Studying politics at a time of global turmoil, in the absence of any opportunity for debate

When people hear that I am studying democracy at the masters level (I am studying Democracy and Comparative Politics at UCL) I often hear things like, “Wow, what an exciting time to be studying Democracy!”, or “You are so lucky, there is so much to talk about!”.  I wish!

There is certainly no absence of big issues.  China is about to grant an unprecedented third term to President Xi Jinping—this is likely to have far reaching consequences for global politics.  What about Taiwan?  What about north Korea?  With about 2/3 of my classmates coming from China, you might think there a perfect opportunity for mutual learning.  Courtesy of Vladimir Putin war has come again to Europe—is he a dictator bent on recreating the Soviet Union or a responsible leader seeking to protect a beleaguered nation in the face of aggressive expansion by NATO?  Energy prices are soaring, bringing a cost of living crisis to many in the West—how will or should this be addressed?  How should the burden be shared? In the United States, ex-President Trump is being investigated for allegedly fomenting insurrection in an attempt to overturn an election result he saw as unfavourable. Is Democracy seriously under threat in America?  Can they not run an election which does not descend into chaos?  Here in Britain, we are about to appoint a new Prime Minister for the third time this year.  I could say that we are about to appoint our third Prime Minister, however, there is a reasonable likelihood that a thoroughly discredited politician (Boris Johnson), who abused his office and lied to the country, may be reappointed by the very same party that threw him out in June of this year (so we may have one repeating).  What does this mean for Democracy in the UK, and can this ludicrous system by which we change our leaders be changed?  I could go on and on.

Nevertheless, in the classes I am taking, there is almost no opportunity to speak with classmates or professors about these events, or the political concepts and theories with which events are concerned. Classes are about 50 minutes, normally held once a week, and more often than not even the core material is not covered.  We are encouraged to read material we rarely discuss and study concepts online we may not even touch on in class.

When I studied Political Science as an undergraduate at the University of Rochester in New York, USA, we had two 15-week terms each year and three hours per week of class time (45 hours of contact time per class/module). The opportunity to engage classmates and the professor on critical issues was considerable. If I felt there were still burning questions, I could wander along and visit a professor in their office (they were almost always there and their door was open—literally and metaphorically) and chat with them, at some leisure—they were delighted by the interest of students and saw them as junior partners in a process of academic enquiry.  Some would regularly invite students to their homes (in groups) to continue the discussion.

At UCL there are three 10-week terms in the same academic year (implying 8.3 hours per class/module), and curiously there are no classes in the third term.  In this term students are meant to be working on their dissertation.  The gap in contact time is immense and one’s ability to learn or explore issues in any level of depth is severely impaired.  In this case, if I am curious about an issue and wish to follow up I must book a meeting online, and I am only permitted a single 10 or 15 minute slot. This barely allows time for a greeting, much less a developed and nuanced conversation about issues of interest.

Furthermore, as a Masters student one might expect more interaction with colleagues, not less.  I am enjoying my learning, but essentially am doing it on my own. 

I certainly don’t blame the professors. They seem as frustrated as anybody by the administrative demands on their time and the inability to continue a promising discussion.  It is clear that they also find these short follow up meetings absurd and seem to despair, as I do, regarding the absence of debate, discussion, and inquiry which must be the point of learning.  The economic reality of underfunded universities and overburdened and pressurised teaching staff guarantees this outcome—but I find it extremely depressing.     

I have been hoping that societies existed where like-minded students could meet and explore issues of interest. However despite my searching, I have thus far come up empty handed.  With one year to go, I have decided to take matters into my own hands and have contacted a nearby pub which will enable us to meet there on a Monday or Tuesday night (when the pub often has a free room upstairs) and have a discussion about issues of interest. I will invite professors and my colleagues on my programme and other relevant programmes, and I am very curious to see how this goes.  I will try to do this twice this term and see how it goes.  The first one will be on November 15th—and if you as a reader are interested in attending please contact me via LinkedIn or by commenting on this post.

I do wonder if part of the issue is the problem lies in how my own personal goals for the programme differ from those of other students.  My objective is very much intrinsic. By that I mean that for me the reward I will receive from this Master’s degree, comes from the learning itself, and from the depth with which I can explore issues of interest.  This is not that surprising, as I am 65 years old, and I am less likely to set off on the beginning of an exciting career.  On the other hand, I get the impression that for many, the value is instrumental—for what the degree will do for them.  I spoke to a Chinese student this week who was attending UCL (a different Political Science programme from mine) and when I asked him why he came to UCL he said, “This is one of the top ten universities in the world and when I get a degree I have a better chance of getting a great job.”  Maybe his interest in learning for its own sake is rather less than mine.

Let’s see if anyone turns up in the pub on 15/11………

Rodney Schwartz

London, UK—22 October 2022 

I started my career in mainstream finance and then impact investing before returning to his lifelong passion of politics in 2021.  This blog reflects that return and is my way of sharing the impressions of someone journeying from finance back into education to study politics after four decades at work.  For those interested in why I started this blog click here, and to read my declaration of known biases, click here.  I welcome any comments.

Market orthodoxy, embedded inflation and fair wages

Inflation across the western world is skyrocketing. Consumer prices across the developed world are rising to near double digit levels—levels not seen since the 1970s. Similarly to the 1970s, a rapid increase in the price of oil and gas has been the main contributor. The war in Ukraine has catalysed a surge in energy and grain prices, and both are causing wider knock-on effects.  This is causing one of the worst cost of living crises in modern times.

Governments and central banks are rightly concerned about rising inflation. It imposes extraordinary hardship on citizens (especially the poor) and squeezes government budgets. On top of this there is a concern that inflation, which with substantial effort and cost appears to have been eliminated in the 1980s is now returning with a vengeance, thus threatening to undo all that arduous work.  The fear is that inflationary expectations get ‘embedded’ into the economy thereby making it harder to control.

Interest rate increases are a tool of central banks to bring inflation under control by dampening demand. Higher rates raise borrowing costs which, at the margin, reduce economic activity. However, in the current environment, it is ridiculously hard to argue that the economy is overheating—far from it.  The global economy is very weak due to Covid, the war, and other factors, but the primary cause is the massive increase in energy costs.  Raising interest rates will weaken growth and do nothing to address the cause of higher inflation.  Their effect will be to push the world economy into a recession.  This might have been a time for REDUCING interest rates, had central banks acted more prudently in past years.  I suspect they were under pressure from the finance sector to keep money loose, which supported asset prices—and this seemed excusable with inflation at seemingly low levels.  Now we are paying the price for this error.

Let’s return to this idea of embedded inflation and how to address it.  Inflation “getting embedded” is a euphemism used by officials for wages which (heaven forbid!) might match inflation.  Central banks and many governments are nearly hysterical about the need to resist this at all costs.  There is no matching angst regarding corporate profit margins—or CEO pay, for example.

The chart below illustrates the share of GDP in the United States which is represented by labour or corporate profits[1]. Notice how labour share of profits has fallen since the 1970s at the same time as share represented by corporate profits has risen sharply.  Maybe its time for some reversion of corporate profits to the historical mean?   Perhaps companies can help prevent inflation from getting embedded by raising prices at less than the increase in costs?  Profit margins might suffer a bit (from historically high levels!)—but is this not preferable to forcing the lowest paid to make choices between heating and eating?

And why do the arguments about “irresponsible pay increases” only apply to low paid workers?  It seems that CEOs have no worries about their own role in embedding inflation.  The chart below[2] shows how US CEO pay packages have risen in comparison to the pay of workers.  Is it simply inconceivable that only average workers should suffer as we ward off embedded inflation?

The next chart[3] shows how labour’s share of output has steadily declined, especially in developed economies.  Is it not time for some correction?  Given labour shortages across the western world, is there not a simple solution to entice staff back to work—just pay them more!  Why does the market orthodoxy of supply and demand only apply in the case of CEOs or banker’s bonuses (the UK just loosened the cap on banker’s bonuses, amidst this cost of living crisis)?  Do only the high-paid need to be “incentivized”?   

Paying workers in line with rising inflation in the current environment is hardly inappropriate–in fact, it’s essential, and any decent objective observer would say the same—in fact, they might say its time workers to catch up a bit.  However, I do not hear this at all. Yes, labour union leaders seek more money for their members, but I do not hear the broader point that in the interest of the nation we simply must reallocate between corporate profits and workers.  And why should these pay increases only approach the rate of inflation? Why should they not match or even exceed it? And while it is true that in the short term profit margins may suffer, we will avoid a social and economic cataclysm.  I also believe that the trendline of economic growth will accelerate if we undertake this shift. The poor and those on moderate incomes have a much higher propensity to spend any incremental income–it is sensible from a growth perspective that we put money in their hands instead of continuing to enrich the rich and the owners of assets.  Who is more likely to spend incremental income, the rich or the poor?  No points for a correct guess.  (I may write a separate blog post on this subject.)

That companies simply “have to” pass on costs (labour or materials) is just taken for granted–almost as a natural law of physics. However, the notion that workers should receive pay increases which support them to keep up or just about keep up with the rise in costs is heresy of staggering proportions. This orthodoxy needs to be challenged.

This is not just about markets, but political choices.  Governments are restraining pay increases for low-paid public sector workers to grapple with inflation.  What they should do instead is pay these workers more, raise funds to cover rapidly rising debt levels by increasing personal taxation at the high end (and lower it at the low end?), increase (not decrease, as the UK is proposing to do) corporate tax rates, and they should, as some countries are, institute “windfall taxes” on energy companies for the unusually elevated level of profits realised merely as a result of the war.  Failure to do so risks social unrest, poor health outcomes (as the poor starve, freeze and are unable to procure health care) and economic weakness as demand suffers.  In any event, they should junk the rule that says workers always have to shoulder the burden of fighting inflation.

A courageous politician would seize on this theme. Where is he, or her?

Rodney Schwartz

London, UK–14 October 2022 

I started my career in mainstream finance and then impact investing before returning to his lifelong passion of politics in 2021.  This blog reflects that return and is my way of sharing the impressions of someone journeying from finance back into education to study politics after four decades at work.  For those interested in why I started this blog click here, and to read my declaration of known biases, click here.  I welcome any comments.


[1] Taken from a PGIM (division of US financial firm Prudential Financial) Fixed Income Division report, dated April 2021, written by Nathan Sheets and George Jiranek, downloaded 17 August 2022

[2] Financial Times, 13/10/22

[3] Financial Times 12/10/22