Tuesday, June 19, 2012

Bill Gates and Richard Tol walk Into a room

with three people in it, and the average income goes up by a billion dollars or so, and then everyone runs screaming.

Eli has been having a look at the report that Niamh Crilly, Anne Pentecost and Richard S.J. Tol authored and that was withdrawn by Richard's former employers in Dublin, Economic and Social Research Institute (ESRI), for having some questionable issues, which, to be honest, ESRI did not explain, and Tol, well you know Tol.

Since the watchword at Rabett Run is RTFR the Rabett went and did that.  Eli has some questions, really two.

The report claimed that

The main finding is that the additional costs of working are highly significant at nearly €7000 per year without children; increasing to nearly €9000 per year with one child under the age of five. These substantial additional costs seriously hamper work incentives as it is shown that there is a 25-fold increase (without young children) in the number of individuals who have a higher income when unemployed than when in employment with the inclusion of these additional costs of working.
which as the bunnies might imagine caused no end of anguish.  The key graphic is Fig. 2

This generates two series of income when in work and not, for otherwise identical individuals. This forms our baseline figure of the difference between in-work and out-of-work pay for each individual. From this baseline, the additional costs of working (the far right hand column in Table 15) were subtracted. Figure 2 shows only two scenarios against the baseline as the graph for zero children under 5 years old is very close to the no childcare scenario and the two children under 5 very close to the 1 child under 5 and thus not shown for clarity.
Negative numbers mean that you make more money on the dole than on the production line..

The Rabett looks at this figure and says, ok, at the right end are the 1% or 10% who have a lot of income when they are employed and not so much when they are unemployed or on the dole.  That's a difference in annual income of  €30,000 or more, and on the left end the folks who don't earn much more than they would get on the dole so the baseline difference is zilch.  But, dear bunnies, here is the interesting thing.  If you look at the red and purple lines, they pretty much run parallel to the blue one.  The implication is that folks who are well off have the same reduction in costs when unemployed as the folks who are dirt poor.  The difference is about €200 per week across the board.

A huge problem with that is that if you look at direct income, over 30% of households in Ireland had direct income of less than €200, and even considering transfer payments, a bit less than 20% had weekly income of less than €200.  This is from the 2004-5 Household Budget Survey that Crilly et al used).  Are you telling Eli that they blew it all on work related expenses and did not spend a dime on rent (more about that later) or food cooked in the house??

To figure out what it cost to work, Tol and friends looked at childcare, transport, Take away food and clothing costs (dress for success).  For example, in Table 15 they set the average expense for transportation if someone is working as €106.30 and €23.93 if not working.  Now some, not Eli to be sure, are on the floor laughing their asses off.  If a bunny is well off, has a car and commutes from the suburbs well, that €106.30 is reasonable.  If not, if your weekly income is €106.30 you are not spending it all on a car (well maybe if you are a 20 year old, that fags and Guiness). It's Bill Gates walking in to the room

Decile Transport Housing Food Away from Home
1 18.65 25.99 7.56
2 38.59 40.78 9.78
3 57.28 51.82 15.19
4 76.46 73.26 22.32
5 106.13 79.77 27.51
6 126.14 99.18 37.4
7 166.52 110.22 45.49
8 166 122.74 51.46
9 197.49 131.12 59.76
10 274.1 210.17 86.77

So right away it looks like expenses were not properly assigned by income.  Richer people have higher expenses, poorer people scrimp and scramble.  If expenses related to work are lower for poorer people (and two of the categories above were the ones Tol looked at) then while the blue line would stay where it is, the other two lines would angle up to the left, moving the point at which they cross the axis towards the left and substantially decreasing the number of people better off unemployed.

It looks like friend Richard assigned high costs of work to low income people.

Which brings the Rabett to housing.  Housing costs, rent and mortgages, simply don't appear in the Tol paper.  Some, not Eli to be sure, would point out that when your income goes to zilch because you are unemployed, you loose your house, either to the mortgage or the rent.  You get tossed out on the street.  That is a rather negative outcome that is not considered.  Or perhaps not if you are Richard Tol.


Holly Stick said...

I think poor people might have higher costs in some cases, as in buying a small amount of something at a time instead of in bulk. And someone on the internet said that poor people without transportation buy more stuff at the corner grocery which is higher priced.

Bryson said...

This is Tol's idea of a model? A pretty clear case of GIGO (T. Huxley put it more elegantly: "Mathematics may be compared to a mill of exquisite workmanship, which grinds your stuff to any degree of fineness; but, nevertheless, what you get out depends on what you put in; and as the grandest mill in the world will not extract wheat flour from peas cods, so pages of formulae will not get a definite result out of loose data.")

Pinotgraves said...

Whodaya think you are, Rabett, some kinda social "scientist"? You self-described techno-bunnies should stick to your knitting (of angora).
The Pika

coby said...

Good work Eli, and thanks for it!

Anonymous said...

I believe Eli is mistaken in the interpretation of Figure 2. The difference between the curves is the net cost of having a child. The curves are parallel because the authors assume that cost doesn't vary with income.


richardtol said...

Eli dear,

There are of course two things that change when you lose your job: Your employment status, and your income. The graph isolates the effect of the former.

EliRabett said...

The net cost of having a child (well actually keeping the kid alive) changes with income. It is fantasy to believe that richer folks don't spend more on their kids. Most poor people park their kids with mom or if they pay for childcare use an informal arrangement if they need kid care

In any case the dashed red line is no kids.

EliRabett said...

Hello Richard,

That graph specifically says what the net difference in income is and your argument is that when one accounts for expenses associated with employment the net becomes negative, e.g. a large number of people have more of the readies when they are unemployed, so no, that graph is not just about employment status.

Since, income falls drastically when one is unemployed from a well paid job, and not so much from a badly paid one, the right hand side of the graph is pretty much associated with the well paid, and the left with the badly paid jobs.

The remarkable take away from that graph is that amount of "benefit" from not spending on work related expenses is uniform across the board.

As Eli pointed out, you believe that and Eli has a bridge in his native land to sell you.

richardtol said...

We tested alternative specifications, and the data told us that the curve is shifted rather than shifted and tilted. This surprised me too.

You are free to register with the data archive, download the data, and run your own tests.

a_ray_in_dilbert_space said...

"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."--Anatole France

John said...

I read the comments in the news story in The Irish Times, and the comments are very critical. For starters, Tol's paper was not peer reviewed.
It is quite possible that it wouldn't survive peer review, which is supposed to filter out erroneous manuscripts.

Of course, it IS economics, and not physics or chemistry. And in economics lots of weird things are believed. The world is still reeling from the 2007 financial collapse, which much of the economics profession proclaimed wouldn't happen, and yet they appeared to have learned little from the ongoing debacle.
Many economists (not all, but many)
continue to prescribe austerity as an alleged cure for the depression. Morons.

EliRabett said...

Hello Richard,

In which case it appears that you are capturing (and Eli maintains that there are still serious problems with the trap) the costs of SHORT term unemployment and basing a recommendation for LONG term unemployment on it.

In the short term (and 2004-5 had very low unemployment in Ireland, a bit more than 3%), people who lose jobs can frequently find new jobs without a problem at the same or even better salaries/wages. In long term unemployment you are simply SOL for euros

If nothing else, we know that long term unemployment causes a major problem with housing, as in the seriously unemployed bunnies are found under bridges and that is completely missing from your analyis

richardtol said...

The main problem with the paper is that so many people read things into it that were not written.

EliRabett said...

John, think of posting working papers as the economic equivalent of arXiv. OTOH, Tol and Co. certainly flogged the manuscript for all that it was worth, actually a lot more

EliRabett said...

The main problem with economics and science today is too many clowns put things in the press release or what they write on their blogs that aren't in the paper.

richardtol said...

Eli dear,

You now assert that we flogged this paper to the press.

Do you have any evidence to back that up?

In fact, there was no press release. The paper was picked by a broadsheet who published before talking to me or my co-authors. The story headlined the main news before any journalist had talked to us.

I was on holiday.

EliRabett said...

Darlin Richard,

You certainly were not shy about defending the work without making clear what the limitations were.

The problem, of course, is that there are going to be people who decide, hey, Richard Tol, major economist, says that I am better off on the dole. They will quit their jobs and most likely move under the bridge when they discover those missing caveats.

You have a serious responsibility

bill said...

The whole ridiculous concept of 'better off on the dole', of course, assumes that you lead some sort of life of leisure on it, giving you plenty of time to look for, say, shelter accommodation, floor space in a friend's apartment, or fitting out the car for a permanent residence.

In fact, you'll need to fit all that in to the lulls in the more-or-less continual harassment you've just embraced, for the sake of convenience; humiliating training sessions that are actually a form of corporate welfare for the training providers, applying for non-existent jobs, or perhaps being forced to spend a couple of days each week in a fluoro lit office prodding ancient IBM compatibles into submitting your resume in order the choke the application process for the small number of jobs that do actually exist.

Or then there's the 'choice' between becoming part of an army of underpaid labourers doing the menial sh!twork no-one else can be coerced into doing for way-under the award rates, thereby placing laudable downward pressure on wages (which some might think leads us back to being 'better off on the dole', but never mind..) during which time you don't have the dignity of being able to claim you actually have a job, but, hey, you're no longer on the Unemployment statistics! Sorry, I didn't mention the choice bit, did I? Cessation of benefits!

Frankly, it's unsurprising that many fall through 'the safety net' and end up under the bridges. What is surprising is that more don't.

And then there's all those glorious sh!t jobs that people are being insufficiently incentivised into (i.e. too much lavish welfare holding back the process of Western civilization, tsk tsk.)

We've had the lad's girlfriend living with us - our two are studying at Uni, but she's been getting the whole song-and-dance of the shi!t exploitative dead-end jobs where employers are directly taking advantage of the very-nearly pariah status of the borderline unworthy , alternating with the sh!t manipulative 'welfare and training' system.

Happy freakin' days! One continuous freakin' party!

Do any of these Economic Geniuses have any direct experience of what life in the underclass actually means?

What was it Gore Vidal said about those for whom it's not enough that they should succeed; others must fail?

Thanks to their own commitment to monumental Stupid there's a very real chance we'll make a new Great Depression out of a correctable slump, in which case I sincerely hope it does come home to roost in their own families, because to have a little revenge is indeed more human than having no revenge at all...

dbostrom said...

Further to bill:

A group of long-term unemployed jobseekers were bussed into London to work as unpaid stewards during the diamond jubilee celebrations and told to sleep under London Bridge before working on the river pageant.

Up to 30 jobseekers and another 50 people on apprentice wages were taken to London by coach from Bristol, Bath and Plymouth as part of the government's Work Programme.

Two jobseekers, who did not want to be identified in case they lost their benefits, said they had to camp under London Bridge the night before the pageant. They told the Guardian they had to change into security gear in public, had no access to toilets for 24 hours, and were taken to a swampy campsite outside London after working a 14-hour shift in the pouring rain on the banks of the Thames on Sunday.

Truth stranger than fiction

Ain't life on the dole grand? You get to knuckle your forehead to a bunch of revanchist toffs and you're given free livery and a plot under a bridge plus all the rain you can drink!

I wonder how much longer Cameron's fraud on his public can last? What's the limit of patience in the UK?

J Bowers said...

dbostrom - "What's the limit of patience in the UK?"

Getting lower. Cameron, Osborne and their neoliberal Bullingdon millionaire club become more of a joke every week. Doctors on strike, police talking of it, suicides of the sick because they're having their benefits stopped by parasitic private companies being paid shed loads (to stop them from claiming benefits, even though their GPs have declared them unfit for work), people being forced to work for free with no employment rights (as in your example which caused outrage). The list gets longer by the week. Labour's definitely back in next time, which will probably be sooner than 2015 given the increasing rifts in the coalition. One good thing to come of it is that more people are aware of what neoliberalism actually means for the ordinary person.

dbostrom said...

Labour's definitely back in next time...

We can hope. What I still don't quite get is why the LibDems destroyed themselves by attaching their fate to plunderers. I get that a coalition w/Labour would have produce a dangerously thin majority and I think I understand the animosity between Liberal Democrats and Labour engendered by brand overlap. I'm still left thinking there was a real failure of imagination at play.

But here are the stated objectives of the Liberal Democrats, as paraphrased by Wikipedia:

The Liberal Democrats are a social liberal political party in the United Kingdom which supports constitutional and electoral reform, progressive taxation, wealth taxation, environmentalism, human rights laws, cultural liberalism,banking reform and civil liberties.

Where's the overlap w/the Tories, except (notionally) in civil liberties? The Conservatives have paid lip service to many of these things (mostly via the particular lips of Cameron and a few of his tight mates) but we've seen their sincerity exposed as zilch. Surely Clegg & Crew were not taken in?

I read that there's a "free market" tinge to a fair slice of the Liberal Democrats; even that distinction is compatible w/the evolved "New Labour."

What a mess. I was in the UK just after the election and it was plain in talking with people that they were frightened by the recession and had been driven into Cameron's arms by panic. Pointing out the fallacy of carving into one of the few pools of employment unaffected by the slump was futile; it was all "no pain, no gain" and bunch of other recited platitudes. Meanwhile my Tory relatives were so happy w/their turn of fortune that they were incapable of processing such niceties as Keynes, etc.

I can see a reversal at the next go 'round but the damage it'll cost is just tremendous, could easily span a generation. Such a pointless waste.

EWI said...

@ dbostrom

"What I still don't quite get is why the LibDems destroyed themselves by attaching their fate to plunderers."

The (overwhelmingly Tory and Murdoch) UK press busied themselves in making the very idea of a Lib-Lab coalition "undemocratic", while a not very different arrangement with the Tories was declared to be the people's will. And the LibDem idiots were promised a referendum on PR by the Tories.

And, poor Richard Tol, eternally misunderstood. Just because Richard has a dodgy analysis to sell you proclaiming that the poor are living it large at the expense of "taxpayers" doesn't mean that he's advocating any right-wing myths, oh no.

J Bowers said...

"even that distinction is compatible w/the evolved "New Labour." "

New Labour turned out to be neoliberal, too. There's currently a set-too between the unions and Mandelson's "think tank" which is still pushing for Blair-ite policies. Irony is that the move by the unions is to have Mandelson's "think tank" declared illegal for being too extremist, just like Mandelson et al pushed to have the Militant crowd declared illegal in the 80s when I could find myself listening to two old guys, best friends, screaming at each other over Labour policies, but then tell stories about when they were both in pitched battles with Mosley's Blackshirts on the streets of London. Ed Milliband's probably to the right of Thatcher, but it's a sign of the times when he's nicknamed Red Ed.

The Lib/Dems wanted to get into power, but who they chose to get into bed with is an indicator of whose policies they most closely feel an affinity with. However, there are some things they are completely opposed to the Tories on and the cracks are starting to widen. Nick Clegg's a joke in the public eye. The one who I was sorry to see go, and I didn't agree with his views on a number of things like sudden cuts to solar tariffs, was Chris Huhne, who stood up to the anti-science Nigel Lawson circus act (Lawson holding heavy influence over Osborne). Luckily (hopefully), Milliband is another one who's regularly called Lawson out on the GWPF bollocks and does seem genuinely committed to acting on climate change. Then again, so did Obama.

dbostrom said...

Ah, yes, I do vaguely remember complaints about an LD/Labour pastiche being undemocratic. Instead the surgeons went to work and created the shambling creature you've got, bits of which are beginning to be rejected and drop off-- leaving a bad smell and suppurating wounds.

Regarding Dr. Tol, I know of another researcher in the social sciences arena whose work is being picked over for convenient skeins to be woven into the romantic fantasies of the Tories, desperate as they are for some reason to return to the '50s when the UK was flat broke but everybody still knew their "station in life." I think any work offering tasty slices of cherry is fair game for being picked over in this way. So, maybe cut Tol a little slack on this.

Two things:

-- Behind your back these people are sneering at you because they don't really believe your work is valid or valuable other than as stage dressing. It's all "trick cyclists";

-- If'll they can flatter an experienced pol like Clegg into becoming a silly performing monkey for an organ grinder they can do the same to just about anybody. See how they care about Clegg's future viability.

Anonymous said...

The reason the LDs didn't get into bed with Labour was not that they didn't want to; it was a clear, if somewhat understated, LD preference. Nor was it that it was somehow undemocratic, which it clearly wasn't if you use the "right" measure. It was ultimately that, after over a decade in power, there was little appetite in the Labour party (apart from the two Eds, Harman and Mandelson from the top table in the coalition negotiating team) for staying in power and a stated preference among those like Blunkett, Reid, Straw, Ainsworth and others for a period out of office. Indeed, I can still remember seeing Reid saying something like he thought coalition was wrong for Labour on account of the scale of the seat losses, the largest in their history. And there was a clear leadership battle within Labour to get under way at the time, too, which also complicated coalition political matters.

And lest it be forgotten, the scale of cutbacks promised by Labour if they had got back in (whether under their own steam or in coalition) would have been negligibly different (though things like timescale would have been different of course -- IIRC, they proposed in their election manifesto to halve government debt in 4 years).

My preference at the time was for a minority Tory government, a new election 6 months or so down the road and a then likely LD-Lab coalition. But that 6-12 months of uncertainty would also have had an economic cost we would be bearing now.

We are where we are. And we are here for a number of reasons: partly global-scale bubble-burst economics, partly economic cycle and partly regional-scale politics leading to the shoe-horning of inappropriate economies into a single-size-fits-no-one-currency (and appropriate economies therein not following their own rules). And the latter has aspects of the two former issues within it.

It's a crazy world at the moment: a world where the banks are reluctant to lend to businesses, despite massive QE in the UK, and where major banks have had their credit ratings downgraded, which will make it harder (probably) for them to lend money to businesses.

Cymraeg llygoden

J Bowers said...

When the Lib/Dems got into bed with the Tories, Brown was still leader of the Labour Party and only resigned after the coalition was formed. Straw didn't move to the backbenches until three months after then, and the reason he gave was because it had looked like Labour would be going into Opposition where fresh blood would be needed in the frontbenches. But I haven't read his memoirs, so perhaps there's more to it there.

Anonymous said...

Yes, but Brown was "already gone". He was a spent force and he wasn't staying. He wasn't acceptable to the LDs in a coalition (at a pinch, beyond a few months while leadership elections took place) and he wasn't acceptable to Labour any longer as party leader in opposition anyway. If he didn't go voluntarily, he was going to be pushed. Battle lines in the Milliband household had already been drawn before the election.

And Jack Straw's movement to the back benches had no bearing on his thinking about coalition in the days following the election. I daresay, though, that he and others of like persuasion were pragmatic about opposition being in Labour's best interests in the medium term for the early return of a Labour government, seeing as an already unpopular government would likely have become even more so considering the economic outlook looking forward, whether in coalition or not.

No, despite the LDs being natural Labour allies, Labour just weren't interested in sharing power, so an LD-Lab coalition was never going to happen that time around. If Labour had had 5 or 6 more seats, then who knows? But they didn't. So, there were two options, one of which we've got. And we'll never know which would have been better. Not that I'd have chosen the route we've gone, but I suspect the one we have is marginally better than the alternative on offer would have been, given the circumstances and how markets react to uncertainty and minority governments and how that feeds in to further malaise in the general economy.

Cymraeg llygoden

Anonymous said...

Well color me stoopid, that is why they call me "Hey Stoopid".

Ah, econometrics!

How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg. Abraham Lincoln

cui bono

dbostrom said...

Fascinating insight into recent upheavals in UK. Thank you.

I'll go out on a limb and surmise that the Conservative philosophy has made Cameron's government highly susceptible to being intractably stubborn when it comes to observing the results of contracting government when public sector employment is collapsing, being amenable to modifying their policy. They shouldn't have started the process when they did, and should have pulled back w/alacrity before they drove the country back into another recession.

dbostrom said...

Job killing Tories:

Vestas abandons plans for Sheerness wind turbine factory

"The decision comes at an awkward time for the government as wind power has been under ferocious attack from Conservative backbenchers.

They have been arguing for subsidies to be withdrawn from onshore farms which they claim to be unsightly and too expensive while the Treasury is known to be sceptical about renewable energy more generally."

Phrased differently, the Conservative Treasury believes transient energy sources to be better than permanent energy sources. With beliefs like that, who needs enemies?

Anonymous said...

Frankly, I have a friend living in the UK who has a different view of the LibDem/Tory/Labour machinations, as he has had to deal with them on a more direct basis. His view isn't complimentary to any of the players, but especially to the LibDems.

Bartley said...

Some, not Eli to be sure, would point out that when your income goes to zilch because you are unemployed, you loose your house, either to the mortgage or the rent. You get tossed out on the street.

Except that you don't, in general, get tossed out into the street.

Rather you land into the soft bosom of rent allowance or mortgage interest supplement. And get to continue living where you're living, free gratis.

Which strongly feeds into the disincentives that Tol described.

J Bowers said...

You know, all Tories aren't so bad:

Conservative Home: Adam Bruce - Contrary to popular opinion, wind energy cuts electricity bills and boosts economic growth

guthrie said...

The lib-dems attracted a lot of people over the years who felt the tories were too socially conservative and economically right wing, but yet didn't have any socialist tendencies and didn't like new labours authoritarianism.

These people were a bit scunnered when they found that the party had been taken over by orange book liberals who had the same economic policy as the tories and didn't seem to have much of an idea of any liberal values including, infamously, living up to your manifesto promises. Since the election they have deserted the party, I know quite a few people online who have cut up their membership cards and refuse to have anything to do with them at all.

Those wanting a good overview of how bad the UK political scene is should read Peter Oborne's "The triumph of the political class".

It is also important to note that many remaining liberals crow about small manifesto promises they did deliver on, such as more funding for CBT, i.e. early intervention mental health. They quietly ignore the fact that the massive coalition budget cuts are cutting the rest of the mental health system to the bone.
Oh, and destroying the NHS, privatising the police service and all the insane ideas Gove has been spouting the last year or so weren't really on anyone's manifesto...

dbostrom said...

Guthrie: ... privatising the police service ...

Make crime into a growth industry? Never a good idea any way you slice it; "crime" will then rise because private businesses have to grow. Either that or the same services will be delivered for more and more money going forward, which sounds exactly like "waste."

dbostrom said...

Here's the application of careless statements by economists:

Cameron announces Tory plan to slash benefits

Housing benefit for under-25s and benefits for lone parents under threat as PM attacks 'culture of entitlement'

The mark of a tin ear:

The prime minister will claim there is now a damaging and divisive gap in Britain between those enjoying privileges inside the welfare system and those resentfully struggling outside.

Really? Middle class marching in solidarity w/City bankers, bravely facing attacks by poor people?

Now to the meat:

As part of a broader argument about a welfare divide in the UK, he will claim: "We have, in some ways, created a welfare gap in this country – between those living long term in the welfare system and those outside it. Those within it grow up with a series of expectations: you can have a home of your own, the state will support you whatever decisions you make, you will always be able to take out no matter what you put in. This has sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing. It gave us millions of working-age people sitting at home on benefits even before the recession hit. It created a culture of entitlement. And it has led to huge resentment amongst those who pay into the system, because they feel that what they're having to work hard for, others are getting without having to put in the effort."

Tol house cookies for the poor. Yum.

dbostrom said...

More echoes, from the Independent:

Taken in isolation, Mr Cameron's basic premise is a sound one. The benefits system should indeed encourage work, rather than stack the incentives against it.

Tories just love this concept, especially because the press is gullible enough to ceaselessly repeat it.

J Bowers said...

And now, on top of the Police threatening strike action... HM Revenue and Customs staff striking over job cuts. For a gummint that reckons they know so much about the free market and how business works, it'd last around two weeks as a business in the free market it claims to know so much about.

guthrie said...

The Tory bastards don't have a clue. A huge percentage of families in this country rely upon benefits for making up the difference; lots of single youngsters over the age of 18 dont's have stable homes, parents or anything else.
The real incentive not to work is that the wages are so low relative to living costs. You manage to lower living costs somehow, people will find things easier. BUt at the moment, with still rather high property prices, high petrol prices, high public transport prices, higher food prices, not to mention the fairly high costs of online access and so on, people simply can't afford to live in this country at all.

I wish the police would threaten strike action, but it is unlikely to happen, the Federation is a bunch of wimps and too many police are apathetic, especially the newer generation who came in during the new labour period.
If you aren't reading Private Eye, you should be, it is an essential guide to the governments insanity, corruption and group think, better than any newspaper because it names people and even prints letters correcting any mistake it has made, rather than burying them on page 94.

So Mr scameron, how many millions of working age people were sitting at home on benefits before the recession? Really? I don't believe you.
Oh wait, you're so stupid that you accept A4E lying about putting people back to work and accept that forcing ill people into work is a good thing, even although it makes their illness worse. Not to mention that all those Remploy people you are throwing out can't find real jobs because nobody wants to employ them in the first place.

J Bowers said...

For a pretty good idea of what unfettered Classical Liberalism would bring, as promoted by UKIP's Roger Helmer and Tory fanboys, and the effects of pulling housing benefits from under-25s, you could do far worse than rent a DVD of Gangs of New York (yes, seriously). It probably illustrates just as accurate a picture of London and Liverpool, which were also overrun by gangs of youth terrorising the good citizenry. Actual hunger is a great motivator for bad deeds.

dbostrom said...

guthrie: The real incentive not to work is that the wages are so low relative to living costs.

If there are any wages to be had at all. "Where are the jobs, Mr. Cameron? Where are the unfilled positions going begging because people are loafing on the dole?"

Cameron's really gone 'round the bend, puffing about "those enjoying privileges inside the welfare system" when his economic policies have ensure there's no place for these people to find work.

J Bowers said...

This is eye opening stuff:

Barclays emails reveal a climate of fear and fierce tribal bonding among traders

"Emails published by the Financial Services Authority show traders change jobs rather than alert bosses to a problem

As Barclays' Libor scandal deepens by the hour, one thing is clear: lots of people inside the bank knew about this. Why didn't they raise the alarm?

In dozens of interviews over the past nine months with people working in finance, this question has come up time and again: why does finance, in spite of considerable investments in internal policing, fail to self-correct? The short answer is greed, but there is more.

Going over the interviews, all of which can be read online, it is clear that at least some people in finance are not primarily driven by money. But they are afraid, powerless, or both. Indeed, if you had to design a working environment that encouraged short-termist conformism and discouraged whistle blowing, then the finance sector would be your blueprint.
"I stressed internally the risk we were taking. But you have to understand: nobody likes a prophet of doom."
Read the emails that the Financial Services Authority made public between traders at Barclays and you know what this former treasurer meant when he said: "If you go public about something in the bank you believe to be wrong, in one stroke you place yourself outside of that world. It's not just your job – it's your identity.""