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Sunday 3 May 2015

Review: Owen Jones, The Establishment

This is a straightforward Them (the 1%) and Us (the 99%) book. It's lucid, well-documented, compelling and sometimes - as in the chapter on the police - scary. Rather than concentrate on its many strengths, I will focus on my doubts.

(1) Trade Unions. It's true that the assault on Trade Union power, led initially by Mrs Thatcher and continued ever since, has helped produce a much more casualised, readily exploitable, and lower paid labour force than existed for many industries - but not all - in the 1960s and 70s. But that assault was possible because the old Trade Unions pissed off a lot of people and not just the bosses.

There has always been some tension between the goals of trade unions and the aims of socialist or social democratic political parties. The former are designed to advance the interests of sections of the labour force; the latter to advance the interests of all workers. Those aims can conflict. In the UK the miners, for example, got into the habit of expecting everyone to stand up for their pay claims - partly playing on other people's guilt when they didn't themselves do such dirty or dangerous work - until a point was reached (for me, in 1984) when people no longer wanted to jump when the miners said Jump! Oh, the miners might get sentimental about the nurses, but that's not the same as a proper discussion about who should be paid what and why. 

Look at France, which retains strong unions ever-ready to strike, and what you see, partly as a long-term consequence of unions pursuing sectional interests is, on the one hand, large groups (notably in the public sector) with very good terms and conditions of employment and, in stark contrast, two big, overlapping, excluded groups: young workers ( or would-be workers) and migrants from France's former colonies, mostly blacks and mostly Muslims. Whatever the rhetoric - and there's an awful lot of it in France - the effect of sectionalism has not been favourable either to equality or fraternity. 

(2) The Big State. Around the world, more egalitarian societies have bigger states, taking a larger share of GDP. This is a bit depressing because in the UK at least, the state has a poor record for efficiency and transparency. To this day, the National Audit Office churns out report after report documenting the waste of billions. Transfer activities have an inherent inefficiency because when you take from A to give to B, there are always administrative costs and, on top of that, there is often bungling. It would be nice if we could cut out the middleman.

Apparently, there is just one major state - Japan - which scores well on equality but has a relatively small state (for details, see Wilkinson and Pickett, The Spirit Level). 

How could you achieve both a lot of equality and a smaller state? It could be done, for example, by legislating high minimum wages and capping top wages. If that is combined with the use of inheritance tax as a major source of state revenues, you can dramatically level the playing field. The last thing I can get enthusiastic about are systems which make heavy use of indirect taxes (VAT) and subsidies such as tax credits and housing benefit. On the other hand, when you legislate for equality then if you are way out of line with market forces, you just end up with black markets, dual systems, evasion and so on. That is, unless people are satisfied with their situation - Owen Jones, for example, points out that nowhere else in Europe do bankers expect to be paid such huge amounts as those in London. And in Germany, at least,corporate greed seems much less common - big companies are kept in the family, not asset stripped and bankrupted by their bosses. So there are cultural issues - and I suspect they include such things as the culture of stag parties and men-only football (In Germany at the time of the World Cup, I was amazed to find the streets full of painted, flag-waving but mixed-sex and sober groups).

(3) Profit. Owen Jones spends a lot of time denouncing the selling off and outsourcing of public services for private profit. Leave aside that there exists some support for this because people got fed up with crap public services. Concentrate on the issue of Profit.

Suppose it cost the public sector £150 to provide some identifiable chunk of a service - like issuing a TV licence or producing a chest X ray. Now suppose a private firm comes along and offers to do it for £100 plus a whacking £25 profit. It's still better value for money than the public service. Why not let them have their profit?

Since there may be important reasons to keep a service public, the first response to this situation should be to ask why the public service is more expensive and whether it can be made more competitive. Frequently, it can indeed be made more competitive - and Owen Jones is quite right to point to the purely ideological commitment to private provision which characterises our recent governments and which led, for example, to the selling off of the one public service rail franchise (the East Coast mainline) which just happened to be more efficient and more profitable than any of the heavily subsided private sector rail rackets. 

To make Profit the enemy is a dangerous oversimplication (as in "People not Profit"). People can benefit from Profit - but not from ideologies of Profit which is what we are currently offered.

1 comment:

  1. Thanks for a really interesting post, Trevor. Very good to read a few well-explained criticisms of Jones's argument with explanation. For a casual reader like me it is always useful to hear as many different points on a subject as possible.

    My review: The Establishment by Owen Jones