International Women’s Day

8 March is International Women’s Day (loading very slowly, today) – a day adopted by the United Nations in 1975 to build support for women’s rights and participation in the political and economic arenas. The banner under which events are taking place this year is ‘Equal Rights, Equal Opportunities, Progress For All‘ and they include an event at the TUC tonight promising ‘a night of comedy, music, poetry, politics and campaigning‘. LabourList is also commemorating the event with a day of women-only blogging, under a female guest editor following Rowenna Davis’s turn in the hot seat last year.

Justice for Colombia, to which Prospect is affiliated, is holding a one hour vigil at the Colombian Embassy today at 4pm to mark International Women’s Day and protest against the ongoing detention of human rights defender Liliany Obando, while Prospect members can download an excellent newsletter celebrating the achievements of women in Prospect.

For as long as inequality remains, we need to be reminded of why, so such special days as these continue to be useful. But, as Michael Foot said:

Describe the challenges by all means, but don’t confuse analysis with action. The one must lead to the other if it is to be useful to people. (Hat-tip: Roger Darlington)

Making International Women’s Day useful to women across the globe via practical action will, I suspect, continue to be a source of challenge for the organisers of such events, and policy-makers more generally, for some time to come.

Tobin, updated

The Tobin Tax was first proposed by Nobel Laureate economist James Tobin in 1972 as a levy designed to deter currency speculation (although he was building on the wider financial transactions tax proposed by Keynes back in 1936). Some sort of financial transactions tax has been back on the political and economic agenda in recent times as a way of dealing with one aspect of the conditions which have led to this last economic crisis (and, frankly, as a means of getting the bankers to pay (back) their share). The wiki entry on the Tobin Tax is good on the background and the recent history.)

An updated Tobin Tax, updated for the modern times and renamed the Robin Hood tax has now been proposed by a coalition of around 50 organisations dealing with poverty, including the TUC, as a way of raising funds from banking activities towards dealing with poverty and climate change, both in the UK and abroad. The campaign features a video produced by Richard Curtis and starring Bill Nighy – and, of course, you can sign up for updates and vote (more than 4:1 in favour, so far, now that stacks of multiple ‘no’ votes have been discounted), too. ToUChstone, the TUC’s blog, has produced several posts on the initiative today as, from a capital markets perspective, has labour and capital.

[Edit 15 February: now a margin of 10:1 in favour – while the multiple ‘no’ votes appeared to have come from two IP addresses, one of which is registered to Goldman Sachs, that Great American bubble machine. Doing God’s work again, Lloyd?]

The Connect Sector of Prospect has a policy of raising awareness of and support for the Tobin Tax dating back to 2001 and this blog supports also the updated initiative: it’s another aspect of a welcome return to Keynesian economic views; in deterring short-termism, it may well have a role to play in improving (long-term) corporate governance; the activities the target of the tax are those which fit well within the definition of being, in Adair Turner’s neat turn of phrase, ‘socially useless’; and the funds it will raise ought clearly to help with the worthwhile central mission of the coalition.

Without going into all the arguments of the naysayers, some of which are less worthy than others, it seems to me that, to be successful, the initiative needs to recognise the following:

1. this is not a cheap way of raising finance to meet long-term UN goals of all countries providing 0.7% of GDP for international assistance – it has to be extra

2. this is not a way of providing bankers with a route back to social acceptability, and neither does it deal with the behaviours which caused the crisis and the need to inject huge amounts of capital to bailing out the banks – both of which are issues which need to be properly tackled. Nevertheless, we do need to understand what role (very) short-term trading plays and why those engaged in it do it, given the tiny margins being quoted; at the same time, the tax needs to target what is demonstrably ‘socially useless’ activity undertaken within the financial services sector – and this itself needs to be cut off. The City needs to recognise this, too, much more than it does.

3. the potential for City creativity needs to be recognised and the issue of accountability to pay the tax properly covered

4. the monies need to be properly ring-fenced and used for specific goals. What can’t be allowed to happen is that money raised and sent overseas then finds its way back to this (or any other western) country in carbon trading schemes.

Overall, however, an initiative well worth supporting.

TUC Recession Report No. 15

The TUC has just produced its latest Recession Report, accessible here at Nicola Smith’s ToUChstone blog posting. This is the penultimate in the series given that data shows the economy no longer to be contracting – so an official, if somewhat marginal, end to the recession has been achieved. (On this point, see also Adam Lent’s post on why the recovery has been so anaemic in the UK).

The headline data are that: 2.458m are unemployed (down on the month and on the quarter, but up by more than half a million on the year) – at a rate of 7.8% (a slight drop on the month and unchanged on the quarter, but up by 1.6 percentage points on the year). The employment rate of the working age population now stands at 72.4%, down by 0.1 percentage points on the quarter and by 1.7 points on the year. The headline figures are, once again, more positive than expected but evidence of a sustained recovery on the employment market is not yet here and long-term unemployment also continues to demonstrate cause for concern.

The second part to the Report continues the social theme of the previous edition’s specific area of focus, which looked at the effects of unemployment on physical and mental health, by looking at the other social effects of recession, including on poverty, happiness, family life, crime, drug and alcohol use and on the prospects for the children of unemployed people. Nicola had blogged previously on the question of how a ‘social recession’ could be measured and had suggested that the view was, on the whole, satisfactory despite some areas of concern. Here, too, the report argues that, while the UK is weathering this recession rather better than those of the 1980s and 1990s, the negative social effects of rising unemployment will continue to cause damage for some years to come. An important lesson for those advocating harsh cuts to expenditure: cuts are not only economically regressive, they leave the social scars festering, too.

Some big (and some not so big) numbers

1. £850,000,000,000 – the cost of taxpayer financial support for an otherwise collapsing banking sector assessed and detailed today by the National Audit Office. The actual amount committed so far is actually £131bn – the rest will fall due if it all gangs agley (again) and the sheltered assets need the protection of the guarantees staked on them. Which it won’t, because of big number No. 2:

2. 5,000 – the number of senior executives working in the banking sector which Lord Myners told the House of Lords yesterday are likely to receive a ‘remuneration package’ this year of £1,000,000 (or more): clearly, such awards must mean that everything is rosy in the garden again. Myners is writing to the NAPF, the CBI and the TUC to ask them to use their influence to persuade fund managers to stop these ‘unreasonable and unjustified levels of remuneration’. Nils Pratley in The Guardian today is calling for a windfall tax on executive bonuses.

3. 5p in the pound – what creditors of Farepak, including ordinary families who had committed an average of £400 in hard-earned cash, and some over £2,000, received (starting from October 2009) following the collapse of Farepak (in October 2006) after some ill-advised financial engineering following which HBOS (oh yes) called in the company’s overdraft. The commercial fund set up to support Farepak creditors, including families, raised just £6m – far short of what was anticipated and likely to have provided an earlier (additional) sum of just 15p in the pound.

A windfall tax on (at least) £5bn (though not all of this is bonus) is likely to raise a substantial sum, provided it is set at a punitive level. I can think of some worthwhile uses for it, too.

TUC Recession Report No. 12

The TUC has published its most recent commentary in this insightful and well-researched series today – you can access it via Nicola Smith’s posting for the TUC’s Touchstone blog here.

The headline figures are that unemployment in the June-August period is, at 2.47m, static on the previous month’s figures (for May-July), but higher than the same period in 2008 by 677,000. The unemployment rate is 7.9%, an increase of 2.1 percentage points on 2008, while the employment rate was 72.6% – 1.8 percentage points down on the same point in 2008 but an increase of 0.1 points on the figures for the previous month.

The TUC comments that unemployment is likely to continue rising into 2010 – small falls in unemployment, or rises in the employment rate, may be more of a blip than a sign of the corner being turned – but the rate at which it is increasing may be beginning to slow. Certainly this recession, despite its length and the sharpness of the drop in GDP, has had a lesser impact on employment than we could have expected on the basis of previous recessions – perhaps a testament to the policy decisions taken at an early stage in the recession.

This month’s special analysis focuses on child poverty not least in the light of the potential impact of the recession on the government’s 1998 commitment to end child poverty by 2020 – to which all the major parties are now committed. Recent progress has been poor and it looks likely that the 2010 milestone of halving the 1998-99 level of child poverty will be be met. However, taxes and benefits do substantially reduce poverty levels and are also a powerful force to reducing levels of inequality – it is unlikely that as much progress as had been made during the 1990s would have been achieved under a government less concerned with harnessing the tax and benefit system towards such aims.

Protecting the real value of benefits, to say nothing of ensuring that they are not reduced in absolute terms, has a key role to play in ensuring that the amount of relative poverty, as well as income inequality, does not become worse during a recession or in the subsequent recovery period.