Public service reform, zombie economics and the “Great Forgetting”

In his excellent recent book Zombie Economics: how dead ideas still walk among us John Quiggin, of the University of Queensland, provides an accessible account of some key economic ideas. These ideas provided the intellectual rationale for substantial social changes we have witnessed over the last 30 years. Many of these ideas boil down to theoretical justifications for the claim that markets are a better means of allocating resources than all available alternatives. Quiggin also summarises arguments against these theoretical rationalisations. The case against markets can be boiled down to the argument that whatever conventional economics might believe to be the case in theory, the real world just doesn’t follow the script. Working on the basis that it does is a recipe for disaster. This raises a crucial question: given that many of these ideas lack strong intellectual support – they are, or should be, ‘dead’ – why do they continue to exert such influence on policy? Societies are being subjected to “zombie economics”.

One of the topics with which Quiggin engages is privatisation.

The ethics of the case for public sector reform

[Originally posted on Liberal Democrat Voice, 24/02/11]

David Cameron’s article on public service reform in the Telegraph was the opening shot in what could be a significant battle both within the Coalition and across the House. The case presented raises at least three important ethical issues.

First, the way in which evidence is being used to justify these proposals is deeply suspect. Mr Cameron states that publicly providing bureaucratic and target-driven services might be worth supporting if they delivered quality services: “but the evidence shows otherwise. Whether it’s cancer survival rate, school results or crime, for too long we’ve been slipping against comparable countries“. These are very partial readings of the data. These claims in relation to both health and education have already been challenged and debunked a number of times over recent weeks. Yet they continue to be advanced as a justification for change.

Economic liberalism and public service reform

[Originally posted on Liberal Democrat Voice, 22/02/11, and ranked most read post of the week]

Are the Liberal Democrats a party of untrammelled ideology – sorry,“principles” – or do ethics and evidence also play a role in thinking? This question struck me forcefully when reading David Cameron’s article on public service reform in the Telegraph. It appears that the imminent Open Public Services White Paper has been formulated with collaboration from the Chief Secretary to the Treasury and Nick Clegg is fully ‘on side’. We await the details, but if Cameron’s article gives us an accurate sense of what is to come then I think there is – or should be – a significant battle shaping up. Cameron’s position would appear to be “The answer is marketisation. Now what’s the question?”. Is it appropriate for Liberal Democrats to be complicit in this agenda?

Economists, implicated

John Maynard Keynes famously wrote that “[i]f economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid”. Many economists, somewhat uncharacteristically, might well be craving that type of anonymity at the moment. Because they’ve been getting a hard time of it. And the discipline may be about to get even less popular.

The arrival of the film Inside Job is likely to fuel the public’s anger at bankers for causing the financial crisis. And not only causing the financial crisis, but subsequently carrying on with business pretty much as usual, while the fallout of the crash is felt in public spending cuts, unemployment and welfare benefit reductions.

But the film does more than that. It broadens the scope of criticism to implicate a range of other professionals. It wasn’t just the corporate bankers: lawyers, central bankers, accountancy firms, lobbyists and government officials were also complicit in pushing a deregulatory agenda. Their actions magnified systemic risk and increased the instability of the financial system in ways that theory said shouldn’t happen. The real world clearly hadn’t read the script.

In amongst the culprits identified are academic economists.

Welfare reform in the dark

Today saw the introduction of the Welfare Reform bill to the House of Commons. Initial Impact Assessments were also published. This piece of legislation has been trailed for many months, but it will nonetheless take quite a while to fathom the detail of what is being proposed across the wide range of areas it touches on. And it will take just as long to explore how it interacts with policy developments in other areas. Much of the early buzz about the Bill was the news that the Government had dropped the proposal to cut Housing Benefit for those receiving JSA for more than 12 months. This is clearly an unusual outbreak of good sense. Many are claiming it as a victory for the Lib Dems, and Nick Clegg in particular. Later in the day we were being reminded not to get carried away with this change – important though it is – because the Bill continues to embody a range of contentious proposals for seismic change to welfare provision (see here at Left Foot Forward, for example).

As those who have read previous posts will know, I am very keen on summing the parts and trying to understand the big picture (see, for example, Piecing together the housing policy jigsaw). It is something that many government are not good at. This government seems particularly poor at it. But in an era of rapid and radical change it is all the more important.

Zen and the art of treadmill running

[Originally posted on Bristol Running Resource, 13/02/11]

I don’t know many runners who like the treadmill. Most people who have experienced the joys of running outside, either on- or off-road, tend to find the treadmill a little bit tedious. And if you’re training involves long runs it can be worse than that.

I’ve a friend who once did all his training for the Bristol Half on a treadmill. It required regularly spending two hours or more staring at the same wall. The degree of commitment required to keep that up week after week is, to me at least, mind-boggling. Much easier to pull on your trainers and head out the door for a change of scenery. Each to their own I guess.

But on days when the weather is pretty manky all but the hardiest souls are tempted to take the indoor option. I succumbed today. And that got me thinking.

Political patronage and a scaled down Parliament

Yesterday’s Guardian carried an article by Sarah Wollaston that raised an issue of profound significance for British democracy. The issue is the Government “payroll vote”. Some 150 of the coalition’s MPs are on the payroll. That means that they are bound by collective responsibility to vote with the Government. They cannot depart from the Government line, at least in public. Nearly a quarter of these votes are held by Parliamentary Private Secretaries (PPS). The PPSs have no real independent influence on Government policy. They are simply lobby fodder which can be used to make it a bit less challenging to secure support in the chamber for Government proposals.

This raises at least two important questions for democratic practice – one old, one new.

Clegg and Co – whose side are they on?

These are troubling times, for many reasons. If you’re interested in the politics of the Liberal Democrats then you’re driven to ask precisely what’s going on. For those who considered they were joining a tolerant and federal party of the centre–left, the omens seem to get worse by the day.

Yesterday we had a letter in The Times by leading Liberal Democrats in local government (reported here). The argument was utterly reasonable. They were not disputing the need for cuts. They were not even pressing all that hard on the point that the cuts cannot, pace Mr Pickles, be made through efficiency gain but will require reductions in frontline services. The main point was that the cuts being imposed on local government – unlike those being made in Whitehall – are being frontloaded. As a consequence they cannot be dealt with by natural wastage or by considered restructuring. Rather they have to be rushed and dealt with by compulsory redundancy, which will incur considerable additional costs. This is going lead to irrevocable – but avoidable – damage. So it was a public request for equitable treatment. Not an unreasonable point, one might have thought.

Monbiot’s tax take and the embedding of plutocracy: an urgent concern for Liberal Democrats

We are, it would appear, reaching a political watershed. There is perhaps a small window of opportunity to step back and consider where we think the country is heading. Then it could be too late. I was planning to post in response to George Monbiot’s article in today’s Guardian. But his post, coupled with other developments, raises some profound issues.

Monbiot’s article gives his take on the implications of proposals for what might, at first sight, appear technical changes to corporate taxation. But he argues plausibly – if rather hyperbolically – that the changes represent  a major concession to the self-interest of multinational corporations. The net result of the changes will be to allow corporations – and banks in particular – to reduce their liability for UK tax considerably. And this is occurring, of course, at the same time as David Cameron is notably prominent in the media saying that the Government is committed to doing precisely the opposite – making sure that banks pay their share in order to help rebuild the economy.

Clegg’s curate’s egg of a speech

We all know about the cuts. And the claims that getting the public finances in order will act as a spur to a revival of private sector economic activity. We’re all – quite possibly including the Government – less clear on exactly how that revival is supposed to occur. We are promised a budget for growth in a few weeks time. But the speech on the economy that Nick Clegg delivered last week was eagerly awaited. Perhaps it would give some early signs of how precisely the Coalition is expecting current policy to deliver this bright new private sector-led dawn.

The speech has not been universally welcomed. David Blanchflower over at the New Statesman dismissed it as “empty waffle”. That’s harsh. But is it fair? One of the challenges is knowing quite how to read what was said. Cynics might say the challenge is knowing quite what, in what was said, to believe.