Confiscate half the income of all anti-vaxers (not just the poor)

Current penalties for non-immunisation are an imposing threat to the poor but completely fail to address shockingly low rates of vaccination in wealthy communities.

Since 2014, parents who do not vaccinate their kids lose eligibility for Family Tax Benefit A. This was a highly popular policy and supported by both major parties.

Losing FTB A is a big deal for poor families. For example, FTB A makes up around $21,000 of the $39,000 of assistance to an unemployed single mum with three kids. So the most vulnerable members of the community stand to lose around 54 per cent of their income.

But if you want to find immunisation shirkers, you look to the wealthy. Vaccination rates are inversely correlated with income. The wealthiest suburbs in Sydney like Mosman and Bondi have some of the lowest vaccination rates in the country. These people don’t care about FTB A, because they don’t receive it.

The obvious solution is to apply painful income disincentives consistently across the community. The government should therefore confiscate 50% of the total disposable income of all Australian families who do not vaccinate their children, regardless of wealth.

So a family in Mosman with a household disposable income of $250,000 would be fined $125,000 each year. Assuming this family has at least one child aged under 18 for a total of 25 years, they would pay $3.125 million. This might sound harsh, but it is proportionate to the penalty on the poorest and most vulnerable in the community.

The public health arguments are identical for both. The case is in fact stronger for families in Mosman and Bondi than most other areas because herd immunity is more at risk there. Blue collar areas like Campbelltown, where our hypothetical single mum lives, have the nation’s best vaccination rates.

Perversely, a consistent income disincentive would be more controversial than the inconsistent one currently imposed. Perhaps the stated justification of public health is really only half the story. The other half is a conservative morality tale. It’s the idea that whereas market income is a right, social security is a privilege. It’s a charity service conditional on ‘deserving’ behaviour.

But for a social democrat the entitlement claims are surely the reverse. Poor kids have a right to a decent relative standard of living, but the wealthy do not have the right to all of their labor and investment income. The latter is inherent in the principle of progressive taxation.

We could argue competing fairness claims all day, but this is irrelevant to protecting kids from diseases. As Matt Bruenig has argued, those who promote punitive income-confiscating interventions love to target social security, but there is no coherent justification for distinguishing between income sources when promoting good behaviour. The notion that infectious diseases care about social dollars but not market dollars is obviously absurd.

A fifty percent income cut is a tough penalty. I thought it was on the harsh side, but society has spoken. The penalty must be applied to all – rich and poor alike.

May the force Bern with you: Economic justice and the future of the American left

sanders obi wan

In a recent post, I argued that economic justice should become central to the policy platform of the American centre-left.

A comment from Su-Min contained a thoughtful critique of the post, and it provides a good opportunity to clarify my position. Su-Min’s first question is whether my argument was based on political pragmatism or morality.

When you say ‘Only economic justice can save progressive politics’, I interpret that as you arguing either that:

  1. a) There is a causal relationship between economic inequality, and other socially progressive causes (race, gender, sexuality); or
  2. b) Alleviating economic inequality is *more important* than these other socially progressive causes.

I don’t think either of these premises is exactly *wrong*, but I don’t think they’re *right*, either, and it’s worth unpacking why that is.

In answer, my argument was based on political pragmatism. There is no general, intrinsic moral priority of alleviating economic injustice over any other injustice.1) Rather, economic justice is a way to incorporate poor and blue collar voters into a centre-left coalition.

Su-Min was sceptical that tackling inequality would lead socially conservative low-income voters – such as Eric Harwood from my post – to change their social beliefs. I don’t believe it would either, at least in a direct way.2) However, a platform of economic fairness gives Eric Harwood a financial incentive to vote for the left and a stake in the identity of the left to compete with his other identities: religious, white, male.

This is not just conjecture. Working class voters are more likely to vote for a centre-left party with strong industrial and class links – something shown in empirical papers here, here and here. It would be ideal if guys like Eric Harwood changed their social views, but progressives really just need their vote.

The US Democrats – more so than other Anglophone centre-left parties – struggle with blue collar whites. This is partly because they lack the industrial and class ties of parties like UK Labour and the Australian Labor Party. Until recent years, inequality-related themes were virtually banished from Democrat rhetoric and policy.

There is great potential for picking up Republican voters by appealing to economic fairness. Republican voters are far more left-wing on economics that the Republican leaders – or even the Democrat establishment:

  • 62% of Republicans support a single payer health care system,
  • 53% of Republicans support raising taxes on the rich,
  • 55% of Republicans support a government jobs guarantee for unemployed workers
  • 57% of Republicans support higher minimum wages for tipped workers.

The secret of Donald Trump’s rise is speaking to these Republicans. That’s why his support base is with self-identifying “moderate Republicans”, and why he is weakest with “very conservative Republicans”. That’s why he is pulling lower income Democrats. It’s also why head to head polling by income group reveals a significant number of poor Americans who will either vote Sanders or Republican, but not Clinton.

Elite Democrats have failed to win over to economically left-wing Republicans because they are out of touch with mainstream America. A recent set of economic experiments found that Democrat students at Yale Law School – prime demographics for future Democrat establishment elites – were overwhelmingly more selfish and less egalitarian than average Americans. So the Democrat establishment’s disinterest in economic justice seems to be grounded in personal beliefs, rather than merely being a mistaken political strategy. It’s hard then to see how things will change without a transformation of the establishment.

Bernie Sanders’ great contribution has been to start a movement for reform in Democratic politics. Even though his chances of nomination are slim, in a sense he has already won. His challenge has pulled Clinton left, and shifted public discourse towards class politics.

For decades it has been assumed that an explicitly social democratic agenda was radically, hopelessly removed from appealing to mainstream America. By showing there’s plenty of mainstream appeal, Sanders has opened the Overton Window to economic justice.

As Obi Wan Kenobi said, “You can’t win, Vader. If you strike me down, I shall become more powerful than you can possibly imagine.” Force ghost Sanders will live on in the new generation of young Democratic activists that he has mobilised and inspired, pointing the way to a fairer future for America.

Footnotes

1) Although there are USA-specific reasons why addressing economic inequality has particular moral urgency. From 1996 to 2011, the number of American families living on less than $2 income per person per day has more than doubled from 636,000 to 1.5 million, including three million children. This kind of deep poverty is rare in comparable rich countries, and it’s hard to think of a statistic in other areas of American social justice that has so deteriorated so badly (maybe you know of some).

2) But there is also a subtle, indirect way that economic justice does change actual attitudes, or at least the intensity of attitudes. In Timmer and Wilson‘s analysis of immigration in US, Canada, Argentina, Australia and Brazil from 1850 to 1930, they found that economic inequality was most strongly associated with the establishment of immigration restrictions. A sad truth is that angry people often lash out, even at the innocent.

Only economic justice can save progressive politics

I just came across an excellent post by Matt Bruenig that, through an empathetic portrait of a poor man who supported Trump and Cruz, skilfully brought together the reasons why economic inequality must be at the centre of progressive politics.

Bruenig came across Eric Harwood on Twitter, when the latter spoke about feeling abandoned by the American safety net. Harwood had worked his whole life, but developed a serious physical disability. He was reaching the time limit of all available welfare programs and despaired about looming homelessness. He could not understand how despite having done all the right things – been a hardworking, loyal American – he could be thrown out on the scrap heap. There are millions of stories like this. It’s part of an extraordinary trend in the USA where life expectancy for middle aged whites is decreasing, mostly due to suicide, alcohol and drugs.

I recommend you read Bruenig‘s post in full, but here’s an except:

When asked what his main issues are, he talked at length about the bank bailout. In his view, the bailout was an incredible mistake. The money that went to the banks should have been given out to the people more generally, who then could have used it to pay off their loans (and thus save the banks) and to pump up demand more generally. He explained further that the bank bailout is just one part of a broader problem with the way the government spends money. Specifically, he thinks it spends too much money on foreign aid, refugees, and immigrants, when it should be spending it on struggling veterans, seniors, needy children, and those who cannot work. He also confirmed that he is, at least in some respects, a social conservative and that he believes abortion is murder. In the 2016 campaign, he says he wants a Trump and Cruz ticket and he doesn’t care who leads it.

Altogether, Harwood struck me as a basically kind and decent man. He’s been economically wrecked by so many of the trends that have hit working-class people in the country over the last few decades. He lost his home in the Great Recession. He has had lower-paying work for much of his life. And now he has a work-limiting disability that may soon cause him to become, in effect, homeless. He has experienced his latest setback as an abandonment of him by society and government institutions: he contributed in the labor force for 31 years and yet he can’t get the social benefits he is justly owed.

His concern about foreign aid, immigrants, and refugees, though misguided in my opinion, has a very clear connection to his economic situation. Put bluntly, he wonders why his country can somehow help these people while he drowns. In the grand scheme of things, the reality is that the US does not spend that much of its GDP on foreign aid, refugees, and immigrants. The reason there are so many poor veterans, elderly, children, and disabled (the four populations Harwood kept bringing up) is not because the government doesn’t have the means to help these groups. It just chooses not to for various ideological reasons. This is something I know because I spend most of my waking hours studying the shape of government spending and the US welfare state. But you could certainly see how someone like Eric Harwood might think otherwise.

The erosion of the American safety net has undoubtedly contributed to the populist right-wing backlash.  Impoverished people, lacking education and access to the political system, are looking for simple answers to their woes. And they have rich, successful people who will confidently tell them who to blame. A growing immiserated under-class is a perfect storm for an reactionary backlash. That’s why economic protections are so vital to a socially progressive and free society. Social liberals should think about embracing a pro-equality economic agenda, if they aren’t already.

There are other compelling reasons for rebuilding fragile social protections. For a social democrat, of course, the restoration of the safety net is simply a moral principle. But for a rational capitalist, it is also an economic imperative. If we open up economy – embrace disruption – members of our community are exposed to more risk, even as there is a greater return to the economy as a whole. The rational response to such risk is good insurance. But instead of increasing social protections, most countries – the USA in particular – have weakened them. It’s no surprise, then, that we have a popular backlash against openness that threatens to undermine international trade and immigration.

Whatever you think of Bernie Sanders, you must admit his message is cutting through. His rhetoric is powerful because it redirects working class anger onto bankers, elites and greedy politicians. His punchy slogans give the afflicted a story with which they can make sense of their suffering. This is why he has a vastly larger political coalition – not just students, but also truck drivers – than the warm-lettuce lefties before him.

There is no agility without security. Morally, economically and politically: the case is overwhelming that frank discussion about class, inequality and the social compact must be the centerpiece of a successful centre-left agenda.

My disagreement with Hillary Clinton, and how I hope she’ll win me over

Despite impressive achievements, Hillary Clinton is grounded in an old style of politics that is ill-suited to the progressive strategy required in today’s America. This applies to both policy and politics. Clinton must transform her approach if she is to become the next President. Despite his hard left-wing politics, Sanders’ unexpectedly successful campaign provides some useful lessons for the future of a successful centre-left agenda.

My ideological disagreement with Hillary Clinton goes back to a series of policies she promoted in the 1990s that hurt the most disadvantaged Americans, in particularly vulnerable women and African Americans.

“Tough decisions” are not necessarily the right decisions. Experience is only advantageous if it demonstrates the desired attributes.

In particular, I object to Hillary Clinton’s personal advocacy of the Bill Clinton administration’s policy of throwing single mums off welfare. Whereas Australia reduced payments to single parents, Hillary Clinton supported throwing more than half of recipients off welfare altogether.

When the Bill Clinton administration abolished the Aid to Families with Dependent Children program, he truthfully declared it would “end welfare as we know it”. It was the first time in American history that any government repealed a section of the Social Security Act.

Following the implementation of this ‘reform’, the number of American households with incomes of less than $2 a day more than doubled to 1.6 million. Today millions of poor American women have stories like this:

Rosa Pena, a 24-year-old single mom in Arizona, told the New York Times “I’ll do what I have to do,” to stay alive, including sell the groceries she buys with food stamps. Other poor women the paper interviewed in 2012 said they sell clothes for extra cash or reluctantly move back in with violent boyfriends. “One woman said she sold her child’s Social Security number … ‘I tried to sell blood, but they told me I was anemic,’ she said.”

The women and children hurt by this policy were thrown were under the bus for centrist cred. They are the poorest Americans, and disproportionately the victims of domestic violence and racial injustice. Hillary Clinton called them “deadbeats”.

Sometimes I compare my life trajectory to that of hypothetical American David, from a similar single mum background. There’s a reasonable chance my family would have wound up on the streets. It’s unlikely that I would have been able to earn good degrees, excel academically and work in relatively high status jobs.

To be clear, I’m not suggesting Hillary Clinton designed the welfare crackdown. But she does have responsibility for the arguments and rhetoric she put forward in support of one of the cruellest American policies in decades. She still stands by the welfare crackdown.

In addition, Clinton advocated “tough on crime” legislation that contributed to the human disaster zone that is American mass incarceration. She remains pro-capital punishment. In the USA, these policies are deeply intertwined with racial oppression.

And then there was disastrously wrong position on the Iraq War. But this is only one of a string of foreign policy failures, driven by her consistent identification with hardline hawks in the US foreign policy establishment. No this is not the norm for a right-leaning Democrat. It’s to the right of the right. Foreign policy judgment is Clinton’s centrepiece claim on the Presidency. Some questions here are obvious and reasonable.

Finally, Clinton has been a long-time supporter of Wall Street, including their push for financial deregulation. After the financial sector blew up the global economy in 2008, the USA needs financial reregulation. It is entirely legitimate to scrutinise Clinton’s strong association with financial elite, particularly when they comprise her major donors and key policy advisers.

None of the above issues absolutely disqualify Clinton for the job. We should acknowledge her impressive list of achievements. In particular, she deserves our deepest respect for punching through the political glass ceiling at a time when that was an even harder feat than it is now. Furthermore, the policies criticised above were to some extent part of the Zeitgeist of the time. That is some defence for a moderate politician. As Gough Whitlam said, only the impotent are pure.

But no one is above answering respectful questions about their history and values. That’s the point about a democratic contest. Unfortunately the best alternative candidate – Elizabeth Warren – did not stand. Bernie Sanders is more left wing than ideal, but it’s nevertheless in the interest of centre-left democracy that he stood up to put forward the “other side”. The Sanders campaign, I expected, would lose the vote but succeed in nudging Clinton towards better policy.

All expectations were that Clinton would emerge as clearly the superior politician. A strong centre-left leader can unify their party behind a compelling progressive vision. They project a certain gravitas that can acknowledge and respect concerns even when not acceding to them.

Instead, associates and supporters of the Clinton camp, and Democratic establishment, have waged a campaign of smearing people with legitimate questions as naïve, stupid, crazy, sexist, racist and/or all of the above. Yet while the Clinton backers deride average Sanders’ supporters as BernieBros, her support among young women has fallen into a death spiral. Within a few months, her share of young women’s voting intentions has collapsed from a large majority to a clear minority. In Iowa, 86% of young women supported Sanders – stronger than the young male vote. A growing number of African American leaders have defected from past endorsements of Clinton and joined the Sanders’ camp.

The ferocious hatred of Bernie Sanders from the establishment is hard to explain. The reality is that Sanders has led a good, honest campaign. Knowing Clinton would likely be the nominee, he has largely avoided strong personal attacks that would damage her in a general election. He defended Clinton on the email controversy, one of her great political liabilities. That kind of team loyalty is all too rare in politics. At the same time, he has energised young people and brought new recruits into the Democrat fold. That’s a model campaign for an outsider, and he should be applauded for it.

My fear is that the Sanders bashing may reflect an elitist mentality within the Democrat establishment and punditocracy. How dare an outsider put their hat in the ring?! Doesn’t he realise Clinton is the ordained appointment of the Very Serious Persons?! The temerity! If this is an accurate assessment, it’s a sad time for the global centre-left. Our mass appeal has always been rooted in an egalitarian ethos.

My inner bleeding heart feels that the instinctive kicking of an underdog is related to status hierarchies and the unjust exclusion of outsiders. My inner economist thinks it’s about an insider clique protecting their monopoly power, inhibiting the benefits brought by vibrant competition.

The Clinton camp talks a lot about “electability”. While they keep talking about it, Clinton blew a lead of approximately 60 percentage points, with Clinton and Sanders now neck and neck. Sanders has won over iconic Clinton demographics like young women by huge margins. It’s time to face up to the empirical reality that Clinton has been overrated as a politician, and Sanders underrated.

The pundit class suffers from a delusion that “electability” is about a simple midpoint on a left-right spectrum. It’s far more complex. First, personality factors such as “likeability” are at least as important as ideology. Second, unlike Australia, the USA’s optional voting complicates the centrist privilege. Motivating the base to vote is as important as appealing to the median voter. Clinton is obviously struggling with youth. A serious risk for Clinton is that young Democrats will not turn out in a general election. Older voters are more reliable, so Sanders does not face an equivalent risk.

Third, the public do not have a stable, unified political ideology as pundits would understand it. That’s some David Brooks/Paul Kelly hot bullshit. Rather, punters have an inconsistent mishmash of vague beliefs, some of which come to the forefront depending on the prevailing public discourse and socio-economic conditions.

The pundits have been wrong over and over on this. When Tony Abbott became leader of the Australian Liberal Party, the near-universal wisdom among the Very Serious People was that his right-wing social views were “unelectable”. He was indeed more right-wing than most Australians, but he could prosecute a relentless case on issues that mattered to Australians at the time. Pundits made similar bloopers over Margaret Thatcher.

Political success requires an ability to reframe public conversation onto desirable agendas and to build new alliances. Both Sanders on the left and Trump on the right have shown extraordinary success in this regard. It’s loosened the Very Serious Persons’ gatekeeper control of public discourse, and that is why the punditocracy hates them so much.

Clinton cut her teeth in “third way” politics. This movement is the compact disc of centre-left politics: innovative and popular in the 1990s, but largely superseded today. Indeed, some third way policies may have brought about problems facing progressives today. In particular, increasing competition and cutting the social safety net made life harder for the working class. Since this time, there has been unprecedented fall in the longevity of middle aged white Americans. No wonder there is rage.

Centre-leftists must bring back some of the blue-collar whites that have been lost to the right. Sanders is onto something with his old school populist talk about inequality and financial regulation. Although somewhat lacking in nuance, Sanders tirades against bankers are a vastly preferable direction of working class anger than Trump’s tirades against immigrants.

Evidence is still preliminary, but Sanders appears to be cutting through with blue-collar Americans. He has demolished Clinton’s lead among Americans with “High School or some college” levels of education, and among those with incomes of less than $25,000. Data from Iowa showed a strong lead for Sanders among drivers of trucks and station wagons.  For a hard lefty, with staunchly socially progressive policies, this would be a remarkable achievement. Ponder this for a moment: Sanders’ base is shaping up as a unity of student liberals and truck drivers. That’s a holy grail left alliance that progressives across the world have been struggling to unite for decades. Maybe, just maybe, this guy actually has something going for him.

Despite Sanders’ strong performance, Clinton is still likely to win. Sanders is at a name recognition disadvantage in the southern states. Most of the super-delegates are locked in behind Clinton. The DNC is shamelessly rigging the contest.

If the Clinton campaign transforms its approach, it could benefit from the new recruits and energy that Sanders has brought to the party. Undoubtedly Sanders will be classy and throw his full support behind Clinton. Whether his supporters will follow depends on how Clinton plays her cards. The first obvious lesson for the Clinton camp is to stop relentlessly bashing Sanders with disingenuous attacks (see here, here, here, here). The Democrat base has seen through these old fashioned too-smart-by-half gimmicks. The attacks backfired, bringing Sanders wider attention and a surge in donations.

It’s also time to lose the tin ear, to stop derisively caricaturing Sanders’ supporters. Bashing the voters is mindbogglingly stupid. When people feel personally attacked, they tend to firm up their opposition to the attacker, and the attacker’s associates. That the supposed political geniuses in the Clinton campaign have failed to realise this elementary point is very concerning for their prospects in a general election. The Clinton camp must stop asserting her electability and start showing it.

Clinton should signal a clear break with policies of the past. She should incorporate some of Sanders’ economic populist rhetoric into her political toolkit and commit to rebuilding the social safety net.

Finally, the Democrat establishment must humble itself to acknowledge that maybe, just maybe, Sanders has discovered an important component of a winning electoral strategy. They should quit their transparent rule rigging, which so far has succeeded only in leaving left egg on their faces. Perceived illegitimacy in a Clinton win will destroy morale among Sanders supporters and push them away from the Democrats.

Hillary Clinton has the potential to be a great and unifying Democrat President. It’s time for her campaign to show it. Until then, I am feeling the Bern.

MYEFO shows Coalition promised a unicorn

The release of the latest MYEFO is more confirmation that the Coalition’s claim to superior budget restraint is an absolute joke.

The Coalition will try to blame international circumstances, but the budget papers show their own policies have made the deficits worse.

Decisions in the 2015-16 MYEFO have increased expected deficits over four years by $3.7 billion. Four of the Coalition’s five budget updates have been net spends:

coalition spending

Labor, on the other hand, delivered five net saving budget updates in a row:

labor  spending

The Coalition’s budget predicament is the inevitable outcome of its dishonesty at the last election.

It promised an impossible combination of lower taxes, new spending and reduced deficits. That didn’t add up then, and it doesn’t add up now.

Too many economic journalists – and even professional market economists – failed to strongly and consistently hold the Coalition to account.

The Coalition’s electoral platform was an innumerate unicorn drawn in crayon. It’s time to hold them to account.

Terrorism feeds off outsiders in a shallow and fragmented world

Over and over again we hear about alienated young people signing up to ISIS because they crave “community”. In this post I try to explain that phenomenon by reference to changes in technology and the economy. Warning: this is speculative and hand waivey.

They [Western society] teach us to work hard to buy a nice car and nice clothes but that isn’t happiness. I was a third-class human because I wasn’t integrated into a corrupted system. But I didn’t want to be a street gangster.   

The quote comes from a 24 year old French man on his decision to join Jabhat an-Nusra, a Syrian terrorist group. He touches on themes that repeatedly come up such accounts: a sense of low status and alienation from a world of shallow conspicuous consumption.

A major driver of terrorist recruitment is, in my view, social isolation caused by the atomising effects of today’s individualistic hyper-competitive mode of capitalism. It’s also influenced by a decline in respect and dignity for those at the bottom of status hierarchies. It’s not surprising that such people look for community and respect where they can find it.

Extremists are becoming specialist online recruiters of this demographic. ISIS is providing a sense of deep community in an increasingly shallow and fragmented world.

In Western liberal societies all kinds of relationships are increasingly short-term. We see this from Tinder to uber, to hyperglobalisation and robots taking our jobs. People are more replaceable. It becomes less rational for employers to make long-term investments in employees, and as a consequence, the converse is also true. It’s even become a thing for employers to mass dismiss their workers by text message.

By cutting search costs, the new model of human contracts is arguably efficient. Corresponding with increasing capacity to measure performance (think online rankings), the new model facilitates the constant reassessment and replacement of our fellow humans. But this is brutal on those who fail to make the cut. We are more likely to end up with an entrenched class of losers.

At the same time, there’s more conspicuous consumption, conspicuous leisure (Facebook holiday pics) and all-round status-flaunting. Society is splintering into a world of winners and losers.

Nicholas Gruen points out poll results showing the increasingly materialistic nature of college students. When asked of the importance of “being very well off financially”:

The latest data from 2013 for entering university students here in the US, 82% say that that is an important life goal. And back in the late ’60s and early ’70s only about 45% said that was an important life goal.

This is something of an anomaly because real incomes for college graduates have increased, so you would think they have less to worry financially. So why is it the opposite?

I propose:

(1) risks in the marketplace have increased due to disruptive competition and a less secure employment relationship (and we are loss averse, i.e. fear losing ground even if we have become richer);

(2) risks have increased outside the marketplace because social insurance has become more conditional;

(3) society is more monetised, so what you get depends more on how much you can afford to pay (other forms of resource allocation like queuing/first in best dressed provided ad hoc redistribution);

(4) within-country inequality is rising – people can see greater wealth around them, spurring a sense of indignity;

(5) norms against flaunting status have broken down – check out a rap film clip [One day I want to do a quantitative analysis of song lyrics over the past 60 years. Hypothesis: fall in pro-social themes and growth in narcissism and egoism];

(6) the institutions in which people traditionally found meaning and fulfillment outside the marketplace – like mass mainstream religious organisations, unions, scouts etc – are declining (marriage is also declining for all bar the rich and highly educated);

(7) there’s less social empathy (see here) and respect (see here and here ).

I suspect all seven contribute to health problems and unhappiness, but 3-7 are the most important for terrorism.

There are two main groups that will be disaffected by the rise of short-term relationships, decline of mass organisations, and emphasis on status:

(1) Those who just prefer deep loyalties, thick identities and intense communities. Some people more than others get stressed out by risk and insecurity (economic competition is stressful and damaging to mental health). Some people more than others crave meaning and deep fulfilment.

(2) The people who slip through the cracks, the “losers” in our cut throat society. Before they had an all-encompassing institution that would take them in, they would receive empathy, and could rely on respect for being a good citizen, union-member, church-goer etc. Now what do they have? Just their own individual deficiencies, apparently.

Both of these overlapping groups are prone to recruitment by extremist groups, offering a sense of community and something to believe in. These communities can provide a sense of honour and dignity to those who have been left behind. As one American boy who joined an online ISIS group was quoted in the New York Times:

For the first time I thought I was not only being taken seriously about very important and weighty topics, but was actually being asked for guidance.

It’s hard to imagine a move back to either long-term safe jobs or mass movement organisations because they are being killed by changes in the economy.

The future employment prospects look particularly grim for low status men. Throughout human history, they have been able to make a living from manual labour if nothing else. But the robot revolution will do away with much manual labour. Jobs increasingly depend on social skills. But gender norms have not caught up. To some extent, they still prime boys for interacting with things and girls for interacting with people. Marginal men are precisely the ones we see falling for terrorism (and many other socially destructive behavior).

While the economic causation of the fall of job-for-life manufacturing is obvious, the economic basis for the destruction of mass movement organisations is more subtle. The great development economist Dani Rodrik suggests that the rise of mass movement politics – vital for establishing good institutions – was in fact facilitated by production line manufacturing. Manufacturing brought people of different ethnicities and religions together on the job. In such a situation, workers could easily see they had shared interests (eg working conditions from the boss, civil liberties from a state that wanted to clamp down on striking rights etc).

Rodrik worries that, with the decline of manufacturing, developing countries may never undergo such a process:

The political consequences of premature deindustrialization are more subtle, but could be even more significant. Mass political parties have traditionally been a by-product of industrialization. Politics looks very different when urban production is organized largely around informality, a diffuse set of small enterprises and petty services. Common interests among the non-elite are harder to define, political organization faces greater obstacles, and personalistic or ethnic identities dominate over class solidarity. Elites do not face political actors that can claim to represent the non-elites and make binding commitments on their behalf. Moreover, elites may prefer – and have the ability – to divide and rule, pursuing populism and patronage politics, and playing one set of non-elites against another. Without the discipline and coordination that an organized labor force provides, the bargains between the elite and non-elite needed for democratic transitions and consolidation are less likely to take place. So premature deindustrialization may make democratization less likely and more fragile.

Unfortunately, in our increasingly atomised, uberised service economy, we lose sight of shared interests. It’s easier for reactionary forces to play divide and conquer between rival religious and ethnic groups.

It’s in this context that we see mass organisations like mass religious organisations and unions being replaced by networks of tribes that target particular demographics or specific opinions rather than a sweep of society. Aided by internet anonymity, this seems to encourage feedback loops of inter-tribal rage.

We live in a society that demands individual success but discriminates based on group membership. We demand people make their own way and accept disruptive risk but when they fail we lack institutions to pick them back up again. We demand hyper-discipline, with every aspect of performance increasingly measured and ranked, but this same society has more capacity to tempt and tap into weaknesses. That’s the downside of liberalism and technological progress.

In a more stressful world, temptation goods that enable people to self-medicate have never been more readily available thanks to rising real incomes and technological progress. I don’t think it’s any surprise that the unprecedented fall in longevity for American middle aged whites (who have been hit hard by hyperglobalisation) is driven by temptations: alcoholism, over-eating, drug-overdose.

For another demographic, the temptation is to slide into an alternative universe online and potentially fall for the siren song of extremism. In this case, the toxic medication offers a fickle sense of self-worth, belonging and power.

I wish I had the answer to this, but it seems wrapped up in the forces of contemporary capitalism.

MicroSpam alert: Gary Banks is wrong to bash penalty rates

Last week I posted about why econocrats’ should show humility in their advice. I coined the term “MicroSpam” to refer to the dogmatic devotion to simple MICRO101 intuition as an all-purpose policy solution. In its classic form, MicroSpam contains traces of both arrogance and naivety.

recent economists’ poll about penalty rates contained some very astute analysis from Australian economists, but unfortunately also a couple of sneaky pieces of pure MicroSpam.

The poll asked whether cutting Sunday penalty rates would increase employment and service availability on Sundays. As an aside, that’s not actually a useful question for policy, as comments by John Quiggin and other economists pointed out. Employment probably will increase on Sundays, but what matters for the economy is overall employment. The effect on overall employment is not clear at all, as work might just substitute to Sunday from other days. Unfortunately a very narrow question engineers a positive response.

Anyway, let’s look at the comment by Gary Banks – former head of the Productivity Commission – for some vintage MicroSpam.

After indicating a “strong agreement”, with a confidence of 10/10 that cutting penalty rates would increase Sunday employment, he comments:

And why stop there? Penalty rates penalise organisations that need to work seven days and workers for whom weekend work is preferred — including within the participation priorities of women and youth. Penalty rates as currently structured are the vestige of a bygone era. The only policy question is how best to effect the transition to modernity.

Umm, I have no idea Gary Banks, why stop there. What on earth could all these silly workers, unions and citizens be on about? They must actually oppose modernity! It’s well-known that the fundamental principles of modernity are sanitation, human rights and the absence of penalty rates.

The answer to Banks’ question, obvious to all people who haven’t headed the Productivity Commission, is that the proposal would transfer money from workers who give up their Sunday to employers (or possibly consumers). The question is therefore at least partly distributional, and questions of distribution depend on our values.

The second obvious answer is that it would be a step towards normalising the weekend as a regular working time. Maybe you like this, but many don’t. The answer is not self-evident.

In the real world, workers can be pressured to work weekends when they don’t really want to. Such work can hurt relationships with family and friends.

To use micro-speak, weekends have network externalities. A network externality refers to situations when the benefit of something to an individual increases with more people also taking part. I wouldn’t get much benefit from the internet if I owned the only computer in the world. But with each additional participant, my potential gain from the internet increases.

Weekends are similar. Most people do not work on the weekend, and their availability helps us have family and community activities. The weekend is therefore an institution that supports positive network externalities for social engagement.

There are some powerful arguments, from both the political left and the political right, that our communities are weakening and fragmenting. Do we really want to weaken them further?

Gary Banks also claims that penalty rates penalise workers. In some contorted language, he refers to women and youth. Is he actually suggesting the net impact on the welfare of weekend workers would be positive? I don’t think he really knows that, hence the contorted language.

A linguistic fudge gives an expert a licence to bullshit. They can’t be proven wrong because their words are ambiguous. This allows them to continue to sound confident even if they can’t actually prove what they’re insinuating.

Rather than knee-jerk scorn of popular social policies, econocrats should reflect on deeper reasons why these policies might be valued by the community.

Any economist should agree that people’s preferences are fundamentally important. Now that’s just MICRO101.