Jeremy Hunt, in his role as Chancellor, has apparently said that no additional pay offer to nurses may be made this year. He has also ruled out backdating the next year’s settlement. There is, apparently, no money available to meet this cost.
Ignore for a moment the total ignorance implicit in this comment, which ignores the fact that approximately 40% of any pay rise comes straight back to the Treasury in additional tax and national insurance contributions.
Ignore too the stimulus effect that this extra spending power for nurses will have in an economy deep in economic crisis.
Inflation’s over 10% – and he wants us to admire the stimulus?
This is also glorious:
Second, when it comes to the value of the spend, politicians share the view of the Office for National Statistics (the ONS) that the value created by nurses and other state sector workers is equivalent to their cost. Private sector workers do, of course, add value through profit extracted by others as a result of their effort, but apparently state sector workers benefit no one else but themselves by reason of their employment, or so it is assumed. So no patient gains from being well, and no student benefits from learning from a teacher, are accepted as existing, just as no police officer adds value for GDP purposes. No wonder public servants go undervalued.
Well, yes, GDP is “at market prices”. As there are no market prices for the output of much of government we’ve got to use something else as our measure. We use input costs therefore. Not perfect but generally agreed. Not something inventend by ONS but which goes all the way back to the invention of GDP itself by Kuznets.
Spuddo is trying to go further than that. To look at the value of what public servants produce. The consumer surplus that folk receive from those goods and services being available. Well, OK, legit thing to wonder.
But if we’re going to do that then we need to do two more things. The first being actually measure the value of that consumer surplus. What, for example, is the value of diversity advisers? Or even, tax funding of bad economists? If we’re to try to measure the value of the output of government then we’ve got to try to measure the value of the output of government, right?
The second being that we know there’s a consumer surplus for private sector goods and services too. The value that people gain but which isn’t reflected in market prices. It must be there – no one would buy anything at all if they didn’t think the value they gained was greater than the cost. As it happens we do have a rule of thumb here. The consumer surplus is 100% of GDP. Just a rule of thumb, not something proven in detail.
Spuddo seems to want to count that surplus for State produced goods and services and not for private. Nonsense, of course it is.