current affairs

The high-speed rail track is the latest signal that the route to deficit reduction now runs via ‘saving to spend,’ explains Alan Shipman.

Banks’ recent mishaps with ‘financial innovation’ have demanded some unusual displays of Finance-Minister innovation. And George Osborne has confirmed his role as one of the most innovative modern Chancellors, even before he prepares to deliver the next Budget in March.

In expanding the UK government’s infrastructure-building commitments while pushing for another round of welfare spending cuts, Osborne has gone the opposite way to most of his post-war predecessors. They tended to let the welfare budget expand, as the inevitable consequence of falling income and rising social need during recession. To fund it, they traditionally swung the axe over capital projects – trusting that most existing roads, railways, power stations and public buildings could creak along for another year without major upgrades or replacement.

The northern extension of HS2 (see this Guardian video is just the latest in a long line of contrarian Coalition commitments, which also include a revived school rebuilding programme, support for the Crossrail project whose cost was questioned in opposition, and a new way of letting big institutions finance public investment projects. Although capital spending reductions announced in 2010 have not yet been fully reversed, it is now clear that further cuts to the government’s redistribution and running-costs will be used to finance new capital projects, and not directly repay debt.

The Coalition headstand 
Past Chancellors have usually taken the opposite approach to ‘fiscal rebalancing’ because cuts to benefits and tax credits are more socially (and electorally) painful than cuts to most infrastructure projects. Indeed, big civil engineering plans often bring some distinctly uncivil responses from the ruling parties’ supporters, as confirmed by those living close to the proposed high-speed route (see HS2 route set to trigger fresh protests).

Economically, spending more on benefits has the merit of immediately boosting demand, by putting money into some of the poorest pockets – shortening the post-Christmas roster of retail-chain closures, even if not enough on its own to get the economy growing again. A higher welfare bill is traditionally the ‘automatic stabiliser’ that helps to end the recession which gave rise to it. In contrast, even a ‘shovel-ready’ infrastructure project can take months to get into motion.  Those crossing affluent backyards can take years, even when planning procedures are fast-tracked to HS2 speed.

Osborne has taken the opposite approach because investment is the key to long-term expansion. A consumption boost worked in 2009-10, restoring the economy to growth, because there was plenty of spare capacity. But three years and a double-dip later, it’s uncertain how much idle machinery can still be easily switched back on. With unemployment falling, the amount of easily-redrafted labour is also unclear. Some economists fear another burst of inflation as rising demand hits inflexible supply. So investment, which adds to capacity as it boosts demand, looks like the safest way to engineer an upturn.

Investor of last resort
Another powerful argument for more public investment was delivered to the Treasury Select Committee at the end of January, as it probed the impact of Quantitative Easing (QE) – the wholesale purchase of government debt by the Bank of England. QE has enabled the Bank to keep base rates interest at a historically low 0.5% throughout the recession, when the wider public deficit and above-target inflation would normally have been expected to send them up. Low interest rates were intended to promote economic recovery, by boosting business investment and reviving the housing market.

But pensioners’ and pension-fund managers’ representatives pointed out two serious side-effects. Low interest rates widen the deficit on the remaining final-salary pension schemes, forcing big companies to divert funds away from investment so as to plug the gap. Low rates also flatten the incomes of pensioners, and others now living on their savings – squeezing their own expenditure, and tying the helping hand that previously assisted younger family members with home-deposits and other big expenditures (see this article).

So for low interest rates to be sure of stimulating recovery, those who benefit most from them have got to be willing to spend more. The government is the biggest beneficiary, and will still enjoy the country’s cheapest credit even if agencies downgrade its currently top (AAA) credit rating. As the damage to pension funds is already done, QE’s overall success may now rely on the Treasury’s ability to splash the cash.

Infrastructure spending has one other major benefit from the Chancellor’s perspective. Because the public outlay can lever-in substantial private investment , and because much of it will take place beyond the Treasury’s 5-year budgeting horizon, the succession of big projects announced with increasing boldness since 2010 need not undermine the Coalition’s promise to eliminate the structural budget deficit.

Many economists are anyway convinced that governments should borrow for public investment, and that the UK should follow standard accounting practice by separating its capital budget (on which rising debts are usually justified by rising assets) from its budget for current expenditure, where debts incurred in downturns should be paid down during recovery. The Treasury’s own forecasting model was highlighting the need for more public capital spending, even before the release of disappointing fourth-quarter growth figures. Osborne’s break with tradition, to boost investment, is fast becoming the new orthodoxy. It should help sidestep the awkward question of whether HS2 will eventually get him (First Class) from Plan A to Plan B.

Alan Shipman 6 February 2013

Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world,  part of the foundation degree in Financial Services.

Cartoon by Gary Edwards

The British penal system is in deep crisis, reports Dick Skellington, and a new Minister of Justice may make matters worse.

It is said that no one truly knows a nation until one has been inside its jails. A nation should not be judged by how it treats its highest citizens, but its lowest ones', Nelson Mandela.

Following the Prime Ministerial reshuffle, the nation now has a new Justice Minister, Mr Chris Grayling, who seems determined to embark on new policies that may have further damaging impacts on an already beleaguered prison service.

In mid-September Grayling, who replaced the more civilised Kenneth Clarke, told the House of Commons: 'the only changes I would want to see will come through returning more foreign national prisoners to their country of origin'. This strategy would, he promised, ensure there was more room in our overcrowded prisons to incarcerate more inmates.

The idea of prisoner transfer abroad is not new, but what is so sad about hardline right winger Grayling's first utterances as Justice Minister is his complete failure to acknowledge some of the more humane efforts of Kenneth Clarke to seek to improve a creaking system. Grayling spoke about the importance of rehabilitation but he signalled a move away from what he called the 'soft justice' policies of his predecessor.

He said: 'Prison is not meant to be a place that people enjoy being in. I don't [want to] see prisoners in this country sitting in cells watching the Sunday afternoon match on Sky Sports. Am I planning to reduce the number of prison places? No I'm not. I do not want to set a target to reduce the prison population'.

According to the International Centre for Prison Studies, England and Wales boasts the highest per capita prison population in Western Europe, 148 people per 100,000. Scotland is not far behind with 135, while Northern Ireland's is a mere 79.

We imprison far more people than many Western European nations. Italy has a rate of 104, Germany 97, Belgium 91, France 85, Switzerland 83, Sweden 82, Finland 75. Norway 66. Only Spain imprisons at a comparable rate to England and Wales, at 144 per capita. However, we do compare favourably with the USA which has an astonishing per capita rate of 724, followed by Russia with 581. In terms of worldwide comparisons, England and Wales sit around mid table, but in relation to Europe, we fall behind many nations, even those new countries from the old USSR who have joined the European Union (see: http://news.bbc.co.uk/1/shared/spl/hi/uk/06/prisons/html/nn2page1.stm).

Occupancy levels in England, Wales and Scotland are also relatively high and for many years our prison service has struggled to accommodate the weight of sentenced souls. The summer riots of 2012 made the overcrowding situation worse. The prison population in England and Wales in August 2012 was 86,656.

Mr Grayling is known for a series of controversial statements. In 2009, he compared Moss Side in Manchester to the violent police television series The Wire. He has been at the vanguard of the political vilification of some benefit claimants as scroungers when he was Employment Secretary, a crusade which disability welfare agencies claim impacted negatively on the perception of the disabled in the UK, and fostered a climate for hate crime to flourish. Within Conservative rank and file Grayling is not known as 'the jackal' for nothing.

On the eve of the reshuffle, disturbing figures were released by The Independent newspaper which revealed that the number of women in prisons in Britain has more than doubled in 15 years, with a total of 17,240 children now separated from their imprisoned mothers. Worse, Britain now has the highest female prison rate in the European Union, with 10,891 women jailed in 2011 alone. A generation of children without mothers is at risk. Of course, it can be argued that some of these women deserve to be behind bars, but many are imprisoned for relatively minor offences for crimes such as shoplifting, non-payment of fines, benefit fraud and offences linked to drug addiction and sex work.

Last year two-thirds of the 10,181 women sent to jail in 2011 served sentences of six months or significantly less. More than a third were jailed for theft or handling stolen goods, or other low-level nuisance offending, and a quarter of them had no previous convictions. In the entire system Britain only accommodates 80 children with their mothers behind bars, housed in eight mother and baby units. With the rate of imprisonment among women spiralling new investment is needed to provide improved facilities for children. 'A significant number of women in prison are not a risk to the public,' said the Labour politician Baroness Corston, who wrote a seminal report on women in British prisons in 2007. The average cost of keeping a woman in jail is £56,415 a year, but punishment in the community costs less than a quarter of that.

The revelations prompted a forthright editorial in The Independent which despairingly began: 'Lock 'em up and throw away the key' is, sad to say, not only the right-wing populist attitude to crime and criminal justice, it sums up the attitude of much of the country." The number of people in Britain's prisons is at an all-time high, it is announced with a tedious regularity. The nation tuts and turns away. Prison itself, it seems, is an issue we should, metaphorically, prefer to lock up and throw away the key' (Leader Independent: Monday 17th September 2012).

The social cost of imprisoning women in increasing numbers, especially mothers, is huge especially the damaging impact on child development and welfare. A child with a parent in prison is three times more likely to exhibit anti-social behaviour, and three times more likely to develop mental health problems. A staggering 65 per cent of boys who have a parent in jail will go on to commit some kind of crime themselves.

The editorial explains: 'Children are the entirely innocent victims of the ballooning prison population. Every year, as many as 200,000 children have to cope with the consequences of a parent in prison - far more than the number who are separated by family break-up. And the ones who suffer the most are the 17,000 each year who see their mothers put behind bars. Most are inside for fewer than six months, But the impact of even a short sentence can be catastrophically disruptive for children who have committed no crime - and who may have already suffered disproportionately because of their drug and drink-dependent mothers' chaotic lives. The children of convicted mothers almost always move house and switch school, as well as facing the stigma and trauma of their situation'.

There are also other disturbing findings. According to the European Court of Human Rights (ECHR), an institution long demonised by Chris Grayling, the British prison system is facing a multitude of problems, from overcrowding to an increase in custodial deaths. On September 19th the ECHR passed a unanimous ruling by the European court of human rights declaring indeterminate prison sentences in the UK system illegal.

The condemnation of our penal system came only days after the Ombudsman Nigel Newcomen reported a 15 per cent rise in custodial deaths during 2011-12. Newcomen reported: 'Overall, numbers of deaths rose significantly compared to the previous year – the third year in a row where the number of deaths has risen'.

These are very alarming statistics but as The Independent editorial acknowledges there seems little appetite to develop a more humane penal system in the UK. The pressure placed on politicians and the judiciary, and the police themselves, by hardline reporting in the tabloid press, does not help reshape public opinion.

It is likely that Grayling's appointment will see a greater shift and emphasis on privatisation. The National Audit Office says that official hopes of saving money by reducing the record prison population in England and Wales by 6,000 and closing older, more expensive prisons have been dashed. Jail numbers are now not expected to fall significantly over the next few years. The Whitehall spending watchdog warns that prison and probation budgets could come under further pressure from even slight changes in demand and would be placed in even deeper difficulties by any repeat of last summer's riots or a more punitive approach by the courts.

The problem is likely to lead to the new justice secretary, Chris Grayling, pushing through a round of spending cuts and accelerating the move to greater privatisation in prisons and probation. So the prospects for the British penal system do not look promising. With prisons bursting at the seams, and the trend towards incarcerating more and more people for short sentences, especially women, it is unlikely the prison population will fall significantly, even if Grayling's transfer abroad programme works. The National Audit Office report concluded: 'The prison population is now unlikely to fall significantly over the next few years. This limits the agency's plans to close older, more expensive, prisons and bring down costs'.
 

• Prison can be a creative environment: see the BBC's collection of prisoner art
• All is not gloom and doom: an uplifting story from Cardiff where inmates have opened a restaurant

Dick Skellington 8 October 2012

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain 

Mass shootings such as those in Oak Tree and Aurora are not surprising but are increasingly part of everyday life.

The carnage at the Sikh Temple in Oak Tree, Wisconsin, following quickly on 'The Joker' killings in Aurora, Colorada, are not uncommon in a United States where gun control laws are lax and violated. These events are sadly part of a disturbing epidemic of mass shootings that has occurred in the United States since 2005. Wisconsin, which passed a law in 2011 allowing citizens to carry a concealed weapon, has some of the most permissive gun laws in the US.

The Brady Campaign to Prevent Gun Violence (BCPGV) published a new analysis just before Aurora and Oak Tree that clearly demonstrates the need for a reappraisal of gun laws in many American states. Their map of mass killings  shows locations by state since 2005. BCPGV have also produced a spreadsheet to catalogue the extent of the slaughter.

As relatives still mourned for the 12 victims of the Aurora massacre, a man slaughtered 6 people at Sikh Temple at Oak Tree. He was shot dead but his violent act was a simple manifestation of a horrifying statistical trend. Across America BCPGV reported a total of 431 shootings with more than one victim since 2005. The nonprofit lobbying group revealed that certain cities displayed alarming tendencies for mass shootings. Chicago had 17 such shootings since 2005 with 30 deaths and 72 injured, followed by New Orleans, Kansas City and Philadelphia with 9 mass shootings each since 2005. But as Oak Tree clearly demonstrates, mass shootings can occur in small town America too. Oak Creek is a town of about 30,000 people in the south-east corner of Wisconsin. Aurora was a quiet suburb of Denver.

American readers of this blog can enter in an address and find out the nearest mass shooting that has occurred near their homes, schools or place of work. The map also links to news articles and personal testimonies of people affected by the shootings to provide a chilling context to the data visualisation. The site also invites readers for comments. One perplexed and angry reader wrote:

'Every minute of the day our culture sends people mixed and confusing messages about what kind of behaviour is appropriate. We show it's appropriate to swim in a ocean of weapons access yet we expect the weakest minds to ignore their violent impulses because the laws say it's wrong. We live in a culture that, by its behaviour, promotes, condones, and encourages rabid violence, then acts shocked and dismayed when sick and broken minds murder people. We're far more focused on punishment than removing the causes. If we don't want people to slaughter our loved ones, don't just TELL them it's wrong, SHOW them it's wrong. Put your money where your mouth is and shut down the weapons factories permanently. The gun fascists are not invincible and people are only helpless if they think they are'.

The worst incidents on US soil since 1991 include:

• Nov. 5, 2009: The Army report 13 people were killed and 30 wounded in a shooting rampage at its Fort Hood base in Texas.
• April 3, 2009: A 41-year-old man opened fire at an immigrant community center in Binghamton, N.Y., killing 11 immigrants and two workers. Jiverly Wong, a Vietnamese immigrant and a former student at the center, killed himself
  as police rushed to the scene.
• Feb. 14, 2008: Former student Steven Kazmierczak, 27, opened fire in a lecture hall at Northern Illinois University in DeKalb, fatally shooting five students and wounding 18 others before committing suicide.
• Dec. 5, 2007: 19-year-old Robert A. Hawkins opened fire with a rifle in Omaha, Neb., at a Von Maur store in the Westroads Mall, killing eight people before taking his own life. Five more people were wounded, two critically.
• April 16, 2007: Cho Seung-Hui, 23, fatally shot 32 people in a dorm and a classroom at Virginia Tech in Blacksburg, then killed himself in the deadliest mass shooting in modern U.S. history.
• Feb. 12, 2007: 18-year-old Sulejman Talovic killed five and wounded four at the Trolley Square mall in Salt Lake City, Utah. He was then shot and killed by police.
• Oct. 2, 2006: Charles Carl Roberts IV, 32, shot to death five girls at West Nickel Mines Amish School in Pennsylvania, then killed himself.
• March 21, 2005: 16-year-old student Jeffrey Weise killed nine people, including his grandfather and his grandfather's companion at home, and then five fellow students, a teacher and a security guard at Red Lake High School in
  Red Lake, Minnesota, before killing himself. Seven students were wounded.
• March 12, 2005: Terry Ratzmann, 44, gunned down members of his congregation as they worshipped at the Brookfield Sheraton in Brookfield, Wisconsin, slaying seven and wounding four before killing himself.
• July 29, 1999: Former day trader Mark Barton, 44, killed nine people in shootings at two Atlanta, Georgia, brokerage offices, then committed suicide.
• April 20, 1999: Students Eric Harris, 18, and Dylan Klebold, 17, opened fire at Columbine High School in Littleton, Colorado, killing 12 classmates and a teacher and wounding 26 others before committing suicide in the school's
  library.
• March 24, 1998: Andrew Golden, 11, and Mitchell Johnson, 13, killed four girls and a teacher at a Jonesboro, Arkansas, middle school. 10 others were wounded in the shooting.
• October 16, 1991: George Hennard, 35, smashed his pickup truck through a Luby's Cafeteria window in Killeen, Texas, and fired on the lunchtime crowd with a high-powered pistol, killing 22 people. At least 20 others were
  wounded.

Mass shootings are now very common in America. The issue of gun control has been ignored for far too long despite a worrying escalation in mass gun crime. This week the man accused of shooting US Democrat Congresswoman Gabrielle Gibbons and killing 6 other people in January 2011 in Tucson, Arizona - a state with notoriously lax gun controls - pleaded guilty after a judge found him mentally competent.

Oak Tree and Aurora are simply two more mass killings added to a long escalating list of violence. They raise important questions for both Barack Obama and Mitt Romney as they enter the battleground for the American Presidency in this autumn's elections.
 

 

Dick Skellington 10 August 2012

The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.

Cartoon by Catherine Pain