Howard Reed’s economics again

Almost 2 million more children than there are at the moment will be in poverty at Christmas in 15 years’ time, according to a highly critical thinktank analysis of government policies.

Projections by the Fabian Society and Landman Economics showed significantly wider inequality by 2030 than they had expected before the general election. It suggested a family 10% off the bottom of the income distribution would expect to earn only another £90 a year – a rise of 1% – while those the same distance from the top would be 25% better of with an extra £1,600.

All incomes rise but poverty does too. A useful example of the fatuity of relative poverty as a concept, no?

26 thoughts on “Howard Reed’s economics again”

  1. If £90=1%(of yearly income)–then £90x 100=£9000 pa

    If £1600=25%(of yearly income)–then £1600×4= £6400 pa

    The bottom 10% are therefore better off than the top 10%?

    The Fabians should have stuck to being a poncy 60s pop star.

  2. None of it makes sense. On top of what Ecks just pointed out they also claim that with the pay rise an extra 800k will be in ‘absolute’ poverty. Like that even exists in the UK today. Isn’t absolutely poverty considered something like a couple of dollars a day??

  3. And just spent Christmas in the rural Philippines… If those pricks want to see real poverty I’ll take them there so they can tell the locals that some work shy twat in England is in the same boat as them, would be amusing to see the reaction.

  4. I wonder what they were expecting before the election and why?
    Perhaps they thought that with socialist policies the richest would suffer a 50% decline in income, and the poorest only a 20% decline, thus reducing poverty, whilst increasing hunger and homelessness.

  5. But if they can’t afford a linen shirt?

    But that’s a good measure for its time. Today, we might consider using owning a smartphone. Not an iPhone but a mid-range or last generation Android.

    Oddly enough, the JRF have an arguably sound definition:

    Professor Peter Townsend, a leading authority on UK poverty, defines relative poverty as when someone’s “resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities”.

    Which they then promptly discard for “less than 60% of median household income.”

    Sighs …

  6. Hmm, define x as a % of a population.

    Increase the population.

    The numbers of x increase.

    I trust the membership of this think tank is restricted to early stage primary schoolchildren?

  7. “… relative poverty as when someone’s “resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities”.

    How would he allow for people whose mobile phones are picked up for a song dahn the pub? And who do a bit of work but never admit to it or pay tax on it?

  8. One of the Iron-Clad Rules of Economics: Economic projections – even when done by qualified economists – are rarely worth the paper they’re printed on.

    The predictive value of a relatively simple linear dynamical mathematical model as it relates to the workings of an extremely complex non-linear dynamical system never really lives up to the hype.

  9. I have been looking over my receipts for the past 20 years or so in a seasonal cleanup (I get some time off at Xmas. May as well put it to good use).

    I’m astonished at how much I used to pay for a decent computer, a less-than-top-end phone, household electronics and electricals.

    My most recent computer cost me £220 and should do me for about five years. I have a backup phone – android but not too many bells and whistles – on a £7/month contract, that is massively better than the Nokia smartphone (one of the last Symbian ones) I had five years ago on a similar contract for £18/month and which would have cost me £250 to buy for PAYG.

    The clothes are mostly cheaper too.

    Obviously there are costs which are going up too. But to be able to take a full part in modern consumer society doesn’t take a fortune – things like housing and heating should be the main focus of attention I think. But the very poorest do get a lot of help with the housing.

  10. I remember paying over £1000 for a computer.

    In fact, I remember paying £128 for 4mb of RAM to upgrade my PC. This was probably mid- to late-90s.

    The things which are expensive seem to be government influenced:

    housing
    power (fuel)
    beer
    tax

  11. BiS

    As a non-economist and as far as I can see, over the years, it reduces the weight of debt.

    Chancellors therefore like it.

  12. BIS>

    It’s really only a better thing than current alternatives, rather than a good thing.

    But anyway, you’re making the classic mistake: deflation doesn’t mean things getting cheaper; it means things are staying the same price while the value of money is changing. I think the common misconception stems from the concept of the basket-of-goods approach to measuring inflation – but that’s only a proxy, not the thing itself, and we try to exclude things from the basket that are changing in price for other reasons (as far as possible while also reflecting real-life spending).

  13. Every economy needs a bit of lubricant. Relative values change: but people really hate falls in nominal income. They’ll put up with changes in real income much better (this is Keynes, a time when he was right).

    Greece is an example of where nominal income has to change. The economic pain of this is high. This is why Friedman et al recommend changing the exchange rate: real income changes, not nominal.

    2% inflation allows real prices to change while nominal don’t: it’s just easier that way, lubricant. Yup, the same people are still getting fucked but there’s less shouting about it. Because relative prices just do change

  14. Bloke in Costa Rica

    MBE, I write software for a living. I costed out the roughly six-month old computer they gave me to do my stuff. Quad 3.6GHz i7, 16 GB RAM, 1 TB hard drive, 512 MB graphics card, two 1920×1080 monitors. About $800 or £500 the lot. So a week’s wages for a normal guy. It is a very capable machine. I couldn’t play Fallout 4 on it without seriously upgrading the video card (and installing Windows, yuk) but otherwise it’s got everything it would need. I have a backup pay-as-you-go dumb phone in case my iPhone gets nicked. Cost me $17 brand new. All three of my Linux machines at home, which I use for a firewall, an applications server and a development box, were castoffs which would perhaps fetch a hundred quid on eBay.

    It is a general rule that if you are making predictions about things 15 years in the future (unless it’s where Venus will be in the sky) then you are full of shit.

  15. Had some mad guy on the local news claiming to be a futurologist in a looking ahead segment that they run at the end of the year to fill time. He was apredicting the big trend in how all the trades people will be out of work due to 3D printing of entire buildings (which he claimed China was already doing, electrics, plumbing and all) and would need to retrain. His other amazing prediction was that no one would drive, now he may have a point overall though it’s generational change at best, buts It’s amazing how you can make money out of spouting this crap

  16. bloke inside the M25

    Mid ’70s a mate was going to the USA so I asked him to buy some RAM for my SWPTc 6800. Cost me just over £700 for 16K – yes kilobytes. Some people just don’t know how lucky they are.

  17. @Dave
    I’m fully aware it’ s the mistaake I’m not making. Unlike Tim or others, I don’t give sweet fuck about liquidity in the economy or the plight of debtors. I regard money is to serve my intersts, not me to serve its. Debasing its value is ot in my interest.

  18. If a company can make more products cheaper, then the price goes down – if all companies become more efficient at producing, then all prices will go down. Increases in productivity leads to a greater supply of stuff, and lower prices. Yet every time you hear the concept of deflation discussed all they talk about is a lack of demand, rather than an increase in supply.

    I don’t understand how we can get to Keynes’ era of abundance, where everyone does fuck all work, if there isn’t deflation – where everyone can afford everything whilst doing fuck all work?

  19. I’ve done some work with the JRF research and yes, they do build it up from practical applications of participating in society, but there comes a point where they have to translate that into something that’s in pounds and pence to do any measuring. The thing is, they redo the calculations each time they do the measurements, so this year it may equate to 60% of median income, next year it may equate to 40% of median income. Or 75%. Or, glod help us if it ever happens, but it is mathematically possible, more than 100%.

    It’s also a headline baseline figure for a generic average person. As a single person with no sprogs I can fulfil all of the JRF’s criteria on 50% of MHI, other people can’t.

    They also need to translate it into words the hard of thinking who control public policy can understand.

  20. @ Bloke in Malta
    Prices going down due to improved efficiency is “Disinflation”.
    A collapse in economic output is “deflation”.
    Sadly most journalists are half-educated and fail to notice the difference.
    Disinflation Good (four legs), Deflation Bad (two legs).

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