Monday, 20 July 2009

When property is theft: the ProgCon assets agenda

Its all go at Demos at the moment.

Readers of Next Left could be forgiven for forgetting that last week, before all the debate over James Purnell and Open Left, the think-tank's Progressive Conservatism project issued its report, Recapitalising the Poor: Why Property is Not Theft, written by Max Wind-Cowie. (This is not be confused with Phillip Blond's ideas for 'recapitalising the poor' which appeared in The Guardian recently.)

Enthusiasts for what Rajiv Prabhakar calls the 'assets agenda' should certainly read the report and think about its policy proposals, which I think warrant further consideration. It is a serious and intelligent contribution to policy debate.

What also makes it interesting, however, is the way it encapsulates the delicate conceptual dance that is 'progressive conservatism' (a step to the left, ahem, a step to the right...)

The dance takes place around the concept of fairness. The report takes a concern for fairness as definitive of what it is to be progressive:

'In sharing the progressive objectives more commonly associated with the left, [progressive conservatives] are driven by a concern for fairness...'

Moreover, this is fairness understood in terms of the distributive outcomes of the market (and not, as in right-wing theories, simply in terms of the processes of the market). Thus, the report defines its objectives explicitly in terms of overcoming the blatant unfairness that the poorest section of the population own so little wealth - so much less, in relative terms, than they did in the 1970s:

'For progressive is a disappointment that between 1976 and 2003, the poorest half of the population went from owning 12 per cent of wealth to owning just 1 per cent.'

When we come to the question 'What is to be done?', however, the report asserts its conservative credentials. Looking at its various proposals, they all have one basic idea in common: asset-building amongst the poor is to be advanced overwhelmingly by alternative uses of public spending targeted at, or tax revenues taken from, the poor. The poor must have more assets. But they must be enabled to build them up in ways that do not challenge any of the existing entitlements - market or state entitlements - of the more affluent.

Well, you might say, what did I expect? This is, after all, a conservative policy document. It would be naive to expect it to embrace policies for asset-building that would involve some significant interclass redistribution.

True, except that this is also meant, of course, to be progressive conservatism - and, according to Max Wind-Cowie, the content of progressivism is given by the commitment to fairness. Given that defining, central commitment to fairness, doesn't one need to consider whether social classes hold their assets and other resources fairly before one asserts that asset-building for the poor must be financed largely at the poor's own expense?

For instance, one might ask: Is it fair that so many people have enjoyed completely unearned appreciations in housing wealth since 1997 (notwithstanding the recent fall back in house prices)? Is it fair that this capital gain, which has little to do with the personal effort of the asset-holders, remains in the pockets of house-owners rather than being shared out somewhat?

Or: Is it fair that capital gains are taxed at a much lower rate than income, giving the affluent an easy way to lower their tax bills by taking pay in assets rather than wages?

Or: Is it fair that the institution of inheritance is structured in our society so that some get a lot while others get little, and in a way that is correlated with other advantages of social class?

If you sign up to the importance of 'fairness', these are questions which have to be addressed. And when they are addressed, one is likely to come to the conclusion that some wealth-holders hold wealth unfairly, and that in a fair society, they would have this wealth taxed away. Insofar as we do not do this, then their property is theft.

Simply assuming, apparently as an axiom of conservative faith, that we are not to redistribute between social classes is inconsistent with the self-declared commitment to take fairness seriously.

What I take away from this report, then, is a clear sense of the way defining a 'progressive conservatism' really does seem to be squaring a philosophical circle. The concepts which define progressivism, notably that of fairness, have their own logic. Let them in, and they spread out in all directions, questioning this, interrogating that. Throwing up conservative boundaries, beyond which the progressive concepts are not allowed to pass, is arbitrary in intellectual terms.

The contradiction is neatly embodied in the report's use of a quotation from Tom Paine in its opening paragraph. In Agrarian Justice (1797), Paine famously argued that all citizens should receive a capital grant at age 21 'to begin the world':

‘When a young couple begin the world, the difference is exceedingly great whether they begin the world with nothing or with fifteen pounds apiece. With this aid they could buy a cow, and implements to cultivate a few acres of land; and instead of becoming burdens upon society...would be put in the way of becoming useful and profitable citizens.’

Over two hundred years on from the days when Tories were instigating crowds to burn effigies of Tom Paine, and calling for him to be hanged for treason, it is nice to see them finally appreciating the force of what he has to say.

Only they haven't quite got there. For Paine, of course, proposed to finance the universal capital grant by means of an inheritance tax. And that still seems to be the sort of uninhibited progressive thinking that would-be 'progressive Conservatives' feel unable to engage with.

Perhaps in another two hundred years, they might finally catch up?


Carl said...
This comment has been removed by the author.
Carl Brouard said...
This comment has been removed by the author.
Carl Brouard said...

I agree with the analysis above, the report has failed to perform the 'delicate conceptual dance that is progressive conservatism’. I am supportive of asset-based welfare, but the report fails to meet the challenge: why would Cameron’s conservatives support this? All it does is summarise ideas from IPPR and academics such as Prabhakar (ideas which would be supported by Labour), and then claims unconvincingly that Conservatives would support this because it’s ‘fair’.

But consider the contrast between Blond’s Guardian article and this report. Take the idea of converting housing benefit into lumps sums to be used for deposits on houses. Never mind how people in receipt of housing benefit would then be able to meet mortgage payments, even at a reduced rate of interest. There is a far more worrying concept underpinning this idea. I agree with the concept of positive behaviour associated with asset-ownership (although this is not an original ideas), and the possession of a house as providing stability and forming a base on which to make long-term plans (which is also an established idea). But what I certainly do not agree with is the conception that the attainment of housing through this initiative would form part of a ‘dynamic wealth creation mechanism’. Mortgage payments would add to household debt, the only way home-ownership among people with low income could lead to ‘wealth creation’ is if owners remortgage in order to release equity, and all the while blindly assuming that their home will rise in value. This is precisely the kind of thinking that Cameron has been condemning; economic growth dependent on housing and excessive household debt. Blond’s article in the Guardian features the idea of converting housing benefits into lump sums (as well as a number of other interesting ideas which deserve to be debated), but he omits the redundant view of wealth generation based on home-ownership and suggests that these lump sums be used to purchase community shares or for social investment.

Blond’s ideas are interesting because they explore the language Cameron uses (admittedly not concrete policy) to move away from traditional Tory policy. Cameron critiques the central prescription [which] robs people of the chance to use their judgement or to take responsibility for making the right decisions.’ This kind of statement should be explored, yet one minute the report’s author asserts that it is ‘important that people have control over their lives, and that they are empowered to take chances’, and the next criticising Child Trust Funds for failing ‘to promote any particular outcome for public money’, and asking people in receipt of public money to spend it ‘on things society views as valuable’ (although there is no explanation of how society’s opinion is voiced). Yet the report ‘prizes financial responsibility at levels of society’, and promotes self-administered pensions. So presumably, the less wealthy, after being told what to spend their money on by ‘society’ for all their working years, reach pensionable age fully moulded by a paternalistic government into financially responsible citizens who will commit a significant amount of their time to research where they want to invest their pensions, and subsequently enjoy ‘regular updates on how their pension fund was growing’ – because of course, like house prices, pension funds can only rise in value.

This disappointing report tries to explore the implications of Cameron’s language but is unable to accept the full implications of this new direction (and therefore fails to hold Cameron to his word). It gives the impression of being bankrupt of ideas (having to borrow them from Labour) and completely out of touch with reality, which is precisely what Progressive Conservatism at Demos sounds like.

John said...

I think the left always has been and always will be far better at recapitalizing the poor that any progressive con man.

New Labour's Child Trust fund is a significant policy to recapitalize the poor, by using general taxation (which is progressive) to give every child a grant at their birth, a bigger grant too poor kids, and an opportunity to save into it.

The Tories opposed child trust fund, child tax credit, minimum wage and working tax credit.