The Economic Dilemma of UKIP

Let us take a short trip Back to the Future. Step into The Doc’s DeLorean modified time Machine, fasten your seat belt, greet Marty McFly in the back seat, and set the destination to 2016 Britain. We accelerate to 88 miles per hour, and after a loud “bang”, it only takes a few seconds to land after the next general election. There are no flying skateboards, the weather is still miserable and the Royal Family is still reigning, but we have a new government. Just like in the last 2010 election, none of the two big parties managed to gain a majority in the Commons. Due to poor electoral strategies, Labour did not profit from David Cameron’s failures in government, and the Tories have come out of the elections once again with the biggest number of seats. However, their former allies, the Liberal Democrats, have suffered a severe electoral setback, and no longer have enough seats to secure a majority. Instead, the Tories have chosen to form a coalition with the party that made a true electoral breakthrough: Nigel Farage’s UK Independence Party. What kind of policies can we expect  from such a coalition, and would it be viable politically? Would UKIP and the Conservatives agree on issues such as welfare, pensions, taxation and social benefits?

In many ways, a Tory-UKIP coalition in the future is not completely science-fiction. UKIP – as well as a number of other Eurosceptic, anti-immigration parties throughout Europe – is  bound to make considerable advances in the upcoming elections for the European Parliament. A poll conducted in January by the Independent on Sunday revealed that UKIP was the most favourably regarded party in Britain with 27% of favourable opinions, even if voting intentions still placed Labour and the Conservatives ahead. However, UKIP seems indeed to have overtaken the Liberal Democrats as the main alternative to the big two parties: Labour was first with 35%, the Tories were at 30%, UKIP was at 19% and the Libdems at 8%[1]. While European elections are often considered as “second-order” events where voters are more likely to sanction governments and bigger parties because they are presumably less important, EP elections still showcase the strength of the different political forces that will matter for future national elections. In Britain, UKIP is a serious electoral contender, and its impact on government policies can already be felt. The government’s tougher line about immigration control, or the promise to hold an “in-out” referendum about the European Union are without doubt targeted at voters tempted by Nigel Farage’s party. Some Tory politicians have already evoked potential alliances between the Conservative Party and UKIP[2]. Hence, such a coalition cannot be ruled out in the future, even if the first-past-the-post system obviously constitutes a severe hurdle for parties outside the Labour/Conservative duopoly. In first-past the post, what matters is not only how many voters parties have, but also how they are distributed geographically, and UKIP still seems to be lacking as to this second criterion.

UKIP as a Working-Class Party

Besides institutional barriers to acces constituted by the electoral system, UKIP and the Conservatives would need to reconcile the preferences of their respective electorates. If this does not look like a huge problem when it comes to issues such as immigration control and relationships with the European Union, it would certainly be more problematic when it comes to public spending, welfare, pensions, taxes and the like. This is essentially because UKIP and Conservative voters tend to have different socio-economic profiles, different interests and different preferences.

On the one hand, recent research has shown that UKIP has the most working class electorate of all British parties[3]. For some time, many believed that the typical UKIP voter was the disgruntled anti-EU middle-class Tory in the South-East. However, it appears that the UKIP electorate is in fact similar to that of other populist radical-right parties in Western Europe: working class, “pale, male and stale”. The core electorate of UKIP is constiotuted by blue-collar workers, predominantly male, older, with low formal education levels, who feel threated by immigration and economic change, and loathe a political class composed of what they perceive – no without reason – as a bunch of posh, privately educated middle-class Oxbridge graduates. Sociologically, UKIP voters would have been the social groups which used to vote Labour in the 1960s and 1970s, but have been forgotten by New Labour in its drive to appeal to urban middle classes. This pehenomenon is by no means a British exception: in countries such as France, Belgium or Austria, the populist radical right is now the most popular party family amongst the native working class – after abstention – while left wing parties essentially source their voters in the new middles classses (teachers, public sector workers, healthcare workers and professionals). After Tony Blair’s drive to the right, managers are now as likely to vote for Labour than for the Conservatives, and the days of old Labour seem long gone.

Interestingly, the preferences of UKIP voters in terms of economic policies also tend to be more left-wing, even if they intend to vote for a party often considered on the far-right. Research on the US also shows that supporters of the Tea Party, which can be considered as the equivalent of UKIP, also often rely on federal welfare programs while supporting a party that wants to scrap them. Hence, there is often a wide gap between the preferences of the voters and the agenda of the party elites in these domains. A recent Yougov poll showed that 73% and 78% of UKIP voters supported the nationalisation of railway and energy companies respectively[4]. Corresponding figures were twice 52% for Conservative voters, and 79 and 82% for Labour voters. Hence, UKIP voters tend to be closer to Labour voters when it comes to socio-economic issues and state intervention in the economy, while Conservative voters prefer market-based solutions, a smaller state and lower taxes.

Accordingly, austerity policies and cuts in public spending pushed by the Conservative party can be thought to hurt the UKIP electoral base, as lower-educated working-class people also rely to a larger extent on public services than higher incomes who can purchase services privately. A conservative-UKIP coalition would inevitably run into this kind of dilemma, and UKIP is conscious of this. At first, its electoral manifesto promised both lower taxes for all and more spending, for instance by scrapping the bedroom tax[5], or establishing a 31% flat tax rate for all.[6]This is is feasible in opposition, but more problematic when a party accesses government and needs to fulfill its irrealistic promises.Eventually, however, UKIP ended up disowning its whole 2010 party manifesto until after the EP elections, claiming that all its policies were now “under review”.[7] It has been shown that populist right-wing parties such as UKIP are particularly prone to “blur” their positions on economic issues in order to solve these dilemmas.[8]

Betraying Voters, or Betraying other Parties?

In a forthcoming article in the European Political Science Review[9], I show that once these parties take part in government coalitions, however, blurring their position becomes more difficult, and they need to make a choice between office and votes when it comes to socio-economic policies. On the one hand, as argued above, they appeal to a large segment of working-class voters who are supportive of state intervention, and obviously those from which they benefit directly. This includes traditional social security schemes such as old-age pensions. On the other hand, in Western Europe – things are a bit different in Central and Eastern Europe -  these parties have only been able to form government coalitions with Conservative or Liberal parties who are more likely to retrench these very same welfare programmes, and who can even be rewarded electorally for cutting public spending. If populist right-wing parties choose office and want to maximise their coalition potential, they may support retrenchment measures in exchange of concessions about immigration control, but at the cost of betraying their working-class electorate and facing substantial electoral losses at the next elections when cuts in public spending bite in. If they choose votes and seek to protect their electorate from retrenchment, they jeopardise their participation in government by betraying their coalition partners, who often cooperate with them precisely in order to pass austerity measures with little opposition. For this analysis, I have carried out fieldwork in the Netherlands, Austria and Switzerland, three countries where the radical right took part in government at some point in time, and where pension reforms were put on the agenda. In all three countries, the tensions between office and votes outlined above were visible, and can serve as interesting signposts for the problems a Conservative/UKIP coalition might face.

In Austria, the Conservative ÖVP chose to form a coalition with the radical right FPÖ in 2000 as a way to curtail the left and trade unions, and push retrenchment reforms that had been impossible to carry out with the social-democrats in government. Accordingly, the FPÖ went for office and basically subscribed to the retrenchment agenda of its coalition partner in exchange of a tightening of immigration rules. While reforming welfare had proved extremely difficult in the past, this allowed for a number of swift welfare reforms to cut public spending, notably by increasing the age of retirement. The problem was that these reforms soon led to a revolt within the FPÖ, precisely because they were hurting the very electoral base of the party, which just like UKIP, was composed of blue-collar, older and male workers. A number of internal dissensions led to the creation of a splinter party, the BZÖ, and Jörg Haider, the party leader, heavily criticised its own ministers for hurting the “small people” the party was claiming to represent. In the end, the Conservatives of the ÖVP chose to drop the FPÖ and get back to form a coalition with the social-democrats, whom they considered more reliable.

In the Netherlands, Geert Wilders’s eurosceptic Party for Freedom (PVV) similarly committed to support a minority coalition formed by the Liberals and the Christian Democrats in 2010. In the run-up to the elections, Wilders had said that he would do everything he could to keep the retirement age at 65 for “Henk and Ingrid”, the typical hard-working, “squeezed middle” Dutch voters that he sought to appeal to. Accordingly he had said that the retirement age at 65 was a “breaking point” in any coalition negotiation with other parties. One day after his party obtained its best election result ever, however, Wilders said that the retirement age was “no longer a breaking point”, and agreed to support a coalition government between the Christian Democrats and Liberals determined to pursue a harsh austerity agenda, with some concessions regarding immigration and healthcare. However, unwilling to betray explicitly an election promise, the PVV systematically refused to support any attempt to increase the retirement age, forcing the government to seek support from smaller parties. Eventually, after the Netherlands entered a recession in 2012 and was forced to carry out even harsher spending cuts, Wilders pulled out of the government, arguing that he could not support austerity measures that would hurt “Henk and Ingrid”.

Finally, in Switzerland, the Swiss People’s Party (SVP) consistently pushed for retrenchment in welfare programmes as a way to fight “abusers” of social assistance taking advantage of “honest taxpayers’s money”. The SVP notably also pushed for an increase in the age of retirement  without any compensation in an alliance with the Liberals and Christian democrats against social democrats and trade unions. In this sense, the Swiss radical right diverged slightly from parties in other countries by adopting a clearly more neoliberal profile, similarly to UKIP when it doesn’t seek to “blur” or conceal its socio-economic positions. However, in Switzerland as well, the contradictions between office and votes were also visible, as its electoral base is also constituted by large working-class segments. Hence, in the referendum votes called by trade unions and the left to challenge these reforms, a majority of the electorate of the Swiss People’s Party disavowed the party elites by refusing an increase in the age of retirement. Conscious of these internal contradictions, the party subsequently contributed to torpedo another reform where its internal conflicts between a neoliberal elite and protectionist voters would come out once again, this time in the run-up to a new election. This was another strategy to blur and conceal the contradictions of its economic agenda.

In general, parties such as UKIP which build their entire electoral profile on an anti-establishment agenda have a hard time being in government, at the very core of the establishment. The interesting thing about their economic impact is that they do not emphasise economic issues as their prime area of competence, and voters do not vote for them primarily because of their economic positions. However, this is precisely what makes them expedient allies for Conservative parties, since they may be more willing to subscribe to austerity in exchange of a tightening in their domains of predilection (iimigrationa nd law and order), hoping that their own voters won’t see how austerity affects their own interests. Oftentimes, however, these calculations tend to be marked by overconfidence, and to bite them back at election time.

Another version of this paper will be published in Dialogue, the magazine of KCL’s Politics Society.


Journalism also Works like a Drug Gang

I came across an old but interesting column by Roy Greenslade about “how journalism became a middle class profession“, describing how journalism progressively closed its doors to people from low-income backgrounds in Britain. I found it especially interesting because the logic described there is extremely similar to the “insider-outsider” logic I talked about for the academic job market:

“Then came the phenomenon of working for nothing. Newspapers, magazines and broadcasters discovered a ready supply of young, enthusiastic students willing to take up unpaid short-term work experience places and even long-term internships. Only the wealthiest of budding journalists can afford to work without pay”

What I didn’t mention in the piece on academia as a drug gang is the impact this has on the class setup of the profession, especially when the “outsider” phase involves unpaid work. Another column by David Dennis nicely outlines this mechanism for the US:

“As my classmates and I were finishing up our studies at Northwestern’s graduate school of journalism, we were naturally bombarded with stories and speeches from people who were actually successful in the field. Nine out of 10 had the same story: in order to succeed, you have to take an unpaid internship in New York for months or years; you build your resume and eventually land yourself a job. One senior member of a leading national magazine, when asked how someone could pay the bills to affording life in New York while working a full-time internship, famously told us that if we couldn’t pull an unpaid internship off, then we didn’t want to succeed badly enough. When we asked how he pulled it off, he told us about how he lived in his parents’ spare apartment upstate while working his internship.”

Now, the social background of journalists has an obvious impact on how journalists see the world and how they represent it for the public, and how political problems are framed (I discuss this here about welfare). A profession that is composed exclusively of people from middle or upper class backgrounds will certainly be blind to certain things and emphasize others.

I would assume that the existence of unpaid work as a necessary step to become an “insider” in academia would have similar effects. There was an an article about recent research in Germany that showed that professorships had not become more open to less advantaged social backgrounds in spite of the mass democratisation of higher education. It had in fact become slightly more elitist, which struck me especially in the light of my own experience.

Now, going back to journalism, what amazes me is the amused or ironic tone some newspaper or magazines took while reporting on my piece on drug gangs – The Australian ended its piece on it with “a load of bollocks” – while journalism seems to works exactly along the same lines.

Why School Choice is Bad for Social Mobility

I am quite a good example of  social mobility. My parents only completed obligatory school – that was four years in rural Portugal in the 1950s – and started working at 12. They moved to France and then Switzerland in the 1970s, and worked their whole lives in unskilled jobs. In spite of that, I went to university, obtained a doctorate and have now a permanent academic position in a highly-ranked university.

However, this upward mobility was only made possible by certain conditions. I grew up in Switzerland, where the quality of education was probably much better than what it would have been if my parents had stayed in Portugal. I grew up in a relatively wealthy village with a library just down the street, that I would visit at least twice a week to refill the comics and books that I didn’t have at home. Most importantly, I grew up in a country where everybody goes to state schools, and where there is no choice in selecting your school. Social reproduction is obviously present, but there is no stigma attached to state schools, as is often the case in Britain. Actually, it may be the contrary. The only people I know who would go to private schools would typically be children of wealthy parents who didn’t make it in the state system. If their grades weren’t good enough to go to the higher tier of the state system, their parents would place them in a private school with classes with only 5 pupils and tutorials to hold their hand until university. Same for university: I just went to my local university without even thinking about going elsewhere. All Swiss universities are pretty good. Even if you don’t go to university, which is the case of about 70% of each age cohort, you can still make a very good life thanks to vocational education.

I have friends in the UK who have children, and I am amazed by how complicated it is early on to select the right school for your children. If you don’t put them in the right primary school, they then might not get into the right secondary school, and then not get good enough A-levels and then they won’t go to the right university, and then they’ll basically fail their life. Even if you’re a good student, you won’t be drilled in the same way to go to a good university in a bad state school, and people seem to rely to a much larger extent on the shortcuts provided by school or university rankings.

Sometimes I wonder what would have happened if my parents had moved to the UK instead of Switzerland, without knowing which schools are best, without being able to afford to send me to a private school or live in the catchment area of a good state school, without writing English well enough to lobby for me to go to a better school, besides not being able to help me with my homework. I probably wouldn’t have done as well because my parents wouldn’t have been able to make the right choices for me, or wouldn’t have had the money to make these choices. This is not because my parents didn’t want the best for me, but their conception of hard work has more to do with getting up early and working hard, as they have done their whole life, rather than educational achievement that they haven’t experienced themselves. In the UK 42.5 per cent of all children whose mothers were highly educated but not British were taught in disadvantaged schools. With the children of poorly educated mothers, the figure rises to 80 per cent – the worst record in the OECD. Hence, being educated but an immigrant doesn’t even offset the segregation created by school choice.

School choice in the UK places so much of a burden on parents that it is naturally bound to reproduce social inequalities. Even if the money part is left aside, it assumes that all parents have the same cultural capital to make perfectly informed education choices for their children and help them “fit in” in the middle class environment of quality schools. Hence, a government advisor – who “was raised in a £150,000 semi-detached house (…), went to Aylesbury Grammar School and then on to Cambridge University” apparently declared that working-class children

need to become more comfortable with middle-class social setting such as restaurants, theatres and offices if they are to succeed.

Working class families are urged to watch plays, visit museums and try middle class food, restaurants and shops to broaden their child’s life experience.

This is simply amazing: as if a middle class habitus could be acquired with a few trips to the national gallery. Even assuming that children need to conform to middle-class values to perform better, working-class children are very unlikely to acquire these values if all rich kids stay amongst themselves in private schools. Now it’s no wonder that Britain has one of the lowest levels of social mobility in the OECD. For instance, in no other OECD country is the income of your parents so correlated to your own income. Only 3% of the richest 20% have mothers with no qualifications. The social segregation allowed by school choice is also one of the reasons why this huge country is run by such a small group of upper-class people with so similar backgrounds, via Eton, because that is where social networks are built, and working-class kids are excluded from them. Now the government says that it wants to rewards people who “work hard and get on”, but people who do – like my parents – without education credentials have seen their real wages fall and the major parties abandon them.

This may be related precisely to so much school choice that upper class parents can more aptly exploit, either by placing their children in private schools or knowing better how to place them inthe good state schools, while children of working class parents are left amongst themselves in poor quality state schools. A strong quality public education sector seems to be a much better way to counter these tendencies, while increasing school choice seems bound to perpetuate them.

Related

Ending school segregation is the key to social mobility

UK school the “most socially segregated in the world”

How Britain claims to fight wage dumping at home but does the opposite in Brussels

Immigration is all the news. There isn’t a day when the government doesn’t come up with some new measure or declaration to fight or reduce immigration flows because they allegedly depress wages. Theresa May, the Home Secretary, said many times that she wants curbs in the free movement of workers in the EU to protect British workers from job displacement. British jobs for British workers and all that, down with Romanians and Bulgarians, the same familiar tune.

Now there is an important legislative proposal currently being negotiated in the EU that nobody (and especially no newspaper) talks about in Britain. In France, however, Libération and other newspapers give interesting information about it: the revision of the directive on “posted workers”. In a nutshell, posted workers are employed to perform a service (for instance build a school) in a country for a limited amount of time, but are formally employed in another member state. Posted work has taken massive proportions in the EU, particularly in construction.

The whole question about the regulation of posted work (as I analysed here *shamelessplugalert*) has to do with  monitoring whether social security contributions are collected, where they are collected, and whether employment conditions conform with minimum standards. Without sufficient controls, there are risks that workers may be paid below minimum wages, companies don’t pay social security contributions, etc. Even if they do but pay them in low-income countries (say Poland) while the service is performed ina  high-income country (say Luxembourg), there is a great potential for downward pressures on wages. This is essentially what the Laval and Viking cases were about.

The revision that is being examined essentially aims at giving member states “greater power to check that companies using workers posted from another EU member state are respecting core national social security rules“. The revision was blocked for over a year because of deep divisions between member states, with two sides with blocking minorities. A first group of countries, amongst which France and Germany, advocated a “maximalist” approach where member states would be granted greater powers to inspect companies posting workers. A second group of countries wanted to strongly limit the ability of member states to control companies and check the employment conditions of posted workers. Who are they? Last December, seven countries voted against the proposal: Hungary, the Czech Republic, Latvia, Estonia, Slovakia, Malta…

…and the United Kingdom. Now that Poland shifted sides, allowing to indeed strengthen labour market control, the UK is opting out. It is interesting to see that while the British government claims to protect British workers from the perils of immigration at home, it seems to systematically fight efforts to do so at the European level, where British voters are not looking.

Oskar Freysinger ou le courage des pleutres

Oskar Freysinger a donné une interview à un journal turc où il remet en cause le génocide Arménien. La semaine dernière, le même Freysinger avait publié sur sa page facebook un texte qui dénonçait les dépenses exorbitantes de l’Etat du Valais pour ses prisons et la non-application de l’initiative sur les criminels étrangers: si on expulsait les criminels étrangers, on aurait plus d’argent pour l’éducation de nos petiots:

“Avec 30 criminels en moins, le service de l’enseignement pourrait engager 25 enseignants du primaire à plein temps et ouvrir presqu’autant de classes. J’en arrive à la conclusion que c’est moins l’argent qui manque en Suisse que le courage de certains politiciens d’appliquer la volonté du peuple”.

2738 “likes”, plus de 1000 partages. “Vous avez bien raison” “qu’on les renvoie”, “Y’en a marre”.

Je ne sais pas si les propos d’Oskar Freysinger ont été fidèlement retranscrits concernant le génocide Arménien, mais je peux m’imaginer que dans sa quête éperdue de publicité, il a fait ces déclarations principalement pour plaire aux journalistes d’un pays ou l’opinion publique et le gouvernement ne veulent pas entendre parler du génocide arménien. Ce qui est intéressant c’est que Freysinger parle du manque de “courage” de la classe politique pour renvoyer les criminels étrangers, alors qu’il sait que cette mesure est en fait probablement très populaire auprès de l’électorat. Personne n’aime les violeurs et les voleurs, surtout s’ils sont étrangers. Mais quelle attitude demande le plus de courage: prendre une mesure très populaire mais qui peut contrevenir a l’Etat de droit, ou défendre les principes du droit et de l’égalité de traitement même contre l’avis de la majorité? Pour ma part, je pense que c’est la seconde. Ce qui rendait le combat de Michel Foucault pour les droits des prisonniers admirable, c’est qu’il avait pour but de s’assurer que les principes de l’Etat de droit sont aussi respectés pour les groupes sociaux que tout le monde déteste et veut voir souffrir. Je n’aime pas les assassins et les violeurs mais je suis contre la peine de mort et pour des conditions décentes dans les prisons parce que nous vivons dans un État de droit. Trahir ces principes, c’est s’abaisser au niveau de ceux que l’on punit.

Ce qui est intéressant c’est que les politiciens qui dénoncent le manque de “courage” de la classe politique face au peuple sont toujours ceux qui courbent l’échine devant les puissants ou les gouvernements étrangers, en particuliers ceux qui ont des problèmes avec les droits de l’homme: Freysinger devant le gouvernement et l’opinion publique turque, ou Blocher au temps de l’apartheid. Quel courage, qu’ils démontrent aussi quotidiennement en tapant sur les immigrants, les prisonniers, les musulmans. Des groupes politiquement puissants, qui comme chacun sait, sont acoquinés avec le pouvoir. Le propre du populisme est de présenter la couardise comme du courage.

Related

What does the Swiss immigration vote mean for Britain and the European Union?

On February 9, Swiss voters accepted by a very slight margin a popular initiative spearheaded by the Eurosceptic Swiss People’s Party proposing to introduce immigration quotas for all categories of migrants entering Switzerland. The referendum has made the headlines of the international press, and its unexpected result – all other major parties, trade unions and business associations had called for a refusal – has been greeted by about all eurosceptic party leaders in Western Europe, from Marine Le Pen to Nigel Farage. The outcome of the referendum has put the Swiss government in a difficult situation vis-à-vis Brussels: Switzerland had signed a bilateral agreement on the free movement of workers with EU countries, and the very principle of immigration quotas seems incompatible with this agreement. However, the main reason why this vote has received such a great deal of attention – in a country that rarely makes the headlines – is perhaps because it has implications much beyond Swiss-EU relations.

Indeed, the vote has come at a time when the free movement of workers within the European Union has been challenged by a number of parties and governments, and when some member states – Britain being the case in point – are seeking to renegotiate their relationship with the European Union. For instance, David Cameron has put immigration control at the centre of his plan to renegotiate the relationship between Britain and Brussels, and Theresa May is a longstanding advocate of immigration curbs within the EU. Even on the left, the Dutch (social-democratic) social affairs minister Lodewijk Asscher recently claimed that free movement was undermining the European social model. Accordingly, the strategy adopted by the EU to deal with Switzerland can act as a signal for its own member states tempted to opt out from or renegotiate the more contested aspects of the EU acquis.

In the past, Switzerland had already been presented as a model for what a “Brexit” could look like. In 2012, Boris Johnson even evoked a place called “Britzerland”, where Britain and Switzerland could prosper outside the EU. However, many of these arguments were based on a deep misconception of Swiss-EU relationships. For advocates of a “Brexit”, Switzerland was often presented as a proof that free trade and access to the Single Market without the whole regulatory apparatus of the EU, notably in the social domain, was a viable option. However, in many respects, Switzerland is more integrated in the European Union than some member states, both in terms of trade flows and regulations. For instance, Switzerland is a member of the Schengen area while Britain and Ireland are not. Moreover, it tends to adapt unilaterally to EU regulations without having an input in the EU decision-making process. In the last twenty years, Switzerland has consistently been adopting EU policies on an “autonomous” basis, and systematically assesses whether its legislation is “EU-proof”. For a country which depends so heavily on trade with EU countries, the unilateral adoption of EU regulations has constituted a central survival strategy, and its actual degree of independence has been exaggerated. Now, the decision on immigration quotas has challenged this path of autonomous adaptation, and may constitute a test case not only for Switzerland, but for the EU as well.

On the one hand, from the point of view of the Commission, adopting a lenient stance by allowing Switzerland to opt out from one of the four freedoms could signal to member states that cherry-picking EU policies is an option, thereby undermining the European project as a whole. If concessions are granted to Switzerland, why shouldn’t they be granted to other countries? In the aftermath of a major crisis that has already tested the limits of EU solidarity, this could start the unravelling of European cooperation as an encompassing project. On the other hand, adopting a harsh stance could provide further arguments to Eurosceptic movements criticising the non-democratic nature of the European Union. After all, the decision on immigration quotas was the result of a democratic vote, and in spite of the fact that is not a member, Switzerland is the country where citizens have voted most often on EU questions, for instance about the extension of free movement to the member states that joined in 2004 and 2007. After the “no” to the European Constitutional Treaty in France and the Netherlands in 2005, this could be understood as another demonstration of the weak regard of the EU for popular votes.

So far, the Commission has adopted a hard stance, while some member states seem to be more willing to grant concessions. A number of ongoing negotiations between Switzerland and the EU have been blocked in the direct aftermath of the referendum, for instance about the extension of free movement to Croatia, the Swiss participation in the ERASMUS student exchange programme, or the Horizon 2020 research programme. An actual exclusion of Switzerland of this latter programme could potentially deprive Swiss universities from hundreds of millions of EU research money: last year, Swiss universities received 1.8 billion of such funding. The commission is seeking to make the case that all EU policies are linked, and that a standstilll in one policy area leads to a standstill in all others. This presumably also helps raise the salience of policy domains where EU countries directly benefit from cooperation. Switzerland has a competitive university system and potentially receives more research money than it pays in. This could act as a signal for Britain, whose elite universities also receive large amounts of EU research money. Britain was onlysecond to Germany in the total amount of EU funds received, and the 2 billion they could hope to receive correspond to just over a fifth of the total government spend on science. While euro-scepticism is often directed towards highly salient issues such as immigration, these less salient but financially important aspects of European cooperation are almost always ignored.

In many respects, it makes sense for the Commission to emphasise that the Acquis constitutes a whole, and that countries cannot keep domains where they win and drop those where they lose. Among member states who may be less keen than the Commission on furthering an “ever closer union”, however, positions have differed. France seems to be championing a hard stance with Switzerland, in line with its recent efforts to fight tax evasion to this country, while Germany seems to be showing a more accomodating stance at least in the short term. From a strategic point of view, it may make sense for member states still committed to the European project to make an example of Switzerland and show that cherry-picking strategies such as those promoted by Britain are not viable. At the moment, David Cameron seems relatively isolated in its attempts to repatriate EU powers to London and limit the free movement of workers. Switzerland may be used as a convenient guinea-pig to show him that the free movement of workers, services, goods and capital are not separable.

Post originally published in the Political Studies Association’s Political Insight Blog.

Why footballers (may) deserve ridiculous salaries and bankers don’t

In spite of £8.2bn pounds in losses, the Royal Bank of Scotland is going to pay £588m in bonusses to its staff. The CEO of the – taxpayer-owned since 2008 – bank said that the issue of bank bonuses was a sensitive one, but that “I need to pay these people fairly in the marketplace to do the job”. The argument that is often put forward to justify the high salaries of bank executives – or of any executive, for that matter – is that they are like top footballers: they have a very specific set of skills, and if their salary doesn’t match up what is offered by the competition (other football clubs, other banks), they are going to go elsewhere. Greg Mankiw, for instance, recently commited another piece defending the one percent by drawing on similar or connected arguments. Moreover, since objections to banker salaries are allegedly only based on envy, we should also be angry at footballer salaries and the ridiculous amount of money that Wayne Rooney of Cristiano Ronaldo receive every month.

I think that the conflation between bankers and football players (or singers, or actors) as two similar categories of jobs is highly misleading if one considers the marginal value of individuals and their replaceability as determinants of value. As good way to assess these two factors is to replace both bankers and footballers by chimpanzees.

First, I  have my doubts about the added value of one particular individual to the collective endeavor he/she is a part of in the context of banking or large corporate structures. I simply cannot understand how the added value of only one person in an organisation which counts many thousands of can be justified by salaries sometimes a million times higher than the grassroots employee. If you remove Brady Dougan from the headship of Credit Suisse and replace him with a chimpanzee, probably not much will change in the short term because thousands of other people work in the bank and ensure its daily operations. Arguably, the bank may actually do better. Remove Diego Maradona from that game against England in 1986 (and replace him with a chimpanzee) and you have a completely different outcome. Remove Humphrey Bogart from Casablanca and you have a totally different movie. The marginal contribution of football players and actors is much bigger than that of CEOs.

Second, and perhaps more importantly, the individual characteristics of corporate managers (which influences their replaceability) matter much less than those of football players or actors for the product that they are selling. In this respect, football players are much less replaceable than CEOS. I do not have a bank account with Natwest because of its CEO (whose name I don’t even know), and I do not buy a MacBook because Apple is headed by Tim Cook. People more or less place the same value in a product of service even if its CEO changes. However, I may go to see a movie because it’s got Kevin Spacey in it. Similarly, Real Madrid bought Cristiano Ronaldo because of his possibly unique free kicks and speed, but also because they can sell millions of overpriced shirts with “Ronaldo” (and not “chimpanzee”) written on them. It is much more difficult to replace them because they are part of the product themselves. I am not saying that the contribution to humanity of Cristiano Ronaldo is bigger, but many parallels often made in the press about the low replaceability of managers – especially by managers themselves – are simply not justified. I simply do not buy the idea that there are only a small handful of people who can run a big bank, but I may agree that only a handful of people can shoot free kicks like Cristiano Ronaldo.

La cuisine statistique de l’UDC

Image

On vote dimanche sur l’initiative “contre l’immigration de masse”. L’UDC a produit des projections de croissance de la population dans ses encarts publicitaires qui ont déjà été critiquées par Martin Grandjean (ci-dessus). l’UDC base ses projections sur la croissance de la population si l’immigration restait à des niveau similaires à ceux de ces dernières années, où l’économie suisse s’est portée particulièrement bien.

Le meilleur moyen de comprendre que ces projections sont fausses est de regarder dans le passé. L’immigration en Suisse a fortement augmenté dans la seconde moitié des années 1980. Si l’on fait une projection basée sur le solde migratoire des années 1985-1991, la Suisse serait aujourd’hui en train de recevoir plus de 200’000 étrangers de plus chaque année (immigration moins émigration). Toutefois, la conjoncture s’est fortement fléchie à partir de 1991, avec un fort impact sur le niveau d’immigration. Le solde migratoire global s’est même approché de zéro en 1997, et il est en fait devenu négatif pour les citoyens européens (plus de citoyens européens ont quitté la Suisse qu’il n’y a eu d’arrivées). Comme le montre le graphique ci-dessous, l’immigration réelle a en fait été beaucoup plus faible que ce qui aurait pu être projeté, en particulier car l’immigration européenne est plus sensible à la conjoncture.

graph

Source: OFS.

Dealing with email bankruptcy

On January 1st, New York Times journalist Nick Bilton, acknowledging that he would never be able to answer all of them, deleted a backlog of 46,315 unanswered emails and, officially declared email bankruptcy. A number of high-profile individuals have declared email bankruptcy over the last decade, the first being Lawrence Lessig in 2004. Just like you would declare it impossible to pay back your debts, by declaring email bankruptcy you acknowledge that is reasonably impossible to answer all your backlog of emails, you delete all of them and officially notify your whole address list with an apologetic email along these lines:

Dear person who has sent me an email over the last 4 years,

Having accumulated a completely unmanageable number of unanswered emails, I had to take the difficult decision to delete all of them. I sincerely apologise for letting you down. If you want me to answer your email, please re-send it to me. I promise that I will try to keep up with emails in the future.

Sincerely,

The problem with this procedure is that it constitutes what can be called a disorderly default. Imagine that any individual, firm or government could decide overnight that they didn’t need to pay back their debts: it would be chaos. Nobody would lend money to anyone in fear of not getting their money back. Similarly, a disorderly email bankruptcy can have dramatic consequences. Why would I send emails to people if they can decide at any time that they don’t need to reply? With such a level of uncertainty, in the long run nobody will be sending emails to anyone. If you think about it, there is no reason why we should deal with email bankruptcy differently from a “normal” bankruptcy. We need procedures to make sure that people will reply to their emails, while at the same time helping individuals overwhelmed by a mountain of unanswered emails.

An obvious solution would be an email backlog restructuring procedure. First, individuals should formally file in a formal request for email bankruptcy (below) to be placed under the protection of the state. You don’t want the enforcers of the people you owe replies to come break your fingers. Second, individuals would be placed under the monitoring of a third party and granted more time to reply to their emails. Bailiffs could come to your house and make sure that you devote all your time to replying to the emails. Alternatively, this third party could reply to the unanswered emails, but in exchange of a drastic email adjustment programme to make sure that insolvent emailers will always reply to their emails in future. Of course, the emails answered by the third party should be paid back with an interest. A central goal of these email adjustment programs would be to teach you not to send tons of emails eliciting replies that you won’t be able to answer, and punish you for profligate emailing behavior.  Eventually, in last resort, an email backlog “haircut” can be envisaged in case individuals have to default, but the conditions imposed on the debtor should be even harsher for instance by auctioning their computer material. Even then, this solution would still be less catastrophic than the disorderly email bankruptcies described above.

Form6-27b

A Modest Proposal to Improve Value for Money for Customers of Universities

Students increasingly want “value for money” from their university education. On a number of occasions, I have heard or read students concerned about what they get for the money they pay, especially with respect to the different individual components of their education. I have received emails calculating the price of individual modules saying that for that money, they’d expect a speedy return of marked essays, or heard students voicing concerns about how much they were paying for each hour of lecture or seminar that they attended. A friend of mine at another university told me that one of their students had asked for money back after one seminar session was cancelled. If you think about it, it is fairly normal that the introduction of fees has led students to put a price on each individual component of their education, and assess more closely the value that they get for their money. Arguably, the value of fees has tripled since they were introduced, but it is difficult to argue that the quality of teaching can triple as well.

This movement of pricing is what many people call the “marketisation” of universities, often with a tone of disgust. I do not think that this marketisation has gone far enough. Students pay very high fees to get an education, but they get little choice about the product that they get. If you compare universities to true commercial enterprises, you’ll understand that they actually sell a very small number of products, and choice, which is primarily what a market system should deliver, is actually very limited. Choosing a degree works as if you could choose between different airlines to get from point A to point B, but each airline would only have one class, you wouldn’t be able to choose your seat, there would be no speedy boarding and the price would be the same if you booked 3 months or 1 day in advance. Precisely, airlines could be a good model for universities to pursue their movement of marketisation, with a much greater deal of choice in price and quality of products for their customers. A simple way would be to introduce a clear and transparent price list for all the different services that we provide, allowing students to choose different speeds and quality of service. This could look like this:

Price of seats in lecture halls: 3 pounds standard, 5 pounds to sit in the front, luxury seats with reclinable back and built-in head massage to stimulate thinking: 10 pounds per lecture. Note-taking service by experienced unemployed PhDs available.

Replying to students’ emails: 2 pounds within a week, 5 pounds within 2 days, 10 pounds for a 1-day service. For an additional 3 pounds, correction of eventual spelling mistakes or typos.

Student meetings to discuss dissertations: 20 pounds an hour; 30 for a service with notes taken. Business premier service with gourmet coffee, cookies and shoe-polishing on demand (booking in advance recommended).

Recommendation letters: pricing per length and degree of positiveness of the letter. Extra pricing for the placement of specific words: “outstanding”, “amazing” and “mindblowing”: 30 pounds. Budget option available for 10 pounds, includes “alright” and “not too bad”.

Marking and feedback on essays. Budget service with no feedback and date of return undetermined: 10 pounds. Business premier service for 50 pounds: 5 pages of feedback, 10% top-up on the the grade, returned within 3 days on your doorstep by a drone, with a bottle of champagne. Personalized help in writing essays available on demand.

Credit cards and paypal accepted.

Related posts: