[Closed] so if your not rich earning 60k a year?

it's perhaps not as widespread as it feels when you've done inner city yoof work/probation work and had the hapless task of trying to find some of these kids gainful employment!

[b]grum[/b]
If you believe the Daily Mail millions of people choose not to work.

It's funny how the sharp global increase in people who [i]"cannot be bothered"[/i] to work exactly coincides with when the bankers globally screwed up the economy.

And although the long-term unemployed is now at a 20 year high, which of course coincides when the Tories were last in power - it's funny how many people get lazy when the Tories are in government, most unemployed people are not long-term unemployed, so are obviously perfectly prepared to work. Which exposes as a lie the claim that [i]"millions of people choose not to work"[/i].

Unless of course this Tory government is telling barefaced lies about the unemployment figures, which I'm not aware the Daily Mail is claiming.

£1m+ base salary ? I'm used to working in/around high earners in finance and law but very few of them make more than £500k base and the majority much lower even if their total compensation is above £1m

Sorry, "salary" was a bit misleading for two of them, compensation would probably have been better, they're equity. Definitely not unusual at all for the big guns at good firms. The third guy was one of ours and a stalwart of our parent company board (but to be honest I have no idea how his remuneration is structured, only that it's sky high).

Equity partners in all the magic circle firms can expect to take home between £1m and £2m each, with lawyers at Slaughter & May particularly well off.

ernie_lynch - Member
when the bankers globally screwed up the economy.

Gordon Brown failed in so many respects but his one great achievement (sic) was his ability to get intelligent people to believe this line. Banks [i]were one[/i] of the many players responsible for the crisis but they were far more a symptom rather than a cause of the problems. Through the role that they play and they inherent (and massive) leverage involved in their business model they reflect and magnify the errors of others. But as Santayana (and Churchill) noted, "those who cannot remember the past ([i]accurately[/i]), are condemned to repeat it." So what do we have now? The same mix of excess liquidity and artificially low interest rates, banks, household and countries with too much debt/leverage, and the financial prudent penalised. Beware the reflection of this mess seen in global finance again.

And although the long-term unemployed is now at a 20 year high, which of course coincides when the Tories were last in power

Current high levels of unemployment across Europe are hardly the result of one party's politics as appealing as that idea may seem!

😆

So the failed banks which caused the credit crunch that led to a global recession wasn't the responsibility of bankers ?

And it was Gordon Brown who convinced the world that it was all the fault of bankers ?

I've got to give it to you teamhurtmore, your tireless determination to push the Tory Party line is really quite impressive !

The Tories make many mistakes Ernie, including the ones that I highlight in my previous post! So sorry that cliched Tory supporter li(n)e falls equally flat I'm afraid. But to argue that the global recession was caused solely by banks is a gross distortion of the truth. So hardly a surprise that poltiticians use it so much. It was a brilliant poltical ploy that by the looks of things worked pretty well. As I said seemingly intelligent people fall for it regularly....

I've had first hand experience of people on benefit turning down work as they cannot be bothered.

I was talking to someone yesterday who hasn't worked for seven years, because the costs of childcare are very nearly as much as she would earn as an auxiliary nurse.

*is pleased he's avoided this thread up until reading page 10*

*will make a point of not revisiting it*

Well of course the global recession wasn't caused solely by bankers, they could not have done it without the help of politicians who let them get away with their greed and incompetence, whether in Washington, London, or Berlin.

Their credit crunch cock-up caused unemployment levels to rocket, or, "lots of people to suddenly become lazy" if you're a Tory.

I've had first hand experience of people on benefit turning down work as they cannot be bothered.

Banks were one of the many players responsible for the crisis but they were far more a symptom rather than a cause of the problems.

Morning JY! Don't agree (plus ca change!)

Economies move in natural cycles pure and simple. A simple analysis of how and why main policy goals conflict over time (growth, employment, inflation, balance of payments etc) shows why this inevitable.

The amplitude of these cycles varies over time. Boom and bust is not inevitable.

There has been a long debate regarding whether and how governments should intervene to manage these natural cycles.The mid part of the 20c was characterised by cross-party support that governments can and should intervene but the results were disappointing (you are young enough I think to recall "stop-go"). The latter part of the 20c and early this century saw a shift towards less government intervention again with mixed results.

Gov intervention has largely been based around (a misunderstanding?) of Keynes. As Balls pointed out, Keynes is not synonymous with (reckless?) increased gov spending. Indeed it is quite the opposite. Put v simply, K believed that (* see below) that you should attempt to run budget surpluses in good times (reducing the upside) so that deficits can be run in the bad IME (to reduce the downside). So far, so good.

The ultimate folly of Gordon Brown/Ed Balls was to ignore this and to arrogantly claim the end of boom and bust. Instead of moving towards lower deficits, they did the opposite. One result was very unbalance growth on financial services and public sector.**

So when the inevitable slowdown came, the Keynesian response card had largely been played. Oopps! How JMK must have been turning in this grave. So with fiscal policy neutralised, what was left? Ultra loose monetary policy.

So the Tories implement this response at a time when the main transmission mechanism (the banking system) was still screwed. Hmm, so where does all that excess liquidity go? Productive assets? Hardly....

* Actually the irony of ironies (repeated throughout history!) is that the Tories have turned out to be more Keynesian than labour. Why? Keynes did not advocate using fiscal policy first and foremost. [b]Securing lower borrowing costs, to stop defaults from spiralling upwards, was far more important. Without that, there was a real danger more government borrowing would "crowd out" the private sector. [/b]Funny that - Osborn turns out to be more of a Keynesian that Balls!

** to be fair, Gordie does get "brownie" points for recognising that fixed exchange rates amplify economic cycles rather than reduce them.

As far as i am aware the consensus view is the sub prime lending market collapsed in the US - iirc this is banking

Yeah but why did the sub-prime market exist in the first place? And why it collapse?

All cards are the same, but it only takes one to knock the entire house down.

it was pure greed that caused it

those subprime mortgages were repackaged and sold off by hedge fund managers who chopped them up and sold them again
they were motivated purely by greed, the lure of the bonus over ruled any sort of logic

when the mortgage defaults became a problem everyone asked the hedge fund managers what these debts were worth, none of them knew what the products theyd devised and sold were actually worth so all banks became paralysed and refused to lend to anyone

so everyone suffers (apart from those that got all those bonuses in the 1st place)

greed and deregulation are to blame, the banking industry pushed for dergulation in mortgages, trading etc etc and their pocket politicians gave them what they wanted

From the OECD:

....the current financial crisis as being caused at two levels: [b]by global macro policies affecting liquidity and by a very poor regulatory framework that, far from acting as a second line of defence, actually contributed to the crisis in important ways.[/b] The policies affecting liquidity created a situation like a dam overfilled with flooding water. Interest rates at one per cent in the United States and zero per cent in Japan, China's fixed exchange rate, the accumulation of reserves in Sovereign Wealth Funds, all helped to fill the liquidity reservoir to overflowing. The overflow got the asset bubbles and excess leverage under way. But the faults in the dam – namely the regulatory system –started from about 2004 to direct the water more forcefully into some very specific areas: mortgage securitisation and off-balance sheet activity. The pressure became so great that that the dam finally broke, and the damage has already been enormous.....

....[b]The crisis [u]originated[/u] from the distortions and incentives created by past policy actions.[/b] When economists talk about causality they usually have some notion of exogeneity in mind; that relatively independent factors changed and caused endogenous things to happen – in this case the biggest financial crisis since the Great Depression. [b]The crisis itself was not independent, but originated from the distortions and incentives created by past policy actions.[/b]

Symptoms or causes? You decide!

kimbers - Member
the banking industry pushed for dergulation in mortgages

The alternative view is that the banking industry [b]responded[/b] to changing regulation and business model of Fannie and Freddie and to changes in risk weighting (sic) of mortgages under new Basle regulations. Symptoms or causes.....

it was pure greed that caused it

And we all know that only exists because the Tories/Labour (delete as desired) brought it in.

they were motivated purely by greed

As most people in business are, yes. Business people wanting to make as much money as possible, hardly a shocker is it? It's only been going on for what, 5,000 years?

@ernie I don't think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it's just more clearly in focus now as we cannot afford the welfare payments.

Very very many people benefitted from the (too) cheap credit that was available. For every bad loan made by a bank there was a willing borrower, be that individual company or government. You cannot say it was purely corporate or banker greed, there were jusy as many if not more greedy indiviudals or over extended themselves. We are now returning to a more normal situation which is painful. As a nation we were living on credit and far too reliant on financial services.

Boom and bust is not inevitable.

why did the sub-prime market exist in the first place? And why it collapse?

@ernie I don't think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it's just more clearly in focus now as we cannot afford the welfare payments.

Very very many people benefitted from the (too) cheap credit that was available. For every bad loan made by a bank there was a willing borrower, be that individual company or government. You cannot say it was purely corporate or banker greed, there were jusy as many if not more greedy indiviudals or over extended themselves. We are now returning to a more normal situation which is painful. As a nation we were living on credit and far too reliant on financial services.

Pretty much how Robert Peston described it recently in that series he did about shopping. I think the greed culture extended to all levels of society. But the question we should be asking is, who created that culture? Those who stood to make short term gains from it, and were not looking to the long term or gave a toss about benefits to society.

@ernie I don't think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it's just more clearly in focus now as we cannot afford the welfare payments.

And yet despite the very high levels of unemployment due to the international economic crises caused by greedy and selfish bankers, JSA is only a very small part of welfare spending in the UK, far more is spent subsidising employers who pay shit wages.

So if you are serious about reducing welfare spending I suggest you start off by insisting that crap employers pay living wages.

Good point ernie and it is worth noting that these payments enable the wealthy shareholders in those companies to get ever higher dividends.

Its also not true to claim we cannot afford welfare [ a rather large umbrella term tbh]. What you mean is you dont want to pay it. This is a measure of your heart and not the countries wallet.

....despite the fact that UK plc has continued to hoard not shed labour leading to a decline in productivity levels. Not quite what shareholders have in mind but then again the reality probably makes less exciting headlines than "crap wages stuff."

Not to mention where the best trends in wages are to be found....and under a Tory Goverment - irony 3 of the day!

You have a phenomenal talent for saying a fair bit without actually discussing the issue or point made... are you a politician by any chance 😉

but then again the reality probably makes less exciting headlines than "crap wages stuff."

What newspaper do you read then ? I never had you down as a Morning Star reader.

.

And as for your "best trends in wages", wages as a percentage of GDP has gone [u]down[/u] since the neo-liberals came to power. In contrast the income of the richest 1% has gone [u]up[/u] dramatically.

See if you can figure out when neo-liberals first came to power by looking at this graph :

[img] [/img]

So yeah, "best trends in wages". If you're a Tory.

Excuse me, I would have thought you would have made the link between wages/productivity/dividends.

Wait till tonight QT for your politicians- Gove, Alexander, Self (not me!) and UKIP bloke etc. see how many points get answered then!!

(there will only be one purple tie tonight but wait to see who is wearing it is time!)

how about
Yes afair point working tax credit does subsidise dividends by keeping wage demands low however they are currently loosing out due to productivity ...we are all in it together 😛
[ you can add punctuation if you really must 8) ]

you know comment on the point make a supplementary point

I thought you would have known that 😉

Liking the purple tie thing has it got anything to do with Prince?

Tut, tut Ernie, stay with the programe. Helps if you use up-to-date data. Here the link

http://www.ons.gov.uk/ons/rel/household-income/the-effects-of-taxes-and-benefits-on-household-income/2011-2012/etb-stats-bulletin-2011-12.html

Disposable incomes have fallen since the start of the economic downturn, with average equivalised income falling by £1,200 since 2007/08 in real terms. The fall in income has been largest for the richest fifth of households (6.8%). In contrast, after accounting for inflation and household composition, average income for the poorest fifth has grown over this period (6.9%).

The result is that income inequality has fallen in the past two years. Not a great headline for the Morning Star I know!!!

BTW, UK Gini coefficient at lowest level since 1986!

As a socialist you would know the problem with falling productivity. If you push for higher wages without increasing productivity what is the result? Fewer people in work earning higher wages. And the implication for income inequality?

Wait till tonight QT for your politicians- Gove, Alexander, Self (not me!) and UKIP bloke etc. see how many points get answered then!!

To be fair I think they are more likely to answer a direct question than you are. For example one thing we be absolutely certain about is how any one of those politicians would vote in a general election if one was held tomorrow.

You on the other hand, despite being a major contributor on political threads, refuse to answer that question, realising that by doing so you would completely undermine this absurd pretense which you try to maintain that you're not a Tory.

.

The result is that income inequality has fallen in the past two years.

Your figures is for the richest fifth, mine was for the one percent. And even if the income of the richest 20% fell by 0.1% more than the poorest 20% in the last 2 years, its hardly going to reverse 35 years of growing economic inequality ffs 🙂

Let's look at it again shall we :

[img] [/img]<

Why are you lot bickering like kids?

You should be working and making money!

Argument on the internet...get a life.

If you push for higher wages without increasing productivity what is the result? Fewer people in work earning higher wages.

PS you argue as socialist as well as molly argues like a christian.

😀 that's not pseudo-socialism, it's labour economics 101!

Cheers Ernie, if there is one certain relationship it's between the strength of conviction and the need to resort to ad Homs! But feel free to update your compelling data after 05 while digesting the fact that the UK' Gini coefficient is at the lowest level since 1986.

(JY don't understand the question about Prince. Wasn't that purple rain?!?)

Yes as i assume you are just winding us all up.

No, forget the Bullingdon mafia, there is a much more important (and increasingly brazen) one. Doubt Will Self will be wearing any sort of tie tonight on QT, let alone the purple one!

But feel free to update your compelling data after 05

So you can ignore it and talk about something different ? 🙂

The top 1% have continued to prosper even through the economic crises caused by the bankers. But you want to ignore that and talk about the top 20% instead.

Yes the affluent professional middle-classes might well have seen a very slightly greater fall in income than the bottom 20%, 0.1% apparently, but that's hardly surprising is it ffs. In times of severe economic crises you always get the "squeezed middle", it's nothing new. Mostly for the very obvious reason that those at the bottom can't go a great deal lower.

None of that detracts from the fact that for the last 30 plus years, since the neo-liberal experiment started, there has been dramatically growing incomes inequality, something which is well documented but you choose to deny to suit your Tory agenda.

For a more up-to-date assessment (since according to you what has happened for most of the last 30 plus years ago doesn't count) from 6 months ago :

[url= http://www.theguardian.com/society/2013/feb/10/uk-super-rich-richer-as-majority-squeezed ]Shocking figures reveal the growth in UK's wealth gap[/url]

[b][i] Britain's super rich have seen their slice of national income grow from 7% to 10% since the 90s.[/i][/b]

[img] [/img]

I look forward to you continuing the deny the bleeding obvious by throwing in irrelevant side issues. You know you want to 😉

😀 Enjoy QT!

I like the course the top 1% have built, there's a sweet looking step-down when you take off in 1995 and land down in 1987.

I say give them more cash if they build trails like that.

Not sure earnie-lynch's graphic can be right unless I'm reading it wrong. Top 1% £35-100k in 2010? I though that the top 1% would be over £70-80k?

Although the trend is clear. Wage inequality has increased in the last decades. Although the US makes the UK look like a socialist utopia for wage inequality.

The pale green represents the gap, not the income range.

The axes suggest "inflation adjusted" average income over time.

But it's hard to find this graph still on the organisation's website or in its 190 page report. However, their conclusion section and especially page 155 is worth reading as it correctly identifies that not only are these global trends but also that they are far more complex than some may like to argue! Then try the OECD report on global inequality and why it transcends political and economic structures.

EL you might like to re- read my link. The average income of the lowest 20% of the population has INCREASED by 6.9% since 2007/8 whereas that of the top 20% has DECREASED by 6.8%. So your 0.1% difference (with the accompanying FFS) may well need some adjustment!?!

Nice report from the Rowntree Foundation BTW. Shame that Ed didnt include the recommendations on page 156 onwards, he really might have been making an impressive speech then! Sleep well!

Hi Earnie. Thanks. I thought that I was missing simething. Odd way to show a graphic though.

What's not clear to me is exactly what this wage inequality statistic is actually telling us, or what we should read into it.

Wage inequality is telling us just that the gap between the highest and lowest earners has widened. Not all that surprising in boom times but less surprising in times of bust.

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards. Think Scandinavia normally.

EL you might like to re- read my link. The average income of the lowest 20% of the population has INCREASED by 6.9% since 2007/8 whereas that of the top 20% has DECREASED by 6.8%. So your 0.1% difference (with the accompanying FFS) may well need some adjustment!?!

Fair point, I wasn't paying attention and tbh I was thinking it sounded completely at odds with the "squeezed middle" narrative so it didn't make a whole lot of sense.

But it was the 1% I was talking about, not the 20%, which as I have previously suggested can always expect to suffer disproportionately more during a severe economic downturn.

However the relatively short period since the banker's credit crunch does not define what has happened with regards to wages for the last 30 years. There has been growing income inequality during that period so your comment :

[b][i]Not to mention where the best trends in wages are to be found....and under a Tory Goverment - irony 3 of the day! [/i][/b]

is clearly false.

Unless of course you happen to be one of the 1%, in which case it is absolutely true.

A nice video which has been posted before about income inequality in the US :

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards.

Also more stable economies. Inequality creates instability.

Hmmm

Also more stable economies. Inequality creates instability.

Not sure whether I agree with this. The US has some of the highest levels of wage inequality (although China is probably the leader in this now) and as western economies go it's pretty stable.

Although I'd agree that for some countries wage inequality is a major source of instability but I tend to think of such not 1st world.

worth reading as it correctly identifies that not only are these global trends but also that they are far more complex than some may like to argue! Then try the OECD report on global inequality and why it transcends political and economic structures.

as far as I am aware the so called communist nations real problems with wage inequality happened when they had liberal market reforms or basically they have capitalism { china and cuba for example]. The cause it is not complex as it is what capitalism does as a few people have the majority/disproportionate amount of the resources.
We could debate whether this is good or bad but lets not pretend we cannot work out why it occurs

ernie_lynch - Member
Fair point, I wasn't paying attention

Phew, so we can drop the nasty stuff and focus on facts!

But it was the 1% I was talking about, not the 20%

Equally fair point and I would genuinely like to see the updated 1% numbers ie including 2011/12. I am not sure that they are availiabl though hence I restricted my comments to the available, independent stats from the ONS. Why? Because I was shocked by them (see below*). The issue of income inequality is clearly a serious one and no one is disputing its rise and the challenges this brings (although most academic studies suggest that the factors driving these trends are more complex that JY is suggesting!). As I said before, Labour are sensible to use this as their policy platform, one because rightly or wrongly they have lost the earlier economic debate and two, and more importantly, the benefits of any recovery (?) have yet to filter through in wages and living standards. So so far so good for Labour.....

But now the interesting bit....

so your comment....Not to mention where the best trends in wages are to be found....and under a Tory Goverment - irony 3 of the day!...is clearly false.

Is not a fair point. * This is where the ONS stuff is interesting IMO. If you are going to base your political strategy on ideas such as the Coalition or the Tories favour the rich and depress the poor, that tax changes benefit the rich and not the poor then you need to be confident that the independent body responsible for producing the supporting evidence is doing so.

Which comes back to the surprise/ shock comment. The ONS date covering the first part of the Coalition terms in office does not support the Labour narrative and as I said on early threads that poses a risk to the new Labour strategy. If pointing that simple, objective fact out makes me a swivvle eyed RW loon in your eyes, then so be it!!! I can live with that 😉

As an non-aligned observer (!) I am interested that those other RW loonies (?!?) at the IFS are predicting that the current ST trends of reduced income inequality under the coalition may only be temporary. In which case the political battle will be an intriguing one to watch - especially for a neutral!!!

Not sure whether I agree with this. The US has some of the highest levels of wage inequality (although China is probably the leader in this now) and as western economies go it's pretty stable.

It was income inequality, particularly in the US, which is at the very root of the present crises. Poor people make very bad consumers, capitalism needs consumers ..... lots of consumers with plenty of spare cash.

So as wages have been driven down and income inequality has widen in the last 30 years, it comes as no surprise that also in the last 30 years credit has become more and more easily available, specially to poor people.

This did stave off under consumption which is the consequence of low wages, for a while, but the end result of giving easy credit to poor people was always going to be fairly obvious.

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards

This much is clear, but is this correlation or causation? And is it necessarily always the case? And how is it actually measured? If you have low inequality, and everyone's benefitting from a strong economy; then this attracts the super-rich people, inequality goes up, but no-one's actually lost out have they?

Or is it a problem of perception? When you have lots of rich people driving around in their Audi R8s, you might feel a bit crap about your Fiesta. However compared to those struggling to eat, you're doing just fine.

It was income inequality, particularly in the US, which is at the very root of the present crises. Poor people make very bad consumers, capitalism needs consumers ..... lots of consumers with plenty of spare cash.

So as wages have been driven down and income inequality has widen in the last 30 years, it comes as no surprise that also in the last 30 years credit has become more and more easily available, specially to poor people.

This did stave off under consumption which is the consequence of low wages, for a while, but the end result of giving easy credit to poor people was always going to be fairly obvious.

Pretty much.

so like wage inequality is inherent in the capitalist system...who knew.

Also this.

So we have a system that promotes low wages ("good for business") but offers credit to poor people to boost consumption and requires the government to effectively subsidise businesses to be able to pay said low wages, in order to sell stuff to people who can't afford the stuff they sell because they're on wages that don't cover the cost of living (including raising kids)....so the poor people need to be offered credit in order to be able to consume to the required level to keep the system going.

Madness?

Totally in agreement with ernie_lynch about the living wage, I am a big supporter of it. It would allow more people to be able to afford to live and raise families without having to rely on tax credits, top up benefits etc because a lot of businesses will pay only the legal minimum they can get away with, "flexible" part time working and zero hours contracts are on the increase so it's easier for employers to hire and fire at will.

If they properly went after the serious tax dodgers as well, that would reduce the need to pick on the poor. Fewer people claiming in-work benefits (thanks to better, living wages, and a Scandinavian-style subsidised childcare system allowing parents to return to work without crippling costs) would allow more money to be invested helping the long term unemployed, and in job creation, so that the unemployed and the yoof have a future to look forward to, and having babies in order to secure a council flat and a benefit income is less of an attractive choice for young women who come out of education thinking they have few other prospects.

Not a criticism of anyone in work and claiming in work benefits by the way - it's the way the system works, and I would if I was on low wages. I am saying the system isn't right. People should be better off working, and people being in work should lessen the burden on the state welfare bill.

But the CEOs and the shareholders will bleat and lobby the government if they dare suggest that their multi million pound profits should be reduced, so it'll never happen.

^ What she said.