Poverty is a scourge which always needs fighting. I spoke about this on Monday. I was pleased to see the Prime Minister dedicate himself to an all out assault on poverty yesterday. Poverty is relative as well as absolute. The west has long since gone beyond making sure people have the basics for life – enough food to survive, a few clothes and shelter. Our welfare systems are designed to let people afford some of the benefits of the rich society around them in addition to some absolute minimum. The political argument is over how much should people enjoy from benefit payments, who should qualify for benefits, and what is the best way of encouraging and helping more people into work, and then into better paid work.
In my speech to the Conference fringe meeting I sketched a small society. Nine people each earned £20,000 a year. The average earnings of the community was £20,000, and there was no inequality. Total earnings were £180,000. A very well paid CEO of a multinational decided he wished to join this community, bringing his income of £820,000 a year. The socialist was against his arrival, as it would generate a huge jump in inequality.
After his arrival the average earnings of the community leapt from £20,000 to £100,000. Inequality shot up from zero, to the highest paid earning 41 times the lowest. The community now had someone to be jealous of. The total earnings of the community reached £1 million.
Surely, however, the community should welcome his arrival. It would immediately mean the community could collect around £500,000 or more of additional income, capital and sales taxes from the new arrival, to spend on the existing community members and their needs. It would allow them to find new markets for their products and services, or to gain higher paid employment by working for the new arrival. Far from the new arrival being bad news, he would generate more growth and allow the people on £20,000 a year each to earn more and to enjoy more public spending than they could afford for themselves. The inequalities need to be looked at on a post tax basis, not a pre tax basis, and need to take into account the impact of the spending by the more affluent on the incomes of the less affluent.
Poverty is the problem to tackle vigorously. Inequality is very bad if it comes about by the poor getting poorer. If inequality rises because more rich people decide to live here, it can provide money for higher living standards for all.
October 8, 2015
Interesting parable of JR on the dangers of defining poverty as relative. But envy, not logic or reason, is the main driving force of the jealous left. Cameron also, listening to his childish speech yesterday, seems to be very clearly of the left in this regard too. He even seems to think there is a gender pay gap due to discrimination. This is patent drivel, as anyone numerate who looks at the figures can see.
Real poverty is about dysfunctional families with drug or alcohol or other problems, more money is not the solution.
We need incentives to work. For many people the interaction of taxation, the costs of working, the benefit system and over taxation provide no incentives to work at all. Many therefore choose not to, given the daft system that pertains.
The foolish IHT ratter Osborne thinks he can raise wages by law. He is deluded it will just destroy and export jobs.
The way to increase wages is to tax less, have a far smaller government, cheap energy, fewer regulation and leave businesses to make decisions for themselves and create more jobs.
Cameron and Osborne continue to run a huge 5% deficit, piss money down the drain in every direction, increase taxation and the complexity of doing business at every turn. On top of this their green crap religion gives us pointlessly over expensive energy too.
October 8, 2015
Still some very good news. I will no long be subjected to the irritating, affected voice and fatuous opinions of Robert Preston. The BBC should very easily be able to find a far better replacement for him for well under £50K PA. Perhaps even someone with sensible Alastair Heath type of views for a change rather than the usual “BBC think” lefty loon.
Some one who could point out that Cameron’s government is far too lefty for the economy & public good.
October 8, 2015
LL can you remember when the BBCs economics editor has not been a lefty Keynsian? I cannot and I go back as far as Dominick Harrod in the 70s.
October 8, 2015
The more I see of the new IHT laws the more stupid and pointlessly complex they look. Coming in fully only at the very end of this governments term. Doubtless to be changed by the next government very shortly afterwards.
Yet the appalling Osborne lied that he was “keeping his promise”. The promise he made all those years ago was to raise the threshold (each) to £1M. This change is nothing remotely like that and comes ten years too late. After inflation it should be more like £1.2M each now.
October 8, 2015
“stupid and pointlessly complex” plenty of law like that, try the divorce laws for one. or child custody.
October 8, 2015
Lifelogic
Absolutely agree about the complexity and unfairness of the new IHT scheme.
Even HMRC was confused for many weeks, I know this because I wrote to them for clarification.
Why should renters be penalised !
Why should single people be penalised !
Why not a simple £1,000,000 as promised, and make it the same for everyone.
Complexity, complexity, complexity, sure sign politicians are involved.
October 9, 2015
Indeed and the total dishonestly of claiming he is keeping his promise of about 7 years ago when it is nothing like it.
October 8, 2015
No wonder Cameron did not want to say anything of substance on the EU. Preferring to pontificate on gender, gay and Elizabeth “discrimination”. His EU long grass strategy looks more and more absurd by the day. How will he choose to RAT on his referendum promise this time?
http://www.telegraph.co.uk/news/worldnews/francois-hollande/11917960/Back-an-integrated-EU-or-quit-Francois-Hollande-warns-Britain.html
October 8, 2015
Listening to part of Eural’s speech, in which he went on about discrimination and opportunity in such an emotional way, it struck me that here was a man who had a big advantage over most other citizens, who would possibly have made a much better job as Prime Minister. This is his ability to speak for long periods and sniff out whatever may be popular to speak about.
There is in fact a discrimination and lack of opportunity, which damages the nation, against ordinary people, who may be shy, unable to speak publicly, have family commitments or just too much common sense to want to go into politics.
In order to gain the talents of such people, and have a better governed country, it would be necessary to reorganise parliament so that decisions could be made by written debate and elections opened up to non political candidates. If this were to be done, then sensible politicians would emerge, while empty headed BS merchants would be left to get a job selling dodgy secondhand cars or some other suitable occupation.
October 8, 2015
A bit off topic but it deals with the working poor. It was nice to see a contributor to a lefty newspaper get hauled over the coals over on how she treats her staff. Like any ruthless capitalist she keeps their tips for herself. I wonder what happens to a tenant who gets himself into arrears with his rent, especially if its due to sickness and unemployment, and his landlord is a Labour MP?
October 8, 2015
Lifelogic You are absolutely spot on when you talk about cheap energy and yet today I learn that the DECC is to grant a further 9 months grace period to the developers regarding the RO scheme. If ever a policy divided the rich from the poor then this must be top of the list!! Rich landowners and foreign developers will get richer and must be rubbing their hands with glee while the rest of us minions pay. Just about sums up the morals of our politicians today.
http://renews.biz/96806/decc-extends-grace-period/
When are we going to get serious about cheaper energy and stop the blatant robbery from the poor? Green issues are killing this country and its people both through poverty and ill health.
October 8, 2015
‘Real poverty is about dysfunctional families with drug or alcohol addiction etc’
What drivel.
Pensioners are one of the biggest ‘poverty group’ who would love to be able to drink and drug themselves to death. According to Age Concern 1.6 million pensioners live in poverty, (as defined by govt. which of course you won’t agree with ) and another 1.2 million on the brink of poverty. A much bigger total than the unemployed list. 25,000 will die of the cold this winter because they do not have enough money to light the fire or put on an electric heater. Hows that for poverty?
We have the lowest pensions in the civilised world and we have some of the meanest employers who squeal at the thought of having to pay out even the modest living wage Osborne proposes. Most ‘Company Directors’ of the big companies are no more than employees themselves anyway, even though they belong to the idiotic anti british I.oD. and CBI. and would like their businesses to be for ever supported by the state.
I never saw a tax that I like to pay, but if I am in the fortunate position of having to pay IHT, well so be it and thank God I will not be one of those this year with ice on the inside of my windows.
October 9, 2015
Yes the state pension is very low, (unless you have a gold plated state sector or MP’s one on top) but it is topped up with many benefits for those without assets or other income.
I agree that fuel cost are absurdly high, due to the global warming (the huge exaggeration of) religion and should be reduced. Being warm is indeed very important for the elderly.
October 10, 2015
graham146: “Pensioners are one of the biggest ‘poverty group’ who would love to be able …..”
Pensioners of course, are the only group who have had sufficient time to make preparations for their old age, and the poor ones maybe didn’t make sufficient preparation.
True the odds are stacked against them. Unless you are one of the privileged group like MPs for example, who can index link their pension provision at the tax payers expense, then if you are saving over a life time to make provision for your old age, only to find that what you may have saved up has been devalued by 9000% you may have just cause to be disenchanted. On the other hand if you have made no provision at all, instead choosing to spend all your funds in the present, well then … it’s hardly surprising that your income is little short of a pittance.
October 8, 2015
I see your argument. Of course it is only a sketch of a small society. One can point to lack of depth and shade of the characters. I am sure you can JR. A £820,000 a year CEO out of the goodness of his heart decides to give….etc.
One forever hears on usually American business programmes how this or that multi-millionaire is using his money to create jobs and prosperity for the Country. One has to watch the Simpsons and the the stereotypical capitalist character of Mr Burns to realize most yanks despite their business programmes are not so naively barking mad.
Surprisingly many Americans including the very rich have never actually so much as been on holiday outside of their country let alone set up home on another continent. It makes me wonder though about British capitalists and people of plain wealth. It seems many do not actually live here. Our countryside is fenced, managed,controlled . An agricultural factory. No genuine countryside. If the wealthy lived here, they would ensure the countryside did not look like a factory and was not a factory. Who would want to live in a factory? Only poor slaves. That is what we are, however well-fed.
October 8, 2015
A nice tale Mr Redwood but many will imagine the CEO paying less tax than the rest of the members of the community. I do not think that the contribution to the tax take made by such individuals is imagined to be as high in reality. The BBC and friends seek to deceive the electorate in such matters.
October 8, 2015
Indeed the £820K CEO cannot take the money with him in the end. He will be paying far more tax than they others put together already. The rest he may spend (perhaps on private schools and private medical care for his family – so saving the state yet more) or on cleaners, builders and gardeners, or perhaps he will save it at the bank or invest in local businesses or building properties for people.
The bank might use the money to give a mortgage to help others and the business might well employ them.
Win, win, win for everyone, but the envious, jealous, selfish, green eyed, lefty twits.
Not that lefties Cameron or Osborne would make this highly moral argument.
October 10, 2015
Christopher huston: “Surprisingly many Americans including the very rich have never actually so much as been on holiday outside of .. ”
What bearing that has on anything is difficult to imagine, but given that ‘their country’ spans a whole continent, where you can bask in the Californian sun, ski in the Rockies, walk in the desert all without having tiresome customs, immigration, passports or foreign languages, the statistic is not really that surprising even if true.
Christopher Houston: ” or set up home on another continent ”
The number of people who have “set up home on another continent” must be tiny as a proportion of any population group – another meaningless assertion masquerading as fact.
Christopher Houston: “One has to watch the Simpsons .. ”
Ahh! a cartoon. Nothing like solid fact to bolster one’s prejudices.
October 8, 2015
Inequality is in any case greatly exaggerated. It’s simply not true it is increasing. At a global level the collapse of communism/socialism and the use increase in trade ad GDP as a result of emerging markets entering the global economy has led to a decrease in global inequality. Capitalism has lifted 3bn people out of poverty. Even in the UK – which on a wealth basis is not particularly unequal anyway (the top 10% own c. 55% of wealth versus c 65% in countries such as Germany and some Nordic countries) – if there has been an increase in inequality it’s due to the phenomenon you illustrate above. The difficult truth is inequality isn’t necessarily a bad thing of itself, what matters is maximising proposersity and making sure as many as people as possible benefit from it.
October 8, 2015
Richard 1
You are totally correct. If we didn’t have Cameron and his centre left big government agenda we should be pushing a small government, free market solution which as you say is maximising prosperity for all, not closing statistical averages
October 8, 2015
At least he cannot hide behind his fig leaf, Nick Clegg, anymore…. and what you hear is what you get…. You all know that this is what you would have got in 2010 if he had won a majority then!
zorro
October 9, 2015
Exactly.
October 8, 2015
Indeed the difference between someone on benefits with rent paid, free prescriptions, council tax, child benefit and the rest and a family with 60K of income before tax is often virtually nothing. Furthermore the working family has all the travel cost of working and little time.
Not convinced by Cameron’s “we have the worse social mobility in the World” claim yesterday either.
October 8, 2015
Where do CMD’s greencrap “Tories” stand on this proposed outrage?
http://new.spectator.co.uk/2015/10/a-supreme-court-justice-and-the-scary-plan-to-outlaw-climate-change/
October 8, 2015
Your example is even more simple.
Even if the new arrival does not dispose of any of their income locally, none of them are worse off than before.
What perhaps changes, is their attitude.
October 8, 2015
Of course the new arrival might decide to dispose of their income locally by, for example, buying up properties at a price that those already there can’t match.
This could distort the property market upwards to a level where those already there can no longer afford to buy and have no hope of ever doing so if they weren’t already on the property ladder, especially if the supply of new housing always falls short of demand, so the situation never resolves itself. I can see why peoples’ attitudes might change in such a situation.
October 8, 2015
brilliant comment
and if you cannot get your kids into a decent school or access basic healthcare then attitudes also concentrate
October 8, 2015
Peter
Yes I can understand your point, but what you miss is that those who are already there will get more money for their house than they would have done if that person had never arrived, so all originally present would be better off financially in the situation you describe.
Only new outsiders would be paying the new higher price you suggest.
October 8, 2015
No current renters hoping to buy are also hit.
October 9, 2015
Ian
Yes again I understand the point, but pray tell me where this magical area is, where people would refuse to sell at the best price, or where the purchaser deliberately pays more than they need to.
Surely the problem in the past has been too higher lending ratio being offered by the money lenders, not the people who actually have the cash !
October 9, 2015
Alan, Iain, of course you are both correct.
Those who already owned will do very nicely thank you very much for no effort of their own, and those who were not yet owners will see their chances of doing so disappearing.
This may not just affect attituces towards the newcomer, but has the potential to cause friction between the existing incumbents.
(It is also not a theoretical scenario in parts of the UK.)
October 9, 2015
Peter Parsons
This is typical poorly thought out rhetoric. Someone rich enough to buy up premium rated property in a premium rated city is hardly likely to have much affect on the average persons buying habits. Unless you seriously think that your average oil rich oligarch is into buying 3 bed semis in Dartford
Iain Gill
Please let me know exactly how many ordinary people would be attempting to rent 8 bed Hamstead properties & are being gazumped by oil rich arabs etc.
You are all of course talking specifically about London and maybe a few dozen properties in the stockbroker belt.
Please explain why an oligarch paying say £10 million for a Highgate mansion or Kensington apartment complex has any effect on semi detached or housing estate detached houses in the home counties, let alone the rest of the country where in some regions average house prices are £140-£150 k
Blimey the lack of reality is staggering.
October 9, 2015
By the way I just found a brand new 2 bed terrace house for sale for £55,000 and a 4 bed semi for £99,000 in Middlesborough or perhaps you’d prefer a 2 bed bungalow in Essex for £99,000 better snap them up (words left out ed)
I won’t put the links up, but they are on Right Move
October 10, 2015
libertarian, in the original scenario the only available properties are in the community, so where else would the incomer buy?
I do not suffer any “lack of reality” in the cost of getting on the property ladder. I see it all around me. When properties at the very bottom of the market cost 7-8 times average (median) earnings (as is the case where I live), average workers are priced out (and commuting to a job in the area I live from either from Middlesbrough or Essex isn’t exactly a practical solution). I know I am fortunate to have got on the ladder before prices got as crazy as they are now. I have friends who are not so fortunate despite earning good salaries. You might not think that having some rich non-British national buy an expensive home has an effect, but it does have a ripple effect all the way down the market.
October 10, 2015
Maybe the rich incomer could build a new house.
Adding to the total number of properties and creating employment for local people.
October 10, 2015
Peter Parsons
Sorry but thats nonsense . If you are talking about ordinary incomers ( be they migrants or from other parts of the UK ) then they are in no way paying over the odds to buy up properties as you put it.
If you are talking rich immigrants then I refer you to my previous post
There are properties all over the UK that are affordable. Way back in the 1970’s ( yes theres nothing new about this at all, the property market has always been like this ) I worked in London but couldn’t afford the £19k price of a flat so I had to MOVE and COMMUTE. It is now very possible to buy reasonable priced housing within an hour or so of London
On to the other issue you raise and here I agree to some extent. Buying a house IS an issue for first time buyers but the there isn’t enough housing brigade are wrong, totally wrong. Its NOT a shortage of houses its a shortage of mortgages. This has been caused because too many people people screamed ( totally erroneously) that the banking crash in the UK was caused by sub prime mortgages , it wasn’t .
My youngest son lives in a house that he rents, he would like to buy it, the mortgage is cheaper than the rent. He can’t get a mortgage because he can’t raise the 20% deposit. So all those holier than though political types ranting about banks killed the market.
Where I live now ( Kent) our county town has had nearly all the office space converted to flats, along with 11,000 new homes been built over the last few years. All available at reasonable prices all within 40 minutes of central London. Mostly either empty or bought up by buy to let investors. Oh and nowhere to work locally as us businesses no longer have access to local office space.
House prices in sought after places ( location, location ) will ALWAYS rise in value as there will always be a limited supply.
What needs to happen is to encourage more people and businesses away from the congested South East into affordable housing in the rest of the country.
We need mortgages and they have to be 100% and here’s why. The government are manipulating the interest rates. When I was younger there were wall to wall ( excuse the pun) Building Societies, most of us obtained our mortgages through them. We saved for a few years ( at one point I was earning 10% interest on my BS savings) scraped together a small deposit and as a saver of 2 plus years we got a BS mortgage.
Now there is NO way that a first time buyer can effectively save for a deposit , with virtually 0% interest paid on savings.
That is the problem. Yes London and some South East properties in nice places are very very expensive. So are Ferraris so buy a Fiesta first
October 11, 2015
libertarian, if you don’t believe incomers ever price locals out of a housing market I suggest you look at the effect they have had in communities in places like the Cotswolds or the south west of England where the younger generation are now forced to leave because there is no longer any housing they can afford in the area they gre up in. It is all very well saying “commute” but that costs money too (c. £5000 per year for a season ticket to London from where I live), which represents several months take home pay for the average worker. For someone to get on the housing ladder where I live needs a salary something like 50% above the national average plus a sizeable deposit and there aren’t that many jobs going which pay that much.
The supply side of the housing market has failed to keep pace with the demand side under governments of all persuasions. Fix the supply side and the market will naturally correct itself. Of course, no politician will ever do that because of the impact on the perceived wealth of existing property owners and the number of votes that would lose them as a consequence.
October 8, 2015
They are not worse off to start with but they may become so if measures are not taken to prevent the richer person from establishing monopolies or gaining control of the government of the community .
Sadly there is evidence for both in the U.K. – the rich monopolise the land and the rents that generate . They own the Govt and instruct it to enact policies such as restrictive planning systems , expansion of credit and mass immigration which enrich them at the expense of society as a whole .
They get the Govt to establish a legal system which works in their favour .
It becomes like a monopoly game where the rich get richer and once the poor start falling behind there is no way back .
Good quality regulation is essential to prevent a slide backwards towards feudalism and serfdom .
Sadly the Conservatives claim regulation is red tape and Labour claim red tape is regulation .
Consequently we end up with a lot of red tape which stifles competition and very little regulation .
October 8, 2015
But statisticians will consider that they are in poverty because they are earning less than a certain percentage of the average income for the community.
October 8, 2015
The parable is incomplete. Instead of there being an extra half a million pounds spent on the community a government will arise to administer the community.
That government will decree that monies should be spent on their friend’s infrastructure projects, a supra community federal club should be joined and membership fees paid, anyone from that club will be welcomed to live whether contributing or not and the government will also give away large portions of the collective wealth to external communities deemed in need.
The CEO will decide his money is being spent poorly and find ways of not paying tax on all his income but government will still expect to spend the same amounts. The other less wealthy members of the community will be expected to contribute more to make up the difference or the community can become more populous to generate income.
The community becomes more dissatisfied.
Governments cause inequality.
October 8, 2015
Trouble is the rich man coming to UK usually brings a whiff of scandal with him i.e. where did his money come from or how did he manage to get a British passport. While for the rest an undiscriminating immigration policy just means, with regard to wiping out inequality, we are just setting ourselves up for sisyphusian task.
October 8, 2015
Spain has traditionally been a place where wanted criminals and retired British business people retire. Naturally, when they require serious health care, even private health care, they have to get on a plane and get back to the UK. Spain is top of the list for medical staff leaving for pastures new, especially to the UK. So the wealthy and criminally minded of the UK swap their sunbeds and welders’ goggles and come back to England, tail between their legs, so their burned eyes and skin can be salved by migrant Spaniards.
There is more than meets the eye to equality and poverty. Perhaps once British patriots decide to live in Spain they should lose their NHS cover and access to medical attention even private in the UK: all medical workers here are in effect part of our national wealth. As a gesture of International goodwill and assisting in addressing poverty in Spain, Spanish health workers could be banned from entering the UK to work.
There can be no morality by the theft or borrowing of another nation’s health wealth. The EU must learn to behave for the good of all its members and not just the richest.
October 8, 2015
Most do not need to return as there are long agreed reciprocal arrangements for citizens of EU member states.
If you fall ill and have the EHIC card you will be well treated in countries like Spain.
Your wish to ban those born in the UK who have decided to live in Spain from ever accessing any treatment in the UK would be totally illegal under EU law.
And quite right too.
October 8, 2015
What a load of nonsense. Based on eight years residence in Spain I can assure you that the Spanish health service is excellent, and their private health care costs a fraction of what it might be in the UK.
There is a reciprocal EU based scheme in which the NHS pay for health service costs of UK nationals resident in Spain which works in reverse for any Spanish nationals resident in the UK.
I am not privy to the social circles you may move in, but rest assured that not all UK citizens in Spain are either wealthy or criminal. A further bonus of residence in Spain are the number of policemen one can see daily, all ensuring that their communities make serene progress through life. I expect to spend most of November in the UK where I will be lucky to see any.
While you lack the courage or means to move and enjoy all the benefits of such as Spain, not least of which are the Spanish themselves, you can continue being cared for by all the other foreign health workers the NHS employs. Consider yourself lucky if you get a Spanish one, you won’t even have to learn the language.
October 8, 2015
This used to be the case. These days the healthcare in Spain and the South of France is much better than is available here for most stuff. Yesterday I spent an afternoon with a relative experiencing again the sheer rubbish service from the NHS and was disgusted that we have to put up with here. Compared with how the same condition would be treated in Spain we are very far behind.
October 10, 2015
Iain Gill
You are absolutely spot on correct.
far too many people in this country prattle on about the NHS being the envy of the world ( it isn’t ) they have no knowledge or idea about other health systems. They believe there are only 2 models NHS or American paid healthcare , they don’t understand that privately provided health can be provided free at the point of use as in many European Countries or can be mixed. According to the World Health Organisation France has the worlds best health system, followed by Germany and little Singapore in 6th place. The NHS is way way down the list. We should be ashamed of the NHS especially re cancer treatment , not lauding it as the greatest thing since sliced bread
October 8, 2015
Occasionally at a hospital or at my dentist I have to confirm that I have lived in the UK for at least 1 year – I don’t know the the official reason for this or when it was established.
October 8, 2015
Its because a British citizen who has been working in Australia or USA for a few years has less/no rights to NHS care, despite him and his families having paid in the majority of their life, than a European national who rocks up having never contributed.
October 8, 2015
What happens if the people coming are not so much rich as enterprising and/or skilled? What is the effect on employment for indigenous people? And what is the prognosis for the impoverished countries they have left behind? Will it not be worse if they lose their best and brightest?
As for genuinely rich foreigners living in Britain, a limited number are welcome – at long last giving meaning to the mantra “Immigration has enriched us all”.
October 8, 2015
Just for a moment I thought you had grasped the physicist’s concept of a ‘test particle’.
But you have considered an open system which has simply imported riches from elsewhere.
Your CEO needs another community to provide his income of £820,000, so your community is indirectly taxing another which is ore economically successful. Another way of looking at your model is that nine immigrants have arrived in his rich country and expect their standard of living to rise without further effort on their part.
Alternatively, consider your community closed. Then, unless your CEO actually has some economic skill apart from organising the income-generating activities of others, the overall economic output of your community will be much the same as before; your CEO’s income will be generated by some form of quantitative easing; inflation will reconcile the small change in real activity with the large change in the income figures. Indeed unless your CEO reorganises the efforts of the other nine in a more efficient way (rather than merely introducing time-sheets, record keeping and other restrictive paperwork) their salary figures will go up substantially, but their real incomes will fall as they support his lifestyle which absorbs more than any one of theirs.
October 8, 2015
Someone pays the CEO that because they think he is worth it to them. The world is an open system and you can indeed import riches from elsewhere. You can also import skills from elsewhere that might, for example, enable you to find gas field, farm more efficiently or build building more cheaply or endless other things or value, thus adding value all round.
Perhaps a better example might be where the rich person came with £10Million of net wealth, giving him an investment income of say £820K.
We had a very good system for encouraging exactly this, the NONDOM systems that Osborne has wrecked at great damage to the economy. He needs to replace it with a new named system and sliding scale depending on years of residence.
October 8, 2015
“Someone pays the CEO that because they think he is worth it to them. The world is an open system and you can indeed import riches from elsewhere.”
I quite agree. I was simply pointing out that JR’s ‘small society’ is not as small as he makes it seem, and if you do make it so you can see other effects at work.
October 8, 2015
The poverty industry invented “relative poverty” to ensure that they would never be out of a job. People should not expect to get something for nothing; there needs to be a reconnect between an individual’s decisions, actions and consequences otherwise we end up with a nation of Mick Philpotts.
And before the bleeding hearts start whining, the elderly and disabled are obviously exempted from forgoing; anyone who has worked and contributed for most of their life should expect some comfort when they become seniors, and I disapprove most strongly to the niggardly attempts to apply means testing to paltry benefits such as Christmas bonuses, winter fuel payments and bus passes.
And finally, free TV Licences should not be funded from the welfare budget, the pensioners should be merely exempted from liability for a TV Licence.
October 8, 2015
Bob, my preference is to let people keep the lion’s share of their income during their working lives. Resulting increased saving would mean there would not need for ‘paltry benefits such as Christmas bonuses, winter fuel payments and bus passes.’ Everyone should be exempted from paying the TV licence. It should be made voluntary.
John’s adoption of the relative definition of poverty – really inequality – leads to some paradoxical conclusions. Imagine that we take the present average UK wage as £25,000 a year and assume UK output doubles roughly every 25/30 years, as it has for the last 200 years or so. Within the next 100 years, average wages (in current prices) will comfortably reach £200,000 a year. So, someone with an income of £100,000 could then be classified as poor and Lord Sugar would be even more right than he already is.
A further problem with these statistics is that they are snapshots of people in a society at a particular point in time and do not estimate a person’s lifetime earnings. A person in their twenties generally earns less that an person in their thirties. A person in their thirties generally earns less than a person in their forties. There is a natural ‘inequality’ built into the income of a person at different stages of life. Statisticians need to look at the lifetime earnings of individuals when they would find that much present inequality disappears.
October 9, 2015
Quote “Imagine that we take the present average UK wage as £25,000 a year and assume UK output doubles roughly every 25/30 years, as it has for the last 200 years or so.”
Unfortunately it appears that politicians are making this sort of optimisitic assumption and using it as justification to pile up unfunded liabilities for future generations .
Earnings profiles are a different in different industries . As someone working in software development I hit my peak at aged 40 years . Eight years later I make 8% less in nominal terms which equates to perhaps 40% less in real terms .
If you work in the public sector your earnings profile is different and is unlikely to fall .
October 8, 2015
As you say “The poverty industry invented “relative poverty” to ensure that they would never be out of a job”. It is patent nonsense.
Just as charities nearly always exaggerate the scale of any problem, yet rarely do very much that would help to solve the problem. Spending most of their time lobbying governments and on PR.
October 8, 2015
and fund raising of course.
October 8, 2015
Dealing with poverty is far easier than dealing with inequality. Both however are fraught with many almost intractable obstacles. The basic obstacles are that we are all born with two main driving forces; survival and procreation. We are sociable because that helps us achieve both but at the same time are competitive so as to gain the greatest advantage to also achieve both producing a dichotomy. Nature also endowed us with both selfishness and a degree of altruism. The former being more natural to us than the latter.
No one is equal to the next as we have different abilities, physics, views and needs so it is going to be extremely difficult to have true inequality it may come in time but it will be a boring world when it does as we would be all identical. I doubt we could survive in such a world as there would be no competition the driving force that makes human progress possible would be gone. Equality of opportunity is relatively easy to obtain but making people use it wisely or even take that opportunity is not.
Wealth not compassion(the left would have us believe it is the other way around) of a community dictates how far we can go in tackling poverty and inequality. It however becomes a never ending battle as wealth increases the measurements change and the goal post therefore are continually being moved and what defines them are reinvented quite often distorted in the process . Of course we must continue to strive to improve standards of living and to improve equality by giving access to impartiality, quality education that teaches us how to think not what to think(brainwashing is one of our greatest crimes we do it to our children and keep do it ad infinitum) and use some of our surplus wealth to help people to help themselves(giving it away in a largess except in exceptional circumstances does nothing constructive only motivates a culture of entitlement and dependency as our current welfare system attests).
October 8, 2015
Huh!
In Mr Cameron’s brave new world, the person on £180’000 would take a 6 month sabbatical, bringing their income to just below the £100K threshold. They’d take maternity and paternity leave, bringing their net contribution to the same as the others.
Such is the world of institutions like the NHS, BBC and so on.
Unable to get an appointment at the local GP surgery for 2 weeks? Look at the list of GPs and see how many are doing just that…
October 8, 2015
There is no mystery as to why the statistic for inequality has widenened.
We have encouraged tens of thousands of the worlds most wealthy individuals to come and live here.
At the same time we have had the largest number of new arrivals in this country’s history, some estimate it as being several millions, mainly from nations much poorer than us.
These two things have skewed the figures at the top and bottom of income scales whilst standards of living have continued to rise over the last fifty years considerably.
There is only one way of reducing the statistic for the numbers said to be in poverty and that is to reduce our population.
This is because poverty is measured as the number of people who live below the average wage.
The larger our population becomes the more people there will be below the average.
By that strange measurement we can say that there is more poverty today than five hundred years ago.
October 8, 2015
The rich employ tax advisors etc to minimise paying. That is why we read of massive global companies paying less tax than the cleaners on minimum wage. Who benefits then? The rich only get richer – -they will do everything they can to ensure it stays that way.
Also, unless something fortunate happens for me, I will undoubtedly be eating, this year, something similar to last years xmas feast, which was a crisp sandwich, for my xmas dinner. I assume all those illegals nicely tucked up in their warm hotels, with free electric, free water, free tv, probably free wifi, no bills to pay at all . . will be having a culturally sensitive lunch provided- -all as a “punishment” for breaking into the country. Clearly pays to be a foreign criminal and come to this country doesn’t it?
October 9, 2015
Bigneil – Rather like the guy on QT who stormed out saying that he had to look for an arch to sleep under (because immigrants had taken all the rooms) I think you’re stretching things a bit.
It doesn’t help the cause.
October 8, 2015
You explain the situation very well. For me the key to existing poverty and inequality is education. Apart from a list of good GCSEs, education is the guidance to aspire, to open up otherwise closed activities in sport and pastimes that I enjoyed as a pupil.
It is a fact that politicians of all colours have spent much of the past fifty years either deliberately destroying such opportunities or doing so out of ignorance by default. I therefore praise CMD in his desire to lift education from the shackles of local government and vested interest groups, be they religious or political.
I was lucky to have enjoyed education at a time when you could partake of the very best irrespective of ones parents income. Now my old school perpetuates this ethos by asking old pupils to charitably contribute to a fund that ensures that those who are able enough, but lack the finance, to partake of the education. The scheme is well on the way to financing the education of one hundred boys from a total of eight hundred. The education opportunity is not just a matter of getting into Oxbridge which many do, but being able to partake in the arts, sport, hobbies and in my case learning to fly.
If every public school in the country did the same there would be many fewer left behind to the vagaries of state education which I accept the present government is doing it’s hardest to improve. Very much within my desire for change I include vocational education and apprenticeships. They are just a different route to the same end which is success and a degree of independence in life.
October 8, 2015
Off-topic, I see that Hollande has just proposed an alternative form of question to be posed in the EU referendum:
http://www.telegraph.co.uk/news/worldnews/francois-hollande/11917960/Back-an-integrated-EU-or-quit-Francois-Hollande-warns-Britain.html
“Do you really want to participate in a common state? That’s the question.”
Not a common MARKET, let it be noted, but a common STATE.
A good question, because whatever “reforms” Cameron may claim to have negotiated it will still be the case:that as far as other EU leaders like Hollande are concerned:
“We need to keep our eyes on the long term, for the federation of nation states, which must remain our horizon.”
October 8, 2015
” I sketched a small society. Nine people each earned £20,000 a year. The average earnings of the community was £20,000, and there was no inequality. Total earnings were £180,000. A very well paid CEO of a multinational decided he wished to join this community, bringing his income of £820,000 a year.”
Say this was a totally isolated community which had its own currency – say we call it the crown. When everyone in the community earned and spent 20000 crowns everything was in balance. The community traded with neighbouring communities and that trade was in balance too. The National Debt was minimal -it was just enough to cover the savings of these modest income earners.
What effect does the arrival of a single very rich person have on the economy? The currency value of the crown increases. So whereas the members of the community could previously sell their products to other communities they find they can no longer do that. The skyrocketing currency has priced them out of their traditional markets. On the other hand they can now afford to buy many more imports than previously which does please those older people who had some saved money. It doesn’t please those young people who didn’t and they find they cannot find work to start their careers in a depressed economy.
The community government now have a trade imbalance to deal with. The residents find that although the new arrival is rich he doesn’t actually spend it all. He buys somewhat better food than they do. He buys an extra pair or two of shoes and and better car or cars but it isn’t anywhere near proportionate to his total wealth. When he does spend he spends on property and land which he fences off and denies the public access . So whereas at one time the ordinary people on the island had access to all of it, they find, as time goes on they find they become ghettoised . He buys up government bonds too which increases their National Debt. The community need that money as they are no longer exporting as they used to.
Let’s assume that the society is slightly larger than originally supposed. We can call it a country and give it a name – Redwoodland. As this is a thought experiment, we can give it a TV station and a government. The new arrival becomes worried when the TV station starts to question if it was really such a good idea to allow such a single wealthy person to buy up large parts of their island. He puts a stop to all that by buying up the TV station and installing a management adopting a different editorial line.
The parliament of the island too comes under pressure. He uses his considerable influence to discredit those politicians who aren’t quite to his liking and ensure the government consists of those who are.
This is exactly the mistake that is being made in Britain too. The ultra rich, many of whom have been exiled from their own countries over the means used to acquire that wealth, aren’t coming to share it. They want to extend their power and influence over the less affluent members of the community.
October 8, 2015
Your logic makes it beneficial to exile all the rich away from this mythical land.
However it seems nations who have some wealthy citizens together with progressive taxation seem to provide a better society than those who have tried equality as a solution to eliminating poverty.
Your assumption that everyone earns 20,000 crowns for ever is a socialist fantasy that is defeated by human nature.
October 8, 2015
Interesting analogy of wage distribution . When the norm was £20,000 the aspiration of the community would be £20,000 , but , when a much higher earner was introduced into the community , the aspiration changed and further ambition entered the relationship . Goals in life do not begin at the bottom , those who have the skill and drive look to the top and try to get there .
What I despair of is someone who has all the attributes of success and the opportunity to thrive , falls by the wayside – often it is the result of the poor leadership they are exposed to or , an unwillingness to face challenge . Communities are not always balanced and have to rely on the strong to keep it heading in the right direction .
October 8, 2015
So why are you causing poverty?
Poverty is a lack of money. In particular wealth. If you have capital, you can always turn it into income.
Mr Median pays 5K a year in NI. 97% of NI payments go on paying state debts, paying off the accumulated pension debts. Actually, paying off pensions isn’t quite right, since that debt is increasing.
So Mr Median gets no services for his payments. He gets no wealth. At the end of the day, he gets a share of the state’s pension debts. 400K of debt. His pension is only worth 105K.
So the state has made Mr Median poor in his old age. Destitute because he can’t live off 6K a year.
Perhaps that’s why you are so anti people knowing that you’ve lumbered them with a 400K debt?
Still waiting for that number. Not looking too good. AA Corporate bond rates have dropped, so the debts gone up. [Silly accountants using an asset rate for a liability], but that’s the law.
FRS17 has gone. FRS102 is now the accounting standard. Obligations have to appear on the books.
October 8, 2015
Re “The west has long since gone beyond making sure people have the basics for life – enough food to survive, a few clothes and shelter.” Not true at all. In this country there are plenty of single people, especially men, sleeping rough. Face some tough circumstances as a single bloke the state will not respond well and help at all, no matter how many years you have paid into the system. If you are lucky enough to find a bed for the night it will often be in a shelter where you are surrounded by drug abusers and petty criminals and your belongings will disappear overnight, and you will get beaten up. Lose your job with a family and you may well end up shuffled around different bed and breakfast accommodation with the kids being forced to change school every few weeks. I really think people in your position should be more careful how you phrase what you are saying.
Cameron doesn’t mean what he says, this is clearly demonstrated by the fact he has surrounded himself with ex public school people while in power, indeed he doesn’t appear to have much experience or contact out into the rest of the community outside that bubble. As ever actions speak louder than words.
Your small society model is ok, and most people don’t mind when that rich individual has gained the money from their own hard work or talent and started off with broadly similar chances, or even if they inherit the family home from the parents. But what Mr Gove has been saying about the undeserving wealthy this week is true, there ARE large number of people who flit into Davos every year and make world changing decisions who themselves were born with an extraordinarily large silver spoon in their mouth, and many are of a very poor calibre who would not stand a chance in a proper meritocracy. I agree with Gove that the world does have a layer of undeserving rich and that does harm all of us. And indeed in this country we are all familiar with some of the “nice but dim” output from our public schools and universities, who wouldn’t get a single exam pass if they had been through the average state school, these people end up in senior layers of society while being far from the best choices for us collectively to succeed.
And remember money is just a token, it really represents a percentage of the community assets. When the poor people find their sons being killed in the army fighting to protect the community, and the rich folks children are not, and similar, then money is an inadequate way of counting worth.
October 8, 2015
The fact is John yours and Labours mass immigration policy are impoverishing the rest of us. Per capita is down. Tax receipts are down but the population is growing by over 300000 per year. House prices are rising, doctors appointments take 2 weeks and a large proportion of English kids can’t get into their local school.
Meanwhile the fat cats of large countries are provided with taxpayer subsidised staff.
It’s all going to end badly. I read Shultz speech. He was adamant that we should sign up to a USE or leave. Where does that leave CMD ‘ S faux negotiations.
Reply If the rest of the EU offer us nothing it makes it easy – we just leave.
October 8, 2015
Which Schulz speech? Can you provide a link to the speech, other than this speech he gave yesterday to welcome Hollande and Merkel to the EU Parliament:
http://www.europarl.europa.eu/the-president/en/press/press_release_speeches/speeches/speeches-2015/speeches-2015-october/html/opening-of-the-solemn-debate-with-president-francois-hollande-and-german-chancellor-angela-merkel
October 8, 2015
Denis. Was reading from Open Europe on the net. Not at home so can’t give a link .
October 9, 2015
It was Hollande, not Schulz.
October 8, 2015
Well Cameron seems to be asking for nothing substantive at all. Certainly not on movement of people, he just seems to want to restrict benefits for a short period. What use it that. Not that he is telling us anything at all of course. Doubtless why he came out with all the lefty discrimination drivel as a distraction technique.
Which he could do now, but hasn’t.
October 8, 2015
Well they clearly will offer nothing of substance. Not least because Cameron is not even asking for much. But when they do will Cameron try to put lipstick on the pig and sell it to us, or will he do a volte-face.
October 8, 2015
A number of people have already pointed out some flaws in your scenario, JR, so I would like to raise a different point – what would happen if the wealthy tenth member did not join the community, and it stayed with just the nine members it started with?
Well, having heard him say it from time to time I’m sure my father would have provided an answer along these lines: if you divided everything up equally, then after a time it would be found that some had wasted their share while others had been more hardworking and prudent and were now better off than they were, and better off than the feckless.
And as a semi-skilled worker whose family circumstances had made it necessary for him to leave school at fourteen he would not actually resent the reappearance of that inequality, but would see it as a natural consequence of the differing characters of the people, and in many cases more so than a consequence of their differing opportunities.
However while that view would have been very widely seen as just common sense back in his day that no longer seems to hold, thanks to the likes of Corbyn, and now if one person is earning more than another then we have various (usually state-funded) experts to tell us that must be the result of one or more forms of social injustice, and all down to “nurture” and nothing at all to do with inherent “nature”, and the preferred solution is to find ways to drag the first person, the upstart, down to the level of the second person.
That was, of course, the theory underlying the cross-party decision to destroy the best state secondary schools in the country and try to ensure that all our children would be dumbed down to the same lower level, a theory which is only slowly being abandoned.
October 8, 2015
I watched the TV programme about a rail journey from Bangkok to Mandalay. If you want to see real poverty watch this!
We have poor people in this country, but please don’t describe them as in poverty. Of these, a fair number seem to be poor because they can’t manage their money – when you see them on TV they all seem to have things like smart phones and other luxury goods and then complain that they have to visit food banks.
The only people possibly in real poverty in this country are those who for some reason or another have been missed by “the system”, who don’t work and for some reason don’t get benefits to which they might be entitled. Possibly more effort could be expended in finding them although some will decline help like the tramp who appears locally late evening every couple of months, sleeps in the church porch, is gone by morning and refuses any help.
No, the only poverty we have of any significance is that produced by statisticians as your example illustrates. All the people in your sample community are suddenly in statistical poverty following the arrival of the millionaire, although in practice their situation hasn’t changed one iota.
October 9, 2015
EP
As usual, a very straightforward and sensible comment.
Your last paragraph sums up the case perfectly.
October 8, 2015
What a clear and instructive parable you delivered. Leaders need to be brave enough to speak in this way. Not pander to the liberal press with their tails between their legs and their snouts in the trough. Speak the truth and let the chips fall where they may.
October 8, 2015
Reply If the rest of the EU offer us nothing it makes it easy – we just leave.
If only it was that straightforward and Mr Cameron was a straight talking and honest politician – not a greasy spin merchant.
The chance of Mr Cameron coming away with nothing from the negotiations is nil.
Even a politician as inept as David Cameron wouldn’t go into negotiations knowing he will receive at least some concession.. The danger is he will by the use of clever political posturing present the re-negotiated position as something substantial when it is just a minor change. There will be a long list of careerists willing to lazily embrace the new status quo.
That’s the reason I disagree with JR’s refusal to dismiss the re-negotiation strategy as a shame right now – it’s a holding pattern for a dishonest prime minister who wishes to disguise his strongly pro European agenda. he personally would like to stay in at any cost.
October 8, 2015
This is of course a simplified scenario ,where the twists and turns of financial abuse, the fraudulent acts , and the diverting of monies elsewhere cannot be seen. It does of not take into account of the capabilities of the CEO whose job could probably done by someone who was more effective with a much lower income. It does not take into account of the capital brought by the conjoined business itself and not the CEO.
There has to be disparity for if there is not, any potential for dynamism is not apparent. There isn’t any energy within a flat playing field ,yet a hill has to be steep enough to climb to create that energy.
October 8, 2015
take out the ‘ of ‘sorry typo ” into account the capabilities”
October 8, 2015
Of course must explain that this is metaphysical ,for some twirp will come up with there is lots of energy in football.
October 8, 2015
Is income inequality immoral? Is income inequality just? Is income inequality expedient? Is income inequality necessary?
The answers to the final two questions are ‘yes’, and ‘sometimes’ in respect of the penultimate. Why not an inequivocal yes to both, leaving professional moralists of various stripes to attend to the first two?
If someone’s wealth is derived from the ownership of property which they purchased, far from being of benefit to society, their impact is broadly negative; they enrich themselves at the expense of people who work and people dependent on the taxpayer for somwhere to live. The same applies to banksters and others whose wealth is derived, not from benefiting their neighbours, but by transfering wealth from them.
So the answer to the main question is that someone who enriches the community in some way is deserving of approval and encouragement by the state and he who simply transfers wealth from the commnity to himself should not only be subject to censure but also active discouragement by the state in order that their talents and enterprise are channelled, if they exist, into more mutually beneficial endeavours.
Here is a very interesting article in Forbes magazine about how the property market is regulated in Germany in order to benefit Germans. Let the enterprising make stuff like the Germans and increase the size of the cake:
http://www.forbes.com/sites/eamonnfingleton/2014/02/02/in-worlds-best-run-economy-home-prices-just-keep-falling-because-thats-what-home-prices-are-supposed-to-do/
October 8, 2015
Perhaps off topic but listening to Cameron’s conference speech attacking Corbyn and the Labour party in such terms, shouldn’t he be arrested for hate speech? – I think so. If one used those terms referring to ( a named minority ed)wrecking the country and undermining it then an arrest would be pretty quick.
October 8, 2015
The problem is that the rich people invite a lot of poor people to live here.
So that they may pay lower wages.
THIS is where the poverty is coming from.
October 8, 2015
‘Poverty’, is a relative term. We are told that certain Africans have to survive on one dollar per day which relative to the UK, is real poverty. However, we should always compare their local cost of living, which is always relative to the average daily wage, before we cry out in horror because we have been there ourselves.
I can remember being able to live on a wage of just £5 per week when a pint of beer was around the equivalent of 10p and a loaf of bread around 5p. In todays Western society that would now be considered “poverty” but thanks to endless inflation and the depreciation of our currency, we are no longer ‘poor’. But we are very poor when compared with the thousands of Millionaires and Billionaires that now reside in this country. It is time that those sanctimonious agitators and activists faced the truth of the matter. Poverty is a relative term, so stop over-blowing it. Concentrate a lot more on your own fellow citizens and let the rest of the world sort out itself. We have NOTHING to be guilty about.
October 8, 2015
Just back from three weeks at our house in the Socialist Paradise of France where everything is shut on a Sunday and most of the shops in the towns are also closed all day Mondays and for a couple of hours every lunchtime.
A college teacher I met was complaining that her working week of 18 hours contact time with the students left her too little time to prepare and a manager in a Paris-based public Housing administration has an employment contract giving him 11 weeks holiday a year !
_______________________________________________________
“The inequalities need to be looked at on a post tax basis, not a pre-tax basis.”
No Government in Britain would dare to publish this information because everyone of us who pay 40 or 50% income tax would see in stark numbers exactly how much of our remuneration the government steals from us and squanders, yes, even a Conservative one !
By the time you start with the gross cost of remuneration paid by our employers, deduct two lots of NI and Income tax, the actual amount received is already quite a small percentage of the total.
Then you deduct VAT and fuel duty from all our expenditure plus Council Tax and then income tax on the interest earned on anything left we can actually afford to save and you are left with a very small sum indeed. That is effectively our “disposable income”.
Anybody care to make a guesstimate of the percentage of gross remuneration left ?
And the Left talk about “Fairness” and “Equality” !!!!
October 9, 2015
You have got wrong again.
Back in seventy a bin man was on in london 400 to 600 pounds a week depending on the round with beer money and using lorry to pick up private waste and finished work at 12 to 1 o clock and most had a second job, rent was about 15 to 30 pounds a week and rates and water was about 250 to 450 a year, a road sweeper on 24 hour call out was on 600 to 700 pounds a week in 1972 and at the of the year week took home more than the leader of the council who would been 45ooo 50000 a year, british gas worker on 24 hour call out was on 600 to 700 pounds a week. in the eighty bricklayes and so on would be paid 800 to 1000 pounds a week, today they earn no more than that. the people at the top of the companies would be on 70,000 120,00o a year.
Con party, all gone private and like you say the big boss on 800.000 to 1,000,000 who pay self dividend and so on to lower their tax and you say the working man today is on 20,000 a year with rent at 200 to 600 pounds a week and council tax without water up at 1500 to 3500 a year.
So you took from the many and given to the few and all their money was spent in the the community were as the big boss invest their money offshore or in 5 star places for dinner and so on which owed by other big bosses.
If a worker in their fifty who could work no more went down to local council yard and saw the man in charge of the council yard, he would say, harry you can sweeper up the yard and make the tea 65 pounds a week and i can get you a pension as well.
Before you made all the changes the people could look after their own today their cannot.
The government look after them with tax credit and housing credit or living on the street.
Red carpet for oversees people and cardboard box for your own.
Well done.
October 9, 2015
You know what brother, you have shoot your self in the foot for greed, to cut the little mans money off was your mistake, nobody left when the banks go down.
October 9, 2015
and you did not save much on the council tax, it all funnel to private companies, some off shore in stead with big pay at the top and little pay at the bottom, your last ditched a tempt to put wages up is to late, fool.
October 9, 2015
Britain has a GDP of $2.76 trillion.
By my arithmetic, and converting to pounds, that works out at around £26,500 per person if everyone had an equal share. This includes everyone. The very young and the very old.
I don’t believe many people would argue that everyone should have an equal share as it doesn’t allow for any incentive to do anything. I’d be happy to get by on that if I didn’t have to get out of bed in the mornings. Especially if I knew that my dependents would get that too. I ‘d have no dependents any more! Fantastic 🙂
So would a society that paid out £10k pa for doing nothing but £100k pa for working really hard produce a bigger total pie than we have at the moment?
I’d expect that I’d be somewhere in the middle and earning about the same as I do now. Would I begrudge those at the bottom getting the minimum? Maybe. Should we pay a family of five a total £50k pa when no-one does any work? I’d say not.
We should insist that anyone who is capable of working should work and should make some contribution to society even if they are only in receipt of the minimum income.