Posts Tagged ‘Economy and Society’

Understanding policy over- and underreactions in times of crisis

Not all crises are met with proportionate policies: there can sometimes be a lack of balance between the costs of a policy and the benefits that are derived from it. Moshe Maor sets out a conceptual toolbox to help understand these responses. He argues that disporportionate responses are not necessarily the result of error, but can be intentionally designed and, under certain circumstances, be successful in achieving policy goals.

Policy scholars who are trying to explain the policies pursued by the U.S. Federal Reserve, the Bank of England, and the European Central Bank during the 2007-2008 financial crisis are confronted by an elephant in the room. The elephant is labelled disproportionate policy by design. At the outset, disproportionate policy response is typically understood to be a lack of ‘fit’ or balance between the costs of a public policy and the benefits that are derived from this policy, or between a policy’s ends and means. It is comprised of two core concepts: policy over- and underreaction. Overreactions impose costs without producing offsetting benefits, and underreactions provide net utility (i.e., the difference between benefits and costs) which is smaller than a counterfactual net utility. Most studies subscribe to the conventional understanding which views disproportionate policy response as a policy mistake or error.

In a recent conceptual turn which challenges the efficient goal attainment assumption, I have presented a radical idea: that under certain circumstances, disproportionate policy response may be intentionally designed, meticulously debated, implemented as planned and, at times, successful in achieving policy goals. Underlying this idea is a strategic perspective of policy over- and underreaction which views decision-makers as boundedly rational individuals who, in some contexts, may produce substantially rational outcomes, as Nobel Laureate Herbert Simon has argued. This may be the case, for example, when decisions involve high stakes, and when decision-makers are motivated to make the right choice.

I have distinguished between disproportionate policy response by error (bounded rationality) and disproportionate response by choice. I have furthermore advanced a distinction of such choices between two disproportionate policy options: namely, rhetoric and doctrine. The repertoire of disproportionate policy options includes those which are disproportionate by definition (that is, there is a lack of ‘fit’ between expected policy costs and benefits); they are perceived by policymakers to be disproportionate; or are grounded in the language of disproportionality, for example, as a form of drama.

Policy overreaction doctrine refers to a coherent set of policy principles which presents an ‘all or nothing’ policy commitment in the pursuit of a policy goal, no matter what the costs are. The idea is for policymakers to use the state’s power in a given policy area to cognitively and emotionally overwhelm the relevant target populations in pursuit of policy goals. A policy overreaction doctrine communicates to the target populations and the general public that, on this particular policy issue, effectiveness takes precedence over policy costs. A classic example is the successful decision made during the 2007-2008 financial crisis by the U.S. Federal Reserve, the Bank of England, and the European Central Bank to follow Bagehot’s (1873) doctrine that, in a crisis, the central bank should lend freely, at a high rate, and on good collateral.

During a crisis involving panic and public fears, assets value is difficult to ascertain for use as collateral; hence the overreaction which is built into this doctrine. Indeed, within a month of Lehman’s bankruptcy, Congress passed the Troubled Asset Relief Program, which allocated $700 billion to address the banking crisis. Once the banking sector and the economy had stabilised, calibration of the disproportionate policy response took place. Ultimately, the Dodd-Frank Wall Street Reform and Consumer Protection Act reduced the amount available to address the crisis to $475 billion.

Policy overreaction rhetoric, a subset of policy overreaction doctrine, refers to arguments that policymakers employ to reach and persuade the target populations of their ‘all or nothing’ commitment to achieve their policy goal, no matter what the costs are. This type of ‘crafted talk’ may be used by policymakers to shape the ‘policy mood’. It may also be used to communicate an implicit message that policy effectiveness takes precedence over costs. A classic example is Mario Draghi’s (2012) statement that “[w]ithin our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” as well as his reassertion of this commitment in order to shield the Eurozone from the 2013 surge in U.S. Treasury yield. The successful choice here has been to formulate a broad, qualitative, and not well-specified statement which, at the same time, is overwhelming, unconditional and easily understandable by market participants and the public.

Policy underreaction doctrine refers to a coherent set of policy principles which presents a conditional commitment for achieving a policy goal based primarily on policy cost considerations. At the heart of a policy underreaction doctrine lie principles for the use of limited resources and restricted government force in order to achieve a policy goal. A policy underreaction doctrine communicates to target populations the implementation of a gradualist approach to the use of government power that leaves much room for compromise. A classic example is the UK government no-regret doctrine in its approach to climate change adaptation, which focuses on increasing the nation’s resilience to a range of possible futures. In the area of flood preparedness, for example, adaptation measures are not designed to perform optimally in any scenario of climate change because they are not tailor-made to address future climate variability and extremes. Indeed, policy underreaction has been evident as practices adopted have failed to deliver when projected climate change predictions regarding winter floods have materialized.

Policy underreaction rhetoric, a subset of policy underreaction doctrine, refers to arguments employed by policymakers to reach and persuade the target populations of the former’s conditional commitment to respond to a policy problem based primarily on policy cost considerations. Examples of such rhetorical positions include a wish to wait until more information regarding the policy problem emerges; a desire for a limited policy outcome in a particular policy domain; an emphasis that policy will not disadvantage certain actors and/or arrangements; or a goal of enacting policy measures that provide net social benefits under all future risk projections in response to a given policy problem. These arguments communicate to the target populations and the general public that, regarding the particular policy issue, policy costs take precedence over policy effectiveness.

Together, these terms represent a repertoire of disproportionate policy responses. The usefulness of each of the terms lies in their convenience as shorthand for the set of broadly similar disproportionate policy options that often dominate the real and manufactured crisis management agenda in various policy domains in many countries. Each of the disproportionate policy options may take a different shape and form depending on whether it is designed before or during a crisis. The more time there is before an impending crisis, the more work can be undertaken in the design of disproportionate policy options.

How do we confidently detect design? To prove conclusively that disproportionate responses have been chosen by design, rather than being a product of error, scholars should aim at demonstrating that (i) policy options are perceived by policymakers to be disproportionate; (ii) policy instruments are calibrated in a way that is highly likely to produce disproportionate response; and (iii) that the decision to design such options is carefully thought out, developed and debated. The aim is therefore to gain firsthand knowledge and eyewitness accounts.

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Note: the above draws on the author’s published work in Policy & Politics.

About the Author

Moshe Maor is Professor of Political Science and Wolfson Family Chair Professor in Public Administration at the Hebrew University of Jerusalem. His full academic profile can be found here.

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image: part of facade of the Bank of England on Threadneedle Street, by George Rex (CC BY-SA 2.0). 

How benefit sanctions push single parents further from work

Benefit sanctions encourage job-seeking behaviour, successive governments have claimed. Yet in the case of single parents, sanctions actually move parents further from work, write Sumi Rabindrakumar and Laura Dewar. They draw on Gingerbread’s research to show how parents are often penalised despite seeking work, caught out by unrealistic expectations from jobcentres and poor administration.

The government argues that benefit sanctions serve a purpose. Under job-seeking benefits such as Jobseeker’s Allowance or Universal Credit, penalising those who claim benefits but do not comply with conditions is said to provide fairness for the taxpayer and change behaviour to help people into work.

In some ways, these principles are intuitive. Indeed, when benefit sanctions are criticised, defenders point to the fact that claimants themselves often agree that penalties should be in place for those who ‘don’t do the right thing’. However, this still raises significant questions as to whether this is actually how sanctions are being used and whether they achieve the impact the government intends.

New research from Gingerbread sheds light on some answers. We already know that the growth in single parent sanctions indicates they are far from the ‘last resort’ that policymakers claim. These findings, based on single parent case studies, show just how far-reaching the impact of sanctions is on families – whether as a result of warnings or actual penalties imposed. Sanctioned single parents describe the severe financial and emotional toll of the sanctions regime; and how they were pushed into debt as a result. Even when sanctions are overturned and benefits repaid, the length of the appeal process means the financial burden is still heavy. The worry and stress caused by even warnings over sanctions was made clear – as the main carer for their children, this caused particular concern for single parents.

Total and utter fear, shock and worry. Panic about how to manage.

The impact of sanctions is not limited to claimants. When benefits are cut, other support must pick up the pieces. This includes friends and family, as well as local services. Housing providers and the voluntary sector were typically relied upon for further assistance – particularly local advice services and foodbanks, as others have found. It also highlights the precarious nature of support for those affected by benefit sanctions. Single parents reported the finite amount of support that already-stretched family and friends can provide; local advice services are increasingly under-funded and not an option for all sanctioned claimants.

Perhaps the government sees this is an unfortunate but necessary result of ensuring people are doing what they can to seek work. Yet the evidence suggests that sanctions actually move single parents further from work. There are practical considerations – parents said they could not afford to travel to the jobcentre or interviews while sanctioned; others have been caught between sanctions and a desire to find more sustainable work. For example, one parent could no longer meet the shift patterns required by an employer alongside caring for her child and was forced to leave her job. She was sanctioned as a result and the financial pressures meant she had to take the first available (and insecure) job rather than wait to apply for a more senior and flexible job as suggested by her work coach. Finally, sanctions – particularly unfair sanctions – fundamentally damage parents’ relationship with their jobcentre and advisers. This chimes with evidence suggesting that some claimants leave the benefit system altogether after being sanctioned.

The government may regard these effects as fair consequences for ‘non-compliance’. Yet as the report shows, single parents are in fact job-seeking, but are impeded by external factors. The lack of part-time or flexible work can mean some do not meet the strict criteria for the number of job applications made in a week. The lack of local affordable childcare can mean single parents need to give up work. Yet, despite the intention to seek and remain in work, single parents are penalised.

This approach to sanctioning is clearly not focused simply on wilful non-compliance. It is the result of a tick-box approach to policing job-seeking activity. Moreover, claimant commitments and Universal Credit were supposed to address individual circumstances to avoid just this rigid approach. However, there is little evidence of this working for single parents. In fact, there are signs that Universal Credit is making things worse. More single parents are now subject to job-seeking conditions (parents of three and four years must seek work and there are conditions to encourage working claimants to increase their pay or hours being piloted) and therefore at risk of being caught out by rigid rules. Worse, the chaotic delivery of support for childcare costs has meant some single parents have had to give up work – and been sanctioned as a result.

The findings add to a growing weight of evidence asking serious questions of the sanctions regime – not just about how sanctions are administered, but their purpose as a whole. Arguably, the experience to date indicates that benefit sanctions poorly serve those with additional support needs and barriers to work and begs the question as to whether they should be used at all – particularly given the impact on claimants with children.

I don’t think the children should be punished…[they] still need to be fed and clothed and live in a warm home…sanctions undermine the purpose of the benefit system in our country to protect the poorest and most vulnerable from poverty.

Notwithstanding an in-depth review of the use of sanctions, the government can limit the financial impact of sanctions in the short term. Instead of dragging its heels, it can introduce a proper ‘yellow card’ system where warnings are used in the first instance, instead of sanctions. The government can also reduce the financial penalty of a sanction – it cannot be right to withdraw an element of state support in its entirety. Alongside this, the government can do more to target sanctions on genuine non-compliance. The government must make conditions realistic for groups like single parents, where they face barriers to work rather than lack the motivation to comply with conditions, and ensure claimant commitments reflect the flexibility needed to accommodate claimants’ needs.

Single parents overwhelmingly want to work – around seven in ten already do. There is little evidence which suggests the sevenfold increase in the number of benefit sanctions for single parents between 2005/06 and 2016/17 (the latter taking Jobseeker’s Allowance and Universal Credit sanctions together) is warranted as a result of single parent job-seeking behaviour. The government has a chance with the new system of Universal Credit to put in place a system that genuinely encourages people to find work, and supports them to sustain and progress in work. While it is politically unlikely that sanctions will be halted, there are choices the government can make to ensure they are not wasting resources on an ineffective and inappropriate policy.

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About the Authors
Sumi Rabindrakumar is Research Officer at Gingerbread.

 

 

 

Laura Dewar is Policy Officer at Gingerbread.

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain)

How local political preferences influence public housing reform

José M. Alonso and Rhys Andrews explore the extent to which housing stock transfer in local authorities across England has been shaped by local political ideology. They explain that ideology plays an important role in making housing reform happen, but that local people can also be a source of resistance and of alternatives to such reform.

The Grenfell Tower fire has put the spotlight on social housing in Britain and has provoked broader questions about the effects of privatization and liberalization of public services in the UK. Over the last decades, policymakers and politicians across Western countries have promoted a wide range of reforms to the public housing sector, with the aim of making the housing market more flexible and reducing the cost of social housing to the taxpayer.

Inevitably, these reforms were especially popular in Britain, where Margaret Thatcher’s 1980 Housing Act opened the door to implementing controversial housing policies such as the “Right-to-Buy”, followed by radical initiatives, such as the large-scale voluntary transfer of all publicly owned local housing stock to not-for-profit housing associations. The housing policy of the “new” Labour governments of the 2000s was marked by a continuation of the preceding Conservative policies; in addition to perpetuating the right-to-buy scheme, large-scale stock transfer was embraced as a means to cope with a large and deteriorating stock of public housing in urban areas across England.

Housing stock transfer has been a contentious policy since its implementation, often prompting accusations of privatization through the back door and concerns that it is motivated by ideological commitments rather than more pragmatic considerations. In academic terms, the “big” economic and ideological rationales behind housing stock transfer have been discussed at length, but we still need to know more about the local politics of this reform.

Credit: Pixabay (Public Domain).

Our research looks at whether local political ideology and political preferences influence levels of public housing provision across councils in England. Our results suggest that local politics matters for social housing: Conservative councils are more likely to transfer housing stock away from the public sector, but local authorities with more Labour voters retain larger stocks of publicly-owned housing.

Although UK central government has utilised numerous levers to steer the social housing market, responsibility for the implementation of social housing policy still remains very much in the hands of local government. Levels of stock ownership and housing services expenditure vary considerably, and stock that has been transferred is managed by a mixture of private providers, housing associations, and local authority-owned Arms-Length Management Organizations.

Theories of political competition suggest that right-wing party rule and political preferences will be associated with the transfer of housing stock away from public ownership, while left-wing party rule and political preferences will be associated with higher levels of government-owned housing. We tested this theory by analysing the levels of housing stock held by English local authorities during the period 2001-14. In our analysis, we found striking evidence that Conservative-led authorities are more likely to transfer housing stock out of the public sector, but that Conservative political preferences among the local population don’t influence this decision. By contrast, voter support for the Labour party matters more for the scale of public housing provision than Labour party control of local authorities.

One likely explanation for our findings is that housing stock transfer reflects the Conservative Party’s “anti-municipalism” and a wider aim to stimulate private sector engagement in local public services through initiatives, such as Compulsory Competitive Tendering and the commercialisation of service provision. Council housing sales were, of course, considered unacceptable by Labour-controlled local authorities until 1997, but became more attractive when the ‘new’ Labour government started to promote social housing externalization policies.

Nonetheless, it is precisely from the late 1990s, when social movements in favour of municipal housing, such as the Defend Council Housing campaign, emerged across the UK; and it is the impact of these local political struggles, which likely explains our finding that as the proportion of Labour voters increases within a local authority so too does the stock of publicly owned dwellings. As such, our study highlights that whatever the national policy framework for housing, local politics continues to matter for the provision of social housing in cities and towns across England.

Overall, our research suggests that local political ideology plays an important role in making housing reform happen, but that local people can be the source of resistance, antipathy, and alternatives to such reform. Surprisingly, even though Conservative-led local authorities in England are more likely to have disposed of their housing stock, Labour-led councils are no more committed to publicly owned social housing than other authorities.

Nevertheless, while this finding may reflect a ‘New Labour effect’, our study offers a nuanced and valuable counterpoint to simplistic accounts of the connection between politics and policies. In particular, it underlines that citizens’ hostility towards local reforms may still influence the likelihood of their implementation. For local tenants and citizens concerned about the accountability gap posed by housing stock transfer that the Grenfell Tower tragedy has so starkly illustrated, our study indicates that resistance to de-municipalisation is possible.

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Note: the above draws on the authors’ published work in the International Public Management Journal.

About the Authors

José M. Alonso is Assistant Professor of Economics at the University of Cantabria.

Rhys Andrews is Professor of Public Management in Cardiff Business School at Cardiff University.

 

Will robots lead to communism? Three strategies to ensure automation works for the common good

Could the consequences of automation lead to the growth of communism, as Mark Carney has warned? Mathew Lawrence writes that deep technological change opens up two divergent paths: one where technologies are managed and owned to our collective advancement against one where they deepen inequalities. He draws on IPPR research to outline three strategies that will ensure automation works for the common good.

A spectre is haunting economists, the spectre of automation. Mass unemployment, wage stagnation and the intellectual and political revival of communism – these are just some of the outcomes Mark Carney foresaw over the weekend when discussing the potential economic impact of technological change. Nothing is determined; how we manage automation will determine whether it immiserates or helps emancipate.

We are not on the cusp of a ‘post-human’ economy, with breathless rhetoric about the imminent rise of the robots and technologically-induced mass unemployment overblown. Nonetheless, the governor of the Bank of England was right to argue the accelerating capability of automating technologies could shake foundational economic and social assumptions: the role of employment as the primary means of distributing economic reward, labour’s position as the central factor in production, notions of scarcity, and how we organise working time, among others.

The reason why the coming wave of automation could, in time, be different to previous waves – more rapid, pervasive, and disruptive – is because of the growing power of artificial intelligence. Whereas past waves of automation typically required machines to have a clear set of instructions in structured environments to enable them to perform tasks once done by humans, today’s machines can act without explicit instruction in complex environments. In other words, machines are increasingly able to problem-solve, and ‘learn’, independently; and are able to perform an expanding range of both physical and mental tasks better and more cheaply than we can.

Under these conditions, automation could emancipate or immiserate. Managed well, automation could build a future of shared economic plenty, the productivity gains of technological change allowing us all to live better and more freely. Managed poorly, automation could create a ‘paradox of plenty’, in which we produce more, yet the fruits are less equally shared, as the benefits of technological change flow to the owners of capital.

Critically, the nature of the machine age will be human-shaped. This is because the pace, extent, and distributional effects of automation are determined by institutional arrangements, and the broader distribution of economic power in society. The future is not technologically determined. Automation is not an external force acting on us, but something shaped by our collective choices, with public policy powerfully steering how technologies are developed, used, and for whose benefit.

IPPR’s report on managing automation set out three core strategies to ensure it works for the common good.

First, we need a managed acceleration of automation to reap the full productivity benefits and enable higher wages and living standards. Due to the UK’s low investment rates, poor management practices, and long tail of low-wage, low-productivity firms, it is the relative absence of robots in the UK economy, not their imminent rise, that is the biggest challenge. To address this, the more rapid adoption of digital technologies, including automation, should become one of the national ‘missions’ of the government’s industrial strategy. A new partnership body, Productivity UK, should also be established with the goal of raising firm-level productivity, including the acceleration of investment in automation technologies. It should focus on the adoption of digital and other technologies for firms in the non-frontier ‘everyday economy’, where technological adoption rates are low, and support ordinary workers to develop and implement technological solutions.

Second, as the fallout from Facebook’s actions continue, it is clear we need to act to ensure the ethical and regulatory architecture shaping the use of digital technologies is publicly determined, not left in the hands of tech giants. We therefore recommended the establishment of An Authority for the Ethical Use of Robotics and Artificial Intelligence to regulate the use of automating technologies. Interestingly, there appears to be growing momentum towards such an outcome; whether the government’s new Centre for Data Ethics and Innovation will be sufficient will be worth watching.

Finally, if automation is to underpin a future of shared prosperity, we urgently need to develop new models of collective ownership. As automation grows, ‘Who owns the robots?’ becomes a vital determinant of the distribution of prosperity. If the share of national income flowing to the owners of capital increases, then existing, deeply unequal levels of capital ownership will accelerate inequality. To make sure that the dividends of automation are broadly shared, we need new models of ownership that hold wealth in common and democratise capital at scale.These could include a Citizens’ Wealth Fund that owns a broad portfolio of assets on behalf of the public and pays out a universal capital dividend and the creation of employee ownership trusts to give workers a stronger stake in the firms for which they work – and an ownership claim on the value they help create.

Carney was right to highlight Marx and Engels as useful guides to an age of automation. When considering the divergent paths deep technological change is opening up – a world where technologies are managed and owned to our collective advancement against one where they deepen inequalities of power and reward – we have one political choice confronting us: socialism or barbarism.

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About the Author

Mathew Lawrence is a senior research fellow and co-author of IPPR’s report on automation. He tweets @dantonshead.

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Wikimedia Commons (Public Domain).

Linda Yueh: History’s ‘greatest economists’ and how their ideas can help us today

How can the ideas of history’s greatest economists from Adam Smith and David Ricardo through Joan Robinson and Milton Friedman to Douglass North and Robert Solow – help us think about the biggest economic challenges of our time? Linda Yueh‘s new book seeks to answer this question through studying 12 economists whose thinking has changed the world. She discusses her work with Artemis Photiadou.

 The Great Economists: How Their Ideas Can Help Us Today is available to buy here.

What was your main aim in writing this book and how did you choose which individuals to include?

I was interested in finding ways to address our biggest economic challenges, such as why are wages so low? Learning the lessons from history and from the ideas of the great economic thinkers seemed like a good way to start. I also enjoy biographies, so this book offered a chance to write about the lives of some of the most influential people over the past two centuries. Although they were all successful in shaping the world around them, it was intriguing how many of them were critical of their productivity and not doing more!

Did studying economists from different schools of thought make you rethink any of your own assumptions about how the economy works?

Especially because my work is based on data, my empirical research including my Macroeconomics textbook (co-authored with Graeme Chamberlin) embody quite a lot of the ‘new neoclassical synthesis’ that characterises macroeconomics today. In other words, the work of many academic economists draws from the most pertinent parts of New Keynesianism, New Classical Economics, and Monetarists. Even Marxist thinking has come back in some fashion, though my work in my previous books (e.g., China’s Growth) had shown how little of the communist approach to economics exists even in the most successful country to have adopted it.

Over the past decade the economics profession has been criticised for a perceived collective failure to identify the systemic weaknesses that led to the 2008 financial crisis. Do you feel that that critique is fair, and does it tell a story about the decline of the discipline from when it was defined by these ‘great economists’?

It’s a fair critique and strongly suggests that there are lessons to be learned from the 2008 crisis. There is a shift in the economics profession towards more empirical analysis, coupled with a push for greater engagement with the ‘real world’, both of which would help. Indeed, the Great Economists that I write about actively engaged with the big issues of the day even if the answers were imperfect. Today’s academic economists tend to have a narrower focus, so there are fewer generalists than before. Generalists are the ones who would be well placed to spot links between the financial markets and economic forecasting since they would be working on the big economic picture, rather than the current divide between those who work on financial economics and the forecasters.

When it comes to responses to the financial crisis, would any of the individuals in the book have supported the British government’s decision to pursue austerity?

I have a chapter dedicated to this very question. The chapter starts with the austerity debate during the 1930s when the Keynesian revolution took off and goes through the later critiques of Keynesianism by other great economists from the other side of spectrum who were opposed to government deficit spending. I then discuss the current austerity debate and how these decisions will affect our future economic growth.

One of the key themes in policy debates since the recession is the ‘left behind’. Is there one particular economist whose thinking could help the losers of globalisation?

Paul Samuelson, who I write about in the chapter on globalisation, is best placed to help us think about how to help those who have been left behind. America’s first Nobel Laureate developed the theory of factor price equalisation that showed how globalisation depresses the wages of workers in the sectors opened up to trade in rich countries. He was a generalist like the others, so he also wrote about how to fashion optimal economic policy to address this issue, which requires adopting the stance of an ethical observer. Akin to John Rawls’ ‘veil of ignorance,’ Samuelson’s idea is for policymakers to position themselves on a policy without knowing how they would be affected. But, he also pointed out how difficult it is to get policymakers to act sometimes. An advisor to US Presidents, he observed: “I can’t think of a President who has been over-burdened by a knowledge of economics.”

Considering the years you cover, it was almost inevitable that the ‘great economists’ would be white and all but one would be male. Would you say there is diversity in who influences economic thinking today, or are 21st century ‘great economists’ still white men?

The Great Economists of an earlier vintage who wrote the models that define the profession were indeed working at a time when there were numerous barriers for women and little diversity. But, their ideas have been modified by a more diverse set of economists. Even among the Greats in my book, I include the Cambridge economist Joan Robinson who further developed Keynesianism by establishing the new field of imperfect competition in the 1930s. I also write about Arthur Lewis from St Lucia whose work on development (Lewis model) was recognised with the award of the highest prize in economics, the Nobel Prize, in 1979. But, I also write about the persistent gender imbalance in the subject. Of the more than 50,000 academic and research economists whose work is listed in RePEc, less than one-fifth are women. But seeing the interesting research being done in economics, I’m confident that the 21st great economists would be a more diverse mix.

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Note: Linda was speaking at an LSE IDEAS event in April 2018; a podcast is available here.

About the Author

Linda Yueh (@lindayueh) is a Fellow in Economics at St Edmund Hall, Oxford University, Adjunct Professor of Economics at London Business School, and a Visiting Senior Fellow at LSE IDEAS.

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

Understanding the UK’s soft power: more than Shakespeare and the Royal Family

Do we understand enough about what soft power is? Gary Rawnsley explains that although the focus has so far been on cultural icons and stories, there is another important aspect to soft power: the actions of the British government. These are seen as a reflection of the values the UK upholds, and so influence opinions overseas. He argues that understanding this dimension of soft power is becoming more urgent as Brexit approaches.

So-called “soft power” is now a critical component of UK government discourses on foreign policy. The 2015 Strategic Defence and Security Review recognised Britain’s soft power capacity as a valuable asset while acknowledging the vital role played by instruments of British public and cultural diplomacy such as the BBC World Service, the British Council, and institutions of higher education. Moreover, frequent discussion of “global Britain” at the highest levels of government after the 2016 referendum and the continuation of the “GREAT” campaign demonstrate an enthusiasm for understanding how soft power can help the UK prepare to leave the European Union.

However, if British state and non-state institutions wish to maximise the country’s soft power potential, they must first understand what soft power is and, perhaps most importantly, what it is not; and as yet there is little evidence to demonstrate that they do appreciate what soft power is. The key lies in recognising how governments and other political actors “generate” soft power rather than “exercise” it, because soft power is a resource, not an instrument. It is the end result – the consequence – of policies pursued and relationships maintained that further social progress and generate favourable opinions overseas. Soft power cannot be touched, counted, or used as and when required. Its accumulation and exercise represent long-term processes that should be barely noticeable. It is something that a nation acquires and exercises naturally, not something that can be deliberated and decided by Cabinets and Kings.

Also, the introduction of other unnecessary labels such as “smart power” and most recently “sharp power” simply add to the confusion. As Tom Fletcher, a former Ambassador to Lebanon, noted in his 2016 discussion of Naked Diplomacy, “it matters less whether you call is soft, smart, new or whatever the next catchy moniker is. What matters is that you call it power. And that you get out there and use it”.

The problem is that successive governments, following the British Council’s lead, remain convinced that soft power is synonymous with attraction and familiarity. For example, opinion poll surveys measured the “attractiveness” of the UK among respondents in Europe, the Commonwealth, and the G20 after the 2016 referendum, while the British Council’s 2014 report, As Others See Us, documents what we already know about high levels of awareness among foreign publics of British culture, education, and society.

While the UK has every reason to be proud of its cultural reach, engagement, and heritage, this does not necessarily translate into “power” so that Britain’s foreign policy ambitions will progress. More attention or familiarity does not correlate with more influence. Of course respondents to surveys overseas are familiar with the Monarchy and Shakespeare. They are highly visible, more accessible stories, they are non-threatening, and certainly more “sexy” than complex political ideas, values, institutions, and processes. Yet this is very different from understanding, accepting, or rejecting the values these cultural icons represent. After all, while “to know us” may be “to love us” in some circumstances, in other situations “to know us” may also be “to fear us” or “hate us”.

Rather, I call for greater attention to the behaviour – at home and overseas – of the British government. It is judged less by what it says about itself than what it does and the company it keeps. Soft power lies in the credibility and moral authority of actions taken by state and non-state institutions. This is the reason why we are justified to worry about reports detailing the questionable conduct of some workers in our most prominent overseas aid charities, such as Oxfam, and when the government insists on maintaining a strong relationship with Saudi Arabia despite criticism of that country’s military action in Yemen.

The policy implications of this approach are clear: To generate soft power, the government must behave in an ethical, transparent, and accountable manner; and when it fails to do so, it must correct its mistakes in an equally transparent way. The Chilcot Inquiry and the inquest into the 1989 Hilsborough disaster demonstrate levels of accountability and transparency that communicate a positive narrative about the UK’s democratic values, institutions, and processes. The value of the Chilcot Inquiry lies not in the detail of who said what to whom and when decisions about Iraq were made; rather the value lies in the fact that the inquiry happened. This is the narrative that contributes to the UK’s soft power by communicating a story that not even former Prime Ministers are above scrutiny. The accountability of the police force, a component of the British state’s power, during the Hilsborough inquest likewise communicates a compelling narrative that is absent in many other parts of the world. These are powerful messages about democratic values, democratic institutions, and democratic processes that are often ignored in favour of a more comfortable, glamorous, and easier narratives focusing on British ‘culture’.

For all of the government’s ambitions to create “Global Britain” post-Brexit, the current institutional arrangements – the absence of public diplomacy from core political institutions, the treatment of overseas applicants to Universities, the demonization of migrants and refugees, and misjudged changes to the funding of the BBC World Service and the BBC Monitoring Service – suggest that the UK does not take seriously its soft power capacity or the public diplomacy mechanisms designed to project it.  As we approach our exit from the EU and need to turn our attention to more strategic approaches to global influence, the UK government needs to do much more to understand and recognise its soft power and both protect and strengthen the public diplomacy mechanisms designed to communicate it.

Issues about governance as well as the (foreign and domestic) policies the government pursues, affect the UK’s capacity to generate soft power and therefore the quality of its global relationships. It is essential that the government recognise how, since soft power arises from attraction to a country’s values and moral authority, the actions it takes at home and abroad will be seen as a reflection of the values the UK upholds, and will therefore have a profound effect on the UK’s soft power. These issues will only grow more urgent as Brexit approaches.

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Note: the above draws on the author’s published work in The Journal of International Communication.

About the Author

Gary Rawnsley is Professor of Public Diplomacy in the Department of International Politics at Aberystwyth University.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Michael Garnett (Flickr/CC BY-NC-SA 2.0).

Don’t call me a customer, treat me like a human: rethinking relationships in public services

The pressures of competition, together with the growth in the use of performance data, keep service providers on their toes: if they want to keep customers and their money, they need to keep them happy. But this is not good news in a public services context, writes Catherine Needham and outlines four key problems created by the customer language.

Once upon a time there were public services that treated everyone the same, and people had to take what they were given. Patients, school children, students, welfare recipients were grateful and deferential and prefaced all their requests, with ‘if it’s not too much trouble’. There would be an audible gasp if ever they did an Oliver Twist and dared to ask for more. Then came Margaret Thatcher with her faith in markets and business people, and a feeling that government would run a whole lot better if lots of things were privatised, and those public services that remained were run like businesses. Users were encouraged to be customers of public services and to demand what they wanted, and to shop around.

Of course, this is an oversimplification– the welfare state never treated everyone the same, and before Thatcher there were groups of people who combined together to demand different kinds of public services. But beyond this simplistic picture, a cross-party assumption of governments has been that public services will flourish through adopting the entrepreneurialism, efficiency, and customer focus of the market. We have seen the customer language and approach take hold in a range of public services. Customer language is applied when people pay directly for public services (e.g. tuition fees); have choice over services (e.g. state schools and elective surgery); and/or are treated in an attentive and respectful way (good ‘customer service’).

There has been a huge growth in performance data about public services, so that we can be smart customers, shopping around between providers to get the best fit for what we want. We can see the death rates of surgeons before we choose a hospital. We can see the punctuality rates of trains and perhaps decide to take the car instead. The pressures of customer competition keep providers on their toes: if they want to keep customers and the money that comes with them then they need to keep those customers happy.

Credit: Pixabay (Public Domain).

There are a number of problems with this, and I’m going to focus on four:

The language of customer is individualising. It focuses on what you want to get out of public services, not on the broader collective goals of those services, which are often public in the first place because they are about shared and equal access to a good life. Prioritising people’s individual demands risks intensifying inequalities in access to services, and in generating collectively undesirable outcomes such as over-prescribing of antibiotics in response to patient demand.

It draws a false equivalence between private customer service and quality improvement. when I’m shopping for car insurance I like being able to pick a different provider if I’m not happy with the one I’ve got, but it took me a few goes at buying car insurance before I learned how to compare them properly and make a good choice. A lot of public service choices are sticky: people make a choice once and after that it is difficult to change university, school, care home, hospital consultant. You’ve often had to work quite hard to get those services in the first place (since a lot of them have entry requirements before you can get through the door). And often (despite the plentiful performance data) the quality of the service isn’t really clear to you until you are in them. There’s little scope to make a poor choice and learn from it the next time, and that means the signals we send to providers by our choices are not a reliable guide to service quality.

The language of customer shifts the blame for bad services onto the individual. If we make consumer choice the engine of change in public services, then – if I’m not a very articulate or motivated customer – isn’t it my fault that the service isn’t better? Making choices about certain things is really difficult. We know that it’s hard to compare energy prices and mobile phone tariffs because they are designed to be difficult to compare. Now imagine choosing a care home to live in, because of advancing dementia or a medical crisis which has affected your mobility. It’s a hard time to make a choice, and we need to have more to offer people facing poor quality underfunded services than blaming them for not being good enough at making choices.

It puts staff and service users in conflict. Underpinning the customer language is the view of public services as a battleground between staff and customers, where customers have to keep their wits about them and be ready to complain, switch and be generally awkward in order to get what they want. You can see this in the language around students as customers in higher education in which tuition fees are seen as flexing customer muscle over wayward academics.

But this conflictual model fails to recognise that the interests of users and providers can be closely aligned. Successful delivery of public services often requires high trust relationships between users and providers on the front line. We need to get better at supporting good relationships, at harnessing relational power. In our 21st Century Public Servant research into the future public service workforce, we repeatedly find that people want public services and organisations that feel human and treat them as humans.

And that’s not easy. In the many presentations we have given to public service organisations what’s clear is that taking relationships seriously is a radical challenge for them. Big organisations in the public (and indeed private) sectors are not good at being human. Large organisations work through the efficient processing of people – the customer service algorithm – rather than the building and sustaining of relationships.

Creating good relationships is small-scale work. We need to find ways for even big organisations to feel small. There may be ways to nest the insights of small organisations in bigger ones, so that within large hospitals and large schools we have wards and classes where relationships can be developed and sustained. We need to get better at understanding the places where good relationships exist and celebrating and copying them, rather than allowing adversarial narratives (‘them and us’) to take hold and thrive.

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Note: the above draws on Catherine’s inaugural lecture given at the University of Birmingham in March 2018.

About the Author

Catherine Needham is Professor of Public Policy and Public Management at the University of Birmingham.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

 

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