In-work poverty is the greatest moral outrage of our generation - it deserves to be treated like it

Blog from January, originally here.
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The moral outrage of in-work poverty

All things considered, I thought some of the reaction on the left recently to George Osborne’s intervention on the minimum wage bordered on the churlish. Even if Osborne’s conversion does owe more to psephology than theology, that a Conservative Chancellor sees Government action on it as a vote winner can only be a positive thing in the long term.

That said, as the Westminster road show has quickly moved on to other matters, the issue of low pay certainly shouldn’t be allowed to be ticked off as covered or consigned to footnotes in next year’s election. Not least for the Conservatives because it will take more than one policy announcement to reach the type of voters that have felt long ignored by them

More importantly, the matter demands far more attention than that – and a great deal more anger among Westminster opinion formers than it’s currently granted.

It’s also not just about economics, but the withering of a basic social contract, and something that goes to the heart of what’s gone wrong with work in this country.

No matter what popular mythology tells us, a great many people don’t actually like work; it’s supposed to perform a function. The bargain used to be that if people looked for work, got themselves out of bed and contributed, they would at least be afforded the dignity and self-sufficiency of being able to pay for a roof over their heads and food for them and their kids. Maybe over time there’d come the chance of a higher wage or home ownership.

It’s an understanding that has sustained support for capitalism, through all its flaws, for generations. Ultimately it survived in Britain because it could – when run in the right way – put food on the table for the vast majority.

Now all of that is unravelling. People are putting more in but getting less out. Growth up and wages flatlining. The jobs market hollowed out, making social mobility even harder. Affordable housing disappearing, rents ballooning. Increasingly, people are subjected to having to rely on help of the state or others to prop them up – not momentarily, but permanently.

A miserable litany of facts bears this out, so numerous they could fill the rest of this page. To spare you and give just a few: over 90% of new claims for housing support are from people in work, while the Trussell Trust say half of people who need to use their food banks have a job. For the first time, more living on the breadline are in work than not. Two out of three children growing up in poverty do so in working households.

This applies to people who come here looking for a better life, too. For some reason, the likes of McDonalds and Costa have started to get their employees to bear a tiny flag of their home nation on their name badge. Visit one and the panoply of nations represented is a reminder if needed that these are the sort of jobs migrants do when they arrive: low paid and insecure. Its useful context for when politicians go headline hunting on ‘benefit tourism’. The number of migrants claiming social security is infinitesimally small, of course. But given most work, it’s likely that the bulk of those who do claim are in employment. Figures are hard to come by, but take the Working Tax Credit – 14.5% of its claimants are non-UK national, compared to 6.4% of out-of-work support (just 2.7% of JSA is claimed by EU migrants).

Contrary, then, to those who look to play people of different nationalities off against each other, their plight is a tiny part of a much broader picture affecting millions of their British neighbours and friends.

The sense of contributing more and getting less is echoed higher up the income scale too – higher tuition fees for the same standard of education; house prices up, quality down – but it is most acutely felt by those on lower incomes. It’s hardly any wonder so much of the electorate are so angry. Nor that many, grimly, take it out on those they (wrongly) deem to be getting an easy ride while they struggle.

Somewhere along the line, something has gone badly wrong. And given that low wage, insecure jobs are about the only jobs we’re creating as a country at the moment, it’s a crisis which will only get worse without action.

Even putting aside issues of GDP and central government spending, restoring that basic social compact of work providing a decent life is fundamental to restoring the spiritual and moral health of a country that calls itself first world. Certainly no one in public life can ever again talk credibly about ‘work being the best route out of poverty’, of opportunity or aspiration, without acknowledging it.

Tackling the cost of living is a vital part of this, of course, but it’s only one half of the challenge. Many uncomfortable with asking more from the powerful push lower tax as the answer, but even abolishing all tax on people on the minimum wage, at great expense, would still leave them with less money than a Living Wage paid by their employer.

Even at £7 an hour, a full time worker in London takes home just over £1,000 a month. The average private rent in the city is £520 a month per person for a flatshare. A Zone 1-3 travelcard: £136. Then there’s council tax, utility bills, and so on.

Far stronger across the board action on the Living Wage (and London Living Wage) is simply non-negotiable, not least as it would have a positive upward pressure on the wages just above it too. Employee representation on company boards also desperately needs to be strengthened if the distribution of rewards are ever to be addressed properly, and sectoral collective bargaining strengthened. These last two are partly what has distinguished the ‘Coordinated Market Economies’ of northern Europe which Labour rightly admires.

Needless to say we have not arrived at this sorry state through the failure of any one individual, government or even party. But that someone in Britain can now work a 37 hour week and still not be able to provide the basics for themselves and their family is a national disgrace, and the starkest symptom of how far we’ve fallen as a country. If our politics can’t fix it, we’ve every right to wonder what it’s there for.

Obama must make poverty reduction a priority for his second term

Piece for New Statesman website
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As Barack Obama prepares for his second inauguration in front of the Capitol building on Monday, most politicos are by now familiar with the demographics which helped put him there. Election night saw 96 per cent of African-Americans vote for the President; 70 per cent of Hispanics and 73 per cent of Asian Americans. Less dependent on traditional independent voters, the Democrats 'expanded the electorate' by boosting turnout in these communities. 

That this causes a problem for the Republicans has quickly become conventional wisdom. It's been little noted, though, how the demographics of 6 November create a challenge for the Democrats too. An important component of the Obama campaign's "get-out-the-vote" (GOTV) effort was the President's personal appeal. There was a pronounced sense of a personal connection between many non-white voters and Obama, and of protectiveness (of which race was one but not the only factor).

The question for 2016 is, how do the Democrats maintain that level of support without Obama on the ticket? They are unlikely to find a candidate with the charisma, backstory and platform to match Obama, whose breakthrough was a truly once-in-a-generation event. 

The answer can only be that, from the White House to the Senate, Democrats need to go further in the next four years to deliver on substance for these communities. Here, immigration reform is often mentioned. But just as pressing is the indelible link between race and poverty in America, particularly in urban areas.

Far too many of the majority black neighbourhoods that helped deliver Obama's re-election in states like Virginia or Ohio continue to be blighted by hardship. A litany of grim statistics bears this out. More than 1 in 4 African-Americans and Hispanics grow up in extreme poverty - with millions struggling just above this threshold. Forty per cent of children in African-American communities grow up below the poverty line (the US is ranked 34 out of 35 of industrialised countries when it comes to child poverty). Poverty is not of course simply an ethnic minority issue – but they are clearly disproportionately affected.

None of this is new. The statistics are familiar, and wash over many American heads by now. But as Michael Harrington once wrote in his seminal book on the subject, The Other America, "you can rationalise statistics...but you cannot rationalise an indignity". Nearly fifty years after Martin Luther-King said that "I have the audacity to believe that peoples everywhere can have three meals a day for their bodies, education and culture of their minds, and dignity, equality, and freedom for their spirits", a significant chunk of the US is still held down by hunger, violence, illness, poor education and precariousness. And sadly, that number has increased since 2007.

Anyone going door-to-door in the election in some of the poorer parts of places like Franklin County in Ohio would have found many who benefited in some small way from the President's first term. Particularly so on healthcare. Stimulus spending and his general stewardship of the economy have also stopped a total collapse in living standards. It could have been a lot worse.

But, as the likes of Paul Tough have argued brilliantly, this is not the prospectus on poverty that Obama the candidate first emerged on. Then, he gave speeches – like the one in Anacostia which Tough details – arguing for a wide-ranging approach to poverty in America. Higher minimum wages and better union representation featured, but also specialised parenting, nutrition and early education programmes. 

If the campaign was anything to go by, the prospect of returning to this seems weak. In the parks and multi-purpose arenas in which Obama delivered his campaign stump speech, the mention of poverty was noticeably scant for a candidate largely relying on GOTV among poor neighbourhoods. If it was name checked it was in a more conventionally liberal way, usually about the need for more teachers – rather than at the heart of his moral vision as once before; his words had lost their transformative edge. As some observed, at times it was like listening to a John Kerry speech.

Prior to that, in office, Obama put up none of the fight for an increase in the minimum wage that he had pledged. He gave not one single speech on poverty itself. Many of the programs he once envisioned exist but remain under-funded and minuscule compared to his initial vision. The basis of union organisation remains weak, as legislation aimed at strengthening it fizzled out early on.

Little of this is Obama's fault alone, of course, but it speaks to a nation's priorities. It's part of a wider cultural blind spot in the US. As Harrington wrote all those years ago, a key dimension of poverty in America is its invisibility to many people. There are certain neighbourhoods most folks don't go into, certain parts of town many go their whole lives without seeing, especially in places like Washington. There's little space in the 'American dream' narrative for those who don't pull themselves up to greatness, or the middle class, but who quietly struggle for their whole lives. It's time the President carved one.

As in the UK, the problem is one not just of unemployment but perilously low wages and economic insecurity. The percentage of those working but still in poverty is at its highest in nearly two decades; average wages are in a thirty year slump. And more and more Americans are falling closer to the threshold. 

For this reason, it's particularly welcome that Obama prioritised, fought for and won protection of the Earned Income Tax Credit and Child Tax Credit in the recent fiscal cliff negotiations, which the Republicans had earmarked for abolition. Beyond that, though, he urgently needs to rediscover the spirit and ideas that animated his early words and interventions on poverty, like the one in Anacostia. African-American community leaders are gathering this week to pressure the President into making urban poverty a priority for his second term. 

There's no doubt that Obama remains a deeply intelligent and thoughtful man, of authentic social compassion. But his record on poverty is a case study in his journey from transformational candidate to good, solid but unspectacular liberal incumbent. He is said to worry about his place in history in this respect, and has asked historians how he can match up to likes of Lincoln. Bringing poverty out from the political fringes offers him this opportunity. For the Democrats, too, it can no longer be dismissed as a 'core vote' concern which turns off swing voters – if they are to replicate 2012's voting coalition in 2016, turnout among minority voters is the swing vote. They will need to act and deliver on a malaise still ubiquitous in far too many of those voters' lives. An electoral imperative has been given to an issue which should long ago have been a moral one.

Post for ShiftingGrounds--

The rise of resentment in America

Three days on from the re-election of President Obama, the hangovers that followed a night of celebration for Democrats have receded. As a nice bonus, the Republicans, by contrast seem to be facing a four-year long headache. The inquisitions and post-mortems have already began. Demographic shifts have altered the political landscape to leave them with a challenge on par in scale with that faced by the UK left in the late 70s and early 80s.

As it turns out, the GOP didn’t understand (or even want to) the nature of the country they so often profess to love. But if the emphatic defeat of Mitt Romney is provoking head-scratching from the US right about America 2012, it should also cause pause for thought among their bedfellows in Britain who – judging from coverage before and in the run up to the election – don’t seem to have updated their view of the country in twenty-odd years.

As Dan Hodges noted of his Telegraph colleague Tim Stanley back in September, these days “the problem isn’t actually with Lefty idealists transposing their dreams on to Obama. It’s Right-wing idealists who transpose their ideological romanticism on to the United States in general.”

In particular, a cornerstone of this is the notion that Americans have no patience for ‘European-style’ attacks on wealth. The story goes that broadsides on those at the top, calls for them to pay more in tax or curb profit-seeking, are resented by ordinary Joe’s who one day think they could be that millionaire chief executive or investor. Money men are always respected, success never resented, we are told. If we “don’t do God”, the Americans don’t do class politics. For years the British right – aghast at their countrymen’s growing resentment of the top 1% – have gazed longingly over the pond and repeated these mantras.

The plutocrats in the US have long spun the same yarn: bashing a billionaire isn’t only just wrong, it’s un-American. One of the stories of this election campaign, though, has been the total unravelling of this narrative.

For those of you raising a sceptical eye-brow, consider this. Romney ran for President on the basis of being a rich man – a successful businessman – and he lost on that same basis. His entire pitch was that as someone who had made it in the private sector, he knew how to create jobs and get the economy going. In times gone by this would have gone largely unquestioned and unparsed.

However, the Obama campaign (in a move straight out of the Rove playbook) turned this supposed strength into a weakness. Those in the Obama camp arguing for an attack on Romney’s record at Bain Capital won out over those preferring to hit the Governor on the safer ground of being a ‘flip flopper’. From early on the campaign sought relentlessly to define Romney in terms of what he actually did to make his money: outsourcing, asset stripping, firing at will, tax dodging. In doing so, they peeled Romney’s supposed ‘experience’ away from ideas of enterprise or wealth creation. And it worked. His reputation never fully recovered. In the home of free-market fundamentalism, Obama’s team were able to pick and win a fight about predatory verses productive capitalism.

This approach was replicated in the furthest reaches of the campaign. Again and again the Obama campaign counter-posed their candidate’s platform “For All”, as the campaign sticker blared, with that of Romney’s. Over and over, the phrase “millionaires and billionaires” tripped from the tongue of Democrats with scorn any time GOP plans were discussed (so much so it upset those poor dears on Wall Street). Tax rises on the very wealthiest also formed a key policy plank for Obama, as he separated the top 1% out from the broader ‘middle class’ in his tax plans.

All this is no small feat, and took some degree of courage when you consider Fox News has spent the past half-a-decade screaming that the President is some sort of Bolshevik. But the space for it was only made possible by a growing anger among swathes of American society at the country’s wealthiest business and financial elites. This comes not just from the financial crisis, but years of declining wages and living standards, as well as Wall Street excess and the saturation – ratcheted up since Citizens United – of US public life with money, SuperPACs and special interests. Romney’s categorical defeat at a time when all the economic indicators suggested he should have won will be remembered as the time that the groundswell of anger at the super-rich that has built up in Europe over recent years reached American shores, and swept the Republican candidate away.

Quite obviously, the US has not suddenly become a socialist nirvana. American society is still beset by huge disparities in wealth and power, and little basis for its transformation exists in a politics where the most progressive US president in forty years has governed as a pretty conventional liberal by UK standards. If taxes on the wealthy do go up as planned, it will only be to where they were under Clinton – far from levels as recent as the 1970s.

But the way in which Romney was defeated is nevertheless important. Fundamentally, it chips away at a notion that has proven vital to the maintenance of the status quo: that the behaviour of the wealthiest is somehow inexorably linked to the public good, and that anyone who is good at money-making must automatically be good at governing or economics, and afforded special status.

It also means that insufferable sirens of the Thatcherite right have one fewer place to point to in the world where their brand of rapacious economic sadism enjoys broad public support. That once-vaunted bond between free-market capitalism and liberal democracy just got weaker still.

Cameron strikes some nice notes, but plays the wrong tune

Post for Shifting Grounds

Cameron strikes some nice notes, but plays the wrong tune

There’s no doubt that David Cameron’s speech to Tory party conference yesterday was one of his better ones since becoming Prime Minister. In some ways it was his most Presidential, not just in the personal touches woven in throughout, but in his attempts to transcend national politics and sketch out a vision of a new frontier – in this case, the new global economy – and place Britain at the heart of it  (sometimes called a ‘moon shot’ in US politics). We are, he said, in a “global race” with new countries on the rise, “sink or swim. Do or decline”.

Cameron also had strong dividing lines on welfare and schools – two issues Labour has no settled position on, but will clearly need to have in the next few years.

But the speech had a fatal weakness. At its core was a diagnosis of a country full of budding businessmen and women and ‘can do’ creatives, being held back by a bloated state and unreformed public services. The solutions that flowed from this were predictable enough – hack back the state, reform welfare, get the deficit down, liberalise school provision. Growth will naturally follow.

But this fundamentally misreads British politics today. Most people won’t become ‘entrepreneurs’, and most don’t want to. They just want to get on, get a good job, earn decent money, provide for their family, and lead happy and fulfilling social lives. The biggest impediment to this in 2012 is not the welfare system or planning laws, but an enormous squeeze in living standards and an economy that only works for those at the top. Wages are stagnating, jobs hollowed out, yet utility bills, rents, train fares, tuition fees and mortgage deposits are all rising (this is the true face of ‘Britain on the rise’ under the Tories). And so are bankers’ bonuses and executive pay, all the while SMEs – a real engine of jobs – can’t get access to finance, and young couples can’t get on the property ladder.

Even those traditionally upwardly mobile parts of the population – at whom the speech was clearly aimed – are suffering from this squeeze. Polling for Southern Discomfort Again showed that between 41%-47% of floating voters in key middle class marginals say they are now not confident they have enough money to make ends meet. As Lord Ashcroft’s polling shows, a key feature of the ‘suspicious strivers’ group he identified is economic insecurity and precariousness.  The squeeze is also having obvious effects on demand and consumer confidence – without which all the “diplomatic showrooms” and ankle flashed to multinationals matters not one jot. Economically and electorally, post-crash Britain is defined more by strugglers than it is by strivers.

To this backdrop, a speech about the ‘global race’ in the new world economy, or unleashing a nation of Steve Jobs style entrepreneurs, is a little arid and far off. It’s not irrelevant, it’s just remote; a bit mid-1990s. On the real day-to-day challenges and anxiety facing people already in work, Cameron had little to say. Bank reform did not feature once in his speech, nor energy companies, or even the words ‘bills’ or ’wages’. The Prime Minister may have struck some nice notes along the way, but he played the wrong tune.

The truth is, most of the obstacles holding back prosperity in the UK and our place in the world come not from an unreformed public sector, but an unreformed private sector. That a Conservative Prime Minister, who came to political maturity in the age of neoliberalism, feels uncomfortable talking to that challenge is not surprising. But it ultimately leaves him unable to connect with the lives of people he needs to reach to win.

It is this divide that Labour needs to put the Tories on the other side of. The party needs to find a consistent line on welfare and schools, but it can’t allow the election be fought on this ground. They need to make 2015 an election about living standards and the squeezed middle; who wants an economy which puts money in the pockets of ordinary people, and who only looks out for the top 1%. Making banks and energy companies work for people, an active industrial strategy, even tax cuts at the bottom or middle paid in part by rises at the top – all, among others, have a role to play. On this divide, the Tories are extremely vulnerable – because they simply don’t grasp Britain’s living standards crisis to begin with. However eloquently delivered, David Cameron’s speech yesterday proved that.