Pay – who pays?

“Taken together, a picture emerges of earnings stagnation or decline for most occupations since 2005. The big difference between Pay Review Body employees and those in non-Pay Review Body occupations in the private sector is that PRB employees are public servants. As such, the government can determine their annual pay settlement.”

These figures of course don’t say anything about absolute pay. I’d be rather less bothered if my pay was £500,000 in 2005 and stagnated to be the same in 2017. I might be forced to buy a little less champagne or not visit Tuscany quite so often. For those at the low end, however, stagnation or decline in pay really bites and have pushed some to use food banks (or borrow more). The counter is always: “yes well, but there is no money and we have to balance deficit reduction and pay increases to ensure a stronger economy and jobs growth”. I leave you to consider what those banal phrases actually mean.

In short, nurses, firefighters et al have been asked shoulder some of the burden for the Financial crash that put us into the mess in the first place, while at the same time asset values have increased along with the levels of wealth of the top 0.01%. Yes, I know its complex, its a dynamic complex system….but you ignore social consequences of technically/econometric based ‘solutions’ at your peril. By that that I mean using tools such as the Laffer curve (tax rate v tax take) might seem superficially a good idea, but it operates in a social and political world where perceptions matter and where experience hurts.

Joseph Schumpeter once described an aspect of capitalism as ‘creative destruction’ – the old and inefficient must make way for the new and better (e.g. canals v railways, landlines v mobiles, internal combustion v electric). All good stuff unless you are a canal owner/worker. The answer? Retrain, Education (Blair’s ‘third way)…it is also Macron’s approach: let the old die and be reformed (labour laws, certain industries) but don’t let the losers fester…invest in them. You decide if the current losers are able to adapt and adopt quickly enough.
This is of course another unresolvable ‘inner contradiction of capitalism’, unresolvable because that is what capitalism is. Governments that get too technocratic, relying on mathematical models, theoretical concepts (e.g. the Laffer curve and neoclassical economic modelling) and inductive logic derived from historical data, can get their fingers burned…or turn on their populations to control potential and actual simmering unrest through various processes of social control (Greece, China, India) or before they go and elect the ‘wrong person’ (Trump, Erdogan, Putin).

This is a warning to both Left and Right – each will try and solve the inner contradictions of global capitalism from their own perspectives (Chavez in Venezuela – Löfven of Sweden – Obama/Trump in the US) but will run into problems that just don’t go away.

Meanwhile, the Planet burns.

Have a nice day, at least there is Wimbledon and the Tour de France on the telly!