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Saturday, 20 April 2013

Saturday, April 20, 2013 Posted by Jake 8 comments Labels: , , , , , , , ,
Posted by Jake on Saturday, April 20, 2013 with 8 comments | Labels: , , , , , , , ,

Our leaders tell us we must be more competitive. So we can work ourselves out of the banker induced crisis. They tell us that to earn money to pay off the debts that came from the crisis we must compete with other countries to attract companies to Britain. 

To do this they tell us we must have a more flexible labour market (i.e. easier for companies to fire us), more competitive wage structure (i.e. pay us lower wages), and we must cut corporation tax for the companies (i.e. reduce companies' contribution to the public purse, paying for the NHS, schools, defence, roads and stuff like that).

So we thought we would look to see how uncompetitive we actually are in terms of wages, sackings, and tax at the moment:

a) Compare wages, and we see the UK average wage measured by the EU is well below other major European countries, and below the average of all the EU27 countries.
Statistics from the European Union, Europa.eu (As figures are in Euros, UK average wage rise is impacted by exchange rate of strengthening pound in this period)

b) Compare labour market flexibility measured by employment protection and how easy it is to fire us: We see UK worker protection is the joint second worst in the OECD:


c) Compare corporation tax rates, using this graphic produced by HMRC for the 2013 budget: We see corporation tax in 2015 will be well below that in the G7. Even before this cut, UK corporation tax is the lowest (main rate is 23% in 2013, and 21% in 2014).




The data shows we already have low wages, low employment protection, and low corporation tax. And yet Britain shows scant sign of recovery. Nothing but anaemic growth, with the worst recovery of any recession since 1920:




Fitch, the second agency to strip the UK of its AAA credit rating in April 2013, stated:  "The downgrade of the UK's sovereign ratings primarily reflects a weaker economic and fiscal outlook". If the government's objective is to strengthen our economy, then all the cuts in wages, benefits, pensions, employment rights, and even all the cuts in top rate income tax and corporation tax are not working

Is this failure incompetence? Or is it failure at all? Is it actually sublime competence, and we are simply missing the point?

We wonder whether all this cutting has nothing to do with encouraging more companies to come to Britain to employ us. And has everything to do with using the Banking Crisis as cover to further exclude 90% of Britons from a share of the national wealth. Austerity and competitiveness is being used to justify cuts to those not working - pensioners and the unemployed - and cuts to those who are working - salaries and in-work benefits. Keeping more for the top 1%. This rip-off has been happening to Ripped-Off Britons for decades (through both Labour and Tory led governments):

http://topincomes.g-mond.parisschoolofeconomics.eu/#Database:

And the share of national income being paid to employees, as a percentage of GDP, has been dropping since the 1970's:


In spite of this fall in employees' share of GDP, leaving more with companies as profits, the government plans to virtually freeze the amount paid in corporation tax while increasing the amount paid in income taxes:



The government response to the stripping of our AAA credit rating by Fitch was:
"This is a stark reminder that the UK cannot simply run away from its problems, or refuse to deal with a legacy of debt built up over a decade. Though it is taking time, we are fixing this country's economic problems."
Thus we see George Osborne's logic:
Rating maintained = proof austerity and cuts work = more austerity and cuts.
Rating stripped = proof we need more austerity and cuts = more austerity and cuts.

What Osborne has forgotten, unless concentrating wealth in the hands of the few is his over-riding objective, as he takes from the 90% (wage freezes and benefits cuts) to give to the wealthiest (tax cuts) is most of the spending is done by ordinary people. Companies come to a country not just to employ people to make stuff, but also to sell stuff. According to government statistics, although the poorest 50% have virtually no wealth,  they do 30% of the spending. Although the richest 10% have over 70% of the wealth, they only do 20% of the spending.


As the Governor of the Bank of England in May 2011 told MPs:

"'The price of this financial crisis is being borne by people who absolutely did not cause it "Now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has."

8 comments:

  1. I was surprised by the graph showing UK average wage has increased in the last few years, but I forgot the chart shows wages in Euros.

    Between 2009 and 2012 the pound got stronger against the euro in exchange rate terms. So the hourly rate in euros went up due to the exchange rate.
    http://www.oanda.com/currency/historical-rates/

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  2. Their idea is to make this a modern day slave economy, but for it not to appear as such.
    They (the rich, the power hungry business leaders and the global faceless e.g. Bilderburg) want the electorate pushed into poorly paid work with the threat of poverty and homelessness when unemployed.
    They don't want you in well paid work with a good pension so you can retire early, that means your not working to make profits for the rich and you have too much freedom to move around the world.
    They want to enslave you in modern terms, but talk about the freedom of a democratic society, but that freedom is only one rung above living in places like e.g. Iran, there is no real freedom as they ultimately control your life though not every day of it.
    They don't want cheap housing or too many park home sites owned by the residents as they want you to spend most of your income on housing to keep you in debt or poor.
    Now people have more income in later life so could retire earlier, they made sure Final Salary Pensions failed and then say it's an impossible system, but most Directors in this country STILL have a Final Salary Pension proving it is still a viable investment for retirement.
    Would these Directors who have access to the best financial advice choose Final Salary Schemes if they were such a bad investment?? No chance, it is a con trick to keep the rest of us poor in retirement, so you keep on working to make them richer.
    With all this debt and bank failures hose prices should have crashed, but that would have meant many people could have bought cheaper housing and the rich (including MP's) would have lost millions on their buy to let properties.
    So they filled the banks and markets with our money called quantative easing and are still building our society and capitalism on more debt, so house prices stay high, so their is no cheap housing and where it outstrips
    wages.
    This means more middle class people are made poorer because they become the bank of mum and dad to help their kids onto the road to debt by helping them buy a home.

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    Replies
    1. Well said i agree with every word you say.

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  3. Work Makes You Free... you do not understand... and I will make you understand >:)

    ReplyDelete
  4. Yes - Arbeit macht frei (work will make you free) was used by another government in the 1930s

    ReplyDelete
  5. working for free makes you free is the Chinese version Cameron probably prefers after Xiaping visit (if that's his name) recently

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