Agreement on problems; differences on solutions I have read GeorgeBundle’s response to my ‘Elephants in the room’ article with interest. In many ways, I think we are in agreement about the facts of the situation; we differ in our response and our solutions. I am going to consider each of his points, quoting the relevant passage from BG’s article, followed by my (NP) response.
GB: Right at the beginning NP raises the question: “on most major issues, the establishment and the media conspire to either ignore or suppress the most important questions?”
Issue number 1: most important questions for whom? Even if they have identified them, the media will find the most trivial angles in which to treat them. Watch any of the paper review programmes and you will see what I mean.
Issue number 2: The establishment’s most important questions are existential and relate only to voter support. The voter responds to issues that directly concerns him/her. There is no conspiracy nor suppression in my view, only different agendas.
NP: The most important issues are those which are likely to have the most effect on the future of a country and the daily life of its citizens. Of course, determining which those issues are calls for fore-sight and judgement, but the criteria are clear enough. GB is right when he says the media tend to trivialise all important issues, but that is my point. They ignore the elephant in the room.
Again GB is more or less right when he points out that governments and oppositions tends to formulate policy with a keen eye focused on the next election. This leads to a couple of “isms”: popularism and short-termism. We all know this is so but, as I understand it, the whole point of the Third Rock Forum is for people to think about these problems and try to come up with answers, not to say “that’s just the way it is” or “that’s just the way people are”. After all, if you consider the extraordinary changes in public attitudes in the last 100 years (on capital punishment, race, sexuality, religion), it is perfectly clear that, if you raise (or, in some cases, lower) public consciousness, you can bring about radical changes in public attitudes.
GB: Then, Nick expands on two subjects, Scottish Independence and Crisis in the Middle East. Very logical appraisal of the situation in both subjects and equally logical answers for the important questions relating to them. I take these two separate issues in one go because both are subjects that are not susceptible to a logical approach but an emotional one.
Take Scottish Independence. It is a nationalist agenda based on people’s emotional value of their nationality. The issue is, will that emotional value be stronger than people’s fear of the unknown? How do pounds, shillings and pence questions come into this conflict?
NP: I have to guess here but, my estimate is that about 15% of the Scots hate the English and would vote for independence even if it meant returning to the Middle Ages. The remaining 85% are, like most people, primarily concerned with their own lives, their families, their jobs and their prospects. That is why I predict the Scots will vote No. Despite grabbing most of the oil revenues, Scotland, under a socialist regime, faces a bleak prospect economically – and I think many Scots know it. (Pounds certainly come into it; after all Alex Salmond expects to keep sterling.!)
In passing, I will add that the bid for independence by the 15% who hate the English is a perfectly respectable position. On the other hand, if a majority of the other 85% vote for independence, then a majority of the Scots will have shown themselves greedy, short-sighted and ungrateful, in that they have decided simply that they will be better off if they snatch the oil revenues. Scotland has enjoyed the benefit of England’s stature and economic strength for 300 years. It has had more than its fair share of the United Kingdom’s wealth. It would be far less distasteful if London decided to declare itself an independent city state and keep all its wealth for the benefit of Londoners. At least London earns its wealth; whereas Scotland would be relying on an accident of geography. And before GB says: “Don’t blame the Scots. That’s the way people are”, I invite him to explain why London is not a city state.
GB: Crisis in the Middle East? Nick’s description of the situation there is absolutely right, including the West’s “cloud coo- coo land” approach to it. What would have happened in Europe in the 17th Century if someone proposed that European countries should be ruled by democratically elected secular people? Where you have a region which is riven by religious, tribal and racial conflict - by cultural tradition – people BELIEVE that they are RIGHT. Only they are right in the eyes of GOD and they will be happy to die to uphold this belief. Even worse, within one religion, Islam, you have centuries old deadly conflict between Shia and Sunni. How is this going to change if you tell them about “universal human rights”? Where is “reason and evidence” going to fit in? One could argue that such attempts might be as naïve and vacuous interference as organizing a military coup to achieve a regime change to establish democracy. Or, accuse a War Lord with war crimes!
NP: Again GB and I agree on the facts. My suggestion that we vigorously promote universal human rights and civilised standards in education, medicine and all other fields of knowledge is not to bring about world peace. It is a practical strategy to confront the rise of extremism and an alternative to the disastrous consequences of military intervention. After all, the extremism of the extremists is based on extreme views i.e. ideas, and the best way to deal with ideas is to present stronger ideas.. Most of these extremist views are provably wrong. The world wasn’t created in six days. Knowledge is not evil. The pursuit of knowledge is endorsed by all world religions, especially Islam, so repression of education is inconsistent even with the belief system of the adherents. So we should engage at the intellectual level with extremist ideology. We probably won’t convert the extremist but we can make it a lot harder for them to recruit new adherents. All my suggestions were practical, relatively cheap and avoided the cataclysmic disasters of current Western foreign policy. I therefore persist in recommending them to the house!
GB: Welfare cuts and the fall in unemployment is a completely different animal. Nick sees the subject clearly and argues well on conventional basis. My issue with his approach is that the problem he describes and the solution he offers is not taking into account the realities of the situation.
My approach is to try to find the elephants in the room. How much anyone earns reflects their value in the market place. This applies equally to low paid and highly paid people. If anyone cannot find a job which rewards his/her work at a level sufficient to cover the cost of their lifestyle, then it is for them to increase their value in the market place in order to receive a higher level of remuneration. It is not the responsibility of the government or a commercial company to subsidize the cost of anyone’s lifestyle. That is the theory. The reality is that, for decades, a considerable proportion of school leavers finish their education without having any value in the market place. They are unemployable. So, the taxpayer steps in and provides them with a living. This used to be a workable solution whilst there were lots of taxpayers and few people to support.
NP: Again we agree on most aspects of the situation. I agree that many school-leavers are ill-equipped for employment (25% of the UK population is functionally illiterate). I also believe that we have created millions of ‘unreal’ white collar jobs to provide employment for the waves of graduates who hold degrees but who remain poorly educated and lack the mental capacity or the training to be efficient white collar administrators.
However, we disagree on a couple of points.
While, in theory, the market mechanism is a perfect system, in practice, it is far from perfect and easily subverted. The most obvious method of subversion is monopoly or oligopoly. This danger is widely recognised and efforts are made to counter it (MMC and its counterpart in other countries) but the fact remains that the pure market model itself does not deal effectively with monopoly situations.
This is only the most obvious defect in the 'perfect market mechanism' theory. GB argues that “how much anyone earns reflects their value in the market place.” Well that depends what you mean by ‘value’ and what you mean by ‘market place’. In recent years, company bosses have increased their rewards for the work they do many times over, at a far higher rate than almost any other type of worker. Has this increase ensued from the market mechanism; or has it ensued from a subversion of the market mechanism whereby a small group of non-executive directors have conspired to increase senior executive pay, confident in the knowledge that those whom they favour will, when their remuneration is reviewed, then favour them? In the ideal market mechanism model, the shareholder would intervene; but the shareholders are pension funds, run by executives whose own remuneration often depends on the generosity of those whom they have already over-rewarded. That is not value determined by the market place; it is an abuse of the market mechanism by a clique of powerful, self-interested individuals.
If we look at the financial sector, where banks have been fined billions for fraudulently manipulating libor and other rates, even the most enthusiastic proponent of the market mechanism will admit the system is open to abuse on a biblical scale. Yes of course the law or the regulators can step in – but that’s my point. The market mechanism on its own doesn’t stop such abuses. For all its undoubted merits, It is an inherently faulty and unstable system.
There is a deeper problem for those who blindly believe in the market mechanism. It centres on what is meant by ‘value’. If you define value as what you can get in the market, everything is simple and clear. Let’s say Fred Goodwin is worth £2 million a year and an annual pension of £500,000 because that’s what his contract said he should have. But there’s another meaning to ‘value’ which involves benefit to others, benefit to society, benefit to mankind. The market mechanism is not very good at estimating that kind of value. Why didn’t the market mechanism make Alexander Flemming a billionaire; why does it pay some footballers £25,000 a week, while paying a first-class care-worker £25,000 a year. I accept the market mechanism does not purport to be able to handle such discrepancies but it certainly makes me realise that a mechanism that can’t even begin to take account of such anomalies is not such a fine thing after all.
GB: Now, another baby elephant is growing in the background. Ever fewer taxpayers and global businesses that provide the Treasury with severely reduced funds cannot support the ever growing population who are basically have little or no chance in the market place. Great sounding political schemes come along which do not change the actual situation but try to put a brave face while tackling an insolvable problem. The big elephant in the room is that the Welfare State, which was introduced in a different world, can no longer be afforded without taxing out of existence all the wealth creating processes. Its cost has to be reduced in such a way that it damages the least the electability of any political party at the next election. When will the establishment and the media discuss this important issue?
NP: Again I agree with the identification of the problem. But it’s not insoluble. As has been argued by other members of the TRF elsewhere, the welfare state needs reform so that unemployment benefit is set well below the lowest income of a full-time worker. This means the government needs to increase the minimum wage and decrease benefits to open a sufficient gap to motivate all those who can to get a job. This, as I point out in my ‘elephants in the room’ article, is already happening.
At the same time, today’s workers must pay more of their salary into a genuine pension fund to give themselves a reasonable pension when they retire. That is probably about 20% of income throughout a 50 year working life. Unfortunately, because the old age pension was never funded as a pension scheme, today’s workers are also having to pay the pensions of those who have already retired, so it’s a tough call. But it is what needs to be done. Yes, it’s true that politicians find it hard to face the truth. But that doesn’t change the truth.