Santa Claus operated out of Frankfurt last year – and gave the Eurozone the fiscal equivalent of several billion stocking-fillers. But the European Central Bank’s largesse may not extend to those who don’t believe in it, writes Alan Shipman.

A single act of generosity by Mario Draghi, the European Central Bank (ECB) governor, has restored lasting calm to the previously turbulent Eurozone, neatly deflecting the winter blizzards across the Atlantic.

Draghi’s most dramatic achievement is to have radically reduced the cost of borrowing for Italy, Spain and other Eurozone countries that have large budget deficits to finance. This cost (the ‘bond yield’) fell to less than 5% in Spain’s early-January auction, from a crisis peak of more than 7.5%. It is a similar story in Draghi’s native Italy, where the public finances have been so effectively shored-up that voters can even contemplate a Silvio Berlusconi comeback. By promising ‘outright monetary transactions’ (OMT), the ECB has asserted the market-stabilising power long enjoyed by its American equivalent, the Federal Reserve. As a result, investors searching for higher yields have now moved back into corporate bonds and shares, lifting Eurozone stock markets to their highest level for two years.

From regarding the Euro area as a sinking ship that would either have to ditch its weakest members or be dragged underwater by them, some investors now view it as a better sovereign borrower than the previously mighty US. Both are currency zones with wide fiscal deficits. At present the US has a more impressive growth rate, while there is still a risk of weaker Eurozone members being cut adrift and forced into default. But in the longer term – if it can now hold together – the Eurozone has a better external balance (exporting more than it imports, thanks to Germany), greater power to impose fiscal discipline on its members, and stronger safeguards against unleashing inflation (sovereign borrowers’ traditional way of short-changing their creditors after securing the cash).

Debt guarantee 
Perhaps most remarkably, Draghi has achieved this monetary escapology without having to part with a single euro of ECB funds. All he has done is announced that his bank will, in future, buy up the debt of any Eurozone country that is forced to default. This guarantees the debt of Italy, Spain and other struggling member-states, making it safe for ordinary investors (and investment funds) to buy. Their governments can now continue to finance the public investment needed to restore growth so that banks and households can bring down their own debt, and the costs of welfare support until new jobs emerge.

The announcement was well timed, coming at a moment when banks and bond-buyers are globally desperate for high-yielding issues, and prefer those which have a government behind them, regardless of quality. After all, Ukraine with an economy stalled by sliding steel sales and politics sliding back into industrial oligarchy and Latvia bailed-out by the IMF in 2008 and dragged through Europe’s deepest ever recession have recently made successful bond issues, despite having higher currency risks and lower credit ratings than any Eurozone member.

Neither Spain nor Italy, the most dangerous of the Eurozone’s weak links, has asked for a bailout so far. Both know that, if they do so, they will be subject to a German-driven, EU-administered ‘adjustment programme’ – worsening their already perilous economic and social situation, and probably discrediting whichever government has to enforce the emergency measures. Their additional borrowing is raising the scale of any future rescue effort. The ECB’s calculation is that, by making it clear that all Euro debt will be honoured in the event of a bailout, this becomes less likely to happen. That’s because member countries now have the fiscal strength required to drive a recovery, and because speculators will stop short-selling the debt in order to fulfil their own expectations of its collapse. The ECB’s promise buys time for governments to act so that the promise won’t need to be fulfilled.

Cross-Channel fallout
If this gamble works, it should be good for other European governments – notably the UK, which will blame its imminent return to recession on the weakness of demand and investor confidence in the single currency area. But in one important respect, the Eurozone’s improbable gain is its non-members’ loss. The UK had retained its top AAA credit rating, allowing it to finance its overrunning budget deficit at negligible cost, partly because it was regarded as a ‘safe haven’ for investment funds that felt at risk from Eurozone exposure. Now that Euro debt has been turned into a positive one-way bet, that of the UK doesn't look so enticing.

A credit-rating downgrade need not (as the US has demonstrated) cause any rise in UK interest rates, or loss of confidence in its turnaround strategy. But it makes it harder to maintain the present low rates long enough to complete the banks’ recapitalisation and float Britain’s mortgage borrowers off the rocks. 

Mario Draghi is unlikely to be on George Osborne’s Christmas Card list at the end of 2013. But if his gamble succeeds, it’s a small price to pay.
Alan Shipman 24 February 2012

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

As towns in Britain begin to switch to 20 mph speed limits, Paul Rowlinson wonders if vested interests will limit their impact

The more palatable option of a petition has been signed by a small number of people and they have tried to raise publicity on local radio and newspapers. Using borrowed equipment, speeds were monitored and 'alarming data' was uncovered, including a motorcycle travelling at 104mph though the 40 mph zone. 

A petition signer who is also a councillor has said that plans are being drafted to reduce speed limits quite significantly in order to 'make cutting the number of deaths and injuries on the county’s roads a priority'. Plans would include reducing many residential 30 mph limits to 20, which is supposedly the limit that most motorists agree should be in force, and a reduction to 40mph for rural single carriageway roads, which I should imagine would be far less agreeable to the motorists who use them.

My guess is that the majority of people don't really want to have speed limits reduced. They probably consider themselves to be very competent at driving at the current speed limit (add ten per cent or so) and avoiding accidents. This may well be the case. 

The problem is surely the people who repeatedly take risks and don't care what the speed limit is. How is reducing a 40 to a 30 or a 30 to a 20 going to affect the behaviour of someone who thinks that driving at over 100 mph on a road that passes within feet of someone's front door is OK?

We now have the technologies available to either limit the speed of the vehicle to the speed limit in operation, or send the incriminating information to the police, DVLA or whoever – so why don't we use it? Do manufacturers and other vested interests, politicians included, fear that motorists would reject new cars fitted with this technology in favour of older models? Would motorists baulk at such a 'nanny state' initiative, claiming an assault on their freedom and human rights? 

Or is it really OK to drive above the speed limit as long as no-one catches you? It's an almost Zen-like question. If a motorist drives too fast through a forest road and there is no-one there to see them, are they still breaking the law?
Paul Rowlinson 27 February 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

The logical absurdity of reducing a budget deficit by expanding it begins to look extremely logical, in the light of Italy’s election and Britain’s credit-rating downgrade, writes Alan Shipman

Had John O’Farrell won the Eastleigh by-election, the comic novelist would have been in a similarly paradoxical situation: immersion in one of the richest reservoirs of comic material – the House of Commons – but in too serious and time-pressed a role to convert it into print. Fortunately, O’Farrell is no stranger to paradoxical situations. His novel of  (non-political) partying and parenthood, The Best a Man Can Get, mines a rich seam of them, between the fleeing partners and flying nappies. Most notably, when he discovers that nature has committed a basic programming error in the design of young children. They confront some of life’s greatest internal and external threats at a time when they are not equipped to convey what’s wrong, except in inchoate burble; then they learn how to speak and relentlessly build up their articulacy, in inverse proportion to the importance of what they’ve got to say.

But there’s one paradox that even Labour’s most experienced politicians still struggle to express. So do the other parties who fared well in the Italian elections, and those in the US Congress who’ll try again in March to avert a leap off the ‘fiscal cliff’ . Whenever those now ‘rebalancing’ the economy are attacked for an over-hasty budget tightening that triggered recession, they have an easy way to dismiss the critics. 

How can you bring a deficit down with policy changes that would move it up? It’s a paradox that enables David Cameron and George Osborne to fend off the fiscal brickbats from Ed Miliband and Ed Balls, even when recoiling from such obvious embarrassments as a pre-Budget downgrade from a leading credit-rating agency.

It seems obvious that the only way to tighten a national budget is to reduce public spending and/or increase taxation. Indeed, this seemed so obvious that it was almost universally agreed among economists until the 1930s. And it’s still the view of many, who periodically propose ‘balanced budget amendments’ to national constitutions (where they’re written down) to make sure governments never let spending exceed their tax revenue in the first place. 

It seems obvious, yet it’s wrong. As in ballooning, so with ballooning deficits: what goes down must sometimes first go up. The realisation that a budget deficit might be closed more rapidly by initially raising it, than by immediately trying to reduce it, was the breakthrough that launched modern economics amid the 1930s Great Depression. The fact that the post-2008 ‘Great Recession’ has now gone on longer than that nominally bigger downturn – with UK national output still below its pre-downturn level, and actually falling again during 2012 – suggests that it’s overdue for rediscovery. 

While the prime minister correctly observes that Britain risks more downgrades if it dares to show ‘reduced commitment to fiscal consolidation’, he is wrong to characterise his opponents’ alternative strategy this way. In practice, both the Chancellor and his Shadow have a deficit reduction strategy, aimed at capping the rise in UK public debt. Imposing immediate spending cuts and tax increases is one approach. Postponing such action, and even reversing it, is another. As it turns out, the effort to cut the deficit immediately has had the opposite effect, and UK borrowing will be higher in 2012/13 than in 2011/12 (). Running a wider deficit two years ago might have led to a lower deficit now – as the US (after a post-recession ‘fiscal stimulus plan’) will continue to demonstrate, if it avoids a springtime reversion to sudden budget cuts. 

The ability of a wider deficit now to generate a narrower deficit later arises from the ‘paradox of thrift’, a centuries-old observation that economists periodically rediscover when times get bad. If one person tries to save more, their savings go up. But if everyone tries to save more, their savings go down, because the lack of demand in the economy reduces production and shrinks their income (or throws them out of work). Similarly, if a government tries to reduce its deficit, and pay down debt, it can cause the economy to shrink, reducing its revenue and raising its spending obligations until the deficit actually widens. If it raises the deficit, resultant economic growth may create the conditions for later deficits to fall. 

Public finances are not household finances writ large – they are fundamentally different, because of their impact on the macro-economy. But explaining the difference takes several chapters of an economics textbook (not quite as entertaining as a John O’Farrell novel). So the advocates of ‘expanding the deficit in order to shrink it’ can never quite win the argument, on the floor of the Commons or Congress, over the advocates of ‘expansionary contraction’. Perhaps, in the month a new Pope is chosen, Europe’s self-defeated budget cutters would do well to recall St Augustine’s wiser strategy: “Lord, please make me virtuous, but not just yet”.  

Alan Shipman 4 March 2013

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

Useful Links

• 60 Second Adventures in Economics - The Paradox of Thrift

Meg Barker looks a little deeper at what can be done to alleviate human suffering

Self-help history: empowerment or victimisation
Examining the history of self-help we can see that books in this genre have tended to be of two types. The first type – empowerment self-help – emerged in America after the great depression and drew on the New Thought movement which believed in the power of positive thinking. Such books held out the promise that by imagining good things and striking the right attitude people could bring what they wanted to themselves: wealth, friends, success, etc. The second type of self-help became popular in the late sixties and seventies. Know as victimisation self-help, books in this category tend to blame the wider world for any problems that individuals have. Akin to the twelve step programmes for addiction, these books are concerned with reassuring readers that their difficulties are not their fault but down to something beyond their control like having toxic parents or a disorder or disease of some kind. Power is located outside the individual. 

In the 1980s and 1990s there was a backlash against victimisation self-help and a return to an extreme form of empowerment self-help which argued that any problems were down to the individual and could be fixed by positive thinking. For example, a quote in the bestseller The Secret by the author's fellow self-help writer, Bob Proctor, says: “Why do you think that 1 percent of the population earns around 96 percent of all the money that’s being earned? Do you think that’s an accident? It’s designed that way. They understand something. They understand The Secret, and now you are being introduced to The Secret.” The Secret in question is the New Thought law of attraction, that successful people bring positive things to themselves merely by thinking about them.

Both these forms of self-help are problematic, and together they set up a false binary around human struggles, which is similar to the either/or view of mental health which I've discussed elsewhere. It seems that we have to believe either that we are personally responsible for all our problems but that we can fix them by changing ourselves, or that the world is responsible for all our problems but that we are powerless then to do anything about them. If we buy into the empowerment way of seeing things then it easily slips into victim blame, whereby we regard everyone, including ourselves, as to blame for any problems in life. If we buy into the victimisation way of seeing things then we have to believe that there is something fundamentally wrong with us and give up any sense that we could do anything about our difficulties.

A third way? Oliver Burkeman
In recent years it seems that a few authors have been looking for a kind of third way of doing self-help: a way that involves breaking out of this problematic binary. What I have called anti-self-help self-help starts from a criticism of the assumptions of the self-help movement in general. It asks questions about whether it is actually good to strive for the things that self-help suggests that we strive for: happiness, wealth, success, a romantic relationship, etc. Are these good things to have and, even if they are, is striving for them the best way of going about it? Anti-self-help self-help locates any problems that we have in the wider society that surrounds us, the messages we receive from it, and how we relate to these, rather than seeing us as isolated individuals responsible for everything that happens to us. But, at the same time, it sees us as actively engaged with this wider world and able to engage with it in different ways, rather than as powerless. 

A great example of such anti-self-help self-help is the writing of Oliver Burkeman. Like his Guardian newspaper column, This Column Will Change Your Life, his first book Help! presented an analysis of existing self-help books, attempting to pull out actually useful suggestions from the overwhelming mass of contradictory messages that he found. His second book, The Antidote, builds on the criticisms of self-help that he came to when writing Help! and suggests a radically different approach. 

Positive thinking, argues Burkeman, actually makes us suffer. The empowerment self-help movement has got it completely wrong. What he offers in its place refuses the disempowering position of victimisation self-help, but instead embraces the potentials of what he calls a 'negative path'. This draws on a cluster of approaches taken from philosophies from Buddhism to Eckhart Tolle, the Stoics of Ancient Greece to the Mexican Day of the Dead. What these have in common is that they all do the opposite of 'positive thinking', instead turning to face the difficult stuff of life.

Thus Burkeman argues for the benefits of meditating on the inevitable fact of our own mortality. He critically evaluates the way in which we tend to react to 'bad things' in our day-to-day life, and considers alternatives where we recognise our own role in categorising what is good and bad and trying to get all of the former and none of the latter. He explores meditation and building the capacity to be with difficult feelings, turning towards the things that scare us rather than away from them. He considers the power of just getting on with tasks we are avoiding, rather than assuming that we have to 'find our passion' or 'get motivated' before we can do anything. He explores the value in considering the worst that could happen (and whether what is happening is 'just bad' or 'absolutely terrible') as well as asking yourself whether you have a problem right now, in the present moment. He questions who this self is that we are trying to improve through self-help, and wonders whether it might be more useful to reflect on whether such a thing really exists in any meaningful sense, rather than assuming that it does and engaging in a futile quest to make it better.

I loved The Antidote because it resonates so well with the answers (and – perhaps more usefully – questions) that I have come to through my own journey through the ways in which psychology, psychotherapy, philosophy, and sociology have understood human suffering and what can be done about it. Like my work, the book is particularly rooted in Buddhist philosophy and it is very nice to see that engaged with so thoughtfully, rather than just being offered as another set of techniques to make people happier.

The anti-self-help self-help manifesto
Where to from here? I would like to see many more anti-self-help self-help books which start from a critical stance towards the self-help industry and offer something more valuable to people who want to think about how they are living and how they might do it differently. Such work would, I think, share some of the following things in common:

•A critical stance towards conventional self-help

•A critical stance towards normative taken-for-granted ideas about what makes a good person and a successful life, and whether happiness and wealth are the best things to be striving for

•An informed understanding of the problems with telling people that they are flawed in some way and need to change by striving after something different

•Drawing on research evidence from psychology and sociology, as well as philosophical understandings from across the globe (not just the 'west'), in order to suggest what might be helpful to people

•Locating people's problems in the inter-relation between them and the world around them rather than entirely internally or entirely external – regarding people as biopsychosocial beings rather than focusing on one of those aspects (bio, psycho, social) to the exclusion of the others

•Suggesting ways forward which involve engaging with the world differently, and recognising how difficult this can be and arguing for wider social change, rather than putting all responsibility on the individual

•An ethical commitment to putting something different 'out there' even though the publishing industry conservatively continues to try to publish the same kinds of messages as before

I'd be very interested to hear from others who are trying to write blogs, books, articles, etc. in this vein, and to continue to discuss whether a 'negative path' or 'anti-self-help' does present a valuable third way.

Find out more
There is more about self-help with useful links to other work here. 

Meg Barker 7 March 2013
Meg Barker is an Open University lecturer teaching mainly on counselling modules, and is also a therapist specialising in relationships. Find her other blogs here. 

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

The shape of your face may be key to political success. Dick Skellington reports.

Research at the University of St Andrews has revealed that long faces, especially in male politicians, are a key to political success and electoral survival. It claims we tend to trust people with longer faces, particularly in troubled times, and that this attribute can be traced to our ancestors' tendency to trust dominant males for leadership. 

I wonder if this thought will cross the mind of 115 Catholic Cardinals when they sit in the Vatican conclave soon to elect a new Pope, now the last of them has arrived from Vietnam to choose a successor to Benedict XVI. Will he be tall and of thin visage?

In US politics the taller Presidential candidate tends to win elections, as Lincoln did. The latest research suggests that it is not just height that is important, but length of visage.

Volunteers were asked to alter photos of the faces of men and women to resemble those they would choose to lead their country in time of peace, and of war. When choosing peacetime leaders they increased the length of face by 6 per cent in men's faces, but stayed the same for women. However, for wartime leaders the face length was increased significantly, by 34.9 per cent in women, and by 45.8 per cent in men. 

Of course there are exceptions to the rule. The former French President Nicolas Sarkozy was very short and had a long face, while Tony Blair was quite tall at six feet but had a small face, making him look rather diminutive. Even in families you can find evidence to support both sides of the argument. Witness the facial differences and heights of Presidents George Bush senior and George Walker Bush.  

If leadership choices are influenced by facial cues and physiognomy that have no relevance to political experience, then it might explain why Prime Minister David Cameron has higher ratings than Labour's Ed Miliband. But it would not explain the popularity of round-faced Alex Salmond north of the border. 

Faces of leaders have long captivated the imagination. The 19th century American sociologist Charles Cooley once observed: 'a strange and somewhat impassive physiognomy is often, perhaps, an advantage to an orator, or leader of any sort, because it helps to fix the eye and fascinate the mind'.  

Other research tends to support the St Andrews study. In men success and leadership are equated to a rectangular face with angular features, focused eyes, a thin straight mouth and healthy skin. Women thought to be good leaders have an oval face with wide, alert eyes, well-defined features and arched eyebrows. 

But while those at St Andrews would argue that longer faces are more likely to make a male leader, other researchers, for example those in Helsinki, have adopted a different approach. They contend that 'baby facedness' does not result in electoral success. So, for those of you out there who have an aversion to a second term of David Cameron, you may now have the evidence to explain why. 

Dick Skellington 11 March 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Gary Edwards

Double standards are everywhere in economic policy – welcome to the world of Bubblethink. Alan Shipman explains

To illustrate: Britain’s bankers must be spared any cap on bonuses, otherwise they will not work hard enough, and the economic mess they created in 2008 will take longer to fix (see this). But Britain’s low-income households must have a cap imposed on their benefits, otherwise they will not work hard enough, and the economic downturn inflicted on them in 2008 will take longer to escape (see this). So if you’re already getting a very good salary, your best incentive is the promise of additional pay, which must be allowed to rise to more than twice that salary. Whereas if you’re struggling along on the minimum, your best incentive is to receive even less (and give up the spare room if you want to avoid a further reduction). It’s a variation in the age-old principle that tax cuts for the rich will boost the economy by encouraging effort and enterprise – while pay and benefit cuts for the poor will achieve exactly the same.

This logic troubles an increasing number of observers, notably the new Archbishop of Canterbury. But as well as pre-dating Orwell’s dystopia, it puts in a Biblical appearance – usually characterised as the Matthew Effect, but actually put most succinctly by Mark (4:25): “For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.”

Another example: the growth of payday lending is a bad thing, because it leads to some of the most deprived households paying the highest interest rates on runaway debts. But the growth of employment to record levels since 2010 is a good thing, signalling the success of present economic strategy even though national output has fallen in the meantime. Payday lending has grown because more households are working for incomes that don’t cover their basic costs – and that’s because a rise in employment against a backdrop of falling output can only mean a fall in productivity and pay. But politicians, reassured by their economic advisers, don’t notice the contradiction.

Huhne and Pryce: a heroic experiment
Economists’ messages may be enduring, but their strategies change with the times. Once criticised for armchair theorising, they now come under fire for armchair empiricism – making ‘investigations’ entirely by crunching data on computers, and never actually stepping into the world they seek to characterise and control. To refute this, two prominent economists recently ditched their heroic assumptions to stage a heroic experiment, testing the predictions of a famous theorem at great personal cost.

The Prisoners’ Dilemma depicts two criminal suspects who, arrested and separately questioned, have the option of confessing to a crime or pleading innocence and blaming their partner. If both co-operate (confess), both can walk free. But if one co-operates (confesses) and the other contests the charge, the co-operator is severely punished while the contestor gets off lightly. The inevitable outcome – theoretically – is that both deny the charge, and both get heavy sentences.

Economists claim an insight into strategy games that ordinary people lack. So when two of the country’s best-known played this game, they inevitably chose strategies different from those that get the worst-case outcome. One of them confessed on the day of the trial, leaving other to contest the charge alone. The result: both got an identical sentence (see Chris Huhne and Vicky Pryce both jailed for eight months), judged alarmingly heavy by their economist friends – who must also be bemoaning the judge’s refusal to read the game-theory account of the Dilemma.

Bubblethink came alive in the immediate aftermath of the sentencing, as the estranged defendants’ allies condemned the injustice and waste involved in jailing a former cabinet minister and former head of the Government Economic Service. Some have even suggested that big fines and community service would have been a more appropriate punishment. The arguments are eloquently put. But they are notably are not extended to many others, comparably convicted of perverting the course of justice, for whom prison is judged a necessary corrective, and attempts to buy their way out of it would be viewed as outrageous.

Dramatic comebacks from this case are not ruled out, despite the frustrated game-play. Vicky Pryce remains one of Europe’s leading economists, whose work on improving the quality of government economic data will likely outweigh any damage to the justice system in the longer term. And Chris Huhne is no stranger to improbable role reversals, having previously moved from writing leaders for the Guardian to running a Credit Rating Agency.

As he switches from HMG to HMP, one of Huhne’s own contributions to Bubblethink is worth remembering. As Energy Secretary, he sat in a cabinet that roundly condemned the ‘casino capitalism’ that nearly destroyed the public finances. But he also devised a financing plan for Britain’s new nuclear power stations based on ‘Contracts for Difference’ a highly popular gambling device among that casino’s professional players, because it lets them take profitable bets on the movement of asset prices without having to buy and sell the asset. These Contracts are supposed to offer private power companies enough guaranteed income to build the new plants privately, without letting them profit from energy shortages and price spikes at public expense.

Two years on, the firms are still arguing over the terms, and Britain’s energy regulator has warned of possible power cuts from 2015 because of coal-fired closures and delays in installing the new reactors. A technique borrowed from the City that almost switched the economy off is now in danger of turning the whole country’s lights off. Economists are agreed that incentives matter, but still struggling to design the right ones.
Alan Shipman 13 March 2013

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

Now research undertaken at the University of Montreal shatters the stereotype. Jocelyn Faubert has worked with Manchester United squads over the last three years. She found that they interpreted visual scenes quickly and made better decisions about them than amateur athletes and non-athletes. She found they had a greater ability to, in her words, 'hyper focus', a facility which enhanced their learning abilities. The research compared 51 Premier League footballers, 21 Canadian ice hockey players, and France's top 14 club rugby players with 173 elite athletes and remarkably, a group of 33 PhD students from the University of Montreal.

Jocelyn concluded that the footballer's brain adapts to information much more quickly, and insight is matched by increased speed of thought. The research backs up a Swedish study which correlated high scoring footballers with high scores in cognitive tests (see this story).

So let's rejoice in the roll-call of bright footballers. Here are some for starters. The late Brazilian world cup winner Socrates was a doctor of medicine and philosophy, while the former Ipswich, Watford, QPR and MK Dons defender Steve Palmer has a degree from Cambridge.  He is believed to be the only footballer of the modern era to study at Cambridge. Other bright sparks include Steve Heighway (Economics), Slaven Bilic (Law), Shaka Hislop (Mechanical Engineering), Iain Dowie (Masters in Engineering), Steve Coppell (Economics), Arsène Wenger (Economics), Gudni Bergsson (Law) and Oliver Bierhoff (Economics). One of the players of the 2013 Premiership season, Chelsea's Juan Mata, is studying for two degrees at the same time!

And The Open University? Our most recent graduate was Richard Hinds. The Sheffield Wednesday footballer achieved a first class honours degree in Law from the OU. Glen Johnson, the current English right back, will soon complete an OU Mathematics degree. Former Manchester United footballer, and the club's assistant academy director Tony Whelan was awarded a Bachelors degree in Humanities from the OU, and has since gone on to complete a Masters degree. Former footballer and Scotland manager Craig Brown has a BA Open. So let's put an end to those stereotypes. 
Dick Skellington 15 March 2013 

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Gary Edwards

George Osborne is unusually reluctant to show how a smaller Budget is financing tax cuts, because new evidence suggests that won’t promote economic recovery, argues Alan Shipman.

When the economy was growing, Chancellors measured their success by how many hidden tax rises they could smuggle into a Budget, and how many days it took the personal-finance experts to unearth them. Times have changed. So when George Osborne delivered his Budget today, it is the hidden tax reductions that his critics are looking for.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Gary Edwards

Government's new initiative on community sentencing for women is long overdue but should be welcomed, writes Dick Skellington.

The Prison Reform Trust has previously called on government to support community solutions to women's offending. They make the cogent point that improving the system for women should also benefit men. 

Government's own research concludes that community sentences are more effective than short prison terms. Community women's centres provide a safe place for women to address underlying problems while maintaining care of their children. 

We are not imprisoning women today on the scale of our forefathers, far from it. In 1900, women made up 17.1% of the total prisoner population in England and Wales. By 2011, the proportion of women prisoners had fallen to 5.9 per cent. Today too, women receive reduced sentences for perpetuating similar crimes to males. 

But between 2000 and 2011 the female prison population in England and Wales rose by 27%. In the 12 months up to June 2011, 80% of women entering custody under sentence had committed a non-violent offence, compared with 70% of men entering custody.Theft and handling stolen goods were by far the most common offences, accounting for 34% of sentenced receptions.  

Over 10,000 women were imprisoned in England and Wales in 2011, more than double the number 15 years ago. Most of the rise in the female prison population can be explained by a significant increase in the severity of sentences.  In 1996, 10% of women convicted of an indictable offence were sent to prison, in 2010 14% were (see these statistics).These changes reflect a shifting national context towards increased sentencing, despite falling levels of most crime.  

Locking women up in prison does not appear to be a very cost-effective way of dealing with crime. In 2010, a Prison Reform Trust study found that non-custodial,  intensive intervention would offer significant cost savings and cut crime.

Look for a moment at the shocking background of women prisoners in today’s Britain. One in four women in prison have spent part of their childhood in local authority care. Nearly 40% of women in prison left school before the age of 16 years, almost one in 10 were aged 13 or younger when they left school. Almost a third of women prisoners were permanently excluded from school – what a comment on the educational system. A third of women prisoners have had a previous psychiatric admission, 51% report they have endured a mental illness, 37% say they have attempted suicide, and 10% were sleeping rough at the time of their arrest. According to the Ministry of Justice, women are less able (due for example to mental health issues) to conform to prison rules, while significant proportions were addicted to drugs and/or alcohol. Over half of women in prison report having experienced domestic violence and one-third sexual abuse. These are disturbing trends.

One of the pressing issues is the treatment of mothers in prison. It is estimated that over 4 out of 10 young women in prison in England and Wales are mothers, and that thousands of children have been separated from their mothers by imprisonment. 

In 2010, 17,240 children were separated. The location of imprisoned mothers is sometimes so remote that maintaining contact with children is rendered problematic. This is made even more difficult by the small number of women-only prisons. In 2009, according to Women in Prison, 753 women were held in English and Welsh prisons over 100 miles from home. Only one half of women with children had received a visit since sentencing. For many women serving a prison sentence for the first time, it was the first time they had been separated from their children for any significant length of time, and this separation can prove final. As well as the risk of losing their children, nearly a third of women prisoners lose their homes and possessions while in prison. Government statistics show that re-offending among women prisoners is higher among mothers who have had no contact with their children during their sentence. Is it any wonder that new Government figures show that the self-harm rate for women prisoners is over ten times higher than for men?

We must not overlook too another dark side of women's prison experience – the treatment they sometimes suffer. In a report last year into New Hall prison, Wakefield, prison inspectors criticised the "unnecessary and unacceptable" practice of cutting off women's clothes when they were strip-searched. An outrageous practice in any penal system which claims to rehabilitate.  Responses to women whose behaviour caused concern were also "excessively punitive", the investigation concluded. Some of the most damaged women at the 350-inmate prison were placed on the segregation unit for "good order and discipline" but efforts to address the causes of their distress and manage their behaviour constructively were inadequate, the report said (see this article). 

And what happens to women prisoners on release? Recidivism is high: 51% of women leaving prison are re-convicted within one year – for those serving sentences of less than 12 months this increases to 62%. For those women who have served more than 10 previous custodial sentences the re-offending rate rises to 88%. Most experts predict that the onset of austerity Britain will mean more women will be imprisoned.  

There are encouraging signs that overuse of remand for women is starting to be reversed after remaining high over the past decade. There were 689 women on remand on 31 March 2012, 12% fewer than the same time in 2011. The introduction of the Legal Aid, Sentencing and Punishment of Offenders Act (2012) provides further opportunities to reduce the women’s remand population. 

Another positive sign is the Government’s commitment to establish a network of liaison and diversion services for vulnerable offenders by 2014, backed by Department of Health investment of £50 million towards its development and evaluation. This initiative is to be welcomed and should prove of particular benefit to women. Establishing liaison services at police stations and courts was a key recommendation of Lord Bradley’s review of mental health and learning disabilities in the justice system and should ensure that people receive the treatment that they need outside of the criminal justice system. 

The Prison Reform Trust has launched a new three-year programme designed to reduce women’s imprisonment rates. The strategy includes: mapping arrest and custody patterns across the UK; targeting high custody areas; promoting alternatives to custody and examples of good and interesting practice; and raising awareness of the complex factors affecting women’s offending and supporting the development of more effective responses to it.

Looking at the profile of women prisoners and the fact that significant numbers are mothers with young children, it seems a no-brainer that we should be exploring alternatives to incarceration. Whilst there are women in prison who have committed serious and violent crime, the majority have not, and are there for very short periods.

So this is a good time for the authorities to begin to further explore new community options preventing women, especially mothers, from entering prison, and thus helping affected families to survive. The Justice Minister's statement is to be applauded.

It will be some time before we can assess the effectiveness of the Government's new initiative. But the plan to introduce robust community sentences may be the first step on a very long road to more humane treatment of female offenders.
Dick Skellington 26 March 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Gary Edwards

With no change to Plan A in sight, the Coalition is condemning more UK children to poverty and injustice, writes Dick Skellington.

The bishops predicted that if action were not taken immediately a further 200,000 British children could be pushed into poverty. "Children and families are already being hit hard by cuts to support, including those to tax credits, maternity benefits and help with housing costs," they wrote (see this report). This open letter followed two extremely disturbing reports.

First, the End Child Poverty campaign reported that over 20 per cent of children in Britain were living below the poverty level. The findings were based on research carried out the previous year, before austerity measures impacted and before the benefit caps introduced this April.  

The report painted a picture of a divided Britain, in which the gap between rich and poor was increasing every  day. The situation was especially acute within our urban centres. In one Manchester constituency almost one half of all the children live in poverty.  ECP found that 47% of children in Manchester Central lived in households earning less than 60% of median income (see BBC report).

Constituencies with the highest levels of child poverty included Belfast West, Glasgow North East, Birmingham Ladywood, Bethnal Green and Bow, Liverpool, Poplar and Limehouse, Middlesborough, Newcastle Upon Tyne Central, and Blackley and Broughton. In these parliamentary seats between 38 and 47 per cent of children lived below the poverty level in 2012. Among local authorities, now facing increasing levels of financial hardship and cutbacks, Tower Hamlets, Manchester, Middlesborough, Derry, Belfast, and Islington experienced the highest levels of child poverty, where between 4 and 5 out of 10 children lived below the median 60 per cent level. 

This map of Britain shows these huge variations in child poverty. Click on a constituency to explore the data, and use the drop down menu to see which party controls that parliamentary seat. 

The figures suggest that in some 69 council wards (areas which are much smaller in size and population than parliamentary constituencies) more than half of children are in poverty. The findings coincide with the publication of disturbing child mortality data which show the all-cause mortality rate for children aged between 0 and 14 years has moved from the average to among the worst in Europe (see this report).
 
Enver Soloman, chairman of the End Child Poverty campaign, a coalition of over 100 leading UK charities, explained the study found "gross levels of inequality" but significant regional differences. For example while the study revealed a 38 per cent poverty level among children living in Manchester, the figure was only 7 per cent in nearby Ribble Valley. In London the figure for Bethnal Green and Bow was 42% but only 6% in Wimbledon. 

Mr Soloman urged the Government and local authorities to prioritise low income families in the decisions they make about welfare spending. Alas for these families, the benefit changes planned by the Department of Work and Pensions will not do this, despite continual statements from the Government stating they remain committed 'to eradicating child poverty'.

The Coalition policies are making child poverty worse. A National Children's Bureau (NCB) report highlighted official estimates that more than a quarter of UK children (27%) – or more than three million – lived in poverty in 2012 (see http://www.bbc.co.uk/news/education-21462601). This compares unfavourably with comparative data from the European Union where the average level of child poverty is 20.5 per cent. The latest figures reveal that Spain has the highest level of child poverty at 27.2 per cent, followed by Italy at 24.7 per cent, Greece at 23 per cent, Portugal at 20.5 per cent and Ireland at 19.7 per cent. At the current rate Britain will soon have higher child poverty levels than bankrupt Spain.

So it came as no surprise that in March, a shocking new survey by the Trades Union Congress (TUC), predicted that over one half of all British children under 18 could be living below the breadline in 2015. 

In the year when Britain will be holding its next General Election, (unless events conspire to produce an earlier date) almost 7.1 million of the nation's 13 million young people could be living in homes with incomes lower than the minimum necessary for a decent standard of living, because of welfare cuts, tax rises and wage freezes. The TUC found that only the poorest 10 per cent of households would be better off by 2015 – and then only by 57p a week. A middle-income household would lose up to £1,200 a year, a 6.6 per cent cut in income.

The TUC study reported a 690,000 increase in the number of under 18s living in households below minimum income standards since 2010. A further 460,000 children were estimated to be pushed below that level by cuts to tax credits. The TUC estimate that only 20,000 children would be raised above the minimum income level by the introduction of the new universal credit system scheduled to be introduced this October.

The findings of these recent studies into child poverty are reflected in the huge increase in the reliance of British people on emergency food banks. Tens of thousands of British people are expected to become reliant on food banks in the next two years.  A surge is expected after April 1 when the changes to welfare become effective. But policymakers show little sign of understanding the trend. The Department of Work and Pensions played down the explosion in dependency – from 29,000 in 2009-10 to 300,000 in 20132-13 – by citing improved marketing techniques by food bank trusts for the increase. But at least in February the Government announced a research study into trying to understand why people are increasingly relying on food banks. What does seem certain is that fiscal austerity measures are part of the explanation (see this article).

As 13,000 British millionaires face the pleasant prospect of a £100,000 tax break during 2013, the plight of our country's poorer children merits Government action. But if the bishops open letter has no impact, then this post is unlikely to.
 
On the eve of the introduction of the new measures four of our leading churches condemned them because they targeted the poor and were unjust. The new Archbishop and our churches are set on a collision course with Government, as indeed are most of our leading charities, and I believe a majority of the British people. This is not a reform portfolio enforced by austerity, but one shrouded in the dark forces of a political attack on the weak and vulnerable.
Dick Skellington 5 April 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

As admirers and critics assess Margaret Thatcher's impact Alan Shipman bemoans the Iron Lady's failure to invest in the benefits of North Sea oil.

Strikes, three-day weeks and phone-box queues were undoubtedly a feature of the decade before ‘Thatcherism’ that had largely vanished by the end of her 11-year rule. But something else which lurked in the background in 1979 had also largely disappeared by 1990 – the UK’s North Sea oil surplus. And the lack of a legacy from it will permanently taint whatever political legacy the Iron Lady is ultimately ascribed. 

The UK was, for the decade from 1980, the only democratic industrial country to be self-sufficient in oil and gas. The UK remained a democracy - despite the notorious tendency for oil-rich states to slide into authoritarianism as their leaders (from Indonesia’s Suharto and Libya’s Gaddafi to Russia’s Putin and Venezuela’s Chavez) bribed their public and bought off their opponents with revenue that needn’t come from tax.  

But oil enabled Thatcher to govern with the autocratic streak that eventually caused her downfall. And the way her administration used it has left the UK permanently damaged, unable to achieve the economic modernisation or political maturity that would have been possible if she had spent it more wisely. 

North Sea production, the product of sustained investment by previous Conservative and Labour governments generated (in today’s terms) £150-160bn in revenue for the Thatcher administrations – enough to pay for all the UK’s industry, employment and agriculture support for  ten years at today’s rates (see the Budget 2013 summary).  

Uniquely, the UK under Thatcher did not channel any of its eventual North Sea windfall into a sovereign wealth fund. That’s something that even the most egregious Middle Eastern dictators were willing to do. Thatcher’s failure to create anything comparable had devastating consequences. Chief among them:

• Massive de-industrialisation as the sudden inflow of oil revenue pushed the pound to record levels, attracting cheap imports and making it impossible to sell many exports. This crushing blow (which destroyed up to 25% of Britain’s industrial capacity in 1979-82) drove Sir Michael Edwardes – then trying to rebuild what remained of Britain’s car industry – to demand that a government incapable of handling the oil windfall should “leave the bloody stuff in the ground". There were less dramatic ways of avoiding the exchange-rate overvaluation, but Thatcher’s chancellors did not consider them. The gaping hole in the supply side led to an equally destructive burst of inflation when ambitious tax- and interest-rate cuts  revived aggregate demand after 1981. In output terms, UK industry has never recovered from the damage wrought.

• Deficient tax capacity: Instead of investing it, Thatcher used the oil surplus to implement a succession of income tax cuts which (along with the 1982 Falklands conflict) ensured her re-election in 1983 and 1987. Her governments repeatedly claimed that these cuts were ‘paid for’ with public spending reductions. But the deep recessions with which the 1980s started and ended meant that public spending did not significantly fall, despite efforts to shrink the Welfare State. Increases in VAT and other indirect taxes offset some of the revenue loss, while  poverty and inequality grew substantially worse as regressive taxes replaced a progressive one. The rest of the income tax reduction was funded by North Sea revenues. When these tailed off due to depletion of the main fields, the UK was left with a permanent deficiency in tax revenue, which undermining public investment – leaving its infrastructures permanently weaker than other EU countries’ and ruling-out any replication of their more generous social policies. The Major and Blair administrations that followed tried to mask the tax-capacity gap by inflating the financial sector, but this strategy fell apart in 2008.

• Financial deregulation: North Sea oil ensured an inflow of dollars that enabled the UK to accumulate capital despite a rising trade deficit. That capital could have been invested in new industrial capacity. Instead the Thatcher governments chose to remove UK capital controls and deregulate the City of London, enabling any oil money that wasn’t immediately consumed to drive an asset-price bubble (which burst in 1987) and a housing-market bubble (which burst in 1991). The roots of the crisis that began in 2008 (and is far from over) were planted in the deregulation launched by Thatcher in 1979 and Reagan in 1980 (see this Economist article). To blame it on their successors is to show a shortness of hindsight comparable to the shortness of foresight for which the Thatcher years may in future be bemoaned.

Margaret Thatcher achieved much. But her greatest achievement was to be in office for the decade that the UK’s chronic external and fiscal imbalances were relieved by North Sea oil. To have fuelled a consumption boom with it and leave subsequent generations with no lasting legacy except an irreparable loss of production and tax capacity is an indelible graffito on the monument her worldwide supporters will doubtless seek to erect. 
Alan Shipman 9 April 2013 

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

Edward Lawrenson reviews The Spirit of '45, the film which has triggered a debate nationally about the kind of society we have become and the kind of society we want to be.

Ken Loach has just directed a documentary called The Spirit of '45. It is a stirring portrait of the founding of the welfare state by the post-war Labour government. It's thanks to the film that I have a credible version of the life I'd be leading if I were the age I am now back in 1945. 

Feeding my details into the film's accompanying website, I learned that I'd probably live in a house without a bath or a shower, a visit to the doctor would have cost me about seven per cent of my weekly wage, and that I only had 30 years to live. 

It's not the cheeriest news, but it did bring home sharply the everyday hardships people had to endure before such things as the National Health Service. Funded by the British Film Institute initiative to support forms of digital storytelling, the online arm of The Spirit of '45 is a provocative exploration of many of the concerns of the film. You can watch interviews from the film as well as those that did not make the final cut, and there's quaint footage, as well as a thoughtful timeline of the past 60 years of British social history (see Timeline Health).

Still, it's the film where my and Loach's priorities lie (speaking at a screening I attended a few weeks back, Loach professed to be unfamiliar with the internet). What Loach does best is make films, and The Spirit of '45 reveals the director in commanding form, telling of the massive programme of nationalisation by the incoming Labour government of 1945. It's an expert assemblage of archive material revealing just how bad life was for ordinary people immediately after the war, incorporating interviews with men and women who were involved in the first nationalised industries.

'After the war', writes Ken Loach, 'people had a sense that they had won the war together as a collective, and that brought a sense of unity in the country. They remembered the '30s, which was a time of great poverty and depression – between two and three million people unemployed, rather like now – and people didn't want to go back to those days. They wanted to use the same methods they had used to win the war to win the peace. So that was the spirit, really, that they would build a better world and do it together.'

The emotional impact of this is extraordinary. Among many testimonies is the childhood memory of a man called Ray, now in his eighties, of his mother dying from a preventable ailment the family doctor lacked the resources to cure. What emerges is a heartfelt tribute to a generation of activists who ensured an end to needless deaths, such as that of Ray's mum. 

Of course, there's a loud and resolute political edge to all of this. If the first half of the film, which charts the heroic work of building the welfare state, inspires admiration, then the second part of it, devoted to the steady dismantling of nationalised industries, provokes anger. When archive footage of Margaret Thatcher flashed up on-screen, I could feel the audience greet the image with a collective and involuntary hiss.

It is unashamedly partisan stuff, and the film does glide over uncomfortable realities to advance its argument. A rosy glow, for instance, settles over the references to post-war town planning that ignores the ugly effects of so much centralised architecture.

Speaking on why he made the film, Loach concluded: 'The narrative is particularly apposite because we have two and a half million people unemployed, a million of them are young people. We are told there is no alternative, but if this is the only society we can imagine building it is a poor effort.' (see the interview). 

The blurb of film states it is 'an impassioned documentary about how the spirit of unity which buoyed Britain during the war years carried through to create a vision of a fairer, united society'.

If it is at a cinema near you, do go and see it. For local listings see here. 
Edward Lawrenson 12 April 2013

Edward Lawrenson's review originally appeared in The Big Issue, No 1043, March 18-24, 2013. It is reprinted here with thanks.

Find out more

Watch the Spirit of '45 trailer.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

Margaret Thatcher’s greatness is continually affirmed by those competing to be hailed as her political successors. Alan Shipman believes she leaves some enduring lessons which today’s parties ignore at their peril. He examines them here.

Pragmatic privatisation
Although the sale of state-owned assets is now viewed as a cornerstone of ‘Thatcherism’, it did not feature prominently in the 1979 Conservative manifesto or the Iron Lady’s immediate action plan. Privatisation gained in importance when the government was let down by the ‘Laffer Curve'– the economic theory that income tax cuts would pay for themselves through burgeoning private enterprise creating more tax revenue – and needed more funds to avoid a rise in public borrowing. Sales under Thatcher focused on state-owned manufacturers and utilities that were saleable because they could clearly work in the private sector. It was only her successors who pushed the privatisation agenda into areas where there was no viable economic model for it, beginning with the still-problematic rail sale of 1993, and extending into social services that she left well alone.  

Education
Growing up before the extension of free secondary education to all (under the 1944 Education Act) and creation of the National Health Service in 1947, Lady Thatcher did not seek fundamental changes in either. When social mobility was found to be limited despite the abolition of fees for selective ‘grammar schools’ like the one she attended, Mrs T was happy to scrap them in favour of comprehensives – more vigorously than any education secretary before or since. The renewed differentiation of secondary education under subsequent  Conservative, Labour  and Coalition governments uncritically reverses her stance. 

Healthcare
While critics accuse her of sowing the seeds for NHS privatisation, Thatcher sought a ‘quasi-market’ within the state-run service because she recognised the inadvisability of letting real markets loose on it. Paradoxically, the huge interest that private profitmaking companies now express in taking over hospitals and running schools was the reason why Thatcher saw no need to privatise them, and declared the NHS ‘safe with us'. In opposition, she was heavily influenced by the argument that Britain had ‘too few producers’, partly because a public sector offering ‘non-marketed services’ had grown at the expense of a private sector that could sell them for profit. But whereas today’s government views the scope for private profit as a reason for bringing the private sector into healthcare, Thatcher  recognised that it made this unnecessary. It demonstrates that the NHS is not, after all, ‘unproductive’, and that an efficient state-run service promotes social objectives without doing economic harm.

Economic policy
When Thatcher took office, a decade of high inflation and falling output and employment (so-called 'stagflation') had made Milton Friedman the world’s most prominent and influential economist, with his own prime-time television series, and a string of academic honours capped by a Nobel prize. By the time she left it, Friedman was a much-diminished and figure, sidelined even by his own Chicago School colleagues. The reason: Thatcher applied Friedman’s main idea, which was that controlling the growth of the money supply would eliminate inflation without causing any loss of output, if combined with labour-market reform to reduce trade-union power. Monetary restraint led instead to a deep recession and surge of inflation in 1979-81, which was only escaped when Thatcher’s second administration switched to interest rates for inflation control. Friedman’s idea that money-supply growth was cause and not effect of credit growth, and affected only prices (not real output), was disputed at the time; and the general switch to inflation-targeting through interest rates set by independent central banks shows a general rejection of Friedman’s monetarist reasoning. While Friedman spoke warmly of Thatcher during and after her prime ministership, she would not necessarily have returned the compliment – her real Chicago School hero being Friedrich Hayek, whose social philosophy and monetary theories were fundamentally opposed to Friedman’s. 

The Holy Family
The late, great Canadian prime minister Pierre Trudeau was probably thinking of his own eventful private life, as well as his Liberal principles, when he pronounced that “the state has no place in the nation’s bedrooms". Lady Thatcher, while

Freedom of Speech
The right to say and do what one likes, however unpopular or apparently offensive, was at the heart of Lady Thatcher’s social policy, from the moment she became Conservative leader in the mid-1970s. She would have been horrified by the censoring of an innocent song from a 1930s musical on grounds of taste and decency, just because her opponents were rushing out to buy it. 

Because she was prematurely ousted in 1990, and resisted the temptation to lecture her successors, we can only speculate on how Lady Thatcher would have tackled today’s problems.  Her record suggests there has been a lot of false extrapolation by those who claim to have continued her work. 
Alan Shipman 16 April 2013

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University. 

Cartoon by Catherine Pain

The Government's work capability processes are unfairly discriminating against, and even killing, the vulnerable, reveals Dick Skellington.

The 'misery and hardship' is a direct quotation is from a report released by the Government's Public Accounts Committee in February, which criticised the Department of Work and Pensions (DWP) for decision-making based on inadequate and ill-judged Atos assessments. 

The report concluded: "The Work Capability Assessment process is designed to support a fair and objective decision about whether a claimant is fit for work, but in far too many cases the department is getting these decisions wrong at considerable cost to both the taxpayer and the claimant."

During the London Paralympics, Atos came in for significant criticism, and this latest riposte from MPs is hardly likely to help the credibility of Atos or the DWP. 

The main objection lies with Atos' assessments which invite people with incurable conditions to prove they are not able to work, despite medical evidence that they are not, causing them much anxiety and even risking suicidal responses. The Atos tests are damaging public confidence in the treatment of people with a disability.

The plight of such vulnerable people came to mind when I read about a Thalidomide victim and mother of four, Martine White, whose condition means she will soon face spinal surgery. Atos assessed Martine in a category which meant she was capable of 'work related activity', which requires her to attend a work-related interview once a month in order to continue receiving benefits. Martine's son had recently given up work to help care for his mother, who also has a full-time carer (see this story).

Martine is not alone. Evidence exists which suggests that Atos assessments, as well as causing distress and hardship, can cost lives. Some Atos assessed claimants died or committed suicide shortly after being told they were fit for work.  

In January, the MP Michael Meacher told the House of Commons that there had been over 10,600 deaths during Atos processing. The disturbing evidence presented to the House prompted a heated debate on the credibility of Atos procedures, but resulted in no prospect of reform.

Calum's List is a memorial page to those who have died, which seeks to persuade the Government and Parliament to improve assessments. So far there are 30 names on the site. Victims of Atos assessments have also created their own website which further catalogues the dismaying chronicle of incompetence and insensitive treatment. 

The British Medical Association (BMA) recently condemned Atos systems. The work capability assessments harm patients, said the BMA, and should be scrapped. People with terminal cancer, it revealed, have been assessed as fit to work, as well as people with severe mental health issues, and those with complex illness concerns. 

The Chairman of the BMA's GPs Committee urged to Government to intervene to reform the flawed Atos system, saying 'the government needs to look again at the whole assessment process and replace it with one that is fit for purpose'.  

• New changes to disability benefits are being phased in from 8 April. Disability Living Allowance (DLA) will be replaced by Personal Independence Payments (PIP), a process which will be completed by 2016. This spring PIPs will be introduced gradually for new claimants, starting in northern England. These payments will depend on new face-to-face assessments, administered by Atos, one of two companies to be involved in new claimant assessments. It isn unclear yet whether the culture at Atos so criticised by the BMA has been changed in time for the new wave of assessments. Given their performance so far, it is not surprising charities remain sceptical about the latest change in our welfare system.
• Atos has apologised to long-term sick people for 'fit for work' assessments,  but places responsibility on the Department for Work and Pensions.

Dick Skellington 18 April 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Gary Edwards

The UK economy is suffering from subsidies that extend the problems they’re meant to resolve, writes Alan Shipman. 

Foremost among these: if you tax anything you get less of it, and if you subsidise anything you get more. Expanding something with a hand-out can be good, if it’s something the community hasn’t got enough of. For if there’s already too much, then subsidy just worsens the excess.  So while supporters of welfare benefits see them as tackling poverty and social exclusion, critics say they amplify these evils. If you subsidise the poor, you just get more of them. Any top-up allows people to get by on unproductive jobs, or none at all. So giving them less can make them (as well as their community) better off, by forcing them into new or better work.

Some evidence of success for a strategy based on these principles emerged from the UK unemployment data released on 16 April. Unemployment rose, in part, because more previously “inactive” adults had chosen to seek work. Many of these are women with children who are far from inactive in their homes, but described as such by economists until they find paid employment outside it. The government says that over 800,000 people have abandoned their claims to out-of-work benefits as a result of stricter eligibility tests, and benefit changes that ensure they’re better off in work.   

These changes would have been essential even without the recent financial crisis, according to Work and Pensions Secretary Iain Duncan Smith, because of an inexorable rise in the number of claimants and average size of claims. The state benefits bill has risen from less than £90bn in 1990 to over £150bn in 2012 and this at that year’s prices. It’s jumped to more than 10% of national output in the current recession. (See this article in The Economist).

However, this growth doesn’t automatically confirm the existence of a ‘benefits culture' prompting people into premature retirement. Some of it has been caused by an unexpected rise in longevity, which leaves many claiming benefits to cover depleted pension pots or rising care costs, so that state pensions comprise almost half of state ‘benefit’ spending. Some is due to house price increases since the early 1990s, causing a rise in accommodation costs which governments dare not reverse because any further price fall would make Middle England’s mortgage unrepayable. The biggest growth has been in benefits and tax breaks given to people in work, which now vastly exceed the £5bn paid in jobseeker’s allowance in 2011/12. 

Corporate welfare
The awkwardness of these rising payments to the working poor (in means-tested benefits and tax credits) is that they can equally well be viewed as state aid for employers, enabling them to pay less than a living wage knowing that the state will make up the difference. This has not been prevented by the introduction of a minimum wage alongside tax credits, which governments dispense much more grudgingly than the numerous tax breaks allowing large employers to minimise their tax bills. The dramatic spread of low pay, while enabling employment to rise and jobseeker’s allowance costs to fall despite the absence of overall output growth, is also the reason that welfare costs will continue to rise after the Coalition’s reforms – as they did under previous governments, including Margaret Thatcher’s.

On the day that George Osborne’s assessed Mick Philpott’s child-killing exploits, a parliamentary committee accused three former HBOS executives of destroying the UK’s fourth-largest bank through avarice and incompetence. It was a reminder that when Britain subsidised incompetent bankers, it got more of them. In this case, government-backed deposit insurance and inevitability of state-financed bailout give large banks an implicit annual subsidy of £10bn, according to the Independent Commission on Banking.  And whereas any subsidy to ‘dole queens’ (and kings) is a richer-to-poorer redistribution that goes back into circulation when recipients spend it, the bankers’ subsidy is a poorer-to-richer allocation that disappeared into their punctured balance-sheets, along with £1,200bn of taxpayers’ money to prevent a systemic collapse.

This trio of errant bankers, and Royal Bank of Scotland’s Fred Goodwin, are often used to portray the whole financial sector as reckless and parasitic. Mr Osborne's resort to the same sort of wrecking synecdoche when using the Mick Philpott case to cast aspersions on all benefit recipients, has tended to expand on all political sides. It’s a tendency that has been spreading, from public-sector reformers who cite Jimmy Savile as a sign of endemic decay in the BBC and NHS, to internal combustion enthusiasts who use one flat battery to reject a whole fleet of electric cars. 

While policy changes may be aimed at stopping the irresponsible arrival of new children, they are also targeting a better deal for those already growing up. Mr Osborne’s 2013 Budget assigns £1bn to subsidise childcare for working families, and several billion to help the purchase of new or larger homes.  Amid a predominantly ‘supply side’ recovery strategy, these measures stand out as delivering a demand-side boost.  The first-quarter growth figures, showing the UK still on the brink of a triple-dip recession, highlight the importance of subsidising assets that the community wants more of. The Chancellor will now be hoping that spending more on nursery places and houses will encourage business to offer more of them, and not just inflate the price of those already there.
Alan Shipman 24 April 2013 

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

With news that 42 out of 45 Congress Senators who opposed Obama's modest gun reforms were in the pay of the gun lobby, US journalist David Simon reflects on how deeply corrupted America's democracy has become.

Never mind that the higher house of our bicameral farce is one in which 40% of the American population chooses 60% of the representation; that millions of New Yorker or Texans, say, are represented and served to the same degree as thousands of Montanans. And never mind that the lower house has now been gerrymandered to a point where a majority of American votes are guaranteed to achieve a minority of the representation – ignore, for the sake of argument, the ridiculous and antiquated structural impediments to popular will ever achieving a popular outcome. Don't worry about that mess. Just focus on the money.

Our elections – and therefore our governance – have been purchased. Instead of publicly funded elections, instead of level playing fields, instead of processes in which the power of actual ideas prevails over the size of the bankroll, we have given our democratic birthright over to capital itself. A gun manufacturer's opinion can be thousands of times louder than the voice of any grieving Connecticut parent. And the damage that might come to political careers from individual Americans who wish to have gun laws require as much responsibility of gun owners as, say, motor vehicle laws? It pales when compared to the damage that can come to political careers from a lobbying group backed to hilt by those who will profit directly from the fear and violence in our culture.

Measured against profit and political security, dead children mean nothing. Common sense is easily dispatched. Truth itself is expendable in any circumstance. Only cash still has meaning to those who claim to represent us. And the cash will always be there, more with every election cycle. Unsatisfied with the profits that can be achieved within the context of actual representative government, capital has instead succeeded in buying the remnants of democracy at wholesale prices, so that profit can always be maximized and any other societal need or priority can be ignored.

That corporations are people was not the great effrontery of the US supreme court's evisceration of democratic principle. No, for all of its ugly tenor, that statement has long been true under the law; corporations have long existed as a concept by which business interests could have the legal standing of individuals. Corporations-are-people got the righteous ink, but the venal sin at the heart of Citizens United lies in the appalling equivocation that declares money to be speech.

One man, one vote? And may the best ideas prevail in an open and discerning marketplace of ideas? Please.

When career politicians are obliged to contemplate the cash available for dishonorable votes, or the cash that will be delivered to opponents in the wake of honorable ones, how can any actual idea matter? Every day, there is less of this republic to respect, but in the United States Senate, there is little to nothing that remains. True, popular sentiment can't as easily be undone in a national contest of wide scope in which both parties are equally monied and mobilized, but it isn't the American presidency that's broken. No, it's the legislative branch; cash money has wrecked Congress, and in doing that much, it has paralyzed American governance beyond all practical hope.

Only fools play a rigged game forever, and governments that elevate money and firearms over human life, that treat their people and their will with such indifference – such governments eventually lose not only honor, but credibility. People lose the reason to believe. Eventually, a deep and abiding apathy prevails. Either that, or someone picks up a brick.
David Simon 28 April 2013

David Simon is an American author, journalist, and a writer/producer of television series. Previously, he worked for the Baltimore Sun city desk for 12 years. He is best-known as the creator of the HBO television series The Wire, for which he served as executive producer, head writer, and show runner for its five seasons

This article was first published on David Simon's website The Audacity of Despair and is reproduced here with kind permission.

For previous posts on US gun crime on this blog see here and here.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

The world of odd book titles is wonderful to behold, writes Dick Skellington.

For every good book title there are some really bad choices out there. The author trade magazine, The Bookseller, holds an annual competition for those titles you wished would go away. You have to wonder why some of these titles were chosen, but some of them may end up as classics of the genre. 

Take your pick from the good and the bad. Here are some contenders for the silliest book title of the past two years. 

The Great Singapore Penis Panic and the Future of American Hysteria by Scott D. Mendelson. A Taxonomy of Office Chairs by Jonathan Olivares. Testicle Balls in Cooking and Culture by Blandine Vie. Cooking with Poo by Saiyuud Diwong. The Adult Spanking and Discipline Handbook: a Comprehensive Guide to Corporal Punishment by governess Gemma Forbes. Estonian Sock Patterns All Around the World by Aino Praaki. A Century of Sand Dredging in the Bristol Channel: Volume 2: The Welsh Coast by Peter Gosson. And The Erotic Rissole by Tanveer Ahmed.

Cooking with Poo won the previous year. But what would win the 2012 accolade? You might find some clues in past winners to guide your choice. These include The Big Book of Lesbian Horse Stories, Greek Rural Postmen and Their Cancellation Numbers, Highlights in the History of Concrete, Bombproof Your Horse and from 1992, a vintage year it seems, the unforgettable How to Avoid Huge Ships. But perhaps the greatest clue to the 2012 winner, announced on 22 March, can be found in the title of a previous prestigious winner, The Joy of Chickens.

The winner of this year's Diagram Prize for Oddest Book Title of the Year is Goblinproofing one's chicken coop by Reginald Bakeley. Goblinproofing faced very stiff competition from, among other titles, Was Hitler Ill? by Hans-Joachim Neumann and Henrik Eberle; Lofts of North America by Jerry Gagne; God’s Doodle: The Life and Times of the Penis by Tom Hickman; How Tea Cosies Changed the World by Loani; and How to Sharpen Pencils by David Rees.

Had I been on the panel I think I would have gone for a shortlist of How tea cosies changed the world, How to sharpen pencils, and God's Doodle. But I am sure your choices would be just as inspired. My personal favourite of all the above titles is Estonian Sock Patterns All Around The World. 

However, Goblinproofing, which gives valuable advice on how to protect chickens from fairies and banish the fairies from your home, won convincingly with 38 per cent of the judges' votes. 

"Books such as A Short History of Tractors in Ukrainian, The Guernsey Literary and Potato Peel Pie Society and The Curious Incident of the Dog in the Night-Time all owe a sizeable part of their huge successes to their odd monikers."

Having once written a book which bombed at the bookseller called Minority Group Housing in Bedford, I think he has a point.
Dick Skellington 1 May 2013

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoons by Gary Edwards and Catherine Pain

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain

Despite the mounting pain of ‘austerity’, opposition parties across Europe find it hard to swing voters’ opinion behind alternative, pro-growth policies. That’s mainly because any ‘Plan B’ would require an initial rise in public borrowing. This is difficult to acknowledge: it’s a bit like telling a hitch-hiker you’ll drive them from Birmingham to London, and setting off towards Glasgow. But evading the issue can make the policy look even less credible, as Labour Party leaders discovered just before May’s local elections.

The idea that we can borrow more and end up with less debt is not the Alice-in-Wonderland approach that critics keep claiming. It’s actually the central lesson of modern macroeconomics. So its portrayal as muddled thinking, or strategically self-defeating, is as much a failure of the economics profession as of the political opposition.

‘Spending to save’ is a well-established aspect of present policy. From the Portas Pilots for regenerating Britain’s high streets to the “campaign costing £18,000 which is expected to raise at least £25,000” in the small-print of charity cold callers, it’s normal to incur higher costs now in order to get bigger rewards later. When correctly judged, these changes more than pay for themselves. So no-one thinks it mad to install solar panels or pay more for a hybrid car.

Borrowing to reduce debt is no less logical. It simply recognises that existing debt was incurred on the expectation of a growing economy. The gross domestic product (GDP) has to expand in order for the debt-to-GDP ratio (which determines its sustainability) to decline. If the government borrows more at a time when GDP is stagnant, unemployment high and the costs of borrowing very low, then the further rise in debt will be outpaced by the subsequent growth of GDP. When national output and incomes rise, debt can then be paid back out of the larger tax base. The substantial ‘multiplier effect’ from public deficits in recessionary times is now recognised in almost all economic assessments, including those of top economists at the International Monetary Fund – which therefore also accept the converse, that trying to reduce the deficit in recessionary times will actually deepen the debt problem by worsening the GDP decline.

Reversing the rules
To be fair to George Osborne, and other finance ministers who stick to the micro-economic logic that deficit reduction will lead to debt reduction, the goalposts haven’t just shifted since austerity started. They’ve been moved to the other end of the field. The prevailing belief among economists after the 2008 financial crisis was that even if public borrowing had a ‘multiplier’ effect on GDP in normal times, this broke down when governments were already ‘over-borrowed’. Once the public debt reached 90% of GDP, any further increase undermined the growth of GDP rather than promoting it. At that point, failure to arrest public borrowing – by reducing state expenditure and/or raising taxes – could lead to disaster, with the debt: GDP ratio spiralling upwards into national default.

The calculation behind that 90 per cent limit has now been shown to be seriously flawed. That may eventually prove fortunate for Osborne, and European counterparts on a similar track, since their lengthening delays before re-balancing the budget mean that public debts previously on course to peak below 90 per cent of GDP could end up going above it.

But even before the calculation errors came to light, it was not clear that high public debt was the cause of stagnation. UK experience strongly points towards its being the consequence. The banking collapses which caused a one-off jump in public debt also arrested the growth of GDP, causing a further cyclical rise in the budget deficit. The solution was to allow that cyclical rise in order to rekindle the growth of GDP – not to try reversing the deficit before such growth had resumed.

Before they recognised its inaccuracy, economists tried to explain the apparent association between early deficit reduction and faster GDP growth with a story of ‘expansionary fiscal contraction.’ Public spending cuts (which most have always preferred to tax increases) would release resources to the private sector, which would immediately invest and employ more, spurred by the lower interest rates made possible by lower public borrowing. Contraction was, indeed, expansionary for small countries that implemented it ahead of the rest: so the two Baltic republics (Estonia and Latvia) that savagely reduced their public spending and public wagebill in 2009-10 now have the EU’s fastest-growing economies, and are embraced by the Eurozone while others struggle to avoid being thrown out.

But for larger economies, which embarked on fiscal contraction simultaneously, the results have been disastrous. Italy is now scarcely governable, Spain’s unemployment rate has reached 27 per cent (and 57 per cent for young people); and the UK has avoided a sharp rise in unemployment only by forcing people into unproductive jobs that increasingly fail to pay a living wage, forcing the government into ever larger employment subsidies.

Opposition parties’ problem is that theirs is a ‘might-have-been’ policy. If they had won the previous election and borrowed more then, they would have generated growth, and public debt would now be lower. No-one can be sure that increased borrowing after the next election will be similarly successful in shrinking the subsequent deficits and bringing debt down. It depends on how bad things get as a result of contractionary experiments now under way.

Alan Shipman is a lecturer in Economics at The Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world, part of the foundation degree in Financial Services.

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain