An interesting morning so far

One of my major outlets has decided to cut pay (pay per traffic that is, the rate at which it accumulates) by 40%. An interesting start to a Monday morning and it’s only 7.30 am.

So, am I subject to an income effect, in which I attempt to write more in order to regain that lost income? Or a substitution effect in which I go off and do other things? Upon such questions does the Laffer Curve depend….

Reality is almost certainly that in the short term the income effect will prevail, in the longer term the substitution….

17 thoughts on “An interesting morning so far”

  1. Actually it doesn’t. The reputed Laffer Curve is supposedly about aggregate taxation of the whole economy. What you’ve got here is competition driving down the price of labour.

    Enjoy your contribution to the economy as your productivity has just risen quite substantially.

  2. I’m an example of the Laffer curve in action, an individual element that aggregates with others.

    The combined effect of high marginal income tax and tax changes reducing the value of increases to pension and savings made leisure a far more attractive use of the many hours of work I was doing at 54.

    I now spend a large proportion of my income overseas.

    Work was great fun but not working is infinitely more fun.

  3. Enjoy your contribution to the economy as your productivity has just risen quite substantially.

    Ouch 🙂

  4. > to write more in order to regain that lost income

    Only possible if you have the time. Without taking up more time, the quality of your Increased output will suffer.

  5. To follow up on AndrewM you could point out to this purchaser the effect of cost-cutting (down to pay-to-write internships) on the quality of output of British newspapers.

    Cue several thousand articles along the lines of “6 surprising reasons to write 40% more articles for Forbes”.

  6. So – pay well to build up a reputation for quality, having got that reputation for quality, fire those that got you the reputation and get all your content from dollar-an-article odesk farmers.

  7. It’s just a natural free market change in the price system. This is (as always) a benefit to consumers. Why would we not want the price to fall? Are Tim and the commentariat really suggesting “protect the prices” arguments? Do we need to rehearse the argument about the Corn Laws again?

  8. > I’m an example of the Laffer curve in action, an individual element that aggregates with others.

    Me too. I’m currently living in a mid-low priced part of the country, earning just under the 40% threshold. I could earn more in London, but my rent would be at least £14K a year more of net income than I’m currently paying, or about £23K of gross income. I might be able to swing a £14K payrise in one go, but probably not a £23K payrise, so I don’t try, and the economy has to do without the extra professional talent and effort I might be able to provide. I spend the time indulging in amateur cooking and photography instead.

  9. Alex B

    Common sense dictates you are the norm (or at least a variation thereof). But then no one is actually disputing the existence of the Laffer Curve are they…

  10. @IanB,

    I don’t want to protect prices either, but I am well aware that dragging prices down to the lowest possible level reduces quality of product to those prepared to pay more than lowest common denominator. Vide: airlines, all British broadsheet newspapers, meat and dairy produce, IKEA, translation services …

    When quality is a 5% niche market it often ends up disappearing entirely in the rush to profit from cheapo customers.

  11. Tim, English lawyers have the solution: they bill by the letter & maximise their fees by sending multiple ones where one would do. Of course you bill by the word & may be constrained by a word budget, so will have to write pieces that are, say 50% of intended word count (and take 50% of the time to write) then apply an algorithm that plugs in words that no right-on copy editor would dare to prune out. For example: ‘multicultural’, ‘to be honest’, ‘Israeli settler’, ‘single mum’, ‘fairness’ – see any Guardian article.
    There’s bound to be an app that does this automatically.

  12. If the fee is calculated by page view, then surely the answer is to write pages that are 40% shorter.

    I don’t know if you insert the page breaks yourself, or if they do; if them, then 40% shorter articles, but more of them is the obvious answer.

  13. Dear Tim

    Much as I wish you long life and happiness (insert some other bollocks). Much as I appreciate the opportunity you provide me to express my jejune opinions, feeble jokes, etc. you are in the position of a coffee house owner without any coffee or a landlord without any beer.

    For example, if instead of wibbling about Telegraph subs in the comment above you’d taken as read that Putin was threatening Kiev you’d have hundreds of comments about the Anschluss, dismembering Chekoslovakia etc and Ian B posting repeatedly that he was the only man on earth that understood the Schleswig-Holstein question.

    There, fixed it for you, more clicks, more money.

  14. “I am in favour of market forces, except as they apply to me, since they threaten my income and my production of my superior, more expensive product that people are too foolish to realise that they ought to want”.

    Honestly, this is classic market forces, not The Laffer Curve. The Laffer Curve applies to an aggregate tax burden distorting the market, and at what point that distortion maximises government revenues.

    Maybe I am the only person who understands the Schleswig-Holstein Question.

  15. You can’t be. I understood the Schleswig-Holstein Question before I was out of shorts.
    It was the popularity of the James Last Orchestra that had me baffled, particularly what it said about our long-term future in Europe.

  16. @IanB,

    Most people see the world only in terms of the most shit they can get for the lowest price.

    Once (and if) your salary elevates you above the peasant ranks your priorities change. Admittedly for most people the change is to “how much shit housing they can get by continuing to eat exclusively from Aldi”. The paucity of other ways to spend one’s hard-earned in ways that distinguish one from one’s former self (other than overpriced housing and Rolexes, neither of which interest me) is convincing me of the “hollowed-out middle class” hypothesis.

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