Archive for mai, 2012

Social Mobility Report 2012 of Alan Milburn

jeudi, mai 31st, 2012

The Politics Live blog of Andrew Sparrow in the on-line Guardian of 30th May, 2012 , provides a useful summary of the key points of the Social Mobility Report by Alan Milburn as reproduced below:

Here are the key points.

? Milburn says the professions generally remain a « closed shop » to applicants from poor background and that attempts to open them up over recent years have made little progress.

The question posed by this report is whether the growth in professional employment is producing a social mobility dividend for our country. The short answer is not yet.

Milburn says across the professions as a whole, « the glass ceiling has been scratched, but not broken ».

The senior ranks of the professions are a closed shop. If social mobility is to become anything other than a pipedream they will have to open up. Unfortunately, the evidence collected for this report suggests that there is only, at best, limited progress being made in prising open the professions. That is not about to change any time soon. Data collected for this report indicates that the next generation of our country’s lawyers, doctors and journalists are likely to be a mirror image of previous generations.

? He says medicine has made « far too little progress » and shown « far too little interest » in improving access to people from poor backgrounds.

Medicine lags behind other professions both in the focus and in the priority it accords to these issues. It has a long way to go when it comes to making access fairer, diversifying its workforce and raising social mobility. There is no sense of the sort of galvanised effort that the Neuberger Report induced in law. That is regrettable, not least because when it comes to both gender and race, medicine has made impressive progress over recent years … The profession itself recognises that the skills which modern doctors require include far greater understanding of the social and economic backgrounds of the people they serve. That is a welcome recognition. It now needs to be matched by action. Overall, medicine has made far too little progress and shown far too little interest in the issue of fair access. It needs a step change in approach.

He says one particular problem is that students need work experience to get into medical school, but that access to this is « often unstructured and informal.

We could uncover little systematic effort on the part of the medical profession to address this palpable unfairness ».

? He says journalism has gone backwards more than any other profession in becoming less open to people from poor backgrounds.

This report finds that journalism has shifted to a greater degree of social exclusivity than any other profession. Without a single representative or regulatory body, responsibility for bringing about change to the media sector sits with organisations’ boards, senior staff, editors, and human resources teams. Our sense is that current efforts are fragmented and lacking in any real vigour. Journalism, with some honourable exceptions, does not seem to take the issue of fair access seriously. Where it has focused on the issue, it has prioritised race and gender but not socio­-economic diversity. That needs to change.

He also says the media industry is the « worst offender » when it comes to abusing internships.

What seems to distinguish journalism from other professions is that interns are substitutes for what in other sectors would be regarded as functions carried out by mainstream paid employees. The practice in much of the media industry is more akin to treating interns as free labour. The problem with that is self-evident. It is possible only for those who can afford to work for free. It means that others ? perhaps with equal or better claims on a career in journalism ? are excluded from consideration.

? He says all the major political parties « continue to select parliamentary candidates who are disproportionately drawn from better-off backgrounds ».

Of the Coalition Cabinet in May 2010, 59% were educated privately. Some 32% of the final Cabinet under the previous Labour Government were also educated privately. Over recent years, the political parties have made some progress on selecting women and candidates from minority ethnic backgrounds. A similar effort is now needed on their part when it comes to diversifying the socio-economic backgrounds of those they select to be their candidates for MPs.

? He says the civil service has « made progress » in relation to improving access.

In 2009, 45% of senior civil servants were privately educated. Today, of the 200 top civil servants, 27% were privately educated.

? He says the legal profession is starting to make « real efforts » to improve access, but that progress is still « too slow ».

In some cases the legal sector is at the forefront of driving activity aimed at changing access to professional jobs, whether this is through co-ordinated outreach programmes or by introducing socio-economic data collection. We commend these efforts and would like to see other professions following suit. There is, however, a lot more that needs to be done. The further up the profession you go, the more socially exclusive it becomes. Even more worryingly, entry to the law ? and therefore the lawyers of the future ? is still too socially exclusive. Overall, law is on the right track. But its progress is too slow. It needs to significantly accelerate.

? He says the government has shown « good intentionality » on the issue of achieving fair access to the professions.

Overall the Government has shown good intentionality when it comes to trying to improve fair access to a professional career, even though it is making more progress in some areas than in others. It needs to be more holistic in its approach and ensure that its efforts are better co-ordinated.

Milburn says the social mobility business compact published by Nick Clegg last year « is to be commended » and he says ministers should publish an annual update on how it is being implemented.

? He says that internships should « no longer be treated as part of the informal economy » because of their importance to young people’s career prospects.

The government should find a way of kitemarking quality internships, he says. And there should be transparent and fair selection procedures.

? He says he will soon be publishing two more reports, one on access to universities and one about what the government is doing to tackle child poverty and improve social mobility.

Debt Overhang Depresses Growth.

samedi, mai 19th, 2012

Siren political voices in recession-hit European countries are luring voters with the appealing notion that there is a simple choice to be made between growth or austerity: Up with growth! Down with austerity! However, the Bloomberg article below – Bond Market May Not Warn When Debt Crisis Strikes – reveals that historically examples of countries growing their way out of excess debt are very rare.
In summary, too much debt – with the critical element being Debt Overhang, defined as a 5-year period when gross public debt exceeds 90% of GDP – depresses growth by as much as 1.2% points lower than in other periods, with real interest rates also typically as low during debt overhangs as they were before. Therefore, the financial markets will not necessarily send a warning signal to a government such as the US, through higher interest rates, that their policy could be detrimental to economic performance.
According to this definition of Debt Overhang, Italy, Greece and Japan are regular members of this club and, although the US is not there yet, it first breached the 90% threshold after the 2008 financial crisis, with Belgium, Iceland, Ireland and Portugal not far behind.
Austerity is not a cure for excessive debt either with such episodes in the past involving all kinds of explicit and disorderly debt restructuring or dressed up another way as e.g. debt forgiveness.
One successful example from the past is the US which made a complete recovery from the 1944-1949 period through balanced budgets, financial repression and robust growth in the 1950s and 1960s; however, with the federal deficit set to exceed $1 trillion in 2012 for the 4th year running, necessary cuts to entitlement programmes a seemingly insurmountable challenge and consumers not in the mood to spend for growth, financial repression appears the only option today.
This means keeping nominal interest rates low and allowing inflation to reduce the real value of debt whilst real interest rates remain negative for savers. Indeed the Federal Reserve has pledged to hold its benchmark interest rate near zero at least through to late 2014 and the Bank of England seems to be following a similar policy.

US vs UK Economic Growth Policies.

jeudi, mai 10th, 2012

In the Sunday Times two weeks ago and following the strong showing of the opposition Labour party in the local council elections, Dominic Lawson ( wrote that Ed Balls the Shadow Chancellor was again urging the government to follow the policies being pursued in a rapidly recovering America. Dominic Lawson recalled, however, that in his column in February he had already pointed out that?.one slight embarrassment for those making this argument is that the public expenditure plans of the US government involve a cut, in real terms, at no less a rate than that proposed by the UK government.
An analysis of the alleged gulf between the US growth agenda and the British austerity approach had also been supplied the previous week by John Redwood, the chairman of the economic affairs committee of the governing Conservative party. This analysis indicates that total US public spending rose by 2.2% in 2011 and is forecast to rise by 3.8% in 2012 and by 2% in 2013. In comparison, public spending in Britain increased by 4.8% (2.2% for US from above) in 2010-11, by 2.9% (3.8% for US) in 2011-12 and is forecast to rise by 2.6% (2% for US) in 2012-13.
The conclusion of John Redwood from the above analysis is that?.if the contrasting performances of the two economies prove anything, it appears to be that an economy with a higher proportion of spending in total GDP with a higher level of public borrowing (i.e. the UK), performs worse than an economy with comparatively lower figures (i.e. the US). Underlying these figures, as Dominic Lawson points out, is the inherently greater vibrancy and flexibility of the US employment market, which allows employers to shed employees more easily in a downturn and, in turn, more rapidly recruit in anticipation of potential growth in the economy. This is a major difference between the US and especially the southern European states suffering most in the Euro-zone from the rigidity of their employment laws.
On the different approach to the British economy presented by the Labour party in the local council elections, Dominic Lawson summarized their economic alternative to that of the Conservative-led Coalition government as aiming to also cut the deficit ? but a tiny bit more slowly! Judging by the extremely low turn-out for the local council elections, it would appear that the average British voter is not convinced that there is any significant difference in the Labour plan for growth either.