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The Times They Are a-Changin‘
Bob Dylan, 1964
We have a problem in Britain. There are a lot of people who are pissed off with the way things are working. One of the good things is that there is some recognition now that the shift of power from labour to capital is causing grief for an increasing number of people. I’m not claiming to know what the answers are, but the one thing that I hope is that the way we humans try and work things out will stick with jaw-jaw rather than the sort of thing we had in the long hot summer of 2011 when people were rioting. And using Blackberry phones – it seems so long ago
One of the problems is the increasing polarisation of the workforce. I earned a decent wage at The Firm, but I never got anywhere near paying 45%/50% (in those days) tax, though I paid plenty of 40% tax until I wised up. I never got anywhere near six figures. That doesn’t bother me particularly 1 – if people want to push themselves hard enough have at it. Part of the secret to happiness seems to be to value the riches that you do have 2It doesn’t particularly please me when CEOs pay themselves shitloads of money, but that’s because I don’t think they are worth it, this is a cartel in action and they are stealing money from the shareholders. I’d rather they actually got the money they want but actually did more to make the firms work better, rather than go for the willy-waving of loads of mergers and buying other firms up. Their yachts don’t really trouble me, and while I despise the louche taste so often displayed by the über rich that’s more because it’s a crime against culture and aesthetics than its effect on my world.
That polarisation is starting a fight. The Torygraph highlights that higher rate taxpayers pay more than two-thirds of the income tax burden in the UK, which is supported by the excellent infographic by Mona Chalabi of the Guardian. That obviously hacks people off. It hacked me off – at the time I hadn’t jumped to the obvious incentive/conclusion, although instinctively I found an answer in the form of employee share incentive schemes, AVCs and retiring early.
And yet I equally despise bollocks like Help To Work, which Suzanne Moore rightly called punishment for the undeserving poor. I’ve never been anywhere near a Jobcentre ever since it was called the DHSS in the early 1980s. I also don’t have a problem with calling some sectors the undeserving poor, if people want me to work because they can’t be arsed then it does make me wonder why. However, there is a deep problem in Britain today.
There are no jobs that match the talents and living costs of an increasing part of the potential workforce. They are either not up to it, or the costs of living the way they would like to is not commensurate with the pay they can get. The whole endless hurt that is house prices in Britain is associated with that. The high house prices are where the work is. We can shovel our old gits out to the seaside as much as we want and large swathes of the North are acceptably priced, but that’s not where a lot of the jobs are. Help to Work should honestly be called workfare. And it should ideally do something useful for society, not just make people who have been out of work for three years go to a Jobcentre every flippin’ day. What the hell is the point of that? Unfortunately it’s structural, it’s not a Depression era New Deal building the interstate highways. It’s just employing a bunch of civil servants to get the long term unemployed out of bed every day. The civil servants/PFI firms are just as unemployed as the unemployed, but they get their benefits in a different way.
We need new thinking here. Despite the ermine probably being on the right of centre, I don’t have a deep issue against the idea of a citizen’s wage, though I do feel uncomfortable being on the same side of the road as George Monbiot, never mind the Greens who couldn’t punch their way out of a paper bag IMO. At least I am also in there with the Swiss, with their vote on a Grundeinkommen who aren’t usually noted for being raving Communists. Unlike the first two, it’s also not about the ethics , it’s the interest of self-preservation. Obviously as wages polarise the highly paid will pay more in tax, for the simple reason that in the immortal words of Al Capone, that’s where the money is. No other bugger has any. With the citizen’s wage, however, I would like to see a whole load of other social fiddling stopped.
All the explicit subs going to families for a start – the citizen’s wage ought to be enough for two adults to put enough on their own and two kids plates, and actually get to enjoy their company. If you want three, or you want to send Tarquin to Eton, or you want to run a car, well go out to work or do without. We run a perfectly workable state school system, indeed if we could break the stranglehold of chuntering out economic units we might well run a better one from an all-round education point of view. And let’s rack back on the crazy expansion of the university system. University is about research and advancing the sum total of human knowledge. The average punter isn’t bright enough to do that, and a 50% university entrance target is basically aiming at the average and up. And the way we’ve rigged the system means that it won’t get you a better job often and the graduate premium is dropping anyway, presumably because of all the dim bulbs but also because, fundamentally, machines are getting smarter and the equalisation with China and India still has a way to go.
There’s just less and less work to go round, and what there is demands more cognitive function, or it’s relatively mindless and low rent. The exams either need to get harder and university more elitist so the taxpayer can support people properly, or people need to lose the idea that you can pre-retire for three years at the beginning of your working life. And if you are going to pre-retire, then for God’s sake keep costs down – the fanciness of student accommodation is presumably a large part of the living costs now. It’s better than anything I was living in until I was in my late thirties!
Pretending that power shift isn’t happening and calling workfare Help to Work isn’t the way to fix it. Let’s have the discussions in the political arena about what might work in the future. It isn’t like Britain is creating no value, but fewer and fewer people are doing the creating, and paying a larger share of the tax burden in doing so. What the hell does success look like? Obviously everybody earning loads of money or with capital wants to hang on to it, but OTOH starving hordes of people running through the streets isn’t that much of a laugh for anyone. Somewhere in between lies the maximized quality of life for the most people. You don’t wanna be killed by the not-haves, but you don’t wanna be bled dry for the 40inch TVs either, as Jamie Oliver called out.
I read The Spirit Level a while ago, and though I didn’t agree with the rationale or the interpretation I’m not so stupid that I’ll let prejudice stand in the way of data. At least it opened up the debate. There’s more of this lefty stuff in Thomas Piketty’s Capital in the 21st century. I note that Piketty has a very good handle on capital, inasmuch as it costs £18 to buy an ephemeral copy as Kindle format. The Ermine generally tries to avoid buying what I can’t touch so I’m happy to wait for the library or the secondhand market to fix this for me. However, the Guardian is pretty much serialising it in a lot of articles.
The Guardian has been getting themselves into a wet mess about Piketty’s book, so I turned to The Economist for a bit of balance. They were pleasantly even-handed to his ideas in this article, although whoever drafted the x-axis in the return on capital chart demands a lot of his readers. However, I will pinch the summary from one of the Guardian’s less breathless articles to summarise Piketty’s thesis
Piketty deploys 200 years of data to prove them wrong. Capital, he argues, is blind. Once its returns – investing in anything from buy-to-let property to a new car factory – exceed the real growth of wages and output, as historically they always have done (excepting a few periods such as 1910 to 1950), then inevitably the stock of capital will rise disproportionately faster within the overall pattern of output. Wealth inequality rises exponentially.
The process is made worse by inheritance and, in the US and UK, by the rise of extravagantly paid “super managers”. High executive pay has nothing to do with real merit, writes Piketty – it is much lower, for example, in mainland Europe and Japan. Rather, it has become an Anglo-Saxon social norm permitted by the ideology of “meritocratic extremism”, in essence, self-serving greed to keep up with the other rich. This is an important element in Piketty’s thinking: rising inequality of wealth is not immutable. Societies can indulge it or they can challenge it.
I remember challenging somebody at work to a bet since he flatly refused to believe that he was in the upper 10% by income 3. I am nowhere near the top 10% by wealth – conveniently it appears you need to be a sterling millionaire according to the ONS to be in the top decile. But it is at least all my own accumulated wealth from when I started work. It is interesting what Piketty says about the toxicity of inheritance to the distribution of accumulated wealth. As an example, take a look around you. Two thirds of the land in England is owned by 0.6% of the population, and it was largely the same families who owned it 200 years ago. 50% of land in Britain is unregistered – by definition it hasn’t changed hands in modern times, but is part of ancestral wealth.
Some might say that inheritance tax is there to address that, but it is only the little people who pay that. The aristocracy struck a deal with the post-war governments who were were keen to shift the balance, mindful of the efforts of the people in the wars. The deal was this “UK.gov, you wouldn’t want people driven off their farms because when Dad hands it on to Son, Son would have to pay 50% IHT, would you?” So there is no inheritance tax on agricultural land in the UK, so it becomes the ancestral wealth store of first resort for old money. The land has to be farmed, but now that’s hived out to contract farmers. These are good enough to rapaciously farm the land using the soil as blotting paper for chemical fertilisers, so we have increased runoff which floods some of our towns and cities, given that our forebears built their habitations around rivers that historically weren’t flash-flooded by industrial agriculture.
This way there’s an income from the wealth and it can be kept inside the family IHT-free though it has nothing to do with farming. The little people obviously get to pay IHT, which hopefully slows down a little bit of the rampant rise in house prices compared to what it would otherwise be, but old money has nailed that IHT problem that seems to exercise the old buffers at the Torygraph
In general we seem to have designed a society in which we live materially richer than kings in recent times – and that includes people sucked into Help To Work. But we are hammering people’s emotional needs. We encourage rapacious advertising to make them always want more, we collectively mentally torture people who are unable to find work in the rapidly shrinking pool by dishonesty telling them that it is all their fault that they can’t find work to match their aptitudes that gives enough return to live in the way the advertising tells them. We make it difficult for people to raise children which is a pretty common aim of human animals, oddly enough. We glorify paid work and despise the unpaid graft that goes into making a human community. In fact generally we despise service to people and glorify service to stuff.
Before readers think the Ermine has been taken over by space aliens and become a raving Communist I don’t agree with Piketty, or the Guardian, that the answer is to steal the money from one group of people to give it all to another. Reading Ayn Rand’s Atlas Shrugged did not cause me to spill my beer. Niall Ferguson’s The Great Degeneration sums up a lot of the problems. What I’d like is for us to apply some mind and intellect to establish where we are, what we want of an economy – the hint is probably to make human life more enjoyable, rather than to worship metrics 4 and digits on a screen, and then to have a decent debate on the big picture. I’m with Scott Fitzgerald that
The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.
Politics now is all to much micromanagement of detail and polarised crap. I fell into that damned trap myself – I kept on earning even when the process of earning money was beginning to seriously piss me off, but never opened my mind to what am I trying to do with life, until I encountered a sudden stop. And then realised that I could stop and should stop bashing my head on a brick wall, but it would demand changes in how I did things.
Let’s avoid that sudden stop and inquire on how to do things differently. As I wander through the neighbourhood I spot loads of UKIP posters. It reminds me of the 1970s when the National Front was marching through Lewisham High Street. UKIP seem racist in a different way – less about colour, but let’s not forget that Europe has known a terrible amount of human misery perpetrated between groups that one would be troubled to spot a difference between by sight 5. The troubled history of the Balkans and the dreadful conflict that started 100 years ago shows where that sort of thing goes. One of the delightful collective qualities of the English are that they are generally a tolerant and easy going bunch of people in comparison.
Hopefully we will think our way out of the problems rather than fight our way out of it. But the language of some of the election literature I am receiving troubles me. I don’t normally bother with European elections for the simple reason that the European Parliament has no executive power, I of the same opinion as both Piketty and UKIP that there is a serious democratic deficit in the EU, and it would be remedied with a Parliament that was elected in proportion to population and had the power to make the running. The EU was historically a trade body set up by technocrats, and that is fine. For a trade body. The expansion of the mandate needs different structures. But smashing it all up in a fit of pique doesn’t strike me as the smartest option either. And what I really, really, want is to lean against a UKIP victory. The East of England is already a redoubt for that party, and these guys scare me, because when you start to hear that the end justifies the means it’s not usually a sign of good times coming.
And we need to stop lying to the people that the economy is disenfranchising.
There’s nothing we can do for you, you’re on your own
would be a far more honest response to the long-term unemployed than bullshit like ‘Help to Work’ and oxymoronic compulsory volunteering. I’m not smart enough to know what the answer there is, but I am smart enough to know that collectively lying to ourselves isn’t the answer. We have to deal with the world as it is, not how it was. And right now the pool of work for the averagely endowed is dropping, the returns on that work is falling, and there seems to be an increasing amount of hurt as a result. There are also a fair few own goals – one of the things I am deeply grateful to Gordon Brown for is keeping Britain out of the Euro. The Island Kingdom is essentially different when it comes to handling money, it is perhaps a shame for other members of the Europe that Britain is not the only exceptionalism.
There’s a lot of slow-burning crap at the moment. To be fair there’s probably always a lot of slow-burning crap at any time through modern history, and every time somebody declares that the slow burning crap has been nailed it turns out that he’s standing right on top of it, like Francis Fukuyama’s The End of History and the Last Man. It’s not just human development where declaring victory is unwise, Lord Kelvin thought physics was done and largely dusted in 1900 bar improving accuracy. But it probably does to engage with the slow burn rather than pretend it isn’t there and end up like Centralia.
- a lot of people get worked up about the unfairness of some people earning shitloads of money. As a citizen of a First World country in the 21st century, many Britons are probably doing pretty well, on a global scale… ↩
- That’s maybe easier for old gits who have known outside bogs, no central heating and draughty windows. Clean water, which in fairness to Britain I have always known, being warm enough and having decent food knocks having the right iFads and consumer goods into a cocked hat. Try doing without any of them for a couple of days in February. ↩
- He declined, because he had already lost £5 to me because he didn’t believe that Mustela erminea has a baculum some time before ↩
- The most common metric of economic growth, GDP, has serious deficiencies as described by the OECD ↩
- I’m really trying to avoid Godwin’s law here, particularly this year ↩