poverty

William Blum on Socialism vs. Capitalism

William Blum, the long-time fierce critic of American and western imperialism, has come back to writing his Anti-Empire Report after a period of illness. He’s an older man of 84, and due to kidney failure has been placed on dialysis for the rest of his life. This has left him, as it does others with the same condition, drained of energy, and he says he finds writing the report difficult. Nevertheless, his mind and his dissection of the ruthless, amoral and predatory nature of western capitalism and corporate greed is as acute as ever.

There’s a section in the Anti-Empire Report, where he discusses the advantages of socialism versus capitalism. He notes that there were two studies carried out under George Dubya to see if private corporations were better than federal agencies. And the federal agencies won by a huge margin every time. He writes

Twice in recent times the federal government in Washington has undertaken major studies of many thousands of federal jobs to determine whether they could be done more efficiently by private contractors. On one occasion the federal employees won more than 80% of the time; on the other occasion 91%. Both studies took place under the George W. Bush administration, which was hoping for different results. 1 The American people have to be reminded of what they once knew but seem to have forgotten: that they don’t want BIG government, or SMALL government; they don’t want MORE government, or LESS government; they want government ON THEIR SIDE.

He also states that the juries’ still out on whether socialist countries are more successful than capitalist, as no socialist country has fallen through its own failures. Instead they’ve been subverted and overthrown by the US.

I think he’s wrong about this. The Communist bloc couldn’t provide its people with the same standard of living as the capitalist west, and the state ownership of agriculture was a real obstacle to food production. The bulk of the Soviet Union’s food was produced on private plots. Similarly, Anton Dubcek and the leaders of the Prague Spring, who wanted to reform and democratize Communism, not overthrow it, believed that Czechoslovakia’s industrial development was held back through the rigid structure of Soviet-style central planning.

However, he still has a point, in that very many left and left-leaning regimes have been overthrown by America, particularly in South America, but also across much of the rest of the world, as they were perceived to be a threat to American political and corporate interests. And for the peoples of these nations, it’s questionable how successful capitalism is. For example, in the 1950s the Americans overthrew the Guatemalan government of Jacobo Arbenz after he dared to nationalize the banana plantations, many of which were own by the American corporation, United Fruit. Benz was a democratic socialist – not a Communist, as was claimed by the American secret state – who nationalized the plantations in order to give some dignity and a decent standard of living to the agricultural workers on them. The government that overthrew Benz was a brutal Fascist dictatorship, which imposed conditions very close to feudal serfdom on the plantation labourers.

Which leads to a more general point about the emergence of capitalism, imperialism and the exploitation of the developing world. Marxists have argued that capitalism had partly arisen due to western imperialism. It was the riches looted from their conquered overseas territories that allowed western capitalism to emerge and develop. Again this is a matter of considerable debate, as some historians have argued that the slave trade and plantation slavery only added an extra 5 per cent to the British economy during the period these existed in the British empire, from the mid-17th century to 1840. More recently, historians have argued that it was the compensation given to the slaveowners at emancipation, that allowed capitalism to develop. In the case of the large slaveholders, this compensation was the equivalent of tens of millions of pounds today. At the time the plantation system was in crisis, and many of the plantation owners were heavily in debt. The slaveholders used the money given to them by the British government – £20 million, a colossal sum then-to invest in British industry, thus boosting its development.

This system has continued today through what the Swedish economist Gunnar Myrdal termed ‘neocolonialism’. This is the international trading system which the former imperial masters imposed on their colonies after the end of imperialism proper following the Second World War. High tariffs and other barriers were imposed to stop these countries developing their own manufacturing industries, which could produced finished goods that would compete with those of Europe and the west. Instead, the former subject nations were forced through a series of trade agreements to limit themselves to primary industries – mining and agriculture – which would provide western and European industry with the raw materials it needed. As a global system, it’s therefore highly debatable how successful capitalism is in providing for people’s needs, when the relative success of the capitalist west has depended on the immiseration and exploitation of countless millions in the developed world.

And in the developed west itself, capitalism is failing. In the 19th century Marx pointed to the repeated crises and economic slumps that the system created, and predicted that one of these would be so severe that it would destroy capitalism completely. He was wrong. Capitalism did not collapse, and there was a long period of prosperity and growth from the late 19th century onwards.

But terrible, grinding poverty still existed in Britain and the rest of the developed world, even if conditions were slowly improving. And the long period of prosperity and growth after the Second World War was partly due to the foundation of the welfare state, Keynsian economic policies in which the government invested in the economy in order to stimulate it, and a system of state economic planning copied from the French.

Now that Thatcherite governments have rolled back the frontiers of the state, we’ve seen the re-emergence of extreme poverty in Britain. An increasing number of Brits are now homeless. 700,000 odd are forced to use food banks to keep body and soul together, as they can’t afford food. Millions more are faced with the choice between eating and paying the bills. In the school holiday just passed, three million children went hungry. And some historians are predicting that the refusal of the governments that came after the great crash of 2008 to impose controls on the financial sector means that we are heading for the final collapse of capitalism. They argue that the industrial and financial elite in Europe know it’s coming, are just trying to loot as much money as possible before it finally arrives.

The great, free trade capitalism lauded by Thatcher, Reagan and the neoliberal regimes after them has failed to benefit the majority of people in Britain and the rest of the world. But as the rich 1 per cent have benefited immensely, they are still promoting neoliberal, free trade policies and imposing low wages and exploitative working conditions on the rest of the population, all the while telling us that we’re richer and generally more prosperous than ever before.

Back to Blum’s Anti-Empire Report, he also has a few quotes from the American comedian Dick Gregory, who passed away this year. These include the following acute observations

“The way Americans seem to think today, about the only way to end hunger in America would be for Secretary of Defense Melvin Laird to go on national TV and say we are falling behind the Russians in feeding folks.”

“What we’re doing in Vietnam is using the black man to kill the yellow man so the white man can keep the land he took from the red man.”

For more, see https://williamblum.org/aer/read/150

As Children Starve, Rees-Mogg Finds Growth in Food Banks ‘Uplifting’

Published by Anonymous (not verified) on Sat, 16/09/2017 - 7:34pm in

I’ve had to write this response to Rees-Mogg’s fatuous, complacent and quite frankly, evil comments about the massive increase in food banks, because it made me so furious. On Thursday, Mike over at Vox Political reported that the Camborne Pool and Redruth food bank reported that some children in Cornwall are literally starving. This food bank hands out 10,000 meals a month, but states that they know there are many more children that they aren’t reaching.

At the same time, Rees-Mogg, whom Mike describes as the darling of the Tory party, was on LBC radio saying that he found this ‘uplifting’. Mike responded by describing Rees-Mogg as an ignorant, homicidal fool.

http://voxpoliticalonline.com/2017/09/14/food-bank-says-children-are-starving-rees-mogg-finds-that-uplifting/

Yesterday, Mike also put up the news that a food bank in Bath has challenged Mogg to volunteer to work for them, so he can see for himself the hardship that the people coming to these banks are experiencing, and hear their stories. Mike commented that there was fat chance of that, as Mogg hasn’t done a day’s work in his life. But he would be improved by having to work in one, or, better still, having to go to one himself.

http://voxpoliticalonline.com/2017/09/15/after-rees-mogg-said-food-banks-that-couldnt-help-the-starving-were-uplifting-hes-challenged-to-work-in-one/

The I yesterday printed Mogg’s comments in full. Basically, the aristo Tory MP for north-east Somerset said that the amount of generosity shown by people in the expansion of food banks was ‘uplifting’, and then went to claim that state aid could not solve the problem of poverty or provide for all the poor.

There’s nothing new in what he said. Bill Clinton made pretty much the same speech when he was president of the US. Clinton stated that there wasn’t a government programme that could solve every eventuality, and so praised private charity and initiatives in doing so. His speech, and admiration for private charity, was part of his ideological commitment to reducing still further whatever was left of the vestigial American welfare state that Reagan and the Republicans hadn’t already destroyed.

Thatcher, and it seems Young Master Mogg, believed that reducing state aid would result in more people giving to charity. And it’s true that studies in the US have shown that Conservative religious people give more to charity than secular liberals. But this misses an important point:

Private charity on its own is insufficient to tackle poverty. State aid is far better at doing so.

I also found a piece in Lobster’s ‘View from the Bridge’ a little while ago, that quoted a biography of Thatcher. Before she died, Thatcher herself supposedly realized that destroying the welfare state hadn’t made people more generous.

Which completely contradicts what Mogg has said above.

As for Mogg’s own attitude, this is the arrogant complacency of a wealthy aristocrat, who has little understanding of the lives of working people, and who fears them and the state will undermine the position of himself and his similarly entitled monied chums at the apex of British society. Young Master Mogg has voted consistently against increasing welfare benefits for them, and voted for increasing the tax burden on working people. But he’s been dead opposed to increasing the tax burden on people earning over £150,000 a year.

It’s the attitude the complacent British upper and middle classes, that looked with bland equanimity on the grinding poverty and squalor of industrial Britain and saw nothing wrong with it. It’s the same attitude that produced this appalling piece of poetry on the benefits of work to children.

‘Tis proper, Sophy, to be sure,
To pity and relieve the poor.
But do not waste your pity here,
Work is not hard to her, my dear,
It makes her healthy, strong and gay,
And is as pleasant as your play.

from Peter Vansittart, Voices 1870-1914, p. 76.

And it’s also contemporary in that we’ve had for the past decade or so Tories and Blairites telling us how wonderful work is for the mental wellbeing of the disabled, even when the empirical evidence says the exact opposite.

Mogg’s a complacent, ignorant pratt, who looks on the growth of child poverty due to the free trade policies of his poverty with complete indifference. Get him out. He has no place in politics, and his views will lead to more starvation and suffering.

Pat Mills Talks to Sasha Simic of the SWP about the Politics of 2000AD

This comes from the Socialist Workers’ Party, an organization of which I am not a member and which I don’t support. But this is another really great video, in which one of the great creators of the British comics for over forty years talks about politics, social class, the role of capitalism and women and feminism, not just in 2000AD, but also in comics and publishing generally, and the media.

Mills was speaking as part of annual four day convention the Socialist Workers hold on Marxism. Simic introduces himself as the person, who gets the annual geek slot. As well as a member of the party, he’s also a convener of USDAW. And he’s very happy in this, the centenary of the Russian Revolution, to have on Pat Mills.

Mills starts by saying that as he was growing up in the 50s and 60s, he read the same books everyone else did – John Buchan, Ian Fleming, Dennis Wheatley, Sherlock Holmes and the Scarlet Pimpernel. But there was something about it that made him angry, and it was only looking back on it that he came to realise that what infuriated him was the fact that these were all authors from the upper and middle classes, who created heroes from those class backgrounds. He makes the point that these were good writers, but that some of their work was very sinister the more you go into it. Like John Buchan. Buchan was the major propagandist of the First World War. Mills says that Alistair Campbell, Tony Blair’s infamous spin doctor, had nothing on him. He promoted the First world War, for which he was rewarded with the governorship of Canada.
He states that he doesn’t want to go too far into it as he’ll start ranting. Nevertheless, he’s glad to be able to talk to the people at the SWP’s convention, as it means they have a similar opinion to him, and he doesn’t have to censor himself.

He makes the point that there are very, very few working class heroes, and believes this is quite deliberate. It’s to deprive working people of a strong role. When the working people do appear, it’s as loyal batmen, or sidekicks, and there is an element of parody there. And it’s not just in comics and literature. In the 1980s he was contacted by the producers of Dr. Who to do a story. He wanted to have a working class spaceship captain. He was told by the script editor that they couldn’t. They also didn’t like his idea to have a working class family. It was only by looking back on where this hatred of the heroes of traditional literature came from, that he came to realise that it wasn’t just that he didn’t want to have any generals in his work.

He also talks about how it’s easier to get away with subversion in comics, as comics are treated as a trivial form of literature, which nobody really cares about. The profit motive also helps. So long as it’s making money, comics companies don’t care what’s going on. And this explains how he was able to get away with some of the things he did in Battle. He states that the way he works is by pretending to write something mainstream and inoffensive, and then subvert it from within. An example of that is Charley’s War in Battle. This looks like an ordinary war strip, but in fact was very anti-war. Even so, there were times when he had to be careful and know when to give up. One of these was about a story he wanted to run about the entry of the Americans into the War. In this story, a group of White American squaddies are members of the Klan, and try to lynch a Black soldier. Charley wades in to help the Black guy. The management rejected the story on the grounds that they didn’t want anything too controversial. Mills decided to draw in his horns and bite his tongue at that point, because he had a bigger story lined up about the British invasion of Russian in 1919, when we sent in 20-30,000 men. It was, he says, our Vietnam, and has been whitewashed out of the history books.

He also makes the point that subversion was also present in the girls’ comics. Even more so, as there was a psychological angle that wasn’t present in the boys’. For example, there was one story called ‘Ella in Easy Street’, where a young girl reacts against her aspirational family. They want to get on, and so the father has two jobs, and the mother is similarly working very hard to support their aspirations. But Ella herself is unhappy, as it’s destroying what they are as a family. And so she sets out to sabotage their yuppie dream. Mills says that it’s not all one-dimensional – he looks at the situation from both sides, pro and con, but the story makes the point that there are things that are more important that materialism and social advancement, like family, comradeship. He says that such a story could not be published now. It’s rather like The Loneliness of the Long Distance Runner, where the hero, in the end, throws the race as a way of giving the system the finger.

Mills reminds his audience just how massive girls’ comics were in the ’70s. They were bigger, much bigger, than the boys’. 2000AD sold 200,000 copies a week in its prime. But Tammy, one of the girls’ comics, sold 260,000. This is really surprising, as women read much more than we men. These comics have all disappeared. This, he says, is because the boys’ took over the sandpit. He has been trying to revive them, and so a couple of stories from Misty have been republished in an album.

This gets him onto the issue of reaching the audience, who really need it. In the case of the stories from Misty, this has meant that there are two serials on sale, both of which are very good, but in a book costing £17 – odd. The only people going to read that are the mothers of the present generation of girls, perhaps. To reach the girls, it needs to be set at a lower price they can afford. This is also a problem with the political material. If you write something subversive, it will receive glowing reviews but be bought by people, who already agree with you. He wants his message to get further out, and not to become a coffee table book for north London.

He talks about the way British comics have grown up with their readership, and the advantages and disadvantages this has brought. British comics has, with the exception of 2000AD, more or less disappeared, and the readership of that comic is in its 30s and 40s. People have put this down to demographics and the rise of computer games, saying that this was inevitable. It wasn’t. It was our fault, says Mills. We fumbled it. Games workshop still have young people amongst their audience, while the French also have computer games across the Channel, but their children are reading comics.

Mills goes on to say that it’s easier writing for adults. Writing for 9 and 10 year olds is much harder, because if they don’t like a story, they’ll say. He says to his audience that they may think the same way, but they’re much too polite to say it at conventions. And they had to respond to their young readers as well, as the kids voted on it every week. They’d tell you if they thought it was a bad story, even if you thought it was the best one so far, and asked yourself what was wrong with the little sh*ts.

He also talks about how difficult it is to break into comics. He has friends, who have been trying for decades to get into 2000AD, and have been unsuccessful. His advice to people trying to do so is: don’t bother. There’s nothing wrong with you, it’s 2000AD. And this also effects text publishing. All the publishers have now been bought up, so that HarperCollins have the fingers in everything, such as Hodder and Stoughton. And their politics aren’t ours.

The way round this is to get into web publishing. Here he digresses and talks about pulp fiction, which is a close relative of comics. He was talking to a guy at a convention, who writes pulp fiction and puts it on the net. It only costs a few pence. The man writes about a zombie apocalypse, but – and this is true, as he’s seen the payment slips – he’s pulling in £3,000 a month. Mills says that this is important as well. He wants to get his material out there, but he also wants to eat. This shows you how you can make money publishing it yourself. Later on in the video, after the questions and the comments from the audience, he goes further into this. He mentions some of the web publishers, one of which is subsidiary of Amazon, which will allow people to publish their own work. He also talks about self-publishing and chapbooks. He found out about these while writing Defoe, his story about Leveller zombie killer in an alternative 17th century England. Chapbooks were so called because they were cheap books, the cheap literature of the masses. And this is what comics should go back to. He says that everyone should produce comics, in the same way that everyone can also make music by picking up an instrument and playing a few chords.

He also praises some of the other subversive literature people have self-produced. Like one piece satirizing the British army’s recruitment posters. ‘Join the army’, it says, ‘- like prison, but with more fighting’. Mills is fairly sure he knows who wrote that as well. It was another guy he met at a convention, who was probably responsible for the anti-war film on YouTube Action Man: Battlefield Casualties. He enormously admires this film, and is envious of the people, who made it.

He also talks about some of the fan letters he’s had. One was from the CEO of a school, he talks about the way reading 2000AD opened up his mind and changed his moral compass. The man says that everything he learned about Fascism, he learned from Judge Dredd, everything about racism from Strontium Dog, and feminism from Halo Jones. He and his headmaster, whom he names, were both punks and he’s now opened a school in Doncaster. The most subversive thing you can do now is to try to create an open-minded and questioning generation of young people. The letter is signed, yours, from a company director, but not an evil one, and then the gentleman’s name.

He concludes this part of the talk by describing the career of James Clarke, a member of the Socialist Labour Party, the Communist Party, a lion tamer and conscientious objector. During the War he ran escape lines for British squaddies in France. And people say that pacifists are cowards, Mills jokes. How much braver can you be than sticking your head in a lion’s mouth. He wrote a pamphlet defending a group of comrades, who tried to start the revolution by following the example of the Irish Nationalists and blow things up with a bomb. The pamphlet argued that this was wrong, and that if the working class wanted to gain power, they should concentrate on confronting capitalism through direct action. He also wrote poetry. Mills describes Clark as being a kind of Scots Tom Baker. One of these is a biting satire of Kipling’s If. The poem begins by asking if the reader can wake up every morning at 5 O’clock, or 4.30, and then labour at their machines, and see their wives and children suffer deprivation while those, who haven’t earned it take it all the profits, and describes the backbreaking grind of hard working life for the capitalist class in several stanzas. It ends with the statement that if you can do all that, and still be complacent, then go out, buy a gun and blow your brains out.

Clearly, I don’t recommend any actually do this, but it is a witty and funny response to Kipling’s poem. I found it hugely funny, and I do think it’s a great response to what was voted Britain’s favourite poem by the Beeb’s viewers and readers a few years ago. Can you imagine the sheer Tory rage that would erupt if someone dared to recite it on television!

Many of the comments are from people thanking Mills for opening their eyes and for writing such great stories. They include a man, who describes how Mills’ works are on his shelf next to his copy of Das Kapital. Another man describes how he used to buy 2000AD just after going to church on Sunday. So after listening to some very boring sermons, he came back from Baptist chapel to read all this subversion. One young woman says that the zines – the small press magazines, that appeared in the 1990s – seem to be still around, as she has seen them at punk concerts. Another young woman says that although comics are seen as a boys’ thing, when she goes into Forbidden Planet near her, there are always three girls in there and two boys. She also talks about how many young women read Japanese manga. Mills states in reply that manga stories generally are light and frothy, and so not the kind of stories he wants to write. But as for women in comics, he says that he spoken several times to students on graphic novel courses, and each time about 75 per cent of them have been women, which is good.

He also talks about Crisis and Action. The Third World War strip in Crisis was about the politics of food, and was set in a world where food production was dominated by a vast multinational formed by the merger of two of today’s megacorporations. Mills states that when the strip covered what was going on in South America, that was acceptable. However, at one point he moved the story to Brixton, finding a Black co-writer to help with the story. At that point, the White Guardian-reading liberals started to be uncomfortable with it. There was also a story in which Britain leaves the EU. This results in the rise of a Fascist dictatorship, and the EU responds by invading Britain. Mills says that he’s been trying to get Crisis relaunched, but the company are stringing him along with excuses, probably because it’s easier than arguing with him.

Mills obviously did the right thing by finding a Black co-writer. Marvel suffered a barrage of criticism with some of their attempts to launch a series of Black superheroes, like the Black Panther as part of the Blaxploitation wave of the 1970s. The Black Panther was particularly criticized. The creators were old, White dudes, who didn’t understand urban Black culture, even if the comics themselves were sincere in presenting a sympathetic view of Black Americans and combating racism.

He also talks briefly about Action, and the controversy that caused. What really upset Mary Whitehouse and the rest was ‘Kid’s Rule UK’, a strip in which a disease killed everyone over 16, and Britain was inhabited solely by warring street gangs. Mills used to take the same train from where he was living at the time with Mary Whitehouse. He said he was editing a Hookjaw script at the time, and notice Whitehouse over the other side of the carriage looking daggers at him. So he put in more carnage and more arms and legs being bitten off.

One of the most interesting questions is about the politics and morality of Judge Dredd. Dredd is a fascist, and in one of the strips it seemed to take the side of authority over subversion with no irony. This was in a story about the punks taking over Megacity 1. At the end of the strip, Dredd gets hold of the leader, and makes him say, ‘I’m a dirty punk.’ Mills actually agrees with the speaker, and says that there are people, who take Dredd as a role-model. He’s had letters from them, which he doesn’t like. He doesn’t know what these people do. Perhaps they have their own chapterhouse somewhere. He went cold inside when he heard about the story. It wasn’t one of his. It was by John Wagner, who isn’t at all political, but is very cynical, so this has some of the same effects of politics. But 75 per cent of Dredd comes from Mills. Mills states that it’s a flawed character, and that can be seen in why the two Dredd films never did well at the box office. Dredd was based on a particular teacher at his old school, as was Torquemada, the Grand Master of Termight, a genocidally racist Fascist military feudal order ruling Earth thousands of years in the future. They were both two sides of the same coin. That was why he enjoyed humiliating Torquemada. But it isn’t done with Dredd. Yet it could have been different, and there could be instances where people have their revenge on Dredd without losing the power of the character. He states that it was because Chopper did this in the story ‘Unamerican Graffiti’, that this became the favourite Dredd story of all time.

It’s a fascinating insight into the politics of the comics industry. The zines and other self-published small magazines he describes were a product of the Punk scene, where people did start putting together their own fanzines in their bedrooms. It was part of the mass creativity that punk at its height unleashed. As for the web comics, he talks about a couple that he finds particularly impressive, including those by the author of the dystopian science fiction story Y – the Last Man, set in a future in which all the men in the world have been killed by another disease. A number of my friends used to publish their own small press magazines in the 1990s, as did Mike. Mike started his own, small press comic, Violent, as an homage to Action when it was that comics anniversary. Mike was helped by some of the artists and writers from 2000AD, and so some of the tales are very professional. But probably not for delicate, gentle souls.

Amongst SF fandom, chapbooks are small books which another publishes himself. And they have been the route some professionally published authors have taken into print. Stephen Baxter is one of them. I think his Xelee stories first appeared in a chapbook he sold at one of the SF conventions.

Looking back at Kids Rule UK, this was my least favourite strip in Action. I was bullied at school, and so the idea of a Britain, where everything had broken down and there was nothing but bullying and juvenile violence really scared me. Action took many of its strips from the popular culture of the time. Hookjaw was basically Jaws. One-Eyed Jack seemed based very much on the type of hard-boiled American cop shows, if not actually Dirty Harry. One of the SF movies of the late sixties was about an America in which teenagers had seized power, and put all the adults in concentration camps were they were force-fed LSD. One of the four Star Trek stories that were banned on British television until the 1980s was ‘Miri’. In this tale, Kirk, Spock and the others beam down to a planet occupied entirely by children, as all the ‘grups’ – the adults – have been killed by disease. Kids Rule UK seems very much in the same vein as these stories.

Mills’ story about Dr. Who not wanting to show a working class family, let alone a spaceship captain, shows how far the series has come when it was relaunched by Russell T. Davis. Christopher Eccleston basically played the Doctor as northern and working class, wile Rose Tyler’s family and friends were ordinary people in a London tower block. As for not wanting to show a working class spaceship captain, that probably comes from very ingrained class attitudes in the aviation industry. A friend of mine trained as a pilot. When he was studying, their tutor told the class that the British exam included a question no other country in the world required, and which was particularly difficult. He stated that it was put there to weed out people from working or lower middle class backgrounds, as they would fail and not be able to retake the exam, as their competitors from the upper classes could.

It’s great to hear Mills encourage people try to produce their own work, and not be disheartened if they are rejected by mainstream publishers. I’m also saddened by the absence of any comics for children. They offered me when I was a lad an escape into a whole world of fun and imagination. And at their best, they do encourage children to take an interest in real issues like racism, sexism, bigotry and exploitation. I hope some way can be found to reverse their disappearance.

Counterpunch: Bernie Sanders Outlines His Plans for ‘Medicare for All’

Today’s Counterpunch has a piece by the radical, progressive Democratic politician, Bernie Sanders, reblogged from the New York Times. In it, Sanders discusses the outrageous scandal that 28 million Americans have no medical coverage, despite the fact that their country spends more on healthcare than almost any other nation. He points out that this is because the insurance-based healthcare system is designed not to give Americans access to decent healthcare, but to enrich the companies’ executives and shareholders. He describes how many Americans cannot afford healthcare, and are forced to cut down on the drugs they need, simply because they cannot pay for them. He argues that the experience of Canada, and the Medicare programme brought fifty years ago, both show that single-payer healthcare is cheap, popular and effective.

He states that he intends to introduce a bill for Medicare for All into Congress next Wednesday, and outlines how he envisages an initial four year transition period from the current American system. He also makes it plain that there will be concerted opposition to his proposal.

His piece begins

This is a pivotal moment in American history. Do we, as a nation, join the rest of the industrialized world and guarantee comprehensive health care to every person as a human right? Or do we maintain a system that is enormously expensive, wasteful and bureaucratic, and is designed to maximize profits for big insurance companies, the pharmaceutical industry, Wall Street and medical equipment suppliers?

We remain the only major country on earth that allows chief executives and stockholders in the health care industry to get incredibly rich, while tens of millions of people suffer because they can’t get the health care they need. This is not what the United States should be about.

All over this country, I have heard from Americans who have shared heartbreaking stories about our dysfunctional system. Doctors have told me about patients who died because they put off their medical visits until it was too late. These were people who had no insurance or could not afford out-of-pocket costs imposed by their insurance plans.

I have heard from older people who have been forced to split their pills in half because they couldn’t pay the outrageously high price of prescription drugs. Oncologists have told me about cancer patients who have been unable to acquire lifesaving treatments because they could not afford them. This should not be happening in the world’s wealthiest country.

Americans should not hesitate about going to the doctor because they do not have enough money. They should not worry that a hospital stay will bankrupt them or leave them deeply in debt. They should be able to go to the doctor they want, not just one in a particular network. They should not have to spend huge amounts of time filling out complicated forms and arguing with insurance companies as to whether or not they have the coverage they expected.

Even though 28 million Americans remain uninsured and even more are underinsured, we spend far more per capita on health care than any other industrialized nation. In 2015, the United States spent almost $10,000 per person for health care; the Canadians, Germans, French and British spent less than half of that, while guaranteeing health care to everyone. Further, these countries have higher life expectancy rates and lower infant mortality rates than we do.

Please go to the Counterpunch site and read the whole article. It’s at:
https://www.counterpunch.org/2017/09/14/why-we-need-medicare-for-all/

The state and state-funded healthcare systems of the European countries have contributed immensely to their people’s health and wellbeing, ever since Bismarck introduced it in Germany in 1875 in an attempt to steal working class votes away from the socialist SDP.

And it’s driving the Reaganites and Thatcherites of the corporate sector up the wall, because it denies them so much of the juicy profits that comes from the insurance-driven sector. That’s why the Tories over here have been privatizing the NHS piecemeal by stealth ever since the days of Maggie Thatcher. It’s why the corporate bosses of the big healthcare firms, like the fraudster Unum, came over here at the beginning of New Labour’s tenure in office to lobby Blair to privatize the NHS.

And it’s part of the reason the Blairites, Tories and Lib Dems, and their paymasters in big business and lackeys in the media, including the Beeb, fear and hate Jeremy Corbyn, as the Republicans and the corporatist Democrats around Hillary Clinton despise Bernie Sanders in the US.

Any civilized country has to demand proper medicine for its people, regardless of the demands of the corporatists to keep it the expensive privilege of the affluent. So, go Bernie! And may Corbyn also win in his fight to renationalize the NHS.

Sometimes The Poor Make It Big. Usually They Stay Poor

Published by Anonymous (not verified) on Thu, 14/09/2017 - 10:00pm in

Above Photo: Shutterstock We’d be a better country if we didn’t rig the game against those whose only mistake was to be born to poor parents. We all want to live in a country where all it takes is hard work and some talent for anyone to succeed. We tell ourselves that we do. We even see examples of people who “came from nothing” and ended up rich and famous. And it’s true that it sometimes happens. Sometimes a child born into poverty grows up to become the president of the United States, a multi-billionaire, or an Olympic gold medalist. Most of the time, however, they don’t. And it’s not because they’re bad, lazy, stupid, or immoral. Often it’s because of our system itself. Take our school system for a start. By funding schools with property taxes, we guarantee that the children from the richest neighborhoods go to the wealthiest schools. If we lived in neighborhoods that were economically mixed with families of all incomes, this wouldn’t be a big deal. But we don’t. Instead we have areas of very wealthy people whose children attend wonderful schools, and areas of concentrated poverty where children attend failing schools. And the kids in the good schools? Their parents can afford tutoring, extracurricular activities, summer camp, and SAT prep classes. It’s the kids whose parents can’t provide those extra learning opportunities who go to the worst schools. Meanwhile, careers are sorted into those that require a college degree and those that don’t. Once upon a time, one could support a family on the wage of a manufacturing job. But America lost those jobs, and replaced them with poorly paid service jobs that often have no benefits. For those without college degrees, getting ahead is difficult. But college is expensive. Even without the tuition costs, one has to keep a roof over their head and eat while attending school. Community colleges and online programs add flexibility for students who work full time while attending school, but it can still be difficult. I don’t advocate a return to the days when men worked and women stayed home. But at least back then, families had an adult whose full time duties were to take care of the home and the children. When women went to work, the expectations of the workplace didn’t change. Men with stay-at-home wives never needed maternity leave or flex time or places to pump breastmilk or time off to pick up a sick kid from day care. But in families where both partners work, or in single parent families, how on earth are parents supposed to hold down a full time job and simultaneously be full-time homemakers? Sociologist Arlie Hochschild examined this in her classic book The Second Shift, finding that the housework often still falls disproportionately to working women, often leaving them frazzled and exhausted. Sometimes the kids lose out, when neither parent has time to spend with them. Wealthier families now pay for the work that women used to do for free: childcare, laundry, cooking, cleaning, and so on. But whom do they pay? Less wealthy women, usually. And those women, after spending a day caring for someone else’s kids or doing someone else’s laundry, still have to figure out how to get their own housework done once they go home. The end result is that most people who start out poor stay poor. And those who start out rich usually stay rich. (Recent studies show that Canada now has three times better social mobility than the U.S., suggesting the American dream moved north.) Ours is a great system, if you’re rich. But we’d be a better country if we didn’t rig the game against those whose only mistake was to be born to poor parents.

Crisis and Closures in the Academy Schools

Published by Anonymous (not verified) on Thu, 14/09/2017 - 4:02am in

One of the major issues is the Tories’ continuing attempts to destroy whatever remains of value in the British education system, all for the profit of big business. Last week, one of the academies closed only a week after it had opened. I did wonder what would happen to its pupils. Would they be thrown out and denied an education, as they had enrolled in the wrong school and there may not be places available in the other local schools.

Fortunately, that’s not going to happen. From what I understand the school will be kept open until someone else is found to take it over.

But it is still absolutely scandalous that British schools are now run by private companies, who can announce at any time that they are no longer interested in running them. Especially as tens of millions of taxpayers’ money is given to individual academies, far beyond the budget for the local LEA. In some cases, the amount spent on an academy can reach £40 million, while the budget for the LEA is under a million.

As for replacing LEA’s, from what I understand from talking to friends about them, the authorities dictate that schools can only join certain academy chains. This makes a mockery of the claim that they are outside LEAs, as these chains in effect act as them. But I suppose as the academy chains are all privately run, the government thinks this is just as well then.

I also understand that one of the academies in Radstock in Somerset doesn’t even belong to a chain based in the UK. The chain’s based in Eire, and all its directors live across the Irish Sea. I can’t say I’m surprised. Eire attempted to encourage investment by massively cutting corporate taxes, in the same way that the Tories are doing for Britain. Thus you find many businesses, that actually do their work in Britain, have their headquarters over there, using the country as a tax haven. And the ordinary people of Ireland have paid for this, just as we Brits are paying for the Tories’ self-same policy over here. One of the books I found rooting through one of the bargain bookshops in Park Street was by an Irish writer describing the way his country’s corporate elite had looted the country and caused its recession. Like the banksters in Britain and America.

The academies are a massive scam. They were launched under Maggie Thatcher, and then quietly wound up as they didn’t work. Blair and New Labour took over the idea, as they did so much else of the Tories’ squalid free market economics, and relaunched them as ‘city academies’. And then, under Dave Cameron, they became just ‘academies’.

They were never about improving education. They were about handing over a lucrative part of the state sector to private industry. They aren’t any better at educating children than state schools. Indeed, many can only maintain in the league tables by excluding poorer students, and those with special needs or learning difficulties. And if state schools had the same amount spent on them as those few, which are more successful than those left in the LEAs, they too would see improved standards.

In fact, academies offer worse teaching, because as private firms in order to make a profit they have to cut wages and conditions for the workforce to a minimum. And with the Tories freezing public sector workers’ wages, it’s no wonder that tens of thousands of teachers are leaving the profession.

And those companies interested in getting a piece of this cool, educational action are hardly those, whose reputation inspires confidence. One of them, apparently, belongs to Rupert Murdoch, at least according to Private Eye again. Yes, the man, who has almost single-handedly aimed at the lowest common denominator in print journalism, lowering the tone and content of whatever newspaper he touches and whose main newspaper, the Sun, is a byword for monosyllabic stupidity and racism, now wants to run schools. Or at least, publish the textbooks for those who do.

Academy schools are a massive failure. They’re another corporate scam in which the public pays well over the odds for a massively inferior service from the private sector, all so that Blair and May’s mates in the private sector could reap the profits.

It’s time they were wound up. Get the Tories out, and private industry out of state education.

RT Parliamentary Coverage: Nurse and Labour MP Karen Lee on NHS Crisis

Published by Anonymous (not verified) on Thu, 14/09/2017 - 3:25am in

In this very short clip from RT, Unison nurse and Labour MP for Lincoln, Karen Lee, describes the chronic lack of nursing in the NHS, and the threatened closure of walk-in centres in her constituency.

Hunt stands up, thanks her for her work in the NHS, and then admits that there is a shortage of nurses in the NHS, there was when he began as health secretary, and then declares he will go on to tell her how he means to solve it. This is where the clip ends.

Lee is absolutely right, just as she is right to remind him that the NHS is seriously underfunded while at the same time, the government is cutting corporation tax and has given £1 billion to the DUP. The government cannot rightly talk about austerity when this goes on.

There’s a piece in today’s I by Yasmin Alibhai-Browne, whose headline states that austerity was never about reducing the deficit. It was all about a Tory class war on the poor. Which is what Owen Jones, and very many other bloggers, including Mike over at Vox Political, have been saying for years.

As for Hunt’s plans to get more nurses into the NHS, I am extremely skeptical about this. All the evidence I’ve seen shows doctors and other medical professionals leaving the NHS. As for those nurses that remain in it, they are to be applauded as they’re increasingly treated extremely shabbily. Such as those, who are forced to use food banks, for example.

The threatened closure of the walk-in centre also shows the massive dangers of the Blairite/Tory NHS privatization. The walk-in centres, otherwise known as polyclinics, were part of New Labour’s big idea for NHS restructuring, which including dismantling the NHS and opening it up further to private investment. Again, not a new idea. Like most of Blair’s economic thinking, it was taken over and developed from the Tories, like the Private Finance Initiative generally. These polyclinics were intended to be privately run, hence the interest in them from the usual private healthcare firms, including ‘Beardie’ Branson’s Virgin Health.

Since private companies have taken over hospitals and GPs’ surgeries, we’ve seen one hospital after another go into the red, while Private Eye reported in their ‘In The Back’ column how several surgeries in London were closed down, and their patients thrown out without medical care, by the private firm running them. Private enterprise in the health service doesn’t work, and leads to gross inequalities in healthcare provision and massive profiteering by the companies.

But Hunt, for all his weasel words about getting more nurses into the NHS, doesn’t care about any of that. Indeed, he actually advocates the NHS’ privatization, though he is very loud in denying it in public. As is his mistress, Theresa May. And it’s been the same all the way back to Margaret Thatcher, who really wanted to privatize the NHS under there was a massive cabinet revolt, as well as evidence from her personal private secretary, Patrick Jenkin, who came back from a fact-finding mission to America and informed her how wretched American private healthcare was.

Don’t be taken in by Hunt’s lies. Believe Karen Lee, and kick out the Tories.

Some comments on the Financial Accountability Office of Ontario’s minimum wage commentary

Published by Anonymous (not verified) on Thu, 14/09/2017 - 3:05am in

The Financial Accountability Office of Ontario (FAO)—an independent, arm’s length, non-partisan research institute—released a paper on September 12th outlining the likely economic impacts flowing from the pending minimum wage increase (see here). The FAO’s findings are already garnering significant media attention and will almost certainly be used by the opponents of Bill 148 as further proof that the Ontario Government is economically reckless.

Contrary to the study commissioned by the Ontario Chamber of Commerce (which warned of 185,000 jobs lost over two years), the Financial Accountability Office is not institutionally or ideologically wedded to a particular political position. This non-partisanship is reflected in the FAO’s findings, which flagged the potential drawbacks associated with a higher minimum wage, yes, but also included many (though not all) well-documented benefits.

Before I provide my reflection on the study’s contents, I wanted to summarize some of the key findings, both positive and negative.

First the negative findings, which are bound to dominate the headlines:

  • The single largest and most potent prediction is that a $15 minimum wage will result in the ‘loss of approximately 65,000 jobs’ (50,000 when we take into consideration the job creation associated with greater consumer spending). This will be the headline-grabbing take away from the study. I will return to this claim below, but it is important to note that a $15 minimum wage will not mean that 50,000 workers will lose their jobs.
  • In response to higher payroll costs, business will try to reduce expenses by increasing automation and by substituting minimum wage workers for higher-paid, more productive workers, thus leading to job losses for workers presently at the minimum wage.
  • Job losses are expected to be concentrated amongst teens, young adults and recent immigrants.
  • Business will attempt to raise prices to deal with the higher payroll costs. This, in turn, is expected to reduce sales, which will trigger further job losses.
  • Consumer price inflation is expected to be ratcheted up by 0.5 percent, which will dampen consumer spending.
  • The FAO concludes that a higher minimum wage is not an effective tool for alleviating poverty because many people working at the statutory minimum come from affluent (above-median income) households. The FAO estimates that just 27 percent of the total gains in labour income will benefit low-income households, while another one-third will flow to households between the low-income threshold ($46,000) and the median-income households ($92,000), leaving 40 percent of the income gains for households with above-median incomes.
  • The overall conclusion is unfavourable: by targeting low-income workers instead of low-income households, the pending increase to Ontario’s minimum wage will fail to significantly reduce poverty, though it will cost many Ontarians their jobs.

On the positive side of things, the FAO’s study notes:

  • Roughly 1.6 million workers will be directly affected by the minimum wage increase (that is 22 percent of the labour market), while those currently making $15-$19 per hour will likely be indirectly affected.
  • Whereas the majority of people currently working at the statutory minimum wage (520,000 people, or seven percent of the labour market) are either teenagers (15-19 years of age), young adults (20-24) or part-timers, once the $15 minimum wage is brought in, most minimum wage workers will be adults and most will be full-time earners. This suggests that the main group benefitting from the minimum wage increase is the people who are most likely to be economically independent and/or have economic dependents (namely children). I raise this because, ordinarily, the group to be most directly benefitted by an increase to the minimum wage—an increase that would usually range from $0.25 to $1.00—would be the teens and young adults working directly at the statutory minimum. Because the proposed increase to the minimum wage is so large ($3.40/hr over the next 17 months) it will capture many more adults in its net (and many more low-income households, too).
  • The new minimum wage is expected to redistribute income from businesses to workers, raise total labour income by 1.3 percent by 2019 and, in turn, boost economic activity. The associated increase in consumer spending will stimulate economic activity and lead to 15,000 new jobs being created, thus partially offsetting the 65,000 expected jobs lost.
  • The scholarly research in Canada finds that higher hourly wages are associated with greater employee satisfaction, reduced turnover and associated training costs, and improved labour productivity, all of which was mentioned (or implicitly recognized) by the FAO study (unlike the study commissioned by the Ontario Chamber of Commerce, which focused only on the economic costs of Bill 148).
  • The scholarly research also suggests that there is no significant impact on adult employment from a higher minimum wage, which the FAO built into their framework.
  • There is expected to be a significant spillover effect arising from a $15 minimum wage. The FAO assumed that those currently earning between $15 and $17 per hour would experience a wage increase of 7.5 percent and those currently earning $17 to $19 per hour would see their earnings increase by three percent. So it’s not just those under $15 per hour who are scheduled to see an increase. Those currently between $11.40 and $19 per hour will likely see an increase. That’s a big portion of the labour market that is about to get a pay raise!

In what follows, I elaborate and assess the findings contained in the FAO report.

First, and most significantly, a $15 minimum wage is not expected to cause 50,000 people to be laid off. The language used by the FAO is ambiguous on this issue. They refer, variously, to ‘job losses’ and ‘reduced employment’, but in footnote #5 they refer to three dis-employment effects including outright job losses, decelerating job creation and a reduction in hours worked. In conversation with FAO economists, I asked for clarification on this matter and was told that 50,000 workers are not expected to lose their jobs. Rather, the combined dis-employment effects add up to 50,000 jobs equivalent lost.

I doubt the media will note this, and part of the problem flows from language selection, but there is a difference between an existing worker being laid off and the rate of (future) job creation slowing down. In in the former scenario an actual person is made materially worse off, while in the latter situation, a hypothetical worker—someone who is not presently employed, but who may seek work in the future—is not able to find a job. In public policy research there is a balance to be struck between terminological precision and conceptual clarity, on the one hand, and readability and accessibility on the other. I don’t fault the FAO for their choice of words, but the likelihood that their claim will be misinterpreted by large swaths of the public (and by public officials) will approach 100 percent.

Second, it is not clear that the job loss estimates for teens and young adults are in line with the latest economic research. The FAO explicitly references Morley Gunderson’s research on the interplay between teen and young adult employment and the minimum wage. Without citing them directly, though, in conversation with the FAO I learned that they also relied on a more recent inquiry by Pierre Brochu and David Green, who find a much weaker relationship between a higher minimum wage and the dis-employment effects among young workers. The FAO claims that their estimates are based on the ‘mid-point in the range’ of scholarly estimates, which implies that the negative employment effects may well be too high (or too low, as they note).

Third, the demographic makeup of those who may lose their jobs is surely significant, though it went unmentioned in the study. The FAO notes that the dis-employment effects will be most strongly felt by teenagers and young adults. The FAO also notes that many of the beneficiaries of the minimum wage hike will be workers in households with above-median incomes, some even from very affluent families. The implication, confirmed in conversation with FAO economists, is that 50 percent of the job losses are going to be felt by young workers coming from affluent households. From a policy perspective this is important. There is surely a social (and indeed, moral) difference between an individual losing a job who has significant financial responsibilities, including provision for economic dependents (including children), and someone unable to find work who, themselves, is economically dependent on another adult. If future job creation for affluent teenagers is one casualty of higher earnings for low-income working parents, that may be a policy trade-off that is worth making.

Fourth, the figure of 50,000 sounds high, but there was no timeline attached to this estimate. In correspondence with the FAO, I learned that the dis-employment effects will play themselves out in the ‘short to medium term’, meaning a few months to a few years. This is also significant. 50,000 ‘job losses’ in one month will have a very different macroeconomic effect than 50,000 jobs lost over a three-year period. Likewise, had the FAO not used absolute job loss numbers, relying instead on relative job losses, the public perception would be rather different. Just think of the headline: ‘50,000 jobs lost as a consequence of a $15 minimum wage’ in comparison with ‘0.7 percent of Ontario’s labour market likely to be negatively affected by $15 minimum wage’. Both headlines are equally true, but the public perception in the first will be very negative, while the perception in the latter would be indifference (0.7 percent amounts to a rounding error in the context of a labour market of 7.7 million people).

Fifth, there are significant omissions in the study, some of which were flagged but some of which were overlooked. For example, there is well-documented research linking a broad range of health outcomes with income and socio-economic status (see here and here, for example). Moving up the income ladder is associated with improved health outcomes, including life expectancy, and by implication reductions in health care spending and hospital budgets. The relationship between low-income and health outcomes was flagged in footnote #1, but was excluded from the study.

Likewise, recent research by Daniel Kahneman and Angus Deaton (two of the greatest living economists) finds that there is a positive relationship between income, on the one hand, and happiness, on the other. In this context, ‘happiness’ can mean either ‘emotional well-being’ or ‘overall life satisfaction’. And while these two dimensions of happiness differ in important ways, both rise with one’s income (though emotional well-being maxes out around $75,000 USD). The Government of Ontario has very few policy levers at its disposal that can directly and immediately improve either the emotional well-being or the overall life satisfaction of roughly two million Ontarian workers and their families. Surely this is a lever that should be pulled.

Similarly, while the economic cost associated with absolute poverty was not assessed, the very well-documented positive social consequences associated with reductions in relative poverty (read: income inequality) were completely overlooked. In its review of the literature, the Ontario Government’s 2014 Advisory Panel on the Minimum Wage noted that a higher minimum wage is associated with both reduced wage inequality and overall income inequality. This is a significant omission and, while it may not have fit inside the parameters of the study, policy-makers cannot remain deaf to the call of income inequality.

Sixth, the FAO’s study overlooked the issue of the gender wage gap (and labour market segmentation, generally). Women are over-represented in minimum wage jobs, including part-time status and in some industries that are heavily reliant on low-wage work, including retail and accommodation & food services. Given the policy significance of the gender wage gap for the Ontario Government’s political objectives, this seems like a considerable oversight. An increase to the minimum wage will likely help close the gender wage gap, as will other provisions with Bill 148, including facilitating access to union representation.

Seventh, poverty is a complex phenomenon with many causes. It must be noted that there is an important distinction between the poverty associated with unemployment and/or the absence of income and the poverty associated with a low-paying job. Clearly, an increase in the minimum wage will not help those who are poor because they do not have a job. A higher minimum wage (nor any single policy instrument, for that matter) cannot solve the problem of poverty as such, though boosting the minimum wage can help alleviate working poverty, both relative and absolute.

Eighth and finally, it is not clear to me that, even if we accept the FAO’s estimates as true, their conclusion necessarily follow from the evidence. The FAO states that 1.6 million people will be directly affected by a $15 minimum wage and that those currently working between $15 and $19 will benefit from the spillover effects. In other words, a very large proportion of Ontario’s labour market is set to receive a pay raise. The Ontario Government certainly has other policy options at its disposal when it comes to improving the economic station of the least well off (including the working income tax credit), but to conclude that a higher minimum wage is an ‘ineffective tool’ for dealing with poverty does not seem in line with the FAO’s findings. A more accurate conclusion, from my perspective, is that a higher minimum wage is not the only tool for dealing with poverty. It is one tool in a broad array of tools, but because the minimum wage will give a large chunk of Ontarian workers a pay raise, I fail to see how this tool could be deemed ‘ineffective’.

There is more to say about this study, but I leave it there for now. It is likely to cause quite a stir in the coming weeks. Let’s just hope the policy discussions that flow therein are factually-grounded.

 

 

 

 

Some comments on the Financial Accountability Office of Ontario’s minimum wage commentary

Published by Anonymous (not verified) on Thu, 14/09/2017 - 3:05am in

The Financial Accountability Office of Ontario (FAO)—an independent, arm’s length, non-partisan research institute—released a paper on September 12th outlining the likely economic impacts flowing from the pending minimum wage increase (see here). The FAO’s findings are already garnering significant media attention and will almost certainly be used by the opponents of Bill 148 as further proof that the Ontario Government is economically reckless.

Contrary to the study commissioned by the Ontario Chamber of Commerce (which warned of 185,000 jobs lost over two years), the Financial Accountability Office is not institutionally or ideologically wedded to a particular political position. This non-partisanship is reflected in the FAO’s findings, which flagged the potential drawbacks associated with a higher minimum wage, yes, but also included many (though not all) well-documented benefits.

Before I provide my reflection on the study’s contents, I wanted to summarize some of the key findings, both positive and negative.

First the negative findings, which are bound to dominate the headlines:

  • The single largest and most potent prediction is that a $15 minimum wage will result in the ‘loss of approximately 65,000 jobs’ (50,000 when we take into consideration the job creation associated with greater consumer spending). This will be the headline-grabbing take away from the study. I will return to this claim below, but it is important to note that a $15 minimum wage will not mean that 50,000 workers will lose their jobs.
  • In response to higher payroll costs, business will try to reduce expenses by increasing automation and by substituting minimum wage workers for higher-paid, more productive workers, thus leading to job losses for workers presently at the minimum wage.
  • Job losses are expected to be concentrated amongst teens, young adults and recent immigrants.
  • Business will attempt to raise prices to deal with the higher payroll costs. This, in turn, is expected to reduce sales, which will trigger further job losses.
  • Consumer price inflation is expected to be ratcheted up by 0.5 percent, which will dampen consumer spending.
  • The FAO concludes that a higher minimum wage is not an effective tool for alleviating poverty because many people working at the statutory minimum come from affluent (above-median income) households. The FAO estimates that just 27 percent of the total gains in labour income will benefit low-income households, while another one-third will flow to households between the low-income threshold ($46,000) and the median-income households ($92,000), leaving 40 percent of the income gains for households with above-median incomes.
  • The overall conclusion is unfavourable: by targeting low-income workers instead of low-income households, the pending increase to Ontario’s minimum wage will fail to significantly reduce poverty, though it will cost many Ontarians their jobs.

On the positive side of things, the FAO’s study notes:

  • Roughly 1.6 million workers will be directly affected by the minimum wage increase (that is 22 percent of the labour market), while those currently making $15-$19 per hour will likely be indirectly affected.
  • Whereas the majority of people currently working at the statutory minimum wage (520,000 people, or seven percent of the labour market) are either teenagers (15-19 years of age), young adults (20-24) or part-timers, once the $15 minimum wage is brought in, most minimum wage workers will be adults and most will be full-time earners. This suggests that the main group benefitting from the minimum wage increase is the people who are most likely to be economically independent and/or have economic dependents (namely children). I raise this because, ordinarily, the group to be most directly benefitted by an increase to the minimum wage—an increase that would usually range from $0.25 to $1.00—would be the teens and young adults working directly at the statutory minimum. Because the proposed increase to the minimum wage is so large ($3.40/hr over the next 17 months) it will capture many more adults in its net (and many more low-income households, too).
  • The new minimum wage is expected to redistribute income from businesses to workers, raise total labour income by 1.3 percent by 2019 and, in turn, boost economic activity. The associated increase in consumer spending will stimulate economic activity and lead to 15,000 new jobs being created, thus partially offsetting the 65,000 expected jobs lost.
  • The scholarly research in Canada finds that higher hourly wages are associated with greater employee satisfaction, reduced turnover and associated training costs, and improved labour productivity, all of which was mentioned (or implicitly recognized) by the FAO study (unlike the study commissioned by the Ontario Chamber of Commerce, which focused only on the economic costs of Bill 148).
  • The scholarly research also suggests that there is no significant impact on adult employment from a higher minimum wage, which the FAO built into their framework.
  • There is expected to be a significant spillover effect arising from a $15 minimum wage. The FAO assumed that those currently earning between $15 and $17 per hour would experience a wage increase of 7.5 percent and those currently earning $17 to $19 per hour would see their earnings increase by three percent. So it’s not just those under $15 per hour who are scheduled to see an increase. Those currently between $11.40 and $19 per hour will likely see an increase. That’s a big portion of the labour market that is about to get a pay raise!

In what follows, I elaborate and assess the findings contained in the FAO report.

First, and most significantly, a $15 minimum wage is not expected to cause 50,000 people to be laid off. The language used by the FAO is ambiguous on this issue. They refer, variously, to ‘job losses’ and ‘reduced employment’, but in footnote #5 they refer to three dis-employment effects including outright job losses, decelerating job creation and a reduction in hours worked. In conversation with FAO economists, I asked for clarification on this matter and was told that 50,000 workers are not expected to lose their jobs. Rather, the combined dis-employment effects add up to 50,000 jobs equivalent lost.

I doubt the media will note this, and part of the problem flows from language selection, but there is a difference between an existing worker being laid off and the rate of (future) job creation slowing down. In in the former scenario an actual person is made materially worse off, while in the latter situation, a hypothetical worker—someone who is not presently employed, but who may seek work in the future—is not able to find a job. In public policy research there is a balance to be struck between terminological precision and conceptual clarity, on the one hand, and readability and accessibility on the other. I don’t fault the FAO for their choice of words, but the likelihood that their claim will be misinterpreted by large swaths of the public (and by public officials) will approach 100 percent.

Second, it is not clear that the job loss estimates for teens and young adults are in line with the latest economic research. The FAO explicitly references Morley Gunderson’s research on the interplay between teen and young adult employment and the minimum wage. Without citing them directly, though, in conversation with the FAO I learned that they also relied on a more recent inquiry by Pierre Brochu and David Green, who find a much weaker relationship between a higher minimum wage and the dis-employment effects among young workers. The FAO claims that their estimates are based on the ‘mid-point in the range’ of scholarly estimates, which implies that the negative employment effects may well be too high (or too low, as they note).

Third, the demographic makeup of those who may lose their jobs is surely significant, though it went unmentioned in the study. The FAO notes that the dis-employment effects will be most strongly felt by teenagers and young adults. The FAO also notes that many of the beneficiaries of the minimum wage hike will be workers in households with above-median incomes, some even from very affluent families. The implication, confirmed in conversation with FAO economists, is that 50 percent of the job losses are going to be felt by young workers coming from affluent households. From a policy perspective this is important. There is surely a social (and indeed, moral) difference between an individual losing a job who has significant financial responsibilities, including provision for economic dependents (including children), and someone unable to find work who, themselves, is economically dependent on another adult. If future job creation for affluent teenagers is one casualty of higher earnings for low-income working parents, that may be a policy trade-off that is worth making.

Fourth, the figure of 50,000 sounds high, but there was no timeline attached to this estimate. In correspondence with the FAO, I learned that the dis-employment effects will play themselves out in the ‘short to medium term’, meaning a few months to a few years. This is also significant. 50,000 ‘job losses’ in one month will have a very different macroeconomic effect than 50,000 jobs lost over a three-year period. Likewise, had the FAO not used absolute job loss numbers, relying instead on relative job losses, the public perception would be rather different. Just think of the headline: ‘50,000 jobs lost as a consequence of a $15 minimum wage’ in comparison with ‘0.7 percent of Ontario’s labour market likely to be negatively affected by $15 minimum wage’. Both headlines are equally true, but the public perception in the first will be very negative, while the perception in the latter would be indifference (0.7 percent amounts to a rounding error in the context of a labour market of 7.7 million people).

Fifth, there are significant omissions in the study, some of which were flagged but some of which were overlooked. For example, there is well-documented research linking a broad range of health outcomes with income and socio-economic status (see here and here, for example). Moving up the income ladder is associated with improved health outcomes, including life expectancy, and by implication reductions in health care spending and hospital budgets. The relationship between low-income and health outcomes was flagged in footnote #1, but was excluded from the study.

Likewise, recent research by Daniel Kahneman and Angus Deaton (two of the greatest living economists) finds that there is a positive relationship between income, on the one hand, and happiness, on the other. In this context, ‘happiness’ can mean either ‘emotional well-being’ or ‘overall life satisfaction’. And while these two dimensions of happiness differ in important ways, both rise with one’s income (though emotional well-being maxes out around $75,000 USD). The Government of Ontario has very few policy levers at its disposal that can directly and immediately improve either the emotional well-being or the overall life satisfaction of roughly two million Ontarian workers and their families. Surely this is a lever that should be pulled.

Similarly, while the economic cost associated with absolute poverty was not assessed, the very well-documented positive social consequences associated with reductions in relative poverty (read: income inequality) were completely overlooked. In its review of the literature, the Ontario Government’s 2014 Advisory Panel on the Minimum Wage noted that a higher minimum wage is associated with both reduced wage inequality and overall income inequality. This is a significant omission and, while it may not have fit inside the parameters of the study, policy-makers cannot remain deaf to the call of income inequality.

Sixth, the FAO’s study overlooked the issue of the gender wage gap (and labour market segmentation, generally). Women are over-represented in minimum wage jobs, including part-time status and in some industries that are heavily reliant on low-wage work, including retail and accommodation & food services. Given the policy significance of the gender wage gap for the Ontario Government’s political objectives, this seems like a considerable oversight. An increase to the minimum wage will likely help close the gender wage gap, as will other provisions with Bill 148, including facilitating access to union representation.

Seventh, poverty is a complex phenomenon with many causes. It must be noted that there is an important distinction between the poverty associated with unemployment and/or the absence of income and the poverty associated with a low-paying job. Clearly, an increase in the minimum wage will not help those who are poor because they do not have a job. A higher minimum wage (nor any single policy instrument, for that matter) cannot solve the problem of poverty as such, though boosting the minimum wage can help alleviate working poverty, both relative and absolute.

Eighth and finally, it is not clear to me that, even if we accept the FAO’s estimates as true, their conclusion necessarily follow from the evidence. The FAO states that 1.6 million people will be directly affected by a $15 minimum wage and that those currently working between $15 and $19 will benefit from the spillover effects. In other words, a very large proportion of Ontario’s labour market is set to receive a pay raise. The Ontario Government certainly has other policy options at its disposal when it comes to improving the economic station of the least well off (including the working income tax credit), but to conclude that a higher minimum wage is an ‘ineffective tool’ for dealing with poverty does not seem in line with the FAO’s findings. A more accurate conclusion, from my perspective, is that a higher minimum wage is not the only tool for dealing with poverty. It is one tool in a broad array of tools, but because the minimum wage will give a large chunk of Ontarian workers a pay raise, I fail to see how this tool could be deemed ‘ineffective’.

There is more to say about this study, but I leave it there for now. It is likely to cause quite a stir in the coming weeks. Let’s just hope the policy discussions that flow therein are factually-grounded.

 

 

 

 

2.5 Million Fewer Poor In 2016; Biggest 2-Year Decline In Poverty Since 1969

Published by Anonymous (not verified) on Thu, 14/09/2017 - 1:00am in

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Above Photo: From Popular Resistance Improving Economy and Help from Now-Threatened Assistance Make the Difference The poverty rate declined to 12.7 percent in 2016, down from 13.5 percent in 2015 and from 14.8 percent in 2014. That 2.1 percentage point drop is the largest two-year decline since 1969. Since 2014, the number of people in poverty has dropped by more than 6 million. Children remain disproportionately poor, with 18 percent (13.3 million) living in poverty, but the proportion of children in poverty also declined steeply over the past two years (down from 21.1 percent in 2014, nearly a 2.3 million decline). In part, the improvement in poverty was related to the increase in people with earnings (up 1.2 million since 2015), and the increase in the number of people working full-time/year-round (up 2.2 million since 2015). The lowest 20 percent of households saw their incomes increase by about 9 percent over two years. Also very important in reducing poverty were government programs. As shown by the Census Bureau’s Supplementary Poverty Measure, without Social Security, the total number poor would have been more than 26 million higher (with nearly 1.5 million more children poor). Low-income tax credits such as the EITC and Child Tax Credit prevented nearly 8.2 million from being poor (nearly 4.4 million children). SNAP/food stamps lifted nearly 3.6 million out of poverty (1.5 million children). Housing subsidies and Supplemental Security Income each lifted more than 3 million people out of poverty. “The increase in people with earnings and the help of tax credits and other assistance has helped millions of people escape poverty,” said Deborah Weinstein, Executive Director of the Coalition on Human Needs. “But the Trump administration and the House Budget Committee have called for big cuts in some of the programs most effective at reducing poverty, including tax credits, SNAP/food stamps, and housing assistance. Weakening these programs would threaten the progress finally being made, years after the end of the Great Recession.” African Americans and Latinos are still more than twice as likely to be poor as non-Hispanic whites, but their poverty has also declined. 22 percent of African Americans (down from 24.1 percent in 2015) and 19.4 percent of Hispanic/Latinos (down from 21.4 percent in 2015) are poor, compared to 8.8 percent of non-Hispanic whites (whose poverty rate was 9.1 percent in 2015). African American and Latino children make up about 43 percent of all children, but two-thirds of all poor children. Their child poverty rates remain extremely high (30.8 percent of African American children are poor, as are 26.6 percent of Hispanic children). “Lower earnings and higher poverty among communities of color remain among our nation’s biggest challenges,” said Weinstein. “In particular, reducing child poverty among communities of color should be a top priority, since they are such an important part of our future.” Today’s release also showed a continued decline in the proportion of uninsured, from 9.1 percent in 2015 to 8.8 percent in 2016. Here too, government programs played an important role: In states that chose to expand their Medicaid programs, 13 percent of their working age population between 100 – 300 percent of the poverty line were uninsured in 2016, compared to 20.6 percent of the same income range for states that did not expand Medicaid. “Those in Congress who want to end the expansion of Medicaid will hurt a great many moderate income workers,” said Weinstein. Editor’s note: Click here to view CHN’s “First Look at Poverty and Health Insurance: Progress We Need to Build On,” a chart detailing some of the statistics released today by the U.S. Census Bureau.

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