Times are hard, our politicians have (with the collusion of the electorate) made a right mess of things and huge numbers of people across the UK and Europe have seen their real income falling. Our leaders are exhorting the people to make sacrifices for the good of the nation, so I think it might be time to take a look at their remuneration. Fair is fair after all.
Performance related pay has become widely prevalent in the private sector. If you’re good at your job then you get more money, be it in bonuses or other benefits. The important point is that your incentives are more closely aligned with those of your employer. Everyone wins. Well, except the people who are bad at their job… MPs on the other hand have a fixed salary, the only risk they face is losing their seat and hence their job. Unfortunately the link is not all that strong. The Electoral Reform Society estimated that approximately 60% of the House of Commons’ seats were safe. Many of the others would only change hands in exceptional elections. For the majority of MPs, there is little to fear from voters.
I think the current level of pay for UK MPs (just over £65,000 p.a.) is about right. However, up until recently it was MPs that set their own salary, and there is still no link with their performance. The US Congress has an interesting system for trying to deal with the issue. Basically, any pay rise that its members give themselves only comes into effect after the next election. In my opinion, that’s a nice idea, but in the end representatives’ pay will (and probably should) be subordinated to other issues when voters make their choices.
So, I propose linking MPs pay to a weighted average of changes in the nation’s incomes. Each year their pay would be revised up or down based on the percentage change in the average income of each tenth of the population. If the top tenth had their income increase by 20%, MPs’ pay would also increase. However, it would not increase by 20% unless everyone’s income went up by that much. Instead, assuming no one else’s income increased it would only go up by 2% (10% of the population, 20% increase, 10% of 20% is 2%). If everyone’s income increased by 20% then it would go up by 20%, if only half the population had an income increase then it would go up by half of whatever their average increase was.
This encourages the government to support growth, but it also encourages it to support growth that benefits the population as a whole. This is because, assuming the same amount of economic growth, the more it is concentrated in the hands of the wealthy, the smaller it will be as a percentage of income for the people it benefits. If the economy is £100b richer, and all the gains go to the rich, it might only give the richest 10% a 1% increase in their incomes. If all of that money went to the poorest 10% it might be 100% of their incomes. So, for the same increase in absolute terms the politicians’ pay would go up considerably more if the money went to the poor.
The last 10-20 years have seen significant economic growth, but much of that growth has gone to the richest part of society. My proposition aims to incentivise economic growth but also a more equitable distribution of it. The rich have plenty of tools for influencing public policy to their advantage, equally attempts at massive wealth redistribution would be likely to hurt growth. For MPs to get their pay increases they need economic growth, my way just aims to ensure that that growth is shared round a bit more.
Of course there are some weaknesses to this proposal. Firstly, it might over-emphasise economic growth as a tool of government policy. I accept this is a possibility and there are plenty of other goals which should be pursued, however, I do think that economic growth remains the best method of improving people’s living standards as long as it can be fairly distributed. It also provides a far more transparent method of assessment than most other policy goals could.
There is also has the problem that it might not actually be a significant incentive. If MPs get most of their income from other sources, then they are unlikely to care much whether they get a 1% or a 3% pay rise. Unfortunately I don’t have any statistics on MPs’ extra earnings, but from my own political experience and knowledge my impression is that most backbenchers do in fact rely on their pay. Ministers may be a different matter – even if they have few extra earnings during their tenure, they often have significant opportunities to earn after they resign. For an extreme example look no further than Tony Blair. In the end, I think some incentive is better than no incentive, and people like Tony Blair are certainly not the norm.
Finally, there is a risk of short termism. The current debt crisis is a good example of the problems with politicians ignoring sustainability in favour of immediate growth. If you can boost incomes significantly with government borrowing then you can effectively mortgage the country’s future in order to get a pay rise now. Of course these arguments could also be applied to having elections on a regular basis. What I would say is that there is a very high incumbency rate in the UK which gives MPs an incentive to think in the long term. In this case my pay scheme could actually work better than elections for long term thinking. If most MPs know that they will probably be in their position for a long time, it doesn’t matter whether they’re part of the government or not; if they leave the other party a heap of shit to deal with, their pay is still going to drop.
So, all in all, I think the idea could work. Bringing a bit of private sector style incentivisation to our legislature would do it good and it would be nice if the proceeds of growth could be shared a little more evenly. If you see any holes in what I’m proposing, please do feel free to criticise.
*It’s worth noting that MPs do also get very good pension rights, amongst other things, which makes the remuneration more attractive than the base figure would suggest.
Picture made by ‘Ambro‘
The eurozone crisis should be depressing anyone who even half-heartedly follows business news. The contagion is spreading rapidly, even core countries such as France and the Netherlands are seeing their debt yields rising. If Italy does go over the edge we can prepare ourselves for a full on depression.
So, here are three pieces of good news. They don’t outweigh the general doom and gloom surrounding the European (and by extension the world) economy, but they do provide glimmers of light at the end of the tunnel. Without further ado:
1) If the eurozone can survive the next year or two it will be in an excellent competitive position. According to a study from the Lisbon Council, a Brussels based think tank, reforms of the major European economies is much further along than the popular perception, and the economic and competitive convergence needed to successfully run a single currency are also taking place. They have harsh words for France, which appears to be reforming as little as the Germans but without their strong economy, but the PIIGS are said to be rapidly improving their situation.
2) Portugal is meeting its targets and Ireland’s GDP has started to grow again. Today the ‘troika’* announced that they were very satisfied with Portugals progress and that it was successfully meeting its targets under the bailout deal. Similarly Ireland’s GDP has grown in the last two quarters.
3) Italy has never defaulted on a debt in peace time. As this Telegraph article explains, Italy’s only debt default in its whole history was on debts owed to the Allies in 1940. I don’t much approve of people defaulting on debts they owe to us, but when we’re actually at war it’s probably excusable. This contrasts with France and the UK which defaulted in 1932 and 1933 respectively. Italian default is the greatest danger to the European economy, and so if you have reason to think they don’t do default it’s a reason to be more optimistic.
Realistically there are plenty of reasons to feel down about the European economy, and my own view is that it has a pretty negative outlook. But hey, writing this post at least made me feel better for a bit.
*The EU, ECB and IMF.
Despite his reputation as the hard man of Russia, it would seem that Putin has a heart, and a special place is reserved in it for everyone’s favourite Italian politician – Mr Bunga Bunga himself.
So, join me in enjoying their happy memories together.
It’s been a while since I posted any funny videos. This isn’t a video, but it is funny. Close enough.
Credit for this obviously goes to Slate.com.
The Guardian published an article some time ago confirming many people’s prejudices about A levels. Some are worth more than others, not just in the sense of getting you into good universities, but in terms of difficulty and rigour.
The problem with this is twofold. Obviously A levels should be comparable qualifications. However, subtler and far more important is the impact on equality. If you go to a good school and have a knowledgeable family then you’ll probably be aware of the reputations of the subjects and can make an informed choice. For those in more disadvantaged positions this is not the case. Law A level is a classic example. It is widely regarded as a joke subject or (non-preferred A level if you’re being polite), but I have heard a number of young people say they wanted to become lawyers so they took A level law. It is entirely logical to do so and also entirely self-defeating.
The pernicious influence of league tables* adds to the problem. By rating schools according to their results they create a strong incentive for schools to push their students into easier subjects. Inevitably the ones who suffer most from this will be the disadvantaged children who don’t have the benefit of well-informed parents. It is a classical problem of differing incentives. The school’s main incentive is to boost its results and for that purpose easy A levels are best. For a level candidates the goal is probably to get into the best university they can, and for that doing media studies is very unlikely to be in their interest.
In theory it should be reasonably easy to solve the problem. Unfortunately, in practice it’s much more difficult. Firstly you would have to overcome political inertia. It is not in the government’s interests to admit that different subjects are easier or harder. Any admission would result in a barrage of criticism from teachers, upset parents and the opposition. If this could be dealt with there would still be the question of how to do it. Either easy exams become harder or hard exams become easier (or both). Call me a cynic, but if the government has a choice between seeing tens of thousands of people do much worse than expected and tens of thousands of people doing better than expected, they’ll choose the one that doesn’t result in crying teenage girls** on television.
So, we get even more grade inflation, the government celebrates its achievements in ‘raising standards’ and making sure that all subjects are equal. Grade inflation is, of course, the other big problem with the UK’s exam system.
Exams are meant to measure absolute and relative achievement, grade inflation interferes with both. It has two possible causes, students might be getting better at exams/smarter or exams might be getting easier. It isn’t implausible that teaching is getting better (I doubt students are inherently smarter), and I’m wary of saying exams are getting easier – after all I’d expect them to seem easier to me given that I’ve already studied the subjects and in several cases done them at university level. However, given complaints from university lecturers about insufficiently prepared students and a bit of gut instinct, I don’t think it’s unreasonable to think that the improvement in grades cannot be accounted for by better teaching.
I personally experienced one example of falling standards due to the oddities of my own experience with A level maths. The year I took it, you had to do three pure maths modules (P1, P2 and P3) in addition to three applied maths modules. The year after, the syllabus was changed to four ‘core’ maths modules (C1, C2, C3 and C4) along with two applied modules. There was no significant difference between the four core and the three pure modules. So, maybe no fall in absolute standards, but it meant that you did one less applied maths module, reducing the content of the A level by almost 20%.
The government recognises the problem of grade inflation, and has tried to deal with it by introducing the A* grade for A levels. In my opinion this is the wrong tactic. It fails to address any of the underlying issues, and in fact A*s are now suffering from grade inflation too. If the system is debased too far then you need to move to a new system, either of exams or grades.
One solution would be to simply grade by percentages – give the best 10% of candidates As and so on. This removes any incentive to make exams easier. Effectively the number receiving each grade is fixed by the total number of candidates. However, what this system lacks is the ability to reliably show absolute achievement. It makes it much harder to tell whether the exams are getting easier or harder. It’s all very well to know that someone is better than 90% of their peers at German, but that tells you nothing about whether they can actually speak the language. The other big problem is that even if you make the exams equally difficult, if weaker students tend to take a particular exam then you have an incentive to take that one to improve your grades.
So, that leaves completely re-jigging the exam system. I think that if you want to deal with both grade inflation and some exams being easier than others this is the only politically viable solution. The next question is what should it be replaced with? Basically, I think the choice is between an A levels+ system or a baccalaureate.
By A levels+ I mean a restart of our current system, with students taking only three or four specialist subjects . A baccalaureate on the other hand would involve a wider range of subjects and would include some compulsory topics such as English and a foreign language (good luck on that since the government removed compulsory foreign languages from the school curriculum). Arguments can be made both ways, and frankly I’ve written enough for today.
*League tables are not actually a bad idea and providing parents with more information can only be a good thing. It is only in this particular respect that I object to them.
**As the link shows, the UK media’s rather excessive interest in hot teenage girls on exam results day is a well documented phenomenon.
Hungary’s annual ‘Margaret Island Festival’ is well is known. Less well known is the ‘Hungarian Island Festival‘ (Magyar Sziget Fesztivál), the far right’s version. The Sun managed to infiltrate this festival, in a pretty decent piece of investigative journalism (credit where credit is due, it’s apparently run by some quite scary people). The Sun journalists got chatting to Chris Hurst, a BNP big wig, and managed to catch him performing Nazi salutes and espousing generally offensive views.
This got me thinking, the far-right in Europe has put quite a lot of effort into moderating its image and appearing more mainstream. Does its success depend on its ability to change its image? Or do successful parties change their images because of the increased scrutiny and integration with the system that comes with success? I expect the more successful parties to be those that present a more moderate image. So, I’ve taken four European parties of the far-right, two successful (by the standards of the far-right) ones and two unsuccessful ones, and made a very unscientific examination of the image that they present.
The four parties that I’ll be looking at will be: our BNP, France’s FN (National Front), Germany’s NPD (National Democratic Party) and Hungary’s Jobbik (The movement for a Better Hungary). The BNP and NPD have had very little electoral success, while the FN and Jobbik have both been able to command around 15% of the vote in past elections.
I’ll start with Jobbik, as it’s the most successful of the four parties. It even has an English language website. As well as being slick and well designed it is also very carefully written to practically ooze moderation. It still sounds very conservative, but certainly not like an extremist party. There are only a few bits which make you feel uncomfortable, such as talking about how the Hungarian Guard (a paramilitary organisation) is not a paramilitary organisation because they don’t carry weapons. Their Hungarian manifesto gives a surprisingly similar picture of moderation. The first foreword (by Krisztina Morvai, their nominee for Hungary’s presidency*) talks about economic issues and appeals for non-supporters not to prejudge them. Similarly the second foreword (by Gábor Vona (the party’s leader) talks about issues such as national self-determination. There is no mention of ‘The Gipsy Problem’, which is Hungary’s equivalent to the Western parties’ immigration issue.
The NPD on the other hand… Well I opened up their manifesto and the first item is the Grundgedanken (fundamental ideas). The first two sentences translate as, “in the 21st century the continued existence of the German people will be decided. Threats come from declining birth rates, the rapidly progressing foreign infiltration, heteronomy* caused by international institutions and the devastating consequences of globalisation.” I think little more needs to be said about the image this party tries to project. I remember looking at its website when I was in the sixth form and it had a map of ‘Greater Germany’ on its front page… Its electoral strength matches the extremity of its manifesto. It barely exists outside East Germany and was beaten by the Pirate Party in the 2009 federal elections (to be fair the pirate party did get a whole 2% of the vote).
The FN is the second successful party of the far right that I’m going to look at. They’re less successful than Jobbik, but can still command a significant share of the vote. If you go to their website and look at their manifesto they have everything organised as subject areas with little clickable pictures. Immigration is the first one, but once you actually read the policy, it’s all couched in terms of crime, benefits and loyalty to the French state. Essentially, it would fit right in with the typical Daily Mail article – a load of very conservative crap, but being careful to avoid seeming like an actual racist/extremist.
Finally the BNP. Their manifesto does not even put immigration in the most prominent spot. That privilege goes to crime and justice (corporal punishment, capital punishment, political correctness etc). In the immigration section of their manifesto they seem to go down an interesting road though. Their first statement is that, “the indigenous British people, will become an ethnic minority in our own country…” This is not a good start… They also keep talking about how most immigrants are, “of third world extraction.” I can only assume that this is code for ‘non-white.’ Finally they have a good moan about how Pakistan wouldn’t tolerate, “millions of Hindus or Christians entering that country and changing it from a Muslim society.” The BNP is certainly trying to promote a more mainstream image for itself (as illustrated by its immediate expulsion of the man I mentioned at the beginning of this post), but its manifesto easily puts it at the more extreme end of the European far-right.
All in all, the parties’ positions have matched my prediction. The more successful ones have had much more moderate-sounding policies than the less successful ones. Whether there is a causal link is much harder to say. My own opinion is that as an extremist party grows there is a process of moderation fed by both external and internal pressure. As successes are achieved the party’s leadership start to see the potential to go beyond being a simple protest party and are also forced to acknowledge the harsh reality of electoral politics and the need to build a coalition of supporters. This in turn leads to more people being willing to support the party as it moderates its stance and new relatively moderate members act to drag it further towards the centre. I believe there are more significant factors for explaining the success (or lack thereof) of far-right parties, but there does seem to be an interesting correlation present.
*Only a figurehead position in Hungary, so I’d be interested to know why she got to go first in the manifesto.
**The opposite of autonomy – imposition of foreign laws and rule on your state. Yes I did have to look the word up.
One of the latest government gimmicks is to have e-petitions. If over 100,000 people sign them then the petition’s topic is debated in Parliament. Currently the most popular petition (107,037 signatures at the time of writing) is demanding that convicted rioters should lose all of their benefits. I’m all for cracking down hard on the rioters, but this particular idea is one that I think is both wrong and foolish.
Here is the exact wording of the petition:
“Any persons convicted of criminal acts during the current London riots should have all financial benefits removed. No tax payer should have to contribute to those who have destroyed property, stolen from their community and shown a disregard for the country that provides for them.”
There are, in my opinion, at least three good reasons why you should not support this petition.
- Retrospective punishment. Any decent system of justice is based on the idea that changes in the law only affect future behaviour. Turning round and changing the law about what people have done in the past is a very dangerous road to go down. Frankly it’s un-British (or at least it should be) to change the law retrospectively.
- We don’t take benefits away from people for other crimes. It’s nonsense to say that rioters are worse than other thieves, thugs, rapists and murderers. If you commit a crime you complete your sentence and then your debt to society is paid. Once you’ve done your time that’s it, the police shouldn’t have the right to come round and punish you more because you’re a bad sort and neither should society continue to punish you forever because it feels particularly outraged about this particular crime.
- People may well disagree with me on the principles that found the last two points, but my final point is a pragmatic one. If you permanently deprive everyone convicted of rioting of state benefits then you are basically giving them a choice between living on the streets and funding their lives through crime or dying. A homeless person, with a criminal record, who is not permitted to receive any help from the state is going to have no other means of surviving. So, you end up with a situation where you have a significant increase in crime and everything gets more expensive for the taxpayer (I can assure you that keeping someone in prison is more expensive than keeping them on benefits).I also agree with the moral argument against leaving people homeless on the streets, but regardless of human-decency, the massive increase in crime and prison costs seems like much too high a price to pay to satisfy one’s anger at a bunch of thugs. Despite their unacceptability, the riots do show up real problems in society and frankly cutting off people’s benefits is going to do nothing to solve them.
I expect most of the people who read this wouldn’t have signed the petition anyway, but if you were thinking of it then I hope this gives you pause for thought. If you really want to sign a petition anyway, then I would recommend the one on retaining the ban on capital punishment.
The London riots have triggered a lot of debate about dealing with the underclass. Yes we know that rioting is unacceptable behaviour, and that looting and arson is pure criminality, but right now I want to think about how to deal with the wider problem that has been highlighted by these events.
Every Western country has an underclass, although it will vary in size and nature from country to country. These underclasses are expensive, unproductive and occasionally lead to major social upheaval. So, if you were suddenly running your country’s government and had a decent amount of political capital to achieve your policies what would you do?
The problem in the UK is not one of absolute poverty, members of the underclass are not starving, they have adequate healthcare and housing. This is a situation that makes me happy to some degree. I think that in an extremely rich and ostensibly civilised country it is important to make sure that there is indeed a safety net. So what are the problems?
Here’s what I think:
– Poverty trap
At the risk of sounding like some kind of unholy cross between a Leftwing stooge and a devout Big Society Cameronite (or is that exactly what a Lib Dem is?), I believe both views have partial solutions. I don’t think it’s possible to just talk about the oppression and neglect of society, resulting in their poor behaviour and disillusionment. People need to remember that even the most deprived citizens of this country still live somewhere that provides free education until they are 18, significant state assistance for further education, healthcare, housing, ensures that they do not have to go hungry etc. People have to take some level of responsibility for their own actions, for failing to take advantage of the opportunities that are offered to them. Throwing money at the problem or building more youth clubs might paper things over and prevent rioting, but it still leaves things simmering. Out of sight-out of mind is rarely a good strategy.
However, it also looks pretty clear to me that one can’t just take the self-congratulatory middle-class approach of announcing that these people are just welfare queens who don’t want to work and leach off the good hard-working citizens of this country. Sure, there are routes out of the underclass available for people, but to use them they have to get past a pernicious culture, unhelpful parents and a failing education system. It’s a cop out to announce that if people simply worked hard enough they could escape their situation.
This actually leads into my first point. Working harder. At the moment members of the underclass are surrounded by a culture of not working. Their parents don’t work, their friends and associates’ parents don’t work, their schools don’t expect them to work and our media seems to focus on and promote get-rich-quick methods of advancement. Solutions to these kinds of problems are difficult. However, I would say that schools have to be the key to it all. There is only so much that can be done to make bad parents be better parents, unless you’re willing to go into some seriously authoritarian behaviour (which I’m not). The school system needs to be used to provide higher expectations for deprived students. Many young people (and here I also include the middle classes) have never really been told ‘no’ in a meaningful way. Their parents want to be their friends and the education system is also unable to provide discipline.
So what is needed in education? I don’t want to go into it in too much depth, but my own instinct would be to say better staff and more disciplinary power for schools. One is likely to cost money, the other is a classic conservative policy. The ability of a teacher is the largest factor in the performance of pupils and children need to have limits laid down in their lives, either by their parents or by their schools. If they learn no limits then they’re useless as workers and effectively end up excluded from society. It might also be worth considering some sort of cash incentive for good behaviour, whether a carrot or a stick. But, rather than aiming it at pupils, aim it at parents. Anyway, sorting out inner city education is much too big a topic to deal with in any more detail than this without giving it its own blog post (which I may do).
Prospects are very heavily linked with education as an issue. However, it’s not the only issue, globalisation has seen outsourcing cutting a swathe through many career paths, and in order to have prospects it’s necessary to also have aspirations and ambitions that are achievable. Education makes things achievable, but those ambitions need to be given to people. Schools, parents and society in general need to be making sure that young people have a goal to work towards and that that goal is realistically achievable.
However, I’m not convinced by claims that there are no unskilled jobs available, from my own (admittedly anecdotal) experience in London there are plenty of jobs of these kinds around, and they often seem to be filled by immigrants who can barely speak English. I think there is a problem with British-born people seeing themselves as above minimum wage jobs, which ties neatly into the question of the poverty trap. By that I mean the situation where people choosing to work instead of claim benefits are faced by an extremely high marginal tax rate. In other words, if they choose to work they get very little or no extra money because they lose benefits as fast or faster than their income increases. There are two potential solutions to this. One is to cut benefits, then when people work there’s more to gain. The other is to increase the return from work, whether it’s by keeping benefits for higher incomes or by raising wages/reducing taxes. Being a wishy washy liberal type I prefer the carrot to the stick, but I’m willing to be convinced.
The final issue that I mentioned is culture. Among the underclass there seems to be a pernicious culture of glorifying illegal behaviour and rampant consumerism (which their incomes can’t support). There is a similar consumer culture across the whole of society and this combines with the promotion of get-rich-quick to present an unrealistic picture of how things should be to the young. When large numbers of people see mediastar/footballer as the only desirable career paths then society has a problem. Particularly when the popular image of those people hides the amount of work that one has to put in to actually succeed at them. Sadly, culture is one area that I don’t have many ideas about on the national level. Its sheer momentum and intangibility makes it much harder to change.
I realise that I have breezed over solutions to the problems that I’ve brought up, but I could write essays on each of them individually and this post has already gone over 1000 words, so I would rather leave that for debate and/or later blog posts instead of writing a thesis.