The Bank of England was right not to bow to the veggie lobby over five pound notes

“When he warned of the economic downsides of a Brexit vote last year Mark Carney will have braced himself for a shower of abuse. But it’s unlikely the Bank of England’s Governor anticipated being castigated, like Falstaff, as a “whoreson greasy tallow-catch” by a coalition of vegans, vegetarians, Hindus and Sikhs, all united in anger at the fact that the new polymer five pound note contains minute traces of animal fat.

But the Governor has stood firm not only in the face of the Brexiteers but also the vegetarians. The Bank announced last week, after some reflection, that it will stick with its tallow fivers.

Is this wise? Wouldn’t it be better to recall the offending notes and placate the 135,000 or so people who felt strongly enough to sign an online petition last year calling for such a reversal? One of the reasons proffered by the Bank last week is “value for money for the taxpayer”. The Bank estimates that it has spent £70m on printing new polymer notes. It would incur these costs all over again to reprint them on new material that did not contain tallow. That’s on top of the £50,000 cost of destroying the tallow-contaminated ones.

In other words, it believes a recall would be too expensive. The Bank does say it will look into the feasibility of making future production runs of polymer notes tallow-free.

But that’s not placated the vegetarian petition signers who have asked how the Bank is justified in putting a price on their ethical and religious rights.

But our societies generally operate on the principle policymakers are justified in making judgements about how much public money should be spent on meeting certain objectives that are dear to the heart of some groups, whether this is providing prayer rooms in hospitals, or protecting the habitats of certain rare species of plant.

Indeed, even human lives have an implied ” value” in public policy.

Many lives could be saved or prolonged every year if the government bought up the niche cancer drugs developed by pharmaceutical companies, or by councils redesigning every potentially unsafe road junction in the country. But they don’t do these things because the public cost is deemed prohibitive.

It’s true that there are some things that most of us would agree should not be measured by the benchmark of money, such as a human liberty.

Money is not a consideration in the eyes of the government when it comes to protecting our citizens from enslavement.

Similarly, the law doesn’t allow people to sell their second kidneys to the highest bidder – even when it would make the buyer and the seller better off – due to the prevailing social conviction that such a trade would undermine human dignity.

It’s not about money.

Yet the number of such incommensurable rights and ethical values has, by necessity, to be very limited or the result would be a chaos of clashing principle.

If we deem every ethical or religious assertion a trump card – overriding all else – in public policymaking the system will fall apart; it would be an open invitation to every crank and zealot to demand special and expensive public recognition for their own particular hobby horse.

Should the belief of vegetarians and Hindus that they should not be put in a position by the Bank of England where they have to touch a bank note made with a trivial amount of tallow be among those small number of trump cards?

Should taxpayers’ money be no object in the mind of the Governor of the Bank of England when it comes to considering the demands of their conscience?

Or did the Bank of England make a reasonable choice in balancing out the strong concerns of a minority with the broad economic interests of society as a whole?

There is no definitively right or wrong answer here. It’s a judgement. We all have the right to make up our own mind about whether a sound decision has been made.

But we surely owe a degree of sympathy to those greasy tallow-catches who are responsible for making the trade-off on our behalf.”

#BankofEngland #commensurablevalues #rights

We may soon have cause to regret Britain’s repellent national conversation about European immigrants

To warn about the consequences of an exodus of European Union workers from the British economy probably comes across like shouting fire in the midst of Noah’s flood. 

Aren’t there more than two million EU nationals in the British workforce, double the number a decade ago? Isn’t net immigration from the EU running at almost 200,000 a year according to the latest figures? Didn’t millions of Britons vote for Brexit precisely to reduce the numbers of workers from the Continent coming to Britain?

Yet if we know that when the flood waters recede there will be an abundance of vulnerable dry kindling and a scorching sun, it’s not alarmist to warn of the risk of a conflagration. And we do know that. The size of the UK-born workforce appears to have peaked in 2015 at around 26.5 million. Workforce participation rates are at a record high. This implies that any net increase in demand for employees from firms, over the coming decade at least, will probably have to be met by new migrants.

Think of all those additional care workers to look after the burgeoning population of elderly. Think of those new doctors and nurses to staff packed surgeries and overstretched wards. Think of construction workers to build the new homes pretty much everyone now agrees we desperately need. Think of the software developers, research scientists, engineers and myriad other skilled workers that Britain will require to drive our national productivity and increase our living standards. We can – and should – certainly fill some of these skilled vacancies through retraining the existing UK workforce.

But not all of them can be filled in this way. Moreover, this is to cut the labour force cake differently. To make the cake bigger, we will almost certainly need to import labour from abroad. But what if the labour doesn’t want to come? The latest figures from the Office for National Statistics this week suggested the number of EU-born workers in the UK workforce may also have now peaked at 2.3 million. There are other signs that net immigration from the EU is now in decline. Employers are starting to complain of labour shortages.

The migration expert from King’s College London, Jonathan Portes, has predicted a sharp fall in EU migration rates in the coming years for a variety reasons. The assumption among British politicians is that EU migration post-Brexit will be like a tap that can be turned on and off. They will import any new workers we genuinely need, they will “manage” migration, they will “take back control”.

But what if the tap is turned and no water comes out? What if there is a supply problem? The UK atmosphere towards immigrants has hardly been welcoming over the past year. There was spike in violence directed at European migrants in the wake of the Brexit vote. The uncertainty over the future rights and status of EU nationals who have made their home here has created anxiety, heartache and anger.

The tone in the most influential organs of the national print media is unrelentingly hysterical and hostile.

Senior politicians have misrepresented the scientific evidence on immigration’s impact on living standards. Others have ignored it out of sheer cowardice, scared of making themselves targets of the right-wing press or of going against what they perceive to be the popular mood.

Would it really be surprising if a skilled European worker, or even an unskilled one, faced with a choice about taking a job in Britain and somewhere else on the Continent or around the world, gave us a miss given the repellent tone of our public discourse on migration and the insouciant attitude of our politicians? 

The assumption is that Britain can choose immigrants. But one day, and possibly quite soon, we might wake up to the hard reality that immigrants can also choose Britain. And then we may have cause for deep regret over the way that we have allowed the national conversation about immigrants to unfold.”

#Brexit #immigration

It’s time for the gig economy to give workers some rights as well as obligations

You might have imagined that an advantage of being self-employed would be that after a major health trauma – a heart attack, say – you would be able to reduce your hours without having to beg for the boss’s permission. After all, the boss is you, right? But the case of Gary Smith reveals how outdated such assumptions are in today’s workforce. As the Court of Appeal’s ruling last week confirmed, the economic reality of Smith’s relationship with Pimlico Plumbers (working five days a week for a single firm from whom he leased a branded van) was that he was a worker rather than a self-employed contractor.

This is not the first case where the courts have found for the “self-employed” over employers in such disputes. But Pimlico’s behaviour towards Smith feels like a watershed moment since it stands out in its unreasonableness. It would not be surprising if many gig economy toilers who feel they have all the obligations of full-time workers but none of the employment rights responded to the Smith ruling by calling their lawyers.

Even after this latest legal setback, firms are unlikely to roll over. Some have business models that appear to be essentially based on avoiding the costs of conventional employment, such as paid holiday leave and the necessity of paying the minimum wage, rather than any other kind of genuine competitive edge. Yet the smarter ones, and the ones who genuinely do things better than the competition, could do themselves a big favour by recognising which way the wind is blowing and facing up to the fact that they have obligations to their workforce, even if that workforce is not technically made up of regular employees.

The Government is preparing to act in any case. An independent review into modern employment practices – specifically the burgeoning gig economy – will report in the summer and will likely make a range of policy recommendations for new regulation.

However, tax may be as important as regulation. As the Institute for Fiscal Studies pointed out last week in its Green Budget, the national insurance system makes it less costly for firms to take on self-employed contractors than new regular employees. In that sense it’s not terribly surprising that almost half of all the jobs created since the financial crisis a decade ago have been self-employed. Faced with a marginal hire in a still uncertain wider market, most firms will naturally play it safe (or rather cheap), particularly if competitors are doing the same.

This story has a macroeconomic dimension. As the gig economy employers frequently point out, no one is forced to work for the likes of Uber, Deliveroo, CitySprint or even Pimlico Plumbers. The fact that many do so, while apparently being unhappy with their pay and harsh conditions, suggest they have little choice; that there is not, in fact, somewhere else for them to go.

The headline unemployment rate might be close to a record low, but the rise of gigging, the explosion of zero hours contracts and chronically weak pay growth, gives this the feel of a market still very much skewed towards the buyer of labour rather than the worker. And this, in turn, suggests that there remains disinflationary slack in the economy.

Libertarian evangelisers for the gig economy pour scorn on the idea that we are witnessing the creation a new “precariat” class of exploited workers and cite surveys suggesting that most self-employed contractors are content with their status and have no particular desire to be treated any differently. In this view of the world, the complainers, such as Smith, constitute a tiny awkward squad in a sea of happy contractors.

To really test this view what is needed is a high pressure and high demand economy where workers indisputably have the greater market power. If the low pay and ultra flexible gigging boom survives that environment the evangelists will have a strong case. But until then the rest of us can justifiably remain sceptical of the proposition that self-employed gigging really does represent the modern worker’s free choice.

This article appeared in The Independent on 12/02/17

#gigeconomy #pimlicoplumbers #selfemployment #zerohours