Well it’s probably got nothing to do with gender then, does it?

“Women working for the Conservative minister responsible for closing the pay gap are paid an average of almost £2 per hour less than men, it has been revealed.”

So, the Indy has it that Nicky Morgan’s Department of Education (who has a dual brief as an education and equalities minister) is paying women £3000 a year less than men. Except, as usual, this is is wrong. Grouping the pay of all women vs the pay of all men doesn’t tell you anything in particular, but it does bore most people because they know that it will lead to a pointless discussion about sexism that doesn’t exist. (I am also not so sure why they are attacking Morgan when it is the responsibility of the Treasury to administer pay.)

As with all of these things, it is illegal to pay men and women differently because of their sex. It is entirely legal to pay people differently based on experience, years worked, etc. This is what we find whenever we look behind the headlines on this issue.

What we really see is that there is a motherhood pay gap, because of the enormous amount of time and effort it takes to raise a child, particularly in the early years (there is also the interesting fact that fathers earn more than non fathers). This is also compounded by having multiple children (obviously). Not to say that having children isn’t a joyous experience for many, but it is a simple fact that women will have to take time off to have children.

Shouting sexism or racism all the time doesn’t help anyone at all (tagged by the Indy under sexism), so get onto the point and for crying out loud, have a debate about compensating mothers for having children, because that is what is really about.

Remittances in China aren’t all they are cracked up to be

 

There are huge amount’s of people moving around in China, and moving around for work; up to 274 million people. Like most migrants, they tend to go to earn higher wages, and this add’s up to a lot of money, with estimates of to 300 billion yuan being sent back by economic migrants to their families. A presumption that can and is made is these higher wages are beneficial for the children left behind because they are being sent back, and then have more money spent on their education. This however, might not be the case..

“When it comes to budget components, we find that remittance-recipient households allocate a smaller share of their budget to education than non-recipients do, and we thus add evidence to the possible negative effect of migration on education outcomes of children who stay behind.”

The households with migrants leaving spent on average 325 yuan per child, whereas households where the parents stayed spent nearly 500 yuan per child. Although households which are receiving remittences are spending more, this is going on consumption and not being invested in human capital. Now while we may well enjoy the increased consumption, we would probably enjoy the benefits of more education and therefore more wealth in the future a great deal more.

“The ones left behind are less likely to value education, and therefore less likely to spend on this particular expenditure component. This could be the case when migrants are parents who leave their children behind, under the care of (less educated) grand-parents.”

It is also strange that result isn’t repeated in other countries which have large recipient communities, such as Ghana, Guatemala, Ecuador, Colombia, Mexico, the Philippines, Nigeria and Eritrea. This may well be that the benefits of education are touted more often in these countries, it might be because of the effect that motivated and skilled parents can have on their children (influencing them to do better but having lower wages themselves as a result) or might be because the returns to higher levels of education are not so easily recognised by the carers for the children. This is an important point to think about as we usually tout the benefits of remittences, and see them as generally quite effective in promoting growth.

 

What is driving the African growth miracle? Capitalism

I love it when you read an abstract that reaffirms everything you know, because I quite like an easy life. “What is driving the African Growth Miracle?” is a paper I have come across again recently, and generally confirms what we know about developing economies, or rather, the process by which they develop.

We show that much of Africa’s recent growth and poverty reduction can be traced to a substantive decline in the share of the labor force engaged in agriculture.”

The agricultural labourers losing their jobs is of course a good thing; it tells us that we don’t need to put as much labour into feeding ourselves, and therefore we can go off and be much more productive elsewhere.

Agriculture doesn’t need that much labour to feed us all, what with mechanisation and more efficient farming methods we can enjoy much more food with half the workforce. This is of course what the definition of increases in productivity means; more for less (and usually a better more).

As many other have argued, one of the great strengths of Capitalism is that it continually improves productivity and thus makes us all richer. Smith said it, Schumpeter said it and no one now disputes it because it is true. More from the paper;

This decline has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity manufacturing and services.

Good. Agriculture is a low productivity sector, and industrialised jobs produce more. This not only makes people who live on the African continent richer, but us richer too, as we can trade higher value items, and enjoy the benefits of those trades too. Here is to more exploitation of Africa!

 

If McDonnell is discussing UBI, we really should be too

John Mcdonnell, the Shadow Chancellor, is giving a series of talks with high profile left wing economists and thinkers. At his talk on Tuesday, where among other things, he completely misunderstood Googles tax arrangements and mentioned Hayek of all people, he spoke of a universal basic income, the idea all citizens should get an amount to live off and that be that.

I know it is fashionable to have a go at the loss making Indy, but God Almighty this article was thrown together 5 minutes before closing time. There is no actual link to his exact quote, there is nothing of what a Labour policy would look like, and although it is believable because of what they were discussing, you could put “considering” after pretty much anything anyone has said. For instance, Jonathon is “considering” suicide after reading the Independent.

Anyway, since the McDonnell quote offers a way into discussing basic incomes, lets do that. The amount referenced by the Independent comes from the Royal Society for the encouragement of Arts, Manufactures and Commerce, which floated a figure of £3, 692 a year or £71 a week for people aged 25-65. This is also what an ASI report found, the difference being that they called their proposal a Negative Income Tax , while the RSAMC confusingly but for understandable reasons (Negative.. bit negative sounding) referred to their proposal as a UBI.

The actual difference between a NIT and UBI is that the former is based on the tax system in the form as a top up to income, or a minimum income if you earn nothing at all. As you earn more it is taxed back off you, like child benefit is, while a UBI is cash given, with then some ambiguity on where the money comes from to pay it. The work disincentives for a UBI are quite bad, because if you have just enough to live, then why not sit around all day. A NIT is a system in which you keep more money for each pound that you earn, with say a tapered withdrawal rate of 40p, so there is at some incentive to go out into the wider world, work and seek higher wages.

I like people working because you know, I am an evil capitalist who wants to crush the human soul it is how a modern economy works, and makes me and you richer. But also, unemployment has been very strongly associated with depression, lower levels of happiness, mental health issues, and poor self esteem, which we don’t like at all.

Since we probably should be thinking about the future of work, where low productivity labour will either be priced out by minimum wage increases or simply unable to provide enough to have an acceptable living standard, this is probably something we should think about.

NHS, really messing it up edition

This is quite terrifying;

More than 1,000 NHS patients in England in the past four years have suffered from medical mistakes so serious they should never happen, according to analysis by the Press Association.

I had someone very dear to me in hospital yesterday for a relatively simple operation. As expected, the operation became the ordeal, with what should have been a 6 hour visit turning into a 13 hour one. But this looks likes a lucky escape..

never events included the wrong legs, eyes or knees being operated on and hundreds of cases of foreign objects such as scalpels being left inside bodies after operations.”

254 so called never events occurred from April to December 2015. These include going in to surgery in terrible pain as a young woman with appendicitis, and waking to find that your fallopian tubes have gone instead. aThere was also the case of the bloke who’s enthusiastic surgeon had removed a testicle rather than the cyst the surgeon was briefed to remove.

Envy of the world? Really?

Sounds like good value for money to me

Today, the Indy is continuing it’s valiant campaign against an organisation that can attract monetary support by highlighting a £4000 a year donation made by Neil Record, a trustee of the IEA, to Matthew Hancock, who last week announced that charities can no longer use taxpayer money to lobby the government. Not that they won’t receive Government money, but future contracts will prevent lobbying on the taxpayer pound.

Think about this. A charity receives money from the taxpayer, which hasn’t been given voluntarily but possibly deserves because the Government judges it to be doing good work, and wants to support a specific programme. Fair enough, if an efficient charity is doing a really good job then I don’t have much of a problem with it having a guaranteed income to do this, because they probably are helping a great number of people.

But then it then uses this money to lobby the Government to account for its particular preferences, and not on the intended purpose, which is to help it’s beneficiaries this is not a good thing. These preferences by the way, were usually demand for, urm, more taxes to be raised and the Government to restrict adults from harmless activities.

WHAT THE HELL IS WRONG WITH GETTING RID OF THIS?

So, back to the IEA for a moment. In 2009, the Devil started to log the amount of money that charities were receiving from the Government under fakecharities.org. Many years and many hard work hours later, Snowden was able to write a few reports for the IEA on the sock puppets the Government has created; because the practice was so completely wrong, charities now have to spend the money that they receive from the government on what the contract states, which will not be to lobby the Government. Hence the huge hissy fits from charities, and the Independent, which is so wrong on so many issues that it is shutting down. What a shame.

The Independent really doesn’t like the Institute of Economic Affairs. Last week they ran a pretty inaccurate report on an evil neoliberal conspiracy to leave the EU, with “close links” between the some IEA staff members and Vote Leave. A subsequent poll of IEA staff members found pretty mixed opinions of Brexit, and the IEA as an organisation doesn’t have an opinion because it is an educational charity, so urm, yeah conspiracy.

From the soon to be dead Indy “They (the rock solid analysts) cast doubt on how independent the research really is or whether it comes with a broader anti-EU agenda that is then used by the campaign groups to make the case for Brexit.

I don’t mean to be facetious, but there actually is a possibility that there is an economic case to leave the EU. Shock horror.

Back to the point at hand. Even the clickbait infested Indy says “There is no suggestion that the donations broke any rules or were not properly declared.” Probably because it had nothing to do with the policy change; occasionally, politicians get things right. On such an obvious point, we should be thanking Hancock for ending this practice of throwing money away.

But allowing myself to think the conspiracy theorists who drafted the headline for a moment and think that policy is decided by money; £4000 is pretty good money to end a multi million pound bonanza.

Is this because the elderly aren’t all that thick?

Under certain assumptions, the estimates suggest that ageing societies will tend to become less averse to open immigration regimes over time.” This doesn’t surprise me at all. On the first point (paper here), as the authors Simone Schotte and Hernan Winkler point out “The old not only differ from the young in terms of age, but they were also born and raised in a different time, in a different economic and institutional context.” It is quite obvious to anyone who has parents, that back in their day it weren’t as easy as it is today son.

When we (young uns) get old, it is quite clear that our attitudes to immigration are going to be quite different to those who went before us. My generation for the most part has grown up in a much more diverse set of surroundings, and the young are the most supportive of immigration anyway. Unless  we currently think that immigrants come and take all the jobs, depress wages or sit around all day claiming benefits, we are unlikely to think that in the future, especially since it doesn’t seem to be true.

Taking a deeper look into the paper, we can read lovely sentences such as this one, which reinforce the previous point “Theories and research in the fields of sociology and psychology show that political attitudes and opinions are shaped during youth and tend to remain stable over the life‐cycle (Alwin and Krosnick, 1991)” I reserve judgement on whether this is a good thing or bad thing when it comes to political attitudes.

But, on a second point, I don’t think the next crop of old timers (50’s) in the Uki s all too out of touch, so you can call me on it in 2025 when the current (70’s) have started to die off. Anecdotal again – the elderly people I know, 70’s plus, are in my grandfathers words “too old to give a shit anymore”.

For one thing, the people who are going to be caring for them in 25-30 years time are very likely to be from abroad, and there is also the pressing question of who is going to pay for it. Well, according to the ONS, the immigrants are, because without them it looks very bleak indeed. I may well be proved wrong, but as Keynes said, in the long run the old attitudes will die out. Or something like that.