It’s inequality, stupid. It’s inequality that is behind poverty, ill-health and the growth of the welfare bill.
He’s right of course. But in an amusing manner. For we define poverty in a relative manner meaning that even if all are getting absolutely richer then if inequality is also rising then we have increasing poverty. Given this definition therefore of course the welfare bill rises when inequality increases, even if absolute poverty is falling, precisely because that’s the way we’ve defined both poverty and welfare already.
We have made assumptions which lead inevitably to this conclusion.
And given the stupidity of the conclusion perhaps we should be re-examining the assumptions?
And it gets better too:
Cumulatively, over the last generation, the weakening of trade unions’ countervailing market power has seen between 5% and 7% of GDP being moved permanently from the workforce to shareholders.
Not quite so Willy, not quite so. For while it is indeed true that the wage share, even the labour share, of income has fallen it’s not equally true to say that the profit share has risen. For they are not the only two parts of the economy: we must also add net subsidies and taxes on consumption (and self-employed income). And taxes on consumption have certainly risen in this past generation: We didn’t used to have VAT at all and now it’s 20% for example.
That’s where the bit lost from the labour share has gone. You’re simply being bamboozled by Howard Reed I’m afraid.