On bankruptcy constraints, soft and hard

One strand of the economic critique of government provision is that public providers face a soft bankruptcy constraint. If they operate inefficiently or extravagantly and run out of money then they can turn to government for a handout to cover any shortfall. If the government is short of money to bail them out they just put up taxes. Private providers, in contrast, operate in the face of a hard bankruptcy constraint. They must operate in the face of ever-present risk. If they don’t produce what consumers demand, and do so as efficiently as possible, then their continued existence is in doubt. Hence, the argument runs, a powerful incentive is missing from the sphere of public provision. This argument has been invoked as one component of the justification for shifting activities from public to private sector.

The frustrations of the armchair runner

[Originally posted on Bristol Running Resource, 28/04/11]

The early burst of warm weather we’re experiencing this year will no doubt be welcomed by many runners. But it is deeply frustrating for those of us sidelined to the armchair. It would be great to be putting in a few miles in the sunshine. I’d been planning to make the Bristol 10k my first race for six months, but that isn’t going to happen.

I’ve had a problem with the ball of left foot, under my big toe, on and off for months now. It comes and goes. It quietens down for a bit only to flare up all of a sudden. A flare up could follow a run, but it could equally appear apparently out of nowhere.

“Fit to work” ergo a scrounger

Quite a few media outlets (for example, here and here) are this morning reporting figures produced by the Department for Work and Pensions that show four out of ten applicants for Employment and Support Allowance failed to qualify for assistance and, hence, are ‘fit to work’. This is taken by Employment Minister Chris Grayling as further evidence of the need to reassess everyone on the old Incapacity Benefit because, by implication, there must be tens of thousands of people receiving IB when they shouldn’t be. They are, in fact, ‘fit to work’. Scroungers.

The BBC reports Mr Grayling as adding:

“We will, of course, carry on providing unconditional support to those who cannot work, but for those who can it’s right and proper that they start back on the road to employment.”

Tax payers and ‘the right to the city’: alternative narratives on cuts to Housing Benefit

A few days ago I tweeted that current housing policy was a “right mess”. That was in part a response to the news, reported in Inside Housing, that there is going to be an increase in the distribution of tents for homeless ex-offenders in Nottingham, in lieu of settled accommodation. But it was a more general observation that the intersection of the various current initiatives don’t seem to sum to anything bordering on coherent. A key element of the current agenda is the reform of the Local Housing Allowance (LHA) for private tenants. And we’re now moving into the implementation phase of the reforms.

I’ve written about the LHA before (here and here). But I return to it because the more I think about it the more I think there has been something missing from the debate.

Pressing on with NHS Reform – a less than rational process

The central question in the current debate over the Government’s NHS reforms is whether the “listening” exercise taking place during the recently discovered “natural pause” in the legislative process is genuine or symbolic. Concerns that the exercise is cosmetic will only be fuelled by an article in yesterday’s Guardian which cites a letter from David Nicholson, the Chief Executive of the NHS, who suggests that the implementation process should press ahead and that there is a need to “maintain momentum on the ground”.

The article includes a quote from Hamish Meldrum from the BMA who states that the BMA has:

… always maintained that changes in the NHS must not anticipate the legislative process and lead to irreversible decisions.

I’ve no idea whether the BMA have always maintained this position. But this quote highlights something very significant about the way policy is currently developing in this field.

AV, extremism and the median voter

Much of the debate between advocates of #Yes2AV and #No2AV is not exactly edifying, particularly some of the tactics employed by the latter group. The quality of some of the debate is pretty feeble. Yesterday’s Question Time was a classic example of an occasion where the topic was raised but the discussion generated more heat than light.

One of the issues that’s attracted a lot of attention is whether a move from First Past The Post to the Alternative Vote will benefit extremists or not. The #No2AV campaign is adamant that it will, while the #Yes2AV campaign is equally certain that the change will have the opposite effect. That the BNP are not in favour of AV is taken as an indication that it is less likely to assist extremists. As I understand it, the BNP’s position is based on a preference for a more proportional system. That at least makes some sense – I’m not sure that either AV or FPTP really offers them a great deal.

This got me thinking about the venerable idea associated with the median voter theorem, which was popularised by Anthony Downs in the 1950s.

Tricky business down the job centre

So it appears that the Department of Work and Pensions may not have been entirely correct. The Department initially denied that Jobcentre Plus employees were tricking vulnerable people in order to sanction them and stop their benefits, as reported in the Guardian last weekend. The Guardian yesterday continued the story with the news that:

The DWP has backtracked and released a statement confirming the practice had been going on in some offices due to a misunderstanding between the department and some jobcentre managers. It insisted this was no longer the case.

Is Cameron’s missing majority really the root of his problem?

Over at the Telegraph today Benedict Brogan posted an interesting piece under the title David Cameron isn’t a winner – and that’s where his problems begin. The thrust of his argument is clear from the title: Cameron’s failure to secure any sort of majority last May fundamentally weakens his position. Cameron is aware of this, Brogan argues, and that awareness infuses the whole business of government.

On closer inspection the rest of the piece turns out to be a rather loose collection of observations regarding things that are going wrong or not working very well. Or, as Brogan styles it, ‘the incidences of chaos are multiplying’. Anyone keeping even half an eye on the way policy is developing would agree that incidents that could appropriately be described as chaotic are not hard to find. But has Cameron’s lack of a majority got anything to do with it?

Groundbreaking economic finding during higher education policy development?

Today’s Guardian carries a piece entitled Plans for tuition fees in disarray, ministers say. There is concern that many universities are planning to charge students fees of more than £6,000, which means that the average of £7,500 for which the Government had budgeted is looking inadequate.  The implications for public spending are considerable. The piece contains the following observation:

Privately, ministers admit they have become victim of the so-called Giffen good, an economic theory in which people consume more as the price rises.

This statement is a worry. It certainly lends support to the argument that a little knowledge is dangerous. If higher education were a Giffen good then that would be a groundbreaking finding in economics. It would be surprising: not least because no one seems to have spotted it before.