London Burning

No matter how hard he tries, David Cameron's attempts to evade responsibility not just for the conditions that may have caused or contributed to the eruption of riots in London, but also the inadequacy of the response to it, it is becoming apparent that not only politicians, but the public at large are losing faith with his reforms and the Big Society it promises.

Cameron of course, beset by calls from the Labor Opposition to reconsider cuts to the police budget laid the blame on parents and the so-called broken society. The rioting was criminality run wild, not a form of political protest against an unjust social order. The police response was slow and tactically wrong, he intoned during parliamentary debates.

Unfortunately for him, the police did not take too kindly to this characterization of events, and the public appear to back them instead of the political leaders. The seeming disconnection of the politicians who were on holiday, the PM in Tuscany, his deputy in France and the London Lord Mayor Boris Johnson in the United States, when the burning of London raged surely did not help build credibility for them.

In this situation, the importance not only of empathy but also a desire to ease suffering on the part of ordinary citizens could have gone a long way.

Austerity and the End of Multiculturalism in Britain

Toby Helm, Matthew Taylor and Rowena Davis report in the Guardian that

David Cameron was accused of playing into the hands of rightwing extremists today as he delivered a controversial speech on the failings of multiculturalism within hours of one of the biggest anti-Islam rallies ever staged in Britain.

A coordinated attack or just a slip up? Salma Yaqoob seems to think the latter. She writes also in the Guardian

I like to think Cameron was genuine in his words when he visited my ward. And that somehow his mind was hijacked by the right wing of his party. I hope for all our sakes he wins it back. Because while areas like Sparkbrook are not perfect, they are succeeding...

 Cameron once had a vision. It was a positive and genuinely uniting and inclusive one that gained him admirers across the political spectrum. He should return to it.

 The "Big Society" the name coined by PM Cameron to couch his vision for Britain to counter the idea of "Big Government" attached to Labor which has resulted in huge fiscal deficits was coincidentally his way of re-branding the Conservative Party in Britain and make them electable. Margaret Thatcher had previously declared, "there is no such thing as society." This was a complete reversal of that way of thinking. Just as Tony Blair had reinvented the Labor brand, so was Cameron.

It now appears that the "Big Society" that the PM had in mind is not so big after all having some strict preconditions for entry. As Yaqoob notes, this is a total reversal of the "face" he put on when he was aspiring to become Britain's next PM. Does the PM's statement unmask the fact that the new Tory brand is just a repackaging of the mean old Thatcherite ideology?

While all this was taking place, a fourth quarter contraction in GDP was hitting the headlines. Dean Baker commenting on the Great British Austerity Experiment notes that

(t)he fourth-quarter GDP report showing that the economy went into reverse and shrank at a 2.0% annual rate is exactly the sort of warning that many of us here were expecting. Weather-related factors may have slowed growth some, but you would have to do some serious violence to the data to paint a positive picture. Of course, the austerity in the UK is just beginning. There will likely be much worse pain to come, with a real possibility that the country will experience a double-dip recession, or at least a prolonged period of stagnation.

 With the pain of economic stagnation possibly setting in, is this the end of multiculturalism in Britain?

Gross National Happiness, Tax Cuts and Income Inequality

It is going to cause grief and discomfort to the statisticians, but British PM David Cameron indicated this week that he was adamant at developing national indicators of happiness to guide public policy. So perhaps instead of bar charts and graphs, government ministers might issue smiley faces and frowny faces depending on what the mood of the citizenry might be.

In this age of austerity, this might not be such a good idea as many public services are going to be subject to the hatchet. On the other hand, if the science of happiness is anything to go by, increasing happiness might be a function of simply reducing inequality (meaning the absolute level of wealth is not what matters, but the relative level). If this is what will bring happiness to the greater number of people, then the last decade of growth that benefited the top tier of society may have had the adverse effect of reducing national happiness in America.

Paradoxically, the party that wants to extend tax cuts to this top tier has been restored to power in the lower house of Congress by the simple fact that many felt Obama gave a handout to the banks and the powerful lobbyists. Their theory of course is that tax cuts will bring growth which will lift all boats (increasing absolute wealth for all, never mind the way the wealth is distributed). That theory may come back to bite them if they repeal the health care measures passed by the last Congress which is aimed at ensuring a minimum threshold of income protection for millions (improving relative wealth). As in Britain, the threat of service cuts makes for a heroic posture, but time will tell if it really pays off in the end.

Nudge Theory Makes Its Way Across the Pond

First it was the Obama White House that adopted nudge theory by appointing Cass Sunstein as regulatory czar, examining all new regulatory proposals. Now it is the coalition government of PM Cameron which has provided a home for it in 10 Downing Street with the setting up of a nudge unit as reported by Andy McSmith of the Independent UK.

The fact that this new theory which is sometimes referred to as libertarian paternalism by its founders appeals to both conservative and liberal leaders alike is evidence that it in fact serves as the real Third Way. It is paternalistic in the sense that it supports the idea that people may not necessarily act in their own self-interest at times, an insight revealed by behavioral science. 

But on the other hand the manner by which to correct this according to the theory is not by imposing a "one-size-fits-all" solution that often limits choice. Instead nudge theorists look at ways to improve the "choice architecture" or to frame the decisions for individuals in such a way that they come to make better informed decisions.

Cognizant that nudges are present all around us, and that they can be used for good as well as for ill, the idea behind applying nudge theory is to correct bad nudges that might lead to predatory practices that abuse the rights of consumers or to improve the poorly designed nudges with respect to personal individual decisions that could have profound public and social impacts such as the amount of savings to set aside for retirement or the kind of health insurance to purchase.

These nudges are cheaper for society in the long-run and lead to greater personal and societal happiness as well, which is probably why the leaders of both the US and the UK are both seeking to apply them, given the tight fiscal situations they are facing which require major reforms in the coming years.