Category Archives: Explanations

Social Insecurities and Resilience

View, print or download a pdf copy here...download link and cover image
View, print or download a pdf copy here…

Eurofound publications on the quality of life inside Europe, offer profound insights into the global ‘state of the nation’ on matters that affect the individual, society and economy.

Social Insecurities and  Resilience, the latest policy brief to be published, highlights how insecure even those perceived as comfortable and secure can be, across Europe.

Eurofound (2018), Social insecurities and resilience, Publications Office of the European Union, Luxembourg. (.pdf)

Authors: Hans Dubois and Tadas Leončikas

Whether being old and feeling exposed when out after dark, or in full employment but doubting that the employment will continue beyond six months hence, the report offers a defining argument for the deployment of economic and social initiatives that put people, their sense of well being and compassionate economic energy at the heart of government thinking.

It is interesting that even across international borders, within Europe, the similarities in unease and concerns are duplicated across communities, whatever their defining local language.

‘Most of the insecurities reviewed in this policy brief have an economic component but are influenced by other factors too. For instance, perceptions of housing insecurity are influenced by tenant protection law, perceptions of old-age income insecurity are influenced by long-term care provision, and perceptions of healthcare insecurity are influenced by the presence or absence of healthcare coverage’.

The significance of having a ‘secure’ life is widely recognised. The United Nations’ 1948 Universal Declaration of Human Rights tells us that everyone has the right to ‘security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his (or her) control’ (Article 25).

In the key findings of the report it is stressed that ‘…only 1% of the EU population enjoys the highest level of security in all five types of social insecurity studied in this brief: personal, housing, healthcare, employment and old-age income. If more types were added, there might be nobody in the EU who feels free of any form of social insecurity’.

The five key measures of insecurity that the report comparatively assesses are…

  • personal insecurity – of being personally unsafe (from crime, for instance)
  • housing insecurity – of losing one’s home
  • healthcare insecurity – of being unable to afford healthcare
  • employment insecurity (for those in employment) – of losing one’s job and
    being unable to find a new one
  • old-age income insecurity – of not having an adequate income in old age

In their policy summary the report authors point out that government and state actors in the provision of services ‘…should be careful not to underestimate how widespread feelings of social insecurity are, especially more moderate forms. These may be early indicators of problems, so preventative policy-making should try to detect better, more
muted levels, as well as higher levels of insecurity’.

This report attempts a broad assay of community feelings across Europe. No small scoping exercise in itself, but when executed as here, then it provides a wealth of evidence and support for the argument that the social enterprise model should become the defining economic and civitas service provision model.

We would argue!

Human capital estimates, UK: 2004 to 2017

The Office for National Statistics has just released updated estimates of the value of human capital. For ONS ‘… the stock of human capital accounts for what skills people have and how much they earn and what qualifications they have, as well as estimating how much longer they will continue to work’.

As such, ONS argues, the value of human capital is often higher in younger workers, which have more years in the labour market ahead of them.

We can look to the historical writings of Adam Smith for the source of the concept for Human Capital, but we owe the the modern Chicago School of economists for this contemporary application of the theory, we would argue.

Human Capital Data icon and web link
View data here

View, download or print the tables containing the ONS data for this report here.

(Spreadsheet in ODS format).

This modern theory was popularized by Gary Becker, an economist and Nobel Laureate from the University of ChicagoJacob Mincer, and Theodore Schultz. However, more recently the new concept of task-specific human capital was coined in 2004 by Robert Gibbon, an economist at MIT, and Michael Waldman, an economist at Cornell. The concept emphasises that in many cases, human capital is accumulated specific to the nature of the task (or, skills required for the task), and the human capital accumulated for the task are valuable to many firms requiring the transferable skills.

The new ONS report delineates the following key estimates…

  • In cash terms the stock of human capital in the UK grew 1.8%. However, once the effects of inflation were removed human capital actually fell by 0.8%. This was the first fall in human capital stocks since 2012, reflecting slower growth in earnings relative to inflation.
  • In 2017, the UK’s ‘real’ full human capital stock was £20.4 trillion, more than 10 times the size of UK GDP.
  • The estimates highlight that in 2004 the pay premium for obtaining a degree was 41% but by 2017 this had fallen to 24%.
  • The ONS analysis also shows that between 2011 to 2017 the average stock of individuals over 35 grew by 7.0%, while the stock of those between 16 and 35 only grew by 3.6%.

We recently published  The Size of the UK Social Enterprise in 2018 – if we believe, as we do,  that the social economy is now a significant influencer of UK trade and business development – then it is pertinent to note that the value of ‘real’ gross human capital is ten times more than GDP.

The social economy must, therefore be a contributor to this value.

Also of note, is the fact that in terms of human capital, according to ONS, … the average stock of individuals over 35 grew by 7.0%, while the stock of those between 16 and 35 only grew by 3.6% over the focus period.

Continue reading Human capital estimates, UK: 2004 to 2017

The size of UK Social Enterprise in 2018?

Hidden Revolution, social enterprise - cover image and web link

View, print or download this SocEnt UK report here…pdf

The answer?

  • 100,000 SocEnt businesses
  • 2 million employees
  • Generating £60 billion of UK GDP

Source: Hidden Revolution – Size and Scale and Social Enterprise in 2018

A report by Social Enterprise UK

Perhaps no more words are needed…well maybe not!

  • 12% of social enterprises are led by someone from the BAME community.
  • 50% of social enterprises have developed a new product or service in the last 12 months.

Taking our sector mainstream?

We are mainstream!

 

Sowing the idea

With the weather getting a little cooler and wetter, now is the time to turn to cultivation, at last. In this short article, you can find some ideas, concepts and web links to help you craft your project ideas  for a social enterprise in the hope that it flowers into reality.

Seedbed notes for a socent - image and web link
Grab our notes here (pdf)

Our notes are broad picture elements for discussion and sparking ideas.

No-one knows your community, group or collection of committed individuals for the project like you do!

You might be creating an agenda for the discussion of first principles, using the notes as a talk to support your work or pulling out some key concepts so that you can explain them to your group or community.  We hope that our notes help?

We would certainly use the content, and distribute copies, if you asked us to speak about your project at an event or a meeting. That way, conceptual information becomes grounded knowledge at the local level, we would argue.

If you embraced all the techniques and tools linked to in the narrative perhaps the noise would drown out the signal.

On the other hand, we have utilised the thinking of everyone from the technical focus of the United Nations, the depth of experience at Social Enterprise UK, to the business ‘nous’ of the Harvard Business Review.

It’s sometimes difficult not to sound ‘preachy’, when discussing first principles. That is not our intent. Rather, to use our notes, and the issues to come, to establish some sound footings for everyone to embrace, on every step of the enterprise journey.

If you have yet to take your first community group ‘conceptual’ step into the ‘seed-bed’, we hope you find something here.

As always, if we can help, just ask us.

 

 

The money illusion – explanations

Illusion image
Thinking about money and society

Put simply money illusion is the propensity to respond to changes in money magnitudes as if you were were responding to changes in real magnitudes.

For example, if we increased your income by 100% from now, but also increased the cost of all the goods and services you used or purchased by 100%, and you were already buying the optimum goods or services for your needs, then you could go on acquiring these at previous rates of consumption. (Any goods or services that you previously couldn’t buy, you still could not afford).

However, the money illusion, in essence, is when your income rises and you ‘feel’ richer, consequently you purchase more luxury or non-standard goods or services because of that feeling and purchase less of the staples you previously bought.

Individuals fail to grasp that their real income has not risen. (Your real income is measured by dividing your money income by an appropriate and consistent index of prices…see below…).

You can see therefore in mainstream economic practice that the banks ability to quite literally print money, to increase it’s own money magnitude at will – remote from real lives and economic behaviour, or for an individual to regularly value and revalue their property portfolio on a rising market, can lead to financial disaster for the individual.

The economist Irving Fisher deliberated long and hard about the high value of stocks immediately before the 1929 Wall Street crash, ands produced many of the indices of value that we still use to measure, or second guess, market ‘fluctuations’ today. This thinking has not prevented economic juddering in recent decades either.

We would wish to argue that a rational social economy, based on business outputs that are focused on social outcome, not individual wealth or shareholder value as a predominant driver, are one way to counterbalance the money illusion.

Taking out the thirst for dis-proportionate personal wealth and dedicate outputs to a wider social good – replacing the feeling of ‘riches’ for the feeling of ‘community’ – is a perfect way to achieve a new economic equilibrium.

Boost the social business market, starve the illusion!


Explanations is an occasional Mining the SEEM piece to explain economic and financial thinking in a clear and understandable way. If you have a term to be explained, or even to tell us when we haven’t been clear, then contact the Editor at Mining the SEEM and let us know.

Ethical business with a social dimension...
Ethical business with a social dimension…

Fiscal drag – explanations

Fiscal drag  - a definition
No holding back the social economy

As we leave the summer holidays behind in 2013 we will be adding a new occasional feature to Mining the SEEM. Explanations.

Part of our social finance mission at SEEM is not only to make finance more accessible to communities and social business, but also to help that constituency understand and be more usefully equipped to negotiate their way through  their financial development,

Explanations will be our way of developing that understanding. Taking a key concept, phrase or idea in economics, banking or social finance and offering up a classic definition for it.

Part of the problem with technical definitions is that technicians and technocrats also use even more technical language to define their concepts – perhaps obfuscating the idea even further.

If key concepts are used in the definition we will also add some supplementary explanation in plain English to frame the definition we have created. You can see an example of this occasional journal entry below – Fiscal Drag.

(If you come across a classic piece of finance speak or strangulated phrases in banking drop our editor a line and we’ll tease out a clearer view and publish the definition for you.

Contact us at editor (at) miningtheseem.org.uk   )

Fiscal Drag – a definition

The restraining effect upon the growth of demand and output that results from increases in the effective rates of taxation under inflation. This happens where progressive tax rates and increased wages and salaries bring people into higher tax brackets, even though real income may be falling…

Supplementary definitions:

Inflation: The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. (See more about inflation on investopedia.com here. )

Progressive tax: The term is frequently applied in reference to personal income taxes, where people with more income pay a higher percentage of that income in tax than do those with less income. (Read more about progressive tax concepts on Wikipedia here.)

Real income: Income, as of a person, group, or country, that has been adjusted for changes in the prices of goods and services. Real income measures purchasing power in the current year after an adjustment for changes in prices since a selected base year. ( Read more about real income calculation on the pages of the Free Financial Dictionary here. )

The SEEM Team – working with interesting ideas

Ethical business with a social dimension...
Ethical business with a social dimension…