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Transformation of an economy

by Frank Schnittger Fri Dec 27th, 2013 at 03:09:50 AM EST

Since 2007 the number of people employed in the Irish economy who do not have a secondary education qualification has reduced by 50%. The numbers of people employed who do have only a secondary educational qualification has reduced by 20%.  But the numbers of people employed with a tertiary educational qualification has increased by 12%.

Many will view this as confirmation that Ireland is being transformed into a knowledge based economy. Another way of looking at it is that the working class in Ireland has been devastated by the recession, whereas the middle class has (relatively speaking) prospered.

There are many factors at play here: The devastation of the Irish construction sector since 2007; the rise in participation rates in tertiary education; and the growth of the mostly foreign owned multinational companies in the ICT, pharmaceutical and services sectors.

Many employees who did not have a third level qualification in 2007 will have retired from the workforce or have achieved a third level qualification since. Most of the new entrants into the workforce since 2007 will have had a much higher level of education than previous cohorts, and some of these will have come from a working class background.

However the educational system is still overwhelmingly the mechanism by which the middle class can propagate itself:

front-paged by afew


EUROSTUDENT SURVEY II: IRISH REPORT ON THE SOCIAL AND LIVING CONDITIONS OF HIGHER EDUCATION STUDENTS 2003/2004 (PDF alert)

Participation in higher education in Ireland is a success story. From a low base of 11% participation in 1966, and still as low as 20% in 1980, today some 55% of school leavers are entering higher education. While this is still somewhat short of leading OECD countries, it is a very rapid increase in a relatively short period of time. A key part of this progress has been a wider and deeper understanding of the role higher education plays in personal development and economic well being as Ireland moves to being a knowledge economy. Another contributor has been the range of measures put in place to encourage those not traditionally represented to enter higher education, including adult learners, people with disabilities and those from less advantaged socio-economic backgrounds. This is a very positive development for the people concerned but also because we can better achieve our ambition to be a knowledge economy if we provide avenues to participation by all who can benefit.

Indeed the proportion of students in tertiary education in Ireland is still not especially high by European standards:

But over half of those in tertiary education come from a professional family background: (PDF Alert - Figures 5a and 5b only available in PDF)
EUROSTUDENT SURVEY II: IRISH REPORT ON THE SOCIAL AND LIVING CONDITIONS OF HIGHER EDUCATION STUDENTS 2003/2004

In keeping with the international pattern, Figure 5a indicates that those from professional backgrounds make up over half of the student group; this group is, therefore, over-represented compared with their prevalence in the national population (see Fitzpatrick Associates and O'Connell, 2005). The pattern is consistent with evidence from earlier time-points (see Ryan and O'Kelly, 2001; Clancy and Hall, 2000). Figure 5b shows that part-time students are somewhat more likely to come from semi-skilled or unskilled manual backgrounds, and less likely to come from professional backgrounds, than full-time students. The Eurostudent survey of 2003/2004 revealed that the majority of students' mothers and fathers are economically active as employees (see Figure 6). Only a small percentage of respondents reported that their parents were unemployed. Compared with the national population, those from unemployed households are under-represented in higher education.

What the above quoted ESRI report fails to mention is that the fees and costs associated with tertiary education have increased significantly in recent years, and dramatically reduced its affordability for students from less advantaged backgrounds.

Minister for Finance, Michael Noonan, has shown at least some appreciation that any widespread recovery must also include a jobs boost for sectors like construction and tourism more associated with working class employment: Innovative Noonan draws attention to plight of the long-term jobless

He cited, as an example of how government could achieve policy objective by tax changes rather than those on the expenditure side, the reduced VAT rate he had introduced for the tourism and hospitality industry. There is no doubt, he said, that the reduced rate had had not only a multiplier effect but also a psychological effect in helping lift tourism and hospitality out of the doldrums into which they had fallen when the crisis began. The reduced VAT rate had worked so well that he had decided to retain it in this week’s budget.

Noonan then spoke at some length about two tax-related initiatives, which he had announced this week in the construction sector. The first of these was the home renovation incentive, which will give up to €4,050 in a rebate to those who spend between €5,000 and €30,000 on renovations or home improvements. The second is a provision that allows those on the live register for more than 18 months to set up a business and earn up to €40,000 free of income tax in the first two years.

Of course, not many can afford home improvements on that scale, and few people unemployed for more than 18 Months will have the capital to set up a business. So the job creation effects are likely to be marginal at best.

Ireland lacks an apprenticeship system on the scale of Germany to promote skilled employment in a wider range of non-white collar occupations and so the overwhelming emphasis is on achieving success in a very academically based educational system.

All of this raises the question of how sustainable Ireland's economic transformation will be, heavily dependent as it is on attracting mainly US knowledge based industries which are extremely mobile and which could easily re-locate elsewhere. The other question is whether the recovery will also be very asymmetric in its impact: The recession overwhelmingly impacted working class sectors with less academic educational attainment. Will the recovery now also leave them behind?

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He cited, as an example of how government could achieve policy objective by tax changes rather than those on the expenditure side, the reduced VAT rate he had introduced for the tourism and hospitality industry. There is no doubt, he said, that the reduced rate had had not only a multiplier effect but also a psychological effect in helping lift tourism and hospitality out of the doldrums into which they had fallen when the crisis began.

Is there any evidence for this argument and any evidence that there is a causal relation? 'Tax expenditures' seem always and almost entirely to help the already well off and, of course, sounds better than 'another tax cut for the wealthy'.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Dec 26th, 2013 at 04:05:41 PM EST
`Great year' for tourism as visitor numbers increase - The Irish Times - Thu, Sep 26, 2013

The number of overseas trips to Ireland increased by 6.7 per cent over the summer months this year, according to figures from the Central Statistics Office (CSO).

In the period June to August, 2,264,800 trips to Ireland were made, an overall increase of 142,000 compared to the same period twelve months earlier.

Minister for Tourism Leo Varadkar said 2013 had been a "great year" for tourism in Ireland and pointed to improved value for money and the Gathering to explain the growth.

The summer months saw a dramatic rise in the number of North American visitors with 437,900 trips made, an increase of 19.9 per cent.

Trips by residents of Britain increased by 4.7 per cent to 879,500 while trips from other European countries were up by 0.9 per cent to 794,700.

The total number of overseas trips made by Irish residents during the period June - August 2013 increased by 3.1 per cent to 2,139,200.

The total number of trips to Ireland increased by 6.5 per cent for the period January to August 2013 when compared to the same period last year.

"Improved value for money, better air access and The Gathering have all combined to give us an excellent year for inbound tourism," Mr Varadkar said. "It looks like being a record year from North America and I am reassured by growth from Britain. We now need to build on this success in 201tioned as 4."

Tourism into Ireland had been in the doldrums in the crisis years not helped by the high price of drinks, meals and hotel accommodation - with prices being mentioned as a negative in surveys of tourists coming to Ireland - not helped by high VAT rates and duties on the products and services used by tourists the most.  

The tax reductions have helped to stabilize, and in some cases reduce those prices but I would expect it to be several years before that filtered into the perceptions of Ireland as a tourist destination in most of our tourist markets. Irish tourism has never traded on price (or climate!) in any case, focusing on family links, traditional music, golf, conviviality etc.

So I would be very cautious of ascribing causality to the tax reductions and tourist volumes especially in the short run. Nevertheless, because tourism is so labour intensive, any increase in volumes however achieved will be very beneficial to employment levels especially in areas of the country with little industrial employment.

The Celtic tiger years saw a huge expansion in Hotels, Spas and other tourist infrastructure with many of those hotels now owned by the state (in the form of Nama) or barely hanging on. Most recent investors in the industry will already have lost their shirts and so anything that keeps those hotels going as a viable concern is to be welcomed.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Dec 26th, 2013 at 04:52:17 PM EST
[ Parent ]
But doing what you always wanted to do somehow seems so often to bring the desired result. How fortunate.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Dec 26th, 2013 at 07:27:23 PM EST
[ Parent ]
Fine Gael is ideologically opposed to increasing income tax rates but that has not prevented the imposition of various other levies on income which have much the same effect. In general, Ireland is not a particularly low tax economy  - see VAT rates below:

Value Added Tax

23% is the standard rate of VAT and all goods and services that do not fall into the reduced rate categories are charged at this rate. They include alcohol, audio-visual equipment, car parts and accessories, CDs, computers, consultancy services, cosmetics, detergents, diesel, fridges, furniture and furnishings, hardware, jewellery, lawnmowers, machinery, medicines (non-oral), office equipment, pet food, petrol, paper, tobacco, toys, tools, washing machines, bottled water.

13.5% is a reduced rate of VAT for items including fuel (coal, heating oil, gas), electricity, veterinary fees, building and building services, agricultural contracting services, short-term car hire, cleaning and maintenance services.

9% is a special reduced rate of VAT for tourism-related activities including restaurants, hotels, cinemas, hairdressing and newspapers. It was announced in Budget 2014 that this special reduced rate of VAT would be retained (it was due to revert to 13.5% from 31 December 2013).

4.8% is a reduced rate of VAT specifically for agriculture. It applies to livestock (excluding chickens), greyhounds and the hire of horses.

0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children's clothes and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, disability aids such as wheelchairs, crutches and hearing aids.

Higher rates tend to be targeted at more discretionary expenditures with more labour intensive services and essential foods etc. taxed at a lower rate, although the influence of special interests in the horse breeding and greyhound industries is visible...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 27th, 2013 at 08:45:52 AM EST
[ Parent ]
Mason Gaffney is a critic of the VAT. Longtime Georgist, he would see most of that income replaced by a tax on the unimproved value of land, that being what that location would be worth if taxed at the rate appropriate to the best and highest use for which it is zoned. There is a considerable body of literature on the determination of that rate and he has cogent arguments as to why the tax should be on only the unimproved value.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Dec 27th, 2013 at 10:16:50 AM EST
If the goal is to increase economic activity increasing taxation on economic activity is self-evidently daft.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Dec 27th, 2013 at 12:40:29 PM EST
[ Parent ]
One of the problems with the Irish taxation system is that many made millions when their farms or other land assets were rezoned industrial or residential but paid no capital gains tax on the proceeds - it was only in 2009 that an 80% windfall gains tax was introduced.  Unearned income in the form of capital gains is actually taxed at a lower rate (33%) than the higher (41%) rate of income tax.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 27th, 2013 at 01:09:01 PM EST
[ Parent ]
How would a Georgist tax help here?
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Dec 27th, 2013 at 01:34:32 PM EST
[ Parent ]
In theory, by canceling out the rise in capitalization of the land due to zoning changes: When the zoning changes, the Georgist tax would go up, which would reduce the price of the land.

In practice, for a variety of reasons, a Georgist tax will have to always be set somewhat conservatively, which means that you would still require a windfall tax to prevent rezoning windfalls and reduce the ability of connected insiders to leverage their connections into illegitimate gains.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Dec 27th, 2013 at 02:10:18 PM EST
[ Parent ]
A Georgist land tax is a huge disincentive to holding land zoned for higher use in anything but that 'best and highest' use. In business terms there are advantages to businesses being located closely together. Arguably, all of the interdependent businesses profit from the physical propinquity of their counter-parties - reduced transport and travel costs and more face to face. Sprawl is thus doubly disincentivized. If construction costs for land improvements are taxed that tax usually becomes the third greatest expense for the improvement and builders often substitute cheap adjacent land for increased height, spreading out horizontally.  so, foregoing that tax encourages builders to build higher. Building height would be determined by geology and technology, not the tax code.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Dec 27th, 2013 at 02:41:23 PM EST
[ Parent ]
Yes, but my question was specifically about changing the zoning of land. Someone with connections could presumably keep the land zoned at a low rate, and then get the zoning changed just before he was ready to use it.
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Dec 27th, 2013 at 03:43:28 PM EST
[ Parent ]
True, but if there are clear regulations in place there will be others who legitimately can ask why that lot next to the skyscraper is undeveloped, who owns it and at what rate is it assessed and can make an issue of it come election time.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Dec 27th, 2013 at 03:54:18 PM EST
[ Parent ]
What's the investment capital situation in Ireland?

It doesn't do a bunch of good for the Irish economy to have valuable, high-tech trained, workers if they are limited to being wage slaves employees of a Trans-nat.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Dec 27th, 2013 at 02:40:02 PM EST
Gross Capital formation went down from a respectable 20% of GDP in 2008 to an anaemic 10% of GDP in 2012 at the bottom of the crisis. Comparable figures for USA were 15% and 13%; UK 17% and 14%; Germany 19% and 18%. These figures show the downturn was much more severe in Ireland.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 27th, 2013 at 03:19:50 PM EST
[ Parent ]
One assumption lurking within this diary is that those with a third level qualification should be considered middle class whilst those without any educational qualification should be considered working class - at least at a first approximation.

Of course some third level graduates may be working in relatively menial jobs, and some workers with no educational qualification have worked their way up to be captains of industry. Normally I would define the working class/middle class boundary as being defined by manual vs. mental labour, although that distinction, too, may often be blurred, with some manual jobs requiring great knowledge and skill, and some "mental" jobs being very routine in nature.

What does seem clear to me, however, from my own work experience, is than mobility between different categories of work is gradually declining, and that educational qualifications are increasingly being used as a proxy for general suitability/ability in recruitment decisions for more and more types of work.

Years ago it was not unusual for workers to move from one "specialism" to another without much in the way of formal qualifications - I myself moved from social research to HR to management consultancy to project management to IT management with only a thin veneer of strictly relevant formal qualifications and training on the way in a manner that would be difficult to imagine today.

Nowadays without a least a degree in a relevant discipline it is unlikely you will even be shortlisted for interview in, say, finance, marketing, HR, IT, engineering etc. not to mention the more formal professions of law, medicine, audit, pharmacy, nursing etc. where legal requirements apply and where employment without at least a primary degree is now unthinkable. Some professions, like psychology, now require a clinical Phd to even qualify for employment.

I would be interested in others reader's observations on whether occupational mobility is increasing or declining and as to whether this is a good or a bad thing - does it improve the quality/efficiency/consistency with which services are delivered or does it merely entrench class and occupational demarcations for little good reason.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 27th, 2013 at 07:16:02 PM EST
I suspect the older the profession, the more regimented it is. New specialisms arise which are filled be people in an ad-hoc manner, but it the new line of work gets established soon there will be professional associations, certifications, and soon diplomas, degrees, etc...

Medicine is more regimented than psychology because it became established earlier. HR and finance are in the process of becoming established. In my line of work I doubt in a few years you'll be able to get work without at least master's whereas 10 years ago firms were poaching numerate graduate students from universities without much regard for specific qualifications.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Dec 27th, 2013 at 07:25:02 PM EST
[ Parent ]
The era of "the gifted amateur" appears to be over. Would a young Einstein's work even be considered for publication today in a serious journal if it were known he was but a patents clerk? Someone close to me is brilliant at his job but neglected to bother with the formalities of a degree. I doubt he would even be shortlisted for interview for a job in his field in most major corporations today. HR departments can only go on qualifications, as they can't judge actual knowledge or skill in most specialist fields, and the corporate specialists in that field only get involved in the recruitment process once HR ave done the initial short-listing.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 27th, 2013 at 08:06:01 PM EST
[ Parent ]
HR departments are useless.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Dec 29th, 2013 at 06:31:15 AM EST
[ Parent ]
That's not true. A good HR department can be an exceedingly valuable asset. I've met HR people who can deliver armor-piercing questions the minute after they meet you, the same way you or I would start asking armor-piercing questions a minute after having finished reading a proposal for a new accounting system or business case.

Now, it may be true that most HR departments are not good enough to be useful. But then, the same is true for most banks' risk control departments.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Dec 29th, 2013 at 07:11:28 AM EST
[ Parent ]
HR exists to protect upper management from employees, not to find talent. Just as risk management is more about producing plausible deniability than about managing risk.

The questions may occasionally be armour piercing, but there's no such thing as useful employment science.

It's almost impossibly hard to predict real employee performance using any of the standard job selection techniques, including tests, problem solving and simulations, team building exercises, and armour piercing questions in interviews.

That's partly because real employee performance depends as much on culture as on talent. It's also because talented and unusually productive employees are often boat rockers, and HR people don't like rocking boats.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Dec 29th, 2013 at 08:42:00 AM EST
[ Parent ]
That's partly because real employee performance depends as much on culture as on talent.

Which is why a smart HR department will look at how a prospective employee will enhance or obstruct the culture they are trying to build in the organization. If they just toss people a barrage of tests and a boilerplate questionnaire, then of course they add no value above a computer.

It's also because talented and unusually productive employees are often boat rockers, and HR people don't like rocking boats.

Then you've either got rubbish HR people or an upper management culture that's afraid to let the technical specialists do their thing.

There may be a cultural disconnect at work here as well. Talking to those of our HR people who have worked in British companies, they make the distinction between employee administration and employee development. The latter function is where HR adds value. The former function can be performed cheaper and just as well by any of a dozen different business control software suites.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Dec 29th, 2013 at 10:41:19 AM EST
[ Parent ]
JakeS:
Then you've either got rubbish HR people or an upper management culture that's afraid to let the technical specialists do their thing.

And that's exactly why most HR departments indeed are useless.
It has nothing to do with the HR specialists' capacities: it's all about corporate culture where upper management routinely rolls over whatever "employees are our best assets" policies and processes put together by HR. From my experience in corporate world, HR departments are increasingly powerless (and increasingly staffed by women - not a coincidence, methinks): as you noted in another comment, "humble and dependent" employees are preferred to talented employees.

by Bernard on Sun Dec 29th, 2013 at 01:31:52 PM EST
[ Parent ]
But that's not HR departments being useless, that's upper management being chronic fuckups. Blaming that on the HR department is like blaming your delayed flight on the check-in clerk.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Dec 29th, 2013 at 02:15:58 PM EST
[ Parent ]
..and you're absolutely right: I'm not blaming the HR dept. folks for being rendered effectively (as: in effect) useless by the chronic fuckups upper management. After all, the rest of the company suffers from the same "leadership" being imposed on us.

This has nothing to do with the HR people themselves who are often very competent (including in my own workplace) and should definitely have a greater say (and it's a crying shame that they don't).

by Bernard on Sun Dec 29th, 2013 at 03:58:20 PM EST
[ Parent ]
There's a basic tension in every organisation between people who want to do a good job, and people who want to play politics and enhance their status.

Arguably the whole point of a corporation isn't to produce goods/services/value/whatever, but - in simple Darwinian terms - it's to increase the self-perceived status of the people at the top wrt to everyone else and to provide extra opportunities for resource acquisition and reproduction for human predators.

There are always people who simply want to do cool and useful stuff, but they rarely make it to the top. So there's a perpetual conflict between reality and perception management.

This is probably a fundamental law of all human organisations past the hunter-gatherer stage, including corporations, city states, nation states, collectives, and co-ops.

The difference with the latter is that power differentials are eroded, so it's harder - at least, it should be harder - for predators to prey on those under them.

I always assess the health of organisations on the balance between Doing Cool Stuff and Being Political. If there's too much of the latter, the culture is pretty much guaranteed to be abusive and dysfunctional - which means it won't just be a toxic place to work, but it will also be really, really bad at getting useful work done. (Although it may still be immensely profitable.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Dec 29th, 2013 at 06:52:54 PM EST
[ Parent ]
As Milton Friedmann taught, the purpose of corporation is maximization of shareholder's value. This highest principle easily leads to a status hierarchy - the closer you are to the top principle, the better you rewarded. Hapless workers do not have to think about shareholders' value at all, hence their subsistence salaries. But you are right about political stagnation vs creativity in large organizations. "Seasoned" corporations tend to sit on their cash cows, keep the hierarchy perks and do not risk with giving a talented worker more freedom. If you have an idea, implementing it as your own business is an interesting option - though challenging, with unfair starter's package of learning messy entrepreneurship and navigating smiling financial sharks.
by das monde on Sun Dec 29th, 2013 at 10:55:22 PM EST
[ Parent ]
Friedman was wrong: corporations maximize executive compensation, and this is perpetuated by bribing board members with sinecures (the board membership itself)

Galbraith may have been right in the 1950s in claiming that corporations maximized their own survivavility (through the 'technostructure': more or less middle management). But that's gone too with the ascent of the MBA class.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Dec 30th, 2013 at 05:58:00 AM EST
[ Parent ]
Executive compensation is all in the name of shareholder value still. But yes, power balance does not always favour ownership, especially collective one.
by das monde on Tue Dec 31st, 2013 at 02:15:10 AM EST
[ Parent ]
In the name of, in name only.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Dec 31st, 2013 at 04:26:13 AM EST
[ Parent ]
This is probably a fundamental law of all human organisations past the hunter-gatherer stage, including corporations, city states, nation states, collectives, and co-ops.

The difference with the latter is that power differentials are eroded, so it's harder - at least, it should be harder - for predators to prey on those under them.

Which is why in the UK the Co-Op put a corrupt incompetent minister at the helm of the Co-Op bank, which went on to fail with a £2bn hole...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Dec 30th, 2013 at 05:53:39 AM EST
[ Parent ]
Power differentials are also more impersonal, even anonymous in modern organizations.
by das monde on Tue Dec 31st, 2013 at 02:16:47 AM EST
[ Parent ]
I mean HR are useless at screening CVs...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Dec 29th, 2013 at 06:19:44 PM EST
[ Parent ]
I think it was in Sandman Nail Gaiman placed the following words in the mouth of 16th century man: "I'm thinking about going into printing. New trade, no guild requirements yet."

Same as it ever was.

I'm with Jake on the analysis. The places for gifted amateurs, ie outsiders are welcome in rapidly expanding fields that can't fill up with insiders. Physics along with most of what we call science was such a field in the early 20th century. Problem now is that the whole array of New Class professions (more or less intellectual jobs with academic education, white collar and economic safety) are shrinking.

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by A swedish kind of death on Sun Dec 29th, 2013 at 02:23:29 PM EST
[ Parent ]
There is some of that.

But mostly I think it's about keeping out the hoi-polloi. Adam Smith was closer to right than to wrong when he observed that most crafts can be learned to an adequate level inside of six weeks (not to master level by any means, but sufficient for passable, if somewhat pedestrian, workmanship).

My current pet theory is that the driving dynamic in the lifecycle of a social organization is the rate at which new positions of power open up, relative to the rate at which positions of power are filled by the products of incestuous nepotism:

When an organization is growing faster than its pool of golf buddies, it is forced to reach out into outgroups for leadership talent. And when you reach out into an outgroup, what do you look for in your talent? First and foremost, he should be a team player, not a usurper. Being competent is also an active plus. This influx of reasonably competent team players of course greatly improves the efficiency of the organization, which enables it to grow even faster and take in more outside talent without having to displace anybody's inbred cousin.

Conversely, when the number of positions of power and prestige in an organization fails to expand faster than the pool which can be filled by common nepotism, the fraction of the leadership recruited on the basis of skill, talent and team play declines, causing the organization to silt up, and starting a vicious cycle which is pretty much a mirror image of the virtuous expansion cycle.

Most of The West(TM) is currently in the latter phase, and establishing largely bogus formal barriers to entry is a way to keep the good gigs "in the family," without overtly signaling that this is what one does.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Dec 27th, 2013 at 08:51:31 PM EST
[ Parent ]
Middle class in the UK now pretty much means 'public school education.'

The old mental/menial distinction is long gone. IT, web design, graphic design, HR, and sales/marketing are all now white collar working class occupations.

Doctors, lawyers/judges, accountants, company directors, and various forms of management remain middle class.

Engineering, nursing, and teaching are middle-ground occupations. The lower levels are menial and disposable, the management/strategy levels can be middle class.

Likewise for writers and journalists. Freelance writing is menial labour, opinion-forming journalism on a national paper is middle class.

Mid-list novel writing is very much working class sweat shop labour in terms of hours/pay/contractual abuse, best-selling authors are treated better (but can still be screwed over by legal).

Public school and Oxbridge remain indispensable for access to the upper levels.

In IT there's a big difference between hiring strategies for start-ups, where evidence of achievement matters more than formal qualifications, and hiring strategies for established corporates, where HR is usually staffed by idiot robots who have no clue what productive employees look like and rely on paperwork and tick boxes instead.

What used to be called working class - cleaners, factory workers, and the like - are probably a near-slave-like underclass now in practical terms. Zero-hours contracts are normal, pay is minimal, and rights are almost non-existent.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Dec 28th, 2013 at 01:11:33 AM EST
[ Parent ]
for being middle class very high indeed. even if one takes the broader term of independent schools as a guide, only 7% of British children attend such schools. Many of their alumni will end up in jobs you have categorized as working class above.

So I would have thought that the even narrower cohort who attend public schools constitute a tiny elite more accurately described as upper class even if most do not have actual aristocratic roots. At most they belong to that part of the aspiring middle class who so hanker after the values and lifestyle of the elite that they become more snobbish than the snobs themselves.

There may very well be a trend toward the pauperization and propletarianisation of formerly prestigious jobs in (say) IT, but has it really progressed to the point where serious IT professionals can be considered working class?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Dec 28th, 2013 at 07:39:14 AM EST
[ Parent ]
Some IT professionals, certainly. Are cube farm dwellers really middle class?

Perhaps a more practical distinction is that if you make stuff - either manually or intellectually, including software - you're working class.

If you tell other people what to do, or are considered to have some right to do same, you're middle class.

And if you float above it all collecting the generous rewards created by everyone else, you're upper class.

I think the public school criterion is a reasonable one in the UK.

No, most of the population isn't middle class. It may think it is, but while it has have very limited political and financial power -  it isn't.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Dec 28th, 2013 at 08:32:08 AM EST
[ Parent ]
Given more people are now employed in service industries rather than "making stuff" where they are often paid even worse than those people who are making stuff, the "making stuff" criterion doesn't work all that well either.

Also by you're managerial criterion, a senior programmer who supervises a junior programmer is middle class.

Guinness, prior to the the early 1980's was organised like an outpost of the British empire. You had the Brewers, who were the top dogs, who were oxbridge graduates. They became senior managers after a couple of years - and senior managers had a diningroom of their own - slightly less prestigious than the Directors dining room.

Then you has the engineers, accountants, marketeers who became dominant in the management structure as the brewing process was mechanised, as the business was financialised, and when Guinness became primarily a brand management rather than a production company and morphed into Diageo.  Later still all enterprise systems were automated using SAP software and even the accountants were marginalised and replaced by "process owners". All ate in the staff dining room.

Lab staff were technically technicians who were called no. 2 staff but were eventually allowed to join in with the no.1 administrative staff who were also allowed use the staff dining room.

There were also separate dining rooms for blue collar foreman and supervisors and craft and general workers, not to menion the lads and boys who were employeed from age 14 up in the old age (but encouraged to continue their education).

Porblems arose when (sy) the daugher of a supervisor joined the company to become a secretary which entitled her to use the staff dining room whist her father - with 35 years service, could not.

Not that the different grades wanted to mix all that much - they were often happy to mix just with "their own kind".

But all that became a problem for the company when deteriorating and antagonistic industrial relations caused strikes which caused irreversible loss of market share. As  the business mechanized and downsized
all these demarcations became counterproductive and the business made a conscious decision to be come a "sinle status" company.

My earliest jobs in the company centred around integrating payscales, removing status distinctions, closing multiple waiter/waitress canteens and replacing them with a single self service restaurant and initiatives such as quality circles to promote team working.

I mention all this, because it seemed to me that class distinctions were as much about history and culture than about anything anybody actually did on the job.  My boss, who joined at 14 eventually became Managing Director, then Chairman of the Labour Court, and then an adjunct Professor of Trinity College Dublin. All without a formal secondary education, never mind a qualification. Times change.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Dec 28th, 2013 at 10:57:00 AM EST
[ Parent ]
'Making stuff' can include paperwork. It just means you're producing... something. It doesn't mean working on a manual production line.

Senior programmers fall into the grey area I mentioned in the original post. I'd say it depends if the primary focus of the job is managerial/political or technical.

As soon as words like 'business strategy' start appearing, you're edging towards middle class levels.

I don't know what the opportunities are like at somewhere like Google. Apparently they've just introduced the psychotic stack ranking system that did so much to promote idiocy at Microsoft, so whatever the prospects used to be, they've just gotten a lot worse.

It's hard to imagine a stock picker at Amazon making it to upper management, but perhaps it's not entirely impossible.

These days the best way up is through a start-up or through something like Kickstarter or Indiegogo. You don't even need a viable product and you don't need to sell shares. You just need an idea/3D render/video that appeals to their respective markets.

I've seen some projects that seem completely impractical to me get massive funding through that route.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Dec 28th, 2013 at 12:00:48 PM EST
[ Parent ]
at least some employers may actually prefer a mild recession (at least in the labour market) to an economic boom time:

Why Corporations Might Not Mind Moderate Depression - NYTimes.com

I pointed out, following on a suggestion by Mike Konczal, that the continuing dire state of the labor market enhances the bargaining position of employers, increasing their power. But can this effect actually mean that employers are better off in a somewhat depressed economy than they would be in a boom?

A lot people have the instinctive reaction that it can't be possible -- that businesses would prefer to have stronger demand, even if it means that they have to pay their workers more and treat them better. And maybe that's true. But it's by no means an open-and-shut case.

I think it may be particularly the case that well established corporates prefer moderate recessions to economic boom times - which may indeed enable younger upstart businesses to thrive and prosper and ultimately threaten their older established rivals more effectively.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Dec 28th, 2013 at 07:50:38 AM EST
Well, that is one possible reason to like moderately bad times.

But I think the more important reason is provided by Smith in Wealth of Nations:

In cheap years it is pretended, workmen are generally more idle, and in dear times more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may render some workmen idle, cannot be well doubted; but that it should have this effect upon the greater part, or that men in general should work better when they are ill fed, than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are generally in good health, seems not very probable. Years of dearth, it is to be observed, are generally among the common people years of sickness and mortality, which cannot fail to diminish the produce of their industry.

In years of plenty, servants frequently leave their masters, and trust their subsistence to what they can make by their own industry. But the same cheapness of provisions, by increasing the fund which is destined for the maintenance of servants, encourages masters, farmers especially, to employ a greater number. Farmers, upon such occasions, expect more profit from their corn by maintaining a few more labouring servants, than by selling it at a low price in the market. The demand for servants increases, while the number of those who offer to supply that demand diminishes. The price of labour, therefore, frequently rises in cheap years.

In years of scarcity, the difficulty and uncertainty of subsistence make all such people eager to return to service. But the high price of provisions, by diminishing the funds destined for the maintenance of servants, disposes masters rather to diminish than to increase the number of those they have. In dear years, too, poor independent workmen frequently consume the little stock with which they had used to supply themselves with the materials of their work, and are obliged to become journeymen for subsistence. More people want employment than easily get it; many are willing to take it upon lower terms than ordinary; and the wages of both servants and journeymen frequently sink in dear years.

Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to industry.

Or, as Kalecki more concisely put it in Political Aspects of Full Employment:

[T]he maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders.  Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a 'disciplinary measure.'  The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.  Strikes for wage increases and improvements in conditions of work would create political tension.  It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders.  Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.

(Bold mine in both quotes.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Dec 28th, 2013 at 12:34:06 PM EST
[ Parent ]
I find it difficult to take part in the above discussion of the usefulness or otherwise of HR functions partly because it's a long time since I worked in one, and partly because my experience of them is so varied.

The HR function in Guinness, in the early 1980's, had a reputation as one of the best around because it was quite innovative in terms of setting up a works council to promote worker participation, was actively spear heading the removal of status distinctions within the company and was headed up by a succession of high profile Directors some of whom has worked their way up from the shop floor and others who became MD's in Guinness and other major businesses/organisations elsewhere.

One of my first jobs was doing a post-audit on a damaging strike to try and determine what went wrong. One of my conclusions - that the negotiations had been handled badly by both sides - could have been career limiting but didn't seem to have that effect at the time. There was an openess to change and to new ideas and to a sense of responsibility that HR had a role in leading that change process across the organisation.

Many years later, when I had occasion to deal with (a radically changed and now English based) HR function from the other side of the fence, as a line manager, my experience couldn't have been more different. All responsibility/accountability was pushed to the line manager with HR claiming to provide a "supporting role" but in practice doing everything but.  You had a sense of HR acting as spies for head office rather than actually adding value to solution seeking on the ground.

This change coincided with the globalisation of the business and the emasculation of the trade Unions within it - but also coincided with the hollowing out and emasculation of line management as well. It got to the ridiculous stage of HR defining their "support processes" as being entirely delivered through intranet based "support tools" and no ownership was ever taken to actually help resolve issues.

But I know the experience in other companies could be quite different, so I would be reluctant to generalise..

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Dec 31st, 2013 at 06:09:50 AM EST
You're talking about the side of HR which Americans call "labour relations". My experience is almost exclusively on hiring practices and employee development.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Dec 31st, 2013 at 06:14:28 AM EST
[ Parent ]
The shift here in the US from making things to making paper and electrons will prove our downfall.  First, you need to make things foreigners will buy with your currency, or you will collapse.  Second, contrary to the great myth of the 90s, you'll never be able to have everyone work at a desk, not in a society bigger than Liechtenstein.
by rifek on Tue Dec 31st, 2013 at 03:59:50 PM EST


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