I posted this thread on Twitter this morning:
I wrote a thread yesterday, and some people have said I did not go far enough in explaining why paying public sector workers inflation-matching pay rises is the right thing to do. They're right, so let me explain the rest of it…..
I've already explained that we can afford these pay rises. Now let me explain why we should make these pay rises (and more) because of the benefits that they deliver.
In what follows please accept my bias. That bias is to think that not a lot works in our economy unless our public services do. If you can find counterarguments feel free to promote them, but I will never believe you for the reasons I explain here.
Without education our children are denied their future. By oppressing teachers, classroom assistants, lecturers and others in the sector that is what we're doing now. We're taking away their hope, and our hope, and that is crazy.
Without good social care, most especially but far from entirely for the elderly, we take away the chance of a good retirement from many who need help to live with dignity whilst denying help to those who need support who need it.
Without good medical care we crush people with pain, anxiety and lives blighted by the uncertainty both create.
Without a properly funded tax system we allow the cheats, crooks, spivs and professional chancers to undermine honest businesses in this country. As a result the private sector has no chance to thrive, and we all lose as a result,
Without post and transport services the basic infrastructure of our economy fails. But it's worse than not just being able to get to work and deliver that work: we need public transport systems to flourish if we are to have a green economy.
I could go on. My point is this though. The services where the government is intent on seeing real pay forced downwards are those on which we depend to make life work for most of us. The rich might think they can opt out. The rest of us can't.
And unless we invest in the people who above all else (tech included) supply these services they won't function. And then we face economic failure.
People know how hard home teaching is because of Covid.
They know they can't work, or at least work as well, when they're sick.
And without social care many families need someone to give up work to support relatives, at massive cost to them and their families.
And if transport and communications don't work we force people into their homes, or onto overcrowded roads, and everything grinds to a halt.
In other words, and to use the language of economists, the externalities resulting from not investing in the people who work in our public services are incredibly high in terms of the costs that they impose on society at large.
I have already shown that Rishi Sunak's claim that we cannot afford to pay the £28 billion that inflation-matching public sector pay would supposedly cost is a lie. It might cost nothing at all.
But the issue goes much further than that. We know that most public sector workers are much worse off than they should be in the UK because of deliberate austerity imposed on them by 12 years of Tory government.
We also know that during that period the big economic question has almost continually been ‘why is the UK doing so much worse economically than our neighbours, even if we take Brexit into account?'
Let me suggest the answer, because like most things that are apparently baffling the answer is staring us in the face. That answer is that we've tried to run the economy whilst simultaneously seeking to destroy our public services, and that's economic madness.
For every pound the government might think it has saved with austerity it has piled several more on business, and most especially households. That's because they have had to bear the costs of the resulting inefficiencies.
And these inefficiencies are very real, and so much so that even the remaining public sector can't work effectively now because of them. Just look at the number of people in hospital because there is no social care for them as the obvious example of that.
The simple fact is that the deliberate undermining of our public services has undermined our national economy and well-being. And if we want to improve either nothing will work until we invest in fully staffed, well paid and properly valued public services.
Sure, that means some people doing jobs delivering no value in the private sector (and lots of those jobs exist) will have to work for the state again. And it will require more taxes be paid.
But people working for the state do pay taxes (something that seems to continually surprise politicians), and they also create value (which the Tories always deny). And that additional value will also help pay for this.
But if we do pay a bit more tax isn't that worth it for hope for our children; help those who need care through infirmity, disability or sickness; having an honest society and one that both works and has a green future? I mean, what is the value of that?
What is more, business will simply work better, make more and pay more taxes if these things happen. That's the obvious result of having a trained, cared-for workforce that need not perpetually worry about the next crisis coming its way.
So, my message is a simple one. Of course politicians can say they can't afford to pay those in our public services, but what they really mean when they say that is that they don't understand those services and the value that they deliver.
I suggest if we have politicians who do not understand that value we have one thing we need to do, and that just to replace them with ones who do. The only problem is, right now they are in short supply. But one day we might get them, especially if we understand why we need them.
PS And for all those wishing to dismiss this as socialism (blah, blah, blah), I'm a chartered accountant who was senior partner of a firm and a director of several successful companies before becoming an academic and campaigner. I argue as I do because I am for a mixed economy that works for all.
PPS This follow-up thread seemed worthwhile as yesterday's went pretty well:
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I saw Wes Streeting on Kuenssberg this morning talking about public sector pay. I find him intensely irritating. It is just me?
No…..
Indeed not. There are all sorts of ways to say that a Labour government will invest in the NHS so that staff throughout the service will be able to provide the care which patients and communities so desperately need, and which staff so desperately want to provide. This absolutely wasn’t one of them.
Nope.
Wes Streeting being shadow health secretary is the biggest indicator we have that Labour are not going to offer much hope for the NHS. He is as right wing as many Tories on NHS privatisation and is the most clearly power craven of all the front bench.
He sees himself as a PM in waiting after Starmer and will tread say anything and tread on anyone to get there.
My opinion of course, I don’t know him personally.
We read this morning of Great Ormond Street hospital inventing a revolutionary new way of tackling cancer .
The Higher Authority (my wife) told me she had been reading of how a hospital in Croydon reorganised to respond to covid and have a small waiting list, happy staff and patients.
The NHS wok force have a great public service ethos which is being dismantled by this govt. We don’t need private firms talking about ‘market mechanisms’ and “modernisation of a 1940s system” -Montefiore on Kuenssberg this morning. Pat Cullen’s (RCN ) response was we have lots of reports for change and a lack of staff prevent them from happening. We know why there are 133,000 vacancies-low pay!
You are right that so many politicians do not value of public services. ( Sorry to post twice in a day)
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Mr Stevenson,
Jings, if you are going to apologise for posting twice in a day ….. where on earth does that leave me? Drowning in the backwash from your quite innocent solecism.
I am happy for multiple postings a day so long as they add to debate
As a public sector worker I have to contribute to my pension, so does my employer – otherwise I don’t get one. I hope that that is clear. It’s not just the public who ‘apparently’ have to pay for it. Which they don’t or don’t have to depending on which lying turd of a politician we have in an any one time. We public sector workers are also part of the voting ‘public’ too. My /our pension contribution is a significant sacrifice of our wages. Those of us in pension schemes are doing our bit. Which is what you are supposed to be doing isn’t it? We don’t get it for free – we work for it and pay for it. Well, we TRY to work for it, when we have enough staff and the budgets.
Our wages are part of the services that a much better informed and more humane governments once agreed to provide for. They decided to soak up that expenditure in the national interest to regrow and MORE IMPORTANTLY and often ignored SUSTAIN that system after the second world war.
The public wealth in terms of NHS, education, transport, social security etc., was meant to increase and did support individual wealth too which as we know also in the round corresponds to national wealth. It is a mixture of more evenly distributed national and individual wealth that has driven this country forward and this is often overlooked through our Thatcherite spectacles we still insist on wearing.
And then what happened?
The United States gets its knickers in a twist over Vietnam, and abandons the Gold Standard and all of a sudden the markets have the power to determine a nations’ wealth. The same markets that have consistently not been able to value assets and risk properly and that has herded us towards crashes time after time again. Now if a government invests in its country, the ‘wisdom’ of the market says it is at risk of running out of money (unless you are the United States exporting your deficits abroad using the world’s reserve currency – the U.S. Dollar). The Gold Standard may not have been perfect but what has replaced it in my view cannot be trusted as ‘neutral’ and in any national interest. The present system in my view inhibits state investment which negates sovereign money creation and leads us into the ‘politics of inevitability’ where there are no ideas.
Israel and Egypt start a war in which the West backs Israel so the Muslim oil producing nations renege on the cheap oil deals the West got after WWII and we get rampant oil based inflation. Big mistake! We didn’t have to take sides – we could have encouraged peace.
Global feral finance begins:- The changes made to the powers of shareholders are used to enable international finance to plunder even decently performing companies in the U.S and the UK and destroy manufacturing capacity and jobs under the lie that such companies were not efficient. Watch the ‘The Mayfair Set’ by Adam Curtis. It was asset stripping time – all perfectly legal BTW.
There are I think some other shocks too that my flu addled brain cannot remember. But I remember the faulty diagnosis: it was von Hayek’s ‘The Road to Serfdom’ that came to the fore – that it was because we could not afford the social and economic systems that Attlee and Roosevelt had set up that meant the West was in trouble. Why of course! How could we have been so wrong!! (Bollocks!).
So, it was with this tissue of lies we stepped forth into the Thatcher and Reagan years which has seen just about everything set up in the post WWII period dismantled and what have we got?
A small percentage of people with huge amounts of money to their name making cash out of privatisations and relaxed attitudes to higher tax and a large amount of people around the world with much less, and political and legal systems constantly modified to maintain this situation. Taking and keeping.
And at the basis of the big lie is that about sovereignty and currency production and the misbegotten and confusing language of fiscal policy where there is apparently a perennial open season on misrepresenting and lying about how it actually works to those who need it to work the most. Most of US out here!
And let us try to remember one of the factors that drove the West to that decision. It was the fear of Fascism (and of revolution in Russian which gave birth to a particular Soviet form of communist fascism – read Tim Snyder). Fascism derived from huge disparities in wealth and opportunity and fairness. World War 1 had made one of the most socially advanced states at the time (Germany) into a breeding ground of right wing extremism.
The public sector and its workers were set up as part of a defensive line against Fascism. That line is now in the process of being irreparably broken as part of this governments fascist tactics to sell our labour – your Dad’s, your Mother’s, sister, brother, uncles – whatever – as cheaply as possible on the world market in the name of ‘inward investment’, just like David Cameron stated in October 2011. You are here for nothing more than to make other people rich – but not YOU. Those British nurses have to be low paid so that the American health companies can make huge returns.
If we are not careful, our future will be nothing more than having our poverty exploited by Fascist manipulators, telling us who to hate next and who to resent, whilst the rich and the big business above us make huge profits whilst our attention is diverted. Just like BASF, Mercedes, BMW, Magirus (who made the infamous gas vans), Hugo Boss did during World War II Germany . And we all know how that tale ends.
And if you don’t know – go to your nearest Synagogue and talk to a Jew about it or visit a holocaust memorial somewhere. They know all about this sort of thing, as do the LGB&T community, gypsies and no doubt the latest crop of people we’ve been told are the problem such as immigrants, teachers, union members and those we are told are ‘woke’ (it’s nothing to do with being awake – it’s just that they choose to remember real history that’s all).
And whist you are at it, consider the relationship between big money/business and Fascism. You’d be very wise to.
Just returned from visiting the family in Singapore (first time in over 3 years).
If I wanted to be picky there is much I could criticize – but the key thing is that the Government (and people/businesses) recognise that it has a duty to set the right environment for people/business to flourish…. and that includes paying its public servants well.
On BBC Radio Scotland GMS this morning the Fraser of Allander (FoA) economic Institute exlpained the capacity of the Scottish Government to control taxation. The FoA suggested it had wide powers over taxation, concentrating on powers to chnage future budgets, but passing quickly over the restrictions imposed by working within a “fixed budget”. The FoA then implied the Scottish government had wide powers over income tax, but did not describe the severe restrictions over income tax here that it is obliged to work under; save to refer in hasty passing to “within some limits”, without spelling them out. The interviewer wanted to discuss income tax, but the FoA wandered off on question-begging references to Council taxes and other possibilities. What the FoA did not do was spell out that over income tax the Scottish government has limited powers, and none over Personal Allowances. Why is that important? Because Personal Allowances are critical. They provide Westminster with a powerful lever; the application of stealth tax – what the euphemist neo-classical economists like the FoA call taxation by fiscal drag: actually fiscal creep (because it really is creepy); the fact that static Personal Allowances ensure swathes of people fall under taxation, or the rate of tax that would not do so in times of inflation – without anyone noticing. Fiscal creep has enormous consequences on tax paid, and its economic and social effects. Inflation benefits Westminster, simply by doing nothing, and seeming to have no hand in it. The Scottish Government can do nothing. At the same time the FoA simply has nothing to say about other ways the devolution of income tax is oerationally limited. HMRC remains responsible for the collection and management of Scottish Income Tax, including the identification of Scottish taxpayers.
I consider the performance of the FoA was dreadful; pretending it can hold to the economist’s weak illusion that they are mere abstract managerialist experts; nothing they say is a matter of politics, or has any consequences. Political economy? Not me guv.
The Fraser has always been good at Unionism, but not necessarily much else
/The most horrible word in English when referring to wealth is Billionaire. Go for a Denmark approach: PR democracy . Germany has 16 laender all PR except one and taxation which gives all a non hunger , non living shop doorway society .The rich find the UK a great tetrapak haven i read