A Red Rose By Any Other Name

Stephanie Flanders is caught on the horns of a dilemma…no,  not which labour senior politician to date next but how to report seemingly all round political support for the self evidently daft idea of a ‘living wage’.

In her recent programme about Keynes  Flanders pretty much used every one of Miliband’s latest ‘lines’ in her eulogy to the benefits of borrowing and spending more…but here, in this report, you might note something is missing. Only recently Labour’s leader came up with another wheeze…. ‘Predistribution’…in other words a minimum wage…or a living wage….central to his Plan B or C or D or whatever it is now.

Strange that in this report about the ‘Living wage’ Flanders makes no mention of that brainwave…normally she would be suggesting that Miliband was leading the political narrative with the Tories dancing to his tune.

Here though she keeps quiet.

Wonder why. Could it be that the default position is that any policy adopted by the Coalition will inevitably fail as of course all Tory policies are wrong.…..therefore she refrains from reminding people that it was in fact prospective new PM’s next Grand Idea…could it be that even she recognises that this is a duff idea that’ll never fly.

 

Here is Flander’s final conclusion….essentially admitting that the ‘living wage’ is probably unworkable but seductive for vote catching politicians as a short term, high profile policy.….   ‘What does all this mean for the living wage? It means that politicians are going to carry on liking this campaign – but carefully. They are going to be nervous of anything that sounds like pressure on companies, and living wage employers will continue to be a self selecting group.

Around 3% of adult workers currently earn the minimum wage. If today’s study is correct, far more – around 20% – earn somewhere between the minimum and a living wage.

Some, possibly many of those 4.89 million people could probably be paid more, saving the government money without hurting jobs or bankrupting their employers. But a free pay rise – for the government and for workers – is unlikely to be available for all of them. Is there such a thing as a free pay rise?

 

It seems she is doing Miliband a favour by keeping his name out of this despite it being a central plank to his big new plan for economic recovery. …higher wages mean higher consumer spending, therefore higher GDP….supposedly…..

‘That is why today’s conference is so important.  Because it is a meeting of economists, business people and politicians who believe the old answers won’t work….And who believe in the need for new ideas to rise to the challenges facing Britain today.

Events over the summer have simply reinforced how urgent this new thinking is.   Britain’s economy has now been shrinking for three quarters in a row.  So the immediate priority for our new agenda is measures that will restore both demand and confidence.

That is what Labour is aiming to do with its Five Point Plan for growth and jobs.

So we need new ideas if we are to tackle the problems the economy faces.

The new agenda is that we need to care about the model of the economy we have and the distribution of income it creates.

We need to care about predistribution as well as redistribution.

Predistribution is about saying:
We cannot allow ourselves to be stuck with permanently being a low-wage economy.

Predistribution seeks to offer them more:
Higher skills.
With higher wages.
An economy that works for working people.’

 

Not worth mentioning though for Flanders?

Let’s have a quick look at a living wage in practise…..Right now a small or medium sized business may not pay a ‘living wage’.…that shortfall is made up by national government by redistributing taxes from big business and high earners in the form of tax allowances and tax credits. Introduce a ‘living wage’ to replace those tax credits and who pays it?  The small or medium sized businesses will have to find the money themselves.…..no longer subsidised by big business they will either have a drop in profits, or have to raise prices and risk losing business…or as is more likely, they will eventually go out of business.…..and all those on a living wage are now on the dole.

‘It is great that KPMG and many other companies are doing well enough that they can afford to pay their employees well. But some companies are barely surviving. In industries such as electronics manufacturing there are huge success stories, but there are also plenty of tiny family run factories that have struggled to survive offshoring –for companies like this paying their staff more simply isn’t an option.

Far from equalising pay this policy impoverishes those least able to afford to make the payments…hardly ‘responsible capitalism’ to put the small business out of business whilst making the fatcats even richer.

The minimum wage only really works in a closed economy.…if at all…in an open, global economy put wages and costs up and jobs go to China where the wages are lower…..which is the cause of the supposed great increase in pay inequality….the businessmen get ever richer as they ‘mine’ labour around the world and keep making profits whilst the jobs in the UK are farmed out abroad and we either go on the dole or cut our wages to compete….therefore the only answer is tax and redistribution….not a ‘living wage’….Capitalism is working just fine….It’s Socialism that is failing to keep up and get hold of a share of the profits to spread them around.

Flanders gives careful support for the idea of a minimum wage…..‘There is not much evidence that this rise in the minimum has cost jobs.’ …..and ‘Starting in the 1990s, academic evidence started to build up about the minimum wage, in the US and the UK, suggesting that, at the very bottom of the labour market, telling companies to pay people a little more did not actually cost jobs.’

Flanders doesn’t delve into that too far,  but she has done her homework…..what was she reading under the covers at night? A report by the Resolution Foundation……..

‘This was brought out in recent research by economists at the Resolution Foundation (you see I have been doing my homework….) It found that higher unemployment was now having a much greater “chilling effect” on wages than in the past.’

 

The Resolution Foundation has close ties with the Labour Party as mentioned before by Biased BBC.…

‘So ‘Newsnight’ mentions a report from the Resolution Foundation think tank about the plight of ‘The Squeezed Middle’, the Ed Miliband phrase used by reporter David Grossman. The guy who appeared from the Resolution Foundation was Gavin Kelly. What Grossman didn’t mention is that ..…He joined the Foundation from No 10 Downing Street where he worked as Gordon Brown’s Deputy Chief of Staff.  He spent over a decade in Whitehall and was a member of the Council of Economic Advisors at HMT, the Senior Advisor to the Secretary of State at the Department for Education and the Department for Communities and Local Government, Deputy Head of the Prime Minister’s Strategy Unit, and a member of Tony Blair’s Policy Unit. Before working in government Gavin was Director of Research at the IPPR and the Fabian Society.  That Resolution Foundation is the sort of think tank the BBC likes to call “independent”.   How ‘independent’ is it? Digging a bit more into that Resolution Foundation think tank, which ‘Newsnight’ was touting last night without letting on that their expert ‘talking head’ was a former advisor to Gordon Brown and that the BBC News website repeatedly presents as ‘independent’, reveals that they receive a fair amount of coverage from the BBC.

Let’s have a look at where the Resolution Foundation places it’s material…….

Strategy will meet our needs
Editorial, The Observer

The economy: hurting, yes. Working, maybe – but for whom?
Rafael Behr, New Statesman

The Today Programme
Vidhya Alakeson discusses Resolution Foundation report on The Today Programme

The Observer, i.e the Guardian, the New Statesman and Today?.……You can see where they’re coming from.

Flanders  might not mention Miliband but she does get his ideas in there.

 

The  ‘living wage’ is a massive stealth rise in  tax….taxes on big business and high earners won’t go down, their taxes will go on schemes designed to buy more Labour votes…..but the living wage is then  paid for by smaller businesses who have to find the money from somewhere….and then go out of business.

It does look like Flanders is floundering a bit here…her political leading man has come up with an idea that is unworkable and she knows it….but other politicians of all persuasions have jumped on board and run off with the idea……she needs to discredit the idea without discrediting Miliband.

So she doesn’t mention him.

 

Still good to see the BBC  goes to impartial sources of advice like ‘The Resolution Foundation’, or the Marxist ‘New Economic Foundation’, or Stiglitz or to Miliband’s guru, Prof Sandel.

 

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12 Responses to A Red Rose By Any Other Name

  1. George R says:

    “Apparently, we are all Keynesians now – not”

    By Jeremy Warner.

    http://blogs.telegraph.co.uk/finance/jeremywarner/100021015/apparently-we-are-all-keynsians-now-not/

       6 likes

  2. George R says:

    Beeboid utopian socialists now propagandise for their economy of ‘entitlement’.

    And a somewhat politically forlorn ‘Newsnight’ tonight had an unconvincing offering ,cobbled together by that (ex-‘Guardian’) Political Editor without authority, Ms Allegra Stratton.

    Her vague drift is that Britain has a ‘squeezed middle’, and apparently to prove her point she took us round to see a well-heeled fellow leftist female journalist who, echoing chum Allegra, also pontificated, in her rather nice kitchen, about her ‘squeezed middle’. Oh, and Allegra’s chum demands much more, and cheaper child care for all the tiny tots (whether it’s good for the tiny tots, or whether we can afford it, or not).

    Talk about middle-class political pressure groups.
    And this one emanates from ‘Newsnight’ office. ‘We demand a bigger creche,’ sort of thing.

    One can view this mildly amusing caricature on ‘i-Player’ soon.

       15 likes

  3. Stewart S says:

    I have just watched tonight’s Newsnight and the section about ‘the squeezed middle’
    looked strangely similar to some of the ‘common purpose’ videos I’ve been watching as a result of an earlier thread ‘the end of the debate and the secret 28′
    The predistribution thing was flagged up straight away as being a labour solution But they failed to point out that the period in question 2001 to 2007 when growth in living standards started falling behind growth GDP happened under labours watch.
    Those ever so nice smiley people from the resolution foundation looked all sorts of reasons that wages for people in the middle have been squeezed except one.
    Forced demographic change. Which has, in this market economy, not only driven down the wages of the so called unskilled but has held back the wages of skilled and semi-skilled manual workers (yes I am one)
    Still the lively-hoods of few million traditional labour voters is a small price to pay for maintaining an inner-city majority. Especially as a lot of them had the gaul to vote for Thatcher (not me)
    The other thing they banged on about was up-skilling.Without ever addressing the problem of where the skilled jobs are going to come from
    As the labour education fraud has demonstrated If you encourage every kid to go to university (by constantly belittling manual work) then the minimum qualification for the checkout at tescos becomes a humanity’ degree.
    The problem is,which again they failed to address when comparing Britain with its competitors.was that with out a manufacturing sector there are no skilled jobs,we cant survive by fixing each others boilers any more than we can by selling each other burgers.
    Now here’s the thing that interested me. Ultimately the whole assembly,including paxman and willits, seemed to be endorsing some form of corporatism.Now I’m definitely not a tory (though I applaud some of what the coalition have done) and I loath with every fibre the bourgeois socialist elite that have hi-jacked the left in the last 40yrs so I that doesn’t bother me so much (the liberal Inquisition came of that what they like I definitely don’t care) But is that really where they (ruling patrician class) want to go? odd ain’t it
    Oh and was it biased?yes it was, but not as much as the section on how well the Kenyan is doing at holding back the waves of hurricane Sandy

       14 likes

  4. johnnythefish says:

    in an open, global economy put wages and costs up and jobs go to China where the wages are lower’.

    Not for much longer, with manufacturing costs dropping like a stone in the US due to tumbling energy prices a strong reversal in this trend is anticipated.

    The UK needs to abandon those useless windmills and start fracking, else we’re going to price ourselves out of the market even more. But you’ll never hear energy debated on the BBC in these terms, will you? And we all know why.

       11 likes

    • uncle bup says:

      Natural gas prices in the US dropped from $10 per mbtu in 2005 to $3 today thanks to fracking.

      Gas is 44% of the UK’s energy mix.

      Do the math.

      Sorry that should be ‘do the maths’

      My bad.

         7 likes

  5. Nick says:

    The bit I don’t get – genuinely don’t – is that Flanders doesn’t mention that by cutting taxes the same result would be achieved. Why don’t they present what the government could do instead of always demanding more pay? The opposite of more pay is less tax!

       11 likes

  6. Sir Arthur Strebe-Grebling says:

    No-one seemed to have mentioned ‘One Nation’ – remember that, Ed Miliband’s name for his class warfare? – although Chuckup Umunna was faithfully parroting the phrase this morning.

       10 likes

  7. George R says:

    BBC-NUJ’s support for Labour’s mass immigration keeps UK wages low,
    as any informed Marxist could have told it.

    “MIGRANTS RUSH TO GET OUR JOBS”

    By Anil Dawar.

    http://www.express.co.uk/posts/view/355444/Migrants-rush-to-get-our-jobs

       5 likes

  8. Jim Dandy says:

    The ‘self-evidently daft’ idea that Boris Johnson supports?

       2 likes

  9. chrisH says:

    Devotion beyond the call of duty Alan.
    Old Flanders will be so pleased that she is worth so much analysis.
    The daft old bat doesn`t even know when and when not to call by a polling station…and like other pale Marxists in tie dye and pastel shades, she has not an original thought in her head.
    That is what that “-ist” means, the “ism” means a whole bag of second hand thought and ideas that are taken en bloc-none of that dodgy “independent thinking, a la carte” type of thought if you don`t mind..
    Flanders is a mere homeopathic dilution of the likes of Keynes-who, at least could think for himself, so unlike his slavish third rate disciples like Steph.
    Flanders is but a passing eructation from the BBC…and , like the rest of the third rate toadies employed by the Beeb, wont even make landfill in historys monuments.
    We won`t forget Savile-Flanders pastel imitations of thought would already be dying on their fat arse, without the kind hat tip by Alan.
    Oxygen of publicity anyone?

       5 likes

  10. JaneTracy says:

    Stephanie floundering Flanders mostly write political blogs these days rather than economics ones. This is for two main reasons.

    1. She is bad at economics. For example “Greece will not default” and “there are no signs of inflation in the UK” just before a surge.

    2. Steph likes to make left-wing political blogs.

       1 likes