Tag Archives: psychometric

From the DWP to the economy – the Coalition’s growing credibility chasm

All the wrong things for all the wrong reasons: The evidence shows no good reason for George Osborne's economic austerity policies - other than, possibly, an intention to rob this nation of everything possible before 2015.

All the wrong choices for all the wrong reasons: The evidence fails to support George Osborne’s economic austerity policies – the only likely explanation seems to be an intention to rob this nation of everything possible before 2015.

The more we learn of the Tory-led Coalition’s policies, the wider the gap grows between what it is doing and what it should be doing.

Look at the sham psychometric tests, exposed by fellow blogger Steve Walker in a series of articles on his Skwawkbox site. It is now firmly established that the DWP – aided by the Cabinet office ‘nudge unit’ – set out to pressgang put-upon benefit claimants into taking part in a crude piece of neuro-linguistic programming – no matter what answers you provided, the test always pushed out a ridiculously upbeat appraisal of your character and then tried to get you to act according to this verdict in your jobsearching activities. The theory is that this will make a jobseeker more confident and finding a job easier. The problem is that it’s quite utterly ludicrous.

If you haven’t already, you can read the Skwawkbox exposure of this particular caper on that site – there are plenty of links to it from this one. The reason it is mentioned here is that it provides a useful set of questions with which to analyse any government activity: First, is the theory behind this activity sound? Second, if that theory is being used to support a particular course of action, is that action justifiable?

So let’s turn once again to George Osborne’s reasons for pursuing economic austerity, as described in the letter Vox Political received from the UK Treasury last month.

Firstly, the letter warns against the perils of losing market confidence. By this, we can see that it means we should fear any downward revision of our credit rating by the credit agencies, as “a one percentage point increase in government bond yields would add around £8.1 billion to annual debt interest payments by 2017-18”.

What’s being said is that a drop in our credit rating would mean the people and organisations that have invested in UK government debt (by buying our bonds) might move their funds to others, meaning the government could be faced with an interest rate rise, leading to increased difficulty in borrowing.

But we know that this isn’t true. The UK’s credit rating was downgraded only a few months ago. Did interest rates rise? Was our ability to borrow hindered at all? No. There’s a reason for that.

As Professor Malcolm Sawyer notes in Fiscal Austerity: The ‘cure’ which makes the patient worse (Centre for Labour and Social Studies, May 2012), “It is well-known that a government can always service debt provided that it is denominated in its own currency. At the limit the UK government can ‘print the money’ in order to service the debt: this would not take form of literally ‘printing money’ but rather the Central Bank being a willing purchaser of government debt in exchange for money.” This is what is happening at the moment. Our debt is in UK pounds, and we can always service it. Our creditors know that, so they remain happy to continue financing it.

This means that the Treasury’s next point, that “any loss of investor confidence in the UK’s fiscal position would not only affect the UK, but also the global economy” is also meaningless. There won’t be a loss of investor confidence, so there won’t be an effect on the global economy.

We move on – to the Chancellor’s claim that fiscal austerity is required to prevent the slowing of economic growth that happens when the national debt hits 90 per cent of gross domestic product (or thereabouts).

You’ll recall that my letter to the Chancellor was prompted by the revelation that the academic paper on which he relied most often, by Reinhart and Rogoff, had been proved to be mistaken. The Treasury’s response pulled out a series of references to other academic works suggesting a fiscal cliff similar to the Reinhart-Rogoff model, off which we would drop if the national debt passed an arbitrary level around 85-90 per cent of GDP. These were published by the International Monetary Fund, which we know isn’t quite as keen on austerity as it used to be; the Organisation for Economic Co-operation and Development, which this blog marked out as “schizoid” only a few days ago; and others.

Obviously I haven’t had time to look up eight academic works to support any opposing theory I may wish to create – and I think I would be foolish to try. I don’t have any grounding in economics beyond what I’ve been able to pick up by following the national and international debates.

But, then, according to Dean Baker of the Center (yes, it’s American) for Economic and Policy Research: “As a general rule economists are not very good at economics.”

He writes: “Most economists are unable to conceptualize anything that someone with more standing in the profession did not already write about. This is the only reason that the Reinhart-Rogoff 90 per cent debt-to-GDP threshold was ever taken seriously to begin with.”

That prodded my curiosity to check some of the papers listed by the Treasury in support of its stance, and the three that I checked (The Real Effects of Debt, Public Debt and Growth, and How Costly Are Debt Crises?) all listed the Reinhart-Rogoff paper in their supporting references. So Mr Baker is right.

“Debt is an arbitrary number,” he continues. “The value of long-term debt fluctuates with the interest rate… The value of our debt will plummet if interest rates rise… This means that we could buy back long-term debt issued today at interest rates of less than 2.0 percent for discounts of 30-40 percent. This would sharply reduce our debt-to-GDP ratio at zero cost.

“Bonds carry a face value, meaning the amount that will be paid off when they reach maturity. This is what gets entered in our debt figure. However bonds also carry a market price, which fluctuates inversely with interest rates. The longer the term of the bond, the more its price will vary with interest rates.

“If interest rates rise, as just about everyone expects over the next three-to-five years, then the market price of the bonds we have issued in the current low interest rate environment will fall sharply. Since we count our debt at the face value of the bonds, not their market price, we could take advantage of the drop in bond prices to buy up… bonds at sharp discounts to their face value.

“The question is why would we do this, we would still pay the same interest? The answer is that the policy would make no sense for exactly this reason.

“However, if we accept the Reinhart-Rogoff 90 per cent curse, then reducing our debt in this way could make a great deal of sense. Suppose we can buy back debt with a face value of 60 per cent of GDP at two-thirds its face value, or 40 per cent of GDP. In our debt accounting we would have reduced our debt-to-GDP ratio by 20 percentage points. If this gets us below the 90 per cent threshold then suddenly we can have normal growth again.

“Yes, this is really stupid, but if you believed the Reinhart-Rogoff 90 per cent debt cliff, then you believe that we can sharply raise growth rates by buying back long-term bonds at a discount. It’s logic folks, it’s not a debatable point — think it through until you understand it.”

I found Mr Baker’s piece after asking Jonathan Portes of the National Institute for Economic and Social Research (NIESR) for his opinion on the Treasury letter. He described it as “Predictable and largely irrelevant”.

So despite my lack of economic education, we have a working theory that suggests the Treasury has built its economic castle on the sand; that its justification for austerity is unsound. What about the austerity measures themselves? Are they justifiable on any level at all?

Evidence suggests not.

Let’s go back to our other friend in this matter, Prof Malcolm Sawyer. “Fiscal austerity and cuts in public expenditure do not work – there is a limited, if any, effect on reducing the budget deficit, and any return to prosperity is severely undermined.” We can see that this is true, using the government’s own figures. It managed to cut the deficit from £150 billion to £120 billion in 2011-12, mostly by axing large projects that invested in the UK economy. How much did it cut from the deficit in 2012-13? Less than £1 billion. The benefit cuts that created much of the fuel for this blog have not helped to cut the deficit at all.

“The reduction of the budget deficit can only come from a revival of private demand which is harmed by an austerity programme,” Prof Sawyer continues. Again, we can see that this is true. Austerity measures such as benefit cuts and the axing of infrastructure investment projects means there is less money available to the people who are most likely to spend it – the working- and middle-classes, and those who are unemployed. People with less money have to spend just about everything they receive in order to cover their costs. That money passes into circulation and the economy grows, through the fiscal multiplier effect. An attempt to explain this effect appeared on this blog within the last few days. The point is that demand increases when the people who earn the least have more to spend.

Therefore we see that Prof Sawyer’s next statement, “Deficit reduction requires investment programmes and reduction of inequality to stimulate demand”, is already proved.

So the answer is to reduce the unemployment rate by creating more jobs and closing the jobs deficit, as highlighted in this blog only a few days ago; to raise incomes by significantly increasing the minimum wage and adopting the proposed ‘living wage’, as promoted in this blog frequently; and investment in infrastructure projects.

What has Osborne done, along with his economically-illiterate chums?

He has created high unemployment.

He has depressed wages.

He has cut infrastructure projects.

He has, therefore, sucked all the demand out of the economy. What effect has this had?

Economic growth has, in the single word of Shadow Chancellor Ed Balls, “flatlined”, borrowing has remained high and the national debt is continuing to rise.

In other words, this part-time Chancellor’s strategy – a plan on which we have all been asked to judge the entire Coalition government, let’s not forget – has failed. Hopelessly.

I return you to Prof Sawyer, one last time [bolding mine]: “The austerity programme is economically irrational, socially irresponsible, and lacks credibility that it can reduce the budget deficit and secure any return to prosperity. The time has come to rebuild through investment and through a major assault on inequality.”

IDS and too many other ministers are having their way by playing ‘fast and loose’ with the facts

Hoban lies: And this is just a taste of the many ways the Conservative-led government has been trying to hoodwink you and me since 2010.

Hoban lies: And this is just a taste of the many ways the Conservative-led government has been trying to hoodwink you and me since 2010.

It seems the Conservative Party is doing exactly as many of us feared, and using the attack in Woolwich on Wednesday to revive its proposals for laws to snoop on the emails and social media communications of law-abiding citizens.

Make no mistake – these powers would not be used for the good of the country, but for repression. And bear in mind that, for a Tory, the law is something that they set, and the poor obey. They think it doesn’t apply to them.

Let’s all remember that these new calls have been prompted by the actions of two men who were already known to – and monitored by – the security services. Monitoring your internet communications would not have made any difference to what happened in such a situation.

You cannot trust the Tories with the facts – all we have to do to prove that is look at Iain Duncan Smith.

Here is a man who will say anything to get his own way – which is to impoverish people who are already poor, pushing them beyond breaking-point with ridiculous ‘directions’ and unreasonable decisions in the hope, one presumes, that they will sign off benefits. The reality is that many of them go on to die from aggravation of their illnesses (if they are sick or disabled) or commit suicide.

He will be dragged before the Work and Pensions Committee within the next few weeks to answer for some of these transgressions, including his claim that 8,000 people who would have been affected by the benefit cap had moved into jobs instead, which the UK Statistics Authority rubbished by pointing out that the report from which he drew the figures “explicitly states that the figures are ‘not intended to show the additional numbers entering work as a direct result of the contact'”.

Worse than that was the claim, taken up by fellow Tory truth-fiddler Grant Shapps (if that’s his name today), that 878,300 people people decided not to pursue their claims for Employment and Support Allowance because a change in the benefits system meant that they’d have to be assessed for their level of disability – and that this showed how necessary this government’s attack on disabled people is. In fact, the figures represented nothing more than ‘churn’ – a turnover of claims withdrawn because of perfectly normal things like people getting better, or finding a job they can do even if they’re ill. After the government intensified its scrutiny of disabled people, the number in receipt of the benefit increased.

Iain Duncan Smith isn’t the only one making mockery of the facts. Look at George Osborne, who made unsupportable claims about the value of another DWP effort – Workfare – a few weeks ago.

Osborne also talks tough on tax avoidance, but he himself is known to have taken part in a legal tax avoidance scheme; he advocated one to a caller on a TV politics show; he re-wrote the law to make it easier for firms in the UK to stash their cash in offshore subsidiaries, putting their profits into tax havens rather than the British tax system; and he allowed tax lawyers from the so-called ‘Big Four’ accountancy firms into his department, where they re-wrote tax laws to make it easier for their clients to dodge high tax bills.

David Cameron said the amount of money available to the NHS was rising, when in fact it had fallen.

Cameron also claimed – on a party political broadcast! – that the national debt was falling under his Conservative Party. In fact, it has risen massively during the course of this Parliament, due primarily to the poor decisions made by the comedy Prime Minister and his allies.

It seems Cameron is a serial exaggerator of the truth. On April 15 he tweeted that the benefit cap is equal to the average wage. His claim was, therefore, that this is £26,000. Average family income, when benefits are taken into account: £31,500.

The government also lied that disability benefits were not affected by the benefit cap. Employment and Support Allowance is a disability benefit and is counted when considering whether a claimant’s income is to be capped.

On March 19 this year, Tory employment minister Mark Hoban lied to Parliament that there were no league tables in place showing which Job Centres had applied the most sanctions on jobseekers. Just one week later, those league tables were leaked to the press. Like his boss, Iain Duncan Smith, Hoban should have been expelled from Parliament under Parliamentary convention. Both are still in office. Why?

Fellow DWP minister Esther McVey has also misled Parliament and the public, this time with regard to Disability Living Allowance.

And, if you want proof that Tories like to play ‘fast and loose’ with the law:

Smith’s department has been forcing people to take rubbish ‘psychometric’ tests that have been rigged to produce set results, as part of an illegal experiment by Downing Street’s so-called ‘nudge unit’ (such experiments require the willing consent of the participants and none has ever been given).

The test itself was stolen by the ‘nudge unit’ from an organisation in the USA, and the UK government has been facing legal action from those people as a result.

The DWP lost a judicial review earlier this week, when a tribunal found that the ‘work capability assessment’, a so-called medical test (in reality nothing of the sort) designed to make it easy to push people off of the sickness and disability benefit Employment and Support Allowance, discriminates against the mentally ill.

Worst of all was the moment in March this year when Iain Duncan Smith decided to actually change the law, because his policies had been found to be illegal. Think about that! If you or I did something illegal, we would pay a penalty ranging from a fine right up to imprisonment for an indefinite period of time; if Mr Smith does it, he changes the law so he can be whitewashed. Tories think the law doesn’t apply to them. His department had been found to have breached human rights laws with the regulations it had been using to sanction people who refused to take part in Mandatory Work Activity or Workfare schemes. Utterly despicable – and worsened by the fact that the Labour Party colluded with the Conservatives to change the law, with no meaningful concessions to show for it.

Come to think of it, if you can remember far enough into this Parliament’s useless history, you might recall that the Department of Health, under Andrew Lansley, started implementing changes to the structure of the National Health Service – illegally – before his Health and Social Care Act was passed by a misguided and misled government.

The Information Commissioner had repeatedly ordered Lansley to publish a risk assessment which had been compiled by civil servants, and which is believed to have explicitly warned that the financial viability of the Tory NHS Bill was seriously questionable, predicting “deteriorations in the financial positions of one or more NHS organisations”. Practices could go bust or require central intervention to prop up their financial position. The Risk Report also warned of economic ‘slippage’ and ‘cost pressures’ arising. The London NHS risk report – which was made public – categorically stated that commissioning groups run by GPs may “not be able to secure [services] […] within the running cost range”.

As Mark McGowan pointed out on his blog, the entire top-down reorganisation of the NHS was done “without a mandate, having concealed their health policy”.

All of the above examples either occurred, or were referenced, within the last two months alone.

With a record like that, how could we possibly believe the ‘snoopers’ charter’ will be a blow for freedom?

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Whoever said Labour has no policies: Prepare to be embarrassed!

Michael Meacher MP has proposed that Labour make the end of austerity its flagship policy. Don't get too excited - Labour has to get into office first, and we've no idea how bad the Conservative-led Coalition will wreck the systems of government before May 2015.

The end of austerity should be Labour’s flagship policy, according to Michael Meacher MP. Don’t get too excited – Labour has to get into office first, and we’ve no idea how bad the Conservative-led Coalition will wreck the systems of government before May 2015.

This is turning into a very bad weekend to be a Conservative.

The Nasty Party has lost control of 10 councils, with hundreds of councillors unseated. Its claims about people on benefits are falling flat when faced with the facts. It has fallen foul of UK and EU law with its fake psychometric test, which turned out to have been stolen from the USA. Its claim that Labour has no policies has proved to be utterly unfounded.

… What was that last one again?

Yes, you must have heard at least one Tory on telly, rabidly barking that Labour can’t criticise the Coalition if it doesn’t have any policies of its own. Those people were not telling the truth – even though they probably thought they were (poor deluded fools).

I am indebted to Michael Meacher MP, for posting information on the following in his own blog. He lists Labour promises, as revealed to date – and it’s quite a long list. Much – or indeed all – of it may have also appeared in an article on the Green Benches site, I believe. So let’s see…

Labour has already promised to:

  • Repeal the Health and Social Care Act (otherwise known as the NHS privatisation Act)
  • Build 125,000+ homes
  • Regulate private rents
  • Promote a Living Wage for public sector workers and shame the private sector into following that lead
  • Offer a minimum 33-40 per cent cut in tuition fees
  • Limit rail fare increases to one per cent
  • Reimpose the 50p rate of income tax for the super-rich
  • Impose a mansion tax on the rich
  • Repeat the bankers’ bonus tax
  • Reverse the bedroom tax
  • Scrap Workfare and replace it with a ‘compulsory’ Jobs Guarantee (I’m not too keen on this one but it’s been promised)
  • Offer a VAT cut or a ‘temporary’ VAT holiday
  • Implement the High Pay Commission report in its entirety
  • Scrap Ofgem and bring in proper energy price regulation
  • Break up the banks and set up a National Investment Bank, and
  • Support mining communities and clean coal technology.

In his article, Mr Meacher suggests that Labour needs to go further, with a really strong hook on which to hang all these policies. He suggests the following:

We will end austerity.

Yes, I thought that might stun you. Let’s have it again:

We will end austerity.

Now that you’ve had time to get used to the idea, I hope you’re applauding as much as I was when I read the article. Why not end austerity? The squeeze on public spending and services that David Cameron and his Boy Chancellor imposed in 2010 has not worked at all. There is now no basis for it – I wrote to Mr Osborne, requesting information on the other foundations of the policy after it was revealed that his main justification contained a huge error, and he has not replied, so clearly he has nothing to say. Its loss will be unlamented and can’t come soon enough.

There’s more in the article so I invite you to visit Mr Meacher’s site and read it yourself.

As for Mr Cameron… he’s a survivor but he’s starting to look tired and the number of his own party members who are stabbing him in the back is growing – Lord Tebbit has stuck his own knife in (again) during a BBC interview.

I wouldn’t bet any money that Cameron will still be PM by the end of the year.

Our upstart politicians have an important lesson to learn: Respect.

vote

Sometimes events coincide to create a coherent pattern, apparently by accident.

So it seemed today, with publicity surrounding the legalised corporate theft of all our images on the Internet, the part-privatisation of the government unit that has been carrying out illegal psychometric experiments on jobseekers… and the publication of my letter to the local newspapers, deploring a previous missive from a Conservative politician who was determined to parrot disproved assertions from his superiors in London, rather than treat us like intelligent creatures and try to connect on an equal footing.

We’ll start with the Enterprise and Regulatory Reform Act 2013, which received Royal Assent last week. Under this act, any image that does not contain information identifying the owner (or has had that information stripped away) will become available for exploitation by commercial organisations.

These so-called “orphan works” are placed into “extended collective licensing” schemes. Any user wishing to, say, put that silly photograph you uploaded to Facebook onto a T-shirt, only has to perform a “diligent search” for the owner which, when it comes up with a blank, will allow them to proceed with impunity. And they won’t have to pay you a single penny for the use of your work.

What can you do about it? Nothing, unless you can afford costly and cumbersome legal action – despite the fact that, previously, ownership of your creation has been automatic, enshrined in the Berne Convention and other international treaties where it is still considered to be a basic human right.

Would you like to know how the Department for Business, Innovation and Skills describes the changes? Like this: “For the first time orphan works will be licensed for use; these are copyrighted works for which the owner of the copyright is unknown or can’t be found.”

That makes it seem like a good thing; in fact, it’s quite the opposite – as you’ll soon find out.

Meanwhile, we see that the government’s Behavioural Insights Team – otherwise known as the Cabinet Office’s ‘Nudge Unit’ – is being part-privatised after causing immense embarrassment to the government when it was revealed that a psychometric test it had devised for the Department for Work and Pensions to use on jobseekers was not only fake but, in fact, illegal.

The team was established after the 2010 election to – according to the government – find ways of getting people to make better choices themselves, rather than through state intervention.

But the psych test foisted on jobseekers by Iain Duncan Smith’s Department for Work and Pensions was the exact opposite of this. Firstly, workless people have been forced to take the test or lose their benefits. Next, the results have been proven to be a sham – it seems you get the same set of personality results, no matter what answers you enter – so there is no possibility of personal choice. Finally, it turns out that the whole exercise is illegal according to both UK and EU law, as “informed consent” is required before anyone takes part in a test of this kind. This is because the test has been presented as research – a “randomised control trial” (see that use of the word ‘control’? Dodgy!) according to a Cabinet Office blog.

As fellow blogger Steve Walker stated in his Skwawkbox blog on the subject earlier today (which I have reblogged), “the test itself is not the point – what is being trialled here is the supposed effect of going through it on the subjects of the trials – the unemployed people being made to participate”.

Informed consent must be given before people take part in such trials, according to the law. A person cannot be pressganged into it; they must freely make a decision to take part – written, dated and signed – after being informed of its nature, significance, implications and risks.

There is also a data protection issue.

Apparently a competition is to be held to find a business partner for the Nudge Unit. It might be hard to envisage many reputable firms seeking to collaborate with an organisation that is known to have been acting illegally, but even worse is the possibility that this will be the first of many instances where parts of the publicly-owned, operating for the benefit of everybody in the country, civil service will be hived off into private, profit-making ownership by a government of privateers who can’t wait to get their hands on all that lovely moolah – that should belong to the people, not them.

Finally, the letter I wrote last week, in answer to one from the local Conservative Parliamentary candidate, was published today in the local newspaper. It responded, with evidence-based information, to a series of groundless assertions about the bedroom tax, the benefit cap and Employment and Support Allowance, that had clearly been handed down to him from Conservative Central Office. Particularly incendiary was the parroted claim that 900,000 people dropped their claim for ESA rather than take the work capability assessment. This had been disproved and ridiculed on the same day Grant Shapps originally came out with it!

It takes a special kind of contempt for your intelligence to repeat, as fact, a claim that we all know is false. The Coalition government seems to be trying to make a living out of it.

The attitude that we see, time and time again, is “oh, they’ll take what they’re given. As long as we put a nice spin on it, they won’t even notice what’s happening to them”.

What’s happening is, of course, that our freedoms are being stolen from us, and all we’re getting in return is meaningless soundbites.

There is an election tomorrow (as I write this). You can see that certain politicians, currently in office, have no respect whatsoever for you, your opinions or your freedoms. You can’t shift them out yet.

But you can – those of you who are voting tomorrow – send a message to them and, if you have any self-respect, you will.

I hope you get the representatives – and the respect – you deserve.