The ignorance of Daniel Garvin

Ho hum, another campaign from the UK Uncut jobbies. This time about a living wage for all.

It\’s the usual nonsensical mishmash of barely understood figures. The big chart on their website is this familiar one:

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The point being made is obvious: wages as a share of national income are down so it must all be going to the bastard capitalists!

Except, of course, as Britmouse charts for us, this isn\’t quite exactly true.

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And:

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Corporate operating surplus is, by eyeballing, pretty much bang on long term trend. Employers\’ NI has risen substantially, taxes less subsidies has risen substantially (most of that being VAT I think?) and so has other income.

That money just hasn\’t moved from wages to profits. By and large, it\’s moved from wages into employers NI, VAT and a rise in self employed income.

They\’re simply wrong. Again.

There are other errors. For a start, real wages have not fallen they have risen. But the really big one is in this:

Instead of pay rises, we have helped pay our own wages through the £20bn of in-work tax credits spent each year. While tax credits are a lifeline to the 5 million households in the UK that rely on them, they have allowed private companies to shirk responsibility for wage bills, shifting it to the public instead and creating a subsidy for private sector profit.

It\’s a failure of logic.

Assume that the market pure and unadorned does not produce the incomes that we think people should have. Absolutely all of us think this to be so of some portion of the population (none of us think that those in a near vegetative state should sim[ply be left to die in the gutter. The arguments come over where and by what means the resources needed for their sustenance are going to come from, not whether they should come from somewhere or other. At the other end, not all of us are sure that someone straight out of school should be able to afford a 60 inch plasma…at others\’ expense that is).

OK, so, by what mechanism should those too low market incomes be raised?

We\’ve essentially two sources. We can insist that, through a higher minimum wage for example (what is now called a living wage), employers pay more in wages.

This has its downsides. The costs of such higher wages will fall on three groups. Those who employer lower paid workers, those who are customers of lower paid workers and lower paid workers in the form of unemployment. That last will come mostly from changing the capital/labour costs calculation, ensuring technological replacement of that very low cost labour. The first is what is trying to be achieved and the middle one, well, as it turns out, the major consumers of the products of low cost labour tend to be other low waged people.

Just not a good idea.

Or, given that we as a society say that these wages are too low then we as a society get to pay to raise them. All of us: that means the tax system. Meaning that the moral answer is indeed tax credits, or a cbi, or benefits.

Assuming that you buy the original idea: that the market unadorned does not provide sufficient incomes, then we should all pay to top up those incomes. Not dump the costs on employers of low waged workers or those low waged workers themselves.

 

 

44 comments on “The ignorance of Daniel Garvin

  1. not all of us are sure that someone straight out of school should be able to afford a 60 inch plasma…at others’ expense

    The cheapest 60-inch plasma TV I found in a quick search cost £994.54 . Jobseeker’s allowance for under-25s is £56.25 . So yes, an unemployed school-leaver could afford one, if they didn’t spend any money on anything else for three months.

  2. During which time they’d probably starve to death. Which would reduce the welfare bill. So win-win for many on here one would’ve thought..

  3. Seth, or instead of starving to death, the could always NOT get the telly and buy food instead. Or are “many one here” supposed to feel bad if someone chooses a big telly over eating?

  4. The cheapest 60-inch plasma TV I found in a quick search cost £994.54 . Jobseeker’s allowance for under-25s is £56.25 . So yes, an unemployed school-leaver could afford one, if they didn’t spend any money on anything else for three months.

    The “plasma TV” seems to have become the de facto measurement of the mythical scrouger-livin’-it-large-at-our-expense, in the same way as measuring things in football pitches, swimming pools, “areas larger than Wales” etc.

    On the article itself, one contrary conclusion from the statistics presented might be-

    Corporate operating surplus is, by eyeballing, pretty much bang on long term trend […] [By and large, it’s moved from wages into employers NI, VAT and a rise in self employed income.

    -that the wealthy have successfully deflected taxation increases onto the poor. There is a not entirely unreasonable point of view that the welfare state is a deal between Capital and the State, in which the State maintains the workforce for the benefit of capitalism (educating it, supporting its unemployment, health needs etc) thus producing a “private profits, socialised costs” system. If such an analysis is considered, then clearly Capital wants to shift the tax burden onto the workers themselves to maximise the profit share of the national income.

    A good potential supporting observation for this would be Capital’s enthusiasm for migrant workers, the profit from which accrues to Capital while the social costs (unemployment, healthcare, childcare etc) accrue to the State.

    This would all be compatible with an econometric analsysis showing profits following trend growth while wages fall in line with the increasing tax burden.

    But then I’m an Austrian School wallah who doesn’t believe in econometrics, so, take it or leave it, you know.

  5. Ian, I believe France is also acceptable as a unit of measurement as well. (And double decker buses).

  6. Ian B, “…mythical scrounger living it large at our expense.”

    Mythical?

    The giant plasma TV may be not the best example, but the welfare trap being what it is, of course there is a leisured rentier class of benefit recipients whose lifestyles reflect a use of greater wealth than is necessary to avoid starvation etc. I accept that some such bolster their incomes via illegal activity, which helps explain how in some cases Paul B’s JSA recipients might indeed end up with a massive TV, but mythical? Nah.

  7. This is all based on the dubious assumption that anyone on such a pittance could even dream of owning such a luxurious item.. Probably bullshit one would imagine..

    Unless, as Frances suggests, they can call on the Bank of Mum and Dad..

  8. Edward,

    Maybe “mythical” is the wrong word. Not sure what the right one is. It’s the construction of a folk devil, or at least a folk caricature or stereotype. People get used to the idea that the scrounger-wiv-a-plasma-TV is representative of a class. That some representatives of said class may indeed conform to the image doesn’t justify it as a stereotype.

    I’ve always been interested in, and thus increasingly skeptical of such folk devils/stereotypes. We seem them constructed on all sides of the political spectrum. The fat cat capitalist, the wife-beating husband (and the gold digging wife), and so on. A currently increasingly popular one is the muslim-violating-white-girls one. And, as in this case, the unemployed livin’ it up large style.

    These stereotypes are problematic because they stand in the way of real understanding and are usually motivated by a deliberate desire to promote hatred of a particular class (capitalists, men, women, muslims, the unemployed) in order to justify being nasty to them.

    Being unemployed is an immiserating lifestyle of being horrifically skint for most people. It’s worth remembering that. We can stand up for free markets and wealth without having to attack the helpless. Can’t we?

  9. @Ian B ‘These stereotypes… are usually motivated by a deliberate desire to promote hatred of a particular class (capitalists, men, women, muslims, the unemployed) in order to justify being nasty to them.’

    I’m not sure what your proof is of this Ian, but I don’t know anyone who ‘hates the unemployed’; I do know people who work a 60 hour week and resent the system that allows able-bodied people a life of leisure (literally speaking) and trinkets which said 60 hour week doesn’t afford them.

    ‘Being unemployed is an immiserating lifestyle of being horrifically skint for most people.’

    For those who want work and can’t find it, and who take their responsibilities seriously, yes. For those who do a bit of robbing on the side and otherwise sit around all day making babies for the 60 hour a week folks to feed, house and clothe, smoking spliffs and playing Command and Conquer, less so. They exist, in their tens of thousands.

  10. You’d like to think so.

    On the telly thing, the real point is that the price of manufactured goods, due to successful globalised capitalism, has fallen to a level where they aren’t luxuries any more.

    Today, a 60″ plasma TV costs the same as having a pint of beer at lunchtime every workday. The latter would have been viewed as a reasonable level of spending for a Working Men in a Working Job even pre-WWII, surely?

  11. “They exist, in their tens of thousands”

    …and there are 2.63 million people on the dole in the UK, so Ian is basically right, and you’re basically wrong.

  12. This is life on benefits:

    http://www.bbc.co.uk/news/uk-16812185

    I don’t know whether they have a big screen, but they can certainly afford the full Sky Tv package and beer and fags to consume while watching it.

    I don’t know why life on JSA alone is always wheeled out in these arguments. No -one denies that living on £56/week is tough. But most don’t. Once you have kids in the family, while the adults may only get JSA, the kids bring in plenty more in benefits. Enough to arrive at an post tax income that most people cannot get from paid employment. That is what is wrong.

  13. Jim wrote:

    This is life on benefits:

    http://www.bbc.co.uk/news/uk-16812185

    Also, the ‘Poor Kids’ film ( http://truevisiontv.com/films/details/63/poor-kids ) shown by the BBC last year (unintentionally?) showed Sam’s father using his PS3 with a pay-per-view flat-screen TV (with Sky) that was costing him more in a couple of months than the olde second-hand 28″ Panasonic widescreen CRT cost my Dad. If they’d have done without (or borrowed) a TV for a couple of months, he could have bought one outright then saved the excess for food and school uniforms for his kids.

    Also http://www.guardian.co.uk/society/2012/may/29/benefits-system-fit-for-work?newsfeed=true in which the subject lambasts the benefit system for not providing any “spare” money for spontaneity, for treats or for emergencies” or to cover her “large but affordable [(when she was employed)]” mortgage . And this is someone who is 50 years old and was once a “higher-rate taxpayer”. Why doesn’t she (apparently) have any savings? All that said, however, Atos and the DWP should never have left her worrying that the benefits she is entitled to would be withdrawn if she didn’t look for work.

    I wouldn’t dream of suggesting that such is typical, but I think it is telling that even sympathetic coverage can’t or don’t find better (i.e. more sympathetic) subjects.

  14. “For those who do a bit of robbing on the side”

    Someone from the Univ of Durham or Newcastle did a study a few years ago into the impact of the black economy on the household finances of those otherwise dependent upon benefits.

    I forget the exact numbers but many households were making almost as much from drug dealing, cigarette smuggling and other nefarious activities as from benefits. This didn’t include robbery or more serious illegal activities.

    Goes some way to explaining the cars and Sky TV package lifestyles.

  15. “Today, a 60? plasma TV costs the same as having a pint of beer at lunchtime every workday. ”

    Indeed it costs the same as having a packet of crisps at lunchtime every workday if you multiple by enough work days. As does a new car, or indeed any other purchase. I am not really sure of the point of the comparison, given it would apply to any purchase. (I don’t think many people would necessarily support the unemployed being paid to have a pint of beer every lunchtime either; so there is no inconsistency).

  16. ChrisM, like depreciation one should calculate the packet of crisps cost over the expected useful economic life of the object.

    A new car is therefore more like ten packets of crisps each lunchtime (at newsagent prices).

  17. One question on the original figures – as work becomes more highly mechanised, wouldn’t we expect the return to capital as a percentage of GDP to rise, because the amount of capital required has increased?

    Yes, real wages should increase, because labour becomes more productive as it becomes more mechanised, but an increasing amount would be needed to give a return on the increased capital required.

    Or have I missed something?

  18. @John B

    ‘…and there are 2.63 million people on the dole in the UK, so Ian is basically right, and you’re basically wrong.’

    A facile error of logic, I’m afraid.

    I’m not ‘basically wrong’, I’m factually right (something you don’t actually dispute).

    By the way, I’ve patiently explained to you on your blog why you’re also clueless re Beecroft.

  19. @ Jim ‘This is life on benefits’

    Good link, Jim.

    Quote: ‘The family receive a total of £30,284.80 a year in benefits’

    Can someone explain to Ian B and his colossally egotistical and inversely incorrect buddy John Band

    a) why this is unsustainable

    and

    b) that it does not mean that you are ‘stereotyping’/creating ‘folk-devils’/’hating’ people/’attacking the helpless’ if you point this out.

    As a subset of the above, can someone also take Ian B through the numbers and point out that it is not ‘immiserating’ to live on £30k a year after tax?

  20. Thanks Richard, that makes sense. (Unlike the idea that anyone is owed a 60″ plasma telly).

  21. Interested, one of the many good arguments against state welfare is that it keeps people in hopeless dependency, often in perpetuity. Even those with plasma tellies.

    It ruins us morally just as assuredly as it will ruin us financially.

  22. @johnb
    I regularly enjoy the luxury of real bread from my local bakery instead of “Mother’s Shame” or its Tesco equivalent. I grew up in a middle-class home with no TV and my father cycled to work until he handed his bike (nearly as old as I was) down to me when I had grown out of mine. You think a plasma TV is not a luxury? Try rejoining the real world where hundreds of millions live on less than $1 a day?
    @ Everyone else – the reason why I and most working-class guys (no, I’m not but I grew up in a working-class town) are unhappy about the benefit system is that some guys *cannot afford* to take a job. The handful rooking the system are a major annoyance but the guys who lose £2,000 for non-tax-deductible commuting costs while 81% of their nominal salary is taken away are the victims.

  23. I don’t have a 60″ plasma telly.

    Granted, I do have a 47″ LED telly. That said, I bought myself 3 years ago when I could afford one.

  24. @ Richard #19
    Supply and Demand
    The amount of capital looking for a good home has mushroomed as the “baby boom” generation born after the soldiers returned from WWII (and as those at home felt certain that should beat Hitler) approach retirement, far richer than our/their predecessors.
    There are not enough attractive investment opportunities to match the supply of capital from those wanting to generate a retirement income from their savings. So investment returns have progressively fallen to the point that we have negative yields on index-linked gilts (and US TIPS).

  25. Jim, Alex, Interested, and anyone else who was fooled by that BBC link

    Oh, that old chestnut. We had great fun taking that BBC piece apart when it came out. And I have no doubt the BBC researcher had even more fun inventing a family whose circumstances manage to press so many buttons. They exist only to wind you up.

  26. @Frances Coppola: are you saying the family in that article are not real? That the BBC has faked the entire thing? Or that the family are real, but couldn’t get the amount of benefits the article claims? Do you have a link to any analysis supporting your allegation?

  27. Jim: Have you ever heard of the concept of outliers? Work out the total amount spent on benefits, divide by the number of beneficiaries and you’ll have a rough, order of magnitude idea of the mean benefit. I would be flabbergasted if that worked out at 30k per family per year.

    I don’t know enough about the UK system to work it out for myself, but for comparison the Australian figure is about AUD$5k per individual (including pensioners).

  28. Matthew L, bear in mind that in the UK “social” housing is either free or the rent is nominal, so perhaps the single largest cost of living (here at least) is paid for in a way that does not factor into crude multiples of weekly benefit cheques.

  29. @Frances Coppola

    And I have no doubt the BBC researcher had even more fun inventing a family whose circumstances manage to press so many buttons.

    The “working family with benefits” sequel to that article was just as good, with the family donating the equivalent of their entire DLA, careers allowance, and more to the church.

    As for Pay Up, I’m not sure that storming and forcibly closing the shops where the people they are trying to help are working is sensible tactic.

  30. Edward: In Australia, welfare housing is state funded so the numbers are still comparable. In Western Australia, for instance, once you’ve qualified for a benefit you apply to HomesWest for a place to live. Besides, the point isn’t to get an accurate figure – it’s to make it clear that the ones living it up on the benefit are not representative of the general welfare population.

  31. @MatthewL: very broad brush I know but the Welfare budget is 115bn. Divide that by £30k and you get 3.8 million. So 3.8 million families can get £30k each out of the UK budget for benefits. On the basis of 2 adults and 2 kids per family thats over 15m people.

    Still think the majority on benefits are living on £56 per week?

  32. Jim, no one said that most people on benefits are living on £56 a week. That’s jobseeker’s allowance for the “someone straight out of school” Tim referred to.

    However, your calculation is not very meaningful. For example, the £112bn social security budget includes child benefit, which is claimed by about 8 million families.

  33. Jim,

    Obviously you DO want me to redo the dissection we did when that article first came out. Read it again and you will realise that NOWHERE does the BBC suggest that this is a real family. And the benefits/expenditure breakdown is for “a family of eight”.

    Most works of fiction are most plausible when there is a kernel of truth, so there may well be a real family behind this, headed by a man who said the things the BBC quotes. But the income and expenditure breakdown? Nah, they made that up.

  34. The big plasma TV / pint-of-beer-at-lunch equivalence is over a year. Since Tim was talking about apprentice-level yoof entering the labour market, so was I. Quite why you’re wanking on about the unemployed, when we were specifically talking about people who work for a living, I don’t know.

    If there are 2.5 million people on the dole, 50,000 are taking the piss, and 2.45 million aren’t, then the only sane conclusion to draw is that unemployed people taking the piss is not a major problem. Similarly, the fact that one family receives GBP30,000 in benefits is monumentally uninteresting when 2,499,999 families don’t. That’s as stupid a methodology as Ritchie’s tax gap calculations.

    The fact that people outside the UK live on a dollar a day is shitty, but of absolutely no relevance to the topic. I mean, I’m a great supporter of targeted and measured international aid programmes like DfID’s current setup, unlike most here, and an opponent of CAP crap, and the massive income rises to have taken place in Africa and Asia over the last 15 years are excellent news, but how the fuck does that have any bearing on how low-income workers in a rich country should do? “It’s OK that you’re working 40 hours a week and can’t even afford a beer at lunchtime, because kids are starving in the Congo”?

    OT Interested: I’ve replied on my blog, but in short, you’re talking crap, because *redundancy pay rights don’t kick in until the person’s been employed for two years*.

  35. Often wrong, but never in doubt.

    Other people (PaulB) were talking about JSA. Its the nature of comments underneath blog posts that sometimes the discussion expands from what was brought up in the initial blog post. Some comments relate to other comments rather than to the initial post.

    If we were talking about people who work for a living, why would anyone here object to them buy a telly, a beer at lunch, or spending money they eared in anyway they see fit.

    Moreover, if we are not talking about the unemployed as well, why are you talking about where 50K of them are taking the piss or not?

    Still, don’t let being wrong stop you from wanking on about whatever it was you were wanking on about.

    Your incredible arrogance would be slightly less annoying (although only slightly), if you were not wrong half the time.

  36. ChrisM: it’s a pity you’re too thick to have learned to read, really. The original discussion was about people who work for a living and have their wages topped up by the state (by tax credits, because their market-clearing wage is considered too low). Hence, the question of whether such a person should be able to afford (a telly / a pint of beer at lunch, them being the same) is pretty key to the whole discussion.

    Seldom wrong; in doubt about as often.

  37. JohnB, you really are a fuckwit at times, and a prick continually. You are too thick to note that the discussion comprises the post, AND subsequent comments. The post was about people who work for a living. The very first comment by PaulB included:

    “The cheapest 60-inch plasma TV I found in a quick search cost £994.54 . Jobseeker’s allowance for under-25s is £56.25 ”

    The second comment by Seth:
    “During which time they’d probably starve to death. Which would reduce the welfare bill.”

    Likewise concerning those who do not work.

    This comment clearly forms part of the discussion and also clearly concerns people who do not currently work for a living. Now do please fuck off you obnoxious wanker.

  38. @Frances Coppola: equally nowhere does it say this is a fictional example. Much as I dislike the BBC I would be very surprised if they published an article that was entirely made up, which is what you are suggesting. I would say the onus is on you to prove that it is not only made up, but also wrong, in that a family as detailed could not get that amount of benefits. So far you have produced no evidence to that end, merely your opinion.

    And if you read the article closely you would see the article mentions a couple (2 people) and 6 kids living with them, which amazingly makes a family of 8.

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  41. @John B ‘OT Interested: I’ve replied on my blog, but in short, you’re talking crap, because *redundancy pay rights don’t kick in until the person’s been employed for two years*.’

    You really are a fuckwit. Unlike you, I actually employ and have employed hundreds of people. In real life, not in theory.

    The current uncertainty is not something which is likely to be resolved within two years or even five years, and it really is an issue when deciding whether to expand and take on new workers that you can be stuck with them, or a massive redundancy package, at some point in the future.

    So you tend not to bother, or you relocate the business elsewhere.

    The same is true, as it happens, for all maternity/paternity regulations, all the diversity screeds, and all the rest of the ‘red tape’ – some of which is bullshit, some of which is not, most of which is well-meaning but naiive, and all of which acts as a dead weight on a business.

    You support all of this in the context of employment because you are an idealist, and a theoretician, not someone with any experience whereof you speak.

    Sure, there are ‘bad bosses’ – but it never crosses your mind, apparently, that they may be as rare as the 50 inch plasma owning unemployed, and as much of a problem.

  42. @Frances

    Obviously you DO want me to redo the dissection we did

    Yes – can we see the link?

    @Edward

    ‘(S)tate welfare is that it keeps people in hopeless dependency, often in perpetuity… It ruins us morally just as assuredly as it will ruin us financially.’

    I agree Edward, except that I believe there are people who should be helped – the sick and disabled, people who want to work and can’t find work (hard to identify, I accept).

    What I’m not too keen on is delivery drivers, secretaries or labourers working their arses off to earn a crust, only to have lads they were at school with taking the piss out of them for working, and getting (effectively) free giant tellies and/or (to John B’s taste) free daily beer, on them.

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