I'm speaking at a PCS fringe meeting at the TUC conference in an hour's time. My theme is that austerity will not work.
My core theme is that austerity is the wrong reaction to the crisis we're in. I explained, in part, why this was the case yesterday.
This graph, again from a TUC source but using data from the Office for National Statistics is another explanation:
In the 60s and 70s wages took around 60% of GDP.
Now it's about 53%.
That's a massive shift away from the reward to work in the economy.
That means people are paid less for the value they create.
But it also means that value is taxed less as profit is now (unlike the 60s and 70s) much less taxed than labour.
And this is despite a real rise in the population.
The result is there is more demand for public services and less to pay for it. So we have a government funding crisis.
And we have people who are forced to borrow to make ends meet.
Austerity won't solve this. Only a real increase in the reward to labour will do that. Our economy is out of balance. Unless that is put right we're in trouble.
And we can put it right. We can invest in business, housing, infrastructure and the services we need. I explain how, here.
All this is possible and affordable. But it will take politicians and economists who believe that people matter; that paying people fair wages matters and that finance has to be the servant of people and not its master.
Is Labour listening? I don't know.....
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I’ve just been to the CLPD meeting at the TUC fringe and I can assure you that there are lots of people in the LP who are hearing you. Unfortunately, the Parliamentary LP are rather more deaf. Nevertheless, you cannot doubt that MPs like Michael Meacher and Kelvin Hopkins are totally on board!
The important thing is for the Unions, yourself, the think tank CLASS and those grassroots, both within and without the LP, to keep up the argument.. and for Ed Balls to be booed whenever he says ‘too far and too fast’. I was a bit encouraged by Ed Miliband’s remarks about inflation and growth which indicated a rejection of monetarism but it is not nearly enough.
The big problem is that Blairites continue to be over-represented in the PLP and it is a strong possibility that there will be a future SDP-type walk-out to join with the Orange book LDs and some Cameroon Tories. It is hugely important that the implications of their politics are understood and exposed.
BTW I imagine that your ears were burning with all the good things that were said about you at the meeting.
Thanks Sue
I was down the road!
[…] to mention that an industrial strategy is not worthy of its name without stating its purpose. I suggested yesterday that the UK is in desperate need of a rebalancing of the rewards in out economy. Real wages have […]
How and why did this decline in the proprotion of wages to GDP happen?
Automation and increases in productivity?
The decline in the power of the unions?
Globalisation and increased foreign/multinational ownership?
I suppose there was also a shift in the 80’s and 90’s towards employee share schemes and non-wage remuneration.
And more recently, a large increase in immigration from the early 2000’s allowed growth without wage inflation. Lower wage inflation kept interest rates low so borrowing was cheap, and this fed more growth.
The shift in power that Thatcher and reagan engineered is the best explanation….