Sunday, November 02, 2014

Sunday Morning Links

This and that for your Sunday reading.

- Will Hutton rightly slams David Cameron for his antisocial view of taxes and public institutions - which should of course sound all too familiar in Canada:
Believe the prime minister and it is morality, rather than economics, which requires him to cut taxes. In an important article in the Times last week that was factually incorrect, philosophically incoherent and economically bonkers, David Cameron set out the Tory credo. He was wrong on all counts. Trying to argue why every reader should vote Conservative, he instead revealed the darkness of the blind alley into which modern Conservatism has stumbled.
The economy needs public agency. The long commutes that Mr Cameron so celebrated in his article are done in publicly provided railways with fat public grants for the private companies that operate them. The innovations that make offices and factory floors competitive come from publicly funded science and public grants that allow companies and entrepreneurs to lay off some of the enormous risk of being technological pioneers. No significant innovation or invention has ever happened anywhere without public initiative at some stage in the process.

Economies and societies grow out of an interdependence between public and private: they need each other and taxation is the financial connecting rod. To echo the IFS, there is no sense in which “every pound of public money is private earning”: private earning becomes as high as it is only because of public investment. Taxes are the means by which we furnish public agencies the wherewithal to provide us with the universities, research, roads, railways, networks and all the rest that allow private companies to flourish. It is why the IMF, considering the best way to get public finances back on track after a credit crunch, recommends that governments try to preserve as much of that enterprise-enhancing public spending as possible, increasing rather than lowering taxes as part of the programme. Mr Cameron’s boast is economically illiterate.

Taxes are socially indispensable as well. “Public services and safety nets” are not inconvenient social burdens that require immoral taxes. They are created as a collectively owned means of guarding against the hazards and risks that every human might confront – of a crippling illness or disability – and problems associated with ageing.

We do not deserve what will or could happen to us, but we pay our taxes to fund systems that protect not just ourselves but each other. Taxation, in this sense, is the most complete expression of our morality. Of course the Treasury should husband our resources, not because taxation is immoral but because it has a duty to make sure this social money does as much work as possible, giving us the biggest return for our moral taxes.
- And David Doorey both reminds us that more social countries tend to be far happier than those which adopt the Cameron/Harper beggar-thy-neighbour ethos, and offers an interesting explanation as to why:
Today, the United Nation’s released its second annual “World Happiness Index”. One thing that is striking about these studies is that the ‘most happy countries’ are always countries with the a long tradition of strong government social welfare programs, high overall tax levels, and of interest to a blog on work law, high levels of collective bargaining coverage. That is, in happy countries, unions and collective bargaining play a substantial role in the setting of conditions of work, which creates a strong middle class. Not surprisingly, therefore, the ‘happiest’ countries also tend to be the least unequal societies: they score well on measures of income inequality.
Given what we know about the effects of collective bargaining, the relationship should not be surprising. Empirically, we know that collective bargaining raises incomes, contributes to a stronger middle class, results in better health benefits and pensions, and produces safer jobs and better job security than the alternative system, in which employers usually fix working conditions unilaterally, subject to certain regulatory minimum standards. We know that countries with high collective bargaining coverage have a broader distribution of wealth throughout society than countries with low collective bargaining coverage. My colleague Professor Michael Lynk has nicely summarized these outcomes in this paper.

We might also expect that countries that respect collective bargaining rights are also more likely to provide a strong bundle of social benefits that tend to make like more enjoyable, and easier, for its citizens. These countries operate under a different type of capitalism than prevails in countries, like the USA, where a belief in ‘market forces’ and ‘individual responsibility” borders on religious doctrine. In these ‘happy’ countries, the role of ‘social partners’, like unions, has long been accepted as a necessary counterbalance to capitalist forces. Critics of strong government and unions like to deride these systems as ‘socialist’. But whatever you want to call it, these systems consistently produce the happiest citizens in the world.
The Happiness Index provides another insight into why collective bargaining coverage might be associated with happiness. In a very interesting segment of the report (pages 62-64), the authors explain that a significant factor affecting happiness is individual perceptions of ‘relative income’. People become less happy when they believe their income is lower relative to a comparator, such as coworkers or friends. This is something I’ve discussed before on this blog (see Why Do Workers Support Policies to Weaken Labour Rights?) A theory might be that where large segments of the population have their wage and benefits fixed by collective agreements, rather than at the whim of human resources policies, there will be fewer gaps in compensation that seem arbitrary or unfair to people. They can more easily understand differences in pay, because those differences are more likely to be transparent and explained in the collective agreements.

In contrast, in countries where union representation is lower, like the USA, unionized workers earn considerably more money and have better benefits and pensions. Nonunion workers become resentful (unhappy) of this privilege, because they are relatively worse off than their perceived comparators in the unionized workplaces. High collective agreement coverage reduces the potential for wage and benefit envy, which breeds unhappiness.
- But David Sirota notes that we're still a long way from giving effect to the principle of using collective power for the public good - and indeed the U.S. is seeing a new batch of candidates who seem nearly certain to turn hard-earned public pensions over to their financial-sector cronies at the expense of the workers who rely on them.

- Amanda Marcotte writes about the split between the progressive preference for real news and the conservative inclination to live in a fact-free echo chamber.

- And there are few issues where the divide is more stark than climate change and resource extraction. On the fact-based side, the BBC reports on the IPCC's eminently reasonable conclusion that we need to transition away from the fossil fuels which power much of the right-wing propaganda machine, while Tim McDonnell discusses the continued environmental damage done by BP's Gulf of Mexico blowout. But Eric Lipton exposes how oil barons are eager to play dirty in trying to silence anybody who questions their destruction of the planet.

- Finally, Amira Elghawaby interviews Glenn Greenwald about the Cons' plans for a more pervasive and intrusive surveillance state.

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