Predistribution is no silver bullet for wage stagnation

The pressures militating against wage growth are strong and will grow even stronger in the future. But public insurance offers a way forward.

'Predistribution' may be a smart approach for the centre-left, but it's likely to prove an inadequate remedy for the problem of wage stagnation facing the UK’s lower-half households. A predistributive approach would aim to address the problem without increasing government transfers. It could embrace a range of strategies. One is more and better education for children who grow up in less-advantaged circumstances. This would increase the likelihood of them finding employment in analytical fields that pay relatively well. But even if successful, it will leave a non-trivial number of people in low-end jobs.

Increasing manufacturing jobs would help, but manufacturing's share of employment has been shrinking for decades in all rich nations, and that's certain to continue. Boosting trade union membership could counteract the downward pressure on wages, but unionisation rates, too, have been falling in almost all affluent countries, and nobody has worked out how to reverse this.

A tight labour market ('full employment') puts upward pressure on wages; achieving that on a regular basis, though, would require greater tolerance of inflation by the Bank of England. The minimum wage can be raised, but it tends to have limited impact above the very bottom of the wage distribution.

Allowing employees to elect a percentage of their company's board of directors ('codetermination') could help to prevent long-term wage stagnation, yetfirms won't opt for this unless it is required by law. Profit-sharing would ensure that pay increases when company profits rise, but here too the uptake is likely to be small.

Rising employment is a way to boost household incomes even if wages are stagnant. However, it's by no means a given that we can continue to generate employment growth. Also, not all low-end households will benefit from a rising employment rate. And even if this strategy works well, it will eventually hit a ceiling; once we reach maximum employment – perhaps 85 per cent of working-age men and 80 per cent of working-age women – there will be no more possibility of relying on rising employment to secure rising incomes.

Finally, a means of improving material wellbeing even if wages and employment are stagnant is to increase provision of public goods and services. From paid parental leave and childcare to spending on roads and parks, these increase the sphere of consumption for which the cost to households is minimal or zero.

Pursuit of the more promising elements of a predistributive approach would undoubtedly do some good. But I'm sceptical that such an approach will be up to the task. The pressures militating against wage growth in lower-half jobs– competition, globalization, technology, nearsighted shareholders ­– are strong, and in all likelihood they will grow even stronger going forward. We may need to do more. Fortunately, we have another option.

Public insurance is a widely used tool for mitigating economic and social risks. Schools, government-financed health insurance, public pensions, unemployment compensation and most government transfers are versions of public insurance. We contribute collectively via taxes, and those who experience the risk event or condition receive transfers or services.

Through this lens, wage stagnation is a new social risk. There is a simple insurance mechanism for alleviating it: an employment-conditional earnings subsidy, along the lines of the UK's working tax credit (gradually being replaced by universal credit) and the US earned income tax credit. These programmes provide a subsidy, in the form of a refundable tax credit, to households with low earnings. The amount of the subsidy increases with earnings up to a point, then flattens out, and then decreases as earnings reach into the middle class.

These employment-conditional earnings subsidies help to compensate for low wage levels, but in their current form they don't address the problem of wage stagnation. To do the latter, the amount of the subsidy needs to rise over time in sync with economic growth. One way to achieve this would be to index it to GDP per capita. Or, decisions about yearly changes could be entrusted to an independent commission.

This won't compensate fully for wage stagnation. If the subsidy amounts to a quarter or even half of a household's earnings and the subsidy rises in line with the economy but earnings don't, then the household's income (earnings plus subsidy) growth will lag behind growth of the economy. It's a partial remedy, not a full solution. But it will help.

What, then, should we do – predistribution or public insurance? If forced to choose between the two, I would opt for defending and expanding employment-conditional earnings subsidies. But over the long run, we ought not think in terms of one or the other. We'll very likely need both.

Lane Kenworthy is professor of sociology and political science at the University of Arizona. A full version of this article is published by IPPR in Juncture.

Ed Miliband at the Labour conference in Brighton last month. Photograph: Getty Images.

Lane Kenworthy is professor of sociology and political science at the University of Arizona

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The view from Google Earth is magnificent - but there's a problem

Google Earth is spectacular - but it can give a misleading impression of the planet and the threats we face from climate change. 

 

Google Earth wants you to “get lost” in its updated interactive map. Collaborations with new media partners mean you can now climb Mount Everest, swim with sharks or visit Afghanistan with Zari the purple muppet. No, really:


Source: Google Earth

Yet as Trump slashes support for the science behind satellite imaging, is Google’s emphasis on spectacle leading us down the wrong path?

Google Earth's new look all starts well enough. Opening the new site on your browser takes you to an image of a blue earth floating through the blackness of space. Back in the 1970s, similar images taken from the Apollo space missions helped kickstart the modern environmental movement. As the astronomer Sir Fred Hoyle put it: “Once a photograph of the Earth, taken from the outside, is available, a new idea as powerful as any in history will be let loose.”


Source: GETTY and Google Earth

And it gets better. Enter a destination in the search bar and you are greeted with the option to link directly out to the Wikipedia page: nerds of the world, rejoice! 

A guided tour from NASAearth is also on hand for anyone whose nerdery is in need of a prompt: “Geostationary satellites in geosynchronous orbits. Greenhouse gases and global warming. Glaciers... going, going, gone,” says the Bob Dylan-esque entry on its "ABCs from Space".

You can then choose to orbit your landmark of choice in 3D. And let’s face it - who doesn’t want to glide around the top of Mont Blanc, pretending to be an eagle? It’s almost as good as the BBC’s actual eagle-cam

But then it hits you. This is no soaring eagle, buffeted by wind currents and having to constantly adjust its flightpath in the face of real-world obstacles. This is a world surveyed at a safe and sanitising distance. Tourism for the Trump age – focused on providing “a consumption experience”. Certainly it is the opposite of “getting lost”.

In fact if anything has been lost or downplayed, it is the principles of scientific enquiry. The program is littered with human choices. Local versions of Google Maps, for instance, have shown different national borders depending on where in the world you log in. And while new, open-data imagery from America's Landsat 8 program is helping bring many regions up to date, other high-resolution imagery comes from commercial providers, such as Digital Globe. And as this Google 'help' page implies, there are issues of time-lag to face. 

You can’t even be sure what you’re looking at still exists. In 2015, Bolivia’s second largest lake vanished - a combination of climate change, El Nino, and irrigation withdrawal caused 2,700 square kilometres of water to evaporate into a dry salt pan. (It has not recovered, and seems unlikely to do so.) Yet on the new version of Google Earth the lake is still a healthy green:


Source: GoogleEarth

The much lauded film clips from the BBC’s Planet Earth II are similarly short on context. As I've argued before, David Attenborough's latest TV series did little to explain the stories behind the spectacle – there was no mention, for instance, of the arctic anthrax outbreak which caused thousands of reindeer to be culled, nor the role of climate change in worsening locust swarms. 

Finally, the new update actually shows you less of the world than it did before. Gone is the “Historical Imagery” tool that allowed you to see how a place had changed through time. Now, the Citadel of Aleppo in Syria is only visible as a bombed-out ruin. A surreal street-view reveals two women cheerily taking a selfie – with debris all around and their legs spliced out of shot:


Source: GoogleEarth

So why do these omissions matter? Because they take users further away from the evidence-based approach of earth science. It turns out that satellite images on their own are of limited use when it comes to quantifying change. Instead researchers must turn the raw pixels into numbers, which can then variously represent everything from forests to cities, glaciers and farms.

As Dr France Gerard at the UK’s Centre for Hydrology and Ecology explains, this process enables us to live in a better managed environment – be that by measuring air pollution or the impact of fertiliser on soil. The centre's landcover map, for instance, has been mapping British land use since 1990. Similar methods allow Sam Lavender’s company to provide Ugandans with a Drought and Flood Mitigation service, as part of the UK Space Agency’s International Partnership Programme.

Sadly, the need for public engagement has never been more urgent. Brexit and austerity have cast doubt over important projects in the UK. While in Donald Trump’s America, funds for earth monitoring are set to be slashed. Two missions already under the knife are PACE, a spacecraft set to track global ocean health, and CLARREO, which would have produced highly accurate climate records. Trump has also called for the earth-viewing instruments on the DSCOVR satellite to be turned off. Phil Larson, a former space advisor to President Obama, describes this decision as “baffling”.

So what can be done to reverse this trend? Experts I spoke to believe that collaboration is key. With government programs being squeezed, the earth monitoring industry may come to rely increasingly on the trend towards smaller, commercial satellites. These are great for increasing the quantity of data available but their accuracy needs to be constantly checked against the data from the larger and more reliable state-launched equipment.

There’s also still more data out there to share. As Bronwyn Agrios from Astro Digital points out, many countries have been gathering region-specific data – which could, in future, be made open source. “The neat thing about space is that there’s no border,” she concludes.

To help this process, Google Earth could do far more to raise public awareness of the science behind its special effects. Yet at least in one way it is already on the right path: its own new range of collaborations is impressively large. As well as the BBC, you can take interactive tours with The Ocean Agency, the Wildscreen Arkive, and the Jane Goodall Institute – all of whom put conservation up front. The Goodall journey to Tanzania’s Gombe National Park even describes the use of satellite imagery to measure conservation success.

 

More links with other citizen science projects around the world could turn the program into something truly ground-breaking. If it can incorporate these, then desktop-tourism may yet save the planet from Trump. 

India Bourke is an environment writer and editorial assistant at the New Statesman.

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