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Saturday, 2 April 2016

Saturday, April 02, 2016 Posted by Jake 3 comments Labels: , , , ,
Posted by Jake on Saturday, April 02, 2016 with 3 comments | Labels: , , , ,

Straight after George Osborne's March 2016 Budget Iain Duncan Smith, a former Tory party leader and former cabinet minister at the Department for Works and Pensions, abruptly resigned from the government. In his resignation letter Duncan Smith stated:

"I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they've been made are a compromise too far. While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a Budget that benefits higher earning taxpayers."

Duncan Smith's specific beef at the time was the Budget's proposed cuts to disability benefits (Personal Independence Payments (PIP*)). An analysis by Paul Lewis, the presenter of BBC Radio 4's Moneybox program, showed that planned cuts to disability benefits saved most of what was needed to reduce capital gains tax and raise the higher rate income tax threshold:



2016/17
2017/18
2018/19
2019/20
2020/21
2016/17 to 2020/21
SAVINGS






Cuts to PIP*
£15m
£590m
£1,190m
£1,300m
£1,280m
£4,375m
SPENDING






Raise higher rate threshold
£0
£365m
£595m
£565m
£600m
£2,125m
Cut Capital Gains Tax rates
£105m
£630m
£605m
£670m
£735m
£2,745
Total SPEND
£105m
£995m
£1,600m
£1,235m
£1,335m
£4,870m



Source: Budget March 2016 Red Book Table 2.1, lines 5, 28, 73. pp.84-85.

A case of economic Darwinism, where the fittest get the money?

Darwin's Theory of Evolution asserts that the fittest survive. How did Darwin know those who survived actually were the fittest? And what were they fit for? Darwin would say they were fit for surviving, and they proved it by surviving.

There is a parallel Theory of Enrichment, as preached by Tory and New Labour alike. Used to justify growing pay and wealth inequalities, the Theory of Enrichment asserts the most deserving get the most money. What are people getting the most money deserving of? They are deserving of getting the most money. How do they prove it? By getting the most money. 

In both theories, Evolution and Enrichment, the winner is the winner. Here are theories that are never wrong. The survivors are 'fittest' because they survived, and the rich are 'most deserving' because they are rich. There is no question of unfairness, it's just how it is.

However, by sleight of speech the "deserving rich" are assumed to be "hard working and talented". The corollary being everyone else is less hard working, less talented and less deserving.

This Theory of Enrichment justifies why, according to the High Pay Centre thinktank, the average FTSE100 boss in 2016 earned in two days what the average UK employee earns in the year. We are expected to believe this is not because they have the ladle in their hands scooping up the gravy for themselves, but because they are hard working and talented.


Whether in Evolution or in Enrichment we are deceived if we believe "fittest" or "richest" is simply a matter of merit. Actually it has much to do with factors external to the fittest and richest themselves.

The visible hand of human interference can change who is fit to survive, and who is enriched. Based on 'survival of the fittest', chickens are extremely fit. By human interference chickens are one of the most successful vertebrates. Billions of chickens are born each year, far more than humans. It is true, these chickens are born to die. But so are we all. If you believe the supermarket adverts you may think the chickens lead short but happy bucolic lives. In fact many of the farms the chickens supposedly caper around turn out to be phoney farms. Tesco's "Rosedene" and "Nightingale"; Aldi's "Ashfield"; Lidl's "Birchdale" and "Strathvale" all turned out to be marketing fictions. 

Chickens became 'fit' by being extremely tasty and nutritious when properly prepared. Providing scant cause for avian bragging rights as the 38 day old birds hang by their feet heading for that electric head-bath.

Excessive success can make some things unfit for survival. The success of the Polio and the Ebola viruses infecting, crippling and killing people made them targets for eradication. Invasive pest animals and plants become the targets of human attack because of their success. Their survival is threatened precisely because they are so good at surviving.


Just as in Evolution so it is in Enrichment. It is human interference, more than human merit, that decides who gets rich. Companies justify high pay for their top executives by keeping everyone else's pay low. Gavyn Davies, the leading economist and former chairman of the BBC, credited two thirds of company profits to keeping wages low. We can see how executive pay has ramped up from a report, "How to make high pay fairer", published in July 2014 by the High Pay Centre think tank. The report stated:

"Typical annual pay for a FTSE 100 CEO has risen from around £100,000-£200,000 in the early 1980s to just over £1 million at the turn of the 21st century to £4.3 million in 2012.1 This represented a leap from around 20 times the pay of the average UK worker in the 1980s to 60 times in 1998, to 160 times in 2012 (the most recent year for which full figures are available)."



To compound the rich enriching themselves, George Osborne's budgets have taken money from the poorest and given to the richest (analysis by the Resolution Foundation).
TBblog4 


UK Inequality measured by GINI Coefficient
While the initial distribution of wealth (salaries; dividends; capital gains) is controlled by the wealthy, the redistribution of wealth is controlled by the government (tax and spend). Ministers of all parties in recent decades have inclined towards helping out the wealthy

However, governments are elected by everyone who votes. While a rich person's patronage is worth more, a rich person's vote is worth exactly the same as a poor person's. Ultimately, it is fear of being caught out by the voters that forces ministers to go against their inclinations. 

Were Iain Duncan Smith's inclinations over-ridden by his instinct for survival, or by his thirst for revenge, or by his conscience? Whichever, it was a rats leaving sinking ships moment. The Tories having presided over years of low economic growth, poor productivity, higher debt, and higher taxes, Duncan Smith decided the Tory government was at last on course to be found out. Perhaps he is right.

3 comments:

  1. Unfortunately, as shocking as these reports are, our general apathy as a society has overtaken the energy generated by such shock. We simply continue to bemoan these situations and then immediately turn the telly on to watch Eastenders and forget about it. Mass protest and the systematic boycott of individual companies in the FTSE100 on a rotating basis (i.e. as each one feels the economic effects of said boycott the masses move to the next - starting with the banks) will start a process of redress. Yes, individual workforces may suffer in the short term, but this will repair itself as a general consensus is reached that redistribution of wealth is required in these companies.

    ReplyDelete
  2. I really WISH YOU would do a 'survey' on how does one force / fit your 'head line banners' of so very many words into tweets, which are meant to be 160, or less letters than your headlines??????

    ReplyDelete
    Replies
    1. I know what you mean. We ourselves struggle to dream up a short statement that fits into a tweet together with the URL and a cartoon.

      For this one we sometime use the following tweet text: "It is human interference, more than human merit, that decides who gets rich http://www.blog.rippedoffbritons.com/2016/04/what-is-wrong-with-income.html"

      Delete

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