Monday, 18 February 2013

Talking about immigration

It has become an established meme of the political right that 'we are not allowed to discuss immigration' but of course nothing could be further from the truth. The papers are filled daily with their thoughts on the subject, and in the most unpleasant of terms. Actually, what is virtually undiscussed in not the international mobility of labour but that of capital (as discussed in the book, pp 106-107). Somehow there seems to be the idea that the latter is 'just' inevitable globalization and that it can proceed without any movements of population, which are deemed to be a 'problem'.

I will post in more detail about this soon, but for now I wanted to share a thought-provoking article written by James Koranyi, a brilliant young historian at Durham University, who is an expert on the cultural history of Eastern and South-eastern Europe, in which he discusses the longstanding British historical fascination with and and fear of Romania, in particular (and linking with the horsemeat scandal, discussed in my last post).

To see an example of what he means by the demonization of Romanian and Bulgarian migrants, have a look at this recent piece in the Daily Mail. Look particularly at the pictures, which, frankly, reminded me of the cartoons in Der Sturmer, the Nazi propaganda leaflet.

Also worth reading is this piece in today's Guardian newspaper, looking at contrasting attitudes to Indian and Romanian immigration.

As I say, more to follow - but I was struck by the coincidence of timing of these three pieces, so wanted to share them whilst they are still fresh.

Monday, 11 February 2013

Beef with efficiency

The current horsemeat in frozen beef meals scandal is an interesting illustration of the issues around what constitutes efficiency which I discuss at several points in the book. The story reflects many different dimensions of this. The way that a hugely complex globalized supply chain has developed reflects one particular, dominant, understanding of organizational efficiency: driving down costs by all means possible. That presents some serious problems even leaving aside the use of horsemeat, such as the unappetising use of mechanically recovered meat products. Thus, even if our microwaveable lasagne only contained beef, we might be rather horrified to see just what that really consisted of, as this selection of charming images allows us to do. But this is what ‘efficient’ use of carcasses means in the dominant understanding. Passing off horsemeat as beef, of course, represents something beyond this ‘normal’ efficiency, because it involves fraud and misrepresentation. But it is only the extension of the same logic. For the suppliers and producers involved it is, precisely, efficient.

To prevent such frauds, and to control the adulteration of foodstuffs in general, requires state regulation, and such regulation is one of the earliest examples of regulation of the free market. This becomes much more complex in extended global supply chains which span national jurisdictions, another of the ways that politics has not caught up with economics as I said in an earlier post about tax avoidance. But it also makes it bizarre that, in the UK, recent years have seen a reduction of food inspectors. Of course this, too, is ‘efficient’ with respect to government budgets, ‘removing the burden of red tape’ from businesses, and ‘getting value for money’ for the taxpayer. In other ways it is grossly inefficient. For a little more paid in tax, the supermarkets and food brands now suffering a catastrophic collapse of confidence in their products - and maze of expensive legal actions - could have had an ‘efficient’ system of inspection.

Then, beyond this, there is you and me, the consumer. Unwilling to spend our time buying ingredients and cooking them, we find it more efficient to buy packaged up meals for the microwave. Worldwide, consumption of ready meals increased by about 10% in volume 2010-2011. And not only do we want it quick, we want it cheap. Efficient? Perhaps not, considering the very high amounts of salt and fat that some of these meals contain. So maybe the time we saved on cooking will turn out to be dwarfed by the time we end up spending in hospital. There will be plenty of time on the cardiac ward to ponder the meaning of efficiency.

Friday, 1 February 2013

A maximum wage?

The Chief Executive of Barclays Bank UK has announced today that he will waive his annual bonus, which could have been worth as much as £2.75M. He will not suffer huge hardship, as his basic salary amounts to £1.1M. What are we supposed to make of this? Should he be applauded for his forbearance? Or should we, as I believe, ask why it might be imagined that he was entitled to this extraodinary sum in the first place? In the book I document the way that the gap between average wages and top pay has grown massively over recent decades, and actually use the example of Barclays Bank (p.116) where the ratio between average pay and top pay grew from 14.5 to 75 between 1979 and 2011.

I don't have any problem with the existence of pay differentials, and I don't have any doubt that the job of CEOs of big companies such as Barclays is a difficult and demanding one. But I don't believe that any job, and any level of skill, is so great as to be worth so much more than someone else's job and skill. There are only so many hours in the day and only so much ability that any one person can have. Let's also clear out of the way two common arguments. It is not the case that these stratospheric payments are a reward for performance because as, again, I document in the book (p.123) executive pay has increased even as share price has fallen. Nor is what is at stake here simply the operation of a free market for talent: these payments are fixed by remuneration committees staffed by a merry-go-round of the same people who receive such exorbitant rewards.

Does anyone actually believe that in the period that senior executive pay has shot so far away from average wages the competence, performance and scarcity of those executives has increased? Was, say, Barclays, so much better run in 2011 than it was in 1979? No. As I said in my previous post on this blog, in a different context, this has been an outbreak of dumb luck not an upsurge of collective talent. Would these companies be so much worse run by someone paid, say, a miserly £500,000? And, in any case, irrespective of what they deserve, how much money does anyone actually need? Meanwhile, some 80% of the world's population subsists on $10 a day or less.

This is not the 'politics of envy' to use a rather hackneyed trope of those who defend such gross inequalities. And, given the relatively small number of people who earn these kinds of sums, it is not that reducing their rewards would enable any great increase in the wealth of others. No, the issue is about the terrible damage done to organizations and to society as a whole by such inequality, which tears apart the social fabric by so polarising life's experiences and chances both now and for generations to come. Actually the politics of envy is more in evidence in the repeated claims that those on welfare are living it up at taxpayers' expense, another socially divisive development. In the book (p.118) I quote official UK government statistics showing that benefit fraud in 2010 totalled £22M. In 2009, the world's top hedge fund manager earned £2.5billion.

In many countries now, including the US and the UK, there is a minimum wage. We need to adopt proposals that have been around for a while now for a maximum wage, too, fixing a maximum ratio between the lowest and the highest paid. Like all radical ideas, such as the debt jubilee, this looks impossible from within the prism of conventional wisdom and of course such proposals are greeted with critical scrutiny as if the arrangements that we actually have have arisen because they were first proposed then scrutinised and then adopted. In any case conventional wisdom has failed. The world we became accustomed to over the last few decades is manifestly broken. It won't be fixed by a few CEOs waiving their bonuses.