Saturday, 12 May 2018

Effective measures to address social mobility and inequality are politically unpopular

A great deal is spoken about equality and, as a result, we have two concepts that are seen as core to the resolution of inequalities: social mobility and income redistribution. In the case of the latter, we've tended to look at redistribution in terms of social class but now there is a fashionable concern that that we should be looking at intergenerational inequalities:
But while there are strong grounds for optimism in some areas, pessimism dominates overall. Pessimists about young adults’ chances of improving on their parents’ lives outnumber optimists by two-to-one. That marks a dramatic, and very rapid, turnaround in outlook. As recently as 2003, optimists outnumbered pessimists by nearly four-to-one. The gloom that has settled across our society since then is common across advanced economies, though Britain is more pessimistic than most.
The Resolution Foundation's work is pretty comprehensive, so it's disappointing when their resolution to the problem identified (today's young people having a better life than their parents) is to give them £10,000 - collected by taxing the existing older population. For me this illustrates the problem we have with developing political solutions to core social problems like equality - the winners in the game of inequality these days want solutions that do not mean them giving up their advantage. You might be able to sell them the Resolution Foundation's bung (although the track record of political responses to inheritance taxes aren't good - as Ed Milliband and Theresa May have found out to their cost) but it really does little or nothing to address the central concern that young people won't be rich enough to buy a stake in our society.

The same applies to social mobility. This is pretty much the subject of Robert Putnam's Our Kids where he explores the barriers to social advancement faced by American young people - driven less by race or location and more by a reborn social class divide (Putnam uses parental education as a proxy so you could argue it's a test of education effect rather than class effect). It's hard to cram a whole book into a sentence or two but, it seems to me that Putnam's findings - for all that we can't get a perfect transfer to UK circumstances - are a better reflection of the social realities facing our next generation than those from the Resolution Foundation.

The problem for the Resolution Foundation is less that working class kids are falling further and further behind middle class kids because of collapsing social capital (essentially Putnam's argument) and more that middle class kids can't afford to buy the assets - typically houses - that their parents were able to buy. For sure the report talks of pay stagnation and job insecurity but its primary thrust is that the resolution of the inequality (ie young people are less able to buy assets than their parents' or grandparents' generation) comes via higher taxes on wealth and specifically real estate wealth.

Not only do I think that the Resolution Foundation's answer is overcomplicated, state-driven and divisive, I'm also pretty sure it won't work. Young people may, at the end of it be a little better off but giving them £10,000 on their 25th birthday isn't going to get most of them onto the housing ladder. Moreover, the Resolution Foundation's proposals for dramatic hikes in property taxes will benefit squeezed local council budgets far more than they will the housing options of young people. And local councils - at least if what they say is a guide - are more interested in building council houses for rent than they are in helping young people buy houses. The result of the report's policies will be some cheery councillors not happier young people - this is not progress.

The problem we have is that the most obvious policy response to the problems of intergenerational inequality and social mobility are not politically easy to deliver. These might include:

Scrapping the strategic planning system including the 'green belt' - nearly everyone says there are too few houses, allowing people to build more homes seems an obvious solution. What would a world without planning look like?

Replacing locational bases for school place allocation with a lottery - most children are in urban areas but, even here, school allocation makes a huge difference. We know that when children from lower social class (as measured by parental education level) are educated alongside their middle class neighbours they achieve better. Our locational system of allocation results in social sortition and less social mobility

Making divorce more difficult and promoting a culture where the order is "get married, have children" not "have kids and maybe sometime later get married, perhaps if he's still around" - yes folks, the children of single parents and children born outside marriage do less well at school. This is the case even when we control for other variables (and, yes, not every child of a single parent fails, just on average such children are more likely to perform less well)

Tax incentives or subsidy for single income households - the effect of a household where one parent doesn't work is also positive. Just as we should encourage marriage, we should encourage stay at home mums or dads - pay them the money we're already allocating to childcare maybe?

Not sending so many young men to prison - Putman reports again and again that the struggling young people he interviews have a father in prison. Again the evidence tells us this forced form of family breakdown results in poorer achievement, lower income, increased child delinquency. It's also a disaster for the young men we lock up - instead of 90,000 in prison we should aim to (at least) half that number

You see the problem? Put forward a manifesto saying scrap the green belt, end parental choice in school places, make divorce harder, subsidise stay-at-home mums and stop locking up so many young men. Go on. It'll be fun. Except for your candidates. It's much simpler to say "my government will pay x to y" or "we'll make it easier to dump you hubby because he snores" or even "we'll tax an unspecified bunch of rich people and companies so we can give you a tasty little cash bribe". This doesn't solve the problem but is more likely to get you elected.



The Stigler said...

Here's an idea: stop following crap career routes in expensive places.

The reason everyone is talking about this so much is because the people who control current media narratives, people in journalism, politics, academia, 3rd sector and law, aren't doing that well. They live in expensive lefty places like London, Oxford and Bristol while not actually making that much money and complaining about it.

You can live in somewhere like Trowbridge, work as a CNC operator and make about £25-30K. A nurse would start at £22K. An apartment starts at £100K. It does mean doing a useful job and living in a *ghastly* place like Trowbridge.

Curmudgeon said...

We won't sort out the education issue unless we give much more freedom to popular schools to expand (and perhaps take over others) and allow unpopular schools to go to the wall. Lotteries may be slightly fairer than having tightly-limited catchment areas, which are effectively selection by postcode, but they do nothing to address the supply of schools. Maybe time to end the role of the State in actually providing education, as opposed to funding it, and consider education vouchers.

Anonymous said...

How about 'Stop Interfering' as a policy platform. Only regulate on clear safety issues, then leave the population to get on with it. Subsidise nothing, plan nothing, let it all happen organically.

Every facet of life will have to learn to stand on its own feet, education, healthcare, industry, agriculture, building, whatever. Individuals would have freedom of choice, but also freedom to bear the consequences of their choices - power with responsibility.

There will be winners and losers, but there's one helluva big incentive to be amongst the former.