Comparing inequality

Tweet In an article published in last Friday's Western Mail, I argued that tackling relative poverty involves not just mitigating its effects on individuals, but addressing the levels of income inequality within our society.

The graph below shows an international comparison of income inequality. (There are, as Churchill famously said, lies, damned lies, and statistics, so there's some explanation of the derivation of the numbers behind this graph at the end of the post.)


The differences are quite striking, with the UK and the USA coming out as two of the most unequal societies in the comparison group.

It's probably no surprise to most that the Scandinavian countries group together at the lowest end. These countries have traditionally opted for a redistributive approach to policy, with higher levels of taxation and benefits being used as mechanisms to ensure greater income equality. Indeed, broadly speaking, the countries with the lowest levels of income inequality tend to be at the higher end of the tax tables – and vice versa.

Not everyone will draw the same conclusions, of course; but two simple conclusions that I draw are that high levels of income inequality are not a pre-condition for economic success, and that tax and benefit policies can be an effective way of reducing income inequalities if followed consistently over the long term.

But the most important factor is about cultural acceptance of high levels of inequality. The 'most equal' societies tend to be those where there has been a long term acceptance of the need for governments to ensure a greater degree of equality.

The problem for Wales is that without that long term political consensus at a UK level on the need to reduce inequality, tackling relative poverty in ways which depend on taxation and benefits policy will always be vulnerable to a change in government and spending priorities. And that's one of the reasons why I think we need to do more to make the philosophical case for reducing inequality, and entrench support for that proposition in our policy making, rather than conduct the argument solely or primarily around specific policy proposals.

I don't doubt that an independent Wales would be more likely to look to the Scandinavian countries for inspiration than to the US; but whilst we remain tied to the UK, we will probably continue to see inequality moving towards US levels.

Notes on graph: The numbers are based on UN data, lifted from Wikipedia (because they had them laid out in an easy to use format!).

I've omitted a large number of countries so as to focus the comparison on those countries whose economy is most comparable to the UK. It's an approach which is open to criticism, of course, but I think that most people would agree that it makes more sense to compare the UK with this group of economies than with either former Soviet bloc states, or African countries, for instance.

There are different ways of measuring the level of income discrepancy, and the results would vary slightly depending on the approach chosen, but having tried it with several of the indicators, the results between this group of countries look broadly the same whichever is used. The particular one I've selected is the '10:10' ratio – the ratio of the household income of the richest 10% compared to the household income of the poorest 10%. (I should also note that it doesn't mean that there are not much larger disparities between the top 1% and the bottom 1%; it's just a simple way of trying to compare overall levels of inequality in different societies.)

Interesting bedfellows

Tweet Money talks, or so they say. And for the Conservative Party, any money will apparently do. According to the Daily Mirror yesterday, Conservative Central Office received £50,000 from a certain Tony Buckingham just after the election, and the same Mr Buckingham bunged another £5,000 in the direction of the Carmarthen West and South Pembrokeshire Association (who are not exactly short of a few bob to start with, as I've noted previously).

Mr Buckingham is described as an oil tycoon, with a personal fortune of £475million, but there's more to the story than that. He has a somewhat colourful past, having been one of the founders of a company called "Executive Outcomes", an incongruously innocent-sounding name for such a company.

The other founder was Simon Mann, who later came to fame in connection with a failed coup attempt in Equatorial Guinea; and Executive Outcomes was a company supplying mercenaries. There's more on Buckingham here, in a piece which includes the description:

"Buckingham was 'a businessman of the hard school', capable of summoning 'a small private army with little more than a few phone calls' and using that army 'to raise fabulous wealth'."

And that brings me to the point – is the money being donated to the Conservative Party coming out of the profits made from a wholly legitimate oil company, or is it the product of mercenary activity? The Tories would argue the former, no doubt. Indeed, the Mirror is careful to quote Heritage Oil as saying that "Mr Buckingham, 58, has had no involvement in military or security operations since 1998.". But is it as simple as that? Is Heritage Oil as a company as distant from the former Executive Outcomes as that, or did the connection go deeper than just the coincidental involvement of one man in both organisations?

As the Observer noted in 1997, "The Executive Outcomes mercenaries are not simply 'guns for hire'. They are the advance guard for major business interests engaged in a latter-day scramble for the mineral wealth of Africa [including] oil, gold and diamond-mining ventures... and offshore financial management services."

This analysis of the companies and their relationship confirms that suggestion. It says that "the Angolan government hired EO to fight for them in exchange for oil concessions – EO effectively became an oil company with a private army". And it appears that Mr Buckingham's oil company benefited from the activities of his other company's private army. That would make it difficult to argue that the 'oil fortune' used to donate to the Tories was itself not built, at least in part, on the activities of a private army carrying out mercenary activity in Angola.

That would be money which no political party ought to be accepting, yet the Tories seem not to have even thought twice about it. Mind you, given the recent payout which Mr Buckingham's company awarded him, the Tories may feel that they've just been given a bit of loose change…

Calls leave me cold

Tweet The statistic in this story that 75% of people want cold calling banned surprised me not at all. What did surprise me though was that consumers are only reporting an average of six cold calls a month. It made me feel that I'm being deliberately picked on; because the total I get is more like that every week.

I've followed the standard advice and registered with TPS, and even reported companies to both the TPS and the ICO. That seems to be a complete waste of time; even complaining to them elicits only a form letter back, while the calls keep coming.

One thing that I have discovered is that they are powerless in relation to cold calls which are from organisations with which I already have a relationship, cold calls from overseas call centres, and cold calls from organisations which claim that they're not selling anything, just 'conducting a survey' or 'offering free information'. It doesn't leave a lot that they could deal with even if they had the will to do so.

So I'm definitely with the 75% who want them banned. And it's a pleasant change to find myself part of such a large majority.

Cutting the hyperbole

Tweet Hyperbole can often get in the way of proper discussion, and it's becoming increasingly unhelpful as a response to the spending cuts being imposed by the UK Government. Opposition politicians, including some in my own party, seem to be unable to refer to spending cuts without prefacing the word with either 'savage' or even better 'slash and burn'. But the words are being used more for the imagery they portray than to make any contribution to a discussion of economics.

The result, unfortunately, is that whilst the opposition are winning the battle of hyperbole, the government are winning the battle of economics. Not because they are right, but because they are keeping to a single clear mantra which people can identify with – "we need to reduce the deficit" – and the opposition are neither challenging that message nor offering any real alternative.

One of the major victories of Thatcherism was her ability to simplify economic arguments for people by comparing the government's budget to a household budget. It was wrong and misleading – national economies don't have to work in such simplistic ways – but it worked, and it's still working today for Cameron. Simply stepping up the hyperbole used in criticising the cuts is likely to be no more effective today than it was in the 1980s.

Part of the problem in trying to put forward an alternative view is that saying that there is nothing inherently wrong with governments running a deficit – even over a lengthy period – feels counter-intuitive; but it is what a lot of governments, of all colours and in many countries, have actually done over many decades.

I wouldn't argue that governments don't need to consider the size of the deficit and the context set by the economic cycle; but the approach of the current government – "there is a deficit, we must cut it" – owes more to ideology than to economics. And the response – "wicked, evil, slash and burn Tories" – owes more to trying to paint a negative image of those doing the cutting than addressing either the ideology or the economics.

What we need to do more of is to explain to people that we have a choice - we can run budget deficits if we want to, provided that we understand why we're doing it, for how long, and what the cost of doing it is. We need to be refuting the basic argument, not simply criticising the consequences.

Moving money around

Tweet The latest edition of Carmarthenshire County Council's propaganda sheet arrived this week. It's a 40-page (20 in English, 20 in Welsh) 'newspaper' which is full of the council's 'good news' stories trumpeting the council's successes, and featuring a good sprinkling of photographs of members of the council's ruling group.

According to the council, it's not a cost to the taxpayer because it's funded by advertising revenue. So, naturally enough, I looked to see how many adverts there are. The answer is that there are quite a few. There is a big but to that, however. All but two of the adverts are placed by the county council itself, advertising one or other of its own services or facilities. And, of the two which are from outside the council, one of those is by the builder of a new school - and appears alongside a story about the opening of that school.

Effectively, this means that the cost of producing the newspaper has been moved out of the budget of the PR department and redistributed across the departments placing the advertisements - which is not at all the same thing as saying that it is no longer a cost to the taxpayer. It also blurs somewhat the distinction between editorial and advertising copy. If the same people are responsible for both, isn't the whole 'newspaper' just one giant advertisement in effect?

The council would no doubt argue that this is a cost-efficient form of advertising. I'd like to see the evidence of effectiveness rather than just reach (as well as being certain that it is replacing rather than supplementing other advertising). In principle, if the figures add up, it's not a wholly unreasonable argument to put forward to justify the expenditure, although it doesn't convince me.

But it isn't the same thing as saying that there is no expenditure. That's just playing with the way the accounts are presented.

Doing it differently

Tweet Today's story about the potential impact on other services of Carwyn Jones' promise to increase education spending highlights an issue which I've posted on previously. To what extent should priorities and spending patterns be decided locally, and to what extent should local authorities be allowed to take their own decisions?

Peter Black, writing on Freedom Central, suggests that this will be a case where Labour and Plaid will "revert to their natural centralising instincts". I think he's being unfair. No surprise there perhaps; but the reason that I think he's being unfair isn't because I am utterly convinced that the government will not take a centralist line on this, it's because singling out two parties is turning a structural issue in politics into a bit of party political point scoring.

It seems to me that, on a range of issues, all Wales' political parties have an increasing tendency to believe that spending patterns and outcomes across a range of services should be consistent across Wales. And many MPs - mainly, but not exclusively, Tories – regularly draw attention to what they describe as unacceptable disparities between Wales and England.

If differences are, indeed, unacceptable, then there is a good case for centralising control. But if we want to retain an element of local democracy, then we also have to accept the possibility of different priorities being set – and different outcomes resulting. The alternative is that local 'democracy' becomes a solely administrative activity, and I'm not convinced that elections are the best way of choosing the best administrators.

I've seen politicians in all parties complaining about 'post code lotteries' in the provision of services, and the solution always seems to be more central control or direction. But if devolution – whether from London to Cardiff, or within Wales - doesn't include the right to do things differently, and therefore the inherent possibility that different priorities will lead to different outcomes, then what is the point?

Slippery slopes and scared horses

Tweet It's clear that one of the main arguments likely to be deployed by the 'no' camp in next year's referendum will be that any further devolutionary changes are another step down the "slippery slope" to Independence. It's nonsense of course; Independence will only come if and when the people of Wales vote for it. And whilst some slopes might well be slippery, that only makes things harder if you're trying to climb up them. From where I sit, the road to Independence looks like a long hard uphill slog; slippery is the last thing I need.

The 'slippery slope' argument always causes a particular problem to Plaid though, because if a party that openly says it wants to see an independent Wales supports further devolution of powers, it's easy for opponents to interpret that as meaning that we see it as a step towards Independence. Would that life were so simple; but the result is that we sometimes become afraid to say what we think for fear of scaring the horses. The real problem should be for the other parties, not Plaid.

The Lib Dems' official policy, as I understand it, is for a federal UK. It's not something that they talk about often, nor as far as I am aware have they done much to define what it actually means, but it's a credible and logical end-point for unionists to aim at. It isn't independence though.

The Conservatives at heart remain deeply sceptical about the whole process, and I suspect that most of them would like to roll back what has happened. Those who support further devolution seem to be reluctant converts - accepting that abolition is not an option, but that the current situation is inherently unstable and inefficient.

The end point from that perspective is probably best summed up as being the 'minimum that we can get away with', although apart from a few more thoughtful Tories like David Melding, they haven't really attempted to work out what that actually means. They are more interested in reaching a point which stems further movement than promotes it; and to suggest that they are supporting another step down that infamous slope is clearly a nonsense.

And then we come to the Labour Party. Hopelessly split between those who believe that a stable devolutionary settlement is the best way to prevent Wales choosing independence, and those who actually promulgate the slippery slope argument. With a dose of 'what's best for the Labour Party?' thrown in for good measure. The result is that their approach to any particular proposal often looks to be more opportunistic than principled. On both sides of the argument.

Against that background, it's easy to see why some think Plaid should be cautious. But I don't believe that Plaid should ever be afraid to say what we think, honestly and openly. And that is that we believe the best interests of Wales will be served by Wales becoming an independent member of the EU, that getting there will be a gradual process, and that we will in the interim support any and every proposal for further devolution of power. Not so much because it takes us towards our end position, but because we believe that it is right for Wales to take as many of her own decisions as possible.

The problem with the slippery slope argument is not that one party is absolutely clear about the end game it wants to see for Wales; it's more that the other three are utterly unclear. Devolution is not the same thing as Independence and one does not necessarily lead to the other, but if devolution is a process not an event, and most of the participants are unable or unwilling to say where that process leads, then they hand ammunition to the opponents of devolution.

It's time for the other parties to be as clear as Plaid has long been. Then we can put the slippery slope nonsense into its proper context.

Joined up reasons, please

Tweet The news that the UK Government seems to have decided in advance to reject an LCO that it hasn't even received yet is further confirmation of the underlying hostility of the UK Conservative Party to the concept of devolution. There was no indication of any willingness to discuss or negotiate what is, at this stage, not even a formal request.

And, in reality, under the LCO process, it isn't for the UK Government to say what powers it does or does not plan to devolve; it's for the Welsh Government to say what powers it does or does not want to ask for. It's no surprise though. The real worry, however, must be the reason given, namely, that "It is essential that there is a joined up approach to tackle these serious issues in England and Wales".

It's a reason which they could give in response to each and every request; but it's meaningless as it stands. Why does this particular issue require a joined-up approach whilst others don't? Why do Wales and England need a common approach whilst Scotland doesn't? What are the criteria which David Jones has used to decide where a joined up approach is or is not needed? Without further clarification, it is hard to escape the conclusion that this is just based on a kneejerk reaction to the whole idea of devolution.

Left, Right, and Centre

Tweet I enjoyed the debate piece by Daran Hill and Adam Higgitt over at WalesHome, but found myself turned off a little by a lot of what happened in the comment thread afterwards. Both Daran and Adam offered us their perspectives 'from the outside looking in' as it were, and such perspectives are always useful.

Not having the hang-ups and baggage that so many of us within the party carry is both a plus and a minus; it enables them to think more outside the box than we can, but they don't necessarily have the same close understanding of the internal dynamic and some of the limitations which it can pose.

Returning to the comment thread, though, there is a danger that we get too caught up in debating what label we want to apply to ourselves, and what labels we want to apply to our opponents. It's a bit of an Endian argument to me; words like left, right, and centre don't have a lot of resonance outside the world of politicians; people are more likely to want to know what's inside the shell than which end we're going to crack it. And we'd be better off trying to explain that than to argue about whether we're more left or right or centre.

It's also the case that the UK mainstream political spectrum has become increasingly narrow over the years; the differences between Labour, Conservative, and Lib Dem are often more superficial than real in large areas of policy. A comment made - by Duncan, I think - was that Plaid could adopt elements of policy from any of those parties if it needed to. Up to a point, I agree with him; it's a reflection of how narrow the spectrum has become.

Despite Plaid's formal adoption of the word 'socialist' in the 1980s – and I plead guilty to having been involved with that change - the reality is that Plaid has always been a loose coalition of disparate people with different ideas about what sort of Wales we want, agreeing (well, most of the time, anyway) on one main objective, namely independence. (Although we've had a fair few arguments about what to call it!)

A party of government, however, needs to have a coherent set of policies which are implementable. That need for coherence poses rather more of a challenge to a party of government than it does to a party of opposition. And a party of government inevitably has to deal with the short term as well as the long term – again, a constraint which a party of perennial opposition does not have to face up to.

The danger, for Plaid, is that we end up becoming a fourth party competing in the same narrow spectrum of politics, fighting on largely short term questions rather than long-term ones. In that situation, what is our USP?

One consequence of trying to play the game of politics in a crowded field within a very narrow spectrum is that parties have become afraid to put forward a real alternative viewpoint. For instance, in an attempt to appeal to aspirational floating voters, there has been an increasing trend for parties to put forward policies which are seen to advance the interests of, and appeal to the instincts of, that particular group.

And one result of that is that mainstream parties in the UK have largely abandoned any real attempt to provide a shared vision of a more co-operative and egalitarian society in which people work collectively to build a better world for all. With no-one putting that case, it can surely be no surprise that advancing personal rather than collective interests has become the norm; and has then developed into a self-reinforcing vicious circle.

If any party is well-placed to rediscover and present that sort of alternative vision of society, it is surely a party whose raison d'etre is to build a different sort of Wales and which has consistently argued for a participatory approach to management of companies and institutions, and for the empowerment of communities.

Universities, graduates, and jobs

Tweet It looks as though a significant number of young people who want to go to university, and who have obtained good enough A level results to do so, are going to be disappointed this year when they find that there are not enough places available for them. And it won't simply be a case of those who obtain the lowest grades being excluded either - depending on the choice of university and subject, many of those rejected could actually possess better grades than many of those accepted.

It raises big questions about how many places should be provided at universities, and how they should be filled.

It seems to me that there are two fairly rational ways of determining how many places should be provided in total. The first is to look at the number of people who want to have a university education, and who meet the minimum requirements; the second is to look at the number of jobs requiring graduates, and only provide enough places to meet that demand. We are actually doing neither of those things; we are setting the number of places based primarily on the cost of providing them.

I make no secret of the fact that I favour the approach of providing the education for all those who want it and meet the minimum requirements. A better educated population has advantages well beyond the merely economic.

But I also think we need to get away from the idea that there are 'graduate jobs' and 'non-graduate jobs'. Of course there are some jobs where a particular degree qualification is an absolute requirement – medicine is the one which immediately springs to mind. But in many cases, employers restricting their openings to graduates are doing so unnecessarily. It's sometimes little more than a lazy way of sifting and grading people.

As a concrete example, I remember having a bit of a battle with HR professionals many years ago when I wanted to recruit non-graduates as computer programmers. We were having difficulty getting the numbers we needed, and I just didn't see that a degree was as relevant as having the basic aptitude and ability. I won the battle, and the people I went on to recruit turned out to be, on the whole, just as effective as the graduates.

Many graduates themselves are already having to recognise that if they want to restrict themselves to jobs labelled as being for graduates, then they are restricting their career chances. And many of those being rejected by universities this year will be every bit as able and competent as those accepted, but will be available for work three years earlier than their successful schoolmates. Employers who ignore that pool of talent will be doing themselves no favours in the long term. Judging people on their abilities and experience rather than on possession of a particular piece of paper may be harder to do; but those employers who are prepared to do it will find they have access to a wider range of talent.

Setting unrealistic expectations about the opportunities available to people just because they are graduates; excluding people from consideration just because they aren't; and deciding how many graduates to turn out for financial reasons rather than based either on demand for skills or demand for places are all misguided ways of looking at the benefits of higher education both to individuals and to society as a whole.