Monday, 4 February 2013

CONSERVATIVES: A REPLY TO JAMES' COMMENTS

INTRODUCTION

To my blog post about Conservatives and why I think they ought to be a lot closer to my (liberal) point of views or solutions to our economic woes, James, a conservative friend, replied with a fairly detailed comment (see previous post).

I thought his comments and my replies deserved a post on its own. Again, I don't delude myself about the practical impact this blog or my thoughts can have on the state of the world but, if I can show one conservative (or two) he/they do not have to abandon their worldviews and beliefs to embrace "left wing" solutions (I'd call them pragmatic but that would be showing my own biases, now, would it not?) to our economic issues then this discussion will have been unusually fruitful for me.

James wrote:



Points 1 -2 (ed: which was about taxes and austerity)

You could very well be right on both points: economics isn’t my field. 

What I am going to challenge is the implication here and in some of your other posts that conservatives are gullible, and have somehow been duped into a sort of “false consciousness”. 

Do you genuinely think that way, or are you just being deliberately provocative?


My answer: A bit of both, Your Honour. Yes, okay, I am sometimes rejoicing in being deliberately provocative.  On the other hand, I did mention before and do believe that a lot of right wing politicians (if not conservative economists) rely on deception and outright lies when it comes to convincing people to vote for measures against their own interests.

In this respect, I do believe that the vast majority of conservatives are being either gullible or, said less provactively, misled. And this is why I think that, should conservatives be clearly shown the evidence and be convinced, they would actually be closer to adopt 'pragmatic'/lefter-wing solutions to our problems.

One of the biggest trick in the right wing politicians' bag (especially the US and, to a lesser degree, UK ones) is to deliberately confuse small entrepreneurs and giant mega-corporations.

Look, I'll give ground first. I happen to believe in something right-wing politicians say. Small businesses are often overly burdened and surely over-taxed. The administrative burden is always going to be a matter of practical give and take. I don't want to risk food poisoning every time I go to a small owner's restaurant. But the taxes? I'll say it. In most western countries, they are pretty damn high on 99.9% of the companies and we're reaching the limit of what can be taxed away.

I would add that I feel the same way about the middle class consumer but those are usually less of a concern for right-wingers, somehow.

However, what do most right-wing politicians do? They do say that, get elected and then they go and cut taxes on the very richest and then cover the shortfall with either debt (thus, deficit) or with raising taxes on the middle class (and, thus, indirectly, on small businesses).

Look at the most recent proposal of the American Right in some American States (thanks to Kevin Drum, Mother Jones, for the reference): http://www.offthechartsblog.org/why-replacing-state-income-taxes-with-bigger-sales-taxes-doesnt-make-sense/


"In an alarming trend, governors in Louisiana, Nebraska, and North Carolina have proposed eliminating their state’s personal and corporate income taxes and raising the sales tax to offset the lost revenue.  These proposals are similar to so-called “FairTax” proposals that several states have considered — and rejected — in recent years.  We outlined the problems with those proposals in a 2010 report.
Proponents claim that eliminating income taxes and expanding the sales tax would make tax systems simpler, fairer, and more business-friendly, with no net revenue loss.  In reality, they would tilt state taxes against middle- and lower-income households".
The analysis of the so-called Ryan Plan was even more brutal. While he did not show quite a few important details, the gist was clear: On the spending side, he simply proposed doing away with nearly every federal service (except Defence) and, on the taxing side, increase taxes on the poorest and middle class while cutting taxes for the very richest.
This isn't conservative. This is outright madness. Even the aristocracy and XIXth century industrialists probably spent more on their paternalistic programs and charity than what he proposes.
It is not in the interest of 99.9% of us (and, thus, in truth, not even in the interest of the 0.1% either) and certainly not good for families, social values, communities, social cohesion and all that stuff social conservatives say they love so much.
So I'll repeat - Yes, that such a discourse can actually find a popular echo is clearly a sign that a lot of people do feel (and are) over-taxed (especially as they lost income growth).

However, it is only popular because voters on the right misinterpret or are lied to when it comes to the actual split of the tax burden. Defend the small mom & pop shop-owner or the small entrepreneur, by all means. Don't confuse them with GE, Pepsi Co and Wal-Mart.
From a source you might admit is not left-wing biased: MSN Money...



James wrote:

Point 3: 


Conflating absolute poverty in Third World countries with relative poverty in the First World seems more than a little disingenuous.

There might very well be people in world who see pictures of starving Ethiopians in the news and think “heh, it’s probably they’re too lazy to grow food for themselves…”, but those people shouldn’t be taken as representatives of the conservative movement.

My answer: Actually, plenty of people think bad things about third-world dwellers. 'They're lazy' might be fairly rare nowadays ('they have bad institutions' seem more common) but it used to be popular to say that Africans were poor because easy weather and abundant natural food sources had led them to be less smart, less in need to work hard.

Arguably, those expressing these views were often outright racists but it was also recycled and expressed more delicately for more palatable mass consumption.

But let's just ignore that and jump to my point: I did say that there is a difference between the third-world and us. However, I think and will try to prove (at least, illustrate) that it is a difference of degree rather than a difference in kind.

Conversely, here in the UK, our welfare state can disincentivise people from looking for work because any increase in their wages will be offset by a loss of benefits. Those people aren’t necessarily lazy (although they are certainly being coddled) but are simply taking a rational view of their situation.

My Answer: This is definitely potentially true. People react to incentives.

The problem with this is that it keeps those people poor, because they have no way of gaining the skills and experience which could otherwise have allowed them to progress from entry level jobs and increase their earning power.

My comment: Aha. So you're saying that, by working (showing initiative), they would avail themselves to opportunities that, in their short termist maximisation, they do not.

I would object that most people are actually reasonably capable of projecting themselves in the future. Even if an entry-level position was not clearly superior to staying on benefits but did lead reasonably surely to better paying positions down the line, I think a lot of people would react, you know, to the incentives over time and actually take the damn entry position.

There's been plenty of programs based on the idea of 'getting people back to work' or 'giving people a boost' to acquire a bit of skill and work ethics they might then use on the more traditional job market.

In France, we've had subsidised low-skill jobs for a while. The French state is a huge consumer of these type of jobs. It allows schools and countless administrations to fill in low level positions with cheap (often rotating, though) labour. In the UK, you've had what has been called 'workfare' or 'work for your benefits'. The idea has been very popular in the USA too.

The results have usually been extremely mixed. It's actually hard to analyse counter-factuals ('what would have happen to that person without such program?') but, in France, the disillusion has been very strong amongst participants over the years.

I personally believe that a lot of people don't go through with these schemes because they know that companies (or, in France, the administration itself) are just looking for dirt-cheap labour and have no intentions whatsoever to convert any of these in real jobs... unless they had a specific need and would have created the position anyhow.  

In response to your point about opportunity and initiative: notwithstanding high youth unemployment in the UK, we have seen an influx of young people from other EU countries over the last few years and they have been generally successful in finding jobs in our retail and agricultural sectors. These migrants haven’t been given any better opportunities than unemployed Britons, but have succeeded because they have are willing to work and take personal responsibility for their own lives. (And good for them!) 

My comment: So you're saying opportunities still exist - as proven by all those EU immigrants who make a success of themselves in the UK - while I am saying the reverse - see above.

Well, okay. Surely some data should help resolve that question one way or the other? Here is a first graph on the subject.

You seem to be right about the UK, though. The UK seems to have relatively few of its people in poverty working as a proportion, compared to France or Germany, though its absolute amount of people in poverty is higher. The USA, as usual, takes the cake: It has the most poor people and the highest proportion of them working. The American Dream, baby!


So, yeah, well, that's a nice graph but it doesn't tell us what happens over time, does it? The question was: Do those working poor eventually escape poverty? They've shown 'initiative' (taking the badly paid job), are they going to be rewarded with 'opportunities'? (progressing over time).

I hope financial news outlet Reuters meet your criteria for non-left biased organisation. Here is what they have to say about Germany.


Extract:  Anja has been scrubbing floors and washing dishes for two euros an hour over the past six years (...) Labor office data show the low wage sector grew three times as fast as other employment in the five years to 2010, explaining why the "job miracle" has not prompted Germans to spend much more than they have in the past (...) Pay in Germany, which has no nationwide minimum wage, can go well below one euro an hour, especially in the former communist east German states. 

http://www.standard.co.uk/news/uk/the-working-poor-staggering-6m-facing-insecurity-have-jobs-8351770.html

I don't know where the Evening Standard rest on the right-to-left scale of British newspapers but here is what they have to say about the UK working poor:

Extract: Excluding pensioners, in-work poverty now outstrips work-less poverty (ed: It seems my graph above isn't perfect) (...)

 The level of in-work poverty is the most distinctive characteristic of poverty today. We need a relentless focus on fixing the labour market to ensure people have the opportunity to improve their prospects. "More people than we can imagine will have experienced poverty since the downturn, circling in and out of insecure, short-term and poorly paid jobs". (...)

 In-work poverty that is becoming the modern face of hardship, and at the same time support for working people is being cut. The high level of in-work poverty undermines any idea that better incentives to enter work, the centrepiece of Universal Credit, is some kind of cure-all.

The fundamental issue here is one of social responsibility. Socialists and social democrats often seem inclined to portray “the poor” as dis-empowered observers of their own destiny. This fosters a worldview in which there is no point in expecting poor people to take personal responsibility for their own lives (or in blaming them when they become the perpetrators of crime).

The poor therefore become wards of the state, and they have a legitimate entitlement to expect the taxpayer provide them with everything they need. Infantilising people in this way strikes me as dangerous on a number of levels.

My answer: So, one, I think your comment does prove or confirms that this debate over initiative/opportunity and personal responsibility is one of the key to understanding conservative economic policies.

You clearly states that work is a matter of individual responsibility and that the poor just need to assume responsibility for themselves. But this assumes that there is, inevitably, "opportunities".

As you can see in the following graph, this is what I contest. "Opportunities" are vanishing and cycling in and out of low paid jobs - what your immigrants full of initiative are actually doing, as well as lots of UK natives - isn't an opportunity.

 I would also add that other graph:


At some point, hopefully, you may recognise that it's not the fault of "the poor" showing little 'initiative'. There really aren't that many 'opportunities' available.

As I said, endlessly cycling through poor paying jobs or part-time jobs isn't an opportunity. It is, at best, a stop-gap.

James also wrote:

One other very general point: economics, like the other social sciences, seems to be dominated at an academic level by people whose politicial convictions range from the extreme left to the centre left. Conservative voices at academic institutions seem to be few and far between. This imbalance can create an environment in it is very difficult to effectively challenge left-wing ideas, and in which the general trend of a discipline therefore becomes weighted to correspond with the beliefs promoted by a particular ideology.
 
(This was my own experience reading History at university - and is also something which William F. Buckley expounds upon in God and Man at Yale). I would therefore be very cautious of accepting academic theory as an objective truth where is being used to propound a particular political course of action, without first understanding the biases of the academic in question, and the context in which they were writing.

My answer: While I would agree with you on social sciences and academia in general, I disagree about economics. Economists, especially Orthodox economists, are usually preaching for free markets regardless of how most human beings react or feel.

There was a test done to measure students' charitable and cooperative instincts. Students of economists always score lowest in those. Either economics is attracting sociopaths or it is turning them into one.

Either way, it's not a hotbed of left-wing political activism, though, like most academics, I do imagine most economic professors are socially fairly liberal. Indeed, many economic professors, because of their belief in free markets, advocate for the liberalisation of drugs, prostitution and the commerce of human organs.

Have a look at the following article: http://www.gnu.org/philosophy/economics_frank/

"Does Studying Economics Inhibit Cooperation?" A study by Gerald Marwell and Ruth Ames found that students of economics are indeed much more likely to free-ride in experiments that called for private contributions to public goods.

So don't worry, James, we economists, as a group, stand very willing to fuck the poor! All in the name of the free markets and self-interest maximising public outcomes, as demonstrated by our mathematical models.

Ask Thatcher and Reagan. Or Pinochet. Conservatives have always felt that, somehow, the poor were responsible for their own unenviable fate - their own social responsibility, as you said. But it is economists who mathematically proved it for them.