Inequality or poverty

Tony Blair famously said:

“[It’s] not that I don’t care about the gap [between high and low incomes], so much as I don’t care if there are people who earn a lot of money. They’re not my concern. I do care about people who are without opportunity, disadvantaged and poor.”

Most people, including the Labour government, interpreted that as focusing on poverty rather than inequality. For an excelllent discussion of historic trends in inequality and how they were influenced, among other things, by poverty reduction programmes pushed by Labour (as well as how that may unwind in the near future) see this excellent discussion by Rick. 

I recently saw a very clear defence of the position that poverty mattered more than inequality from Miles Kimball. His argument comes from surveys that quantify a basic principle of economics, which is diminishing marginal utility. He quotes results which suggest that a dollar of income means an awful lot more to someone earning half the average wage than someone who earns double the average wage. He suggests the results come close to validating the second principle of justice suggested by John Rawls. To put the idea at its most simple, we should not worry about the rich too much because their extra money buys them very little extra happiness, but instead focus on reducing poverty.

Now of course this point is irrelevant if we are talking about reducing poverty by taxing the rich. The rich are a very good source of money, because they will not miss it very much. The importance comes if we compare two societies. One has no poverty, but a significant number of very rich people. The other has no rich people, but still has poverty. Miles’s argument is that we should prefer the society with no poverty to the one with no super-rich. In a static sense I think that is right, but I have dynamic concerns that I will now come to.

Right at the start of Miles’s discussion is an interesting paragraph:

“Before going on, let me concede first of all that the amount of wealth held by the ultra-rich is truly astonishing, and that making sure that the ultra-rich do not convert their wealth into total control of our political system is important. Documenting and studying in detail all of the ways in which the ultra-rich influence politics is crucial. But short of the ultra-rich subverting our political system, the focus of our concern about inequality should be how well we take care of the poor; whether money needed to help the poor comes from middle-income families or the rich is an important issue, but still of secondary importance to how well we take care of the poor.”

I want to explore a point that Miles does not pursue. If money matters so little to the very rich, why would they want to become ultra-rich to an astonishing degree, and go on to try and control the political system to ensure they get even more? The answer comes from exactly the same logic as Miles uses. If £1000 means nothing to you because you are very rich, if opportunities arise you put effort into making that £1000 into £10,000 or £100,000. The fact that the ultra-rich have wealth that is truly astonishing may not be an accident, but may be a result of exactly the same principle that Miles explores: diminishing marginal utility. The rich are no different from everyone else in wanting more utility, except for them it requires huge amounts of money to get it. [1]

To see why this can matter, consider an argument put forward by Piketty, Saez and Stantcheva that I discussed here. Why has pre-tax income for the 1% risen so much in the two countries, the UK and US, that in the 1980s saw large reductions in top income tax rates? The argument these authors put forward is that with punitive tax rates, there was little incentive for CEOs or finance high-flyers to use their monopoly power to extract rent (take profits away) from their firms. It would only gain you a few thousands after tax, which as they were already well paid would not increase their utility very much. However once top tax rates were cut, it now became worthwhile for these individuals to put effort into rent extraction.

As I discussed here, the bonus culture may be the means of rent extraction that was incentivised by cutting top tax rates. If you want to see the kind of thing I have in mind in action, read this article by Ben Chu on what happened to Theresa May’s wish to see annually binding votes by shareholders on executive pay. That kind of lobbying takes effort. It worked, and as a result top executives at the builder Crest Nicholson can ignore a shareholder vote against changes to their compensation rules. No wonder executive pay seems to rise even when a company’s fortunes turn sour.

So it seems to me that I could take the same basic principle that Miles explores and write a very different conclusion. Once we allow those at the top the opportunity to earn very high incomes, and the only way these individuals can see to get additional utility is to embark on rent seeking, we can at the very least divert their effort from socially enhancing activities (i.e improving the company). When those efforts extend to influencing the political system, we are in serious trouble. These activities may culminate in taking over the political system, which after all is what has happened in the US, with potentially disastrous consequences. For that reason alone, inequality matters as well as poverty.

[1] Of course status linked to competitive consumption is also important.

When Labour lost its soul, and the next election

Even the seasoned political commentators who are sympathetic to Labour cannot understand the reported popularity of Jeremy Corbyn, the left wing candidate for the Labour Party leadership. Perhaps those party members with more centrist views have left during Miliband’s leadership, they muse, leaving constituency parties dominated by the far left. These commentators may be right that if Corbyn was elected it would be electorally disastrous for Labour, but in failing to correctly understand his relative popularity they show how dangerous the Westminster bubble has become. It is not Labour party members who have changed, but the position of most of their potential leaders. 

If you want to see the tragedy of what is currently happening to Labour, you just need to look at the Welfare Bill that was debated in parliament yesterday. This bill

●     repeals most of the Child Poverty Act, and in particular abandons poverty reduction targets

●     tightens the ‘benefits cap’, the total amount a family can receive in benefits

●     extends the freeze on working age benefits for the next four years

●     limits child tax credits (subsidies for the low paid) to the first two children

Although Labour tabled amendments to this bill, after those were inevitably defeated it abstained rather than voting against. Of the four leadership candidates, only Corbyn defied this party line.

Labour did not vote against this bill despite the inevitable result that it will increase child poverty. Indeed, an apt title for this bill would be the ‘Increasing Child Poverty’ bill. One of the great achievements of the last Labour government was to reduce child poverty, largely through the system of tax credits, and today’s Labour party has abstained on a bill that will set about dismantling and reversing that.

I doubt if any Labour Party members think now is the time to start increasing child poverty. They wanted child poverty reduced under the last Labour government, and with the number using foodbanks in the UK rocketing, they hardly think now is the time to reverse that. For many party members reducing poverty is a core Labour value - it is one of the reasons they joined.

So why on earth did Labour not vote against this bill? The main reason Labour gives is that they must ‘listen to the electorate’. Measures to ‘reduce welfare’ are popular among voters. It is popular because voters constantly see stories in the press and TV about people living the ‘benefits lifestyle’, and justifiably resent that. This is what people mean by ‘reducing welfare’. But if you ask people about child poverty, they overwhelmingly believe that it should be a government priority to reduce it. There are not stories about the hardship that poverty causes every day in the media, and how the welfare system is vital in preventing even worse. So welfare is associated with supporting scroungers rather than reducing poverty.

The other excuse often given by Labour MPs for supporting measures of this kind is that they need to show they are competent to run the economy, which alas nowadays means reducing the deficit. Yet we know there is no macroeconomic logic in reducing the deficit as rapidly and as far as Osborne plans. Again Labour appeal to what voters believe, never mind the reality. In addition, this government is cutting inheritance tax for the better off. So not opposing this welfare bill is equivalent to saying that the children of the poor must pay so that the rich can pass on more of their wealth.

This electoral strategy of moving the party to the right by abandoning its core values seems doomed to failure. Unless the plan is to outdo the Conservatives in dismantling the welfare state, Labour will always be seen as ‘soft on welfare’ by the electorate. Even if they voted with the government on every single deficit reduction measure, the Conservatives will still argue that Labour’s claims to be competent at running the economy are not credible, and use the unchallenged assertion that Labour caused austerity as evidence. In addition, following the Conservatives to the right is potentially suicidal because it takes for granted that those on the left will continue to vote for them.

If you want to know the disaster that can befall those who follow this ‘a bit to the left of the Conservatives’ strategy, look at what happened in Scotland, and look at what happened to the Liberal Democrats. However it would be very foolish to think that the LibDems are no longer important in UK politics. Their new leader, Tim Farron, will undoubtedly try and fill the void that Labour leaves on the centre left, and I think he has every chance of succeeding. His party voted against the ‘Increasing Child Poverty’ bill. He said

“The truth is the Tories do not have to cut £12bn from welfare: they are choosing to. The Liberal Democrats will always stand up for families. We will not let the Conservatives, through choice, and the Labour party, through silence, unpick our welfare system."

I’ve also seen it reported that he said he would have attended the recent anti-austerity march. If he campaigns against what he could call Osborne’s ‘excessive and obsessive austerity’, his eclipse of Labour on the left is assured. For those who think that poverty should be reduced and the rise in food banks is an indication of social failure, it will be pretty obvious who to vote for in 2020.

A budget for our next Prime Minister

There is a simple way to read George Osborne’s budgets. Forget the economics, and just think politics.

Take the macroeconomics of aggregate fiscal policy, for example. Many pages have been filled (in some cases by me) about the folly of fiscal austerity while interest rates are near their lower bound. Under the coalition I calculated (with the OBR’s help) that this policy cost the average household the equivalent of at least £4,000 over the last five years. The arguments put forward to support this misguided policy have changed, but they seem to get worse rather than better: I go through the latest in this short piece for today’s Independent. But the focus on the deficit helped Osborne win the last election (admittedly with the help of Labour’s reluctance to challenge what he said), and is on course to lead to a radical reduction in the size of the UK state, as Colin Talbot sets out here.

How about his bold move of a substantial increase in the minimum wage? At first sight it seems very strange: it is a policy that if introduced by Labour would have much of the press, and most economic journalists, screaming about unnecessary interference with the market and the onset of socialism. Until now the level of the minimum wage has been carefully calculated by the Low Pay Commission to avoid significant job losses. The OBR calculate that Osborne’s proposed hike will lose about 60,000 people their jobs. But as Tim Harford explains, it is not as if Osborne has an alternative economic view. He just needed a dramatic move to give him political cover for his large cuts in tax credits.

Most of those on low earnings will still be worse off - by a lot in some cases, often decreasing work incentives - but he knows from the last election that impressions are more significant than numbers. [1] Probably the most important impact of this budget will be to raise poverty, particularly child poverty. The previous coalition’s policy changes also increased poverty, but their impact on the official statistics was offset by the overall decline in real wages. Over the next five years that will no longer happen, so again the cover is being put in place: change the definition of poverty. The economics is ludicrous, but we should have got used to that by now.

Then there is inheritance tax. It is not often I agree with Janan Ganesh, but he is correct when he wrote just before the budget:

 “George Osborne wants to refurbish the Conservatives as the natural habitation for working people … But the message will always be muffled as long as the tax system favours assets, including those bequeathed, over earned income … the greatest perversity of the system survives and will only worsen if the threshold for inheritance tax is lifted this week.”

But this year, and probably for the next one or two, George Osborne has a more important political goal in mind than confining Labour to opposition (particularly when they are doing just fine without his help). He wants to be sure that when David Cameron steps down, as he has promised to do, it will be George Osborne who is seen as the natural successor. Most of the Conservative base is not devoted to the cause of free markets, but is passionate about their own families’ income and wealth. It also likes high defence spending, so the budget contained a commitment to keep to the 2% Nato target. For those who hope for measures to tackle what Chris Dillow calls the true ‘something for nothing’ culture, the UK housing market, I suspect that too will not happen before the Conservative Party have elected their new leader (if it happens at all).    

If this sounds too cynical to you, all I can say is that I learn from experience. When I wrote this three years ago, Paul Krugman no less said I was getting “remarkably cynical”. Unfortunately, save for one detail, my cynicism proved pretty accurate. When it comes to implementing good (evidence based) economic policy, in both the UK and the rest of Europe, we are living through very depressing times.

[1] Postscript: the reaction of the UK press is outlined here

The Conservatives and the ghost of Christmas past

In October 2002 Theresa May, the then Chairman of the Conservative Party, said to her party’s conference: "There's a lot we need to do in this party of ours. Our base is too narrow and so, occasionally, are our sympathies. You know what some people call us – the Nasty Party." That tag owes something to the contrast between the public images of Margaret Thatcher and Tony Blair: the Iron Lady compared to Blair’s easy informality. In terms of policies it is not totally clear that the label was deserved. Poverty increased, but the poor were not denigrated. Unions were broken, but many felt the unions had become too powerful and selfish in their use of power. The state was reduced by privatising utilities, but the welfare state was not seriously diminished. Unemployment rose substantially, but inflation had to be brought under control. But whether deserved or not, I think May was right in her observation.

David Cameron also appears to have believed that the Conservatives had this image problem, and in opposition he aimed to create the idea of a modern compassionate Conservative Party. Hoodies were to be hugged, environmental goals embraced, and most tellingly of all, rather than deny the relevance of ‘society’, he wanted to create a ‘Big Society’. I am not concerned here about how real or radical these changes were, but instead just note that he felt a change of image was necessary to end the Conservative’s run of election defeats. The fact that they did not win the 2010 election outright perhaps suggests the strength and toxicity of the nasty brand.

What a difference a few years make. As the government finds it more and more difficult to cut government spending on goods and services, it aims austerity at welfare spending. There is plenty that has already happened, some well known, some not. As to the future, here is Paul Johnson of the IFS talking about the implications of the latest Autumn Statement. The scale of cuts he is talking about for welfare are huge (particularly if state pensions are ring fenced), yet they appear to be Osborne’s preferred option. The Conservative’s current Party Chairman  and an influential MP have recently suggested restricting benefits for those with more than two children, to encourage ‘more responsible’ decisions about procreation. Never mind the impact this would have on those children.

Changes to welfare already introduced, together with falling real wages, have led to a huge rise in the use of food banks in the UK. Here is data from the Trussell Trust, one of the main operators of voluntary food banks. 346,992 people received a minimum of three days emergency food from Trussell Trust food banks in 2012-13, compared to 26,000 in 2008-09. Of those helped in 2012-13, 126,889 (36.6 percent) were children. The Red Cross is to start distributing food aid in the UK, for the first time since WWII. A letter from doctors to the British Medical Journal talks about a potential public health emergency involving malnutrition. It is undeniable that benefit changes are a big factor behind these developments, yet the government seems intent on hiding this fact. 

Actions are of course more important than rhetoric, but rhetoric can help define image. It is undeniable that ministers, including the Prime Minister and Chancellor, have attempted to portray the poor and unemployed as personally responsible for their position due to some character failure. Even a proud institution like HM Treasury cannot resist being part of this process. (‘Hard-working families’ looks like going the same way as ‘taxpayers money’, becoming a routine slight against either the unemployed or the poor.) Both Cameron and Osborne will be too careful to emulate Romney’s 47% moment, but too many Conservative MPs appear to share the attitudes of some of those on the US right.

So what accounts for this U turn from compassion to disparagement? The recession is one answer, which has hardened social attitudes. The success of UKIP, the political wing of the majority of UK newspapers, is another. [1] Yet it seems incredible that a political calculation that appeared valid before 2010 can have been so completely reversed in just a few years. Even Theresa May, whose speech started this blog, has joined in on the act. There are those vans of course, but asking landlords to check the immigration status of tenants is an incredibly stupid and harmful policy. We will see in 2015 whether it pays to be nasty. [2]

Yet even if the strategy works in the short term, and even recognising that politicians often do questionable things to gain votes, this just seems a step too far. It is one thing to create hardship because you believe this is a necessary price to improve the system or reduce its cost. Perhaps you really believe that cutting the top rate of tax at the same time as cutting welfare will benefit everyone eventually. But it is quite another thing to try and deflect any criticism by unjustly blaming those who earn too little, or who are trying to find work. That just seems immoral.

I suspect Cameron as the Compassionate Conservative would have agreed. He would have also noted that, although nastiness might accord with voter sentiments today, at some point in the future voters in more generous times will have no problem forgetting this, and just remembering the Conservatives as the nasty party. As Christmas approaches, this tale from Charles Dickens seems apt. 

[1] For those who are offended by this sentence, let me say this. There are two obvious explanations for the correlation between UKIPs policies and the views of the Telegraph, Mail and Sun. One involves the causality implied by the sentence and the post that it links to. The other is that newspapers just reflect the concerns of voters. But if the latter is true why do they (with the odd exception) just reflect the views of voters on the right, rather than those on the left? And why do the mistaken beliefs of voters tend to correlate with the impressions created by these newspapers, as I note here?  

[2] Even if it does, I strongly suspect one casualty will be the LibDems. If their leader spoke out as Vince Cable has done, they might just have a chance of not being associated with these policies and attitudes. But he has not, and as a result the party is in serious danger of losing many votes and I suspect much of its activist base. 

Inequality and the Left

In the debate over inequality and priorities set off by Ezra Klein’s article, Kathleen Geier writes (HT MT) “the policy fixes for economic inequality are fairly clear: in no particular order, they include a higher minimum wage, stronger labor unions, a more progressive tax system, a more generous social welfare state, macroeconomic policies that promote a full employment economy, and much more powerful government regulations, particularly in the banking and finance sector.” And part of me thought, do we really want to go back to the 1970s?

Maybe this is being unfair for two reasons. First, in terms of the strength of unions, or the progressivity of taxes, the 1970s in the UK was rather different from the 1970s in the US. Second, perhaps all we are talking about here is swinging the pendulum back a little way, and not all the way to where it was before Reagan and Thatcher. Yet perhaps my reaction explains why inequality is hardly discussed in public by the mainstream political parties – at least in the UK.

The 1997-2010 Labour government was very active in attempting to reduce poverty (with some success), but was “intensely relaxed about people getting filthy rich as long as they pay their taxes.” This was not a whim but a strategy. It wanted to distance itself from what it called ‘Old Labour’, which was associated in particular with the trade unions.  Policies that were explicitly aimed at greater equality were too close to Old Labour [1], but policies that tackled poverty commanded more widespread support. Another way of saying the same thing was that Thatcherism was defined by its hostility to the unions, and its reduction of the top rates of income tax, rather than its hostility to the welfare state. 

I think these points are important if we want to address an apparent paradox. As this video illustrates (here is the equivalent for the US), growing inequality is not popular. Fairness is up there with liberty as a universally agreed goal, and most people do not regard the current distribution of income as fair. In addition, evidence that inequality is associated with many other ills is becoming stronger by the day. Yet the UK opposition today retains the previous government’s reluctance to campaign on the subject.

This paradox appears all the more perplexing after the financial crisis, for two reasons. First the financial crisis exploded the idea that high pay was always justified in terms of the contribution those being paid were making to society. High paid bankers are one of the most unpopular groups in society right now, and it would be quite easy to argue that these bankers have encouraged other business leaders to pay themselves more than they deserve. Second, while Thatcherism did not attempt to roll back the welfare state, austerity has meant that the political right has chosen to paint poverty as laziness. As a result, reducing poverty is no longer an uncontroversial goal. [2]

What is the answer to this paradox? Why is tackling inequality not seen as a vote winner on the mainstream left? I can think of two possible answers, but I’m not confident about either. One, picking up from the historical experience I discussed above, is that reducing inequality is still connected in many minds with increasing the power of trade unions, and this is a turn-off for voters. A second is that it is not popular opinion that matters directly, but instead the opinion of sections of the media and business community that are not forever bound to the political right. Politicians on the left may believe that they need some support from both sectors if they are to win elections. Policies that reduce poverty, or reduce unemployment, do not directly threaten these groups, while policies that might reduce the incomes of the top 10% do.

This leads me to one last argument, which extends a point made by Paul Krugman. I agree with him that “we know how to fight unemployment — not perfectly, but good old basic macroeconomics has worked very well since 2008.... The causes of soaring inequality, on the other hand, are more mysterious; so are the channels through which we might reverse this trend. We know some things, but there is much more room for new knowledge here than in business cycle macro.” My extension would be as follows. The main reason why governments have failed to deal with unemployment are accidental rather than intrinsic: the best instrument available in a liquidity trap (additional government spending) conflicts with the desire of those on the right to see a smaller state. (Those who oppose all forms of stimulus are still a minority.) In contrast, reversing inequality directly threatens the interests of most of those who wield political influence, so it is much less clear how you overcome this political hurdle to reverse the growth in inequality.

[1] This association is of course encouraged by the political right, which is quick to brand any attempt at redistribution as 'class war'. 

[2] The financial crisis did allow the Labour government to create a new top rate of income tax equal to 50%, but this was justified on the basis that the rich were more able to shoulder the burden of reducing the budget deficit, rather than that they were earning too much in the first place.  

Dealing with Increasing UK Poverty

I ended a recent post with the following: “Surely it should now be clear that this is a government with at least as strong an anti-state, anti-poor ideology as Mrs Thatcher, but with rather less honesty about what it is doing.” For someone who tries to avoid hyperbole, this is pretty strong stuff. So where is the evidence for this claim?

The anti-state side should be familiar to regular readers. Once you realise that the austerity policy has no sound basis in terms of macroeconomics, and the markets are saying ‘please supply more UK government debt’, then you look for other motives. A desire to shrink the size of the state seems to account for both the composition of the austerity programme, and the refusal to undertake a balanced budget stimulus. I have obviously focused on this macro issue, but the anti-state focus of policy is also pretty clear in the NHS reforms, and in the push (I could use a stronger term) to create academy schools.

What about the anti-poor part? This is not my field, so the evidence I present below may not be the most up to date or complete. However I think its worth setting out the evidence as I see it, because it does not get the publicity it deserves. Here I focus on the standard measure of poverty, which is the number of people with income below 60% of the median for that year.

First from a historical perspective, lets go to the latest annual study by the New Policy Institute.

Different UK groups in poverty (after housing costs)

	1981	1991	2000/01	2010/11
Children	20%	31%	31%	27%
Working‑age adults with children	16%	25%	25%	24%
Working‑age adults without children	7%	15%	16%	20%
Pensioners	22%	35%	25%	17%

Source: Hannah Aldridge, Peter Kenway, Tom MacInnes and Anushree Parekh, Monitoring Poverty and Social Exclusion 2012, New Policy Institute.

Poverty increased across the board in the decade of Mrs. Thatcher, although of course correlation does not establish causation. What is really noticeable since then has been the decline in pensioner poverty, which can be seen as a success story for government action. 

Poverty among other groups has been relatively static. Given that the 1997 Labour government made reducing child poverty a major priority, the relatively small reduction there is disappointing, but it was not for want of trying. Researchers at the IFS estimate that had financial support merely risen with inflation, child poverty would have risen by over one-quarter to around 4.3 million by 2010. [1]

So what of the future? The following table comes from another IFS study that tries to estimate likely levels of poverty out to 2020. It is out of date in that it takes no account of cuts in welfare provision announced by George Osborne in November last year, of which more below.

Estimates of future proportions in UK poverty

	2009 (data)	2015	2020
Children	19.5	22.2	24.4
Working‑age adults with children	17.1	18.5	20.0
Working‑age adults without children	15.0	15.9	17.5

Source: Brewer, Browne and Joyce (2011) Child and working-age poverty from 2010 to 2020, IFS.

So poverty is going back up. [2] This is a direct result of policy. The study estimates that “the impact of changes to personal tax and benefit policy announced by this coalition government is to increase relative child poverty by 200,000 in both 2015-16 and 2020-21, and to increase relative poverty for working-age adults by 200,000 in 2015-16 and 400,000 in 2020-21.” “The main culprit is the change in uprating benefits from the RPI to the CPI.”

Yet this is out of date. In the pre-budget report in November the Chancellor announced that uprating would be further reduced to 1% for three years. So the likely increase in poverty is even greater than these figures suggest.

As the government is creating this increase in poverty, how are they going to deal with the problem? The answer seems to be by stigmatising the poor. The Chancellor famously said “Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next-door neighbour sleeping off a life on benefits.” Unfortunately this line appears to resonate with a growing hardening of public attitudes towards welfare provision. This in turn reflects a persistent tendency of particular tabloid newspapers to run stories about benefit scroungers. [3]

For example, Randeep Ramesh writes “Stories referring to large families had more than doubled in frequency since 2003, accounting for some 7.4% of articles. The facts are that families with more than five children account for 1% of out-of-work benefit claims. Very large households with ten or more children are a staple of tabloid shock stories: there are, according to DWP, 180 such claimant households in Britain.” As Ian Mulheirn points out here, using Department of Work and Pensions research, the percentage of those claiming unemployment benefit whose previous work record suggests they are trapped in a dependency culture is pretty small. So the facts do not support the rhetoric, which of course politicians know, so the rhetoric is part of the strategy. (There is also an unwillingness within government to try and model the impact of reforms, as Alex Marsh notes.)

Thus the solution of how to ‘deal with’ poverty is to return to Victorian attitudes (HT Mark Thoma, who also has this nice historical account from the US.) There is even the suggestion that UK ministers might change the statistics to reflect the idea that poverty is a result of character rather than circumstance. Dependency is always an issue with welfare, but as Brad DeLong writes here (and James Kwak here), it does not warrant hysterical overreaction.

When the charity Save the Children recently launched its first campaign to help UK families in poverty, the reaction from conservative MPs and the right wing press was predictably to blame the messenger. Perhaps they think the rapid growth of food banks in the UK of the last few years is also politically motivated?

[1] My reading of this was that in the case of child poverty (and unlike pensioner poverty), fiscal measures were fighting against the effects of greater wage inequality.

[2] These poverty measures are sometimes criticised because they are relative, and disguise the fact that everyone’s living standards are going up. I think this criticism is misplaced, but it is worth noting that it does not apply to the recent past and near future, where real incomes in the UK have tended to fall.

[3] I’m often surprised at how social scientists are reluctant to give newspaper reporting the importance it deserves in shaping certain social attitudes. We are often told about the ‘puzzle’ that people’s perception that crime is increasing is at odds with the fact that it is falling, yet given how crime is reported, I see no puzzle at all.