Lies, damned lies, and Tory pledges

The French have a saying, that the only person committed by a verbal contract is the one who believes it.

The same could be said of other apparent commitments. Brexit pledges for future prosperity, for instance. Or, indeed, Conservative election promises.

A glowing example of the latter is in Theresa May’s claim, in the Conservative election manifesto at the 2017 General Election in Britain, that she would deliver:

Fairer corporate governance, built on new rules for takeovers, executive pay and worker representation on company boards.

Top executives at play work

A steadily growing abuse of recent years is the shameless increase in corporate executive pay while others are on stagnant incomes at best. While there was a reduction in top pay in Britain between 2015 and 2016, that still left CEOs in the top companies on 129 times as much as the average for their workforce. Twenty years the ratio was 48 to 1. That was bad enough, but the ratio today is eye watering.

Anyone who believes the top CEOs are working nearly three times as hard as their counterparts twenty years should probably stop reading this piece now.

Equally, anyone who thinks they’re worth the same as 129 of their staff has an inflated assessment of the job of a CEO. Generally, it consists of making a lot of money whether or not the company is doing well and, when it gets into trouble, leaving with a colossal payoff before stepping into another only slightly less grossly overpaid job.

The employees on 1/129 of his income will find themselves paid a few weeks’, or if they’re lucky a few months’, salary and then battle to get another job. Homes and families may well be sacrificed in the process.

The actual proposals that have now been made by Theresa May’s government are somewhat less ambitious than her initial words suggest.

Companies will be urged to appoint employee directors or advisory groups advising their boards. They will not be mandated to do so.

As for the gaping disparities in pay, the 900 biggest companies will be required to publish the ratio of top incomes to the average of the employees. This presumably is intended to “name and shame” the worst offenders. Sadly, I rather expect it to have the opposite effect.

For some time, police used Anti-Social Behaviour Orders against young people who routinely behaved badly. These days, “ASBOs” have been replaced by injunctions. One of the problems with these measures, is that they’ve come to be regarded by their recipients as badges of honour: you haven’t made it as a full-blown hooligan unless you have your injunction.

Can you imagine the conversations between leading CEOs on golf courses after the May proposals are enacted?

“We’ve had to publish our salary ratios,” says Gunther, “mine’s 135:1”.

“Really?” says Paul, “mine’s 151:1.”

“Wow,” replies Gunther, “I’ve got my work cut out for me.”

“You can say that again. I plan to push on to 170:1 by next year,” says Paul as he drives his ball off the tee into the bushes on the right of the fairway, “you’d better get moving.”

Oh, well. Such is life. Just further proof of the principle I started off with:

If you’re disappointed over a Tory promise, you have only youself to blame – for having believed it in the first place.

At the end of 2014: a glimmer of hope for 2015?

If 2014 had a dominant issue, it would have to be immigration.

Anti-immigrant feeling is on the rise across the rich nations, with some countries such as Britain, France and Sweden seeing brutally xenophobic parties of the far right advancing threateningly. Indeed, such views are affecting, or perhaps I should say infecting, the entire political establishment: the British government has even announced it no longer intends to help finance rescue missions for migrants left to drown in the Mediterranean. It seems a death sentence is a fitting punishment for people attempting to reach Europe illegally.

Citizens of a Christian nation show their compassion

Much of the hostility comes from significant sectors of the working poor, traditionally the natural supporters of the Left, so it too feels pressured to make concessions to views it should be resisting.

While there’s no excuse for it, the spread of xenophobia among the poor isn’t hard to understand. Men and women in unskilled work are on pay that barely allows them to survive. The alternative of eating or heating is starkly posed to many families, especially to the 622,000 (according to the most recent UK government figures) on zero-hour contracts, technically in employment but with no guarantee of either work or pay. It’s no surprise that Britain’s Trussell Trust, which was feeding 30,000 people at food banks in 2007, is now feeding a million.

Life for the poor is even more precarious because, in economies struggling to recover from the 2008 shock, redundancy is an ever-present threat. So yawning before them is the black hole of unemployment, an increasingly desperate state as benefits are reduced in the name of austerity, or withheld as increasingly stringent conditions of entitlement are imposed.

In these circumstances, it’s easy to believe that immigrants in unskilled work are taking jobs which might otherwise have gone to native-born unemployed. Many of these immigrants accept lower wages, so there’s the sense that they are undercutting applicants from within the country. When skilled jobs, for instance in healthcare, go to immigrants, that too can be seen as denying opportunities locally.

So it’s easy for the far right to whip up bitterness against immigrants. And yet it isn’t immigrants who introduced zero-hour contracts, but employers wanting to cut payroll costs. Nor do immigrants demand lower wages, they merely accept them as preferable to the conditions they’ve left behind. Nor, finally, is it immigrants who are keeping locals out of skilled work, but short-sighted economic policies that deny training opportunities to our young people.

The attraction of making immigration the issue is that immigrants are generally easily identifiable, whereas the corporate or political figures responsible for the real problems prefer to say out of sight. Immigrants become an easy scapegoat for all our ills, easy to fear, easy to hate. Parties based on humanity’s baser instincts, like UKIP in Britain or the Front National in France, rise on those feelings.

So it was refreshing, in this toxic atmosphere, to sense a glimmer of optimism at the end of the year. At the beginning of December, the OECD, the club of the most prosperous nations, published a study which, first, confirmed the blindingly obvious, that inequality is increasing, but then went on to assert a truth which badly needed stating: far from encouraging growth, inequality holds it back.

Estimated consequence of changes in inequality (1985-2005)
on subsequent cumulative growth (1990-2010) 

This is dynamite.

Firstly, it gives the lie to the Reagan-Thatcher sacred cow of trickle-down economics: let the rich grow richer, and their wealth will flow downwards to enrich the poor in turn. It turns out that enriching the rich just makes the rich richer. The only surprise is that anyone’s surprised.

Secondly, it shows that inequality doesn’t even encourage economic growth. Many once believed that it was better to have unjust distribution of a bigger cake, but the OECD shows that unjust distribution itself slows the growth of the whole cake. Increasing inequality between 1985 and 2005 held growth back by 8.5% on average across the OECD between 1990 and 2010.

It seems that fairness isn’t just morally preferable, it’s more economically efficient.

So, if all but a tiny minority of us are feeling poorer, it’s because we’re becoming poorer. The zero-hour contracts, the downward pressure on benefits, the cuts in public services aren’t about fixing the economy. They’re the necessary price of growing inequality, where the wealthiest 1% or even 0.1% prosper, but the least well off 40% see nothing grow but their suffering.

These are key notions, and all the more so since they’re being voiced in the wake of one of the more important publishing events of recent years: Thomas Piketty’s Capital in the 21st century. He shows, with real data to support his argument, that inequality is growing ineluctably. What’s more, while in the twentieth century there was a reduction in inequality in income, that trend is recent and by no means guaranteed. Nor has there been any corresponding reduction of inequality in wealth:

… the upper decile own 60 percent of Europe’s wealth and more than 70 percent in the United States. And the poorer half of the population are as poor today as they were in the past, with barely 5 percent of total wealth in 2010, just as in 1910.

Piketty’s central contention is that for as long as the rate of return on capital is higher than the rate of growth in the economy, the gap between the wealthiest in society and the poorest – note the depressing finding that half the people own less than 5% of the wealth – will continue to widen. And we now know this restricts overall growth.

Why do we allow this to happen? Because people with property of $100,000 or $200,000 think of themselves as on the brink of wealth, and believe their interests lie with the very wealthiest, those whose property is measured in the millions. They support measures to shore up inequality because they believe they may in time benefit from them.

Meanwhile the poorest, apparently impotent to change anything, with no voice in politics, look for an easy target. Blaming immigrants is a convenient way to explain their difficulties, and they rally behind UKIP or the Front National or their ilk.

But Piketty and the OECD, joined even by the IMF, have highlighted the real cause of their problems: inequality.

That’s what gives me some encouragement at the end of 2014. The terms of debate are beginning to change, at least at top levels of economic thought. Perhaps we can encourage some trickle-down in ideas, even if it has failed in finance. If the parties of the Left can find the courage to reject facile immigrant-bashing, and to challenge the failed economic wisdom of the Reagan-Thatcher legacy, then they may mobilise support for progressive change. Towards greater justice, and towards greater efficiency at the same time.

It wouldn’t be a moment too soon.

Happy 2015. I hope.

Immigration: aiming at the wrong target

We never seem to stop talking about immigration these days. And yet the real problem we face isn’t immigration – it’s precisely all that talk about it. Or more generally, the someone-else-to-blame mentality that lies behind all the hot air and bad temper.

Anti-Immigration: it's all the rage
Even among people descended from immigrants

One of the more remarkable women I know of was Emilie du Châtelet. She became a champion, in the eighteenth century, of what the best recent student of her life, calls “feminine ambition”: she forced the scientific world to take her seriously, publishing extensively on physics, including a translation of Newton’s Principia which she raced to complete before her premonition of death was verified.

She had a servant called Sébastien Longchamp, who would ultimately be dismissed from the household she shared at the time with Voltaire. Decades later, after his own death and even that of the man who published them, Longchamp’s Memoirs of his time with the illustrious couple appeared. One has to question the reliability of such a source; even so, there are some stories he tells in his ‘what the Bulter saw’ document, that ring true.

He tells, for example, of a summons to her bathroom, to fetch more hot water from the fireplace and pour it into the bath. As he came to edge, he realised that she was entirely naked, and the water completely transparent. To avoid being scalded, she parted her legs so that he could pour the water safely away from them. When he tried to do so with his eyes averted, she admonished him for getting the hot water too close to her body, so he was obliged to watch what he was doing and therefore view her naked.

Mme du Châtelet was by no means promiscuous. She would certainly not have appeared naked before a man. But that precisely is the point: Longchamp was not a man. He was a servant, and to a noble such as Emilie, that is less than a man. There was no need for modesty before him.

An outspoken champion of rights – hers at least – against the stubborn conservatism of her time could harbour such views. That may make it less surprising that men who took their commitment to freedom and equality so far as to engage in armed rebellion against British rule in North America, could nonetheless condone slavery. There’s no doubt that men like Thomas Jefferson were made uneasy about keeping slaves, but not enough to free them, at least in their own lifetimes.

Surely the answer is that they didn’t see their slaves as truly men or women (they certainly saw them as women in some measure: Jefferson fathered several children on one). Like Longchamp, the slaves were lesser humans, different enough from the masters to warrant denying them their liberty.

Now fast forward two and a half centuries.

We live in a world that is more unequal than at any time since the end of the Second World War. In England, 1.4 million people have an annual income of under £6000 a year; 6000 have an income over £1 million. On their own, the income of each of those super-rich is worth over 150 times that of the people at the bottom. And there many hundreds of people who take many more times still that lowest level.

With that excess money, they can fund politicians and buy them. They can threaten to move their wealth elsewhere to get their way. They have in particular bought the British Tory Party, and are now buying UKIP; it is no accident that while their earnings have grown over the last four years, those of the poorest have fallen still further.

The people who take that money and exercise that power know they deserve it. They know they are exceptional. They excel those who have, and receive, less. In other words they know themselves to be superior. The rest of us may be human, but we are a lesser kind of human. 

 There are 6000 of them which, funnily enough, was the size of the French aristocracy in the eighteenth century too. Like them, their position is based entirely on wealth. It’s no surprise that they preserve and maintain the same attitudes.

There are so many more of us. And we have votes. Why don’t we put an end to their domination?

Because instead of opposing them, we aspire to be like them. We protect the rights of the wealthy in the hope that some day we’ll join their ranks, and enjoy that protection.

However, since we certainly don’t want to blame ourselves for our troubles, we have to find someone else to blame. How about immigrants? There are relatively small numbers, they’re relatively easy to spot, and it’s easy to come up with some kind of justification based on our being the true possessors of this land while they are interlopers in it. Though the English took the country from the Celts, as did the French, and the Americans took it from the Natives who were there before them.

That’s the trap that UKIP or the Tea Party or the Front National in France lure us into. Blame the other, the foreigner, the alien. The lesser human.

The death of Michael Brown in Ferguson, and above all the fact that his killer has avoided any kind of justice, shows how those ideas are as strong today as they ever were. American Blacks may not be slaves, but who can say that Whites regard their lives as equally valuable?

Here one in six of our voters rally to the xenophobes of UKIP, and a higher still proportion of French voters flock to the Islamophobic Marine Le Pen. So we talk endlessly about the perils of immigration and do nothing about those who steal the bread from our mouths.

What of those people, the ones who really run the show and cause our problems? 

They’re laughing at the lot of us. All the way to the bank.

Sandwich man, stand up and call on us to stand with you

One story yesterday seemed to sum up the problem of lack of political focus in Britain today, and in the West more generally.

The story concerned the company Greencore and its operation in Northampton, in the English Midlands. Greencore make sandwiches for several of the major supermarkets, including Marks and Spencer. They’re growing strongly. Recently it emerged that they’d been recruiting unskilled workers in Hungary, much to the anger of many in the local population: Northampton, like a lot of Britain, indeed of Europe, is suffering high unemployment.

Greencore in Northampton
from the Guardian

Inevitably, this engaged what is now the common debate about immigration.

Is it true that the company simply couldn’t find enough staff locally prepared to take on this low-paid, difficult work (days can last twelve hours and, according to an employee, managers may pressurise workers to stay even longer)?

Locals say they never saw the jobs advertised and would apply at once if they had the chance, if only to get off the unemployment queue at last. But, some argue, the company prefers to employ Hungarians who are prepared to work for lower wages.

Nonsense, say the company. They are an equal opportunities employer. Everyone is paid the same. There is no advantage to the company to use Hungarians rather than Brits; it just can’t find enough Brits.

I have no idea who’s right and who’s wrong here. Nor, it seems, does the Guardian journalist, who simply presents both sets of arguments and leaves it to the reader to decide. What I do know, is that this is only tangentially a problem of immigration; that the tangential problem is easily resolved, without leaving the European Union or imposing tighter border controls; that meanwhile, there is far more serious problem raised by the case, which no one seems prepared to take on. Indeed, UKIP and their allies in the Conservative Party seem only concerned with diverting attention from it, while Labour is having trouble plucking up the courage even to raise it.

First, the easy problem. To ensure that the company is playing straight, all we need is legislation to impose on such operations that all staff should be paid equal rates for equal work. We could keep the companies honest, making them live by the standards Greencore says it applies already: to pay immigrants the same as locals so there’s no financial incentive to recruit abroad.

Will UKIP pick up this call, for equal wages for immigrants? Don’t hold your breath.

UKIP won’t pick up the demand even though it would solve the problem. Indeed, it would solve some other problems too: it would ensure that women or people from ethnic minorities are not discriminated against either. You make sandwiches, you get paid the same as any other sandwich-maker.

Now let's turn to the far more serious problem. Its nature emerges from the detail of the article.

The unskilled staff in Greencore are on minimum wage, £6.50 an hour. After they complete their three-month probation period, they qualify for additional payments to compensate them for working in the cold environment sandwich production requires. Where conditions are a little colder, the employee receives 24p extra an hour; if conditions are officially “cold”, they get 48p an hour more; if they work in a freezer, they get 68p an hour more.

The maximum such a worker could earn, therefore, would be £7.18 an hour. That’s for working in a freezer for up to twelve hours a day.

Meanwhile, last year Patrick Coveney, Greencore’s Chief Executive took £1.3m. That works out at a cool (pun intended) £788 an hour.

Putting it another way, assuming an average of 220 working days a year, a worker doing 12-hour days at Greencore would have to work for 69 years to earn what Mr Coveney took for a single year.

Putting it more simply still, Mr Coveney believes he is worth the equivalent of 109 of his unskilled employees.

That he contributes more than any one of those unskilled workers, I can accept. Even perhaps that he contributes more than ten of them – many have long suggested that no one in a company should be paid more that ten times what the lowest paid receive. But that he contributes more than 100 of these workers? I’m afraid that simply defies belief.

He takes as much as 10-12 General Practitioners, 20-25 experienced nurses. He may run the world’s best sandwich-making operation, but does that make him worth 10 GPs? Seriously?

Now, that’s the real problem today. We live in a society dominated by, moulded by, people who believe they are worth as much tens, dozens, perhaps in some cases hundreds of the rest of us. They will do all they can to preserve that position. Over the last four years, a new report has shown, that has caused the least well paid 5% of the British population to lose 3% of its earnings, while the top 1% has increased its disposable income by between 1.2% and 2%.

Every moment we spend debating immigration is a moment we take our focus off that primordial question of our time. UKIP exists to keep our focus elsewhere; the Conservatives will do nothing to highlight the issue; the big question is, does Labour have the guts to wrench the debate on to that ground?

Because if it did, it could win the next election. And do something about the most shameful distortion of our economies today. Which isn't immigration, but inequality.