NEETs are only a symptom of a much deeper problem

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It has been suggested this week that “Primary schools in England should be required to identify children at risk of leaving education at 16 without finding a job”, with a view to putting mentoring / tutoring arrangements in place for the children thus identified. Although the review is specifically about England, the same issue exists in Wales. There is something profoundly depressing about the idea that we can and should categorise children in such a way before they are even 11 years old - or even, according to the author, for pre-school children.

It’s not a new issue, and the links between deprivation in childhood and poor opportunity in adulthood have been well understood for at least 60 years – I read the seminal study on the issue by JWB Douglas (“The Home and the School”) back in the 1960s. Six decades later and we’re still only debating how to address the symptoms – because treating the symptoms is what the proposal for mentoring and tutoring is about. That’s not to argue that we should not be trying to treat the symptoms – any help that we can give the children concerned is to be welcomed.

But really, after all that time, we shouldn’t still be debating potential corrective actions at all – we should be addressing the underlying cause. It remains the case that the social class and financial situation of the parents are the factors with the greatest influence on children’s life chances. Even if we were to accept that the situation of the parents is down to their own choices in life (although I hasten to add that I don’t accept that things are as simple as that), that is no justification for restricting the opportunities open to their children. Yet, far from seeking to make the starting point in life less unequal, recent decades have seen a continued concentration of wealth and income in fewer and fewer hands – and the gap between the richest and poorest in society has grown, not shrunk.

Gross inequality isn’t the natural order of things, and life doesn’t have to be that way. It is the result of political choices made by UK governments, both Tory and Labour, over decades. And the most depressing part of the reporting on the pending review is that it doesn’t even seem to touch on that.

The issue over care should be about how it is delivered, not how it is funded

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The UK’s new PM talked a lot last week about care, and there’s no doubt that identifying what care is needed and how it is to be provided are significant issues facing us, particularly as the population ages. Sadly, though, the debate rapidly turned into one about how care is to be paid for, which is a completely different issue – and in some ways, irrelevant. The need for care is based on the aggregation of the needs of millions of individuals – whilst the level of provision might vary according to how much money is available or what budget is set, the need doesn’t change in response to the funding.

If we start from first principles rather than ideological views about money and the size of the state, the nature of the problem changes. One of the problems with neoliberal economic thinking is that it values only two things: labour and capital. The economy is seen as belonging only to those who supply either their labour or their capital – with a huge bias in favour of the latter. Everything and everyone else is then seen as a ‘burden’ on the productive economic activity of those groups, often with the implicit assumption that the living standards / purchasing power of those non-productive groups should be limited to the basics. But if we instead see the economy as a social construct, with the objective of serving all members of the society in which it operates, the picture changes completely. A successful economy needs to be able to provide a decent standard of living (leaving aside, for the purposes of the current argument, who decides what that is, and on what basis) for all its members – young, old, sick, and disabled. And, however defined, that ‘decent standard’ includes things like education, health – and care.

If ‘the economy’ is to serve all of us rather than only those supplying labour or capital, the question ceases to be about how much we tax to pay for x, y, or z, and instead becomes one of how we ensure that the level of economic activity is high enough to provide that decent standard of living – and what mechanism we use to share the benefits of that economic activity. Economic growth is important, of course, but once we accept the obvious truth that growth cannot be infinite in a world where resources are finite, we cannot use that growth – however much the politicians try to do so – as an excuse to avoid discussing the issue of distribution. But avoiding that issue, ultimately, is why the supporters of the current neoliberal capitalism reduce everything to a question of ‘how will you pay for it?’. Better – from their perspective – to turn people against each other over a question of taxation than to get to grips with the question of how wealth and income are distributed. All the debate around how care is to be funded - like the debate about the welfare bill, or the pensions triple lock – is about diverting attention away from the key question, which is about the distribution of wealth and income within society. And whose interests are served by that?

May was a near record month for UK saving

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The UK Government accepted a record level of deposits from savers during the month of May, the second highest total on record for the month of May. Savers (mostly pension and life insurance funds as well as some wealthy individuals) clearly recognised that saving with the UK government is one of the safest places for their money, because the UK government’s ability to create extra money as and when required means that they can never lose their capital. That’s one way of presenting the figures, but it’s not the way that most of the media chose to present the same information. Instead, the near-universal response (here’s one example) was to treat it as a disastrous increase in government borrowing.

The disparity serves to underline the simple and unavoidable fact that what looks like a debt to one party will always look like an asset to the other. It also underlines the way in which those who want to deliberately constrain or reduce UK government expenditure will choose to interpret the facts in the way which they believe boosts their perception – to say nothing of boosting their own financial interests. The willingness to deposit such large sums with the government suggests that the savers aren’t really against what they describe as ‘government borrowing’ at all – why would they be, when they’re the main beneficiaries? It’s more that they’re against the government spending money on services instead of cutting taxes. And – surprise, surprise – those who benefit most from interest payments on government ‘borrowing’ would also have the most to gain from tax cuts.

For the rest of us, the problem isn’t government borrowing per se, it’s the way in which paying for that borrowing ends up funnelling money into fewer and fewer hands, concentrating wealth rather than spreading it. Any meaningful attempt to decrease inequality must inevitably mean that we have to look at the way in which wealth and income are distributed within the economy. Understanding that one person’s debt is another person’s asset is one small step towards that.

Making the pie bigger isn't enough

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Politicians at both ends of the M4 place a great deal of emphasis on economic growth as a way of making us better off. It’s true, of course, that a bigger pie makes it possible for people to enjoy bigger slices – and making the pie bigger is a convenient way of avoiding questions about the way the pie is shared. Sometimes, vacuous phrases about rising tides lifting all boats are thrown into the debate, but it’s an analogy which isn’t as helpful as the initial image may appear. In the first place, only seaworthy boats are lifted – unseaworthy ones simply get inundated. Secondly, even for all the boats that are lifted, there is still a huge disparity between a superyacht and a dinghy, and rising tides do nothing to reduce that. Thirdly, at the risk of pushing the analogy too far, if the owner of the superyacht steals the sails and oars from the dinghy, the rising tide isn’t overly helpful to the guy in the dinghy.

The point is that whilst growth creates the potential to benefit all, the reality can be different: ignoring the question of distribution of benefit is akin to a belief in the magic of trickle-down economics. In the US, the proportion of GDP going to employees (through wages etc.) has fallen from a high of 58% in 1970 to around 51% today; over the same period, the proportion diverted into profit has risen to around 12%. There is a similar pattern in many other advanced economies, underlining the way in which the benefits of economic growth have been concentrated in fewer hands, leading to an increase in inequality. On the face of it, the UK is something of an outlier. According to this research, the proportions of GDP going to wages and profits have been remarkably stable in the UK, which might give us superficial hope that rising GDP will indeed benefit society more generally than is happening elsewhere.

As the research also makes clear, however, such high level statistics are hiding a pernicious growth in inequality. It’s not only the share of GDP going to ‘workers’ which matters, it’s also the way in which that is shared out amongst those workers. More detailed analysis shows an increasing remuneration gap between the lowest and highest paid workers, and that in turn leads to an increase in inequality, and means that an apparent increase in wealth is not being felt at all by many. It underlines the importance of governments avoiding a dependence on simplistic measures of ‘success’ such as overall GDP, or even average GDP per head. Growth per se is not enough. Even if growth is always possible and sustainable (which is a whole other, far from unimportant, question), we cannot ignore – as many politicians seem keen to do – the question of the way in which wealth and income are shared within society. Baking a bigger pie is not enough.

Avoiding the real issue - again

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Last week, this blog referred to the question of a falling birth rate, and the alleged ‘problems’ it creates. The Sunday times (paywall) carried an article this week about a new report from a think tank calling itself the Centre for Social Justice on the same issue. The report itself, Baby Bust, is available here. The main factor on which it alights is that it is all the fault of immature men, who are entering the adult work force later and thus deferring parenthood for men and women alike. But it was the ‘solutions’ which caught my eye.

Leaving aside the socially conservative proposals about incentivising marriage and encouraging mothers (not fathers, note) to be stay-at-home child carers, moving to ‘household’ rather than individual taxation – all massive steps backwards, particularly for the status and role of women in society – it was their proposals for education which leapt out at me:

“Reduce the school leaving age and get most young people into the workplace as early as possible”, and

“In a similar vein, we should drastically reduce the numbers of 18-year-olds going to university.”

They didn’t suggest to what age the school leaving age should be reduced. I suspect that they don’t want to go back to sending 8 or 10 years olds down the mines (or aren’t prepared to say so), but it seems clear that they want to at least reverse the increase from 16 to 18. They also want to increase the retirement age to qualify for the state pension. My interpretation of it all was that their idea of ‘social justice’ seems to mean that working class boys, and women in general, should know their place and understand their station in life, as though the 1950s was some sort of golden age. It was a depressing read, and no surprise to find the foreword written by a Tory Shadow Minister.

But, to return to last week’s post, what it’s really all about is looking for a ‘solution’ to a ‘problem’ in a way which avoids the need to look at how the economy serves society, and above all at wealth distribution within society. ‘Social Justice’ which protects the wealthiest at the expense of the rest is an Orwellian use of language, to say the least.

The issue of distribution isn't going to go away

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The view that a falling birth rate is a ‘problem’ which needs to be addressed might be being expressed most forcibly by the political ‘right’, but it isn’t confined to that wing, as evidenced by this article last week from Polly Toynbee in the Guardian. Whilst (justifiably) demolishing the arguments of some Reform Ltd figures, she ends up agreeing with the objective (increasing the birth rate) but giving a different rationale.

There is a fringe element amongst those who support increased birth rates which is tinged with both misogyny (men controlling the fertility rate of women) and racism (a belief that the ‘solution’ to the economic drivers of immigration is to produce more native-born workers). Given the roughly twenty-year lead time involved in producing more workers, the latter is economic nonsense, but then racism and xenophobia have never been about logic or economics.

More seriously, the economic case for increasing birth rates revolves around the fact that the ratio of ‘productive’ to ‘unproductive’ adults is changing as the population ages. In an economy built around the assumption that the product of economic activity belongs to those engaged in it rather than to society as a whole, the fact that there is a problem is undeniable. Fewer workers supporting more non-workers – with no other changes to the economic model – will clearly lead to difficulties. Rebalancing the ratio by increasing the supply of people, even if we ignore the 20-year lead time, turns it into something of a Ponzi scheme, in which any increase in life expectancy (generally a good thing) has to be balanced by an increase in population size (not such a good thing in a finite world where resources are already being exploited unsustainably). Another solution, pursued in the UK by governments of both colours, is to reduce the number of non-workers by making people work longer. That would certainly rebalance the ratio and cut the cost of maintaining retirees: fewer pensioners = lower pension costs. But it also makes retirement (and even more so, a lengthy and healthy one) increasingly a privilege for those who have good occupational pensions and are not doing physically demanding work. It’s a ‘solution’, in short, which favours the better-off at the expense of the less well-off.

There is another approach, but it involves a change in paradigm – a shift away from seeing the output of economic activity as belonging only to those actively engaged in economic activity. If, instead, we see the ‘economy’ as being something which belongs to the whole of the society in which it operates, then the question becomes one of how the output of that economic activity is used within that society. A properly functioning society (including the economy which is part of it) needs to meet the needs of all its members – old, young, sick, and disabled members as well as productive workers. The idea that we only need to worry about how big the pie is, rather than how it is shared, has validity only so long as any increase in the size of the pie is both sustainable in terms of its use of finite resources, and equitable in terms of how the extra pie is used. Falling back on ‘growth’ in the abstract – the default position of Labour, Tory, Lib Dem and Reform Ltd politicians alike – is thus no solution at all if, as is the case at present, that growth is not only not sustainable within the resources available, but also the benefits are overwhelmingly captured by a tiny proportion of the population. We cannot simply avoid indefinitely the question of distribution.

Debt, per se, is not bad

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There was a story a month ago about a report from the Institute of International Finance that the total amount of global debt had reached a record height of $324 trillion. It’s a huge sum, so large as to be beyond comprehension in terms of our own daily interactions with money. It’s an estimate, of course. It could not be otherwise; human record-keeping is neither precise nor transparent enough to know for certain. Let’s just accept that it’s a very, very large number.

Whether we should be worried about it or not is another question. Since all money owed by one person or body is owed to another person or body, it is inevitably the case that a total financial debt of $324 trillion is precisely matched somewhere by a total financial asset of $324 trillion. It’s just that the debt and the asset are in different hands. And whilst estimates of how much money exists in the world vary significantly, one thing we can say is that, since ‘money’ is, in its very essence, simply a way of denominating and trading debt (“I promise to pay the bearer on demand” etc.), the amount of money in the system must match, if accurately calculated, the amount of debt. An over-simplification, for sure, but if every individual and organisation were to repay all their debts tomorrow, the world would indeed be debt-free – but it would also be money-free. There would still be a pile – many piles – of physical notes and coins somewhere, but they’d be essentially worthless. And the economy would grind to a halt. Asking how much debt is the ‘right’ amount for the world economy is like asking how much money should exist. It’s a question which has no correct answer; the only thing we know is that, as the world’s population grows and becomes more affluent, the amount needed will increase. Worrying about how much debt there is, and by how much it is increasing, is focussing on the wrong question.

The right question is about who is in debt and to whom they are in debt; it’s about the underlying economic power relationships. The reason that it worries some is not the existence of debt, nor the amount of debt, nor the increase in that amount: it is about potential default – whether those in debt will be able to repay their debts. It is a concern by the rich that the poor will not be able to continue transferring their few assets to the rich, because (almost by definition) much borrowing is by those who have no money from those who have lots. What concerns politicians about the debt mountain facing the poorest – whether individuals or countries – should not be whether they are taking on debts that they can’t cover, but how and why the need for them to do so arose in the first place. And since that inevitably leads to discussion about how resources and wealth are distributed in the world, it’s easy to see why they prefer to avoid it.

Economic migration is neither new nor unique

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For generation after generation, Wales has lost people, particularly young people, who have left to seek a better future elsewhere. The immediate cause is well-understood: a lack of opportunity here, coupled with greater opportunity elsewhere. Within the UK, it’s not a phenomenon unique to Wales of course; Scotland and much of England outside the south-east corner have suffered the same fate. The wider reasons for that economic imbalance are well-understood as well: a centralised state which concentrates power, wealth and talent in the centre by sucking it in from the peripheries. The extractive and exploitative nature of the Welsh economy is easily seen by looking at transport links – the best ones overwhelmingly run from west to east rather than north to south, historically facilitating the extraction of mineral and other wealth.

The fact that Wales has not been an independent country during that time, and the consequent lack of a recognised international border obscures the basic fact: most of those who left Wales were (and are) what are today called, usually pejoratively, economic migrants. People who live in an area denuded of much of its wealth by far-away rulers migrate in search of a share of what was originally theirs anyway. We’re not good at recognising it, but it is the same imperative which drives many of the migrants reaching these shores currently. Coming from countries which were systematically exploited and robbed by their colonialists, they travel to where the wealth now resides in search of opportunity. And it should be no surprise that the country of choice for many of them will be the one which colonised them, and whose language was imposed upon them. So, for example, Algerians tend to favour France and those from the former British Empire tend to favour the UK.

If anyone should be able to understand and empathise with economic migrants, it is us here in Wales. But by and large, many amongst us don’t. Perhaps it’s due to a lack of understanding of our own history, coupled with an acceptance of the version of history with which we are fed. But the bottom line is that, whilst many in Wales blame the exploiters for the loss of those who leave, they blame the individuals for the new arrivals. In truth, our interests have more in common. If it’s an unfair distribution of wealth which drives economic migration, it is a fairer distribution which will reduce it. It’s no accident that, in the UK as in the US, anti-immigrant sentiment is being driven and funded by some of the richest political donors. We only have to ask ourselves who might feel most threatened by any suggestion of a fairer distribution of wealth, whether within a state or more globally, to understand why.

Equality and equity are not the same thing

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This week’s speech by Plaid leader Rhun ap Iorwerth has been presented by some as a move “…away from the emphasis on future independence that became predominant during the leadership of his predecessor”. Maybe; at first reading the words certainly give the impression of a leader and a party determined to improve the position of Wales within current structures rather than one committed to changing those structures. However, given that two of the five points in the plan ('Scrap the Barnett formula and enshrine into law an Economic Fairness (Wales) Bill to rebalance the wealth of the UK'; and 'Give Wales the ability to set its own tax bands and rates') depend completely on legislation at Westminster which Plaid acting alone has no hope whatsoever of delivering, and which neither potential future UK government shows any inclination to deliver, it sounds like a way of emphasising the weakness of devolution as much as working within its constraints. And what is that, if not an argument for independence?

Whatever, there was nothing with which I could disagree in four of the five points. However, the fourth point of the five point plan concerned me rather more. “Bring forward legislation that ensures an equal share of public spending across Wales” is entirely within the powers of the Senedd (at least, insofar as it relates to Welsh Government expenditure – UK expenditure is, again, outside of that remit), but is potentially something of a double-edged sword. There is – in the speech as reported at least – a certain lack of detail. Is this to be based on spending per head (in which case, the lion’s share will inevitably continue to go to the south east)? Over what time period would it apply – per annum, per decade? If it’s tied to annual spending, that’s a major obstacle to large localised projects.

And what about the entirely valid critique of the Barnett formula (that it doesn’t take account of need): isn’t there a danger here of replicating that approach within Wales? Perhaps the intention is to talk about an ‘equitable’ share of spending rather than an ‘equal’ share. It’s a harder concept to explain, and it isn’t such a simple sound bite, but it is what Wales actually needs. Given the historic under-investment in parts of the country, any attempt at ‘levelling up’ necessarily requires a deliberately unequal pattern of spending if cash is to be directed at the areas of lowest GDP per head, for instance. It is, of course, precisely that requirement (to redirect spending from the wealthiest areas to the poorest) which has been the rock on which the Tory government’s commitment to ‘levelling up’ has foundered. It might have gone down well in the so-called ‘red wall’, but it went down badly in Tunbridge Wells. In Welsh terms, diverting resources to Gwynedd might go down well in the north and maybe not so well in Cardiff, but that's not a good enough reason not to do it.

It is not enough to talk – as Labour in England are doing, for instance – about ‘growth’ as the magic ingredient which resolves the problem. A rising tide, as the saying goes, does indeed lift all boats, but it doesn’t change the relative size of those boats. An uneven distribution of wealth and opportunity is never going to be solved by increasing the levels of wealth and opportunity for everyone; that requires a redistributive element as well. There is plenty of scope within the other four points of the plan for there to be a plan for redistribution across Wales; but a target of ‘equalising’ spending will undermine that. We need equity, not equality.

Slogan and substance

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The very essence of a truly great political slogan is that it should resonate with as many people as possible whilst being essentially meaningless or, at the very least, sufficiently vague so as not to commit its authors to actually taking any particular action. The current government’s mantra of ‘levelling up’ is a masterpiece of the genre. What’s not to like about the idea of boosting the economy in areas which feel as if they’ve been left behind? In practice, however, it’s selective; it only applies to areas which voted for the Tories.

The concept of ‘levelling’ has a long tradition in English history – as does the idea of that levelling being selective. The Levellers of the Civil War period almost four centuries ago were also in favour of equality for all, although their definition of ‘all’ only extended to males (excluding servants and wage-earners of course), and some wanted it only to apply to heads of households or property owners. If Johnson had a political philosophy, he might almost have stolen the gist of it from that movement (although obviously he would have more than a little difficulty with their opposition to corruption or nepotism).

Its selective application isn’t the only way in which the practice differs from the slogan. It also has little to do with ‘levelling’ – there is absolutely no intention, and never has been, to bring all areas up to the level of the richest. It is, from the outset, a means of using public money to attempt to ensure the continued electoral success of the Conservative Party. The funds are being consciously and deliberately directed to those constituencies which the Tories need to retain or win in order to maintain a majority. The rest will remain as forgotten and left behind as they have been for decades, because Johnson simply doesn’t need their votes. That which is presented as egalitarian and unifying is implemented so as to divide and discriminate.

It should have been obvious from the outset that this would always be the result, although it seems not to have been for many. For any party wedded to the erroneous household budget analogy it is impossible to put more resources into one area without taking them from another. For those of us who understand that ‘money’ is not limited other than by the capacity of the economy, that isn’t a problem; but for fiscal conservatives like the Tories it is always the case that additional money spent in one place has to have come from somewhere else. Levelling up can only be a one-way process for those who accept that there are additional resources available, a category which excludes the current government. Fortunately for the government, it’s a category which also excludes the main opposition party, as evidenced by a report today that a Labour MP is demanding that no resources should be transferred from the wealthiest part of the UK to the poorer areas. That’s right – the party which tells us that ‘the union’ is all about pooling and sharing is at the same time demanding that there should be no transfer of wealth from the richest to the poorest. It’s an odd kind of ‘pooling and sharing’.

There is a reason why one part of the UK is richer than the rest; regional inequality is not an accident. It’s not being ‘anti-London’ to highlight the facts. At its simplest, we have an economic system which drains talent and resources from the periphery and concentrates them in the centre; London’s wealth has grown by transferring that wealth from the rest of the UK (and from overseas colonies before that). It is not an accidental result of some impersonal process; it is the inevitable result of an economic system set up to work that way. It means that ‘levelling up’ can only happen in one of two ways: by identifying and directing additional resources to the poorest areas, or by redistributing those resources which currently exist. Which of those you choose depends on your view of economics, but what is certain is that neither the current governing party nor the official opposition have any intention of doing either.

Levelling up is an utterly meaningless slogan, but it works. The compliant media are still attaching the label to everything that the government tells them is part of the plan. People fell for it in 2019, and are still falling for it now.

Ideas don't come from nowhere

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On Tuesday, the Western Mail ran an article on the attitudes towards Brexit amongst respondents on the street in Port Talbot.  Like any straw poll, it is inevitably no more than a snap shot of the views of a few people, and cannot be taken as a reliable indicator of the state of public opinion.  Nevertheless, it rang true as a cross section of the different opinions which exist still over the issue. 

The response which particularly drew my attention was this one: “When we went in there was only five countries and now there are well over 20 countries and the smaller countries all want money from the EU.  It’s time we got out.”  I’m sure that it’s a view held by many, and reflects the argument put forward at the time that the completely misnamed ‘membership fee’ was too high and meant a flow of cash out of the UK and into other countries.  But from a Welsh perspective, we’re one of the poorer areas benefiting from the redistributive process – and by rejecting continued membership, the majority of Welsh people effectively voted against the whole idea of redistribution.

It is, though, very much a ‘British’ view.  (And Wales would be one of the smaller countries if it were a member of the EU.)  It’s easy – too easy – simply to blame the lack of a Welsh media for the fact that people see the issue in UK terms rather than taking a more Welsh perspective.  It’s more complex than that, though – yes, of course people’s views can be coloured by what they read, but it’s also true that people’s views colour their choice of reading.  Merely putting more options on the menu isn’t the panacea as which some seem to see it.  Horses, water, etc.

It isn’t simply about the contradiction between a ‘British’ and ‘Welsh’ standpoint either.  Many politicians are too quick to assume that here in Wales we have a natural tendency to support the idea of redistribution from the rich to the poor.  I’d like to believe it, but I really can’t; it may have been true in the past, but the past is a foreign country.  The ideology which capitalism builds around itself is winning out, not least because it is inadequately challenged. 

People have become convinced that their relative poverty is caused by people poorer than themselves, not by the richer taking a disproportionate share.  That is part of what lies at the root of an attitude of hostility to immigration, overseas aid, and regional redistribution at a European level.  And it’s exacerbated by politicians saying that they have to respond to people’s so-called ‘legitimate concerns’ when they should be challenging the ideology which drives them.

Freedom depends on equality

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I have posted a few times on the idea of freedom of movement as being, in principle, a right available to all rather than just a privileged few, and one response which I often get is that allowing freedom of movement to all would lead to even more mass migration than the world is currently seeing.  It’s an argument that I understand, but it’s an argument based on practicalities rather than on principle.  The fact that treating something as a right might cause problems isn’t an argument for saying that people don’t have that right; it’s an argument for considering what those problems are and how they might be tackled.

People choose to migrate for a number of reasons.  (I use the word ‘choose’ rather loosely here; in war-torn countries, or those ravaged by famine and disease, it doesn’t look much like a choice.)  One way or another, the basic driver for most migrants is the search for a better life.  That is as true for the rich person migrating to a tax haven as it is for the poor African seeking a route to Europe; the difference is that ‘better’ means something rather different at the extremes.  Ultimately, the fact that a better life is available elsewhere is down to differences in economic wealth across the world; global inequality is the main driver.  The question, in terms of policy, is how we respond to that; and there are broadly only two possible options.

The first is the one being advocated by virtually all parties in virtually all the world’s wealthy states: pull up the drawbridge, control the borders, select how many (and which) immigrants are allowed in, treat freedom of movement as a privilege only for the few – in essence, to adapt a phrase from another context, “what we have we hold”.  The consequences of that are what we are seeing daily – dispossessed, desperate people risking their lives to travel illegally where they can’t go legally.  And I’m sure that I’m not alone in believing that this is, ultimately, a line which cannot be held, even if we wanted to.

The second is to acknowledge that inequality is the underlying cause and address that inequality.  In essence, that means a deliberate, planned, and managed transfer of wealth from the haves to the have-nots on a global scale.  The UN target of 0.7% of Gross National Income in aid barely scratches the surface of what is required, and that’s even truer when at least some of that aid from the richer countries is then spent back in the donor countries.  It is unlikely to be a popular policy as things stand – we are already seeing people talking about cutting the foreign aid budget because ‘charity begins at home’.  I can understand that view as well when there are so many in our own society who are struggling with the basics; but isn’t that, also, the product of inequality, albeit on a more local basis?

At a European level, this is what the structural funds from which Wales has received large sums (even if we have failed to use them wisely) are all about – trying to spread wealth more evenly across the EU.  The essence of much of the Brexit campaign was to reject the idea that rich countries (like the UK) should contribute more in order to achieve that aim, and one can legitimately argue that the people of Wales rejected the whole concept of redistribution (although that hasn’t stopped our politicians from trying to claim an exemption for Wales).  One of the tragedies of politics in Wales was seeing those who have most to benefit from an attempt at equalisation throwing their lot in with the privileged whose starting point is that the rich have an absolute right to increase their share of wealth at the expense of others.  Sometimes, turkeys really do vote for Christmas, it seems.

The EU vote in Wales also served to underline how big the task in front of us is if we want to move to an approach based on spreading wealth rather than raising walls.  If those who would benefit from more equality reject it in favour of the proposition that the rich should hold on to what they have, what chance of persuading the population as a whole to a position of greater altruism in favour of the world’s poor on an even larger scale?  Yet for those of us who believe that building walls and controlling borders is the wrong way to go, that is the task facing us.  We have to make the argument for greater equality, both at home and worldwide.  But where are the politicians with the courage even to attempt that, rather than lamely fall in behind the privileged and the prejudiced?

Why would they give us the money?

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I can understand why the First Minister would come out demanding that Wales doesn’t lose a penny in regional aid following Brexit, and that the UK Government should commit to making up the difference.  It’s a natural response, given the sums involved and the number of important projects which depend on this funding.  But hold on a minute – didn’t we just, effectively, vote against the whole principle of regional aid, even if wasn’t put that way?

As one of the EU’s richest member states, the UK contribution was higher than the amounts received back in payments such as the budget rebate, farm subsidies and regional aid.  That ‘disparity’ was one of the core arguments of the Brexit brigade.  No-one on the Remain side took the trouble, as far as I can recall, to explain the reasons for that, let alone to defend it.  But there are a number of reasons for the disparity, and it’s worth stopping for a moment to consider what that ‘excess’ payment was spent on before assuming that it will automatically now be available to spend.

For instance, some of it went on those apparently hated ‘eurocrats’ – you know like the people that manage the CAP, negotiate trade deals and other agreements, and manage the single market.  We won’t need them any more, will we?  Well, not exactly...  Let’s take the case of trade negotiators.  For the next two years, we will still be paying our share of the EU costs of employing such people, so that they can negotiate with the UK as well as the rest of the world – and we will also need to recruit and pay more of our own civil servants to negotiate with them, whilst at the same time, negotiating our own deals with the rest of the world.  That latter cost won’t come to an end in two years’ time either – we’ll need those skills for the foreseeable future.  Indeed, the cost of doing this sort of thing for the UK alone is inevitably going to be higher than it would be if the cost was shared between 28 states.  Bang goes part of the ‘spare’ money.  And that’s just one example.

But more importantly, a lot of the EU budget is spent on attempting to redistribute wealth, from the richer areas to the poorer.  One can argue (and I certainly would so argue) that this hasn’t always been spent well or effectively, (although that’s generally more to do with those receiving the largesse than with those dispensing it) but Wales is far from being the only poor area of the EU, nor the only beneficiary of the EU’s attempts at redistribution. 

Further, anyone who was really serious about wanting to slow migration within the single market would be arguing for more redistribution, not less.  All the talk about people moving from areas of low economic activity to areas of high activity has focussed on the impact on the receiving countries, but if there is a part of the UK which should realise more than any other area how badly such migration impacts the areas from which people migrate, it is surely Wales.  Isn’t that loss of young working people exactly what we have been suffering from for decades?

But back to the point – to argue that we should not contribute more than we get back (which is what the leavers were doing) is in essence to argue against the very principle of redistributive policy.  It is to argue against the richer helping out the poorer.

One doesn’t need to take much of a look at some of the Brexiters to understand that arguing that the rich should keep what they have and not share it is probably instinctive and natural for them.  So, regardless of what they said during the campaign, why would anyone believe that people who are against the whole concept of redistributing wealth are suddenly going to be generously in favour of it within the UK?  Worse, why do they even need to, when the people of Wales themselves have voted to support that sort of economic selfishness?

Not much of an argument

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It’s not often that I find myself defending the leader of the Conservative Assembly group; in fact it may even be a first.  But yesterday’s attack on him for alleged hypocrisy in accepting payments under the Common Agricultural Policy (CAP) whilst advocating leaving the EU seemed to me to be more than a little misplaced.  I see no inconsistency between arguing for a different way of doing things on the one hand and making the best of the current situation on the other.  It would be unkind of me (although that won’t stop me) to point out that the criticism seems to be coming mostly from his own party, but whoever is doing it, attacking him personally for accepting farm subsidies from the EU which are not currently available from the UK Government is a long way removed from grown-up debate.  

(A more accurate accusation of hypocrisy would compare his support for farming subsidies to well-off farmers such as himself with his opposition to benefit payments for the poorest in society.  When is a benefit not a benefit? The answer, it seems, is that it depends on to whom it is being paid.)

The spokesperson for Davies is entirely correct to say that the money is effectively funded from the UK’s contributions; and those campaigning for a ‘leave’ vote are equally right in saying that, freed of having to pay the money into the EU, the UK government could simply make the payments direct to UK farmers.  There is no magic money tree in Brussels from which the money springs forth, no more than there is a magic money tree in London from which the block grant to the Assembly springs forth.  In effect, making payments to ‘Brussels’ (or any central government) is, in part, a redistributive mechanism; all countries make payments in and all countries receive payments out, but the proportion of receipts is not the same as the proportion of payments.

On the question of the flow of funds to Wales, the ‘remainers’ are repeatedly asking us to accept that we can trust Brussels more than London to pass funding on to Wales.  I happen to think that they are right on that question (which, incidentally, is part of the reason for a nationalist being more supportive of membership of the EU than of the UK); but that’s because I see the EU as being instinctively more redistributive than the UK.  (It’s not as redistributive as I’d wish, but we’re dealing here with the two options which are on the table, rather than what I might wish for.) 

The issue does, though, draw attention yet again to one of the weaknesses of the ‘remain’ campaign.  I just don’t feel that repeatedly telling us ‘you can trust Brussels more than you can trust us’ is the cleverest argument to be putting.  Politicians supporting continued membership of the EU seem almost afraid to put the underlying argument – that of a deliberately redistributive policy – before us, but that is, in essence, the real difference on this issue.  The ‘leavers’ are playing an essentially selfish hand – we can keep all our money and not pay any to those foreigners across the water - whilst the ‘remainers’ are effectively arguing for a system of active aid to the poorest regions of the EU.  But instead of putting that argument of principle, which actually equates Wales with other countries and nations within the EU and argues for the institution in principle, the ‘remainers’ are responding to selfishness by trying to put a selfish spin on their line as well – ‘we (Wales) will do better in than out’.  It’s not an argument which does much for me.

On the specific of the CAP, there’s another point as well.  As a rule, I tend to argue that trying to predict whether something will or will not change in the future is a dodgy business.  In principle, we can no more be certain that the CAP will continue unchanged than we can be certain that the UK Government would simply replace the CAP subsidies with UK subsidies.  I’ll make an exception in this case, though.  Despite the widespread understanding and agreement that the CAP needs to change, there are so many vested interests and obstacles to change that I think we can be reasonably certain that we will see no significant change any time soon.  However, arguing that the EU is sclerotically unable to make necessary changes doesn’t strike me as the most brilliant argument for continued membership either.

Perhaps Wales is shrinking...

Tweet I don’t doubt the importance of the proposed Metro system for Cardiff and district.  And I can understand why its proponents and supporters are getting increasingly excited about the possibility of it coming to fruition.  But there is such a thing as hype.

The story on the subject in Monday’s Western Mail was a case in point – the printed version was headlined with the claim that it would be a “catalyst for transformation of Wales”.  It is, I suppose, possible that for some people Wales really is just that area around Cardiff bounded by Merthyr and Bridgend, but surely the First Minister should know better than to claim that an investment heavily geared to the needs of Cardiff and its hinterland can really transform “the economic and social prospects of … the country as a whole”?

Anyone making such a bold claim needs to be able to demonstrate exactly how putting such a high proportion of Wales’ transport investment into one corner of the country really delivers benefits to the rest.  It’s not that I doubt the value of transport infrastructure to those who benefit from it, but from a bit further west we’ve just heard that the electrification of the railway line to Swansea is to be delayed, and electrification even further west than that hasn’t even made it onto the agenda yet.

One of the driving forces behind demands for devolution to Wales has long been the perception that successive UK governments, of both colours, have favoured and prioritized investment in the South-east to the detriment of the rest of the UK.  Disappointment is an inadequate word to describe my reaction to seeing the same attitude becoming increasingly prevalent in Wales.

Strength in Union?

Tweet As presented by the media and politicians, the apparent demand for an extra payment of £1.7bn to the EU seems almost calculated to boost the anti-EU wing of the Tory party and encourage Cameron to argue for the UK to leave the organisation.  However, given that at this stage it’s a proposal which will be subject to negotiation and agreement, the cynic in me wondered whether it was actually intended to do the opposite, by giving Cameron a chance to show how he can negotiate the figure down and claim a great victory.

Whichever, the issue raised two rather different questions in my mind.

The first is the approach of the UK Government to promises and agreements which it makes.  The famous ‘Vow’ given to Scotland isn’t the only example it seems – in the case of the EU, the government signed up to a set of rules and is now rejecting the outcome of their application.  His word appears not to be his bond.

The second is what it says about Cameron’s attitude towards redistribution.  The whole issue is presented as though the £1.7bn is simply going to be shovelled into a black hole in Brussels and used to pay fat cats and bureaucrats.  But the purpose of this particular budgetary adjustment is to ensure that payments in more closely match countries’ ability to pay.  That is, in essence, a redistributive approach – it’s not about penalising economic success as some have tried to present it.

There’s a parallel of sorts with the infamous Barnett formula, and with the recent referendum.  I seem to remember Cameron and others repeating ad nauseam that one of the great advantages of ‘the’ union is its ability to pool and share resources.  He didn’t really mean it then; and he certainly doesn’t mean it when it comes to the EU.

Selfishness isn't enough

Tweet One of the more depressing aspects of what passes for debate in Wales about membership or otherwise of the EU is that it concentrates entirely on how much money and how many jobs Wales does or does not get as a result of membership.  It’s a very narrow and selfish way of looking at membership of any organisation.  Worse, it in some ways concedes the argument to the antis.

Whilst it’s true that many jobs in Wales ‘depend’ on the EU, that is saying little more than that extant employment patterns ‘depend’ on the status quo.  But that would be true for any ‘status quo’; and if the status quo changed, so would the employment patterns.  I seem to have a vague recollection of claims being made prior to entry into the then EEC that UK jobs ‘depended’ on trade with the rest of the world and would be damaged by membership.  It’s equally valid as an argument.

When it comes to Regional Aid, the antis are entirely correct when they say that, if the UK wasn’t making large payments to the EU, then it would be able to spend even more on regional policy within the UK.  Whether any UK government would actually do so or not is another question entirely, and the history of UK regional policy doesn’t give me much faith that they would.  But an argument in favour of membership of the EU based primarily on scepticism about whether any UK government would be as generous to Wales doesn’t seem to me to be a particularly well-based one.

And what if, by some amazing miracle, the situation in Wales were to be transformed, such that Wales became a net contributor to EU funds?  If the only argument in favour was that we get more out than we put in, then the logic flows the other way – which is pretty much the position of UKIP and Tory sceptics at a UK level: 'it costs us more than we get back'.  The point is that membership of any club requires a subscription, and if one of the aims of the club is an element of redistribution, then some members will contribute more than they get back, whilst others contribute less.  Every winner has to be matched by a willing loser somewhere else.  There has to be a better reason for joining any club than an expectation of benefiting at the expense of others. Universal selfishness leads, ultimately, to poverty for the majority.

And that gets us to the real economic debate about the EU, which is hidden behind claims about how much regional aid we get or how many jobs depend on membership.  The EU is a club which aims to enmesh and equalise the economies of Europe, through economic co-operation.  Redistribution is a key element of that (which is the underlying reason why the EU is more dependable than the UK in this context), but co-operation and redistributive policies are close to anathema for the Tories and UKIP; they want only a system of competition where the strong get stronger and the weak go to the wall.

That argument about co-operation, which is also about keeping the peace on a continent which was torn apart by war for centuries previously, is one which supporters of the EU seem unable or unwilling to put; but by failing to put it, they are in danger of conceding one of the basic points of the antis, which is that the only thing that matters is narrow economic self-interest.  There’s a lot of things that I don’t like about the way that the EU has evolved, and much that I’d like to change (although that’s a great deal wider than a self-interested renegotiation of the terms of membership which is all the Tories seem to be interested in); but given the choice of European co-operation or competition, I choose the former.  However, it’s a choice which isn’t being widely articulated.

Blunt instruments

Tweet A couple of weeks ago, in his column in the Western Mail, Dylan Jones Evans made the remarkable suggestion that the governments in Cardiff and London should use their purchasing power to buy enough electricity and gas at a low price to supply all pensioners, and then make it available at a special "vastly reduced" pensioners’ tariff.  Or, if the suggestion isn’t that remarkable, the source at least is.

For some reason, that particular column never actually seems to have appeared on Dylan’s own blog, although he’s usually pretty assiduous about replicating his column there.  I couldn’t find it on the Wales Online site either, but I did manage to find a news agency version here.

I don’t have any objection to the suggestion as such, although it does seem to me that there are one or two potential problems.  More mportantly, I don’t really understand why one would limit such a plan to energy and pensioners.  After all, it isn’t only pensioners who have difficulty with their bills; and it isn’t only the energy bills with which they have difficulty.

Given that pensioners currently make up about 1 in 6, but are projected to become 1 in 4 by 2050, if the state is going to buy enough energy for a quarter of the population to get it cheaper, why not go the whole hog, and buy enough for all of us?  And why not include telephones, and water, and…

And that brings us to what seems to me to be a flaw in an otherwise laudable idea.  The money saved by using government purchasing power to buy large quantities of energy from the energy companies has to come from somewhere. 

There are only two possibilities in reality.  The first is that the energy companies take the hit and reduce their profits by a corresponding amount.  I’m not sure that anybody really believes that that is likely to happen.  The second alternative is that the price paid by other customers increases by a corresponding amount; the ‘purchasing power’ of a small number of large buyers only really works if there are a large number of small buyers whose prices can be hiked to compensate.  And that seems a far more likely outcome.

I wouldn’t dismiss the idea on those grounds either.  It amounts to a redistributive policy in effect – those who can afford to, pay more, whilst those who cannot, pay less.  Not so much a stealth tax as a stealth redistribution. That’s normally a proposition that I’d be happy to support.  Whether intervening in the energy market in this fashion is the best way of achieving redistribution is another question – it’s a pretty blunt instrument compared to using the tax system to achieve the same result.

The problem is incomes, not prices

Tweet Fuel poverty is a term with which we’ve all become increasingly familiar, but I’ve always had a nagging doubt about whether “poverty” is really the right word.  For those on low incomes, it’s accurate enough; but any definition based solely on the relationship between cost and income is always likely to include some for whom the term “poverty” is a misnomer.  After all, draughty old mansions can be expensive to heat as well.

A couple of weeks ago, I heard the term “transport poverty” being used to describe a situation where people spend a large proportion of the disposable income on running their car.  Again, it may be accurate for some – but I’m sure that Rolls-Royces can cost a lot to run as well.

Last week, Peter Hain referred to “food poverty”.  Again, I don’t doubt that some people, particularly the poorest, spend a disproportionate amount of their disposable income on basic foodstuffs.  It would be stretching a point to suggest that better-off people with expensive tastes might also spend a high proportion of their income on food, but it’s at least theoretically possible.

There’s a common thread in all of these types of poverty, though; or rather there is a common thread in the way they are described.  They are invariably portrayed as being price problems – the price of fuel, the price of running a car, the price of food – with the politicians demanding action on prices in response.  But the problem isn’t really about prices at all; it’s about incomes.

Fuel prices in particular are on an inexorable upward trend.  There’ll be variations in both directions en route; but the overall direction over time is going only one way.  And as recent events have demonstrated, demands that food should be both cheap and wholesome are probably incompatible.

I want to lift people out of poverty – all types of poverty – as much as anyone else; I just don’t believe that attempting to control prices in a market economy is ever going to be an effective way of doing that.  The distribution of income between the richest and the poorest is excessive and the gap is becoming larger.  Accumulation of resources in fewer hands; redistribution from the have-nots to the haves - that’s the inevitable outcome of free market capitalism.

Correcting that, and giving people fair access to resources, involves redistributing income, not controlling prices.  I don’t hear many politicians even suggesting that; it’s far too easy to criticise others over prices.  But if we really want to tackle poverty, it has to involve redistribution of income and resources.  Anything else is just empty rhetoric.

Who's subsiding who?

Tweet A story in the Times on Sunday drew attention to a report from Oxford Economics. The report analysed the pattern of tax receipts and government spending by 'region' across the UK and came to the conclusion that only in London and the Southeast of England is the balance between the two a positive one. For the rest of the UK (including Wales, of course) the balance is a negative one.

So far, so utterly unsurprising. But the story as reported went beyond the facts by stating that it showed the "the increasing reliance of the country on the capital", and placed the whole story under a headline claiming that "Tax from southeast props up rest of welfare-hungry Britain", as though those conclusions inevitably flow from the hard facts.

It's not as simple as that, however. Let's take the example of a major retailer with stores all over the UK, but with its headquarters in London. The profits come from all of their stores, but most of their staff outside the southeast receive below the average annual salary, whilst most of the HQ staff in London receive salaries above average. As surely as night follows day, the result will be that many of their HQ staff will pay above average tax bills, whilst many of their staff elsewhere will pay low tax bills – and may even be in receipt of working tax credits.

But who's subsidising who here? For sure, that tax on those higher earnings is being used to pay benefits to the lower earners, but the money to pay those higher earners came from all over the UK in the first place. There isn't only one redistributive transfer taking place here; there are two. The first is the one which flows from the decisions taken by private companies about where to site their HQ and how to distribute salaries; the second flows from the tax and benefit system and is an attempt to at least mitigate the first.

But it's only ever the second which comes in for criticism in the media. The problem isn't restricted to the private sector either – it's also reflected in the distribution of higher paid civil service jobs, as well as jobs in all those other government agencies. Why is redistribution considered by so many to be a good thing when it's done by the private sector and when money flows from the poor to the rich, but a bad thing when it flows the other way?

I wonder where the reporters live...