Is evidence-based policy losing out to populism?

Populism always sounds good, but in the long-run it usually hurts those it is supposed to help.

In the UK, interest rates used regularly to be cut to stimulate an artificial boom before an election. This was good for the ruling political party, but the country paid a heavy price later. In the nineties, the Liberal Democrats championed the idea of making the Bank of England independent, and, in 1997, Labour implemented the policy.

As a result, inflation has been controlled, and business and international investors have more confidence in the UK. It’s no panacea. It didn’t stop serious mistakes being made over bank regulation. But, I think, it’s proved a real success.

In 1997, the Labour party proposed a National Minimum Wage. Many were deeply concerned that, by not allowing the existence of low paid jobs, this policy would price some low skilled workers out of the job market.

To counter that fear, the minimum wage was set, not just by politicians, but after the public recommendations of a new independent body.

The Low Pay Commission’s terms of reference were:

to recommend levels for the minimum wage rates that will help as many low-paid workers as possible without any significant adverse impact on employment or the economy.

Over the seventeen years of its existence, internationally, the Low Pay Commission is seen as a policy success.

These two policies are excellent examples of evidence based policy. Independent bodies assess the evidence and publish their conclusions. Politicians provide their terms of reference, but, by subcontracting the assessment of the best precise levels of interest rate or minimum wage, we avoid populist decisions that might do more harm than good.

Unfortunately, the tide seems to moving against evidence based policy. In the 2015 election, Ed Miliband proposed a minimum wage of £8 by 2020. £8 wasn’t a particularly high figure. From previous experience, if the economy kept growing, that’s about what the Low Pay Commission would have recommended.

What was bad about Ed Miliband’s proposal is that it ended the policy of setting the minimum wage based on the evidence at the time.

Worse was to come after the election.

In a shameless piece of political opportunism, George Osborne announced that the minimum wage will be raised to £9 per hour by 2020. The Office for Budget Responsibility warned that this could well cost around 60,000 jobs. But as this policy provided Osborne with political cover to significantly cut in-work benefits, and few of those extra unemployed would ever vote Tory, why should he care?

Of course, Jeremy Corbyn has now gone one further than Miliband and Osborne. He is proposing £10 per hour.

Jeremy Corbyn is also proposing the Bank of England print money for new large scale housing, energy, transport and digital projects.

If politicians could instruct the Bank of England to fund the capital spending of the government, this would drive a coach and horses through the independence of the Bank of England.

I would like more capital spending, especially on housing, but printing money to get it is dangerous.

 Up to the time of the independence of the Bank of England, inflation was a constant threat to the UK economy. If we want more capital spending, the government needs to struggle with the difficult problem of finding the money, not pretend it can magic it out of thin air without dangerous inflationary consequences.

The political tide may be turning towards populism, but we don’t have to follow it. In coalition, the Liberal Democrats had a good record of supporting these evidence-based institutions. Even if Labour and the Tories start to abandon them, I hope we stick with what has served the country well for eighteen years.

* George Kendall is chair of the Social Democrat Group, which is being formed to celebrate and develop our social democrat heritage, and to reach out to social democrats beyond the party. He writes in a personal capacity.

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58 Comments

  • I think we could all agree [just look at the results of the 2015 General Election] that the Liberal Democrats in government had a good, one might even say unsurpassed, record of rejecting populism.

  • Eddie Sammon 10th Sep '15 - 4:36pm

    I’m partial to a bit of populism. Only a bit of it. The problem is a lot of evidence in flawed, unless it is scientifically sound, so it is important to maintain a degree of common sense and critical thinking. Technocrats often have their own personal interests too.

    Best regards

  • I am struggling with this article and I think the reason for this is because there are too many things branded under populism and it is hard to see where the boundary line is between being anti-populist and being anti-democratic.

    In the run up to the 1997 general election the Liberal Democrats were the only party to advocate ” independence” for the Bank of England to set interest rates. In a debate between the three prospective chancellors Malcolm Bruce ran rings around Ken Clarke and Gordon Brown on this issue (I like to think that Tony Blair was watching the debate because just after the general election he forced Gordon to accept Lib Dem policy). As George Kendal says this has undoubtedly been good for the economy and is a policy which keeps on giving. [Not that I have ever met a voter who has thanked us for the billions of pounds it has saved.]

    The minimum wage is a different kettle of fish,unemployment responds to many things (like the Bank of England’s interest rate decisions) not just the minimum wage and there is far less economic theory to guide the commission to the point at which minimum wages would have a significant adverse effect on the economy. Furthermore it is not only a question for economics but also a question for fairness. In a situation where the government are providing financial assistance [soon to be drastically cut] to people on low wages how do you strike a balance between the worker, the government and the employer? Is there to be no popular input to the decision?

    If the answer to every question is to set up an expert panel to deal with it: interest rates (Bank of England); minimum wage (low pay commission); university tuition fees (Browne commission); airport capacity (Davies Commission); whether Saddam Hussein has weapons of mass destruction (Sir John Scarlett’s committee) etc etc what is the role of the elected politician. Furthermore how are voters expected to choose politicians if all they can say about any of the questions of the day is – I will appoint a panel of experts to tell me what to think.

    I believe this is an area we should consider case by case rather than by a blanket derision of “populism”.

  • George Kendall 10th Sep '15 - 6:09pm

    @Richard
    My article did rather gloss over the issues you raise in your thoughtful post. Mostly this was so it didn’t get too long. I was hoping a comment might give me a prompt me to address them. So thank you!

    It’s true that expert panels can be flawed. Too often their conclusions are determined by who wrote their terms of reference, or who decided who made up the expert panel. Sometimes it may be because a strong-willed chairman is too adept at sidelining conflicting opinion.

    But, if expert panels have been effective, but their advice is disregarded for short-term political expediency, that, in my view, is a very bad thing.

    I think this has happened with the minimum wage. Let’s face it, no one knows what will happen to the economy in the run-up to 2020, so to set the minimum wage five years in advance, and claim this was evidence-based, would be absurd.

    I believe, even more strongly, that Jeremy Corbyn’s ‘People’s Quantative Easing’ would be inflationary, and would destroy the credibility of the Bank of England, and its ability to reassure international investors that its decisions were based on evidence, rather than political expediency.

    Most expert panels are advisory, such as the Low Pay Commission. You may see in the clip I linked to of Vince Cable, that he actually overruled one of the minor recommendations of the Low Pay Commission. Which is fine. His change never made the news because it was a reasonable and small change.

    Do I think that expert panels should make all these decisions? No. Ultimately, with regard to the issues like an expansion of Heathrow, these are political questions which experts can inform, but should not decide.

    In general I think they should be advisory. But, occasionally, where the issue is more technical than one of principle, I think politicians should consider setting the terms of reference, and then delegating decision, as it has with the Bank of England.

  • To give away the government’s control of the money supply was to remove some of its power to produce full employment, which might be why we never had full employment under the Labour government when we might have expected it. Instead we had a government that attacked those who were having problems getting a job, most likely because it is only when there is full employment that these people will be employed. Of course it is possible to change the remit of the Bank of England and make it responsible for reducing unemployment to 2% of the working population and for them to not bother about inflation which affects those with savings more than those who have inflation linked wage rises.

    The National Minimum Wage since 2008 has not risen to the same extent as before 2008 therefore it is right for politicians to address this issue, especially if the government is forcing people to take minimum wage jobs and subsidising these wages with tax credits.

  • @ Joe Otten and @ Michael BG

    I think that Michael’s comment provides an answer to Joe.

    One issue of fairness is between those in the lowest paying jobs who gain under a minimum wage and those who could only get jobs if the rate of pay were lower still and lose out because of the minimum wage. That is the fairness that Joe points to …

    … however as Michael BG points out there are other issues of fairness to be considered to. For example is it fair that taxpayers subsidise employers [Joe would probably say employees] by topping up the wages that employers are prepared to pay through tax credits. Raising the national minimum wage eases the pressure on tax payers, turns the screws a bit more tightly on employers and may help the lowest paid who are in employment [perhaps not as much as George Osborne would have us believe as much of the gain will be offset by a reduction in tax credits]. The people who lose out are those who could have just squeezed into employment at a lower minimum wage but who are not offered jobs at the higher minimum wage. Some (but not all) of these people, estimated at 60,000 by the Office of Budget Responsibility [another one of George’s expert panels] will be amongst the least well off in society.

    In order to meet John Rawls definition of justice perhaps a higher national minimum wage (aka the national living wage) should be accompanied by higher levels of Job Seekers Allowance to compensate the people who just miss out on getting jobs. I don’t think this is part of George Osborne’s current thinking. In a democracy I believe the judgement should, ultimately, be made by those who have been elected rather than by experts.

  • George Kendall 10th Sep '15 - 7:04pm

    @Michael BG
    The reason the minimum wage went up so slowly in the down-turn, was because the Low Pay Commission feared it would result in higher unemployment. They thought companies would then spend more on mechanisation and other ways to gain productivity, and this would result in them employing fewer people with low skills.

    Before Osborne’s announcement, the minimum wage was projected to go up significantly over the next few years, as we are now out of the depression phase and into the expansion phase.

    However, lack of jobs for the unskilled is going to be an ever-increasing problem. As the economy expands, technology will increasingly find ways to replace people with machines. I shudder to think of the impact on employment if Driverless Cars ever become practical. Even if they don’t, there are a thousands of other ways jobs are going to be lost due to technology. New jobs will be created, but I understand most experts think those jobs will not be suitable for unskilled workers.

  • Graham Evans 10th Sep '15 - 7:11pm

    While it is easy to dismiss out of hand many of the policies which Jeremy Corbyn is advocating, I do not think we should so readily align ourselves with those who automatically oppose the concept of People’s QE. As has been said many times before, comparing government finances with household finances is naive in the extreme. A decade ago no “respected” banker or politician would have supported QE as we now know it. Indeed it is only a few years ago that the leaders of the Eurozone, and particularly Germany, still opposed QE. How times have changed. Moreover, we need to recognise the limitations of what is now conventional QE, namely the central bank buying government issued bonds. The theory is that this indirectly frees up money for investment and consumption. But of course, there are many organisations which in practice must continue to hold government bonds, particularly pension schemes and insurance companies. Consequently, by reducing yields, QE has actually increased the pension liabilities of many companies’s pension schemes, reducing the ability of these companies to invest (or increase wages). While in theory the central bank can at some stage in the future resell the bonds it has bought there can be no certainty that economic circumstances will actually permit this to happen. On the other hand Corbyn’s proposal for infrastructure spending through the so-called People’s QE, could actually produce lasting benefits for the long term health of the economy. It is surely a nonsense that the Government is prepared to mortgage our future energy needs to the French and Chinese, and, in practice like so many other PFI projects, provide a near guaranteed return to the investors, but is unwilling to consider alternative means of financing the programme. I accept that People’s QE cannot be a blank cheque for spending, particularly if it is used for current expenditure rather than capital investment. However to dismiss it out of hand merely because of its main protagonist is the very opposite of evidence based policy development.

  • George Kendall 10th Sep '15 - 7:19pm

    Richard: “is it fair that taxpayers subsidise employers by topping up the wages that employers are prepared to pay through tax credits”

    I prefer to simply think in terms of the outcomes we should expect, and which outcome we prefer.

    If the state sets a high minimum wage, then employers will follow the example of France: invest a lot in increased productivity, and the result, as in France, will be greatly increased unemployment.

    I’m no fan of tax credits, which have all sorts of problems, but thankfully they are on their way out.

    But some kind of in-work benefit is vital. Otherwise, either we’ll have a high minimum wage with resultant high unemployment, or a low minimum wage with the unemployed having no incentive to work because they’d be better off on benefits.

  • George Kendall 10th Sep '15 - 7:30pm

    @Graham Evans
    There is a lot of debate about QE and we still don’t know the long term consequences. So it may be that, in a recession, printing money for capital spending would be a better alternative.

    What scares me, though, is that once the precedent is set that printing money to fund infrastructure is set, it’ll become a very easy mechanism for politicians to fund extravagent capital programmes which will stoke up inflation. If the funding is by a loan from the Bank of England, and Corbyn wouldn’t answer that when asked, then there’s still the problem of potentially wasteful capital spend being foisted on future generations.

    But even if we decided printing money to fund the capital programme could be restricted to stimulus during a recession, and not abused at other times, it undermines the Bank of England’s independence. And if that were to happen, the bond markets would probably demand higher interest rates, and that could add a significant extra burden to the government for a long time to come. I agree it’s an option, but it’s a risky one.

  • George Kendall 10th Sep '15 - 7:37pm

    @Michael BG “To give away the government’s control of the money supply was to remove some of its power to produce full employment”

    This was one of the arguments used against independence of the Bank of England in the 1990’s.

    If governments had always set interest rates solely based on the long-term economic interests of the country, that would have been a valid argument. But, in practice, when faced with the choice of damaging the country with a pre-election boom, or not getting re-elected, few politicians did the right thing.

    The market knew this. So when the Bank of England was made independent, they were reassured, and as a result, lowered the interest they demanded on our debt.

  • Little Jackie Paper 10th Sep '15 - 8:36pm

    Otten – ‘Hyperinflation is, surely, a symptom of trying to get something for nothing. People’s QE?’

    Interesting point this. What about house price hyperinflation? That started under Conservatives, accelerated under Labour and the Coalition seemed relaxed. Indeed, it is one of the great oddities of our politics. As the article says, inflation was generally regarded as the great economic threat – just that didn’t seem to apply to house price inflation.

    The article asks, ‘ If we want more capital spending, the government needs to struggle with the difficult problem of finding the money, not pretend it can magic it out of thin air without dangerous inflationary consequences.’ How about having a currency that appreciates rather than houses? Post QE we have a toilet paper currency and the effects have been strangely unremarked upon even though the implications of it surely affect the economy as a whole?

  • When political parties sell their souls to get into number ten, anything they then say they did is meaningless becasue we all remember Clegg sell out.

    You are now in one of the poorest position you have ever been in and that is because people blame your lot for the Tories, Cable said to day the Liberals kept the excessive of the Tories at bay, I do not believe thatl.

  • @ George Kendal
    “However, lack of jobs for the unskilled is going to be an ever-increasing problem. As the economy expands, technology will increasingly find ways to replace people with machines. I shudder to think of the impact on employment if Driverless Cars ever become practical. Even if they don’t, there are a thousands of other ways jobs are going to be lost due to technology. New jobs will be created, but I understand most experts think those jobs will not be suitable for unskilled workers.”

    I agree a lack of jobs could be a problem with increased productivity and greater use of machines to replace humans. However I would like to see it as an opportunity. The average working week could be reduced. The increased production could be taxed more to give those not in work more money to spend to generate the market needed to consume the increased number of goods. Work instead of being an economic necessity could become what we as liberals must hope it will become voluntary.

    If only the most skilled will get paid employment then the state will have to provide enough resources to those not in work so they can enjoy the fruits of the increased productivity.

  • Personally I am very dubious that the supposed link between the inflation rate and interest rates is “evidence based policy” whether the Bank of England does it or the government… Economic fad would be my feeling…

    Certainly I remember all too well that during the years of the “Thatcher economic miracle” we had both high inflation and cripplingly high interest rates. Now we have really low inflation despite the longest period of really low interest rates anyone can remember… meanwhile Thatcher sold off all those state assets whose value doubled or trebled in an hour after they were sold – what was that if not pure inflation? Yet no economists seemed to notice… And public spending was considered to cause inflation to the extent that councils were forced to sell off housing stock but not allowed to spend the receipts on new houses.

    Now of course interest rates are being held low because if they are allowed to rise the government, with its crippling level of debt, will quickly go bankrupt… No-one mentions that either, and the fiction that it is to do with the inflation rate is maintained…

  • George Kendall 10th Sep '15 - 10:49pm

    Hi Little Jackie Piper (should I call you Jackie?),

    I entirely agree that house price inflation is a major problem. The solution is simple, but incredibly difficult. The number of people per house smaller than previous generations, there’s a growing population, and the country is building far fewer houses than are needed.

    As I indicated in the article, I want us to build a *lot* more houses. Some should be built by the state, but where the funds come from is a really difficult question. Printing money is dangerous – maybe we need to find a way for that to work, but the idea fills me with foreboding.

    We will also need the private sector to build more too, and changing that will involve some very hard political choices.

    However, I disagree with your implication that QE has made our currency worthless. Inflation is low, our currency hasn’t collapsed on the international markets. As for a currency that appreciates, that’d mean negative inflation, which economics tell us would cause the economy to seize up. Unless I’ve misunderstood your point.

    @Robert
    Thanks for your comment about the Liberal Democrats. The party wasn’t really what I intended my article to be about. Do you have any thoughts on evidence-based policy, the independence of the Bank of England, or how the minimum wage should be set?

  • George Kendall 10th Sep '15 - 10:50pm

    @Michael BG
    I used to believe in a citizens income. I’m afraid I’ve come to believe now that providing a no-strings-attached income to all citizens would be a disincentive to people working.

    There are currently 4 people of working age supporting each pensioner in Britain, by 2035 this number is expected to fall to 2.5, and by 2050 to just 2. That means, if we want to continue with our current welfare system, which I do, we’ll need every possible person working.

    @AndrewMcC
    I’m no fan of Thatcher, she brought in the new breed of Tories who see their job as defending the interests of, what she called, “our people” – in other words the privileged.

    However, I think a lot of the high inflation of the 80’s was not her fault. Once inflation got out of control, as it did in the 70’s under both Labour and the Tories, it’s very hard to rein in again. Coupled with that, she had a large budget deficit, and an economy with other very serious problems.

    But I completely agree with you on right-to-buy and selling off shares too cheaply.

    I think the reason interest rates are so low is nothing to do with government debt, but a fear that the Chinese crisis could cause a worldwide slow-down. Interest rates have a lagged effect, so if interest rates rose to stop inflation, then the economy slowed down due to China, the lower interest rates could push us into recession.

  • Little Jackie Paper 10th Sep '15 - 11:15pm

    George Kendall –

    I’d settle for Little Jackie PAPER. Amazing how often that gets mistyped.

    On housing, I can only agree. I am astounded by just how many people on the internet seem to think that houseprice inflation isn’t inflation.

    On the rest, I suspect we will need to agree to disagree. Simply I would like a currency with greater purchasing power. Would negative inflation be a risk? Maybe. Presumably exporters wouldn’t be crazy either!

    I’m not as optimistic as you on the value of sterling. A purely personal example. I went to my wife’s country in 2003 and got 90 of the local currency to the pound. A couple of years ago I had to haggle them up to 70. I do wonder, looking at my energy bills whether currency movements play a role in what happened there!

    Regardless, I don’t think we disagree on a great deal here.

  • Little Jackie Paper 10th Sep '15 - 11:21pm

    George Kendall – Just as an addition, you are right to point to China. I’m really surprised that’s not getting more coverage. Try here – http://www.voxeu.org/article/just-how-risky-are-china-s-housing-markets. It’s a bit out of date, but those risks are rather more than theoretical.

  • George Kendall
    It is, of course, quite possible to look at the economic situation in a 180 degrees opposite way to your description. In other words, we have low productivity. Why? Because we have lowered the real pay of people, and therefore allowed too many pointless jobs to be created. We currently have too many people working. What we need now is to reverse this, and encourage people to stop, by paying them to do so. The current obsession with work seems to arise from the new puritanism we are experiencing in this country. We need to look carefully at all alternatives.

  • George Kendall 11th Sep '15 - 12:05am

    @Little Jackie Paper

    My deepest apologies. I noticed my error a little while after, when I was googling for the meaning of the name 😉

    Happy to agree to disagree, though, as you say, I’m not sure we disagree that much. It’s certainly true that sterling has depreciated in the world markets.

    In case you’re interested, here’s a relatively concise description of negative inflation/deflation (my bold):
    “Deflation is the opposite of inflation. Deflation refers to situation, where there is decline in general price levels. Thus, deflation occurs when the inflation rate falls below 0% (or it is negative inflation rate). Deflation increases the real value of money and allows one to buy more goods with the same amount of money over time. Deflation can occur owing to reduction in the supply of money or credit. Deflation can also occur due to direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy
    http://www.allbankingsolutions.com/banking-tutor/inflation.htm

    Regarding China, maybe I am too alarmist, but I do worry a little about the possibility that an economic crisis in China could trigger social unrest that led to the removal of the Communist party from power. History doesn’t provide a lot of happy precedents for revolutions. I recall a very impressive Chinese graduate student I met on a train journey once: she wanted democracy, but not a revolution.

  • George Kendall 11th Sep '15 - 12:07am

    @Tim13

    Some people do take that viewpoint. I think that, regardless of the interests of wider society, unemployment is very bad for the unemployed.

    In sweatshops in the far east, there may be jobs that are worse than being unemployed. But I doubt even so-called McJobs are.

    See https://www.menshealthforum.org.uk/news/unemployment-bad-your-health
    (which, by pure happenchance, includes a photo of Norman Lamb!)

  • @George Kendall
    “I used to believe in a citizens income. I’m afraid I’ve come to believe now that providing a no-strings-attached income to all citizens would be a disincentive to people working.
    “There are currently 4 people of working age supporting each pensioner in Britain, by 2035 this number is expected to fall to 2.5, and by 2050 to just 2. That means, if we want to continue with our current welfare system, which I do, we’ll need every possible person working.”

    I used to believe that we should have a policy of full employment where everyone in society can work. If you are correct and there are going to be fewer jobs to do, then those not in work need the money to spend as consumers. If companies need fewer workers then the companies will need to pay higher taxes to transfer the money that in the past they would have paid as wages to those who are earning nothing.

    Encouragement to those not in paid employed to do things may be needed, but it should be remembered that no one said a wealthy rich person benefits from being in paid work.

  • Peter Davies 11th Sep '15 - 8:28am

    @George Kendall
    “I used to believe in a citizens income. I’m afraid I’ve come to believe now that providing a no-strings-attached income to all citizens would be a disincentive to people working.”
    The major string attached to Job Seeker’s Allowance is that you should not work. You would keep your citizens’ income if you got a job. There are very few people who genuinely don’t want a job. There are quite a few who try to avoid jobs that will make them no better off. The carrot would be far more effective than the stick.

  • Every time a minimum wage has been introduced and every time a minimum wage increase is announced there have been howls that it will cause a large number of job losses. Do you know how many times they have been right? Zero. But, apparently, that isn’t evidence.

    As for printing money: we’re a heavily indebted economy on both the public and personal level and we currently have a 0% inflation rate. That is a very bad combination indeed. We should be targeting an inflation rate of around 4-5%. Printing money for investment is a sensible way to both help raise inflation and ensure that we have reasonable levels of investment both for the current and future health of the economy.

  • George – I’m deeply sceptical when it comes to the supposed merits of “evidence- based” policy. It almost always suffers from confirmation bias – “evidence” is chosen to selectively support a particular position and ignore anything else.

    https://en.wikipedia.org/wiki/Confirmation_bias

    One way this is done is to selectively filter by place or time to exclude unwelcome evidence. For instance it’s been argued (including on LDV) that mass immigration is a positive because it expands the economy (true) and that recent immigrants pay more in tax than they take in benefits (also true). Case closed then?

    Not quite. The size of the economy is a poor measure; on a per capita basis the advantage is much less. Also GDP (or even GDP/capita) is a weak proxy for government to target and itself subject of much gaming. It gets even worse if you look a few years into the future. Young adults at the peak of their earning power obviously generate a surplus but as they age that goes negative except for high earners. And that’s before you factor in factors like the impact on housing and infrastructure costs which are huge.

    So, which way does the evidence point?

    Another way to confound “evidence-based” policy is to create helpful ‘facts’. For a fee you can engage a sympathetic think tank to write a report that just happens – entirely coincidentally of course (!!!) – to support your agenda. And if you control some part of the information flow (as large companies and governments often do) then the ‘facts’ in the public sphere have a built-in bias (which is why liberals like transparency).

    E.g., AFAIK all the evidence that says that TTIP will benefit EU citizens tracks back to a series of EU-funded reports by a think tank using a wholly discredited methodology that has a track record of wildly overstating gains. And then there is a profound lack of transparency where it’s most needed.

    http://www.independent.co.uk/news/uk/home-news/ttip-controversy-the-european-commission-and-big-tobacco-accused-of-coverup-after-heavily-redacted-documents-released-10473601.html

    How far have these profound shortcomings in the evidence base informed the Lib Dem stance on TTIP?

    Sometimes it happens that the evidence for or against a particular policy is overwhelming – as it is that PFI funding arrangements are truly terrible deals for the taxpayer – but that doesn’t seem to have informed Lib Dem policy to any great extent.

  • George Kendall 11th Sep '15 - 4:51pm

    @Michael BG, @Peter Davies
    It’s possible I’m misunderstanding you guys.
    If you want a form of Citizen’s Income which is not unconditional, where citizens had, perhaps, to do some kind of voluntary work, I might be in favour.
    If you want something that will reduce work disincentives, like a negative income tax, or a change to benefits, so that there is a gentler withdrawal of benefits as you earn more income, then I would be enthusiastically in favour.

    But for an income that is totally unconditional, I think the time for that has not yet come.
    Who knows, maybe in in forty years, mechanisation will mean there are so few jobs, we will have to totally change our assumption about working for a living being the norm? But we aren’t there now.

    Until we are, I would like our focus to be on improving education, so fewer young people enter adulthood without qualifications, there are better opportunities for adult education and training, and more positive incentives to work, so it is easier for people to escape the psychological trap of long-term unemployment.

    I’m no fan of unskilled jobs. They can be boring, even soul-destroying. But they do give social interaction, and reinforce basic skills like time management. And while so many of our young people are unable to do any other kind of work, I really don’t want to see those jobs disappear.

    I fear in the medium term, most unskilled jobs will disappear anyway.
    http://www.huffingtonpost.com/2012/06/19/unskilled-workers-2020-mckinsey-global-institute-study_n_1609767.html
    So providing better training and education is crucial.

    @Peter Davies, like you, I much prefer the carrot to the stick.

    @Nick, you’re right that there have been pilot studies such as the Canada’s Mincome experiment, but so far, they’ve never gone beyond that. I’d love to be proved wrong, but if there was proof that unconditional basic income didn’t reduce work incentives, why has no country ever taken it beyond a pilot study?

  • George Kendall 11th Sep '15 - 5:17pm

    @Nick @Gordon
    You’re right about the first paragraph. I love nuance, but I’ve found that when I write with nothing but nuance, all my readers fall asleep. So I try to make my title and first paragraph a little provocative.
    Like you, and others in this thread, I think evidence-based decision-making used in the wrong way is very dangerous. Too often, evidence-based decision-making is just as subjective and flawed as any other kind, either because it’s trying to apply quantitative techniques to questions that cannot be quantified, or because of confirmation bias, selective evidence, and a host of other flaws.

    I do however, think that sometimes expert groups have proved to be extremely useful. And the Low Pay Commission, the Bank of England, and the OBR are good examples. When bodies like this have been shown to work, but politicians disregard them anyway, I’m afraid that’s populism with no redeeeming qualities.

    @Gordon
    Thank you, in particular, for your thoughtful post. I think I agreed with everything you said, until you came to TTIP.
    Regarding TTIP, in general I’m in favour of more free trade, but I simply don’t have enough information about TTIP to have a confident opinion.
    Regarding PFI, I’ve read that some PFI schemes have been appallingly designed, and are extremely bad value for the taxpayer. I’m pretty sure that is true of some of them. As to whether it’s true of all of them, I don’t know enough, but I’m sceptical.

    @Eddie Sammon
    I realise I never replied to you. I hope some of my other answers answered your point. I agree a lot of evidence is flawed, and of course every person is flawed and fallible.

  • George Kendall 11th Sep '15 - 5:38pm

    @Jack
    If you mean that the minimum wage set following the recommendations of the Low Pay Commission over the last seventeen years has been a success, and that it has avoided a significant adverse impact on employment, then we’re in full agreement.
    If you mean we can raise it as high as we like without causing unemployment, then I disagree. In my view, while no proof is ever complete, the higher unemployment in some parts of continental Europe is a strong indication that making business pay too much extra to employ people means they employ fewer people.

    Regarding our low inflation. The great problem for the Bank of England is that using interest rates to change inflation is like turning a super-tanker. If they keep interest rates low for too long, the effect won’t be seen for some time. And some change in the world situation, like a shock to the Chinese economy, might change the situation entirely.

    I believe the annualised inflation rate is about 1%, which is low. But in 2011, it reached 5%. And I’m afraid I disagree. From what I’ve read, while you want some inflation, a long-term rate of 4-5% will have damaging consequences.

    @John Bennett
    I’d not heard of Alcuin before, I just looked him up on Wikipedia, and I agree with the quote you gave. But I fear I don’t agree with you on universal benefits. I think we should be very careful about giving benefits to those who don’t need them, when there are so many vital public services that are underfunded.

  • @ George Kendall

    The evidence is that a Citizens Income benefits the poor and is not a disincentive to work. It encourages part-time work. However you want to dismiss this evidence! There is a perception that a Citizens Income will cost too much and fear that the general public are not liberal enough to accept that some people will have the freedom not to work. I don’t understand why a liberal thinks people should not have the freedom not to work.

    The whole idea of a Citizens Income is it is unconditional to work. At the moment we have three main benefits that the majority of the population receive: – Old Age Pension. Job Seekers Allowance (and others based on this rate) and the Personal Income Tax Allowance. Therefore there are few people who do not already receive some money from the state.

    I would like to know how much a Citizen’s Income would cost annually to replace the Income Tax Personal Allowance of £10,600 with a Citizens Income of £40.77 a week. Then I would like to know what the 2% National Insurance rate on incomes of over £40,044 would need to be increased to, to cover the increased costs.

  • George Kendall 11th Sep '15 - 6:22pm

    Hi Michael,

    I checked the wiki article, https://en.wikipedia.org/wiki/Basic_income, and what struck me most was the there were all these pilot studies, but nothing came of them.

    The article claimed that there was no evidence of a lack of work incentives. I can imagine that might be true in a village community, where there is strong social pressure to get stuck in and help.

    I just don’t think it would apply in the urban parts of the UK. I’ve seen youngsters in the UK with no motivation whatsoever to work, and no hope either. It upsets me to think of what their long-term future will be. I fear, if there were a Basic Income, it would make this problem worse.

  • @ George Kendall

    I note you didn’t comment when I wrote, “fear that the general public are not liberal enough to accept that some people will have the freedom not to work. I don’t understand why a liberal thinks people should not have the freedom not to work.”

    I think for someone to write that young people should not be given the freedom not to work is as illiberal as saying anyone should not have the freedom not to work. Shouldn’t a liberal trust the individual to make the decisions that they wish and not force them to conform?

    Also are you really saying that a Citizen’s Income of £40.77 a week will be enough to stop people feeling the economic necessary to work?

  • George Kendall 11th Sep '15 - 9:49pm

    Hi Michael,

    I know some members, who think benefits shouldn’t be unconditional, argue that freedom not to work interferes with the freedom of others not to pay for people not to work. But that’s not my position at all.

    I prefer to call myself a Liberal Democrat, rather than a Liberal, because of exactly the sort of question you are asking. I know for some members, liberty and freedom are paramount, and that’s fine for them. For me, while liberty and freedom are important, there are other considerations just as important.

    Fortunately for me, I have cover in the preamble to the constitution. Perhaps the relevant part to point to is:
    “we seek to balance the fundamental values of liberty, equality and community, and in which no one shall be enslaved by poverty, ignorance or conformity. We champion the freedom, dignity and well-being of individuals”

    I regard long-term unemployment, particularly for young people who have never had a job, as being terribly damaging to their well-being.

    I’m not interested in whether other people are subsidising them. Relatively speaking, cost to the state is only of minor importance to me. I’m much more concerned that some of them could be seriously damaged by the experience.
    See: https://www.menshealthforum.org.uk/news/unemployment-bad-your-health

  • George Kendall 11th Sep '15 - 10:00pm

    I missed one important point. Because I’m less concerned with the cost to the state, I think allowing the unemployed to do voluntary work instead of seeking paid work is fine. This may, of course, be difficult to implement. But if it could be made to work, and if it’s their choice, it’d be fine.

    There is another consideration – though not something that is a big factor for me – I have met many on the doorstep who are livid about people they know, on benefits, who they think have a better standard of living than them. I used to think this was just people moaning about people whose situation they didn’t understand. But as people have said things like: “my brother in law can afford a nice holiday, has a much nicer standard of life, I’m working, he’s not, how is that fair?” I’ve come to the conclusion that it probably does happen. In a democracy, and especially when we might work in a future coalition, what concerns significant numbers of the electorate shouldn’t be completely ignored. But, as I said, the primary concern should be for the welfare of the person who is long-term unemployed.

  • George – What I am saying about TTIP is that on this immensely important issue the Lib Dems have presented NO meaningful evidence I am aware of that suggests it’s a good thing. Neither has anyone else. So much for evidence-based policy!

    FWIW “free trade” is one of those words/phrases that can mean almost diametrically opposite things depending on the speaker. (“Fair” is another – for many Tories it’s only fair that they keep all their income and pay no tax to support “shirkers”). “Free trade” in the context of TTIP means freedom for large companies from any laws and regulations that might impact their profit. That includes laws on environment, health, tax, employment and so on as multiple examples attest. There is a large evidence-base for this that also shows that “free trade” in the TTIP mould is immensely damaging. Bad outcomes shouldn’t surprise as it’s essentially a return to feudal arrangements of one law for the powerful in their castles and another for the peasants. It’s the opposite of liberal values.

    So, yes, it would be welcome if politicians paid more heed to evidence. It would be especially welcome if Lib Dems did so.

  • George Kendall 12th Sep '15 - 12:55am

    @Gordon
    Thanks for getting back to me.

    I fear you won’t like this answer, but I’m reluctant to comment because although I heard and read a little about it. It seems a complex issue that I’d have to spend a lot of time investigating, in order to understand both sides of the argument. For the same reason, I tend not to comment on most issues relating to the NHS, because I just feel I don’t yet know enough.

    This doesn’t mean I’m not reading and thinking, just that when I express an opinion on the internet, I want to be reasonably well-informed.

    If you were a party member, I’d suggest you write an article about it here, and start a debate. If you did, I’d read it. LDV do sometimes print articles from guest columnists who are not party members, so that might be a possibility.

  • @ George Kendall

    “I prefer to call myself a Liberal Democrat, rather than a Liberal,”
    “I regard long-term unemployment, particularly for young people who have never had a job, as being terribly damaging to their well-being.”

    I wouldn’t disagree with the health effects of being unemployed. I wonder if the conditionality of benefits is a factor. Maybe men are more effected because their social status is often determined by their job and society looks down on those without a job. To make not being employed a life-choice would remove any effects of conditionality and hopefully over time the general public will accept it as a legitimate life choice. I would like to see other reforms to go along with this increase in freedom and that would be providing support and not pressure to find paid or voluntary work and to be concerned about the fulfilment of the person and not just being concerned with getting them into any job. I am sure a person would be better off doing what they wanted as a volunteer with no financial worries than being forced by economics to do a job they hate.

    (It should be recognised that I don’t believe that having a Citizens Income of £40.77 a week would be enough for anyone to have the freedom to choose not to work.)

    However I recognise you are not taking a liberal position and believe that you know better than the individuals themselves and you want young people to conform.

    I do wonder how accurate these stories are and where those on benefits get the money. Are they using savings? Are they borrowing the money? Did they have a piece of good luck? Are they claiming more benefit than they are entitled to? Has someone given them it as a gift? I don’t understand how anyone on benefits will have large amounts of money to spend on holidays aboard. Of course it is possible to not spend money on some things to enable the money to be spent on something others might see as a luxury that those on benefits shouldn’t have. So many unanswered questions. As a politician on the doorstep we are never going to get the answers. Even when it was my brother-in-law taking about another of his brother-in-laws I didn’t get any answers because my brother-in-law had not asked the right questions, and he wasn’t interested in knowing which questions he could have asked.

  • George Kendall 12th Sep '15 - 11:16am

    @Michael BG
    Where you and I agree, is that policy on benefits is too much driven by reducing government spending, and not the interests of the person on benefits.

    You could be right, that conditionality increases the damage of being unemployed. And that society could adjust to remove that damage. But I think there is something *good* about work in itself, even if it is boring and unfulfilling – something innate in the human condition that needs this sense of being rewarded for the effort we expend.

    If, due to technological change, we move to a society where most people do not work, we will have no choice but to adapt. But there is the risk of serious problems. Humans have proved remarkably flexible in adapting, so perhaps we’ll be able to adjust, but perhaps we won’t. And, even if we do adapt, it will be a painful societal change, which I would prefer we avoid if we can. There’s a risk it could go badly wrong, and in the technological, financial and economic situation the UK is currently in, it might be impossible to succeed.

    “However I recognise you are not taking a liberal position”

    I could reframe my position to use liberal language. I could say “liberty from the psychological trap of unemployment”, but I think that’s an awkward use of language. I’d much prefer to talk, as our preamble does, in positive language, like: “We champion the well-being of individuals”.

    I know that my concern for the well-being of the unemployed comes over as paternalistic. Some give other motivations, and use liberal language like “giving all people the liberty to use as much of the fruits of their labour as possible to live their life to the full” – but, in practice, while that uses liberal language, it’s a justification for low taxes at the expense of the weak and vulnerable. I’m trying to be honest here, and say that my motivation is a concern for the well-being of others, even if some regard that as paternalistic.

    “I do wonder how accurate these stories are and where those on benefits get the money”

    I do too. It may be you are right about this brother-in-law. But with the specific conversation I recall, I had to question myself. What did I honestly believe? I have spoken with people with direct experience of charitable work with those on benefits, who have warned me not to be naive. If my friends are right, I think this man could well have been telling the truth about his brother-in-law.

  • @ George Kendall

    I am glad we can agree that policy regarding those not in employment should be concerned with their best interests, and I like the idea that you are moving on conditionality. I don’t think being paternalistic is liberal because liberals trust individuals to make their own decisions and this is one of the reasons in the past they supported the widening of the franchise.

    However I don’t think you have done voluntary work instead of paid work. I have never felt that being paid for something has given me a sense of reward (maybe because the pay is always low). I get my reward from a job well done and in the past getting people to buy what they were happy with. I think my most rewarding role was working voluntary in an infant school 3 or 4 days a week. I also achieved a great sense of reward because I felt so appreciated by the members of staff. I think maybe you are not considering the sense of reward you have received for doing tasks voluntary for the Liberal Democrats.

    I wish I knew how to change people’s opinions when they think there is something “good” about paid work itself. It is not the payment that matters but what comes with the work.

    As I said once I believed in full employment, but I don’t think it is possible for the UK to ever have it again especially as a member of the EU and the free movement of labour within it. Therefore unless we force employers to employ people they would rather not, there will always be people who can’t find paid employment. If the job market is going to evolve so the number of people who employers do not wish to employ increases we need to start now to change attitudes to work.

    There were some programmes on the BBC hosted by Anne Robinson on Money. There was a woman who purchased new clothes every day but was on benefits. She often missed meals so she could spend the money on clothes. I assume she also used her rent money to buy clothes as she was later evicted. Another woman purchased lots of new items for her home by getting loans, but in the end the items were taken away because she couldn’t afford the interest payments. Just two examples of where at a moment in time those outside might see them as better off than themselves. Again unless the right questions are asked even those working with those on benefits can reach the wrong conclusions. It is only if we could examine their personal finances then we could make a decision based on the evidence.

  • George – I have been a party member for 30 years.

    I sympathise with the difficulties of getting to grips with complex issues like TTIP or the NHS. Like you I often steer clear of those where others have a better background. However, the context of this discussion is evidence-based policy and it is clear that there is none behind the party’s support for TTIP except a reflexive response to the claim it is to enhance “free trade” even though that claim is transparently false – it’s designed to advance protectionism.

    How can one know without first becoming an expert on international trade? Very simply actually; because it is written in close consultation with hundreds of corporate lobbyists while public interest organisations are excluded. Adam Smith understood perfectly well how, when merchants get together they soon turn to conspiring against the public interest. Did the Lib Dem leadership and policy establishment not smell a rather large and extremely putrid rat?

    Apparently not. Lib Dems have always claimed to have some special interest in constitutional reform (voting reform, HoL reform etc.) yet despite the inclusion of far reaching constitutional changes as an essential component of TTIP the party establishment still didn’t smell a rat and, as far as I know, they have yet to advance any credible evidence that supports it.

    Your title asks if evidence-based policy is losing out to populism. Perhaps e should also ask if it’s losing out to corporatism.

  • George Kendall 12th Sep '15 - 7:42pm

    Hi Michael,
    “However I don’t think you have done voluntary work instead of paid work.”

    You’d be surprised. As well as doing massive amounts of voluntary work for the Liberal Democrats, I have done, and I’m surprised at how much now I think about it, almost as much of other kinds of voluntary work.

    However, I think there is something fundamentally different, psychologically, separate and different about when you are working and getting a pay check, to when you are doing voluntary work and getting paid as unemployed.

    And, even if there wasn’t that difference, I have observed that a lot of young people on the dole don’t do voluntary work. In the long run, I think this does them a great deal of harm.

  • George Kendall 12th Sep '15 - 7:51pm

    @Gordon
    “I have been a party member for 30 years”

    Profuse apologies.

    But that’s excellent. Why not do an article for LDV on the subject? You clearly write well, you seem to know a fair bit about the subject. I can’t speak for LDV, but I’d imagine they’d publish it.

    Hopefully that would then spur others to respond, which is what I’d find useful. I never feel I can even begin to form an opinion until I’ve started hearing from both sides of the subject.

    It doesn’t need to be long. In fact, if it’s brief, all the better. I find the really interesting discussion comes if you respond to comments, and engage in the detail there.

    And why not make the article a challenge to others to defend TTIP? Perhaps a title something like: “I think the proposed trade deal with the USA (TTIP) will harm the UK, what do you think?”

    I’d be very surprised if someone who knew something about the subject didn’t respond to your challenge.

  • I am surprised that you feel there is more of a sense of reward from paid work than voluntary work. I believe that it is difficult because of the conditionality rules to do voluntary work if you are receiving Job seekers allowance now. This might be the reason that young people do not explore the possibilities of voluntary work. However behind the idea of the work programme and getting a work placement where the person receives only their benefit is the idea that being in that work placement will give them the benefits of being in a real paid job, and from there they can find paid employment. The health benefits of work are not because of the receipt of a poor wage, but are the result of the other benefits from work.

    In the past large numbers of women didn’t have paid employment, but they were not affected by being not in paid work, I wonder why this was not a problem then?

  • George Kendall 12th Sep '15 - 9:01pm

    Hi Michael,
    “This might be the reason that young people do not explore the possibilities of voluntary work”

    I’ve not got recent experience, but when I’ve met young people who are unemployed, I’ve sensed a deep resentment and anger. I suspect there is also a feeling of self-loathing, but that’s only a guess.

    I think one of the things that paid work gives people is the feeling of self-respect that comes from earning your own way in the world.

    That may be one reason for the high levels of mental illness among the unemployed.

  • Correlation does not equal causation. Central bank independence isn’t necessarily the cause of low inflation, particularly as inflation has been pretty low throughout the developed world. The cause is much more likely to be the emergence of low-cost goods from China and elsewhere.

  • @ George Kendall

    I think it was in about 2008 when I last met unemployed young people. Some were angry at the system and the conditionality they had to meet and even then sanctions. If the general public only respect a person if they are in paid employment is it any wonder people feel not respected when unemployed and claiming benefit. If you talked to a young people on a voluntary work placement (I don’t know if any exist) or working as a volunteer in a charity shop I expect they will have self-respect. As I keep saying it isn’t the money that makes the person feel valued it is other aspect of work which still apply in voluntary work.

    Also conditionality reduces self-respect as well as independence and freedom.

    If you go back to the web page about the effects on unemployment on men’s health you can read –
    “Unemployed men actively seeking work have a 20% greater risk of death than employed men.” – even looking for work is bad for a man’s health.

    Also: “The results were positive both in helping people return to work (87% entered employment, a voluntary or training placement, or some form of education) and in improving health outcomes.” Please note there were health benefits from voluntary and training placements.

    The report states that:
    “the strong cultural connection between work and masculine status may affect men’s sense of well-being”
    Research suggests “that it was the social, health and economic circumstances associated with this change (being unemployed), not claiming the benefit itself” that affect men’s health.
    Being told that they are going to be made redundant can affect health.
    Being unemployed reduced the psychological and social resources of a person.

  • George Kendall 13th Sep '15 - 2:03pm

    Hi Michael,

    My position on Citizen’s Income isn’t cast in stone.

    My current policy view on long-term unemployment is based on a little bit of experience, some anecdotal evidence, and some things that people who word in the charitable sector have said.

    If I see compelling evidence that contradicts this, who knows, I may change my mind. But at the moment, I feel that’s unlikely.

    I should add, although I’m uncomfortable calling myself a Liberal , that doesn’t mean I don’t think I’m a liberal (small l). And I’m sure my position on this is identical to many who do self-describe as Liberals.

    I mostly call myself a Liberal Democrat. However, I think I’m also a social democrat and a liberal, and in the right context, I would describe myself as either.

  • Hi George

    (Your name as a familiar ring to it and I wonder if we met while at university in the 1980’s. Were you at Lancaster University in the early 1980’s?)

    You asked a question in an earlier post – “why has no country ever taken it beyond a pilot study?”

    I read somewhere that Richard Nixon when President considered introducing a Citizens Income but decided he didn’t want to be seen as supporting the “Hippie Lifestyle”.

    I hope you will re-consider your position on Citizens Income and maybe one day you will come round to the idea of replacing the Personal Income Tax Allowance with a Citizens Income (as I have already written that would be £40.77 per week). If everyone had this then those who were unemployed and then became employed would keep the £40.77 before losing any benefit. It would be an incentive for taking a part-time job. The Conservatives have recently slashed the amount a person can keep on Universal Benefit before they start to loose benefit when employed. Having a Citizens Income would reduce the need for Tax Credits.

    As you are a member of the Liberal Democrats you have liberal tendencies, but I have failed to convince you that a Citizens Income is a good thing. Is it any wonder politicians don’t try to convince the general public who are less liberal than you?

    I hope you will continue to look at the evidence that voluntary work and work placements provide for people the same health benefits as paid employment.

    I hope you will examine your paternalism and consider if instead of forcing someone to do something because of your paternalism that it would be better for them for the state to work with them to find a solution that is right for them and improves their well-being. Not a one-size fits all approach but fitting the solution to meet the needs of each individual, which I consider a liberal approach.

  • China has mounting private debt that means that an economic collapse might now be likely (see Steve Keen’s recent columns in Forbes for the facts and figures). The point about secular low inflation, and record cheap debt, means that now is the time to find new areas of growth and move up the value-chain so that everyone can participate in the knowledge economy. Instead, there is banking, the housing casino, the public sector mopping up northern unemployment, and low-level services. What should Britain DO in the 21st century? Now is the time to make that vision happen with a radical approach.

  • George Kendall 13th Sep '15 - 9:21pm

    @Stevo
    I agree China could hit major problems. But I don’t think that will stop the flow of cheap exports from China, it may even increase them. It will, however, create enormous uncertainty, and could have pretty dire consequences for the world economy.

    What’s you view on our balance of payments deficit, and the other major trade imbalances around the world?

    You are right that these issues are all inter-related. A trade deficit is to do with over-saving in some countries, under-saving in others, and certain exporting countries not depreciating their currencies, or not quickly enough.

    I often have the impression that the media narrative can only worry about one thing at a time. But the trade imbalances worldwide, in some ways, worry me more than anything.

  • George Kendall 13th Sep '15 - 9:22pm

    Hi Michael,
    I often post in the members forum of LDV. If you have an account, or if you get one, we could chat more in there.

  • Agree about the trade imbalance. It’s also another factor limiting domestic demand. It would be good to have higher domestic consumption in China and Germany so that Britain could export relatively more and stop borrowing to enable cheap consumption.

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