Social care - the problem isn't money

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Yesterday, Andy Burnham laid out his ambition for a National Care Service which would provide care free at the point of use to all who need it. His proposal related only to England, but the underlying problem which it seeks to address is a problem in Wales as well, and we face the same issues, probably more so with an even more ageing population than England. There’s a little bit of the ‘jam tomorrow’ about the promise, given that it seems to be little more at this stage than a pledge to put the issue in Labour’s manifesto for the next English / UK General Election. And until we see the detail, it’s hard to be certain whether the ‘problem’ he’s seeking to address is really about care at all – for some, it seems to be more about protecting middle class inheritances.

The political and media response has largely centred on the question of ‘how will you pay for it’ (and the consequent suggestion of tax rises), as though the problem is first and foremost a financial one. It’s completely the wrong question to be asking. The much bigger and more important question is whether the resources are available, or can be made available. Let’s just consider one type of resource – labour. There’s already a shortage of carers, meaning that they are providing what is generally understood to be an inadequate level of care today. And, in typical left-hand-right-hand manner, government obsessions with migration numbers are constraining one of the key ways of increasing the supply. It’s not enough to simply look at the number of vacancies (now and under a better system) and the number of people unemployed and match the two numbers; there are also issues around geographical location, skill sets and attitudes. Maybe attitudes aren’t important to economists looking only at numbers, but to those whose relatives are receiving care, having people committed to providing a client-centred service in a friendly and empathetic way rather than simply going through the motions does actually matter. A lot.

Increasing the wages and status of the job might help to attract more of the ‘right’ people, but that’s about method rather than objective. Whether we use that mechanism or another, the objective of getting more people into a professional career as carers implies a willingness to divert a potentially scarce resource – suitable employees – from other economic activity into providing care. And it is that question, of determining how resources should be deployed in the economy, which is the central one, rather than how it is to be paid for.

It’s a question which isn’t unique to the issue of social care. What sort of economy we want and whose interests it serves are key questions – another example is this story today about campaigners calling for investment in socially useful activity rather than armaments factories. Treating the provision of social care as simply a matter of finance is missing the point, to say nothing of missing an opportunity to push back against the prevailing view that everything revolves around money. Without addressing that issue, tomorrow’s jam might turn out to be rather less palatable once the jar is opened.

Understanding compounding

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There is, apparently, no hard evidence that Albert Einstein ever described compound interest as the eighth wonder of the world, although the quote is widely attributed to him. Whoever did or did not say it, there is an underlying truth about the power of compounding. It is not well understood however. And pensions is a case in point. The pensions triple lock is an example of compounding in action – at least, in the years where both wage and price inflation are below 2.5%. In those years, the third element of the formula – the increase by 2.5% – increases the spending power of the state pension (albeit by a small amount) compared to inflation, but because that increase is a permanent increment to the pension, it is part of the sum on which the following year’s uplift is calculated. Over time, it will serve to increase the spending power of pensioners – which was, of course, the original intention, following the years of decline in pensioner spending power after Thatcher broke the earnings link.

What it means, though, is that those who benefit most from a long term implementation of the triple lock aren’t today’s pensioners, nor those close to retirement age, but those furthest away from retirement age, giving the power of compounding time to work its marvels. It’s strange how poorly understood this is.

This report from Saturday, tells us two things about Generation Z and millennials. Not only are they worried that their state pension will be worth less when they eventually retire than it is today – they are also the group most keen on abolishing the triple lock. On the other hand, those keenest on retaining the triple lock – existing pensioners and those about to retire – are the groups who stand to gain least from it. It's an inversion of the reality.

It highlights a lack of understanding of the basic mathematics of compounding, certainly. But it also highlights two other things. The first of those is an essentially short-term outlook on finances. And the second is the power of relentless propaganda telling us that a slow increase in pensioner spending power over the long term is somehow unfair to those who are working and paying taxes today, ignoring the fact that they will be the beneficiaries. As ever, the questions we should be asking are firstly, what is the ‘right’ level at which to set the state pension, and secondly, who benefits from the abolition of the triple lock. The first is a difficult question; it’s easy to see why politicians and governments try to avoid answering it, because the answer is almost certainly going to be ‘significantly higher than today’s level’. As for the second, well, as long as politicians and governments continue to promote the household analogy for government finances, those who benefit from reduced government spending (and a consequent reduction in taxation) will always be those who hold the most wealth and the highest incomes. What a surprise.

Why do we have to be the greatest or best?

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The distressed band of Reform Ltd members of the Senedd seem almost to have been competing with each other to sing the praises of the British Empire during the debate on whether the constitutional future of Wales should be a matter for the people of Wales or not. It goes without saying that their answer was ‘or not’.

There are a number of fallacies and false assumptions in the line of argument for those who claim that the Empire ‘gave’ people parliamentary democracy, common law and the industrial age. The first is that it assumes that these outcomes are axiomatically better than anything that the conquered peoples already had or might have developed for themselves, the second is that it overlooks what was taken away in the process (such as native cultures, languages, traditions), and the third is that it judges the impact only by outcomes, not methods, rather forgetting that what was achieved was the result of invasion, massacre, oppression, and large scale theft of wealth and resources. But then, taking a more holistic view of history isn’t what Anglo-British nationalists do. There’s no point arguing any of that with them; once someone has decided that his or her nation is “the greatest nation in the history of the world”, there’s not a lot of scope for debate.

What interests me more if the ‘why?’. What is it that compels some people to want to believe that their nation is the greatest ever, rather than accepting that history is messy, and that past rulers might done some bad things along with the good ones? What’s wrong with just being normal, average, or run-of-the-mill, good at some things, bad at others? And the even bigger question, in the context of the debate in the Senedd, is why past greatness (even if it were true) somehow means that what exists today can never be changed in the future. It’s a complete non-sequitur, yet absolutely central to the world-view of these nationalists, and utterly impervious to logic.

What we know from history is that ‘nation’ is something of a fluid concept – as must inevitably be the case for something which is essentially subjective in nature – and that geographical boundaries of nations have rarely been fixed for long. Just about the only constant is change; sometimes by military means, other times by democratic choice. The British Empire was built by conquest, and then torn down by new or historic nations gaining their independence, whether through conflict or negotiation. The boundaries of the new emerging countries were set largely on the basis of imperial administrative boundaries rather than what might be called ‘nations’ – as a result, the legacy of conquest has often been further conflict and wars – a legacy which has to be weighed up alongside any ‘good’ left by the period of empire.

It’s not unreasonable for some to argue that Wales should not seek independence, and even to believe that Wales’ best interests are served within the UK. I disagree with them, but it is at least possible to debate the question. Arguing that Wales cannot even be allowed to debate the issue, based on some notion that the UK is an eternally indissoluble whole and better than any other country that exists or ever has existed is simply dogma based on a lopsided and incomplete view of history. Yet that’s where around 40% of the members of the Senedd seem to be.

Guns or butter?

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The idea of setting an ‘ethical framework’ for investment in and support of ‘defence’ industries sounds very noble. The devil, of course, is in the detail, and we’ll have to wait and see what the Welsh Government actually comes up with. The language being used to date doesn’t fill me with optimism; even if the words come from the mouth of a minister, they sound more like the sort of civil-service-ese which ends up justifying just about anything. For example, the meaning of “It’s important that we recognise legitimate ethical concerns while supporting a focus on high-quality jobs that the sector sustains in communities across all parts of Wales” isn’t exactly definitive. I suppose it will eventually come down to what is or is not considered ‘ethical’; but it’s hardly a standard which can be defined in entirely objective terms.

Opposition politicians have been raising questions as to whether introducing ethical considerations might lead to a loss of jobs, with the implicit suggestion that maintaining and increasing employment is more important to them than any ethical considerations. Maybe this is simply circling back to the essential subjectivity of any definition of ‘ethical’, but I cannot think of any framework which I would consider to be ethical which would not have, as a central aim, a reduction in the total production of armaments; and fewer armaments necessarily means fewer jobs producing them. However, the scope for Wales to pick and choose which armaments it will or will not produce is probably limited in any event.

Governing is hard, and it involves choices. Moving the Welsh economy away from any dependence on armaments to an emphasis on building for peace and prosperity would be a huge achievement. From their statements, it is clear that the opposition parties (including Labour) are saying that jobs trump ethics, even if some are using slightly more nuanced language. The challenge for a Welsh government which comes from a tradition of opposition to war and militarism is to come up with a framework which actually changes anything, rather than being a fine-sounding jumble of meaningless words. Because if it doesn’t change what is done in the armaments industry in Wales (and that implies an acceptance of the resultant possibility of losing existing jobs – or simply failing to attract new ones), what exactly would be the point?

Coincidence, not quid pro quo

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It remains to be seen whether the large donations given to Reform Ltd by two economic migrants a week or so ago will still be legal when legislation going through parliament is actually enacted. Although the government was very clear in advance that the legislation would be backdated to the date it was announced, the level of detail needed to know whether a particular donation would or would not be legal was not provided. We do know that Farage and his team have said that the economic migrants concerned have asked for, and will get, nothing in return. Their donations might help to elect a government sympathetic to their modus operandi, but that will just be a fortunate (for them) coincidence.

One of the things that the money will be used for, according to the company, is the development of policy. Whilst the donations won’t determine the nature of the policies developed, it is not entirely unreasonable to suppose that the donors are unlikely to want to fund the development of policies which might impact them financially in a negative way. Again, that will just be coincidence, not cause-and-effect.

We’ve had a taster of the sort of policies which might emerge in this report today. We don’t know who has funded the work – ‘think-tanks’ are notoriously shy when it comes to financial transparency concerning their own activities. The organisation is described, though, as being “linked to Reform”, a formula (not unique to Reform Ltd; most parties seem to use similar mechanisms) which frequently allows policies to be floated with a degree of credible deniability should that be felt necessary.

Amongst the policy proposals are the abolition of capital gains tax and inheritance tax, along with a number of pension schemes enjoyed by public servants, including teachers. Oh, and the abolition of the state pension, which would be reduced to a means-tested benefit available only to the very poorest of pensioners. It doesn’t take a lot of thought to work out who might be the beneficiaries of such a policy. Those who see paying pensions as “unaffordable” seem to see reducing taxes on the wealthiest as entirely affordable. I can’t imagine a couple of billionaire economic migrants being exactly displeased if their donations were to lead to such policies. It would, of course, be another of those amazing coincidences rather than any form of quid pro quo.

Who loses when people don't vote?

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The hoary old chestnut of compulsory voting raised its head again this week, with Labour peer Lord Kinnock publicly backing the move. He’s not alone; a number of academics are also writing to the PM supporting the proposal, arguing that “Inequalities in turnout mean those who do vote do not reflect the wider population, but are richer, older, whiter, and more economically secure than the UK public at large”. They’re not wrong about that, but I’m not at all convinced by the implicit suggestion that forcing poorer, younger, more diverse and less economically secure people to cast a vote will produce the more left-wing skewed result that they seem to assume. At least some of those categories are fertile recruiting territory for the racist right.

In any event, is the assumed impact on the overall result the ‘right’ criterion for deciding whether to follow that route or not? It’s always seemed to me that the only safe assumption which can be made about the feelings of people who decide not to vote is that they are content for the government to be chosen by those who do vote. Sort of a mass proxy vote without naming the proxy or instructing him or her how to vote. The reasons for that attitude might vary – they might genuinely not care, or not believe that it will make any difference, or simply be too consumed by day-to-day pressures to take the time out to think about voting, let alone actually doing so. Looking at the record of UK governments, and the way in which the first-past-the-post voting system has traditionally created large numbers of ‘safe’ constituencies (although they may be breaking down now), it’s hard to argue with many of those who say that their vote won’t make any difference. I know – I’ve tried it often enough. It is surely for the politicians to demonstrate, by actions as well as words, that there is a genuine difference between them, and persuade people of the merits of that difference, rather than simply obligate them to go to a polling booth and complete a ballot paper. I certainly believe that people should engage with the process and that they should go out and vote, and it’s something that I encouraged throughout my time as an active political campaigner. And like most candidates, I would have been grateful to have been spared the effort of going round knocking doors of supporters on election day to remind them to go out and vote. But should they really be compelled to do so, and fined for not doing so?

My real objection to compulsory voting is based on the nature of the relationship between the people and the state. Does the state serve the people, or do the people serve the state? Forcing people to do something they don’t want to do looks more like the latter than the former. Now, of course, living together in a society means that we have to have rules, those rules are made by the people we elect to parliament as our representatives, and choosing those representatives is a serious matter. Freedom to choose which side of the road we drive is no freedom at all and freedom to kill infringes the right of others to live; restrictions on freedom are a key part of a civilised society, especially when those restrictions protect the freedoms of others. But whose rights and freedoms, exactly, are threatened by those who choose not to vote? It’s not only not obvious to me that the result would change, it’s also not obvious that anyone loses anything as a result of a non-vote. If the only losers are lazy and uninspiring politicians, which is what I suspect, there is no justification for compulsion.

Political choice isn't the same as economic necessity

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One of the most widely-understood concepts in economics is the law of supply and demand, where the price of an item ends up being set at a level where the demand exactly equals the supply. It’s not only the best understood, it’s also an incredibly useful concept, underpinning the way in which markets work. It also gives rise to the idea that price increases happen when demand exceeds supply, and if supply cannot be increased in line with demand, then inflation results. It follows that one way of controlling inflation is to reduce demand – which is usually interpreted in practical terms as reducing people’s ability to spend. One way of doing that – and this is virtually the only tool available to the Bank of England – is to increase interest rates. People who have to spend more on borrowing money have less available to spend on other things, and are forced to concentrate more on the essentials of life.

The theory, though, is much cleaner and simpler than the practice. Not all inflation is caused by such a simple theoretical mechanism. Much of the inflation we are seeing today is a direct result of a perceived reduction in the supply of oil, caused, primarily, by Trump’s reckless bombing campaign in Iran. There isn’t an actual shortage (as yet), and if a real shortage does emerge, it will be more to do with the difficulty in getting the oil to market than with any underlying shortage. The perception of a threat of a shortage has, though, allowed speculators to push the price up, and the oil companies to increase their profits at no additional cost to themselves. Inflation caused by rising demand is not the same thing as inflation caused by a reduction in supply – especially when it’s not even a real reduction. The increase in the price of oil is real enough, however, and works its way through not just to the price of fuel at the pump, but to the price of everything which needs to be transported from one place to another – which is most of the things we buy.

The Bank of England seems poised to respond to ‘inflation’ in the only way it knows how, by increasing interest rates. It’s an example of someone with only a single tool in the box, a hammer, seeing every problem as a nail; but it’s a circumstance in which an interest rate rise does nothing to address the underlying problem. Far from prices rising because people have too much money, this type of inflation is already leading people to cut back on their spending; deliberately reducing their spending power still further just adds to the cost of living crisis. The government and its wholly-owned and controlled central bank cannot seriously claim to be addressing the cost of living crisis whilst simultaneously adding to it.

Then we have the Tories’ latest wizard wheeze of cutting welfare benefits to control inflation. There is no doubt that cutting benefits would reduce the amount of spending power in the economy, which is the stated objective. However, it would do so by reducing the spending power of some of the least well-off, almost all of whose income is already going on essentials rather than discretionary purchases. Reducing the spending power of those already struggling to pay for the basics is applying abstract economic theory without looking at the real impact on real people.

Whether the increase in energy costs is a temporary phenomenon or a longer term change remains to be seen, but either way, it will work its way through the economy in a way that a general  excess of demand over supply would not. Whether it therefore needs action at all is a judgement call, but it seems that judgement is being replaced by a blind commitment to a wholly arbitrary inflation target of 2%. And, as is ever the case in an economy run for the benefit of the few, it is those least able to cope who will bear the biggest burden. It’s a political choice, not an economic law, which underpins that.

What makes concerns 'legitimate'?

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The ‘independence’ referendum held in Piddington earlier this week has largely been treated as a bit of a joke and dismissed as symbolic rather than serious. Treating it as symbolic is not unreasonable – those behind it don’t really seem to be terribly serious about setting up border crossing points, let alone a police force and/or army to repel any asylum-seekers that might be sent to the area by the UK government. I’m a little puzzled about the mechanism under which the referendum was run – it surely can’t have been in any way publicly-funded, not least because a parish council running a publicly-funded referendum on an issue way outside its purview would be an interesting precedent. I doubt, though, that even a referendum run entirely by volunteers would be treated quite so indulgently if it were called by, to choose a body at random, one of the UK’s devolved parliaments.

It has had the effect that its instigators presumably wanted, which was to draw attention to local concerns about the plans to use a nearby MoD base as a temporary home for asylum-seekers. I’m not sure that it has shown the opponents of the plan in an entirely positive light, however.

There are certainly practical issues around moving 1200 people into a site: things like availability of public transport, shops, medical facilities etc. There will be issues of that nature wherever people are placed, and it’s entirely reasonable to check that they’ve been thought about and that provision is being made to match the need. And at least some of those objecting do seem to be talking about this type of issue. Others, sadly, less so.

Talk of women needing to attend self-defence classes, for instance, is based on some very dark – and unsubstantiated – assumptions about a whole group of people. Associated with that is the suggestion that these people are ‘unvetted’. It’s true, as far as it goes – but how many of the existing local residents have been ‘vetted’? We don’t really know our neighbours and the secrets they might be harbouring, even if we’ve lived in an area for decades, but we can be certain that, amongst them – even in a small village – there will be a sprinkling of actual or potential criminals. It’s true that we know even less about people moving in, but that’s true whether it’s an individual, a family, or a thousand people as proposed in the Piddington area. When it comes to people moving between villages and cities, no-one seriously suggests that all movement should be banned in order to prevent the movement of anyone who might turn out to be a criminal. In terms of sheer numbers, there are likely to be more potential criminals in a group of 1,000 than in a family of 4, but there is no hard evidence that the proportion will be any higher than amongst the existing population. All we have is an assumption, based on the assertions of racists and their enablers, that asylum-seekers always pose a greater threat than white British citizens.

We need a reasoned debate about how to treat people arriving in the UK by irregular means and where to house them pending any decisions on their longer-term future, but politicians leaping in to support people’s ‘legitimate’ concerns isn’t it. The only thing that makes those some of concerns legitimate is politicians describing them as such. Whilst facts and logic are never going to win an argument against prejudice and hatred of ‘the other’, reinforcing those attitudes by calling them ‘legitimate’ simply makes things worse.

Efficiency isn't the be-all and end-all

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It may be true, as this report at the weekend suggested, that the breakdown of air traffic control last week was due to a military aircraft entering ‘spurious’ data into the system. Further investigation might tell us that, and it’s reasonable to expect that the military will be looking into how and why one of their planes did whatever it did. That doesn’t exactly let air traffic control off the hook though: how did their systems, on which so many aircraft and people are so dependent, allow ‘spurious’ data to be entered in the first place, and how did such data then destroy the system? Computer systems only do what they’ve been programmed to do, and if unexpected data gets in, that’s a failure in programming and testing as much as of the user who inputs the data.

That aside, one of the other interesting questions which emerged was about the extent to which backup systems are in place. They offered two reasons, neither of which really stands up. Why NATS being in the midst of a “complete overhaul of its systems” is a reason for a lack of backup is something of a mystery: being in the middle of a change is precisely the time when having a backup in case something goes wrong is most immediately relevant. But perhaps the second reason – that it would cost “vast amounts” of money – is really the operative factor.

From my own background in IT, I’d say that they’re right about the cost. Building in redundancy and duplication can, indeed, prove costly, and there’s a danger that all that extra equipment and cost will never be used. There’s a judgement call involved though, and it’s one that the drive for ‘efficiency’ doesn’t always seem to recognise. It’s a feature of late capitalism in a globalised world that organisations have attempted to drive out cost by reducing the amount of capital employed. After all, the return on capital will always be improved if the same output can be achieved using half the capital. It’s an approach which has given us globalised supply chains and just-in-time deliveries, all built on the implicit assumptions that the world will become ever more integrated and that systems can be completely relied on. Most of the time, those assumptions have proved correct, and things have worked. Until they haven’t.

Whether due to war, pandemic, the capriciousness of nature, man-made climate change, or simple human error, the systems and structures on which we depend have been made increasingly vulnerable. And all in the name of ‘efficiency’ (or, rather, one particular aspect of efficiency, the use of capital), and the vulnerability is hidden from sight until something goes wrong. For sure, organisations routinely carry out risk assessments, but it’s often a tick-box exercise. Whether risks have been properly identified and their probability and impact correctly calculated is a much more open question, as is the issue of whether impact is measured in human terms, or merely financial ones.

It might look like a big extrapolation from a systems error caused by incorrect data entry, but the point is an important one. Humans need resilience; capital doesn’t. Yet much of our economic system has been hijacked to serve the interests of the latter rather than the former. It isn’t the only way of doing things.

How should the political system respond to defections?

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As long ago as 1908, in Human Nature in Politics, Graham Wallas argued that political opinions and actions are largely the result of habit based on irrational assumptions. The idea that choosing for whom to vote is an essentially irrational act is not an entirely bad starting point for any discussion of politics – and perhaps we can extend it to the choice of which party to join. The defection of a Reform Ltd MS to Plaid Cymru was a superficially stunning one, although from an interview with her that I read a few weeks ago, I did wonder how on earth she had ended up as a member of Reform Ltd in the first place. Her views seemed to be so much at odds with the political platform of that company. That essential irrationality referred to above is one obvious potential explanation, even if it might be a little harsh to say so given the obvious genuineness of her concerns now. I find myself wondering exactly what selection process led the company to place her as their lead candidate – did she give the ‘expected’ answers to the questions, did they ignore her answers completely, or did they not even question her at all?

Whatever, the fact is that she has defected, and it looks as if she might be a great deal more comfortable in her new political home. Given the record of parties led by Farage, an implosion is as unsurprising as it is welcome. It’s still early in the Senedd term, and there is probably more to come, although whether it will involve a move as extreme as a leap from Reform to Plaid remains to be seen.

The defection highlights (another) problem with the new voting system for Senedd elections. People who voted solely on the basis of party affiliation now find their vote over-ruled a matter of a few months after the election. It seems to be a golden rule in politics that the party from whom a member defects demands a new election, whilst the party receiving the defector denies that one is necessary. It’s a rule which seemingly applies to all parties in all elected bodies.

Underlying the legal fact that no election is necessary when a politician switches party is the fiction in Westminster politics that the electoral mandate in a constituency is given to the individual not to the party. Indeed, naming the party affiliation on the ballot paper is a relatively new innovation – in 1948, it was explicitly banned. Yet, having moved from a situation where it was at least arguable that people were voting for both a party and an individual to one where we only vote for a party, the Senedd has retained that Westminster fiction as though it is some sort of divine law. Reluctant as I am to bolster Farage’s shysters in any way at all, I have to acknowledge that keeping the law as it is because it reduces Reform Ltd’s score by one is not a good enough reason to justify the current practice. It would surely be a fairer reflection on the voting which took place just a few months ago for the seat to be declared vacant and awarded to the next placed candidate for the party concerned. Too late for this instance, of course – but defections can affect any party, and this early in the Senedd, the chance of there being more cannot be ruled out. Personally, I’d prefer a full STV system, with any defection leading to a by-election, but if we’re to have a ‘party-only’ vote, let’s at least be consistent about what it means.