inequality

Error message

Deprecated function: The each() function is deprecated. This message will be suppressed on further calls in _menu_load_objects() (line 579 of /var/www/drupal-7.x/includes/menu.inc).

A parable for both fairness and the climate

Published by Anonymous (not verified) on Mon, 17/01/2022 - 10:48pm in

Oxfam in recent article have released news that the Covid pandemic has made inequality even worse: New billionaire minted every 26 hours, as inequality contributes to the death of one person every four seconds  In a new briefing “Inequality Kills,” published today ahead of the World Economic Forum’s Davos Agenda, Oxfam says that inequality is... Read more

The Highs and Lows of 2021: A Disabled Person’s Perspective

Published by Anonymous (not verified) on Fri, 14/01/2022 - 8:00pm in

The Highs and Lows of 2021A Disabled Person’s Perspective

Penny Pepper shares some of the enduring inequalities and the memorable breakthroughs which characterised the past year for disabled people

ShareEmailTwitterFacebook

When attempting a review of 2021 from a disability perspective, it’s hard to avoid the Coronavirus pandemic.

Discussing this with my networks, friends and colleagues, I asked: was there anything beyond COVID-19?

We already know the horrific statistics that disabled people have been disproportionately affected by the virus for reasons that are not entirely clear. According to the Health Foundation, “there has been a surprising absence of analysis of the reasons for this particular inequality”. 

But some of the impacts on disabled people that have not received as much exposure include chronic loneliness, a multiplying of barriers and exacerbated isolation. If you are already restricted by barriers to your freedom – along with limited support – it’s no wonder that COVID-19 has increased them.

It is difficult for anyone not to sink into the psychological effects of this ‘new normal’ – a mindset likely to deteriorate with the Government appearing to give up on those citizens that it has corralled into the paddock of the ‘most vulnerable’. Indeed, Long COVID may bring new members to the disability club – and no doubt the shock at how much discrimination and even abuse disabled people face will leave many reeling.

Add to this the impact on the NHS. Many chronic secondary health conditions disabled people already face cannot now be treated regularly or in time, resulting in complications that are more serious – more expensive – in the future. 


‘Life Unworthy of Life’The Lessons of T4
Stephen Unwin

The Government’s much-delayed non-event of its health and disability green paper – ‘Shaping Future Support‘ – was a repeat exercise in old policies boiling down to the idea of ‘can we make this cheaper and get you back to work?’. It disregarded the ‘social model’ of disability – which examines how society is organised in a way that is non-responsive to disabled people – opting squarely to ‘improving’ the lives of individual disabled people.  

The Health and Care Bill likewise was met with mixed responses. Disabled people hardly merited a mention in it and the proposed legislation remains a confusing, contradictory effort. As reported by the King’s Fund think tank, “the bill falls far short of a meaningful commitment on social care”.

Disabled activists roll their weary eyes. Social care is already in tatters; the battlefield and the casualties mount up even now. From being denied support to use the toilet at night, to endless heartless ‘assessments’, the current approach is obscene and counter-intuitive to the original purpose of a welfare state. Unsurprisingly, not one person supported the Government’s approach when I issued a call-out for views across my networks. May the Gods help us all if this bill is implemented. 

2021 also saw the independent peer Baroness Jane Campbell and others speak out to support the continuation of ‘hybrid’ online working, although a number of disabled people reported that it was not always an easy option. Like most people, we are missing the interaction with other human beings – the right to do this, to be within a community in the outside world, is something for which disabled people have campaigned fiercely, whether it’s through the independent living movement or the closure of vast mental asylums.

It is not for the first time I feel that disabled people are more acutely aware of what it means to lose basic freedoms than their non-disabled counterparts.

Some Memorable Highlights

Determined to find some highlights in 2021, I was reminded of some breakthrough moments within society and the media.

Channel 4 reported an overall viewing figure of 20 million for the Paralympic Games. Some people with Down’s Syndrome secured the right for their campaign to challenge what they believe is a discriminatory abortion law at the High Court, hailed as a ground-breaking action for people with learning difficulties. 

We saw the deaf Eastenders actress, Rose Ayling-Ellis, win BBC’s Strictly Come Dancing, irresistibly lifting the mood of many and leading to a huge interest in learning BSL. Veteran disabled actor Liz Carr was on TV a lot – including in a recent episode of The Witcher, wearing a fetching ginger wig, and in the much-delayed release of the Hollywood film InfiniteThe Bookseller – the industry magazine of publishing – even had a ‘disability special edition’. Responses may have been mixed, but it’s a great start. 

One of my favourite highlights was screenwriter Jack Thorne’s MacTaggart Lecture at the Edinburgh TV Festival last August. As an old-timer still determined to tell the widest disability story, Thorne’s words encourage my cautious optimism. His lecture was important because we remain ignored, side-lined, overlooked, patronised, second-class, and sometimes hated without much condemnation. We need to be heard.


Recognise Disabled People’s RightsInstead of Turning them into Charity Cases
Penny Pepper

Our visibility on TV, in particular, is increasing and stories are moving away from the tired clichés of ‘pity porn’ and its flip-side twin ‘triumph over tragedy’. What happens behind the camera counts for just as much in terms of equality – from who is writing material to who the make-up artist is. As Thorne observed, “TV has failed disabled people”, and there is a lot to do. The statistics on this make a mockery of inclusion initiatives – and committees and forums and think tanks – that I have been privy to for more than 25 years. 

A story helps us become human, but as the biggest marginalised group comprising 20% of the population, we scarcely make up 2% anywhere within diversity streams. Our chronic absence from the mainstream narrative links directly to institutional discrimination, including disabled people have been treated during the Coronavirus pandemic and the ongoing scandals with the Department for Work and Pensions (always a low point). 

Among my personal highlights in 2021 was writing for Byline Times and the engagement with readers.

Surviving my working-class background, 1970s power cuts as a kid and Thatcher in the 80s, it’s good to look back on what we’ve all survived – and I remain optimistic with the grassroots disability activism that continues. Together, let’s look out of the window – watch less mainstream news and wait for the sun.

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post The Highs and Lows of 2021: A Disabled Person’s Perspective appeared first on Byline Times.

The Growing Regional Wealth Gap and Why it Matters

Published by Anonymous (not verified) on Tue, 11/01/2022 - 2:00am in

The Growing Regional Wealth Gap& Why it Matters

Sam Bright evaluates new data showing a growing divide between richer and poorer parts of the country

ShareEmailTwitterFacebook

New data has been released by the Office for National Statistics (ONS) in recent days about the wealth gap between people living in different areas of the country.

The statistics haven’t generated much attention – even though they show burgeoning wealth inequalities between the richest and poorest regions.

The data reveals that average (median) wealth among individuals in the south-east of England (£236,000) was £157,000 higher than in the north-east (£79,000), between April 2018 and March 2020. Or, to put it another way, individual wealth in the north-east was just a third of individual wealth in the south-east.

What’s more, the ONS data shows that these wealth inequalities have been growing markedly in recent years. Indeed, the wealth divide between the south-east and north-east was £80,000 in nominal terms – or £92,000 after adjusting for inflation – in July 2010 to June 2012, meaning that the gap has roughly doubled over the past decade.

And the numbers are even starker in relation to household rather than individual wealth. Household wealth has increased in the south-east by 43% since 2006, now standing at £503,400 – compared to just £168,500 in the north-east.

These wealth inequalities are largely a product of the housing market, and the rapid inflation of property prices in the capital – and the wider south-east – in relation to the rest of the country. In 2020, the average house price in London stood at £497,000 – almost double the England-wide average of £262,000. In Yorkshire, the figure was £175,000, in the north-west £177,000, and £275,000 in the south-west.

This hyper-inflation has been persistent for decades, entrenching obscene wealth disparities between homeowners (and non-homeowners) in different regions.

In London, property inflation stood at 200% in the 1980s, more than 100% in the 2000s and more than 60% in the 2010s. Consequently, if one household bought a property in London for £50,000 in the early 1980s and another bought a house in Yorkshire for the same amount at the same time, the former would now be worth some £400,000 more than the latter (£770,000 in London versus £380,000 in Yorkshire).

This has, in turn, pumped up the London rental market. As of May 2021, the average rent in London was £1,583 a month, compared to a UK average of £997. Renters in north-west England were paying roughly half the amount required in the capital – at just £790 a month.


Why Johnson Isn’t Serious About‘Levelling Up’
Sam Bright

Why Does this Matter?

Place-based inequalities have grown under the radar in recent decades. Commentators on the left have continued to place emphasis on class divisions – the inequalities between rich and poor, regardless of geography – rather than inspecting how these disparities manifest within and between regions.

However, as recent elections (and referendums) have demonstrated, place-based grievances are increasingly important in understanding the political and social fabric of the UK.

The Conservative Party’s victory at the 2019 General Election, and Vote Leave’s success in 2016, were super-charged by a feeling of political and economic marginalisation among ‘left behind’ towns in the north of England, the Midlands and Wales. Similar resentments in Scotland nearly propelled it to independence in 2014, and have underwritten the SNP’s success in the country for the past decade.

The nation’s wealth continues to accumulate among a narrow cohort of the population living and/or trading in the south-east. However, the way in which this is occurring – through property inflation – is arbitrary and unfair. People working in the same professions, earning roughly the same wages and paying the same taxes, may be on the opposite ends of the wealth barometer – merely due to the location of their property.

Many people argue that these regional wealth gaps are insignificant, because the wealth of homeowners is relatively immobile. In other words: a person owning a home in London is likely to see little benefit from their property wealth, because they’re likely to stay in the London property market for years – buying another house that has inflated roughly at the same rate as theirs. They’re not able to improve their living conditions through the growth of their property wealth, because all properties in London are similarly over-priced.

However, the Coronavirus pandemic has changed this arithmetic. The normalisation of home-working has lowered the compulsion to live in the same place that you work – allowing property owners in the capital to liquidate their assets and venture beyond the confines of London. Indeed, Londoners bought homes outside the capital worth £27.6 billion in 2020, the largest amount spent since 2007.

This has a potentially corrupting effect on housing markets outside London – pushing up demand in areas with comparatively lower house prices and making it harder for local people to step onto the property ladder.

ENJOYING THIS ARTICLE?
HELP US TO PRODUCE MORE

Receive the monthly Byline Times newspaper and help to support fearless, independent journalism that breaks stories, shapes the agenda and holds power to account.

PAY ANNUALLY – £39 A YEAR

PAY MONTHLY – £3.50 A MONTH

MORE OPTIONS

We’re not funded by a billionaire oligarch or an offshore hedge-fund. We rely on our readers to fund our journalism. If you like what we do, please subscribe.

The imbalanced inflation of property prices in the south-east also creates acute inter-generational inequalities. London property owners will eventually be able to pass down their assets to the next generation, dividing the wealth of the nation based on property inheritance. This is particularly significant given the concentration of income and opportunities in the capital; London represents a disproportionate 23% of national output, and its GDP per capita exceeds the England-wide average by some 40%.

Ergo, if your parents owned a property in London or the wider south-east, you are infinitely more likely to be able to afford a property in this part of the country – allowing you to take advantage of the riches afforded by our all-consuming capital.

Moreover, if London rental prices continue to outstrip the rest of the country, and if opportunities continue to be enclosed in the capital, vast inter-generational inequalities will widen between people in different regions. Moving down to London on a graduate salary is already prohibitively expensive; costs that are not suffered by Londoners who are able to live at home during the early years of their career.

If salaries further stagnate, as they have for the past 15 years, and London property prices continue to rise exponentially, young people outside the capital’s commuter belt will be locked out of the city that currently acts as the engine of the British economy. This process – which shows no signs of abating – violates the principles of fairness and equality of opportunity on which our economy and education system is ostensibly premised.

Regional inequality may not be the most popular injustice in modern Britain, but it is certainly one of the most profound.

Sam Bright’s book, ‘Fortress London: Why We Need to Save the Country From its Capital’, will be published this year

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post The Growing Regional Wealth Gap and Why it Matters appeared first on Byline Times.

The Effect of Monetary and Fiscal Policy on Inequality

Published by Anonymous (not verified) on Sat, 08/01/2022 - 1:25am in

How does accounting for households’ heterogeneityand in particular inequality in income and wealth—change our approach to macroeconomics? What are the effects of monetary and fiscal policy on inequality, and what did we learn in this regard from the COVID-19 pandemic? What are the implications of inequality for the transmission of monetary policy, and its ability to stabilize the economy? These are some of the questions that were debated at a recent symposium on “Heterogeneity in Macroeconomics: Implications for Policy” organized by the new Applied Macroeconomics and Econometrics Center (AMEC) of the New York Fed on November 12.

The Symposium

The Symposium brought together a distinguished panel of researchers from academia and policy institutions—some of whom have written foundational works in the growing literature on heterogeneity in macroeconomicsfor an open and lively discussion on these topics. The conversation featured four sessions, two in the morning and two in the afternoon, which are outlined in the agenda (including links to all the presentations). A recording of the proceedings is also available on the Symposium website.

The morning sessions, which we cover in this post, explored the effects of monetary and fiscal policy on inequality. The afternoon sessions, covered in tomorrow’s post, examined the effect of inequality on the transmission of monetary and fiscal policy, and the normative lessons of this literature for monetary policy. This discussion was timely given the relevance of these topics in current policy debates, both in the United States and around the world. In the U.S., for example, the active debates on the macroeconomic impact of redistributive fiscal policy (see this Liberty Street Economics post on “excess savings”) and of the Federal Reserve’s new flexible average inflation targeting framework are in fact very much centered on questions of redistribution and of the uneven effects of policy on wages and unemployment.

Inequality, Fiscal Policy, and the COVID-19 Recession

The first session focused on understanding how recessions affect economic inequality, the policy tools that can mitigate these effects, and whether the COVID-19 experience taught us something new about the efficacy of these tools in providing support to those who need it.

Claudia Sahm of Stay-at-Home Macro (SAHM) Consulting and the Jain Family Institute discussed whether the fiscal policies that were employed in response to COVID-19 helped to mitigate economic hardship for those that were particularly marginalized by the epidemic. She argued that the answer was a resounding yes, but that, even with that help, the hardship was still greater for some, such as low-wage workers and people in minority groups. While the U.S. government’s COVID response could be described as going “big, … broad, and … fast,” there remains, Sahm said, room for improvement.

In particular, Sahm noted that the stimulus checks, which were sent out fairly rapidly and to nearly everyone excluding those in the top 20 percent of the income distribution, supported families with less income pre-COVID relatively more—therefore, this form of fiscal policy did help to mitigate some rise in inequality. Nonetheless, inequality was still present in many dimensions, none more so than in the death rate from COVID-19, where minorities suffered to a much greater extent, she said. The inequities can further be seen in the labor market, where the recovery in employment is thus far less complete for people of color. For example, as of October 2021, the employment rates for Blacks and Hispanics were 3 percentage points below their pre-COVID levels, while the employment rate for whites was 2 percentage points below its pre-COVID level. Sahm also noted that much of the inequality is structural, pre-dating COVID. In this sense, fiscal policies during the pandemic were fighting an uphill battle; so while they were partially successful, inequities remained.

Finally, Sahm gave several policy prescriptions for the future. First, she argued that we need to improve our existing automatic stabilizers such as the unemployment insurance (UI) system, which had difficulty reaching even those that were eligible. Second, she advocated introducing new automatic stabilizers like stimulus checks, with disbursement tied to economic indicators rather than reliant on the political process.

Peter Ganong of the University of Chicago focused on the UI system during the pandemic, noting that while there were other support programs (economic impact payments and the paycheck protection program, for example), UI was arguably the most able to target those in need.

Ganong noted that the COVID recession featured an unprecedented expansion of UI. First, there was an introduction of sizeable UI supplements, and second, eligibility was expanded. In terms of the supplements, Ganong pointed out that, while the stated goal of the legislators was to replace 100 percent of lost income, relative to that goal, legislators overshot, providing many with more than a 100 percent replacement rate. The UI supplements were therefore very progressive in that the replacement rate for those at the lower end of the (pre-displacement) income distribution was above 100 percent, while for those at the higher end of the distribution the replacement rate was less than 100 percent.

What were the effects of these payments on spending and job-finding rates for recipients? Using data from JPMorgan Chase Institute and the parent bank’s customers, Ganong showed that that the UI supplements increased spending and reduced the job-finding rate among recipients. The spending effects were much larger than previous estimates for the spending effects of UI, while the job-finding effects were six times smaller. In this sense, the supplements were largely a success, but the analysis helps underscore the fact that there are still issues that UI cannot fix, including the duration dependence in unemployment—that is, the fact that those who are unemployed longer have lower job-finding rates.

New York Fed President and CEO John Williams opened the discussion. His first question focused on the purpose of the stimulus checks in the COVID recession relative to prior recessions: was the focus on measuring the marginal propensity to consume (MPC) out of the checks misplaced, given that their intended purpose was primarily relief rather than a way to stimulate aggregate demand?

Sahm noted that, even during the COVID episode, stimulus checks both provided relief and stimulated consumption. She noted that those at the bottom 20 percent of the income distribution use 80 percent of their spending on necessities. Relatedly, Ganong noted that the MPC is still a relevant number because it measures both actual consumption out of the checks, as well as the need to consume out of the check, that is, those who have high MPCs are those who have a high marginal utility of consumption.

Williams also asked about the current degree of excess savings in the economy, noting that we do not know how it is distributed across households, and how the panelists viewed the propensity to consume out of that wealth over the next few months. Ganong pointed out that data from JPMorgan Chase account holders through July 2021 showed that the liquid asset balances for those in the bottom income quartile are up by 70 percent relative to their pre-pandemic levels, indicating that indeed even those at the bottom were able to save some of the transfers they received. Sahm said it is unlikely that these savings will deliver large consumption booms in the future since the MPC out of wealth is small, though she admitted that this issue is still an open question.

Finally, an audience member asked about other policy interventions such as those in Europe, and how they compare to those that were in the United States. For example, furlough policies and wage subsidies for those on furlough were much more heavily used in Europe relative to the United States. Would those have been a better solution relative to UI and stimulus checks? Sahm agreed that the so-called German model may be a better one, since it prevents individuals from entering long-term unemployment. Ganong had noted that entering long-term unemployment has the negative feature of duration dependence, that is, the longer the unemployment, the harder it is to find employment. In this regard, furlough programs would be able to prevent this experience.

How Does Monetary Policy Impact Inequality?

The second session focused on the impact of accommodative fiscal and especially monetary policy on the distribution of income and wealth. It asked whether running the economy “hot” for an extended time reduces inequality and improves outcomes disproportionally for disadvantaged groups or for low-income households, and about the effects of unconventional monetary policy (in particular, quantitative easing, or QE) on inequality.

Gianluca Violante from Princeton University addressed both questions from the perspective of quantitative Heterogeneous Agent New Keynesian (also known as HANK) models, which take into account distributional issues as well as the fact that households are not perfectly able to share risk with one another. Violante pointed out that the effects of QE on inequality are ambiguous. While on the one hand QE tends to increase the value of assets, thereby increasing inequality as assets are mostly held by rich people, it also lowers the cost of long-term borrowing, such as mortgages, favoring the middle class. Most important perhaps, unconventional policy is often the only option left to central banks to fight recessions when interest rates hit the zero lower bound. And recessions represent a “double whammy” for low income, less educated, and more disadvantaged households, as he argues in a paper with Heathcote and Perri.

In recessions, low-skilled workers are disproportionately likely to experience unemployment, which further reduces skills. In the presence of skill-biased technological change (that is, a change that works against low-skilled workers), a low-skilled individual may give up searching for a job, leading to an increase in non-participation and to a persistent gap in earnings relative to high-skilled workers. Violante then discussed ongoing work with Felipe Alves where they build on this literature to argue that policies such as average inflation targeting—which involve running the economy hot during expansions to compensate for the lower inflation during recessions—may have beneficial effects on the income distribution. This is because workers who lost their jobs in the recession get hired back during booms, in spite of having lost skills, and manage to regain some of those skills while being employed—a development that can result in persistently higher earnings for low-income households.

Stephanie Aaronson of the Brookings Institution then discussed what the notion of a hot economy entails. She highlighted how little agreement there is in the profession regarding this concept, especially given the uncertainty surrounding the measurement of the natural rate of unemployment, u*. She then pointed out that for more marginalized groups, such as Blacks and Hispanics, both the level of unemployment and its cyclicality are higher, suggesting that these workers benefit more from a tighter labor market. Borrowing from her work with Barnes and Edelberg and Daly, Wascher, and Wilcox, Aaronson showed that a hot economy (as measured by the unemployment rate being lower than u*) does help to reduce the unemployment gap between Black and Hispanic men and women with respect to their white counterparts. This finding does not apply to all disadvantaged groups, however, such as men with less than a college degree. In terms of income inequality, the effects of running the economy hot are even less clear, she added. This is partly because the composition of income across cohorts differs: high-income households receive a substantial fraction of their earnings from financial and business incomes, which tend to be very procyclical, while low-income households are more reliant on transfer income, which is mostly countercyclical.

Finally, Aaronson touched on inflation, which is a potential implication of running the economy hot, as the U.S. economy is currently witnessing. She emphasized that inflation has important redistributive consequences, both because low-income households tend to be borrowers and because recent research argues that their consumption basket may be more sensitive to inflation than that of higher-income households. In terms of implications for monetary policy, Aaronson concluded that stabilizing fluctuations in economic activity, and in particular avoiding recessions, ought to be a primary goal of policy given that recessions tend to disproportionally hurt marginalized groups—a message very much in accordance with Violante’s conclusions.

After the presentations, Williams opened the discussion by asking how we tell apart the cycle and the trend in analyzing inequality, especially because the phases of the business cycle have become longer over time. Aaronson replied that indeed distinguishing between the cyclical and structural sources of inequality is critical, as monetary policy may have limited efficacy against the latter, which should be the purview of fiscal policy. Violante agreed that there is solid evidence that technological changes and globalization are the main sources of the increase in inequality over the past decades, and these sources have little to do with monetary policy. However, as mentioned above, there are subtle interactions between the cycle and the trend where stabilization policies can play an important role. Another participant’s question further pushed on this point and asked Aaronson to what extent macro conditions interact with structural sources of inequality—for instance, employers may find it costlier to discriminate when the labor market is tight. Aaronson concurred and thought that this interaction was most likely one of the mechanisms behind the effect of a hot economy on unemployment gaps between Black and Hispanic and white workers, which she discussed earlier.

After the morning sessions, Williams gave a few remarks on the importance of heterogeneity for monetary policy analysis. Anticipating some of the discussion of the afternoon sessions, he highlighted the extent to which heterogeneity across sectors and households has been essential in analyzing the dynamics of the macroeconomy during the COVID-19 pandemic—especially the behavior of labor force participation, quits, and inflation. He mentioned that appreciating the correlation between health, job loss, lack of financial security, and access to credit is key to understanding the events since 2020, especially for communities of color and low-income households, and for deciding what needs to be done in terms of policy. Williams emphasized that the Fed explicitly recognizes heterogeneity in its reference to broad and inclusive employment goals. A discussion followed Williams’ remarks during which a number of issues were raised, such as the possible long-term effects of monetary policy, the definition of maximum employment in the Fed’s mandate, the heterogeneous costs of inflation and climate change, and the political economy of central banking.

The bottom line from the morning sessions was that both fiscal and monetary policy have meaningful effects on inequality. In light of this evidence, how should policy be conducted? This question was the topic of the afternoon sessions, discussed in the forthcoming companion post.

Marco Del Negro is a vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Keshav Dogra is a senior economist in the Bank’s Research and Statistics Group.

Laura Pilossoph is a senior economist in the Bank’s Research and Statistics Group.

Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

The Effect of Inequality on the Transmission of Monetary and Fiscal Policy

Published by Anonymous (not verified) on Sat, 08/01/2022 - 1:24am in

Monetary policy can have a meaningful impact on inequality, as recent theoretical and empirical studies suggest. In light of this, how should policy be conducted? And how does inequality affect the transmission of monetary policy? These are the topics covered in the second part of the recent symposium on “Heterogeneity in Macroeconomics: Implications for Policy,” hosted by the new Applied Macroeconomics and Econometrics Center (AMEC) of the New York Fed on November 12.

Inequality and the Transmission of Monetary and Fiscal Policy

The first session in the afternoon (the agenda includes links to all of the presentations) asked what we have learned from the new literature on Heterogeneous Agent New Keynesian (HANK) models about the transmission and the efficacy of monetary policy. It also asked what we learned from the COVID-19 recession and the associated policy response on the impact of redistributive policy on aggregate demand and supply.

Greg Kaplan from the University of Chicago discussed lessons from the HANK literature regarding monetary policy and its ability to stabilize economic activity. One lesson is that stabilization policy may be harder than envisaged in models with a representative agent. In representative agent models monetary policy can rely on the intertemporal substitution channel—lowering interest rates induces households to consume. This channel is much weaker in HANK models, partly because these models recognize that a number of households have a hard time shifting consumption over time either because they have little wealth or because their wealth is illiquid. Instead, the main transmission channel of monetary policy in HANK models involves changing household disposable income—and in particular affecting income for households with higher marginal propensities to consume. But this often involves redistributing resources among individuals, where some win and others loose (for example, debtors versus creditors) from policy actions.  

This finding points to two further lessons for monetary policy. One is that the redistributive effects of policy can no longer be swept under the rug as is the case in representative agent models. The other is that the connection with fiscal policy is also front and center, since many of the consequences of monetary policy in these models involve public debt and the reaction of the fiscal authorities. A final lesson from HANK models, which ties in with the discussion in the first part of the symposium, is that the benefits from aggregate stabilization largely derive from alleviating the hardship of the most vulnerable households during recessions. From Kaplan’s perspective these four lessons suggest that monetary policy should focus less on fine-tuning aggregate demand and more on stabilizing inflation and enhancing the stability of the financial system.

Veronica Guerrieri from the Chicago Booth School of Business discussed monetary and fiscal policy in the context of the COVID-19 pandemic. She first highlighted the striking distributional impact of the pandemic recession, which hit some sectors (for example, leisure and hospitality) and some workers (for example, low-income workers) harder than others. As she shows in her recent paper with Lorenzoni, Straub, and Werning, the pandemic shock can be seen as a supply shock which propagated through the economy via demand channels. In particular, the income losses of workers with high marginal propensity to consume resulted in aggregate demand shortages for a while. Moreover, shocks in some sectors spread to other sectors because of complementarities and supply chains. This demand shortfall called for policy stimulus, and at the same time the asymmetric nature of the shock called for social insurance. To some extent, targeted fiscal transfers accomplished both goals.

Guerrieri then asked whether fiscal (and monetary) stimulus in the United States has been excessive, and whether the inflation that the U.S. is currently experiencing is the outcome of such stimulus. Again, she stressed that differences across households, and specifically the heterogenous savings behavior by income in response to the transfers, are key for understanding the effect of the stimulus on demand, both on impact and over time. She also emphasized the heterogeneity across sectors, with some sectors that have recovered well beyond their pre-pandemic levels and others that are still struggling. In another recent paper with Lorenzoni, Straub, and Werning, Guerrieri and coauthors argued that some of the inflation the U.S. is currently experiencing may be desirable as it helps adjust relative prices across sectors, thereby cooling some of the demand in the booming sectors and directing it toward the weaker ones. In fact, the stimulus may also help the reallocation of labor across sectors as it leads to more sustained wage increases in the strong sectors, which in turn attract workers, thereby lessening supply shortages.

In the discussion that followed the presentations, New York Fed President John Williams said that while he appreciated the insights from the HANK literature on the trade-offs faced by monetary policy, in the end the objective of monetary policymakers remains achieving the dual mandate of price stability and full employment with the tools at their disposal. Does the HANK literature have lessons in terms of which monetary tools (conventional interest rate policy, forward guidance, QE) are best suited to achieve the mandate? Both Kaplan and Guerrieri emphasized that an implication of heterogeneity is that fiscal policy is in many ways better suited than monetary policy to stabilize the economy, because it can be more precisely targeted toward different households.

Gianluca Violante of Princeton University agreed on this point and wondered why fiscal policy is seemingly conducted in a much less sophisticated and thoughtful way than monetary policy. He hinted that one reason may be political economy considerations—the need to achieve compromise—but another reason could be the moral hazard inherent with transfer-based policies. He argued that the willingness of fiscal authorities to act effectively during COVID may be due to the fact that moral hazard was largely absent in these circumstances. St. Louis Fed President Jim Bullard highlighted that if either fiscal or monetary policy are not doing their job in terms of stabilizing the economy, this may limit the effectiveness of the other.

Heterogeneity and Optimal Monetary Policy

The second afternoon session discussed how heterogeneity should affect the design of optimal policy. Adrien Auclert from Stanford began by noting that the normative HANK literature is still in its infancy, relative to the positive literature. He outlined two key outstanding issues. The first issue is that while the New Keynesian (NK) literature is organized around a single tractable “textbook” model and a set of agreed upon methods for solving and estimating quantitative models, no such consensus exists in the HANK literature. But progress has been made: we have a number of tractable HANK models that can be used to understand positive and normative aspects of HANK economies, and we are closer to having efficient tools for solving and estimating HANK models.

The second issue concerns what objective function policymakers should optimize in our normative models. In the canonical NK model, under certain conditions, maximizing household welfare is equivalent to minimizing an “ad hoc” loss function which penalizes deviations of the output gap and inflation from their targets. This equivalence was an important factor in the success of the NK literature, since policymakers already viewed their objective in terms of a simple ad hoc loss function. But when it comes to the HANK literature, there is generally no simple, microfounded loss function that plays the same role.

One approach is to continue to use an ad hoc loss function to analyze optimal policy in HANK. Although this approach is straightforward, it may miss out on important forces within the model and provides no guidance on which measures of inequality, if any, should be incorporated in the policymaker’s objective function. A more technically challenging approach is to solve for policy that maximizes household welfare within a HANK model. In Auclert’s view, the literature that does this has uncovered some findings that should generalize (for example, optimal policy tries to undo the redistributive effects of aggregate shocks), but it is less clear whether other specific findings from particular papers will generalize (some studies find that policy should put more weight on stabilizing the level of output to stabilize consumption inequality, while others find that price stability remains the dominant concern).

Michael Woodford from Columbia University discussed another dimension of heterogeneity, namely heterogeneity of expectations. He argued that while this dimension has been relatively less studied—presumably because it requires relaxing the conventional assumption of rational expectations—it is worth incorporating into our models, both because it is clearly present in survey data, and because algorithmic models of expectation formation can be more tractable than models with model-consistent expectations. Woodford outlined one approach to modelling heterogeneous beliefs based on his work with Yinxi Xie. This approach assumes that households and firms make decisions based on looking forward over a finite planning horizon, implying that heterogeneity of beliefs arises from differences in their planning horizons. In Woodford’s model, this nests fully rational expectations as a limiting special case (when all agents have infinite horizons). An important implication of belief heterogeneity for policymakers is that the same policy announcement will lead different decisionmakers to expect different paths of policy tools and other macroeconomic variables, since some of them put a lot of weight on far future outcomes while others have much shorter planning horizons. Another implication is that policy should depart from fully stabilizing output gaps and inflation in order to reduce distortions arising due to heterogeneity in beliefs.

In the following discussion, Williams emphasized that, while we know heterogeneity is important, and each heterogeneous-agent model has its own particular implications for optimal policy, it will be important to learn which conclusions are robust across these different models.  Woodford agreed with Williams (and with Kaplan’s earlier remarks) that it would be too early to follow the policy conclusions from any one paper, but argued that we can still say something about which conclusions are likely to be robust. We can learn which variables in our models have the properties that expectations about those variables have a particularly large effect on outcomes; we should then want to keep those variables stable, so that they are easy for agents to forecast, regardless of how precisely they do that. Kaplan noted that economists generally do not make their models more realistic simply for the sake of realism, but to match some feature of the data that existing models cannot; he wondered what empirical puzzle belief heterogeneity solves. Woodford suggested that finite planning horizons may offer one solution to the “forward guidance puzzle.”

Bullard emphasized the advantage of building on tractable models (for example, lifecycle models with within-cohort heterogeneity), which avoid some of the technical problems Auclert mentioned, but can still match important features of the data. Auclert agreed that simple models are useful to study particular forces (for example, countercyclical movements in the price level can provide insurance to households with nominal debt), but argued that richer models are useful to trade these off against other important forces (for example, in the presence of nominal wage rigidity, countercyclical inflation may have less favorable effects on the distribution of real resources).

In sum, the upshot from the symposium is that taking heterogeneity into account is crucial for policy, both because its effect differs across households—not only fiscal but also monetary policy can significantly affect inequality—and because heterogeneity changes the way we understand how fiscal and monetary policy are transmitted to the economy.

Marco Del Negro is a vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Keshav Dogra is a senior economist in the Bank’s Research and Statistics Group.

Laura Pilossoph is a senior economist in the Bank’s Research and Statistics Group.

The Role of Educational Attainment in Household Debt and Delinquency Disparities

Published by Anonymous (not verified) on Sat, 08/01/2022 - 1:23am in

This post concludes a three-part series exploring the gender, racial, and educational disparities of debt outcomes of college students. In the previous two posts, we examined how debt holding and delinquency behaviors vary among students of different race and gender, breaking up our analyses by level of degree pursued by the student. We found that Black and Hispanic students were less likely than white students to take on credit card debt, auto loans, and mortgage debt, but experienced higher rates of delinquency in each of these debt areas by the age of 30. In contrast, Black students were more likely to take out student debt and both Black and Hispanic students experienced higher rates of student debt delinquency. We found that Asian students broadly followed reverse patterns from Black and Hispanic students by age 30. They were more likely than white students to acquire mortgages and less likely to hold student debt, but their delinquency patterns were in general similar to those of white students. Women were less likely to hold an auto loan or mortgage and more likely to hold student debt by age 30, and in most cases their delinquency outcomes were indistinguishable from males. In this post, we seek to understand mechanisms behind these racial and gender disparities and examine the role of educational attainment in explaining these patterns.

One potential mechanism may be gender and racial disparities in labor market outcomes, such as in earnings and employment. Unfortunately, we do not have data on labor market outcomes for our sample of City University of New York (CUNY) students. Rather, we consider education outcomes as a proxy for labor market outcomes drawing on the overwhelming evidence in favor of a strong linkage between education and labor market outcomes. In this post, we leverage administrative data on demographic and educational outcomes from an anonymized data set of all first-time freshman students enrolled with CUNY, the largest urban college system in the United States, between 1999 and 2014.

As in the previous two posts in this series, we focus on students who entered CUNY for an associate (AA) or a bachelor’s (BA) degree and refer to them respectively as AA and BA students. We leverage two educational outcomes here: student’s GPA at the end of the expected time to earn the degree (two years for AA students and four years for BA students), as well as their graduation rate in their intended degree (AA or BA) by age 30. We will look at differences in these outcomes by gender, race, and degree type and try to understand whether differences in educational attainment may have contributed to the racial and gender disparities in debt behavior we saw earlier on in this series.

As we’ve done throughout this series, we use multivariate regression analysis, and present bar charts for the regression coefficients of interest. All regressions continue to control for a rich set of background characteristics, such as immigration and visa status, type of high school attended, year of entry to CUNY, and whether a student is disabled, economically disadvantaged, or an English-language learner. The charts shown below are split into two panels—the upper panel represents results for students who enter CUNY for an AA degree (AA students), while the lower panel depicts results for students who enter for a BA degree (BA students).

Degree Attainment

The first educational outcome we look at is intended degree attainment. In the nationally representative NSC-CCP sample (see first post for details), 19 percent of two-year public school students and 51 percent of four-year public school students graduated by the age of 30. The numbers were not too different in our CUNY sample—25 percent of AA and 52 percent of BA students attained their intended degree (AA and BA respectively) by age 30. Distinguishing by gender, we find that AA and BA female students were respectively 8.5 percentage points and 10 percentage points more likely to graduate by age 30 compared to their male peers. These differences respectively constituted 34 percent and 19 percent of the sample average.

Distinguishing by race, we find that Black and Hispanic students were markedly less likely to graduate with their intended degree by age 30 relative to white students and the gap was perceptibly larger for BA students. Specifically, Black and Hispanic AA students were respectively 5.6 percentage points and 6.6 percentage points less likely to graduate while Black and Hispanic BA students were respectively 17 percentage points and 16 percentage points less likely to graduate than the white students by age 30. These gaps were sizable—for AA students, the Black-white and Hispanic-white gaps were respectively 22 percent and 26 percent of the sample average, while for BA students, these gaps were respectively 32 percent and 31 percent of the corresponding sample average.

Since educational attainment is a critical determinant of labor market outcomes, these large disparities in graduation rates may translate into disparities in employment and earnings, which in turn may lead to racial disparities in repayment and delinquencies. On the other hand, there is no discernible difference between the graduation rates of Asian and white AA or BA students. This tallies with the overall similarity in debt and delinquency patterns for Asian and white students and the divergence from patterns for Black and Hispanic students seen in the earlier two posts in this series. Although women were more likely to graduate than men with their intended degrees, the gender pay gap in the labor market is well known and likely is an important contributor to the inferior credit card delinquency patterns of women AA students seen in the second post in this series. As discussed below, gender differences in graduation may not be the only factor affecting the gender pay gap and the gap in consumer debt and delinquencies; a detailed discussion of other social and economic factors affecting this gap is beyond the purview of this post.

Female Students More Likely, While Black and Hispanic Students Less Likely, to Graduate with Intended Degree by Age  30

Difference in Probability to Obtain Intended Degree by Age 30

Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.

College Grades

Another educational outcome that might signal labor market outcomes is a student’s GPA. The chart below shows differences in cumulative GPA at the end of the fourth semester for AA students and eighth semester for BA students—that is, after the expected time to earn the respective degrees. We refer to this as the final GPA for brevity, but this does not necessarily occur in a student’s final semester of enrollment. The average final GPA was 2.60 for AA students and 2.87 for BA students.

The chart below also shows that women had a higher GPA than men, with the gender gap being 0.14 and 0.13 points respectively for AA and BA students, equivalent to  5.4 percent of the corresponding average GPA in the sample. Differentiating by race, we find that Black, Hispanic and Asian AA and BA students had lower GPA than comparable white peers. The Black-white, Hispanic-white and Asian-white differences were respectively 0.37, 0.32 and 0.05 GPA points for AA students (14 percent, 12 percent, and 2 percent of the sample average) and 0.37, 0.33 and 0.13 points for the BA students (13 percent, 12 percent, and 4 percent of the sample average). The average disparities for female students relative to male students, and for Black and Hispanic students relative to white students were similar across both types of degrees under consideration. Additionally, results for final GPA are qualitatively very similar to results for degree attainment except for the results for Asian students. One reason behind the lower GPA of Asian students relative to white students, a result that is incongruent with national averages, is that in the CUNY data set Asian students are the racial group with the lowest average income. The contrast between the national averages, where Asian-Americans are the highest-earning racial group, and our data set may be a factor behind the unexpected low educational outcomes seen in our analysis below.

Black, Hispanic, and Asian Students Have Lower GPAs than White Students

Difference in Average GPA after 100 Percent Time in Degree

Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.

Discussion

Our analysis above shows large negative Black-white and Hispanic-white gaps in key educational outcomes. These are likely important factors in the relative adverse delinquency outcomes as well as corresponding homeownership gaps we find in this series through their effects on labor market outcomes, such as employment and earnings.

But there surely are additional factors at play that affect the racial and gender gaps in debt and delinquency outcomes we observed in this series. One reason behind our mixed debt and delinquency results for women, despite their comparatively successful educational outcomes, may be that potentially some of the household debt is taken out by another member of the household. Another possible reason is that educational attainment might not translate to professional attainment as much for women compared to men. Women and minorities face additional barriers that may contribute to some of the gender and racial differences in outcomes we find in the first two posts. Gender and racial biases may hinder hiring, promotions, and movements up the career ladder. The role of women as mothers and caretakers and often the consequent temporary withdrawal from the workforce may serve to increase the gender pay and career gaps.

The debt and delinquency results for Asians also do not follow in a straightforward manner from the educational results to the labor market outcomes those results may suggest, thus emphasizing the role of other factors that may be at play. Although Asians in this data set have lower educational attainment (which is consistent with their lower propensity to hold non-mortgage debt), interestingly, they have higher propensity to own a home. Asians, in our CUNY sample, are relatively low-income which may relate to lower educational outcomes and in turn, lower propensity to hold non-mortgage debt. Their higher probability of homeownership may be due to differences in preferences, differences in household composition and also differences in the area they live in. Thus, while the differences in educational attainment identified above surely serve as an important catalyst in the gaps in debt and delinquency, especially the Black-white and Hispanic-white gaps, they may not always paint the whole story and there clearly are other factors at play which are beyond the purview of this post.

This post concludes a three-part series investigating racial and gender disparities in debt holding and delinquency outcomes. Leveraging a unique data set merging administrative educational, demographic and debt records at the individual level, we fill an important void of information on the differential household debt outcomes among college students. We find that Black and Hispanic students are less likely than white students to hold credit card, auto, and mortgage debt, but are more likely to become delinquent in those debts. We find  higher propensity for Asian students to hold mortgage debt but lower propensity to hold non-mortgage debt with not much differences in delinquencies, and mixed results for women.

Racial disparities in education outcomes in our sample suggest that Black and Hispanic debt and delinquency outcomes may be fueled by labor market disparities. However, our educational outcomes seem to fall short of explaining some of the Asian and female debt results and reveal that there are other deep-rooted social and economic factors that affect these gaps. More research is needed to identify these factors and a match of an individual-level labor market data set with the education-debt data set can further elucidate the mechanisms behind the disparities we have uncovered in this Liberty Street Economics series.

Chart data

Ruchi Avtar is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Rajashri Chakrabarti is a senior economist in the Bank’s Research and Statistics Group.

Kasey Chatterji-Len was a senior research analyst in the Bank’s Research and Statistics Group.

How to cite this post:
Ruchi Avtar, Rajashri Chakrabarti, and Kasey Chatterji-Len, “The Role of Educational Attainment in Consumer Debt and Delinquency Disparities,” Federal Reserve Bank of New York Liberty Street Economics, November 17, 2021, https://libertystreeteconomics.newyorkfed.org/2021/11/the-role-of-educational-attainment-in-household-debt-and-delinquency-disparities/.

Related Reading
Uneven Distribution of Household Debt by Gender, Race, and Education (November 2021)
Unequal Distribution of Delinquencies by Gender, Race, and Education  (November 2021)
Economic Inequality: A Research Series


Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

A Portrait of Broken Britain

Published by Anonymous (not verified) on Sat, 08/01/2022 - 12:12am in

A Portrait of Broken Britain

Sam Bright explores the social, political and economic crises that have been stoked by successive Conservative administrations

ShareEmailTwitterFacebook

“Broken Britain” was the phrase deployed by David Cameron in the immediate run-up to the 2010 General Election, to describe a perceived social decay that had occurred under Labour’s leadership since 1997.

Focusing in particular on crime and an alleged growth of social disorder, Cameron said in January 2010 that, “we don’t have a strong enough response to crime… we tolerate too much criminal behaviour. Some would say that we’ve become too selfish, too greedy, it’s all about me and self gratification – not about thinking of others and community”.

However, over the past 12 years, since Cameron won the election and formed the Coalition Government with the Liberal Democrats, the situation has deteriorated. Britain is now suffering from crises of cronyism, inequality, crime, and the private capture of public goods.

Since July 2021, the Byline Intelligence Team has been cataloguing this social, economic and political breakdown – quantifying the scale of the problems facing the UK. These declining circumstances have been the product of successive governments, led by three Conservative prime ministers. Yet the latest, Boris Johnson, does not seem to command the faith of voters seeking a dividend after years of austerity and restraint.

A large percentage of voters think that the Government is doing a bad job across multiple policy areas, including: the NHS (70%), crime (59%), borders (73%), levelling up (66%), Brexit (75%), taxation (58%) and education (55%) – according to a new Ipsos MORI poll.

Yet, while the masses are plunged into ever-worsening circumstances, the richest have seen their wealth burgeon as their access to power has increased. Britain is broken – but not for everyone.

Cronyism

The Byline Intelligence Team and The Citizens have led the effort to expose and archive the COVID contracts awarded to firms with links to the Conservatives – finding deals worth at least £3 billion given to party donors and associates.

Subsequently, we calculated that 12 of these firms had increased their profits by £121.7 million during their latest accounting periods – equivalent to a 57.1% profit boost.

The Government has also drawn criticism for its use of an expedited ‘VIP lane’ for the awarding of contracts to suppliers with links to ministers, MPs and officials. After the Government released the names of VIP firms awarded personal protective equipment (PPE) contracts during the Coronavirus pandemic, we calculated that nine of these companies had cumulatively increased their profits twelve-fold – from £8.5 million to £109 million.

The benefits afforded to Conservative friends and donors similarly extend beyond Government contracts. More than a quarter (26%) of Conservative donors who have given at least £100,000 to the party between 2010 and 2020 hold a title or an honour. And, of the Conservative Party’s 20 biggest donors since 2010 – those donating more than £1.5 million – 55% (11) have received an honour or title. Ten were given these awards in the past decade.


The Conservative Cash Carousel& Socialism for the Rich
Sam Bright and Peter Jukes

Inequality

But, while elite Conservatives have prospered in recent years, the circumstances of the poorest in Britain have deteriorated markedly.

In 2019/20, the percentage of people in the UK in relative poverty (before housing costs) was almost two percentage points higher than it was in 2010/11.

By 2019/20, it was estimated that 14.5 million people in Britain were in poverty after housing costs. Over the same period, there was a 13% increase in the child poverty rate (after housing costs).

In-work poverty has also increased by 21% since 2010, while the number of emergency food parcels distributed by Trussell Trust food banks in 2020 was 402% higher than it had been in 2010.

These problems have also been suffered more acutely in some areas of the country –notably poorer areas of the midlands and the north of England that opted for the Conservatives in 2019, often for the first time in decades.

Healthy life expectancy – the time that people are expected to spend in good health – fell for either men or women from 2009-11 to 2017-19 in 16 of the 20 ‘Red Wall’ areas for which data is available.

Indeed, a new paper in the Lancet health journal has found that, overall, life expectancy has been falling in many areas of the north over the past decade. It found extreme differences in life expectancy between the richest and poorest areas of the country – with men in parts of Blackpool expected to live for 68.3 years, compared to 95.3 years in some areas of Kensington and Chelsea in London.

From 2014/15 to 2019/20, the percentage of children in poverty increased in Red Wall seats from 29.8% to 34.6% – a jump of 16%. And, from 2011/12 to 2020/21, the proportion of secondary school children eligible for free school meals in Red Wall areas increased from 19.5% to 24%.

As of 2020/21, a staggering 39% of secondary school children are eligible for free school meals in Blackpool. Our analysis indicates that Red Wall areas saw their local authority budgets cut on average by 34.2% from 2010/11 to 2017/18, compared to an England-wide average of 28.6%.

But not all have suffered equally. The highest-earning MPs – benefitting from second jobs in the private sector – have earned £6.7 million in additional income, while child poverty has increased in their constituencies by 20.4%.

The number of high net worth individuals living in Britain has also increased in recent times. In 2020, their number was 26% higher than in 2010. In 2010/2011, the richest 1% of Britons held a 7% share of total national income; by 2019/2020 their cut was 8.3%.

Meanwhile, in the past six years, the top nine elite fee-paying schools in England – the so-called ‘Clarendon Schools’ – have increased their assets by 44%, or almost £600 million.

There are even pervasive inequalities seen within our political system – particularly inequalities between men and women. In 2020, the top 10 highest-paid male special advisors (SPADs) earned, on average, £23,000 more than the top 10 highest-paid female SPADs – a gap of 22%. Analysis of Cabinet Office data also shows that 382 male civil servants earned more than £150,000-a-year in 2020, compared with only 126 female civil servants. The top 10 highest-paid male civil servants earned, on average, £150,000 more than the top 10 highest-paid female civil servants – a full-time pay gap of 36%.

Privatisation

An accompaniment to the growing wealth of the rich has been the creeping control of private companies over public goods and services.

This process has been placed on steroids during the pandemic. By July 2021, the total value of COVID contracts awarded to private firms had amounted to £54.2 billion – more than the GDP of 140 countries and territories.

Yet, many of these companies have a questionable record. Three leading management consultancy firms contracted to deliver key public health services during the Coronavirus crisis have been fined £100.9 million collectively since 2010.

This is a trend across public services – not just related to healthcare and the COVID-19 pandemic. Five companies have collectively won £5.8 billion worth of contracts since 2010 to run asylum and migrant services, despite accusations of misconduct against some of the firms.

And while David Cameron pledged to clean up the banking sector after the 2008 financial crash, financial firms have been found guilty for 46% of the £9.8 billion fines handed down by Government agencies to the 10 British industries most punished for corporate misconduct since 2010.


NHS Privatisation RepresentsThe Pillaging ofOur National Inheritance
Rachel Morris

Crime and Policing

What’s more, though Cameron pledged to fortify the Government’s stance towards crime, the evidence suggests opposite outcomes have occurred.

In recent years, total recorded drug offences have increased in England and Wales by 19%, with possession of cannabis recording a 21.5% increase. Statistics also show worsening health outcomes for drug users, and the number of deaths related to drug poisoning have increased year on year from 2,652 in 2011 to 4,561 in 2020 – a 72% increase.

Meanwhile, there has been a rape convictions crisis, with only 1.6% of the 50,210 reported rape cases in England and Wales in 2020 leading to a conviction. 

There has also been growing scrutiny of police forces and their attitude to sexual assault, following the conviction of Metropolitan Police officer Wayne Couzens for the rape and murder of Sarah Everard in 2021.

A series of investigations by the Byline Intelligence Team revealed that more than half of Metropolitan Police officers found to have committed sexual misconduct between 2017 and 2020 stayed in post: a total of 43 officers out of 83 – or 52%.

Meanwhile, 75% of police officers across England and Wales who abused their positions or failed to properly investigate sex crimes between 2017 and 2020 remained in place. We also found that 14 police officers over this four-year period abused their position for sexual gain – and 16% remained in their post.

This problem also seems to extend throughout the criminal justice system: two-thirds of prison staff found to have committed sexual harassment stayed in post – a total of 30 members of staff out of 47, or 64%.

This article was produced by the Byline Intelligence Team – a collaborative investigative project formed by Byline Times with The Citizens. If you would like to find out more about the Intelligence Team and how to fund its work, click on the button below.

FIND OUT MORE ABOUT THE BYLINE INTELLIGENCE TEAM

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post A Portrait of Broken Britain appeared first on Byline Times.

Rhetoric and Reality on ‘Levelling Up’ Don’t Match, Finds New Research

Published by Anonymous (not verified) on Fri, 07/01/2022 - 3:23am in

Rhetoric and Reality on ‘Levelling Up’ Don’t MatchFinds New Research

Thomas Perrett reports on findings by the New Economics Foundation which expose a significant problem with the Prime Minister’s vague flagship policy

ShareEmailTwitterFacebook

In the aftermath of the Conservatives’ victory in the 2019 General Election, Boris Johnson claimed that his Government would reduce regional inequalities, reversing the laissez-faire, Thatcherite dogma that the party had previously been associated with by delivering “higher wages, a higher living wage, and higher productivity”.

In a speech last July, he argued that “the towns and cities that people say have been left behind have not lacked for human ingenuity” and that “there is no intrinsic reason why one part of this country should be fated to decline or indeed fated to succeed”.

However, new research from think tank, the New Economics Foundation (NEF), has revealed the galling inadequacies of the ‘levelling up’ agenda, exposing the Government’s failures in alleviating the effects of the Coronavirus pandemic, and demonstrating that inequalities have in fact become further entrenched since Johnson assumed office.

According to the NEF, the poorest 50% of the population have seen their incomes decline by an average of £110 in real terms, in contrast to disposable income gains of £3,300 for the top 5% of families.

The research – which examined forecasted household incomes for December 2021 using data from the Department for Work and Pensions and adjusting for mitigating factors such as inflation, earnings and interest rates using data from the Bank of England and the Office for Budget Responsibility – elucidated the stark contrast between household incomes in December 2019 and the consequences of ‘levelling up’ two years later.

It found that the lowest income groups have experienced a 0.5% reduction in disposable income, while the wealthiest have gained by 2%. 

Regional Inequalities Grow

The NEF’s research has shown that disposable incomes across the north-east have barely risen since December 2019, having increased by less than 0.1% (£20) on average.

The north-west and Merseyside saw a 0.2% (£80) increase in disposable household income, compared with 0.3% (£90) in Yorkshire and the Humber, which contrasted sharply with a 1.3% rise (£600) in London and a 1.1% rise (£550) in the south-east.

The income gap has widened within regions. Single parents and the unemployed were hardest hit, as workless families experienced income reductions of £200 a year on average across Merseyside, the Midlands and Yorkshire and the Humber.

The incomes of single parents, the only demographic to experience declining incomes across all parts of the country, were nonetheless strikingly varied across different regions. Single parents in the Midlands and the north saw their incomes fall by around 15 times as much as their counterparts in London.

Dominic Caddick, assistant researcher at the NEF who co-authored the report, told Byline Times: “Our research shows that families in the north of England have gained the least since 2019 and those living in the north with incomes in the bottom 50% nationally have seen their incomes fall in real terms.”

He condemned the failures of Johnson’s Government to address regional inequities, describing the report’s findings as “an indictment on any government, especially one that puts levelling up at the heart of their agenda”.

The NEF also found that the Government’s inadequate handling of the Coronavirus pandemic was responsible for the exacerbation of inequalities. The UK economy, which contracted more rapidly than the majority of other developed economies during the crisis, experienced faster growth in 2021. But the UK remained one of only two countries in the G7 with economic activity that lagged behind 2019 levels by 2%.

The data also demonstrates the meagre protections in place for those in precarious work. The UK already had a relatively low proportion of in-work income recovered through unemployment support, and the decision taken in October 2021 to scrap the £20 universal credit uplift has, according to the NEF, left many of the most vulnerable families exposed to rising prices. 


Why Boris Johnson Isn’tSerious About ‘Levelling Up’
Sam Bright

An Imperfect Storm

The New Economics Foundation’s findings appear to present a significant problem for the Conservatives. For the areas which have largely experienced a considerable contraction in income, particularly since the Coronavirus pandemic, are the same areas which swept Boris Johnson into Downing Street in 2019.

After a series of scandals engulfing the Government over allegations of corruption and Downing Street Christmas parties at the end of last year, new polling suggests that the Conservatives now trail Labour by 16 points in crucial ‘Red Wall’ seats. In 58 key constituencies which Johnson won in 2019, 49% of those surveyed say they would vote for Labour if a general election was held now, as opposed to just 33% who would vote Conservative. 

Indeed, many people living in these regions regard the levelling up agenda as a failure. According to an Opinium poll carried out for the NEF, 58% of people across the country, and 63% of Northerners, have seen no evidence of it. Only 20% of people responded that they felt better off than they did two years ago, and only 4% said that they felt significantly better off in the two-year period following Johnson’s premiership. A mere 18% of Northerners said that their situation had improved, in comparison with 25% of Londoners – indicating that the exacerbation of regional inequalities may yet prove devastating for Johnson’s unstable electoral coalition. 

Dominic Caddick told Byline Times that the failure of Boris Johnson’s levelling up policy is particularly damning when viewed within the context of rising interest rates and soaring energy prices, as the Red Wall may be squeezed further in the months ahead.

These issues would “further expose the decision to remove the £20 uplift for universal credit in October”, he said, which “was the biggest overnight real-terms cut to benefits in UK history and rising costs mean families will be struggling even more to get by”. 

“Weaker economic activity due to new COVID variants will also put people in precarious work at risk of losing their jobs,” he added. “With no indication of the furlough scheme returning, this could mean further significant drops in income for workers in affected industries.”

Many economic factors threaten to further entrench in-work poverty. Back in November, citing concern over rising inflation, Bank of England director Andrew Bailey hinted at increasing interest rates, a policy aimed at protecting creditors’ investments by preventing aggregate demand from pushing up prices, which will likely involve diminishing workers’ wages and limiting bargaining power.

The stark regional inequalities the NEF’s research has highlighted have also brought to light other Government policy failures, such as the failure to expand renewable energy sources, or to create a comprehensive programme delivering full employment and infrastructural initiatives. The combination of job insecurity and stagnating wages could yet signal a crisis for Johnson’s Government.

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post Rhetoric and Reality on ‘Levelling Up’ Don’t Match, Finds New Research appeared first on Byline Times.

‘A Deeply Dangerous Power Grab by the Home Secretary’: Conservative Peer Calls for Plans to Strip Citizenship Without Warning to be Scrapped

Published by Anonymous (not verified) on Fri, 07/01/2022 - 2:27am in

‘A Deeply Dangerous Power Grab by the Home Secretary’Conservative Peer Calls for Plans to Strip Citizenship Without Warning to be Scrapped

Baroness Sayeeda Warsi told peers that immigrants’ fears that future generations would be treated like outsiders and second-class citizens are not unfounded

ShareEmailTwitterFacebook

The Government’s plans to allow British people to be stripped of their British citizenship without notice is a “deeply dangerous power grab” by the Home Secretary, according to the former chair of the Conservative Party and the first Muslim woman to attend the Cabinet.

Conservative peer Baroness Sayeeda Warsi called for clause 9 of the Nationality and Borders Bill – which was passed by MPs in the Commons and is now being considered in the House of Lords – to be struck out and said it was a “government sleight of hand” as a “last-minute addition”.

Although the power to rescind citizenship from British citizens, if it is deemed “conducive to the public good”, has existed for a number of years, it has been incrementally expanded over time.

The 1981 British Nationality Act allows for the deprivation of citizenship. Today, a British citizen with no other citizenship can be stripped of their citizenship if there are reasonable grounds to believe that they can acquire another citizenship. The high-profile case of Shamima Begum in 2019 demonstrated the principle – with her British citizenship rescinded because her parents are from Bangladesh, even though she has never lived there. 

Clause 9 now extends the power further, meaning that the Government will not be required to provide notice of a decision to deprive a person of their citizenship.

“This power grab by the Home Secretary is deeply dangerous, one that seeks to deprive someone of their right to citizenship without even giving the person being deprived the right to know, depriving them even of the right to check whether the Secretary of State had the legal basis or accurate facts to exercise that power,” Baroness Warsi told peers. “These proposals would mean that I would have greater protections when being deprived of my driving licence than of my nationality.”

The Home Office has said that “citizenship is a privilege, not a right” but that clause 9 would only be used in “exceptional circumstances” – such as not knowing where an individual is because they are in a war zone or because informing them would “reveal sensitive intelligence sources”. 


Plans to Strip Citizenship Without Notice Must Kickstart A Popular Movement Against the ‘Hostile Environment’
Liam Shrivastava

A fact-sheet issued by the Home Office on clause 9 states: “It is vital, including to our national security, that we ensure that, just because we cannot immediately tell a person they are to be deprived of British citizenship, it doesn’t make the decision any less valid or prevent the deprivation order being made.”

But the clause has led to widespread concern that the power could be used more widely, and expanded further, with analysis by the New Statesman concluding that up to six million British citizens could be eligible to a deprivation order without warning under clause 9 – including two in every five people from non-white minorities, compared with just one in 20 people categorised as white.

Baroness Warsi told the House of Lords that the “notion of citizenship being a privilege seems to be a popular, but sadly ignorant, mantra”.

“My parents’ generation, now in their 80s, always feared that their future generations would be outsiders, second-class citizens who would be told to ‘go back home’ or to leave,” she said. “My generation always dismissed these fears as unfounded, but Windrush proved they were not baseless. Clause 9 and the Government’s exponential use of deprivation powers compound these fears.”

Baroness Warsi, who was made a peer in 2007, was born in Yorkshire to Muslim parents from Pakistan. A lawyer, she served as chair of the Conservative Party from 2010 to 2012 and was a Senior Minister of State in David Cameron’s Coalition Government until her resignation over the Government’s policy on the Israel-Gaza conflict in 2014.

She has been vocal about Conservative Islamophobia. After plans for the party to hold an independent inquiry were watered-down in 2019, she told the Guardian: “It’s like a really painful divorce. It does feel like I’m in an abusive relationship at the moment, where I’m with somebody that I really shouldn’t be with. It’s not healthy for me to be there any more with the Conservative Party.”

Speaking in the House of Lords debate, she said that her parents – from a former UK colony – had rights as British citizens, as “all those in the Empire and the Commonwealth did”. 

“When my grandfathers fought for the British Indian Army as British subjects, they did so as citizens,” Baroness Warsi said. “When the Windrush generation answered the call for workers and came to this country, they did so as citizens. When South Asians took up gruelling jobs in the mills and foundries of Yorkshire, as my family did, they did so as citizens, as equal members of this country in a continuation of a bond that had started decades earlier.”


From Conrad’s Kurtzto Enoch PowellConservatism Takes A Dark Turn to the Past
Peter Jukes and Hardeep Matharu

She said this had not been a “conditional or temporary right” that a government would “try to take away from them and their children or grandchildren in ever more cunningly creative ways” and that “it certainly was not a privilege”. 

“It was a right, one established through our colonial history, through strife, blood, sweat and those who even gave their lives,” she added. “By formally taking a British passport, they were merely formalising a right, not having a privilege bestowed upon them.”

Baroness Warsi blamed both Conservative and Labour Governments for expanding the scope of deprivation of citizenship over the years, because they had “torn down the basic belief that all citizens in this country are and should be equal and that, as a citizen, you are a permanent member”.

According to the Home Office, removing British citizenship is used against “those who obtained citizenship by fraud and against the most dangerous people, such as terrorists, extremists and serious organised criminals” and “always comes with a right to appeal”.

The latest figures show that, between 2010 and 2018, around 19 people a year on average have been deprived of their citizenship on the grounds of this being ‘conducive to the public good’, as stated in the Home Office’s fact-sheet.

“These laws have the potential to include Members of Parliament and their families,” Baroness Warsi told peers. “They include our loved ones, friends and colleagues; they include some of us. This is not scaremongering, this is fact.”

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post ‘A Deeply Dangerous Power Grab by the Home Secretary’: Conservative Peer Calls for Plans to Strip Citizenship Without Warning to be Scrapped appeared first on Byline Times.

‘A Total Waste of Police Time’: Labour Rows Over Drugs Policy as Cannabis Offences Surge

Published by Anonymous (not verified) on Wed, 05/01/2022 - 11:22pm in

‘A Total Waste of Police Time’Labour Rows Over Drugs Policy as Cannabis Offences Surge

New data shows a mounting drugs problem in England and Wales, while Labour and the Conservatives remain committed to status quo solutions, reports John Lubbock

ShareEmailTwitterFacebook

Total recorded drug offences increased in England and Wales by 19% from 2019/20 to 2020/21, with possession of cannabis recording a 21.5% increase, according to data from the Office for National Statistics (ONS) compiled in a new parliamentary report.

“The main drug offence recorded in 2020/21 was ‘possession of cannabis’ (63%), followed by ‘possession of controlled drugs (excluding cannabis)’ (18%), ‘trafficking in controlled drugs’ (18%),” the report states.

The statistics are increasingly relevant amid a disagreement between Labour Party Leader Keir Starmer and Labour Mayor of London Sadiq Khan, who is considering the effective decriminalisation of cannabis and other Class B drugs in a pilot scheme – employing a method known as ‘diversion’ – that will offer young people counselling or “speeding course-style” classes instead of prosecution.

As a Class B drug, the maximum prison sentence for possession of cannabis is currently five years.

14,900 penalty notices for disorder (PNDs) were issued in 2020/21, with possession of cannabis the second most common reason for a PND after a person being ‘drunk and disorderly’. 25% fewer PNDs were issued in 2020/21 than in 2019/20 and 60% fewer than five years ago.

However, while custodial sentences for most crimes have been falling for the past decade, a greater proportion of drug offences are receiving prison sentences.

According to the parliamentary report, between 2008/09 and 2019/20, the proportion of drug offenders receiving a caution fell from 46% to 30%, while the proportion receiving a custodial sentence increased from 9% to 16%. This goes against the general trend for all offences whereby the number of people sentenced immediately to prison is falling.

Average prison sentences for drug offences have also risen. The average sentence for drug trafficking in 2020 was 43.6 months, compared to 3.9 months for possession offences, according to the report. In 2012, 25% of drug offences resulted in prison time of at least three years – which increased to 40% in 2020.

The report also notes that on 30 June 2021, there were just under 14,000 people in prison for drug offences – 16% of the overall prison population. As reported by the Guardian in 2020, “people from Asian and other minority ethnic groups are 1.5 times more likely to go to prison for drugs offences than white people”.

While convictions for drug offences have been increasing, convictions for common assault have been falling since 2015, and only 1.6% of the 50,210 reported rape cases in England and Wales in 2020 led to a conviction. 

Statistics also show worsening health outcomes for drug users.

“The number of deaths related to drug poisoning have increased year on year from 2,652 in 2011 to 4,561 in 2020,” the report states. “This represents a 72% increase. 2020 saw a 4% increase in deaths compared to 2019.” Drug misuse accounted for 13% of accidental deaths in 2020.

Old Thinking

These statistics suggest that current drugs policy is not working and contradict the official stance of the Labour Party.

Keir Starmer told journalists at a press conference yesterday: “I’m not in favour of us changing the law or decriminalisation, and I’m very clear about that… I’m not in favour of changing drugs laws.”

The Prime Minister’s spokesperson agreed, saying that “decriminalisation would leave organised criminals in control while risking an increase in drug use, which drives a climate of violence”.

But organised crime is already in control of the illegal drugs trade and reported use of drugs in the UK has been rising since 2013.

According to the ONS, “following a period of falls between year ending December 1995 and year ending March 2013, there was a change in the trend. Between the year ending March 2013 and March 2020, the proportion of adults reporting any drug use in the last year has increased by 15% (16- to 59-year-olds) and 28% (16- to 24-year-olds) respectively”.

Ant Lehane, of the Labour Campaign for Drug Policy Reform, told Byline Times: “As many Labour councils move towards diversionary measures which save police time and reduce reoffending, it is shameful that the Home Office has overseen an increase of over 20% for simple cannabis possession offences.

“This is a total waste of police time, and will place further strain on the criminal justice system which has been decimated by the Tories. It’s time for bold measures such as full decriminalisation. Instead, we are stuck with a Prime Minister who dresses up as a police officer to seem ‘tough on crime’.”


David Lammy‘Young People are Dying On Our Streets– We Need to Get On with Legalising Cannabis’
Hardeep Matharu

But senior figures in the Conservative and Labour parties currently refuse to treat drug misuse as a health rather than a criminal problem. This is despite polling which shows that the British public has been growing increasingly open to the idea of liberalising drug laws.

According to a 2018 YouGov poll, 43% support legalisation and 41% oppose it, while the remaining 15% don’t know. Another poll in 2019 showed 48% support for legalisation for recreational drug use and 77% support for legalising medical cannabis.

The UK is actually the world’s biggest producer of medical cannabis for export to other countries, but it remains illegal in the UK. A private members’ bill has been put before Parliament which would legalise medical cannabis, proposed by MP Jeff Smith, leader of the Labour Campaign for Drug Policy Reform, but the bill has little realistic chance of passing. 

A Home Office spokesperson told Byline Times that “the Government has no plans to decriminalise harmful drugs” and that Sadiq Khan “has no powers to do so and the police are always expected to uphold and enforce the law”.

“Decriminalising drugs would lead to lawlessness and hand over control of our communities to organised criminals, pushing up serious violence and its corrosive impact on mainly young black men in London,” they added.

This article was produced by the Byline Intelligence Team – a collaborative investigative project formed by Byline Times with The Citizens. If you would like to find out more about the Intelligence Team and how to fund its work, click on the button below.

FIND OUT MORE ABOUT THE BYLINE INTELLIGENCE TEAM

ShareEmailTwitterFacebook

SIGN-UP TO EMAIL UPDATES

OUR JOURNALISM RELIES ON YOU

Byline Times is funded by its subscribers. Receive our monthly print edition and help to support fearless, independent journalism.

SUBSCRIBE TO THE PRINT EDITION OF BYLINE TIMES FROM AS LITTLE AS £3.50 A MONTH

BECOME A PATRON OF BYLINE TV

SUBSCRIBE TO BYLINE TIMES & GET THIS MONTH’S DIGITAL EDITION IMMEDIATELY

The post ‘A Total Waste of Police Time’: Labour Rows Over Drugs Policy as Cannabis Offences Surge appeared first on Byline Times.

Pages