Posts Tagged ‘income inequality’

New publication: ‘Reconceiving the Welfare State’

Wednesday, December 22nd, 2010

David Craig’s three-part guest-post series looking at the prospects for the welfare state was one of the most-viewed and best-regarded pieces that we published this year. Now, as promised, it’s been collected (in slightly revised form) into a single online publication.

From my foreword:

New Zealand doesn’t generate at lot of profound theoretical analysis of the political economy of institutions like the welfare state. In particular, the New Zealand political blogosphere is the last place you’d expect to see someone grappling with the dilemmas of progressive labour market regulation in the context of Foucaultian ‘governing through freedom’.

Which is why I’m so pleased to have had the opportunity to publish work by David Craig.

In the case of this essay, which appeared in an earlier form as a series of blog posts in September 2010, I can even claim that it was something I wrote that prompted him to start composing it. (Even if he swiftly went well beyond anything I’d said in both scope and depth.)

I fully expect David Craig’s conception of the ‘wellbeing society’ to be developed into a recurring idea in the journals and textbooks of the future. When it does, I’ll be able to say, you heard about it here first!

You can download a copy here.

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Weekend reading (special edition): Ed speaks

Friday, October 1st, 2010




Ed Miliband – A New Generation

The younger Miliband brother is now leader of the UK Labour Party and this conference address is his first extended speech in that role.

Some commenters here at Policy Progress haven’t been impressed, but I’ve been reading the text of the speech (my preferred approach to taking in these sorts of things) and, while I can’t comment on his skills as an oratorical “performer”, I thought the content was pretty good. He set some distance between himself and New Labour:

New Labour embraced markets in our economy and was right to do so.

But lets be honest we became naïve about them.

. . . We must shed old thinking and stand up for those who believe there is more to life than the bottom line.

And:

The hard truth for all of us in this hall is that a party that started out taking on old thinking became the prisoner of its own certainties.

The world was changing all around us – from global finance to immigration to terrorism – New Labour, a political force founded on its ability to adapt and change lost its ability to do so.

The reason was that we too often bought old, established ways of thinking and over time we just looked more and more like a new establishment.

Let me say to the country:

You saw the worst financial crisis in a generation, and I understand your anger that Labour hadn’t changed the old ways in the City which said deregulation was the answer.

You wanted your concerns about the impact of immigration on communities to be heard, and I understand your frustration that we didn’t seem to be on your side.

And when you wanted to make it possible for your kids to get on in life, I understand why you felt that we were stuck in old thinking about higher and higher levels of personal debt, including from tuition fees.

That comment about tuition fees is rather intriguing. Like others, I’m a little uncomfortable with this and other comments about immigration in the speech but there’s a difference between validating grassroots concerns and being anti-immigrant, and I think he stops short of crossing that line. The speech also has a strong generational theme:

This generation wants to change our economy so that it works better for working people and doesn’t just serve the needs of the few at the top.

This generation wants to change our society so that it values community and family, not just work, because we understand there is more to life than the bottom line.

This generation wants to change the way government works because it understands the power of the state to change lives but also how frustrating it can be if not reformed.

This generation wants to change our foreign policy so that it’s always based on values, not just alliances.

And this generation knows very profoundly that to change Britain we need a new politics.

Above all, I lead a new generation not bound by the fear or the ghosts of the past.

Miliband also returns to his theme about a renewed focus on inequality:

And we need responsibility at the top of society too. The gap between rich and poor does matter. It doesn’t just harm the poor it harms us all.

What does it say about the values of our society, what have we become, that a banker can earn in a day what the care worker can earn in a year?

I say: responsibility in this country shouldn’t just be about what you can get away with.

And that applies to every chief executive of every major company in this country.

As the Guardian said just ahead of the speech, “Ed Miliband is not expected to make any major policy announcements in his speech; he favours a long-term approach using semi-independent policy commissions.” But there’s some interesting hints there of directions to come.

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Commentary round-up

Wednesday, September 29th, 2010

A regular feature spotlighting new writing (and audio) from top commentators Rod Oram, Colin James and Brian Easton.

In the Fairfax paper this week, Colin James asks, Will unequal tax cuts be good for the economy? After covering the usual contestation between government and opposition about who gains what from the October 1 changes, he concludes by saying:

Much has been made of the rise in income and wealth inequality since the 1980s in our sorts of “Anglo” economies.

That may be an element in recent political volatility and might partially explain conservative parties’ failure in Britain and Australia to win majorities in otherwise propitious circumstances: the 1950s-60s upward socioeconomic mobility stalled in the 1980s. In turn it may be a factor in faltering economic growth, now the house-bubble-borrow-and-spend taps have been turned off.

Intriguingly, the Economist magazine, not noted for soggy leftism, several times directly linked inequality to growth rates in a recent survey of Latin America: the more unequal a country, the slower its economic growth.

Of course, Latin America is different. Isn’t it?

Colin’s Otago Daily Times column is The long haul back out of the 2000s economic haze, another look at our economic situation and economic prospects:

New Zealanders were the most indebted in the developed world after now-bust Iceland. That debt was lent by foreigners: New Zealand’s country debt to the rest of the world, at 86 per cent of GDP, poses a risk that in another global shock credit lines might be pulled in.

But:

Despite our 2000s profligacy, we have a real possibility of a reasonable decade ahead. We may even, with luck, avoid a house price plunge: prices might just go sideways and let inflation engineer the fall of 30 per cent or so in real terms needed to align with fundamentals.

That however depends on exports to Australia and China, and they both have their own problems. Australia is heavily reliant on mining (as Rod Oram has noted previously) while  China needs to contend with “water; widening social and economic divisions; corruption”.

Rod Oram’s Star-Times column, Water forum offers sign of hope, covers the Land and water Forum, as Colin James did last week. Rod is a bit more cautious than Colin about whether Nick Smith has achieved a break-through in collaborative processes:

. . . it remains to be seen how far the government will buy into the forum’s recommendations. If it treats them as a framework for an enduring consensus on water, then it could run a robust, publicly supported national water strategy.

Then it, business, environmental and other lobby groups and the wider public would want to use the collaborative process to find common ground on other very difficult issues such as energy strategy, adaptation to climate change, urban land use and design, or even the likes of savings and superannuation.

But if the government treated the forum’s recommendations as a menu from which it selected politically acceptable items, or worse rejected others under pressure from lobby groups, it would make a mockery of the collaborative process. It would leave us mired in the same old adversarial politics.

Rod also talks to Nine to Noon about Transpower versus the business lobby and the government’s changes to the rules for foreign investment. He sets out some interesting ideas of his own for the latter:

Oram: It would be far more interesting if approval was contingent, for example, on a large-scale investment that would improve the industrial capability of New Zealand and increases exports beyond a business-as-usual case. Or there would be safeguards, so for example if a foreign investor bought a New Zealand company any money that that company had received in the way of government R & D grants over, say, the previous five years were refunded. You could be an awful lot more strategic about that — as other countries have been.

Ryan: Unless you lose your investment to other countries.

Oram: No but other countries are strategic. They know what they want, and they know what to ask for and expect from foreign investors. And we don’t.

Brian Easton publishes an index of his articles on gambling economics.

If you have thoughts about the issues raised by our commentators this week, or other interesting pieces of commentary you’d like to highlight, then leave a comment below!

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It’s Ed!

Sunday, September 26th, 2010

The new leader of the UK Labour Party has been announced. The contest had turned into a two-horse race between the Miliband brother, David and Ed, sons of the prominent Marxian economist Ralph Miliband who each worked for many years as advisors for Tony Blair and Gordon Brown respectively, and then went on to become senior ministers in the Brown Cabinet.

The elder brother David entered the race as the favourite, but in the end the winner was Ed Miliband, the younger and reportedly the more leftwing of the two — although a set of parallel Q&As by the blog-site Left Foot Forward highlighted how similar they were on the substantive issues.

The victory makes Ed Miliband a central figure in the international progressive movement at an important period of renewal. His views and the way he goes on to shape his party will inevitably have an influence on the tenor of progressive thinking here in New Zealand.

So I thought it was worth citing the following statement (from those same Left Foot Forward Q&As), which I think sets out one of the central challenges for progressive governance in our time (as also discussed at Policy Progress, here and here):

Would you make tackling income inequality a specific goal of a Labour government?

Yes. It is the right thing to do for people on low incomes and it is the right thing to do for society as a whole. Strong, cohesive societies are ones in which hard work is fairly rewarded. More unequal societies are less well off in a range of ways, for example suffering with poorer physical health, poorer mental health and higher crime rates.

New Labour was too cautious on this issue, and as a result, despite us being the most redistributive government in history, inequality rose. So we need a different approach that targets the fundamental causes of inequality rather than focusing on just trying to use redistributive payments to correct for failures in our economy. That is why I am so passionate about a living wage and want to see tax cuts for responsible businesses who pay a living wage.

Many people are surprised to discover that taxpayers are paying more than £6bn each year subsidising low wages in our economy and I want that to end – improving pay and saving money for government. I want a High Pay Commission to sit alongside the Low Pay Commission and address the unfairness that comes when a banker earns in a week what their cleaner earns in a year. And I want a new industrial activism to build a new economy less reliant on low-wage, low-skill jobs and better at investing in people and in skills.

P.S.: Left Foot Forward offers some advice to the new leader.

P.P.S.: As does Malcolm Tucker (from The Thick of It).

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Reconceiving the welfare state (part three)

Thursday, September 23rd, 2010

This is the conclusion of David Craig’s conceptual analysis — parts one and two were published over the last two weeks.

Towards a wellbeing society? Market- oriented social wellbeing beyond ‘social inclusion’ and workfare

I argued in earlier posts that the relations between state, society and markets have continued to shift, with market power now strongly institutionalized and in many ways built into people’s subjective and normative expectations of work and welfare.

Overall, I think it crucial that we start re-thinking based on this shift, and that we actively re-consider how the best can be made of it.

Social democratic responses to this shift have tended to rely heavily on state intervention to deliver quick and controllable change. This intervention has been effective in a number of areas, but it has also been in some ways top down and technocratic, reliant on an elite control of the executive function inherited from previous neoliberal ambits (which captured state power to push through marketising reforms). Enacted by a professional political machine using polling and other restricted modalities of participation, this engagement has not really taken advantage of any real shifts in the social order emerging from neoliberalism which might have underpinned a more thorough shift of ground for the welfare state. These shifts include the emergence of a re-commodified labour market reaching further down than ever into families’ lives, time, assets and incomes.

On the other hand, many conceptions of the social which have been activated in policy contexts have been relatively lame and reactionary: Third way governments have played to the communitarian, to moral reaction, to punition and a shrill work ethic, while failing to see anything in the social that might provide a stronger basis for representational political action. The state doing some things for poor people is important, but it can also be self defeating for social democrats seeking to engage and mobilize low paid workers and households whose real living conditions are dictated by market outcomes.

Overall then, here is a call for a conception of the social much more closely linked to markets and market outcomes, but also as viscerally involved and engaged on a day-to-day basis with carving out a stronger niche within those arrangements. The state surely has a role legislating this, as do political managers in making smart policy around it. I suggested that gendered labour (and wider structural and institutional dimensions of the labour market and its governing), the early childhood and family environment, education (especially early education) and the housing market could all be fruitfully examined as sites where this kind of renewed engagement with the social and markets might have traction.

In all these fields we need above all to construct strong historical narratives which avoid dull thirdway notions such as social inclusion, partnership or (simple work or community) participation, and cut to the wider political economic chase in terms of the major forces shaping social and market relations.

These narratives need, in other words, to comprehend some of the following: and also to show people clearly what they have to do with their own past, present and future. They need, in other words, to:

1. Recognise and draw attention to the big picture political economic drivers behind changes including asset, income, intergenerational, health and neighbourhood inequality (ghettoisation), alongside the widening obligation for individual agency and responsibility.

Core to this will be historically understanding the effects of market mechanisms in basic areas (labour, capital, land), how these have been set up and regulated, and what social effects they have had. The housing market, for example, driven by a range of factors including favourable tax policies for landlords and a wider concentration of income in the top deciles, has over time delivered a polarised situation in which home ownership levels are falling while overall housing costs are rising faster than real wages. Asset concentration follows income inequality, and many families are the poorer for this, as the following (before and after housing costs) graphs from Bryan Perry’s 2010 survey of Household incomes illustrate.

Proportion of all individuals in low-income households by age, 60% REL threshold (Before Housing Costs)

Proportion of all individuals in low-income households by age, 60% REL threshold (AHC)

2. Help rebuild and refocus understanding of the roles of state and society, by:

  • raising wider debate around the actual costs of rising inequalities, making voters more aware of who these costs impact on, and how the social order and outcomes has been structurally changed by these shifts;
  • Building understanding about the real potential social bases of embedding and shaping of market forces, and the ways market arrangements can be more smartly managed to produce better social outcomes;
  • Linking, in robust policy terms, the social and political economic drivers to individual and family lived experiences, especially in terms of inequality, control, stress, resilience;
  • Building recognition of the real costs of labour market commodification, day to day;
  • Building recognition of the limits of the state’s role on the social development side (without weakening that role into mere monitor or bankroller).

From such a debate might emerge, if we are lucky, a plausible conception of wellbeing in relation to markets, social processes, and the scope of state intervention.

This conception would of some necessity go beyond the notion of a welfare state, without losing sight of that entity’s core social security capabilities.

In this context, I don’t think it’s naïve to talk over time about founding some new, durable understandings around something like a wellbeing society (rather than just a welfare state). Perhaps, and this is worth debating, it is not naïve either to talk about the real scope of market-oriented wellbeing. If we can even begin to do this in ways that go beyond the narrow social inclusion-ism of thirdway workfare, we will already be making progress.

We need venues for this discussion to happen, here, in NZ and more widely: Policy Progress seems to me to be a great starting point.

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David Craig is senior lecturer in Sociology at the University of Auckland, where he teaches around the history and political economy/ sociology of liberalism; colonialism and development; and urban sociology. His previous posts for Policy Progress were State subsidisation of low wages, Reconceiving the welfare state (part one) and Reconceiving the welfare state (part two).

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