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By playing fast and loose with the Northern Ireland protocol, and even wishing to overrule the international rule of law previously, it is clear that the current Government has no intention of being respected – or even liked – in the world. Even though Boris Johnson may feel a temporary grandiose delusion, pretty much in keeping with a narcissistic persona, of British exceptionalism when talking about his contribution to the conflict between Ukraine and Russia, it is patently clear that if the conflict escalates to involve the European Union more including neighbouring countries things will change more. That is, Britain will ‘feel’ its identity as being a geopolitical loner. It already has had a taste of being a loner with the perception from France, and much of the world, that Britain is now a laughing stock. British people, especially Scottish and Welsh citizens, need to prioritise not being tarred with the same brush. British conflict with France means that Britain will remain unsuccessful in ‘securing its borders’. Immigration policy is fitting for Priti Patel’s Britain: having an immigration issue getting more out of control, and yet having a lack of freedom of people inwards to keep key industries going, whether that be lorry drivers, fruit pickers, or people to wipe your grandma’s arse in the care home.
The problem with the populist media, and the stereotype of the Red Wall, is that they collectively are dragging the rest of us down. The stereotype is that they’re at home watching Ricky Gervais, fist pumping attacks on ‘women’s with penises’, but all along they’re simply sticking two fingers up at the people who stole their jobs. Fine, this is a stereotype. But why has their war so far been on lawyers, NHS, GPs, the BBC, Starmer, people who care about equality, University academics, and so on. It is all nonsense. This all points to an arrogant Executive, loving their freedom of speech but suppressing the feelings and views of others, a deeply nasty autocratic authoritarian state. The fish rots from the head down and Starmer’s difficulty is that he has no interesting offering on the European Union, no clear strategy on improving the NHS and social care, no overall idea about how to win on inflation despite screaming rather sanctimoniously about his Windfall tax. Labour currently is a deplorable collection of has beens, some of whom are nasty, unpleasant, and so on, but they are needed. Britain needs to get out of one party rule. One Nation Toryism has turned into a tinpot dictatorship, where it feels impossible to get rid of Boris Johnson despite the fact he is unbelievably crap. Whether it be P&O Ferries, or the fact that the British automobile industry has imploded, the phobia to discuss how badly |Brexit has gone is now really rancid. It is stopping getting in the way of the country. The people who are holding the country to ransom are not the Unions who want to protect transport from being so automated that disabled people don’t have a chance. The people holding the country to ransom are the Tories.
Sunak probably has a skimpy idea of behavioural macroeconomics despite having had a well paid job in the City and access to lots of other money. But be in no doubt that his recent helicopter drug is an ideological addiction which will see inflation, coupled with Brexit, go through the roof. It does matter that Nadine Dorries does not have a clue, because her ignorance is totally dangerous to the rest of the UK’s (ironically) culture. The destruction of the BBC, enabled by its senior membership, has already begun. Look at CBeebies or BBC4. Not everyone has access or means to universal broadband. Yes, remember the nasty git who wanted to introduce a green economy, improved social care and NHS, rail nationalism to stop unconscionable fair increases, break up of the energy companies (a known issue since about 2014 and successfully ignored by David Cameron in the 2015 election to ‘get Brexit done’ and a load of other crap), national broadband, and so on? Yes, that evil Jeremy Corbyn. Thanks to the power house of intellectuals at the Guardian (I am joking), partly, and despite socialism going from strength to strength in Wales and to a lesser extent in Scotland, we now have permanent Tory rule in England. The Lib Dems, under Jo Swinson, have shown how toxic they can be. Back to the internet. Not everyone can watch Netflix, or the Disney Channel, so these kids definitely will be sorry to see the back of Hacker T Dog. Be in no doubt the Tories are holding the UK to ransom. Sure, you can blame it all you like on the COVID-19 pandemic. Or you could explain it through naked opportunism from a bunch of corrupt crooks with no moral compass.
It is undeniable that the Tories have unleashed a series of political fiascos that could accelerate the breakup of the United Kingdom. That’s ok with me, because it will remind these people that ‘take back control’ and tub thumping about national sovereignty can go in one direction. Talking of one direction, even musicians are feeling the pain of Brexit. But why the news blackout in talking about how dire Brexit is, costing about £400 million per week? Surely it’s time to call time on those who personally profited out of Brexit but who have happily seen the UK implode. Boris Johnson with his culture of corruption has to go. Even if the Guardian are complicit in keeping this lot in power, something radical has to be done to get rid of this lot. The Tories can’t be allowed to hold the UK to ransom any more.
There has been some startling consensus over the national political settlement, including as it applies to English dementia policy.
There has generally been cross-party agreement about personal budgets, even though the ‘direction of travel’ from the UK Labour Party is to favour a ‘rights based approach’ to advance choice and control rather than merely though a financial budget.
There are good reasons not to put many eggs into the personal budget basket for dementia; these include how the range of ‘products and services’ for dementia can be in places rather underdeveloped, and the formidable potential safeguarding issues for certain vulnerable individuals living with dementia.
Another consensus is to be found in wellbeing, or living well.
I was struck by a recent recommendation from the first ever report by the All Party Parliamentary Group on Wellbeing Economics, entitled “Wellbeing in four policy areas” (published September 2014):
“Health and Wellbeing Boards should bring together public health professionals, Clinical Commissioning Groups, GPs, and other stakeholders to develop strategies for ‘whole person care’ which effectively integrate mental and physical health.”
Unknown to me, they had been doing great work even prior to the last UK election. Their ultimate aim, unsurprisingly, is to make wellbeing into a pervasive policy strand that straddles across all areas of life.
This ‘wellbeing prism‘ has impacted on various areas of policy, I suspect, in the past, like ‘The Big Society’. I have always felt that the ‘dementia friendly communities’ policy in England, heralded in the Prime Minister Dementia Challenge, although clearly having some roots in the Japanese ‘caravans’ ‘befriending’, fits well into the ‘Big Society’ ethos.
One of the problems with both ‘dementia friendly communities’ and the ‘Big Society’ has been whether the civic sense of solidarity might diminish statutory obligations.
I have witnessed the problems with this, first hand, in writing my book ‘Living better with dementia: champions for enhanced communities’ which I hope to publish next year. The same tensions exist in statutory obligations in the form of equality and human rights law, and statutory entities, and non-statutory community-driven ones there too.
As the O’Donnell Report puts it, wellbeing:
‘leads us to place greater weight on the human factors that explain the big differences in wellbeing, but that tend to be pushed to the margins in traditional policy making’.
There has been some focus on how we need an ‘alternative measure to GDP’. Cynics unsurprisingly argued that such a measure might inevitably gather political momentum given the problems we have had with economic growth in the last few years.
But the general arguments from the APPG on wellbeing economics make an enormous amount of sense to me. Julian Huppert is the current MP for Cambridge, and I dedicated my current book to his mother Prof Felicia Huppert, Professor of Wellbeing at Cambridge. Julian is, to my knowledge, on the APPG on wellbeing economics.
The next parliament, I hope, will see a continuation of a focus on wellbeing in policy. As pointed out in their first report, there is considerable overlap with the wellbeing field and that of the ‘social determinants of health’.
In my next book, I continue with analysing this overlap, using housing as an example. Housing is clearly an area which impacts upon the quality of life of people living well with dementia, not just from architectural perspectives of design, but also how spaces are organised to facilitate personal interaction.
Similarly, planning in the built environment is important, with considerations of inclusivity and accessibility.
These are all ‘desirable’ (or even ‘essential’?) attributes of the ‘dementia friendly communities’.
Unpaid caregivers and paid carers, like professionals, are vital in the social capital of these communities too.
It is said elsewhere that while there has been a strong focus on GDP-style economics the lack of focus on wellbeing means that we do not touch upon many policy areas, such as strife caused by marital breakdown.
I feel that this touches upon another tension of dementia policy, this time at a global level.
We know, for example, loneliness is an important source of emotional morbidity for people who have received a probable diagnosis of dementia all around the world.
Also, jurisdictions have been encouraging the aspiration of people living with dementia to live independently; in other words, not institutionalised in some form, as long as possible. This, I think, is intuitively right, so long as it is not perceived as a ‘failure’ if somebody does need the support and care provided from an institution.
There are some people who believe that the ‘successful ageing’ and ‘ageing in place’ movements have overplayed their hand; with cynics pointing out they fit nicely into the ‘small state’ narrative, a rather individualistic narrative, which takes little account of our cohesion as a society.
But this I genuinely think would be to analyse the issue too much but with one important proviso.
That proviso is that I don’t think you can value people simply in terms of their economic productivity.
I refer to this ‘equality of wellbeing’ even in my Introduction to my new book. Such equality of wellbeing throws a different light on equality driven by a purely economic sense.
In summary, in reference to the first ever report from the APPG in wellbeing economics, as the next Government and the Civil Service turn their minds into thinking about wellbeing and health policy, it will be forefront in their minds that we are about to embark on a huge behavioural change bringing together the NHS and social care.
This transformative change to ‘whole person care’ will bring great opportunities, I feel, as well as formidable challenges, not least funding considerations at a local and national level.
But I feel like the current Government, and like future ones hopefully, that a focus on wellbeing is desirable. O’Donnell is reported to have said, “If you can measure it, cherish it!”
Ideally, it would be nice to have some form of metric to see whether wellbeing interventions have any effect. I am mindful of the excellent work by Prof Sube Banerjee and colleagues on DemQoL, but others exist. And of course we should not want to end up where we started: in a target driven culture which hits targets but misses the point (as famously phrased by Sir David Nicholson).
There might be desirable effects of such metrics, though. They could be formally put into grants for research for living well with dementia; to see whether some activities are more beneficial in care homes, where there is a high proportion of people living with dementia often, than others.
The Baroness Sally Greengross asked me to put in a chapter on arts, music and creativity in my current book; so I did.
But, as the new APPG report on dementia this year rightly discusses, such a metric could be used to incentivise the use of the arts and creativity to improve the quality of life of individuals in society. And I have no doubt whatsoever that arts and creativity are a linchpin of dementia friendly communities too.
The APPG in dementia earlier this year, under Sally’s leadership, urged the importance of high quality commissioning in post-diagnostic support for dementia.
If we have more a ‘joined up’ approach to commissioning and policy, in parallel with the breaking down of silos needed for ‘whole person care’, I think England can consolidate its formidable lead in the ‘dementia friendly communities’ policy in the world.
Other jurisdictions might even follow suit.
Gus O’Donnell (Chair) – and Angus Deaton, Martine Durand, David Halpern and Lord Richard Layard(2014). Wellbeing and Policy. London: Legatum Institute. Accessible at: http://www.li.com/docs/default-source/commission-on-wellbeing-and-policy/commission-on-wellbeing-and-policy-report—march-2014-pdf.pdf?sfvrsn=2
Wellbeing in four policy areas: ￼Report by the All-Party Parliamentary Group on Wellbeing Economics (September 2014). Accessible at: http://b.3cdn.net/nefoundation/ccdf9782b6d8700f7c_lcm6i2ed7.pdf
All-Party Parliamentary Group on Dementia assesses progress of the National Dementia Strategy for England
2014 report: The National Dementia Strategy: Change, progress and priorities
Accessible at: http://www.alzheimers.org.uk/site/scripts/download_info.php?downloadID=1447
Characterising the leadership of Margaret Thatcher is difficult. The problem is that, despite the perceived ‘successes’ of her tenure of government, her administration is generally accepted to have been very socially divisive. For many, she is the complete opposite of ‘inspirational’, and yet listening to current Conservative MPs talk there is a genuine nostalgia and affection for her period of government.
What can Ed Miliband possibly hope to emulate from the leadership style of Margaret Thatcher? Thatcher’s early leadership can definitely be characterised as a ‘crisis’ one, in that full bin liners were not being collected from the streets, there were power blackouts, Britain was going to the IMF to seek a loan, for example. However, the crisis now is one which does not have such visible effects. Miliband can hope to point to falling living standards, or increasing prices due to privatised industries making a profit through collusive pricing, but this is an altogether more subtle argument. A key difference is that people can only blame the business models of the privatised industries, not government directly. Whether this will also be the case as an increasing proportion of NHS gets done by private providers is yet to be seen.
It is perhaps more likely that Thatcher’s leadership, in the early stages at least, migth be described as “charismatic”, involving both charisma and vision. Conger and Karungo famously described five behavioural attributes of charismatic leadership. They are: vision and articulation, sensitivity to the environment, sensitivity to member needs, personal risk taking, and performing unconventional behaviour. In a weird way, Thatcher in her period of government can claim to have provided examples of many of these, but it is the period of social destruction at the time of closure of coal mines which will cause doubt on sensitivity to the environment. While ‘Basildon man’ and ‘Ford mondeo’ man might have been looked after, apparently, ‘Easington man’ was clearly not. A ‘One Nation’ philosophy promoting one economy and one society might not be a trite construct for this, after all. The problem is that ‘Basildon man’ has himself moved on; the ‘right to buy’ is the flagship Tory policy epitomising independence, aspiration and choice for the modern Tory, as resumed by Robert Halfon, but there is ultimately a problem if Basildon man is not able to maintain mortgage payments, or there is a general dearth of social housing.
In a way, looking at the failures of Thatcher’s leadership style is a bit academic now, but still highly relevant in reminding Miliband that his ‘political class’ cannot be aloof from the voters. It is a testament to the huge ‘brand loyalty’ of the Thatcher brand that there are so many eulogies, and one enduring hagimony from the BBC, to Thatcher. Jay Conger provides a way of understanding how charismatic leadership is to be maintained, and the “Poll Tax” is symptomatic of Thatcher’s failure of these aspects. Conger identifies continual assessment of the environment, and an ability to build trust and commitment not through coercion. Miliband likewise needs to be mindful of his immediate environment too: his stance on Workfare disappointed many members of Labour, causing even 41 of his own MPs to rebel against the recent vote, and upset many disabled citizens who are members of Labour. What happens when charismatic leadership goes wrong can be identified clearly in the latter years of the Thatcher administration. These include relatively unchallenged leadership, a tendency to gather “yes men”, and a tendency to narcissism and losing touch with reality. I still remember now (and I am nearly 39), the classic, “We have become a grandmother” and that awful Mansion House spectacle when Mrs Thatcher proclaimed that ‘the batting had been tough of late’ whilst maintaining a quasi-regal ambience.
I personally disagree with the notion that elections are won from the ‘centre ground’, particularly because I conceptually do not find the classification of ‘left’ and ‘right’ helpful (especially if you, like me, wish to embrace “One Nation Labour” with genuine goodwill). To use the market analogy, I think it’s like making an offering which looks and functions like an iPod, but which has some of the features missing; you might as well buy the real thing. A more sensible strategy for a competitor to the incumbent is to offer something really disruptive; in other words, something which offers some of the good qualities of the current market leaders, but which adds useful value. Ironically, enough time has passed since the airbrushing of socialism from the mainstream UK political system occurred with the advent of New Labour for Ed Miliband to give this another go. You can argue until the cows come home, and many mere mortals who are management theorists have given it a go, about whether charismatic leadership needs both charisma and vision. Despite Denis Healey’s famous doubts about whether Ed Miliband has charisma, it seems that Fraser Nelson has latterly judged Ed Miliband to be quite personable. Certainly, Ed Miliband to come close to becoming a charismatic leader himself needs to have an extremely clear vision. He may have to “think the unthinkable”, and make an unrealistic promises such as a NHS which is ‘comprehensive, and free-at-the-point-of-use’ (still miraculously, though, in the current NHS constitution). However, to borrow George Osborne’s phrase, “there is a debate to be had”, about whether the deregulation of markets under the Conservatives and New Labour did lead to a climate which encouraged the global financial crash to spread to the London markets. There is also a debate to be had about the ‘market failures’ of privatised industries. Sure, nobody is wishing ‘Thomas Cook’ to become a state-owned travel agent, or you to wait a month to have a phone line fitted by the State. But this is to present outdated, prejudiced, ‘Aunt Sally’ arguments. There is a debate to be had instead about whether we wish certain national services, like utilities or railways, to be fragmented, at relatively high prices, and where there is clearly a substantial benefit to shareholders and corporate directors but little benefit to consumers. Nobody wants to see the Unions ‘holding the country to ransom’, but it is a triumphant failure of Tony Blair and New Labour that this demonising malicious memes have been allowed to remain alive almost forty years on. Nearly all people, instead, firmly believe in the idea of democratic representation, and this has now become vital in abuse of the workforce by certain employers. We hear stories all-the-time of powerful corporates using ‘zero hour contracts’, and it is this Government which has seen the dilution of employment rights of workers and employees (reduced eligibility for unfair dismissal claims, and a lower quantum of award.) And, finally, there is a debate to be had about what exactly underlies the ‘maximum number of people in employment’ claim; is it for example an increased number of part-time, flexible workers who are under-employed, or is it an artefact of migrant workers from Eastern Europe who are doing temporary jobs in the UK?
Ed Miliband has often many times remarked about his thoughts have been ‘shaped’ by Margaret Thatcher, despite the fact he is very clear he disagreed with many of the views of Thatcher. We need, however, a frank discussion of where Britain goes from here. Frankly, a pig with a rosette could have won certain Labour seats in Scotland, but those days are over. Labour’s membership started to go into decline from around 2002/3, long predating the fall in membership after the Iraqi war. The ‘paying of respects’ to the late Baroness Thatcher has allowed some Tory ideology to go unchallenged, such as the importance of the Unions in society, or the failure of privatised industries. However, what Ed Miliband can hope to emulate is a precise articulation of a vision. Miliband has to prove that he is the right person for the right times (2014/5), like Blair, Thatcher and Cameron/Clegg might have been. If Labour is to be given the honour of a mandate in 2015, it needs to have an extremely clear idea of what it hopes to achieve, and for whom.
Gordon Brown did not bankrupt the economy, like Andrew Mitchell perhaps did not say some things as alleged
Whilst it is for Andrew Mitchell ‘to clear his name’, with the help of the Tory-led media, it is perhaps time to right another wrong. And that is that Gordon Brown did not single-handedly cause a global recession. Whilst the newspapers are full of Andrew Mitchell’s rigorous defence, it is perhaps time, especially ahead of Christmas, to knock on the head what has been the biggest lie of all time. That due to the Labour government led by Gordon Brown Britain nearly became bankrupt.
A reminder from Hansard from 22 April 2009 reminds us of the magnitude of the problem facing HM Government’s at that time,
Meanwhile George Osborne had wished to meet the spending commitments of Labour – and in fact exceed them, as he proudly boasted in front of the Tory-led BBC one breakfast morning.
The “deficit myth” is of course well rehearsed elsewhere. See for example this now seminal outstanding article by Ramesh Patel which has been shared more than 5000 times on Twitter, which establishes some of the main points. Indeed, yesterday the Guardian provided (again) the data in all their full clarity, demonstrated in this graph here. This graph shows that the Tories ran a formidable deficit themselves during the tenures of Norman Lamont and Ken Clarke, and that the deficit did explode as a result of the global financial crisis (to repeat, a global financial crisis not caused by Gordon Brown).
Well does it matter? Of course it matters hugely. The whole raison d’être of this “wretched coalition” is “to sort out the mess that Labour left”. When most people are asked why they don’t blame Labour for the state of the NHS during their period of office, when indeed it has been reported that there was a record level of patient satisfaction, many people apparently respond that “they were one of the lucky ones”. Quite often, at this point the line of attack then changes to personal attacks on Gordon Brown, “selling off gold”, completing ignoring the issue that George Osborne’s record on selling gold is not spectacular itself.
And it clearly does matter, given that borrowing continues to be a problem in the UK, and whilst the Coalition inherited an economy which was growing – albeit in a fragile way in May 2010 – it then entered double-dip recession, which a period of temporary recovery, boosted by some creative accounting. George Osborne and his media team obviously did not take too kindly to Evan Davies’ excellent questioning of George Osborne over the use of the 4G [future] receipts in presenting the GDP figures. The evidence indeed now points towards a “triple-dip recession“.
Indeed, the line of attack has always thus far be to compare us to Greece, and how we are at risk of losing our ‘gold-plated triple A rating‘. However, Downing Street has hard to embark on a propaganda war saying how because of the Eurozone crisis it might be inevitable we will now lose this rating, with bad news ‘which keeps on coming’. The risk to our triple A rating, as is widely known, long predates the Eurozone crisis, with eminent Keynesian economists, who know considerably more about economics than the Chancellor, warning about the dire consequences of pursuing a lack of growth. Such economists have of course included Prof Paul Krugman, Prof David Blanchflower, Prof Joe Stiglitz, and Lord Skidelsky (two of whom have won the equivalent of the Nobel Prize in economics).
And of course the ‘parlour state of the nation’s finances’ provides the raison d’être for the ‘slash and burn’ failed economic policies of the UK government since May 2010. I remember very clearly when Sunder Katwala, Director of “British Future” but at that time Chair of the Fabian Society, with speakers including John Denham MP, told a packed breakfast meeting at a fringe meeting in September 2010 how, even if the reduction of the deficit in the UK went successfully, there would be an invitable aftermath of social destruction which would be hard to remedy. Since then, the Government has embarked on a £2bn (estimated) reorganisation of the NHS amongst opposition from the BMA and the Medical Royal Colleges, libraries have been shut, withdrawal of “education maintenance allowance”, and the welfare reforms have been a disaster (with 30-40% of “fit-for-work” claim decisions overturned on appeal).
So before we lose too much sleep over Andrew Mitchell, it’s perhaps time to think about another wrong that should be righted, as we tell this current lot to “get on their bike” in 2015.
This article was published in the September issue of an international global economics journal. The author @legalaware came top in the MBA examination at BPP in economics and marketing in May 2011.
Book Review: The pursuit of happiness: Toward an economy of well-being – Professor Carol Graham, Brookings Institution Press, Washington D.C. Brookings Focus Books.
Graham’s “Pursuit of happiness” is a punchy crystallisation of emerging themes in the measurement of happiness, and the possible usefulness of the study of happiness in itself and for the development of global economic policy. As a reader, one may easily get the impression that Graham wishes to rebutt one fundamental assumption; that the “pursuit of happiness” is simply a policy fad or fashion. In what is an immaculately referenced work of scholarship, Graham provides a balanced appraisal of the current literature on ‘the economics of happiness’, comes to clear and useful conclusions on the published research, and signposts future possible avenues for discussion. Graham’s ‘license-to-operate’ in such a fertile intellectual exercise is evidenced by her grasp of the most senior players in the world of economics, and a deep sense of respect towards them. One senses too that this respect is reciprocated. She is also able to intertwine her thesis with strands from other fields, most notably philosophy, in producing a rich tapestry which does not mean that the economics is suffocated inadvertently by other disciplines. Far from being a “dismal science”, Graham provides much reason for optimism for those people involved in this burgeoning field of economics, and indeed establishes herself, entirely appropriately, as an inspiring leader.
Graham is currently a senior fellow and the Charles Robinson Chair at the Brookings Institution, a College Park professor at the School of Public Policy at the University of Maryland, a research fellow at the ‘Institute for the Study of Labor’. Her previous books include, “Happiness around the World: The Paradox of Happy Peasants and Miserable Millionaires” (Oxford University Press, 2010), and “Happiness and Hardship: Opportunity and the Insecurity in New Market Economies” (Brookings Institution Press, 2001, with Stefano Pettinato).
Graham has written extensively, and is a renowned expert on issues including poverty, inequality, insecurity, the political economy of market reforms, subjective well-being, and the economics of happiness. In “Happiness around the World: the Paradox of Happy Peasants and Miserable Millionaires”, Graham explored what we know about the determinants of happiness across and within countries of different development levels, including some counterintuitive and surprising relationships.
Her professional standing is outstanding. Graham has testified in the United States Congress several times on the economic situation in Latin America and has discussed related topics on NBC News and CNN amongst many others. Her work on well-being has been reviewed in The New Yorker, Science, The Washington Post, The Financial Times, and Newsweek, again amongst many others. She is an associate editor of the “Journal of Economic Behaviour and Organization”, and on the editorial board of the “Journal of Applied Research on Quality of Life”.
Graham’s most recent book, “The Pursuit of Happiness: An Economy of Well-Being” (Brookings Institution Press, 2011), raises the challenges posed by the use of measures of happiness as comparative well-being indicators. Economists are increasingly using happiness surveys to understand the debates on happiness and policy. Graham was a pioneer in the economic study of happiness, and she has been involved from the start in discussions about applying this approach to economic policy-making.
The book is well-written and very accessible book, and immaculately researched avoiding bias and imbalance. She crucially examines the pitfalls of delving into the policy realm with happiness research and indicators. In a carefully formulated argument, Graham explores what we know about the determinants of happiness, across and within countries at different stages of development. She then takes a look at just what we can do with that new knowledge and clearly presents both the promise and the potential pitfalls of injecting the “economics of happiness” into public policy-making.
Fad, fashion or fertile area for discussion?
A problem that Graham faces is that she began her work long before happiness became so fashionable in economics research and policy. In his inaugural address, President Barack Obama said that all Americans “deserve a chance to pursue their full measure of happiness.” In subsequent speeches, he has emphasised that people will pursue their “own version” or “own measure” of whatever makes them happy.
It seems reasonable, of course, to aspire for people to become happier, but should happiness supplant economic growth as an objective of government policy? The kingdom of Bhutan already uses “gross national happiness” as its preferred measure of progress. The British government even apparently has an office in Whitehall studying how to track well-being, using happiness as a base. Finally, in the United States, the Centers for Disease Control and Prevention is incorporating novel measures of well-being into national health statistics.
Despite the potential contributions that happiness research can make to policy, Graham emphasises that a sound note of caution is necessary in directly applying the findings, both because of the potential biases in survey data, and because of the difficulties associated with analysing these kinds of data in the absence of controls for unobservable personality traits. In addition, happiness surveys at times yield anomalous results which provide novel insights into human psychology—such as adaptation and coping during economic crises—but, according to Graham, these do not translate into viable policy recommendations.
One way to gauge that effect is through what has become known as the economics of happiness – a set of new techniques and data to measure well-being and contentment. Hundreds of thousands of people are surveyed and asked how happy or satisfied they are with their lives, with possible answers on a scale between very unhappy and very happy. The ideas are filtering through to politicians and the public. Most recently, as reviewed by Graham, the Sarkozy Commission – led by Nobel Prize-winning economists and sponsored by the president of France – issued a worldwide call for the development of broader measures of national well-being. The idea is to develop metrics that can be compared across countries and over time, like GDP, but instead emphasise rather more than income.
Structure of the book
“The pursuit of happiness” is indeed a very clever, if often used, tagline, originating, as Graham explains, in the Declaration of Independence for the United States of America (1776). Thankfully, for the reader, Graham offers an useful note on the terminology of terms often used in this field, such as “happiness” and “well-being”, which makes sense of the discussion on the measurement of well-being which follows. The structure of the book makes for very easy navigation through the start-of-the-art of the field of the economics of well-being.
The economics of happiness
Somewhat counter-intuitively perhaps, part of the challenge of establishing the economics of happiness as a science comes from understanding accurately its relationship to other subjects.
Most academics in the field appear to converge on the notion that happiness and well-being can only be successfully researched and explained, if done through an inter-disciplinary approach. Graham has some success in achieving this.
Her discussion of philosophy comes up as a recurrent theme in the book, however there are some areas which appear to be somewhat neglected. Many ethicists make arguments for how humans should behave, either individually or collectively, based on the resulting happiness of such behaviour. Utilitarians, such as John Stuart Mill and Jeremy Bentham, advocated the greatest happiness principle as a guide for ethical behaviour. While psychologists have been using surveys of reported well-being to study happiness for years, economists only recently ventured into this arena. Early economists and philosophers, ranging from Aristotle to Bentham, Mill, and Smith, all incorporated the pursuit of happiness in their work.
It possibly would have been perhaps useful for Graham to explain with a higher degree of precision what the scope of her discussion is, and why she has decided to omit certain issues. She nonetheless does not evade difficult issues in the literature which impact upon policy. An undercurrent in Graham’s work is that the globalisation process, mediates the effects of inequality and poverty on well-being. Globalisation is a major engine of growth, at least in the aggregate, and therefore plays a major role in reducing poverty; however, it is globalisation also introduces or exacerbates other factors that affect people’s well-being as much if not more than income growth.
Graham explains successfully her central thesis that, as economics grew more rigorous and quantitative, more parsimonious definitions of welfare took hold. Utility was taken to depend only on income as mediated by individual choices or preferences within a rational individual’s monetary budget constraint. The study of happiness or subjective well-being is part of a more general move in economics that challenges these narrow assumptions. Happiness economics—which represents one new direction—relies on more expansive notions of utility and welfare, including interdependent utility functions, procedural utility, and the interaction between rational and non-rational influences in determining economic behaviour. Graham introduces this topic, like all her topics, in a totally unassuming and unthreatening way, including reference to the ever-endearing “homo economicus”.
Enmeshed within her work is the potential impact that her quantitative and qualitative research might have on national policies, and this is inevitably an aim of chapter 5. Graham is successful, in my view, in giving an account of the tensions between her new ‘dismal science’ and government policies, and the attention of the reader is politely drawn to other policy directions (such as libertarian paternalism or “Nudge” by Cass Thaler and Richard Sunstein, and “The Social Animal” from David Brooks).
For more than a decade, Graham in a number of successful academic collaborations has been studying happiness around the world, in countries as different as Afghanistan, Chile and the United States. Graham evidently finds it remarkable how similar the forces driving happiness are in various countries, regardless of a nation’s level of development.
Graham has identified a number of consistent patterns: a stable marriage, good health and enough (but not too much) income are good for happiness. Unemployment, divorce and economic instability are terrible for it. On average, happier people are also healthier, with the causal arrows probably pointing in both directions. Finally, age and happiness have a consistent U-shaped relationship, with the turning point in the mid- to late-40s, when happiness begins to increase, as long as health and domestic partnerships stay sound.
However, Graham, in keeping with her previous published work, points out some glaring inconsistencies. While there are stable patterns in what leads to happiness, there is also a remarkable human capacity to adapt to both prosperity and adversity. Thus people in Afghanistan, a war-stricken country with poverty like that of sub-Saharan Africa, are as happy as people in Latin America, where typical social and economic indicators are a good deal stronger. Kenyans, meanwhile, are as satisfied with their health care as Americans are with theirs. Being a victim of crime makes people unhappy, but the impact is smaller if crime is a common occurrence in their society; the same goes for corruption and obesity. Freedom and democracy make people happy, but the effect is greater when they’re used to such liberties than when they are not. The bottom line, according to Graham, appears to be that people can adapt to tremendous adversity and retain their cheerfulness, while they can also have virtually everything – including good health – and be miserable.
There is a stellar cast of academics who have impacted on Graham’s programme of research. Reassuringly it is immediately obvious to the reader where Graham’s work ends, and where the work of others begins. Graham makes it very clear what her substantial contribution to the field has been, without taking any of the credit for the work by others who have influenced her. The respect that she has for other members of the academic community is obvious, and helps to establish her as a central figure in the field of economics sciences. For example, Graham readily acknowledges that Richard Easterlin was the first modern economist to re-visit the concept of happiness, beginning in the early 1970s. Indeed, Easterlin posits that Graham has directly asked whether happiness should be a goal of public policy, and describes Graham’s work has “eloquent”.
Easterlin, in his original study, revealed a paradox that sparked interest in the topic but is, as of yet, unresolved. While most happiness studies find that within countries wealthier people are, on average, happier than poor ones, studies across countries and over time find very little, if any, relationship between increases in per capita income and average happiness levels. On average, wealthier countries (as a group) are happier than poor ones (as a group); happiness seems to rise with income up to a point, but not beyond it.
Graham’s approach, which relies on “expressed preferences” rather than on “revealed choices”, is particularly well suited to answering questions in areas where a revealed preferences approach provides limited information. Indeed, it often uncovers discrepancies between expressed and revealed preferences. The research has a powerful context. For instance, Prof. Amartya Sen’s ‘capabilities-based approach’ to poverty, for example, highlights the lack of capacity of the poor to make choices or to take certain actions. In many of his writings, Sen indeed criticizes economists’ excessive focus on choice as a sole indicator of human behaviour. Prof. Sen himself won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1998. Understanding the limits to choice approaches—and willingness to use the information contained in preferences expressed in well-being surveys — may help us better understand the divergence between economists’ generally positive assessments of the globalisation process and those of the typical layman (or woman) experiencing the process, according to Graham.
Graham additionally observes, with the help of others, that individuals are remarkably adaptable, no doubt, and in the end can get used to most things, and in particular to income gains. The behavioural economics literature, for example, shows that individuals value losses disproportionately to gains (see Kahneman, Diener, and Schwarz, 1999, among others). Daniel Kahneman and Vernon L. Smith won the Nobel Prize in economics in 2002, and the classic, “Well-being: The foundations of hedonic psychology” is cited in Chapter 1.
Graham is clearly impressed by David Blanchflower too. Blanchflower and Oswald (2011) have based their review on the results of broadly based international surveys of self-reported happiness, focusing on the United States and Europe. In keeping with Graham’s views, they argue that indices of national happiness (based on individually administered self-reports of subjective happiness) might be more meaningful indicators of national well-being than economic measures such as gross domestic product (GDP). In fact, Blanchflower and Oswald make extensive reference to the Report by the Commission on the Measurement of Economic Performance and Social Progress, in which Stiglitz and his associates argued convincingly for international authorities to assess subjective measures of happiness instead of using more traditional economic indices.
The person who shared the Nobel Memorial prize in economics with Stiglitz in 2001, has himself has previously opined about this work that,
“Since 1776 the ‘pursuit of happiness’ has been the great world question. Here, reflecting on modern survey techniques and results, Graham drills deeper. What does happiness mean? For example, is it opportunity for a meaningful life? Or, is it blissful contentment? And why does it vary, as it does, across individuals and around the world? How does the perception of happiness differ in countries as disparate as Cuba, Afghanistan, Japan, and Russia? Graham is opening up a whole new frontier in economic and social policy.”
Nonetheless, Graham, in keeping with her previous conclusions published elsewhere, feels that there is no consensus about which interpretation is most accurate. Yet numerous studies, which demonstrate that happiness levels can change significantly in response to a variety of factors, suggest that the research can yield insights into human well-being which provide important, if complementary, information for policy-makers. Even under the rubric of set point theory, happiness levels can fall significantly in the aftermath of events like illness or unemployment. Even if levels eventually adapt upwards to a longer term equilibrium, mitigating or preventing the unhappiness and disruption that individuals experience for months, or even years, in the interim certainly seems like a worthwhile objective for policy.
One thing that people have a hard time adapting to, however, is uncertainty. People seem to be much better at dealing with unpleasant certainty than with the uncertainty of how bad a particular health condition or economic downturn will get. Graham’s (relatively recent) survey research, with colleagues Soumya Chattopadhyay and Mario Picon, shows, for example, that average happiness in the United States declined significantly as the Dow index dropped with the onset of the financial crisis in 2008. According to their calculations, happiness fell 11% compared with its pre-crisis levels, reaching its lowest point in mid-November 2008.
Graham highlights that when the market stopped falling and some stability was restored in March, average happiness recovered much faster than the Dow; by June, it exceeded its pre-crisis level, even though living standards and reported satisfaction with those standards remained markedly lower than they were before the crisis. Once the uncertainty ended, people seemed to be able to return to previous happiness levels, while making do with less income or wealth.
Yet, if people can stay happy with less money, they can also become discontent with more. This is the “paradox of unhappy growth”. In research with economist Eduardo Lora, Graham found that, in countries with similar levels of per capita income, respondents experiencing higher economic growth rates were found, on average, less happy than those with less growth. One explanation proposed by Graham is the following: rapid economic growth typically brings greater instability and inequality with it, and that makes people unhappy.
Limitations of the book
There are very few limitations of the book, which may in fact be strengths of the book. Graham does give due regard to psychological methods: the economics of happiness is an approach to assessing welfare which combines the techniques typically used by economists with those more commonly used by psychologists. It relies on surveys of the reported well-being of hundreds of thousands of individuals across countries and continents. This approach relies on more expansive notions of utility than does conventional economics, highlighting the role of non-income factors that affect well-being. It is well suited to informing questions in areas where revealed preferences provide limited information, such as the welfare effects of inequality and of macroeconomic policies such as inflation and unemployment.
Graham, instead, does not refer overtly to politics or religion much, but this may be simply because Graham wishes to focus her thoughts without potentially offending particular groups of readers. Economic freedom correlates strongly with happiness preferably within the context of a western mixed economy, with free press and a democracy. “Socialist” East European countries were less happy than Western ones, even less happy than other equally poor countries. It would be inaccurate to consider the ex-Soviet states as socialist, however, as socialism indicates that the workers own the means of production, which under the Soviet Union was not the case.
Graham deliberately does not discuss the enormous field of “the science of well-being”. For example, the psychologist Prof. Martin Seligman has provides the acronym PERMA to summarize many of Positive Psychology’s findings. It also turns out that happiness forms a central theme of Buddhist teachings. For ultimate freedom from suffering, the Noble Eightfold Path leads its practitioner to Nirvana, a state of everlasting peace. In Catholicism, the ultimate end of human existence consists in felicity (Latin equivalent to the Greek eudaimonia), or “blessed happiness”, described by the 13th-century philosopher-theologian Thomas Aquinas as a “Beatific Vision of God’s essence in the next life”.
The writing style means that Graham frequents certain topics on more than one occasion (for example, a comparison between Aristotle and Bentham philosophy, and the “happy peasants and frustrated achievers”). Whilst this approach might present the text as a coherent argument which spans across all five chapters, the danger is that the reader is left feeling a bit disorientated, as to whether or not he or she has read the same points twice.
Finally, I felt that there are a few parts of the discussion which appear to have received very little coverage in this book, such as the role of personal life events on the happiness on an individual, or the impact of common conditions (such as ageing or dementia) on an individual’s well-being (or quality-of-life). In Graham’s defence, however, discussion of such topics would be to be take Graham’s discussion of the ‘economics of well-being’ more into the ‘cost of well-being’, which may be an area which has to be confronted at some stage. This could even make an interesting future book, if Graham and colleagues are able to find reliable econonometric measures for well-being which could guide policy?
One is wary about saying that this book is a “seminal contribution to the literature”, when Graham’s books and academic papers have all been greeted with the highest acclaim. Nonetheless, in my view, Graham clearly provides a convincing case that, even if there is a bandwagon effect in people wishing to be seen to studying and applying the research from happiness and similar concepts, the literature is making great strides. The case for this is even more compelling given the particular stakeholders involved in advancing the field. Whilst Graham clearly acknowledges the interdisciplinary nature of the topic, she provides “clear blue water” between economics and other disciplines.
The book is a superb introduction for anyone who wishes to get up to speed with the field of happiness economics in the year 2011, and will appeal to readers from a diverse range of backgrounds. Graham’s style is uncluttered, articulate, extremely informative, interesting, and, in places, even very entertaining. The text is elegantly crafted, with some fascinating and classic quotations, which are all entirely relevant to Graham’s overarching thesis. This book will do much to enhance the reputation of economics, and will leave the reader with the conclusion that it is far from a “dismal science”, and certainly very far removed from any notions of the concept from Thomas Carlyle.
Blanchflower, David. and Andrew J. Oswald (2011). “International happiness: An introduction and review”. Academy of Management Perspectives , 25, 6–22.
Easterlin, Richard A. (1974). “Does economic growth improve the human lot? Some empirical evidence” In David PA. & Melvin, W.R. (eds.) Nations and households in economic growth, pp. 98-125. (Palo Alto, Ca: Stanford University Press).
Graham, Carol, Soumya Chattopadhyay, and Mario Picon. (2010b) “The Easterlin Paradox re-visited: why both sides of the debate may be correct.” In Ed Diener, John Helliwell, and Daniel Kahneman, eds., International Differences in Well-Being. (Oxford: Oxford University Press.)
Graham, Carol and Eduardo Lora, eds. 2009. “Paradox and Perception: Measuring Quality of Life in Latin America”. Washington, D.C.: The Brookings Institution Press.
Kahneman, Daniel, Ed Diener, and Norbert Schwarz (1999), Well- Being: The Foundations of Hedonic Psychology, New York: Russell Sage Foundation.
Sen, Amartya. (1993). “Capability and Well-Being”. In M. Nussbaum and A. Sen, eds. The Quality of Life, pp. 30–53. (New York: Oxford Clarendon Press.
Over the last decade, pay at the top of the UK’s largest listed companies ballooned up to £4.2 on average on average for FTSE 100 chief executives from £1 m between 1998 and 2010, while salaries for workers barely kept place with inflation. Jeremy Bentham (1748-1832) had a huge impact on the world of philosophy, proposing utilitarian value as, ‘the greatest happiness for the greatest number of people works well as a way of doing justice’. This encapsulates why so many members of the general public appear to have a fundamental problem with excessive bonuses for bankers. Whilst people on the left politics-wise do not necessary deny the contribution of bankers to ‘wealth creation’ of the UK economy, many such citizens resent that they appear, along with Premier League footballers, to have levels of pay which represent an excessive contribution to the social value of society. The utilitarian could in fact stress that growth, wealth and GDP contribute much to the happiness of all. These depend upon a functioning banking system. Likewise, banks, in turn, need investment bankers to turn a profit. If those bankers are best incentivised by the promise of large bonuses, then so be it. Indirectly, that makes everyone happier.
Earlier this year, Downing Street appeared to concede defeat in its battle to stop banks paying huge bonuses to their staff; dictating the size of individual bankers’ payments or overall bonus pools was not possible. Instead bank bosses and ministers tried to thrash out a deal that would publicise details of payouts that could reach £7billion this year. The climbdown on bonuses has been a huge embarrassment for Government ministers who had threatened much tougher measures. The impression conveyed in the UK media that bankers have not been adversely affected by #gfc, and indeed some feel that the bankers have profited. This has been against a whirlpool of accusations and counter-accusations that the taxation policy has been indeed been ‘regressive’. Whilst politicians and economists have latterly been at each other’s necks, both are aware that there is enormous voting capital in ‘getting this right’. Equally in the USA the Obama administration have immersed themselves in a populist attack on wealthy US citizens including corporations.
Rumbling along in the background is a subplot ignited by John Maynard Keynes, an outstanding Cambridge academic, and a Liberal. There has been much discussion about whether Vince Cable, a Cambridge graduate, and a Liberal Democrat, follows in the tradition of Keynes, to some extent fuelled by Cable himelf. Robert Skidelsky, Keynes’ official biographer, has made his concerns patently clear. Cable has extensively studied Keynes for his Doctoral studies. Perhaps playing to the Keynesians last week at the Liberal Democrats’ 2011 Summer Conference, Cable opined that, “Keynes talked about a ‘paradox of thrift’; everyone and every country being individually wise but collectively foolish – leading to a downward spiral”.
The paradox of thrift is a very famous paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees, and similar sentiments date to antiquity. The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total “savings” in the population because of the decrease in consumption and economic growth. However, there have many inward attacks of Keynes’ well-known paradox, not least because of the unwitting conflation of the terms “capital” and “savings”. It is mooted that the classical theory of growth in macroeconomic did not presume that every saver was the ultimate investor of goods, especially in relation to the earlier work of another great economist, Ricardo. Economists have recently been quick to point out that Keynes uses the term “savings” to embrace a ‘hoarding behaviour’, which leads Keynes to his direct proposition of a ‘paradox of poverty in the midst of plenty’. Again, there is a problem with definition, as bankers bonuses might constitute ‘plenty’, but not the growth in the UK economy called ‘pitiful’ by Prof. David Blanchflower, himself a pupil of Keynes.
Should the alleged ‘excessive profits of bankers’ be clawed back by the State for its benefit? David Ricardo is credited with the first clear and comprehensive analysis of differential land rent and the associated economic relationships (Law of Rent). In schools of economic thought including neoclassical economics, land is recognized as an inelastic factor of production. Rent is the distribution paid to freeholders for “allowing” production on the land they control. Of course, corn and money, and farmers and bankers, are not necessarily synonymous.
“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land ..”
There has been a wider issue about whether the ‘differential theory of rent’ is due to strong emotions concerning ‘private property’, but prominent liberals such as JS Mill have proven words and deeds on the issue, through for example the Land Tenure Act. Adopting a populist stance has always been easy for Vince Cable, and most Liberal Democrats heavily tout that St Vince The Cable was apparently one of the first to predict the banking crisis (as indeed objectively evidenced in Hansard). Whilst a synthesis of the economics is undoubtedly interesting to economist, both new and old, people will want to know what Cable can do about it. The answer is ‘not much’, as the FSA’s code on renumeration is considered ‘good practice’ (but relatively ‘toothless’). Cable wishes also to address the ‘disconnect’ between the excessive pay of top Directors and the performance of these companies, where Cable feels that a schism has developed. Many believe that many senior bankers seem virtually unsackable, which makes an analysis of what level of pay is appropriate for bankers from the “wage curve”. Blanchflower and Oswald (1994) how the existence of a wage curve for a dozen countries, defining the wage curve thus: “A worker who is employed In an area of high unemployment earns le than an identical individual who works in a region of low joblessness”. It would be interesting to know what the views of 31-year old trader, Kweku Adoboli, are towards that. Or indeed, what Oswald Grübel thinks: according to the Wall Street Journal this morning, “Oswald Grübel resigned as chief executive of embattled Swiss bank UBS AG in the wake of a trading loss that cost the bank more than $2 billion and now has cut short the career of a giant of Switzerland’s business community.”
The @Legal_Recruit system (which will be available here) is a very attractive easy-to-use cloud-based service which will allow @Legal_Recruit learners to complete sample tests, under real assessment conditions.
It will be available on Monday 3 October 2011 for the first time.
Current law students, who are doing the GDL, LPC, LLB(Hons) or LLM, especially those who are seeking training contracts or vacation placements for 2013/4/5 being made available in the next academic year may find this new service/product useful. It will be available on the internet via a secure website, and will cost £7.50 for unrestricted lifetime use. All Legal Recruit learners will have their own secure website username and password, and be invited to participate in the development of the huge bank of validated questions. These questions are set in a fair way, with due attention to equality, diversity and culture.
This product has been built because it is felt by many that law students, the staff of their colleagues/universities (including their academics and their career services) and corporate law recruiting managers that the pivotal importance of the verbal reasoning test is grossly underestimated. This is not sensible, given the intense effort needed to complete any qualification in law. However, if your performance in a verbal reasoning test, and you fail to meet the cut-off score, it is possible that you will not be invited for interview, despite having a II.1 or above. This is clearly a tragedy.
Such practice will be ideal for any law students needing to complete a SHL Direct assessment for their real training contract/vacation placement application. Candidates are strongly advised to look, as a top priority, the practice tests in the practice area of the SHL website. There you can take a full-length verbal reasoning test which has been made available from the main SHL Direct website and it’s well worth looking at the example questions. You’ll also most likely enjoy looking at the advice given about verbal reasoning tests on leading corporate law recruitment sites, such as Eversheds and Clifford Chance. Obviously, Legal_Recruit does not actively endorse any of the entities above, or vice versa.
There will be very clear instructions in the @Legal_Recruit practice assessments which are akin to the current SHL verbal reasoning instructions. In the practice test, you are allowed to go backwards, although in the real assessment you will not be given this option. You must complete the practice examples before you do the test, and you are told not to press any function keys or do any background jobs such as printing during the test itself.
The word count per passage will ideally vary from 70 to 150, with a mean length of 107. Passages will avoid as far as possible the use of semi-colons, and be of no shorter than 8-10 words. They will be written in plain English, with no spelling or grammar errors. The passages will therefore avoid American spelling or American English. The mean number of words in a sentence will be about 15-20.
Assessments will consist of 30 questions, containing 15 passages (2 questions per passage). The 15 passages will be selected at random by the Legal_Recruit system from a huge database consisting of an equal number of questions in the following 16 subject areas.
- Health and Safety
- Human resources
- Modern Languages
@Legal_Recruit follows the leading twitter accounts in the world which daily produce news stories, which make excellent narratives for the verbal reasoning assessment that Legal_Recruit will be offering.
Legal_Recruit learners will be able to choose a maximum time permitted from 19 to 39 minutes; this is to that it’s easy to do the assessments with reasonable adjustments for learners who will benefit from them to allow them to perform on a ‘level-playing field’.
It’s interesting that there is no subject bias at all in the exemplars. Interestingly the passages appears to avoid contentious branding, politics, or subjects which are generally controversial.
It is essential for our system to work for our questions to be carefully set in keeping with the real verbal reasoning tests which our Legal_Recruit learners will face in their real assessments set by SHL for their training contract/vacation placements. If you would like to participate for free, and receive immediate feedback, in our sample assessments, please direct message @legalaware or @legal_recruit, and if there are any problems in me following you, please do let me know immediately, and I will remedy. We benefit from obtaining a huge bank of normative data, which indicates to us that all the questions are of the same (correct) standard, and from being able to give you an accurate indication of where you sit on the normal distribution curve.
You may enjoy following up-to-date developments in online psychometric assessment on the @SHLGROUP twitter feed.
Ed Miliband yesterday offered membership to the Labour Party for a penny to anyone under the age of 27. This is apparently part of Ed’s firmly-held belief that young people should have a political voice, as part of his “Speak out for your generation” campaign. The membership offer for the smallest subscription rate possible will last for just one year. This article looks at whether 1p is too low. It is beyond the scope of this article to consider whether it’s too high! I have discovered, in a totally non-scientific way, that non-Labour members overall reckon it’s a terrible idea. On the other hand, people who are Labour supporters think it’s terrific.
One of my Twitter followers said (in less than 140 characters),
“It is good.. we need a mass membership party and I hope many will take up the offer”
“Absolutely excellent idea. Encourage young people to join but must make it relevant to them when they”
Whilst elsewhere the well-known contrast between cost and value has been discussed, offering membership for 1p only threatens to send out the message that being a member of Labour has both low cost and low value. This is not a particularly desirable message.
The Labour movement doesn’t just want eligible voters, although that, of course, is a major ambition! Labour, as a large members’ organization, wishes to empower individuals with the shared values as Labour to contribute to future policy. However, appealing to young voters with a relatively low cost product is pursued as a successful business strategy by IKEA.
To put a downer on all this, one is forced to acknowledge that the problems with such ‘discount retailing’ are well known in the different worlds of economics and commerce. For example, the 2001 Nobel Prize winner in economics Prof. George Akerlof, from the University of Berkeley in California, has illustrated a key problem with a simple thought experiment.
Imagine that a carton of ‘real’ milk wholesales for £1, but that a carton of watered-down ‘subnormal’ milk wholesales for 60p. A typical buyer might willingly pay up to 80p for the subnormal milk, but £1.20 for the real milk. Mutual gains are made from the transaction by both the customer and the buyer. However, Akelof argues that, if the buyer is unable to discern the quality, both grades of milk must eventually for the same price – about 90p. He concludes, under this system, honest retailers of real milk go bankrupt, while retailers of subnormal milk flourish. The problem with the relevance of this example is that the low price Labour membership is of lower quality, for which there is absolutely no evidence.
Furthermore, more fundamentally, discounting may imply that a product is not particularly desired in the marketplace at full price. The price of discounted products is what economists call “elastic”. Price elasticity of demand is a measure of how much the demand of a product varies with price. A product is very elastic if a small change in price leads to a massive change in demand. It remains to be seen whether the price of Labour membership in young voters is at all elastic. That sort of data genuinely would be interesting.
Finally, Ed Miliband early on in his leadership has made it clear that he will support something he believes in, such as the ‘Yes to AV’ campaign. Economists have previously observed that low price is only made possible in the modern global world because of massive innovation in the information technology industries. In practical terms, given that computer wizardly is so cheap (and social networking through Facebook and Twitter is currently free), it would make no sense to offer a product for a much higher price than your most immediate competitor. The opposite argument is, if the price or cost is too low, then motivation for improvement of the actual product, in Labour’s case the development of policies fit to govern the UK, is poor.
It will be evident therefore from this short article that the issues concerning ‘discount retailing’ are potentially complex. Whether lessons from economics or marketing should be brought to the political world itself is a thorny issue in itself. However, when you consider voters or political parties as buyers and suppliers, you’re on a slippery slope? Of course, you’d never tolerate a “Vote one party – get one free”, or would you?