h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Is this thing still on? Anyone still here?

This is an interesting article. It describes a paper that shows how left/centrist/right wing parties have evolved between 1980 and 2009. In 1980, centre-left parties favoured policies that were of maximum benefit to the 40th income percentile, and centre-right parties favoured policies for the 91st. In 2009, that had shifted to centre-left parties favouring the 99.6th percentile and centre-right the 99.9th. Would be interested in comments on this, the paper and the methodology.

http://www.newleftproject.org/index.php/site/article_comments/servants_of_the_1_politicians_and_the_economic_elite

Just a quick point - the assumption is made that spending on public services benefits the poor as the rich do not use these services. I'm not sure that this is true. I seem to recall reading that following the formation of the NHS, it was the middle and upper classes whose health improved because they were more aware of the services on offer and educated to the point that they understood the benefits available. Given that such a large part of Western spending is on health services and this is increasing under successive governments, this would surely skew the results - no?

I'm here *waves*

off out for the day though

Hi swl,

I'm not sure how they determined which parts of society benefited by how much. This is also my main concern about the paper. Did they do it based on assumptions or using some statistical method? I'm not sure - might be hard to say without reading the paper and I don't think I have the expertise to judge it.

Away from home at the moment with rotten Internet but maybe somebody can look at it in more detail. It does seem to be a rather exceptional claim they're making though so I'd expect exceptional evidence to back it up.

I would say they have made a lot of assumptions. I can't really agree with the conclusions either, I would say that society has moved away from such easily defined classes where money is the discriminator.

There are many wealthy working class nowadays, and people who benefit from social spending are not obviously of one social class, for example the elderly benefit most, I would say.

My thought would be that the individual is given more weight than the family today, and that 'liberal' thinking was in the ascendancy.

I've had a quick look at the paper, got as far as the equations, and accepted that I just won't be able to understand it.

But intuitively I don't see that it's hard to accept that in the UK the coalition have been running things for the benefit of the 1%, and that New Labour's most favoured groups would have been much further up the scale than the last Old Labour government.

Certainly as regards the current government, I don't see how there can be any doubt.

Hey Otto, well done for trying! I'd been thinking about it, but haven't quite had the motivation. Did you read enough to answer swl and MacKay's suggestion that there might be assumptions built into it? My feeling was that the article was suggesting that they didn't do that, that they estimated the effect of each policy by a more objective process, but it's easy to claim that and another thing to actually do it.

I'd agree with you that the general direction of their claims seems likely, but like swl it's the magnitude of the effect they claim that is surprising. They're not saying just that the Tories are serving the 1% they're saying that everyone is serving the 1% (or rather 0.6% for New Labour and 0.1% for Tories).

This is interesting. Twenty odd years ago when I was at uni studying History I did a term where the topic was applying a sociological study to the study of the history of protest in 20th century South Africa and Japan. That sociology study had as one of its central ideas that political parties move further to the right the longer they are in power for.

Unfortunately, that is almost everything I remember about it.

I had a look at the paper last night and the equations are too much for me and I stopped after about 3 pages. I am going to read it through again in the cold light of day, the equations will still be too hard but maybe can gleam the assumptions behind it

I think that there has been a clear and dramatic shift to the right over the time period in question

To that extreme is startling.

Right, I've had a bit of a think about this and another attempted re-read of the article, which I still don't (and can't) understand.

Some thoughts that occur to me about possible limitations of this work. It's entirely possible that these are both naive and unfair, as, you know, not an economist.

1) The project looks as if it measures decisions. If that's so, then it's only measuring departures from the status quo, not the status quo itself. I don't think we can necessarily assume a neutral or fair starting point. If there's initial injustice or imbalance, then what could be interpreted as a series of corrective moves can look like something else.

2) The fact that the richest benefit the most from decision X is perhaps less interesting than how far down the income scale the benefits stop. For example, if the top rate of tax is cut, then the richest get a whopping great benefit that no-one else who isn't in the top rate will get. But if the second highest rate, or the basic rate, is cut, then the richest will still benefit the most but that benefit will also be felt further down the income scale. Would both scenarios register in the same way on this survey? Would (say) a VAT cut register differently?

3) John Rawls argued that differences in wealth can be justified if they serve to maximise the position of the least well off. In other words, allowing inequality allows incentives which creates growth which in turn increases the material position of the least well off. While it sounds similar to "trickle down" economics, it's not quite the same point. But the question is worth asking in principle... is making the rich richer making everyone else better off.... even though the answer is almost certainly 'no', because what we have in practice is rent-seeking behaviour whereby the rich just help themselves to an ever-larger share of the cake that isn't growing anywhere near enough to justify it. (More on Rawls: A3136042)

Excellent points Otto. I hadn't thought about (2) at all. I think the result still stands though, because it shows how there has been a change over time.

I'm certainly not convinced that either (1) or (3) have much chance of explaining/justifying away - probably it's 2.

But regardless of the exact figures, the overall gist just seems undeniable to me.... things are being run in the interest of the 1%...

How much of this is confirmation bias though?

Some figures that I think are relevant and don't involve equations that none of us seem to understand -

1) Government will spend £715,000,000,000 in 2014, of which £488,000,000,000 goes on welfare, state education, state pensions, the NHS - fully 68% of all spending is spent on things the top 1-10% don't tend to use directly.

2) In 2014 it is expected that Government will raise £258,000,000,000 through income tax and NI, of which the top 1% contribute nearly 25% and the top 10% contribute 54%

It seems to me pretty clear that the burden of taxation overwhelmingly falls upon the top earners and it is spent on services they do not directly benefit from. I don't have a beef with that particularly.

But I accept I see things through my particular lens. Can others see that a student paper appearing in a left wing publication sensationally castigating the rich might be a tad hyperbolic?

They are saying they can't say *how* excatly how we got to this point just that we seem to have

with the inputs they have put in, and the weighting they have given them and there seems to be a fair amount of thought gone in to that

does that make sense?

If we are stuck with the equations and all should we try and put it on SEx, they are good with maths, as well as science

The country is run by the top 1% who throw us scraps so we remain good subjects.

This paper makes all sort of assumptions that are not borne out in fact - for example it used to be that the elderly were mainly the better off, they didn't do back breaking labour in atrocious conditions, nowadays the group that have benefited most from the NHS are the poorest who now live longer, though it remains the rich live longest. However to then extend that to say that spending on the NHS benfits the poor most is simplistic.

"1) Government will spend £715,000,000,000 in 2014, of which £488,000,000,000 goes on welfare, state education, state pensions, the NHS - fully 68% of all spending is spent on things the top 1-10% don't tend to use directly."

Even if they don't use those services directly (which in many cases I doubt), they benefit indirectly and those indirect benefits are huge - to the extent that those indirect benefits enable them to be as rich as they are and enjoy the standard of living that they do.

"2) In 2014 it is expected that Government will raise £258,000,000,000 through income tax and NI, of which the top 1% contribute nearly 25% and the top 10% contribute 54%"

These figures tell us much more about income inequality, and just how large a share of the pie the top 1% have managed to wrangle for themselves.

"Can others see that a student paper appearing in a left wing publication sensationally castigating the rich might be a tad hyperbolic?"

Yes, if that's what it was. But it's not. It's a blog post based on a paper written by a Doctoral student published by City University as part of their 'working papers' series. This is a common way for Economics and Econometrics working papers (by everyone from career young/doctoral researchers through to senior academics) to be made available for review and comment quickly - though I couldn't tell you whether or not it's been peer reviewed. However, I'd also note that the author is not a student at City.

So while I'd accept the "extraordinary claim, extraordinary evidence" claim about the *scale* of the shift (though not the shift itself, which is intuitively obvious to most people here), I think as a piece of academic work that no-one here is qualified to assess, it's worthy of more respect than just being dismissed as a "student paper in a left wing publication".

I'd be suspicious of things that are "intuitively" correct just because they match your own world view/politics. See my comment about confirmation bias.

The fact is it's only a student paper blogged about by the student himself in a left wing publication.

McKay,

"This paper makes all sort of assumptions that are not borne out in fact... to say that spending on the NHS benfits the poor most is simplistic."

I think they gave the health spending just as an illustrative example of policies that could favour different groups to different extents. I don't think they made as assumption about it. From what I can understand in their paper, they used some mathematical model to infer which group benefited the most from each policy, they never decided that for themselves.

swl,

"it's only a student paper"

That's a bit glib isn't it? I mean, assuming he did economics as his degree subject, by the last year of his PhD (which he says that he's in) he will have spent at least 6 years and possibly as many 8 years studying economics. That's more study than you need to become a medical doctor.

And on your other point, to elaborate a bit on what Otto said: suppose a government institutes a policy that hugely increases inequality, making the rich much richer and the poor much poorer, but leaves taxation levels more or less the same. In this scenario, the percent of government revenues coming from the top will hugely increase. By your reasoning, it seems that this policy benefits the poor?