biggest problem is a faulty paradigm: a fundamental flaw at the heart of the models and assumptions of the economic mainstream, aided and abated by an academic establishment which excludes dissenters from its journals and top faculties.
So if economists want to be useful again, they should do two things.
First, we need a proper Parliamentary inquiry into the failures of the Treasury model and official forecasting before and after Brexit. There is an argument for this to be extended to the Bank of England and even to the private sector. Economists need to cooperate, if even anonymously: are some under pressure to toe various lines? If not, what is the real reason for such a succession of flawed consensuses?
Second, the real threat to the economy is absurd decisions such as the ruling that Uber drivers should be treated like employees (on the basis that the US firm exerts too much control and direction over drivers, even though they are free to choose their hours and commitment).
If not reversed, this judicial activism will destroy jobs and push up prices; it is a shame that such a good week ended on such a sour note. The Government may need to legislate to make it clear that Uber and other similar enterprises are platforms, not employers. If economists want to redeem themselves, they should explain why flexible markets are good and why it would be a genuine disaster if we kill off the sharing economy with red tape.
India and Intolerance - Free that Pigeon
Irfan Hussain in The Dawn
INDIA has a population of over a billion, a thriving economy, a respected voice, a powerful military and an ancient civilisation. Its scientists have put a satellite into orbit around Mars.
So how does it proclaim its position in the world? By detaining a pigeon allegedly carrying a warning note to Prime Minister Modi. And for good measure, it has expelled a Pakistan High Commission staffer, Mahmood Akhtar, for espionage.
According to The Hindu, Akhtar had recruited two Indians to spy for Pakistan. One of them is Maulana Ramzan Khan, a preacher entrusted with the maintenance of a village mosque. The other is Subhash Jangir, the owner of a small grocery. So clearly no James Bond, either one of them.
The truth is that despite its rapid progress and its size, India is a deeply insecure country. While my columns critical of Pakistan have been met with praise and approval from Indian readers, I have been flooded with furious emails whenever I have said anything negative about their country.
It is almost as though Pakistani journalists were not permitted to talk about their neighbour. And not just Pakistanis: a few years ago, I met the Economist correspondent based in New Delhi who was visiting Lahore to cover the general elections.
Half-jokingly, I said to him that it must be a drag to be in Pakistan during the party season in Delhi. He assured me he loved to visit Pakistan because while in India, readers reviled him whenever he wrote a critical piece for his weekly. But when he wrote a negative article about Pakistan, his Pakistani readers immediately agreed with him.
About 15 years ago, I was in New Delhi, and was invited by the Times of India to speak to their editorial staff. In that informal discussion, I pointed out that despite all of Pakistan’s military interventions, a small group of us writing for the mainstream press still opposed core state policies on Afghanistan, Kashmir and the nuclear programme. The Indian media, on the other hand, were almost unanimous in rallying around the national (and nationalistic) agenda.
None of the journalists present challenged my view. However, one editorial writer pointed out that the ownership pattern of the mainstream press meant that businessmen relying on official contacts did not want to rock the boat.
But the reaction I get to negative articles from Indian readers suggests that the problem goes far deeper. Take the case of Arundhati Roy. Here is a hugely talented writer and a gutsy campaigner who has won international fame for her fiction, as well as for her reporting about the most vulnerable and persecuted segments of Indian society.
On the couple of occasions, I have cited her work in my columns, I have been inundated with emails from Indian readers denouncing her, and insisting that I had lost credibility by quoting Roy.
Clearly, her gritty exposure of the excesses committed by Indian security forces as well as by corporate groups against the marginalised has exposed a raw nerve running through the elites and the expanding middle class.
The current ban prohibiting Pakistani movie stars as well as musicians from acting and performing in India provides another example of the chauvinism that has gripped the country. True, this took place against the backdrop of the bloody attack on an army camp in Uri. But are cultural links to be forever hostage to acts of militancy?
To our shame, we retaliated by imposing a similar ban on Indian movies and TV channels. Had our leaders an ounce of common sense, they could have underlined the crassness of the Indian move by continuing with the previous laissez-faire policy. But sadly, common sense is in short supply on both sides of the border.
So why do so many Indians carry such large chips on their shoulders? Obviously, there is much to admire in the country, ranging from the vibrancy of its arts to its colourful traditions and fascinating history and geography. Then why are they so defensive about the occasional criticism? After all, they cannot hope to bask constantly in international adulation.
While I don’t have any empirical research to back me, I suspect that this touchy reaction to adverse comments derives from India’s history of domination by foreigners. Muslim invaders from Afghanistan and Central Asia ruled much of the subcontinent for the first 800 years or so. They were then displaced by the British who proceeded to govern India for the next couple of centuries.
South India, by contrast, remained largely independent of Muslim rule, and its people are much more self-confident as a result. On a visit to the region several years ago, I was repeatedly told that if it hadn’t been yoked to New Delhi, South India would have made far greater progress.
I realise I am sticking my neck out, and expect the usual flood of angry emails. But would the Indian authorities please set the poor captive pigeon free?
INDIA has a population of over a billion, a thriving economy, a respected voice, a powerful military and an ancient civilisation. Its scientists have put a satellite into orbit around Mars.
So how does it proclaim its position in the world? By detaining a pigeon allegedly carrying a warning note to Prime Minister Modi. And for good measure, it has expelled a Pakistan High Commission staffer, Mahmood Akhtar, for espionage.
According to The Hindu, Akhtar had recruited two Indians to spy for Pakistan. One of them is Maulana Ramzan Khan, a preacher entrusted with the maintenance of a village mosque. The other is Subhash Jangir, the owner of a small grocery. So clearly no James Bond, either one of them.
The truth is that despite its rapid progress and its size, India is a deeply insecure country. While my columns critical of Pakistan have been met with praise and approval from Indian readers, I have been flooded with furious emails whenever I have said anything negative about their country.
It is almost as though Pakistani journalists were not permitted to talk about their neighbour. And not just Pakistanis: a few years ago, I met the Economist correspondent based in New Delhi who was visiting Lahore to cover the general elections.
Half-jokingly, I said to him that it must be a drag to be in Pakistan during the party season in Delhi. He assured me he loved to visit Pakistan because while in India, readers reviled him whenever he wrote a critical piece for his weekly. But when he wrote a negative article about Pakistan, his Pakistani readers immediately agreed with him.
About 15 years ago, I was in New Delhi, and was invited by the Times of India to speak to their editorial staff. In that informal discussion, I pointed out that despite all of Pakistan’s military interventions, a small group of us writing for the mainstream press still opposed core state policies on Afghanistan, Kashmir and the nuclear programme. The Indian media, on the other hand, were almost unanimous in rallying around the national (and nationalistic) agenda.
None of the journalists present challenged my view. However, one editorial writer pointed out that the ownership pattern of the mainstream press meant that businessmen relying on official contacts did not want to rock the boat.
But the reaction I get to negative articles from Indian readers suggests that the problem goes far deeper. Take the case of Arundhati Roy. Here is a hugely talented writer and a gutsy campaigner who has won international fame for her fiction, as well as for her reporting about the most vulnerable and persecuted segments of Indian society.
On the couple of occasions, I have cited her work in my columns, I have been inundated with emails from Indian readers denouncing her, and insisting that I had lost credibility by quoting Roy.
Clearly, her gritty exposure of the excesses committed by Indian security forces as well as by corporate groups against the marginalised has exposed a raw nerve running through the elites and the expanding middle class.
The current ban prohibiting Pakistani movie stars as well as musicians from acting and performing in India provides another example of the chauvinism that has gripped the country. True, this took place against the backdrop of the bloody attack on an army camp in Uri. But are cultural links to be forever hostage to acts of militancy?
To our shame, we retaliated by imposing a similar ban on Indian movies and TV channels. Had our leaders an ounce of common sense, they could have underlined the crassness of the Indian move by continuing with the previous laissez-faire policy. But sadly, common sense is in short supply on both sides of the border.
So why do so many Indians carry such large chips on their shoulders? Obviously, there is much to admire in the country, ranging from the vibrancy of its arts to its colourful traditions and fascinating history and geography. Then why are they so defensive about the occasional criticism? After all, they cannot hope to bask constantly in international adulation.
While I don’t have any empirical research to back me, I suspect that this touchy reaction to adverse comments derives from India’s history of domination by foreigners. Muslim invaders from Afghanistan and Central Asia ruled much of the subcontinent for the first 800 years or so. They were then displaced by the British who proceeded to govern India for the next couple of centuries.
South India, by contrast, remained largely independent of Muslim rule, and its people are much more self-confident as a result. On a visit to the region several years ago, I was repeatedly told that if it hadn’t been yoked to New Delhi, South India would have made far greater progress.
I realise I am sticking my neck out, and expect the usual flood of angry emails. But would the Indian authorities please set the poor captive pigeon free?
Uber ruling is a massive boost for a fairer jobs market
Aditya Chakrabortty in The Guardian
Yaseen Aslam. James Farrar. Remember those two names, because they are giant-killers. This summer the men took on not just one £50bn multinational, but an entire business model. On Friday, they won.
As minicab drivers for Uber, Aslam and Farrar were deemed to be self-employed. The status meant they were denied the most basic rights that other workers take: no minimum wage, no sick pay, no paid holiday. But as an employment tribunal judge heard over several days in July, that classification was both wrong and unfair. And he agreed.
The obvious thing to say about Anthony Snelson’s ruling is that it is huge. It poses an existential threat to Uber in Britain. It will also send shockwaves through a string of companies using the same business model to do everything from delivering takeaways to providing cleaners to couriering court documents.
Most of all, it is a massive boost for all of us who want a fairer jobs market – and a big slap in the face for the government. For most of the past six years, ministers have turned a blind eye to the growth in bogus self-employment, zero-hours contracts and Sports Direct-style agency work. They have preferred instead to celebrate the record employment numbers as proof that austerity is doing the trick. Just before the last election, Nick Clegg claimed: “If you want a glimpse of the sort of worker that will thrive in the new economy, you need look no further than the growing numbers of self-employed people.”
On this subject too, the hapless Lib Dem was wrong. The idea that the swelling army of self-employed Britons are all budding SurAlans and Bransons, swigging lattes and toting MacBooks, is for the birds. Serious labour-market analysts agree that a large number of those now in self-employment are there as a last resort. And many believe a big chunk should not even be classed as self-employed. As with much else in our insecure labour market, firm numbers are hard to come by. But the Citizens Advice Bureaux believe that the reserve army of bogus self-employed may number around half a million.
For some Britons, self-employment doubtless means freedom. But for others, it means the freedom to be exploited, deprived of rights – and to be underpaid. According to recent research from the Resolution Foundation, the typical self employed Brit is now earning less than when John Major was prime minister.
For the likes of Uber, self-employment is hugely profitable. The giant company has 40,000 drivers working for it in Britain – and as long as they are self-employed they are almost cost-free. On that basis, Uber can keep on adding to its fleet of drivers for next to nothing, and thus rack up ever more passengers and squeeze out competitors.
But as the judge found on Friday, Uber drivers are not self-employed at all. They have little of the liberty you might expect, but are instead interviewed, recruited and controlled by the firm. Uber sets their default driving routes. Uber fixes the fares. Uber instructs them on how to do their job and runs a disciplinary procedure. The drivers work for Uber – not the other way round.
As the ruling observes, the company and its highly-paid boosters do their best to cloak this relationship in the language of chummy marketing and hi-tech piety. They use the term “gig economy”, when what they mean is casualised labour. They claim to be “disrupters”, when what they’re really disrupting are our labour laws. And Uber still markets itself like a plucky underdog when it is now worth $62.5bn – more than Tesco and Barclays put together – and numbers among its public affairs and public relations people the former advisers to Ed Balls and Michael Howard. Pretending to be the future, it is really the past: a cab company that relies on its drivers being cheap and available. Except your local cab firm doesn’t have the lobbying muscle or the Westminster contacts.
Uber confirmed that it will appeal against the decision, and you can expect this case to keep the courts busy for a few months. Other businesses that have copied the Uber model will be watching anxiously. And so will their workers.
A few months back, I interviewed a courier called Mags Dewhurst, whose job is biking urgent medical supplies to hospitals around London. Like most other cycle couriers and drivers, she’s also classified as self-employed; she’s also fighting to change her status. Next month she will be battling her company, CitySprint, in court.
Dewhurst has a strong case. She wears a uniform with a logo, clocks in with a controller each morning. And then: “For 50 hours each week, I’m told what to do.” She’s been impatient for the Uber verdict, knowing that it will be of huge symbolic importance for her own case. On Friday afternoon, I texted her: How pleased are you?
Her reply: “On a scale of 1-10? A GAZZILLLLION.”
Yaseen Aslam. James Farrar. Remember those two names, because they are giant-killers. This summer the men took on not just one £50bn multinational, but an entire business model. On Friday, they won.
As minicab drivers for Uber, Aslam and Farrar were deemed to be self-employed. The status meant they were denied the most basic rights that other workers take: no minimum wage, no sick pay, no paid holiday. But as an employment tribunal judge heard over several days in July, that classification was both wrong and unfair. And he agreed.
The obvious thing to say about Anthony Snelson’s ruling is that it is huge. It poses an existential threat to Uber in Britain. It will also send shockwaves through a string of companies using the same business model to do everything from delivering takeaways to providing cleaners to couriering court documents.
Most of all, it is a massive boost for all of us who want a fairer jobs market – and a big slap in the face for the government. For most of the past six years, ministers have turned a blind eye to the growth in bogus self-employment, zero-hours contracts and Sports Direct-style agency work. They have preferred instead to celebrate the record employment numbers as proof that austerity is doing the trick. Just before the last election, Nick Clegg claimed: “If you want a glimpse of the sort of worker that will thrive in the new economy, you need look no further than the growing numbers of self-employed people.”
On this subject too, the hapless Lib Dem was wrong. The idea that the swelling army of self-employed Britons are all budding SurAlans and Bransons, swigging lattes and toting MacBooks, is for the birds. Serious labour-market analysts agree that a large number of those now in self-employment are there as a last resort. And many believe a big chunk should not even be classed as self-employed. As with much else in our insecure labour market, firm numbers are hard to come by. But the Citizens Advice Bureaux believe that the reserve army of bogus self-employed may number around half a million.
For some Britons, self-employment doubtless means freedom. But for others, it means the freedom to be exploited, deprived of rights – and to be underpaid. According to recent research from the Resolution Foundation, the typical self employed Brit is now earning less than when John Major was prime minister.
For the likes of Uber, self-employment is hugely profitable. The giant company has 40,000 drivers working for it in Britain – and as long as they are self-employed they are almost cost-free. On that basis, Uber can keep on adding to its fleet of drivers for next to nothing, and thus rack up ever more passengers and squeeze out competitors.
But as the judge found on Friday, Uber drivers are not self-employed at all. They have little of the liberty you might expect, but are instead interviewed, recruited and controlled by the firm. Uber sets their default driving routes. Uber fixes the fares. Uber instructs them on how to do their job and runs a disciplinary procedure. The drivers work for Uber – not the other way round.
As the ruling observes, the company and its highly-paid boosters do their best to cloak this relationship in the language of chummy marketing and hi-tech piety. They use the term “gig economy”, when what they mean is casualised labour. They claim to be “disrupters”, when what they’re really disrupting are our labour laws. And Uber still markets itself like a plucky underdog when it is now worth $62.5bn – more than Tesco and Barclays put together – and numbers among its public affairs and public relations people the former advisers to Ed Balls and Michael Howard. Pretending to be the future, it is really the past: a cab company that relies on its drivers being cheap and available. Except your local cab firm doesn’t have the lobbying muscle or the Westminster contacts.
Uber confirmed that it will appeal against the decision, and you can expect this case to keep the courts busy for a few months. Other businesses that have copied the Uber model will be watching anxiously. And so will their workers.
A few months back, I interviewed a courier called Mags Dewhurst, whose job is biking urgent medical supplies to hospitals around London. Like most other cycle couriers and drivers, she’s also classified as self-employed; she’s also fighting to change her status. Next month she will be battling her company, CitySprint, in court.
Dewhurst has a strong case. She wears a uniform with a logo, clocks in with a controller each morning. And then: “For 50 hours each week, I’m told what to do.” She’s been impatient for the Uber verdict, knowing that it will be of huge symbolic importance for her own case. On Friday afternoon, I texted her: How pleased are you?
Her reply: “On a scale of 1-10? A GAZZILLLLION.”
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