Posts Tagged ‘United Kingdom’

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police

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You wouldn’t know it from the speeches at either of the major-party political conventions. But the number of Americans—black, white, Hispanic, and others—killed by police continues to grow at an alarming rate.

You wouldn’t know it from U.S. media, either—since, like the political parties, they tend to create an equivalence between shootings of police and shootings by police and blame those who have died at the hands of police for their own plight.

So, we have to go to foreign media, such as the British Independent [ht: ja], to comprehend the level of police violence in the United States, especially by way of comparison.

One counting project found 613 people had been killed by US police so far in 2016, as of 28 July [618 as of 27 July]. American police routinely carry guns, and most high profile incidents are shootings.

Official figures in the United Kingdom could not paint a more different picture. Statistics released by the Home Office – Britain’s interior ministry – show how rare it is for the UK’s police to use guns.

In England and Wales in the 12 months to March 2016, British police discharged their firearms on just seven occasions, the statistics, released on Thursday show.

This figure is actually a record, of sorts. In the same period ending in March 2013, firearms were used only three times. In the 2015 period they were used six times. Seven uses of weapons is the highest since at least 2009.

Yes, that’s right, 7 occasions over the course of a year, compared to 618 in the United States just in the first 7 months of 2016.

The United States, of course, has a much larger population than the United Kingdom.

Britain has 64.1 million residents, the US 319 million. But on a per-capita basis, Britain’s rate of police gun use would translate into US police using their guns on 35 occasions in an entire year. This would be an unthinkably low number.

Here’s another useful comparison (from Edward P. Stringham): the 2015 homicide rate for U.S. law-enforcement officers (4.6 deaths per 100,000 officers) was nearly identical to that of all Americans (4.5 per 100,000). But, in the same year,

police killed 1,207 Americans, or 134 Americans per 100,000 officers, a rate 30 times the homicide rate overall. Police represent about 1 out of 360 members of the population, but commit 1 out of 12 of all killings in the United States.

It’s clear that, in the United States (compared to other countries and the overall homicide rate), guns don’t kill people, police officers do.

greed

It is interesting that, on the surface (but, as I explain below, only on the surface), neither major political party on either side of the pond seems to be making the claim they’re the “party of business.” Not the Conservative and Labor Parties in the United Kingdom, or the Republican and Democratic Parties in the United States.

Here’s Chris Dillow on the situation across the pond:

What I mean is that back then, the Tories were emphatically on the side of business, exemplified by Thatcher’s union-bashing and talk of “management’s right to manage”. In the 90s Labour – first under John Smith and then under Blair – devoted immense effort to trying to get business onside via the prawn cocktail offensive.

Elections then were won and lost by chasing the business vote.

Things have changed. In taking the UK out of the EU against the wishes of most major companies, the Tories can no longer claim to be the party of business. And Theresa May’s talk of getting “tough on irresponsible behaviour in big business” and of “unscrupulous bosses” suggests little desire to become so.

You might think this presents Labour with an open goal. It would be easy to present policies such as a national investment bank, more infrastructure spending and anti-austerity as being pro-business.

But there seems little desire to do this.

Something similar is going on in the United States. Neither major party political candidates embraced business during the nominating campaigns or their conventions.

In fact, in his acceptance speech, Donald Trump lambasted big business for supporting his opponent:

Big business, elite media and major donors are lining up behind the campaign of my opponent because they know she will keep our rigged system in place. They are throwing money at her because they have total control over everything she does. She is their puppet, and they pull the strings.

While, last Thursday, Hillary Clinton vowed to overturn Citizens United and challenge key corporate decisions:

That’s why we need to appoint Supreme Court justices who will get money out of politics and expand voting rights, not restrict them. And if necessary we’ll pass a constitutional amendment to overturn Citizens United!

I believe American corporations that have gotten so much from our country should be just as patriotic in return. Many of them are. But too many aren’t. It’s wrong to take tax breaks with one hand and give out pink slips with the other.

Both parties, it seems, are trying to court voters who are fed up with business as usual.

But, as I see it, that’s only what’s happening on the surface. None of the four parties is making a claim to be the “party of business” because, below the surface, all four are the parties of business.

What I mean by that is that the common sense of all four parties is the promise to promote faster economic growth and create more jobs and, in the absence of alternatives (such as direct government employment or worker-owned enterprises), that means creating a business-friendly economic and social environment.

Now, the parties may differ about how to create such an environment (e.g., in the United States, lowering individual and corporate income taxes versus using nonprofit foundation contacts to arrange business investments). But they agree on the goal: it’s up to the government to create the conditions for private corporations to use their profits to foster economic growth and job creation.

The result is that, in the current climate—with flat or falling incomes and grotesque levels of inequality—none of the parties wants to openly declare itself the “party of business.” But, they don’t have to, because they are already—all four of them—the parties of business.

flat

A new report from McKinsey & Company, “Poorer than Their Parents? Flat or Falling Incomes in Advanced Countries” (pdf), confirms many people’s worst fears. As it turns out, the trend in stagnating or declining incomes for most workers (including the middle-class) is not confined to the United States, but is a global phenomenon.

Brexit and Trump are just the tip of the iceberg. Because of flat or falling incomes, many workers across the rich countries are angry and want change.

According to the authors of the report, as much as 70 percent of the households in 25 advanced economies saw their incomes drop in the past decade. That compares to just 2 percent of households that saw declining incomes in the previous 12 years.*

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In the United States, fully 81 percent of households suffered a decline in market income between 2005 and 2013. But, as it turns out, after taxes and transfers, falling market incomes were turned into flat disposable incomes. (The situation elsewhere, such as in France, the Netherlands, the United Kingdom, and Italy, was even worse, in terms of both market and disposable incomes.)

Here’s what the U.S. numbers mean: employers were able to take advantage of declining labor incomes (since only upper-income households experienced strong wage growth, which is really just a distribution of the surplus to most of them), thus increasing corporate profits; while workers, through taxes on their wages (and thus not a distribution of the surplus), were forced to pay to finance programs that helped reverse some of the effect of declining market incomes.

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Another major consequence of flat or falling incomes is a dramatic increase in inequality over the course of the past two decades. Since I’m quite critical of comparing inequality indicators (e.g., Gini coefficients) across countries (as I explained here), what is most relevant is the change in inequality indicators for individual countries and, especially, the difference between market-income and disposable-income indicators. Thus, for example, when the authors of the report calculate “net Gini” (market Ginis minus the effect of taxes and transfers, the middle line for each country in the chart above), the United States ends up reversing market inequality the least—scoring 35 in 1993 and 37 in 2005 and 2012.**

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The final major economic consequence, in the United States and elsewhere is that today’s younger generation—regardless of level of education—is increasingly at risk of ending up poorer than their parents. As readers can see in the chart above, wage incomes declined for all segments of the labor force in the 2002–12 period but, in all three countries, wage income declines were most severe for younger workers (under the age of 30). The average decrease in the wage income of these young workers ranged from 2 percent (for higher educated workers in France) to 27 percent (for medium educated workers in Italy). In the United states, lower educated young workers faced a decline of 15 percent, similar to that of medium educated workers; while even higher educated young workers saw a decline in their incomes.

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And then, of course, there are the political consequences of flat or declining incomes. The authors of the report note that

The people who felt they were not advancing and believed this was a persistent problem expressed sharply negative views of foreign trade and immigration. They were nearly twice as likely to believe that “Legal immigrants are ruining the culture and cohesiveness of our society” as those who were advancing or neutral, and one-and-a-half times as likely as those who were not advancing but hopeful about the future. Nearly 70 percent of them also agreed with the statement “Cheaper foreign labor is creating unfair competition to our domestic businesses,” compared with 43 percent of those who were advancing or neutral. Fifty-six percent of them also believed that “The influx of foreign goods and services is leading to domestic job losses,” compared with 29 percent of the advancing or neutral respondents and 41 percent of those who were not advancing but hopeful about the future.

By implication, failure to correct flat or falling incomes could lead to a rise in the number of people who see flat or falling incomes as a persistent problem and lose faith in tenets of the global economic architecture.

That’s the source of the challenge to the self-professed expertise of mainstream economists (who tend to celebrate a market-based global economy), as well as movements as diverse as Brexit, the Trump campaign, and the insurgency within the Democratic Party represented by Bernie Sanders.

But the authors of the report are not done. The natural final question is, what are the prospects for the future? Their conclusion is, to say the least, sobering. If present trends continue—including the decline in labor unions, the continuation of job-displacing digital technologies, the rise in temporary and part-time work, and overall slow growth—it is likely

an even larger proportion of income groups in advanced economies—from 70 to 80 percent—could experience flat or falling real market incomes in the next decade to 2025 than did during the 2005–12 period.

As I see it, the existing set of economic institutions can neither accommodate nor preclude the possibility of an even larger portion of flat or falling incomes for the foreseeable future. The current economic system has failed, even on its own terms.

The situation is so dire that the authors of the report (who, remember, did this research for McKinsey, the most prestigious management consultancy in the world) note that “the idea of a guaranteed basic income has attracted renewed interest as policy makers seek to grapple with flat or falling incomes in the middle class, high youth unemployment, and the prospect of further job losses to digitization.”

A universal basic income is certainly a start. It’s a recognition of how dire the current situation is and how ominous the future prospects are for the majority of the population—workers, the middle-class, call them what you will—within the advanced countries.

But it’s only a start. The widespread nature of flat or falling incomes in the United States and across the rich countries, and then the dire forecast looking forward, mean it’s time to imagine and create a radically different way of organizing economic and social life.

 

*In general, the analysis in the report appears to be carefully done. I do, however, have one criticism. The major comparison is between two periods: 1993-2005 (when most incomes were rising) and 2005-2014 (when they were falling). That’s fine. All of the data of which I am aware (such as real wages and average 90-percent incomes) confirm much the same trends. The problem is, it was in the mid-1990s that workers’ incomes were at their lowest. If we extended the analysis back to the mid-1970s, then we’d discover that, across the entire 1973-2014 period, workers’ incomes have been generally flat (with both short-term increases and decreases within that long-term trend).

**On a scale of 0 to 100, where a score of 100 indicates complete inequality (one person earns all of the income) and a score of 0 represents completely even distribution of income across the population (each citizen earns the same amount). Numbers in the high 40s for market income and high 30s in the net Gini coefficient (after taxes and transfers) indicate an obscenely unequal distribution of income in the United States.

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