Title: Citizenship in America and Europe: Beyond the Nation-State?
Author: Michael S. Greve and Michael Zoller
Publish Date: 2009
Publisher / Edition: AEI Press, 2009

The collapse of the Soviet Union transformed the political landscape of the West no less profoundly than it did that east of the former Iron Curtain. Long moribund but virulent nationalisms were quickly aroused in the Balkans, as were equally intense tribal rivalries in several of the Soviet Union’s former client states in sub-Saharan Africa. Ensuing civil war and violent conflict led a large exodus of refugees from these troubled regions to seek asylum in the West, along with many economic migrants, whose numbers were swollen by the large international population flows that attended the sudden global expansion of capitalism also triggered by the Soviet Union’s collapse. In Europe’s case, foreign immigration was further augmented by the opportunity the Soviet Union’s collapse presented Germany to reunify and many of the Soviet Union’s former satellite states in East Europe to join the European Union.

Read the rest at the Library of Law and Liberty blog

The recent media interest in the Occupy Wall Street and Occupy London Stock Exchange movements has certainly been mixed. From sympathy to contempt to exasperation on the part of St Paul’s cathedral staff at least, the protests and people’s reactions to them are proving difficult to pin down.

Besides the recent accusation that protestors are at best “part-timers” (based on thermal imaging evidence that is somewhat disputed), there is also an accusation that the protestors are not putting forward any concrete, viable demands. The diverse reports about the protests and the many generalisations that seem to be made about those engaging in them, is perhaps indicative however of a deeper problem: the inability of society to engage successfully with government on the major issues of the day. Rather than dismissing the protest movement as utopian or aimless therefore, perhaps it is time that the government not only introduced more ways to inform the wider population about the banking reforms under discussion, but also gave them the incentive to learn by opening up avenues through which people could make their suggestions for improvement heard.

Although the media makes a valiant effort to explain developments in the financial system, it is little wonder that large swathes of the public either don’t understand or don’t trust the recommendations housed within the 3000 pages of the Dodd-Frank Bill and the 300 pages produced by the Independent Commission on Banking. Not only are the reforms set for completion in a distant future, but there is little faith that the Dodd-Frank Act in particular will improve financial stability given the influence the banking sector itself had on its creation. The government might be wise therefore to attempt to include a wider spectrum of people in the drawing up of future reforms and in the implementation of ICB recommendations.

During the 18^th century, if a controversial issue was raised in Parliament, it was not unusual for the British government to specifically request that petitions and further information be sent by constituents to their MPs. This meant that groups likely to be affected by the particular issue would be encouraged to come together in order to write to their MP explaining how the proposed legislation would affect them, either for better or worse. In this way, government could put together a clearer picture of “public opinion” on the matter at hand before debating it fully. Although the definition of “the public” may have changed since then, the spirit is still laudable and perhaps it is time that this spirit of public involvement was revived. The recent e-petition scheme is a step in the right direction but there is still a considerable level of scepticism amongst MPs that the petitions it might generate will be worthwhile – this attitude must change to prevent total disenchantment with the democratic process. The wider population deserves to be given more opportunities to make their voice heard without being branded as inconvenient, ill-informed, insincere or necessarily anti-capitalist. After all there is a great difference between being against capitalism and being against a banking system that favours banks considered “too big to fail”.

It is true that protestors need to spend more time defining their demands and finding like-minded people, even if this means splitting into smaller groups. The risk otherwise is that they will all be classed under the same umbrella and be judged as too disparate a group to possibly talk with a coherent and valuable voice. However, the government can also improve the situation by spending more time informing a woefully uneducated public on the complexities of the financial system and showing greater willingness to listen to them. They might achieve this by encouraging petitions or by encouraging MPs to hold information-gathering exercises within their local constituencies, which local businesses or members of the community could attend in order to put forward their opinions on the banking crisis. The process might not be perfect but it could at least signal a step towards a more successful engagement between a public who knows what it wants and a government that is prepared to hear what they have to say.

Stewart Lansley’s report for the TUC on ‘Britain’s Livelihood Crisis’ documents how many middle and low-income jobs have witnessed below-average growth in real levels of remuneration since the late 1970s. According to the report ‘skilled motor mechanics’ witnessed earnings growth of just 34% between 1978 and 2008 compared to a median of 57%. Some occupations have even witnessed declining levels of remuneration, for instance ‘fork lift truck drivers’ have seen their wages fall by 5% over the period. In contrast professionals, those in high-income jobs, have seen above-average growth, solicitor’s earnings rising by 114%.

Moving from employee remuneration to industrial competitiveness, the CPS analyses a number of international studies, noting Britain’s movement down the league tables. Looking at the ‘Global Competitiveness Report’ and the ‘World Competitiveness Yearbook’ Ryan Bourne and Jon Wilson highlight how, since 1997, the UK has slipped from 7^th to 12^th in the former, and 9^th to 22^nd in the latter.

If both the TUC and the CPS are right then Britain is becoming a less competitive place to do business, where some employees are suffering below-average wage growth. Can the CPS and TUC find common cause in addressing some of Britain’s economic woes? Not likely, this is clear when the reasons for these problems are discussed.

The TUC believes that Britain’s ‘livelihood crisis’ is the result of the country turning away from ‘welfare capitalism’ and embracing ‘market capitalism’ in the 1980’s. Deregulation and the acceptance, by both political parties, of the need for freer markets, has resulted in growing inequality. The cure – a ‘post-market model’ in which the Government intervenes in the economy to create more evenly-spread economic growth.

In contrast, if the CPS accepts the TUC’s diagnosis of the problem (which I doubt it would), its remedies certainly differ. For the CPS Britain’s economic future can only be secured by lowering taxes, removing restrictive (in particular employment) regulations and shrinking the size of the state and the deficit. In short the CPS wants a fuller expression of ‘market capitalism’. Providing support for their conclusion the authors of the report cite Britain’s fall down the ‘Index of World Economic Freedom’, from 5^th to 16^th between 1997 and 2011, as indicating how economic freedom is tied to economic growth.

It is perhaps unsurprising that the TUC and the CPS disagree and perhaps both would feel the other is incorrect, both in their diagnosis and proposed remedy. However, a more worrying thought is that both are correct. The TUC correct that market capitalism creates inequality, the CPS correct that market capitalism is necessary for strong economic growth (which the TUC concedes has occurred in Britain since the 1980s). If this is the case then one of the inherent characteristics of a dynamic market economy is a high level of inequality. I am aware that sceptics of such an idea will point to the Scandinavian economies as evidence you can marry economic growth with relatively equality, but this does not necessarily mean that Britain can replicate their success.

Of real concern is that if both the TUC and the CPS have diagnosed the current situation correctly, then solving Britain’s problems may involve a trade-off between economic growth and equity. Rarely is such a trade-off discussed, commentators on the right and the left preferring to argue that their solution can increase everyone’s utility. I for one, hope that one side, or indeed both, is correct and that economic growth and equality can be achieved. However, if they cannot, it could be time to discuss where priority should lie.

Wading into the debate over whether Clegg, or any others are hypocritical for their views on unpaid internships is a good way to avoid the argument.

Clegg claims unpaid internships are discriminating against the less well off, and as they are a vital leg-up in the world of work, this is a real hand-tied-behind-the-back problem. Without the internships they can’t afford, the best jobs will be closed off to them and social mobility will be stunted.

This may be true to a limited degree, but the majority of highflying internships are paid and those that aren’t are a reflection of the tough economic times. Major banks, law firms and consulting bodies all offer remuneration, negating Clegg’s argument, while others that aren’t paid are still satisfied by the quality of intern they bring in. If people didn’t want them, there would be no takers. The real unpaid phenomenon appears to be concentrated in the world of Westminster – perhaps his announcement was the sign of a guilty conscience…

Are unpaid politico roles socially backward? As MP Jake Berry said, his unpaid internships were ‘more along the lines of work experience’. This holds true for a significant number of wageless positions. Their length is often less than paid ones, weeks rather than months, and their responsibilities fewer. It would be a folly to rely on someone who isn’t actually obliged to turn up for work in the morning.

In these short periods, the intern is likely to be getting far more out of the experience than the employer, who will be training someone up and may only get a few weeks’ real productivity. The tables then turn when the length increases and the employer is gaining a real asset – and should pay for the privilege.

Other than the obvious free labour, which some companies will inevitably exploit, unpaid internships make it easier to hire – knowing that your intern isn’t workshy means recruiting is much easier and for some SMEs, the ability to offer unpaid roles could mean the difference between deciding whether to take on a new employee in the first place.

The real issue is perhaps less socio-economic than geographic. The vast majority of internship-offering firms are in London, and if you don’t live in or around the city, hard cheese. There are few, regardless of class, who could afford to rent temporarily in London for the duration of an internship, and at that level, whether it is paid or unpaid will make little difference.

Interestingly, given many unpaid internships cover travel expenses, this can be a better bet for some interns living in far flung locations with huge travel costs that the minimum wage but no travel expenses could not cover.

Does there need to be a resolution? Perhaps – Clegg raises an interesting if precarious point, but there should really be a limit to the time one can work unpaid. The real problem, of London being inaccessible, is something neither Clegg nor the Government can do anything about, except maybe to significantly lower the outrageous cost of train travel etc, making it affordable to commute in and out of the city.

Like the minimum wage, the unpaid internship has voracious defenders and opponents, but for once, it would be good to see the political argument based in reality rather rhetoric.

(In the interests of openness: Civitas offers unpaid internships up to a maximum of 6 weeks. Paid internships are offered for a commitment of three or more months)

It is a pertinent adage that the ‘devil is in the detail’, but perhaps an even more relevant expression for the new Government and its localism agenda should be: ‘genius is one part inspiration and nine parts perspiration’. If David Cameron et al have given us the inspiration with their conception of the ‘Big Society’ and a bottom-up approach to government, it is the perspiration of local governments, and ordinary British citizens which is required for these ideas to work. The TGLP seminar provided a very useful insight in this regard, with much of the discussion centring on how local governments can take advantage of new Governmental initiatives for financing local and regional development.

The prospects for the London Thames Gateway, and in particular the ‘Golden Triangle’, the area stretching east from Canary Wharf to London City Airport, and north from the O2 Centre to the new Olympic Park in Stratford, are, by the admittance of those who attended, bright, at least more so than many other areas of the country. However this is not to underplay the issues which face local governments in the London Thames Gateway, as they are indicative of the problems faced by all local governments in responding to new economic and political conditions. One area of particular uncertainty is the role that public spending and central government investment will play in the future.

Discussing this issue was the keynote speaker Tony Travers, who spoke on how local government can stimulate growth without central government investment. Mr Travers described the current situation as a ‘new world’ in which the financial relationship between central and local governments would change, from one where local governments relied on grants, to one where they must take advantage of incentives. ‘Business Improvement Districts, ‘Local Enterprise Partnerships’ and ‘Tax Increment Financing’, are just a few of the many incentives local governments can take advantage of, all carrying with them opportunities, but more importantly, also posing significant challenges.

Nowhere is this more apparent than with the plans to allow local authorities to retain the business rates levied on business premises. For many advocates of localism (including this author), such a move is widely welcomed, however it will add a new dimension to local government’s financial decision making. Mr Travers predicted that in the future successful local authorities will be proactive, have developed planning skills and strategically base financial decisions on expected future revenue streams, something which some centrally-funded councils have little experience of. Successful councils will use incentives, such as ‘Tax Increment Financing’ to implement successful infrastructure developments which expand the council’s tax base, failing councils will not do this, or will do so unsuccessfully, producing wasteful funding outlays which decrease the likelihood of future action. Similar pitfalls could affect councils who fail to, or unsuccessful use incentives such as the ‘New Homes Bonus’, the ‘Business Rate Supplement’ or the ‘Community Infrastructure Levy’ as all involve councils making decisions which could affect both their future and current revenue streams, placing them in an improved or weakened financial situation.

All this is a far cry from the situation where local councils’ economic independence was sacrificed for financial security. One delegate warned that ‘local government should be careful what it wishes for’, a warning perhaps reflecting the fact that (in Mr Travers’ words) ‘councils are more exposed than in the past to the vagaries of the economy’. This exposure provides an opportunity but also a danger for local governments.

The question then is what can be done to improve the prospects of success for local governments in this ‘new world’? The answer seems to lie in the adages cited above; localism will only be successful if local governments know how to properly take advantage of the incentives and freedoms provided, the ‘detail’ and the ‘perspiration’ must be got right. To this end, the Government and local governments must be encouraged to expand the dialogue and discussions about how they can prepare for greater autonomy, indeed events like the TGLP seminar are a vital component of this.

In the long-run, localism and the devolution of power will hopefully help produce a more responsive, more efficient, leaner state, which is necessary if Britain is to tackle its burgeoning public debt and the future public expenditure commitments for an ageing population. However, the danger is that in the short-term localism will exacerbate regional disparities and exacerbate the financial and social problems of poorly-run authorities – this must be avoided.

The full press release is available here

Economic Growth – Could the Government do more? is available here