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Why we should ignore the newspapers

by Chris Dillow     October 8, 2013 at 11:19 am

Another day brings another furore about the press, the latest being about The Sun's stigmatizing the mentally ill. This poses the question: why should we fret about newspapers' misconduct?

I'll fess up here. I read the Mail most days. But I also read Holy Moly and Popbitch, and for similar reasons. I don't regard any of them as politically serious.

In fact, there's decent evidence that the political importance of the dead trees was over-rated, even before their circulation began to fall. Here's one US study (pdf) by Jesse Shapiro and colleagues:

We find no evidence that partisan newspapers affect party vote shares, with confidence intervals that rule out even moderate-sized effects. We find no clear evidence that newspapers systematically help or hurt incumbents.

This is consistent with John Curtice's assessment (pdf) of the 1997 election:

Relative to the often highly evocative and strident manner in which the British press often conducts itself, its partisan impact is a small one.

Since then, it's highly likely – given their falling sales – that newspapers' influence has declined further. In the last general election, there was no relationship between the papers' political positions and aggregate votes.

Sure, there is some countervailing evidence. Fox News does seem to have influenced American voters (by tforge tech everette); a neat experiment suggests papers can affect voting; and there's evidence that local papers can encourage turnout and hence improve the vigour of local democracy.

On balance, though, we probably exaggerate the influence of the press. And insofar as this does exist, it's likely that its many infractions against decency are eroding it still further.

Insofar as voters have ideas that we leftists don't like – and in some respects they don't – it is because of cognitive biases which arise without the media's help.

Of course, journalists think that newspapers matter enormously, but then sausage-makers think that sausages matter a lot. We should take neither at their word.

I fear that lefties who fret about the Mail's antics are actually playing into its hands. Like a has-been popstar craving attention, the papers are resorting to ever-more desperate efforts to attract eyeballs. Linkbait is now a business model, and your outrage is their profits.

Let's be clear. The newspaper business is a relatively minor one – the average household spends less each week on papers than it does on fish – which doesn't deserve the attention we give it. 

Cameron’s tragedy is that he fails in even understanding the point of leadership

by Chris Dillow     August 30, 2013 at 12:59 pm

David Cameron is a terrible advert for Oxford PPE. He's long been ignorant of economics – as his prating about the "nation's credit card" and the "global race" attest – but his defeat last night suggests he knows little about politics and history too.

It's a cliche that this was a failure of leadership. I suspect, though, that it was a failure to even see what leadership is. Leadership is the art of getting people to follow you when they don't have to; if they do so because they must, you're not a leader but a boss.

But leadership in this sense is not just about speechmaking and doing the right thing. It's about getting dirty, and using the darker arts of politics.

One such art is timing. If your position is strong, you should act. If it's not, you should wait. Had Cameron waited until the UN inspectors have reported, his case would have been strengthened by reports of the incendiary bomb attack on a school.

But there's another failure. Leadership also means identifying potential oppenents and cajoling them – maybe nicely, maybe not – into supporting you. And at this, Cameron has long been poor. Fraser Nelson says he's "aloof."

And only a few months into his permiership one Tory sympathizer wrote:

There is little affection for Cameron on the Tory benches. His regime is chilly, even aloof. MPs who cross him know that they are unlikely to be forgiven. Slowly, the numbers of the disaffected and dispossessed are growing.

Contrast this with two great American leaders – Abe Lincoln and Lyndon Johnson. Their success rested on not so much on them taking the moral high ground – the best that can be said for LBJ's "moral compass" is that it wasn't quite as defective as Nixon's – but on their ability to twist arms, and appeal to low motives.

Their precedents are, I think, relevant. Both men faced parties which were loose and fissiparous, which is the condition of today's Tories. Not only are they intellectually divided – for example on both social and economic liberalism – but they are also socially so; the Cabinet might be full of public school millionaires, but the backbenches aren't.

His long failure to close this gap means that Cameron lacked both the ability to convert potential rebels and the trust which was necessary to induce people to follow him on what would have been a speculative venture.

In this sense, there's a tragic aspect to Cameron. He has thought of politics as (by his own lights) a noble venture – as when he pushed through gay marriage and in his desire to stop crimes against humanity. But politics isn't just that.

Sometimes, to win a moral crusade you need immoral means. Leadership isn't about being like Martin Luther King, but being like Lyndon Johnson. 

Why it’s Simon Danczuk who is ‘economically illiterate’

by Chris Dillow     July 4, 2013 at 1:54 pm

In the Times (£) Simon Danczuk says lefties such as Owen Jones are "economically illiterate." He misses the point that, in many respects now, it is not the left that's economically illiterate but rather centrists like him.

 - It is economically illiterate to ignore the massive evidence that unemployment is a huge source of misery, and to talk instead of the minority of scroungers.

 - It is economically illiterate to complain about crony capitalism, as Danczuk does, without recognizing that basic economics tells us that crony capitalism is the only likely form of capitalism.

 - It is economically illiterate to think the unemployed can be incentivized into work when there are 4.9 officially unemployed people for every vacancy, and 12.1 unemployed if we use a wider definition of joblessness.

– It's economically illiterate to believe that the macroeconomic cost of scrounging is anything other than very small.

 - It is economically illiterate to speak of the "benefits of getting people into work" as Danczuk does, but then accept the Tories' tight fiscal plans for after 2015 – especially if you don't raise the inflation target.

 - It is economically illiterate to think the government is in control of its finances, and that fiscal policy alone is sufficient to reduce the deficit, without recognizing that deficit reduction requires a decline in the private sector's net financial surplus.

 - It is economically illiterate to think a jobs guarantee for those who have been out of work for more than two years is anything close to an acceptable employment policy, when these account for less than one-fifth of unemployment, and when helping them into work might well displace the shorter-term unemployed.

 - It is economically illiterate to ignore the evidence that there's very little that governments can do to much improve the economy's medium-term growth rate.

 - It is economically illiterate to ignore the fact that, throughout the west, there has been a long-term collapse in demand for unskilled work.

 - It is economically illiterate to ignore the possibility that preferences are endogenous. Insofar as some unemployed are lazy, their laziness might not (just) be a cause but rather an effect of their unemployment: why make yourself unhappy wanting something you can't have?

I don't say all this to attack Mr Danczuk, but rather to make a broader point. The phrase "economically illiterate" has long been used to smear leftists as unrealistic utopian dreamers. And I'll concede that the description fits many of the soft left. But this tactic ignores a nastier fact. At the current juncture of capitalism, what is  really economically illiterate is the belief that capitalism is compatible with decent employment prospects and living standards for all workers – especially if you limit your policy options to those that are acceptable to Paul Dacre.

Why is the UK seeing a record fall in workers’ wages?

by Chris Dillow     June 14, 2013 at 11:01 am

Real wages are falling at a near-record rate. Wednesday's figures show that they were 6% lower in April than they were in April 2008.

This is the biggest five-year drop in real wages since 1921-26, and the second-largest fall since records began in 1855.

This cannot be blamed simply on the recession. As the IFS has pointed out (pdf), real wages rose during the recessions of the early 80s and 90s. Something, then, has changed since then. But what?

Here's a theory. Back in the 70s and 80s, bosses could often not efficiently monitor their workers. To keep pilfering and skiving within tolerable limits they therefore had to pay better than market-clearing wages, to buy goodwill. The upshot was that wages rose even during downturns, because bosses feared that real wage cuts would create discontent and thus increase thieving, insubordination and malingering.

This led to a huge literature in economics on efficiency wages, gift exchange (pdf) and insider-outsiders (pdf), which tried to explain high and sticky real wages.

However, as Frederick Guy and Peter Skott have shown, socio-technical change since the 80s such as CCTV, containerization and computerized stock control has made it easier for bosses to monitor workers. Direct oversight means they don't need to worry about buying workers' goodwill. They are instead using the Charles Colson strategy: "When you've got 'em by the balls, their hearts and minds will follow."

Years ago, firms wanted smaller but motivated workforces. Now they can control workers directly, they don't need to worry so much about motivation* and so are content with larger but grumpy workers.

All this has three implications:

1. Talk of "wage rage" misses an important point. At the point of production – to use a quaint Marxian phrase – there is little meaningful rage, because workers can do little to fight falling real wages. (This poses the danger that such rage will find perhaps misdirected political expression, such as in antipathy towards immigrants).

2. Issues of industrial organization – how firms are organized – have important macroeconomic effects. Macroeconomics cannot be easily studied separately from ind. org. Economists need to look inside the "black box" of industrial structure.

3. You cannot understand economics without understanding power. The fact is that bosses' power has risen and (many) workers' power has declined. In this sense, the rising incomes of the 1% and the fall in real wages for the average worker are two manifestations of the same process.

* except, of course for top-level managers who cannot be directly monitored – hence their rising incomes.

This is why the soft left always fails against Etonians

by Chris Dillow     May 27, 2013 at 10:30 am

Some people are unhappy that an Eton entrance exam asked candidates to write a speech justifying the shooting of protestors. Their disquiet reflects the discomfort the soft-headed left feels when confronted with the cold hard facts of life.

It is no accident that the question follows a passage from Machiavelli.

What we're seeing here is that Eton – the training ground for our future leaders rulers – instinctively understands the nature of power, whereas its soft left critics have always been simperingly naive about it. I mean this in five senses:

1. Political power rests, ultimately, upon force and violence. Plan A for the ruling class is to govern by consent. But there is a plan B.

2. Power comes with risks. If you give bosses power over companies, there's a danger they'll extract wealth for themselves at others' expense. If you give bankers' power over the economy there's a danger of damaging financial crises. And if you give guns to some people and not others, there's a danger people will be killed*. This is something New Labour never really understood. In creating so many new criminal offences and bolstering the power and self-importance of the police, it thought it was acting out of good intentions but was – to take only the latest example of many – merely giving them licence to bully old ladies.Good intentions are not enough.

3. Power depends upon mechanisms. The question rulers must ask is: what tools do we have to exercise our will? Eton knows that one such mechanism is force. Again, though, social democrats have long been naive here. One reason why New Labour was cringingly deferential towards bosses was that it thought that "leadership" was a magic which enabled things to get done, and that the secrets of such ju-ju were known by a priestly elite of "business leaders". But that naivete was nothing new. Back in 1931 a Labour government was replaced by a coalition government which promptly left the gold standard, prompting one Labour politician to bewail "Nobody told us we could do that." Both episodes betray social democrats' ignorance of the tools of power. But Eton's examiners know what the tools are.

4. The role of bad faith. The examiners are not asking for a philosophical defence of killing protestors, but for a speech. The difference is that political speeches need not be true or sincere. The legitimation of power rests partly upon lies and half-truths.

5. Who, whom? Lenin got it right. Power is about who does what to whom? Eton's examiners know that their charges will be the "who" and the rest of us the "whom."

A great thinker – well, greater than most on the non-Marxist left – once asked: "what chance have you got against a tie and a crest?" None at all, given that they know what power is whilst the soft left is just wimperingly emotive. 

* I nearly wrote here that there's a risk that power will be abused. But when people speak of the "abuse of power" they often mean what they mean when they speak of "drug abuse" – the routine use of it.

Why doesn’t the left think more about how to shift public opinion?

by Chris Dillow     May 15, 2013 at 1:26 pm

What function do, or should, left-wing parties serve? I ask this old question because of a paper which Jon has drawn my attention to.

Peter Taylor-Gooby points out that, as inequality has risen, attitudes towards the poor and benefit recipients have hardened. He suggests several longer-term reasons for this, among them the decline of class alignment and rise of individualism. I'd add three other factors:

– A mistaken factual base. The public under-estimate bosses' pay and over-estimate welfare benefits.

– Recessions usually make people more mean-spirited.

– Capitalism generates cognitive biases (ideologies) that result in hostility to welfare recipients.

As Taylor-Goody says, it doesn't need to be this way: "Alternative approaches that emphasise reciprocity, solidarity and inclusion are possible."

This poses the question: how do we get to such approaches from where we are? One possibility is to look to a leftist party to argue for them. But there are good reasons to expect the Labour party not to do this. Just as companies' marketing strategies rarely work by telling potential customers they are stupid, so political campaigns rarely do so. This is why Labour panders to some of the worst aspects of public opinion, on immigration or welfare, rather than outrightly opposes it. The Labour party is a managerialist marketing strategy, not a force for truth and justice.

But if Labour is not an agency for radical change, what is? Sure, there are a few bloggers and columnists who are trying to shift the Overton window, but these tend to preach to smallish groups of the already-converted.

This, of course, is not to deny that social attitudes can change. For example, during my lifetime, attitudes to gays has improved considerably. But I fear that this progress has been like Max Planck's view of scientific advance – it has happened one funeral at a time.

And herein lies a paradox of the left. Whilst we have spent decades advocating social change, we have remarkably few answers to the question: through what mechanisms, exactly, can it be achieved?

UKIP’s rise is a triumph for the pro-establishment ruling class

by Chris Dillow     May 7, 2013 at 12:26 pm

In a protest against an out-of-touch political class, the British public have voted for a party led by someone whose class background is indistinguishable from Cameron's or Clegg's.

In this respect, UKIP's success demonstrates not the weakness of the ruling class, but the exact opposite – its complete victory.

I don't just mean this in the sense that political power is held in the hands of such a narrow group that the Dulwich-educated son of a stockbroker can present himself as an outsider.

What I mean is that, as Adam says, UKIP is not an anti-establishment party. For example:

– The demand for tougher border controls is a call for an increase in the power of the state.

– Whilst its possible that immigration control might be very slightly positive for low-wage workers, it would be bad for average wage-earners, and there are many better ways of improving the lot of unskilled workers.

– Hostility to gay marriage is fundamentally anti-liberty, as it asserts the power of the state to intervene in private relationships.

– The call for a flat rate 25% tax would be a big tax cut for the rich.

Cutting employment regulations would worsen working conditions and job security for ordinary workers, without creating many jobs.

– The demand that welfare recipients do compulsory workfare and not buy cigarettes or alcohol would be a reduction in the welfare state safety net, to the detriment not just of actual recipients but also to those in insecure jobs who fear becoming jobless.

UKIP's policies, then, do not challenge either the power of capital over worker or (what is a similar but distinct thing) the power of managerialists.

This is why I say their support represents the victory of the ruling class, because it demonstrates their complete power. I'm thinking here of Steven Lukes' "third dimension" of power:

Is it not the supreme exercise of power to get another or others to have the desires you want them to have – that is, to secure their compliance by controlling their thoughts and desires?…Is it not the supreme and most insidious use of power to prevent people, to whatever degree, from having grievances by shaping their perceptions, cognitions and preferences in such a way that they accept their role in the existing order of things? (Power: a radical view, 2nd ed, p27, 28)

It's in this sense that the ruling class has triumphed. The discontent that people might reasonably feel against bankers, capitalists and managerialists has been diverted into a hostility towards immigrants and the three main parties, and to the benefit of yet another party with a managerialist and pro-capitalist ideology. In this way, even "protest" votes help sustain existing class and power structures.

Does news coverage of tragedies like in Bangladesh worsen the problem?

by Chris Dillow     May 1, 2013 at 9:10 am

In 2010, 140,000 children aged under five died in Bangladesh. If the country had the same mortality rate (pdf) as the UK, only around 15,000 would have done so. This implies that around 125,000 Bangladeshi children die each year from poverty.

This fact, however, does not feature prominently in nightly news bulletins, even though it is equivalent to two Rana Plaza collapses every week.

There is, of course a simple reason for this. The news reports abnormal events, not normal ones; "dog bites man" is not news. Collapsing buildings are abnormal and so newsworthy whilst acute poverty is normal and so isn't news.

This bias is inherent in the nature of news. And yet it can be misleading. You cannot understand why so many Bangladeshis tolerate working in sweatshops until you realize that doing so gives their children not just a better chance in life, but a better chance of life. Thanks in part to the economic development brough by those sweatshops, child mortality in Bangladesh has fallen.

However, news reports which draw attention to the evils of sweatshops but not to those of rural poverty understate the benefits which such sweatshops have brought. Yes, they're hellholes which perhaps could and should be improved upon – but they're better than the alternative.

In this sense, news generates a bias amongst its western consumers; it encourages a hostility to globalization and industrialization even though these are – albeit imperfect – routes out of poverty.

There's a parallel here with attitudes towards crime reporting. It's a commonplace that whilst crime has fallen in recent years, the fear of it hasn't. A big reason for this, I suspect, is that violent crime – being abnormal – gets reported whilst folks living safely, being normal, does not. Ordinary reporting thus warps our perspective.

You cannot reasonably judge a probability distribution merely by looking at the far tail of it. But this is what the news invites us to do. 

There's another relevant bias here. Whilst under-reporting deaths from rural poverty the news is full of the doings of the rich and powerful. This too can have pernicious unintended effects. Laboratory experiments (pdf) have found that the mere act of communicating with others can induce them to behave more altruistically towards us. This implies that we are likely to be better-disposed towards the rich and powerful than we otherwise would be, and less well-disposed to the silent poverty-stricken billions. This too generates a bias towards tolerating poverty.

I say all this as a caveat to a common complaint. Everyone complains – with justification  – about bad, right-wing, dumbed-down linkbait journalism. But even when journalists are doing their jobs well, they are contributing to some unpleasant biases, by the very nature of what constitutes news. You cannot, rationally, base your political opinions in what your see in the news.

UKIP want freedom for themselves but to deny it to others

by Chris Dillow     March 25, 2013 at 10:45 am

Katie Price and UKIP agree that benefit recipients should not spend "our money" on booze and ciggies.

A little thought, however, reveals that such spending is in fact puny. Let's do the numbers.

The DWP says that, in 2011-12, working age people got £52.7bn in benefits. Of this, £16.6bn was housing benefit and £2.7bn council tax benefit, so benefit recipients saw £33.4bn. This is 2.2% of GDP, and 5.2% of total government spending.

What fraction of this £33.4bn is spent on drink and ciggies? We can use table A6 of the latest Family Spending tables as a guide. These show that the poorest decile spend an average of £148,80 per week on non-housing. Of this, £2.70 per week (1.8%) goes on alcohol and £3.90 (2.6%) on tobacco and narcotics. If we apply these proportions to the £33.4bn of benefit income, then £606m of those benefits are spent on alcohol and £875m on tobacco.

But the government gets a lot of this money back in VAT and excise duties – about £689m on tobacco and £190m on alcohol. This implies that benefit recipients'  spending on tobacco and alcohol costs taxpayers a net £602m. In fact, not even this much, to the extent that brewers and tobacco manufacturers pay tax on their incomes.

This is a tiny sum. It's 0.09% of public spending and 0.04% of GDP. In making an issue of this, Ms Price is enlarging things out of their proper proportion.How unlike her.

What's going on here? Usually, I'd quote C.B.Macpherson, to the effect that there's still a puritan strand in politics which regard poverty as a moral failing and the poor as objects of condemnation. However, considering Ms Price's career, puritanism is hard to discern.

Instead, I suspect what we see with her and with Ukip – and, one could argue, with some who support press regulation whilst favouring social liberalism in other contexts – is asymmetric libertarianism.

People want freedom for themselves whilst seeking to deny it to others; this is why some Ukippers can claim to be libertarian whilst opposing immigration and gay marriage. This debased and egocentric form of libertarianism is more popular than the real thing.

Eight ideas for supply side socialism that the left should pursue

by Chris Dillow     March 12, 2013 at 11:02 am

I rashly promised yesterday to suggest what some supply-side socialist policies might comprise. Here goes.

1. Invest in education, especially in the early years. The demand for unskilled labour has collapsed, and we shouldn't bet in on recovering. Instead, we should try to raise human capital. This requires pre-school interventions, improving the standards of schools in poor areas (pdf) and, perhaps, simply more intensive education. If inequalities of human capital can be reduced, so will one source of income inequality. 

2. Shift the tax base. Efforts to tax profits don't work. Better ways of taxing the rich, whilst preserving incentives to work and save would involve taxes on land, inheritances and a progressive consumption tax.

3. A state investment bank. Personally, I'm sceptical of the idea that banks systematically starve promising companies of funds; I suspect the bigger reason for low investment is the lack of innovation. Neverthless, we should ensure that the few good investment ideas there are get funded. And most of the arguments against a state bank are exaggerated.

4. A citizens' basic income. This is normally seen as a redistributive policy, a way of increasing workers' bargaining power. It might raise productivity through at least two routes. First, it would give workers the chance to reject bad jobs, and wait until a better match turns up. Second, the increased wages which would follow from this rise in bargaining power might compel firms to raise productivity in order to maintain profits.

5. Freer migration. In the short-run, immigration can raise growth by removing labour market bottlenecks. In the longer-run, it can increase innovation and productivity (pdf).

6. Coops. The financial crisis is, in many ways, a crisis of managerialism and ownership. Top-down bank CEOs got overconfident and made terrible decisions; failed to solve principal-agent problems that led to excessive risk-taking; and failed to adapt well to the new macroeconomics of the 2000s.Outside shareholders did nothing to prevent this. This suggests the need for new forms of ownership. The obvious (though not only) candidate is worker ownership. There's good evidence that this increases productivity, and it might have longer-term benefits for growth too, insofar as it helps encourage a culture of trust.

7. Shrink the state. It's possible – I put it no stronger – that a smaller state is conducive to faster economic growth in the long-run. Hopi's proposal for zero-base spending review might therefore make sense. But you cannot cut spending intelligently from the top down. A precondition for intelligent cuts is to empower public sector workers, who are better placed to identify genuine waste.

8. Macro markets. One role for government should be to encourage – perhaps via nationalized banks – markets for insurance in income risks, as Robert Shiller has proposed. Such moves might be egalitarian – insofar as such products are given freely to worse-off workers. But they might also help encourage real innovation by allowing entrepreneurs to insure against the background risks (eg of recession) which can undermine otherwise good investments.

This is not a complete list, and there are countless details to examine. This list should, however, remind us that supply-side economics needn't be the preserve of the right.

Another thing. Some of you might remember my book. Some chapters, however, were not published. This pdf is one of them.


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