#budget 2012

[stevenstrauss-blog]

Euro Crisis: The German Approach Is at Least Partially Correct

Structural Reform in Europe is Key for the Euro's Survival

Germany has received scathing criticism from many experts for its approach to resolving the euro crisis. Germany has been trying to: limit/reduce government budget deficits and promote large-scale structural reform (e.g., improved international competitiveness in the European periphery, create a central authority to manage Europe-wide finances with real enforcement powers against national governments, etc).

A common and vehement criticism is that, to avoid a 1930s-scale economic collapse, Germany and the core euro countries (e.g., Finland, Netherlands, etc.) must shift from an austerity approach to aggressive pro-growth policies. They're urged to: recapitalize weak European banks, create a European bank deposit insurance system, promote fiscal stimulus in place of austerity (implying a mechanism for periphery countries to borrow with a German guarantee), weaken the euro against foreign currencies, and accept some euro inflation. Structural reform (which the Germans view as a top priority) is considered of secondary importance by Germany's critics, to be addressed only after the current crisis is averted.

The hour is late. Unemployment in some euro countries is at Depression levels (in Greece and Spain, unemployment now exceeds 20 percent). The collapse of the euro and the European common market -- which would be economic catastrophes -- are being openlydiscussed. Further, a 1930s-style Depression could also lead to political disasters. The 1930s weren't just an economic disaster -- they set the stage for WWII.

However, the harsh criticism of Germany's approach misses the extent to which corruption, demagoguery and governmental incompetence in Europe's periphery are significant barriers to: resuming growth, resolving this crisis, and continued European integration. Greece is my example, but the issues described below exist in varying degrees across Europe's periphery.

Greece has been in an economic crisis for several years, but its government still hasn't reduced public sector corruption. The elites that benefit continue to resist change. For example, paying bribes (to Greek hospitals to obtain treatment and to tax inspectors to evade taxes) reportedly remains a common practice. The public has very little belief in the honesty of the public sector -- "six Greeks in ten expect public officials to abuse their position for personal gain."

Well into the crisis, the Greek parliament retained all sorts of perks for itself (e.g., free Mercedes) while demanding sacrifices from common citizens. In Greece and other countries of the euro's periphery, violent ultra-nationalist political parties gain in popularity, and rumors connect them with the old corrupt elites.

These aren't just anecdotal reports in the press. In Transparency International's 2011 annual ranking of public sector corruption, New Zealand ranked 1st (the least corrupt country in the world), Germany ranked 14th, and Greece ranked 80th (tied with countries such as El Salvador and Morocco).

Consider another metric: In the most recent World Bank Ease of Doing Business Survey, the easiest country for doing business is Singapore (ranked 1st), with Germany ranked 19th. Greece is ranked 100th (just ahead of Papua New Guinea). Apparently, it's easier to do business in the Republic of Yemen (ranked 99th), than in Greece. As one simple point of comparison: In Greece, it takes 77 days (and probably a few bribes) for a business to turn on electric service; in Germany, it takes 17 days.

A free press is key in fighting public sector corruption. But across the euro's periphery, freedom of the press is weak and often under attack. For example, Greece ranks 70th on the most recent Press Freedom Index, behind Bhutan and ahead of Nicaragua. As a benchmark, Finland ranks 1st with the world's freest press; Germany ranks 18th.

I have huge sympathy for the Greek public (and the other peoples in the Euro's periphery) who suffer from this corruption, are disgusted and want change: "Only one Greek in tensays they see enough corruption prosecutions or strong enough punishments for offences". However, Greece's governing elites - rather than tackle popular reforms such as fighting corruption (that might adversely impact themselves) - have focused instead on unpopular moves, such as pension fund reform.

This wasn't supposed to happen. Countries on the periphery were supposed to converge to euro core standards. However, the periphery's ruling groups resisted fixing corruption problems during the pre-crisis boom, and resist fixing them now despite the crisis engulfing their people.

Germany/the core, as a consequence, prefers to tightly control bailout terms -- to continually pressure the periphery to reform. Otherwise, emergency loans will become gifts, temporary subsidies become permanent annual transfers, and structural reforms will again be postponed indefinitely. Aside from the risk to the German taxpayers, a failure to come out of this crisis with real reforms sets the stage for an even bigger debacle at a later date.

The Germans deserve commendation for their commitment to a united Europe. It's amazing that Germany continues its efforts to achieve a greater fiscal, regulatory and political union with strong non-corrupt transparent institutions. However, it's also amazing that, several years after this crisis began, the countries in the euro's periphery can continue to resist real reforms.

The Germans are correct -- structural reform cannot be put off any longer.

I invite you to follow me on Twitter at: @Steven_Strauss or on Facebook at: https://www.facebook.com/Steven.Strauss.Updates

About the Author: Steven Strauss was founding Managing Director of the Center for Economic Transformation at the New York City Economic Development Corporation (NYCEDC). He is an Advanced Leadership Fellow at Harvard University for 2012. He has a Ph.D. in Management from Yale University and over 20 years' private sector work experience. You can follow him on twitter at: @Steven_Strauss or on Facebook at: https://www.facebook.com/Steven.Strauss.Updates

Follow Steven Strauss on Twitter: www.twitter.com/steven_strauss

This is cross posted from my blog, and originally published on July 22nd, 2012 as Euro Crisis: The German Approach Is at Least Partially Correct

[kelvinewald-blog]

Government of Canada Graduate Program Recruitment Numbers in for 2011-2012

In an earlier post I wrote about the concerning performance of the Government of Canada in recruiting top Canadian graduates, and the age vacuum that exists today.

Budget 2012 announced large layoffs to the public sector (and similarly less hiring). We will not see the effects of this plan until the PSC 2012-2013 report next year, as the annual report covers until March 31, the same time the budget is released. The Public Service Commission (PSC) annual report 2011-2012 is here, and here is a roundup of the grad recruitment trends:

Post-Secondary Recruitment Program Hiring

For the cycle, the government hired 836 new grads into the PSR program, a 33% decline from last year. We could see this trend become even worse, as these are results from Budget 2011, and Budget 2012 announced the drastic employment cuts.

Applicant numbers increased from last year to 21,643. 3.8% of unique applicants that applied were hired, below the average hire rate of 4.4% over the last decade or so.

Recruitment of Policy Leaders Program Hiring

The RPL program is the elite hiring program for the government that recruits high caliber PhD or graduate students into the government for fast-track positions in various agencies or departments. On average, only 2% of those who apply are hired. This cycle there were 1,401 applicants, of which about 40 qualified, and 18 were hired. This is the lowest amount hired in the history of the program.

Summary

Hiring and application numbers are down

Effects of the dramatic layoffs and hiring cuts from Budget 2012 have not been felt yet; so it will likely get worse

The government has had some success in utilizing online assessments, a good step towards removing hiring barriers such as cumbersome paper and pencil assessments 

[neilstockley]

Budget 2012: Three stories the Liberal Democrats must tell

Budget Day.  This morning’s Guardian reports:

Wealthy individuals are to face a rise in stamp duty on properties worth more than £2m, as George Osborne helps fund a demand from Nick Clegg to remove taxation altogether from 2 million of Britain's lowest paid workers over the course of this parliament.

In a victory for the Liberal Democrats, who have reluctantly accepted abolition of the 50p top rate of tax, the chancellor will announce in the budget that stamp duty is to be raised from 5% to 7% on properties worth more than £2m.

The rise will help the chancellor raise an extra £2.2bn to meet the Lib Dem target of raising the personal income tax allowance to £10,000 from 2014, a year earlier than planned.

Clegg, who persuaded Osborne last year to meet this target by 2015, irritated some Tories in February by calling on the chancellor to go "further and faster".

It’s now widely agreed that if the Liberal Democrats are to have any chance of avoiding a total debacle at the next general election, we need to do a better job of differentiating ourselves from the Tories, come out from under the coalition brand and show how Lib Dems in government make a difference.  In opposition, the party built, partly lost and then rebuilt a brand: the decent party, who stood up for “ordinary people not the best off”.  But this narrative has steadily faded since the coalition government was formed.  Nick Clegg and colleagues need to revive it.

Both the rise in stamp duty and the rise in personal income tax allowance are hard won, key totems for the Liberal Democrats.  But their well “trailed” mentions in today’s Guardian and FT don’t mean the party’s political problems are over, far from it.

As the veteran US Democratic political consultants James Carville and Paul Begala once said:

“Facts tell, but stories sell . . . If you're not communicating in stories, you're not communicating.”

Nick Clegg and his colleagues will need to quickly get across three connected types of story.

The story of the process.  Okay, that’s a bit dry, maybe it’s the story of the politics.  At its most simple, this story tells how Nick Clegg and Danny Alexander (the heroes) set upon George Osborne (the villain) and persuaded / forced him to bring forward Budget measures to “help the millions and not the millions”, as he had planned.  The Lib Dems have to brand “our” policies in the Budget.  The Guardian story quoted above is a very good start, but stories over recent weeks about Lib Dem splits over the “tycoon tax” and disappointment over  the 50p tax rate being scrapped may have muddied the message.  And watch for counter stories in the media about “the policies that George Osborne planned to do anyway”.  This morning, the Spectator Coffee House blog foreshadows “a Budget by and for the Coalition”.

The story of the policy, which shows how real peoples’ lives will be better off as a result of the Liberal Democrats’ Budget victories.  Just mentioning the policy is never enough.  Moreover, yesterday’s ICM poll suggested that the public are quite indifferent to lifting the personal allowance and Labour and others will charge that it’s not really a policy for the poorest.  This video from the White House, with President Obama asking people“what does $40 mean to you?” contains the kind of story that’s needed.  (Maybe Tim Farron and Jo Swinson e-mailed me to ask what I’d do with an extra £60 a month because they were planning a Lib Dem version?)  Most importantly, we don’t need more lists of policies or more vignettes.

The story of the party, the “big story”, explaining who the Liberal Democrats are, what the party is about and what the public “gets” by letting them have a chance in government.  This one takes longer to tell, and it’s really the sum total of the other stories.  In his spring conference speech, Nick Clegg set out the story he would like the public to hear:

The Liberal Democrats are once again a truly national party of government. The only party of the centre ground, not of the left or right, of north or south, rich or poor but doing the right thing for the whole nation . . .

. . . A one nation party of the radical centre, representing all regions and nations. Seeing not what divides us - but what unites us. Sound on the economy, passionate about fairness: doing the right thing and battling vested interests. Challenging the status quo.

But will the voters see it that way?  Will the Budget prove to be a help or a hindrance?

And in the wake of the Health and Social Care Bill, however, Labour are out for blood and the forthcoming local election campaign will show their mettle at spinning counter-stories.

I think it’ll be clear within a few days whether the first two stories have got up.  The state of the party’s brand won’t be clear until usual the round of pre-autumn conference polls have been published.  But the heat is on.

[neilstockley]

What voters think of the Liberal Democrats, post-Budget

Let’s forget Bradford West, just for a moment, and assume that it’s an out-of-the ordinary and unique constituency, a one-off result for a one off politician, as the BBC’s Nick Robinson says.

Shouldn’t the Liberal Democrats be enjoying a new wave of popularity?

After all, our ministers didn’t look silly this week over Cornish pasties or the fuel tanker dispute.

More seriously, lifting the personal allowance and the higher level of stamp duty for people buying properties over £2m were significant Budget victories for the party.  

In the first line of the 2010 manifesto the party pledged to raise the personal allowance to £10,000 to remove low-income workers from paying tax. This is now on course to be delivered a year before the next general election in 2015.

The move vindicated Nick Clegg’s decision to set out his big negotiating demand for the Budget in public. 

Now for the bad news.  The public still do not see the increased personal allowance as a Lib Dem policy.  The Populus post-Budget survey, published this week, found that only 23% of voters thought that the Lib Dems deserved most credit for the change.   19% gave the Coalition most credit and 16% said the Conservatives deserved most credit. 22% said “none of them”.  Voters have still not heard Nick’s political story behind the Budget, proving how the Lib Dems made a difference.  

Moreover, Populus found a net plus-10% of respondents agreeing that “increasing the tax-free allowance before people start paying income tax will make little or no difference to me”.  Voters have not heard a story of the policy, which would show how real peoples’ lives will be better as a result of the increased personal allowance.  

Meanwhile, the story of the party – the Lib Dems’ brand narrative, the sum total of all the stories – remains negative.  According to Populus, the Lib Dems now have the least positive scores for competence, having the best leaders, having clear ideas and being united and the second lowest scores for being honest and “sharing my values”.   The figures have changed little since last autumn, when the Populus eve of conference survey showed the brand image continuing to bottom out.

It looks like the higher tax threshold was drowned out by the abolition of the 50p tax rate, the “granny tax” and the prevailing narrative that the Budget did not go do down well with the public, who saw it as mostly unfair.   More worrying, these findings show just how hard it is for the Lib Dems to campaign for party policies from within the Coalition.

Yet the party can’t afford and shouldn’t give up on trying to build its own brand.  The question is what kind of brand, and how to do it.  Nick Clegg wants the Lib Dems to be seen as more competent economic managers than Labour and fairer and more compassionate than the Tories.  It’s clear from other Populus figures published this week which of these themes works best for the party. 

On party attributes, the Lib Dems’ best score was on “being for ordinary people”, with net agreement of minus 2%, way ahead of the Conservatives (minus 35%) but well behind Labour (+18%).  This used to be the party’s strongest suit, and voters may be prepared to give us the benefit of the doubt.

Otherwise, the Lib Dems fared lead least poorly as the party voters trust to “cut the deficit without hurting the most vulnerable” (just 2% behind the Tories) and to “look after the NHS” (just 2% behind the Tories).  (Note, however, that Labour had a decisive lead in both these areas.) 

The Lib Dems’ worst ratings were as the party trusted to “help business to recover and grow”, “steer the economy through difficult times” and “get a grip on crime and disorder”.

Crucially, the job of reviving the Lib Dem brand won’t be achieved in a few weeks.  This is going to be at least a three year campaign, which won’t succeed unless the entire party is involved.  But listing policies (like this) and providing vignettes (like this) simply aren’t working.  We have to start telling stories to voters about the positive difference Lib Dems in government are making - assuming, of course, that the public wants to listen at all.

[theflanderspigeonmurderer]

Osborne sounded like he'd just shat himself when quaking in front of Alistair Darling. Also, Dennis Skinner <3

[theflanderspigeonmurderer]

I suppose Osborne never considers under-employment when trying to boast about creating new jobs. A lot of people I know are stuck on 12-16 hour weeks because too many people are being taken on, presumably because Osborne is giving breaks to companies who help him massage the figures? Anyway, you can't live on a 12-hour week - especially with benefits being slashed all over the place. I hate him. I fucking hate him and his squeaky little voice.

[detoutpourtous]

Le crime organise va-t-il contribuer à la caisse électorale du Parti Québécois?

Avec le cadeau que vient de faire le Pari Québécois au crime organise, en haussant les taxes sur les cigarettes, ce qui va augmenter le chiffre d'affaires des contrebandiers, est-ce que le crime organise va contribuer à la caisse électorale du PQ.

[wifeofwrath]

From the beginning we have reached out to government and said “Do the right thing. Split this into bills.” We have quoted, and you have heard me, Mr. Speaker, quote back to the Conservative Party their own principles with respect to omnibus bills, to closure motions, to Trojan horse legislation, that when they held the seats of opposition, they strongly stood for the principle that this place should be accountable to Canadians, that governments should be accountable to Canadians.

We have used their own arguments and words, not our own. We do not expect the government to be swayed by what I say here today, but we thought, we assumed that the words and principles of the Prime Minister, the Minister of Citizenship, Immigration and Multiculturalism and the Minister of Canadian Heritage and Official Languages would mean something powerful enough to them that they would actually pause and be swayed by their own arguments and principles.

What happened to those principles? There is a certain seeking of convenience from the government, that it finds this whole process difficult or annoying.

This process that we engage in as parliamentarians is critical and essential, not an inconvenience.