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:
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.