25 3 mins 7 yrs

It seems to me that many on the political left simply do not GRASP basic economics. Let’s quickly consider this “headline” from the news today;

A record five million UK workers are now in low-paid jobs, research from a left of centre think tank suggests. Those earning less than two thirds of median hourly pay – equivalent to £7.69 an hour – rose by 250,000 to 5.2m last year, the Resolution Foundation said. It said a “growing rump” of low-paid jobs was a problem for ministers because it kept tax revenues low. The government said it had taken lower earners out of income tax and wanted to raise the value of the minimum wage. Workers in Britain were more likely to be low paid than workers in comparable economies like Germany and Australia, the left-of-centre think tank’s report said.

OK, let’s sort the facts out here which this left wing think tank conspicuously avoids, shall we?

1. MORE British people are in EMPLOYMENT now than has been the case in many years.  One reason for this is that the Government has moved some people who were stuck on WELFARE into employment and oddly enough, they start at the lower end of the median hourly pay rate. That is 100% logical. Why would those joining the work force for the first time in YEARS come in at above media levels of pay, precisely?

2. The UK continues to suffer from unprecedented levels of IMMIGRATION from poor Eastern European countries. These people come here hungry for work and they see our lowest paid jobs as manna from heaven – and employers in certain industries will oblige them. The supply of those willing to embrace modest wages has increased so even an economic idiot will understand the consequences!

3. The way to make things better for those at the lower end of the wage spectrum is to make sure these people do not pay income tax. We need Government to accept that taking LESS tax is a good thing even if it does then reduce Government expenditure – the very thing the Resolution Foundation wants to see increased!!!!!

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  1. Is it not astonishing that so many believe that low wages are better for a national economy than high wages? Governments would boast of how earnings have increased under their stewardship and the prospect of increased pay would provide incentives for workers and voters. Today, as we see from DV’s article, lowering wages for the a substantial portion of British workers by allowing in those from countries with lower living standards is seen as a centre-piece of economic policy. In short, making people poorer is good for them. I find it absurd.

  2. Right wingers and ” libertarians ” love the idea of low wages. They think its the way to prosperityif you can believe that.

    People in places like Germany do not see it that way. Their understand ” the market ” twice as well as their British or American cousins do, yet their workers have more rights, theor blue collar workers are paid more, and their economy has done well over time.

  3. How can anyone suggest that the UK ‘is doing well’ when the national deficit grows year on year?

    In reality we are the most indebted nation in the ‘western’ arena. Last year it was £105 billion pounds or 6.5% of GDP, this year it is 7.7% of GDP, – a shortfall that is increasing year by year, – and we are ‘doing well’?

    We are more indebed than Greece ever was and it will not take much of a fall in bond rates to induce a default.

    The low pay rates for immigrants, as I have mentioned before, has inspired a latter day version of what used to be called a ‘slave trade’.

    That their low rates of pay are also heavily subsidised by various governmental means, suggests that our politicians are well aware of the damage indiscriminate immigration is causing to us all, and their false figures for employment are, in reality, meaningless, being little more than an indication of the extra burden placed on our own ‘working class’.

  4. Wage increases have not kept pace with inflation for the past six years. That means that living standards are falling for millions of “hardworking people” as Cameron likes to call them.

    There is more pressure on wages in low paid jobs because of competition from workers made unemployed as well as from eastern Europe. If someone of a salary of £25,000 loses their job (possibly because of technology) they will first look for a job at a similar salary. But if they can’t find one they will be forced to compete for a lower-paid job. The result is that there is no pressure on employers to increase wages for people earning £15,000 a year or even less.

    It is good that the income tax threshold has been raised to £10,000, but national insurance deductions start at £8,000 and this never gets a mention by politicians.

  5. Tax credits are in effect a subsidy to low-wage employers, just as housing benefit is welfare for landlords. Without it, rents would be forced down to what tenants could afford. But if that happened, millions of landlord mortgages would be under water and the scumbag banks would be in trouble again.

  6. Phantom

    Tax credits are state top-ups for low earners. They may “buy votes” but they also subsidise low-pay employers.

  7. end all tax breaks and subsidies.

    Right now nothing is changing, it can’t. We can’t dismantle everything at once, but it has to happen. We have created leviathans that need to be dismantled. The obstacles that stand in our way have been built for 100yrs incrementally. The only way to remove them is incrementally.

  8. Agreed. The government could announce the withdrawal of lots of tax-breaks and subsidies over (say) a five year period. But it would not get re-elected. Putin could get away with it, but not Cameron or Obama or Hollande.

  9. Peter is right. No US govt would get away with ending subsidies to American industry.

    The US steel industry must be one of the main beneficiaries from government handouts, and is also protected by tariffs on foreign (incl. European) steel products.
    These measures have been successful in keeping steel mills in traditionally industrial regions operating. They will have to get their act together once the free-trade deal with the EU comes into force.

    Pennsylvania is, I believe, a steel producing state, and anyone there calling for an end to subsidies and free trade better get used to rising unemployment.

  10. No one really wants to remove all subsidies and tax breaks.

    Big beneficiaries include

    The average American ( home mortgage deduction )

    Oil and gas industry

    Wheat and corn and dairy farmers ( but not many other farmers )

    Everyone wants the other guys subsidy to be removed. Their own is entirely legit, of course.

  11. The problem is that employers are not raising wages. Instead many employers are using scams such as ‘independent contractors’ and not checking the legality of workers. It is a short sighted approach to maximize near term profits rather than paying employees/consumers more and thus increasing demand for their products and services. It illustrates the low grade of more and more corporate executives. The inequality issue is not going away like some fad, until it is addressed the economy will not be robust and productivity will decline. If not handled by the private sector, governments will have to get involved.

  12. The average American ( home mortgage deduction )


    The UK abolished tax relief for mortgage interest in 2000. The sun still rose the next day and the property market continued to boom. The relief had been scaled back to next to nothing over the previous ten years, but it shows that major tax breaks can be removed. It was a cornerstone of the UK tax system for decades, and often trumpeted by Thatcher as part of her “property-owning democracy” rhetoric.

  13. It is a short sighted approach to maximize near term profits rather than paying employees/consumers more and thus increasing demand for their products and services.

    As Marx wrote, one of the conflicts of capitalism is that it encourages employers to pay wages at such a low level that their employees cannot afford to buy the goods and services that they produce.

  14. I agree that the home mortgage deduction should be phased out, along with other changes leading to a simpler and fairer tax system. As it is now it is so complicated, no one understands it.

    If there was a proposal to eliminate this deduction, some of the biggest opponents would be Republican politicians, real estate agents, the construction industry, and the Tea Party element, along with Democrat politicians who would say it was unfair to the lower income strivers.

  15. it has nothing to do with any of that. What it has to do with is the whole economy. Now some here will say Oh the economy is booming…. lol

    The economy is in a strangle hold placed on it by the federal government, in the form of regulation, the epa, and especially Obamacare.

    Obama came in after the dems had already been on a two year binge of destroying the economy in the two years after he was elected they screwed the economy possibly terminally by putting the last piece of socialism in place that they needed to have government control over the entire system.

    The economy can’t grow because the foundations have changed. We went from socialism lite to full blown government involvement in every aspect of both business and private life. Employers can’t and wont hire or pay more average people because they can’t afford to. The medical industry is one sixth of our economy and every person in the country is involved with it.

    Right now it’s being dismantled, the repercussions of this are just starting to be felt, the next 5 years are going to be a nightmare. You can put up all the faery tales you want about how Obama’s time being better for the economy than Reagans all you want. Reagan launched a 20yr boom Obamacare has launched what if not changed is a 20yr spiral downward.

    If Obamacare stays in place instead of an economy of producers the whole thing changes into an economy of takers. You have two choices production without healthcare or healthcare without production. That is the consequences of the past 6yrs all brought to us by the left.

    Now the current right can’t fix it, the left don’t want to fix it because socialistic control has been their dream and they have achieved it. The problem is Socialism doesn’t work. It especially can’t work in a society that was designed as it’s antithesis.

    As long as the Government through Obamacare and the IRS controls our lives we’re fucked.

  16. The unique problem here in the US is that some of the angry white working class are entirely in sympathy with the bosses, they are so brainwashed. They hate unions, they don’t like govt mandated worker protections, etc.

    They are slaves whose loyalty is to the slave master.

  17. See above.

    Every other rich country has health protections, we finally got something that protects the population, and this is what terrifies them.

  18. this doesn’t protect anyone Phantom. More people don’t have health coverage now than before, people are paying out of pocket outrageously more, each piece of this that gets implemented is one failure after another that’s why all the key pieces don’t get activated until after elections.

    You live in a world of your own, you are fine so your fellow countryman is fine. That’s just not reality based.

    Also I ask are you in a Union, did you need a Union to get where you are, I doubt it. You got to where you are through your own achievement, but your special we know.

    The protections for workers are on the books unions aren’t only not needed they are destructive.

    No one including me is saying that you don’t gelp the poor, but you don’t help those without insurance by taking away everyone elses insurance which is what gas happened. Within 5yrs the only healthcare companies that will exist are for those that make over 100grnd a year and everyone else will be on the government system which is already proving to be a disaster despite what your precious NYT says today.

  19. whoa whoa whoa

    Hold the presses. What I just posted was a bit out of date. The truth is much better.

    At its most basic level, the Affordable Care Act was intended to reduce the number of Americans without health insurance. Measured against that goal, it has made considerable progress.

    A perfect measurement of the numbers of people affected by the law is still difficult, but a series of private sector surveys and a government report reach the same basic estimates: The number of Americans without health insurance has been reduced by about 25 percent this year — or eight million to 11 million people.

    Of that total, it appears that more than half of people who are newly insured signed up for Medicaid, especially in the states that opted to broaden eligibility for the program to low-income residents. Most of the rest enrolled in private health plans through the new state insurance marketplaces.

    In addition to the recent changes, three million to four million people, mostly young adults, became newly insured through provisions of the law that kicked in before this year.

    “There’s no question it’s come down,” Dan Witters said of the uninsured rate. Mr. Witters is the research director of the Gallup-Healthways Well-Being Index, which has been surveying Americans about their health insurance status since 2008.


    This stupidly named ” Affordable Care Act ” is not perfect, but it addressed a huge social problem that the Republicans refused to address, one which all of them went AWOL on essentially.

    It will never be repealed by they way – too many white working class or working poor Americans have some proper health coverage now, and it will be politically impossible for the Republicans to take coverage away from them.

    The Republicans never had any counterproposals for Obamacare that would greatly increase insurance for a population and they still don’t..

  20. // compared with 17.1% in the fourth quarter of 2013. //

    Still, 17 pc is a small portion of the population.
    I don’t know, but I’d say a measure of the bill’s success would be how many Americans are now comfortable with their health insurance premiums, people who formerly were broke buying insurance.

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