The FT made this observation yesterday:
Fork-lift truck drivers in Britain could expect to earn £19,068 in 2010, about 5 per cent lower than in 1978, after adjusting for inflation. Median male real US earnings have not risen since 1975. Average real Japanese household incomes after taxation fell in the decade to mid-2000s. And those in Germany have been falling in the past 10 years.
After thirty years if the neoliberal model of economics being in operation this one paragraph reveals what it is really all about: making the rich richer and leaving the rest behind.
I've never heard this stated more bluntly than by Alvin Rabushka, the creator of the concept of flat taxes, who told me when I interviewed him in April 2006 when I undertook research on flat taxes for the ACCA that:
The only thing that really matters in your country is those 5% of the people who create the jobs that the other 95% do. The truth of the matter is a poor person never gave anyone a job, and a poor person never created a company and a poor person never built a business and an ordinary working class guy never drove economic growth and expansion and it's the top 5% to 10% who generate the growth for the other 90% who pay the taxes to support the 40% in government. So if you don't feed them [i.e. the 5%] and nurture them and care for them at the end of the day over the long run you've got all these other people who have no aspiration for anything more than, you know, having a house and a car and going to the pub. It seems to me that's not the way you want to run a country in the long run so I think that if the price is some readjustment and maybe some people in the middle in the short run pay a little more those people are going to find their children and their grandchildren will be much better off in the long run. The distributional issue is the one everyone worries about but I think it becomes the tail that wags the whole tax reform and economic dog. If all you're going to do is worry about overnight winners and losers in a static view of life you're going to consign yourself to a slow stagnation.
As for the role of government, he said:
I think we should go back to first principles and causes and ask what government should be doing and the answer is “not a whole lot”.
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A timely repeat of the Rabushka ‘doctrine’, Richard. There’s no doubt in my mind that your’re right about Gove, Maude and the rest of them. Indeed, watching recent appearances on TV (including C4 News last evening) I think you can see how hard these contemporary versions of Victorian ‘factory masters’ have to work to keep from letting slip that they’d much prefer a system where most of us went around touching our forlock whenever one of their ilk passed by.
With regard to Rabushka, well all he’s doing is what many leolibarals do: reinventing core principles of 19th century capitalism while framing them in a way that makes them more pallatable than when they were last tried (and after much struggle, rejected). In this case, as Hobsbawm points out in the Age of Capital (1848-1875): ‘…the middle class believed that workers should be poor, not only because they had always been, but because economic inferiority was a proper index of class inferiority.’
It’s been increasingly evident since the Tories entered government last year that they and many of their LibDem apologists/supporters now feel their grip on power is sufficient to let deeply entrenched (but largely hidden) views such as above resurface and inform their policies.
“The only thing that really matters in your country is those 5% of the people who create the jobs that the other 95% do. The truth of the matter is a poor person never gave anyone a job, and a poor person never created a company and a poor person never built a business and an ordinary working class guy never drove economic growth and expansion and it’s the top 5% to 10% who generate the growth for the other 90% who pay the taxes to support the 40% in government.”
Interesting! What profit would the 5% make if the other 95% weren’t there putting in their time and labour to provide the goods from the businesses the 5% create? Where would their profits come from if the other 95% didn’t earn wages to buy the products these businesses make? Businesses who keep demanding more and more productivity, yet pay less and less for the extra work indertaken?
If the other 95% took matters into their own hands and formed and ran companies for thenselves and for the benefit of the community, where exactly would that leave the other 5%?
I think in reality, the other 5% needs the 95% a helluva lot more than the 95% needs the top 5%!
If you see what I mean! 🙂
“If the other 95% took matters into their own hands and formed and ran companies for thenselves and for the benefit of the community”
Show me any society where that has worked on any reasonable scale, by which I mean sufficient to pay for decent healthcare, education, infrastructure etc.
Actually the other 95% can do that
It’s called the democratic process
And it’s about having politicians willing to deliver the Courageous State – a state willing to do these things
Nauseating. You’ve got to wonder why, if the bottom 95% don’t matter, don’t create any wealth, then the top 5% get so worked up about the threat of strike action?