[Politics] Cost of Living Crisis

[Randy McNob]

The examples already been given. Paying 1 person 16% more on say £10M (highest paid PLC) - is £1.6M. Spread that across her 2200 employees is £727 each.

exactly. why give 1.6m to someone already rich instead of 727 quid to people who need it more

Plus that money gets recycled back into the economy much better. The CEO would just hoard it

 

[Springal]

exactly. why give 1.6m to someone already rich instead of 727 quid to people who need it more

Plus that money gets recycled back into the economy much better. The CEO would just hoard it

You’re assuming those people aren’t getting a pay rise though. The example I gave already are and vast majority on £50k+

 

[Randy McNob]

You’re assuming those people aren’t getting a pay rise though. The example I gave already are and vast majority on £50k+

Many key workers are on strike and have been for more than a year but all they demand is their pay is where it should be today since they have had to suffer pay freezes, not even asking for an increase at levels above where it should be today. The governement say we are poor and don't have the money and have only been offered real terms pay cuts, as it will cause inflation.

But if you're a company CEO it's boom time, the coffers are booming.

I think average front line wages have increased around 8% which is below inflation

Just more evidence the Tories are the party of wealth inequality

 

[WATFORD zero]

Yes, I realise that the 100 CEOs aren't the only people earning £3.9m per year. But there aren't any other figures to quote. I was replying to a specific figure about specific people.

I suspect the 300,000 people on over £200,000 salary for PAYE is quite a high proportion of the people getting over £200,000 UK income, not a very small percentage. How would you enumerate "very small"? 5%? That would mean 6 million people with income over £200k in this country. Seems unlikely.

Rather than guessing at numbers and telling us what 'you suspect' it's fairly simple to find some real figures from the Office for National Statistics

Union fury as figures show pay rises among top earners driving inflation​

The best paid have had the highest wage hikes, but the majority of workers have seen their salary growth fall, according to ONS data

But figures from the Office for National Statistics (ONS) show that since January, annual wage increases are only becoming more generous among the top 10% of earners, while the rest of the working population is suffering a decline in wage growth.

Analysis by the TUC of official figures also shows that workers among the top 1% of earners, with an annual income of at least £180,000, were paid 7.9% more than last year.

By contrast, those who are paid £59,000 a year saw the rate of their wage rises fall from 7.2% to 5.5% a year, while workers receiving £26,300 a year saw an even bigger fall in annual wage rises, from 9.5% in January to 4.7% in April.

https://www.theguardian.com/money/2...pay-rises-among-top-earners-driving-inflation

London’s top earners enjoy strongest UK pay growth since start of pandemic​

https://www.ft.com/content/62bc5935-0207-42c3-81ae-296d9c7b484f

 

[Jolly Red Giant]

Let's be clear - wage rises DO NOT cause inflation. Inflation is the result of the drive for profits. Capitalism needs inflation to maximise profits and keep the good times rolling (for the 1%).

 

[Bozza]

Union fury as figures show pay rises among top earners driving inflation​

I'm sure I'm just being obtuse here, but I can't see anywhere in your quote where there is a proven link between the pay rises you cite, and inflation.

It reads a bit like someone somewhere confusing correlation with causation, possibly mischievously to suit a narrative.

 

[WATFORD zero]

I'm sure I'm just being obtuse here, but I can't see anywhere in your quote where there is a proven link between the pay rises you cite, and inflation.

It reads a bit like someone somewhere confusing correlation with causation, possibly mischievously to suit a narrative.

You're right there is not a direct link between the pay rises quoted and inflation, beyond the fact that pay increases are currently being blamed by the Government for 'sticky' inflation and the report that I have linked to shows the income brackets with the fastest growing pay increases are the higher ones.

 

[Bozza]

You're right there is not a direct link between the pay rises quoted and inflation, beyond the fact that pay increases are currently being blamed by the Government for 'sticky' inflation and the report that I have linked to shows the income brackets with the fastest growing pay increases are the higher ones.

So, do you agree with the government on that?

 

[WATFORD zero]

So, do you agree with the government on that?

I think there are a whole number of drivers for the current 'sticky' inflation that we are seeing, but there's already threads for most of them

I'm just off out for dinner, but I'm sure in a few hours, and a few glasses I could be persuaded to list them

 

[Machiavelli]

You're right there is not a direct link between the pay rises quoted and inflation, beyond the fact that pay increases are currently being blamed by the Government for 'sticky' inflation and the report that I have linked to shows the income brackets with the fastest growing pay increases are the higher ones.

Yes, exactly. And worth noting that 'pay rises' (which, in the case of public sector workers especially, are yet the latest but harshest iteration of over a decade of annual real-terms pay cuts) only really began to kick in over the past 6-12 months precisely when inflation peaked and then began to fall. Yet the entire narrative beginning with Bailey, and repeated ad nauseum by the government, its cheerleaders in the press and those that want pain inflicted on themselves and others in similar circumstances is that pay rises cause inflation, and that a 'wage-price spiral' should be avoided at all costs.
What has actually happened over the last year or two is that we've had increased prices which has led to increased nominal wages which has then led to decreasing prices, ie quite rapidly falling inflation.
We can hope that eternal verities are rejected when they no longer apply, but as a good songsmith once sang, 'You can hope in one hand, and shit in the other, and see which one fills up first'.

 

[beorhthelm]

Many key workers are on strike and have been for more than a year but all they demand is their pay is where it should be today since they have had to suffer pay freezes, not even asking for an increase at levels above where it should be today. The governement say we are poor and don't have the money and have only been offered real terms pay cuts, as it will cause inflation.

But if you're a company CEO it's boom time, the coffers are booming.

I think average front line wages have increased around 8% which is below inflation

Just more evidence the Tories are the party of wealth inequality

many key workers voted for strike action, few actually took it. nursing and teachers carried on going in, with token numbers on the picket lines. good strategy, get the effect without too much hurt on the members pockets.

 

[beorhthelm]

...Yet the entire narrative beginning with Bailey, and repeated ad nauseum by the government, its cheerleaders in the press and those that want pain inflicted on themselves and others in similar circumstances is that pay rises cause inflation, and that a 'wage-price spiral' should be avoided at all costs.
What has actually happened over the last year or two is that we've had increased prices which has led to increased nominal wages which has then led to decreasing prices, ie quite rapidly falling inflation.
We can hope that eternal verities are rejected when they no longer apply, but as a good songsmith once sang, 'You can hope in one hand, and shit in the other, and see which one fills up first'.

a narrative repeated in every country and central bank. we're not an outlier following maverick policy. not sure if your second paragraph is acknowledging the wage-inflation cycle, as lower "nominal" wage increase lead to lower price increases as demand reduces. it's simple, increase wages increases money available, which means more demand for goods and services. at the same time costs, which labour is one of the largest, increase and push up prices too. there are other factors too, they dont mean this feedback loop doesn't happen.

 

[Machiavelli]

a narrative repeated in every country and central bank. we're not an outlier following maverick policy. not sure if your second paragraph is acknowledging the wage-inflation cycle, as lower "nominal" wage increase lead to lower price increases as demand reduces. it's simple, increase wages increases money available, which means more demand for goods and services. at the same time costs, which labour is one of the largest, increase and push up prices too. there are other factors too, they dont mean this feedback loop doesn't happen.

While I understand your first sentence, no idea what point you're trying to make.
As to the second sentence, who's said that?
As to your question about my second para, no, I'm not acknowledging what you claim, and the whole post constitutes a problematisation of the narrative/mantra of the 'wage-price spiral' (not the 'wage-inflation cycle' as you call it), which is quite clearly supported with recent developments in the UK economy.
As to the "it's simple", no it isn't. Increasing wages does not increase the money available, because it doesn't effect the money supply, that comes from more borrowing (and, as a consequence, lending).

 

[beorhthelm]

While I understand your first sentence, no idea what point you're trying to make.
As to the second sentence, who's said that?
As to your question about my second para, no, I'm not acknowledging what you claim, and the whole post constitutes a problematisation of the narrative/mantra of the 'wage-price spiral' (not the 'wage-inflation cycle' as you call it), which is quite clearly supported with recent developments in the UK economy.
As to the "it's simple", no it isn't. Increasing wages does not increase the money available, because it doesn't effect the money supply, that comes from more borrowing (and, as a consequence, lending).

yeah misread that second para. point is the wage-price spiral is a real problem, if we didnt have wage restraint we'd see inflation stick or rise in a feedback loop, rather than decrease as input prices fall.
that's the theory anyway. we could have done it different to the theory, just gave everyone inflation matching wages, hoped nothing bad would happen and revelled in new economic model. bit of a risk though, if inflation did carry on rising.

 

[dsr-burnley]

Let's be clear - wage rises DO NOT cause inflation. Inflation is the result of the drive for profits. Capitalism needs inflation to maximise profits and keep the good times rolling (for the 1%).

To be fair, capitalism keeps the "good times rolling" for the 99% as well. At least, most people in capitalist countries seem to be a lot wealthier than their equivalents in non-capitalist countries. Are there any examples of countries that can prove me wrong?

 

[Randy McNob]

Yes, exactly. And worth noting that 'pay rises' (which, in the case of public sector workers especially, are yet the latest but harshest iteration of over a decade of annual real-terms pay cuts) only really began to kick in over the past 6-12 months precisely when inflation peaked and then began to fall. Yet the entire narrative beginning with Bailey, and repeated ad nauseum by the government, its cheerleaders in the press and those that want pain inflicted on themselves and others in similar circumstances is that pay rises cause inflation, and that a 'wage-price spiral' should be avoided at all costs.
What has actually happened over the last year or two is that we've had increased prices which has led to increased nominal wages which has then led to decreasing prices, ie quite rapidly falling inflation.
We can hope that eternal verities are rejected when they no longer apply, but as a good songsmith once sang, 'You can hope in one hand, and shit in the other, and see which one fills up first'.

But huge corps have raked in billions
CEO's have enjoyed 16% rises
and bankers bonuses were restored

But transport workers, NHS workers, teachers and other key workers have to suffer real terms pay cuts to curb inflation

 

[Jolly Red Giant]

To be fair, capitalism keeps the "good times rolling" for the 99% as well. At least, most people in capitalist countries seem to be a lot wealthier than their equivalents in non-capitalist countries. Are there any examples of countries that can prove me wrong?

The 99% are and have been suffering declining living standards since the emergence of neo-liberalism in the late 1970s. The poorest 10% of people in Britain pay a higher effective tax rate than the richest 10%. The NHS doctors are not on strike for a pay increase - the are on strike for pay restoration. Their income is today 35% less in real terms than it was in 2008.

America is still the richest country in the world - yet wage rates in the USA have declined in real terms to below where they were in 1966. One third of workers in America make less than $15,000 a year (over 50 million people - and their average wage is just over $6,000). The median wage in America has been stuck since 1998 at a little over $500 a week. A worker on $500 a week has a greater burden of tax than someone earning $1m a day - 8 hours and 40 mins of working time in comparison to 6 hours. America has such poverty that in some counties the life expectancy of individuals is 48 years, ten years lower than it is in places South Sudan. Somalia, and the Congo (you should read - for example - David Cay Johnston on the American economy).

Yes - people in Western economies have a higher income and standard of living than those in the neo-colonial world. However, countless studies have shown that the greatest negative impact on society does not come from the level of poverty - but from the gap between the 1% and the 99%. The global economy is completely intertwined - a ship gets stuck in the Suez Canal and supply chains are disrupted for months - so the reality is that, irrespective of the level of income of the 99% - everyone within that cohort is negatively impacted by capitalist society. The 26 richest people globally own more wealth than the poorest 50% of the global population - a new billionaire is created every two days - and since the pandemic the billionaires combined have doubled their wealth. Furthermore - the living standards of those in the developed capitalist world are falling more rapidly than in the neo-colonial world (there has been a significant decrease in the numbers living on less than $2 per day - but that is primarily down to growth in the Chinese economy over the past 30 years).

We are entering an Age of Disorder. Post WW2 - in an effort to stave off the revolutionary upheavals that followed WW1 - the countries of Europe, using American money, embarked on a programme of spending that created the welfare state in countries throughout Western Europe. It was the hay day of the social democracies (the LPs and SPs of Europe). The ability to sustain the welfare state came to a shuttering halt in 1973 with a worldwide economic depression - and that was followed by the emergence of Thatcherism, Reaganomics and wider neo-liberalism. Combined with the collapse of Stalinism in 1989 - it had the impact politically of destroying the social democratic parties as parties representing working class people - and created what was effectively a global form of Blairism - where one after another (if they survived at all) the social democratic parties became parties representing the interests of neo-liberal capitalism.

Like all shocks to the economic system - neo-liberalism kicked started growth in the global economy by deregulating trade and allowing the free movement of finance capital. Along the way finance capital created exotic financial products that facilitated the creation of bubbles in financial markets - futures, derivatives, options, CDSs, etc. which led to a series of economic crises during the neo-liberal period - the worst being Black Monday 1987, Black Wednesday 1992, Asian financial crisis 1997, the dot-com bubble 2002, the great recession of 2008, and most recently the covid crisis. Each of these economic setbacks are biting deeper, lasting longer and stoking up even bigger problems for the future. Every attempt to resolve each subsequent crisis is effectively kicking the can down the road and adding to the scale of the problems during each subsequent crisis. This has now resulted in two potentially catastrophic developments over the coming years - firstly, the climate crisis that is rapidly heading towards a tipping point - and secondly, inter-imperialist conflict, currently manifest with the Russian invasion of Ukraine - and the potential for the use of nuclear weapons (something that has come one step closer with the supply of F-16s to the Ukrainian military in recent days).

The problem is that - within a capitalist context - capitalism cannot help but eat itself from the inside out. More and more wealth has to be accumulated in fewer and fewer hands - and the rest of the population have to face a cost of living crisis, an ecological crisis that could destroy the planet, increased military conflict that raises the risk of nuclear war (the ideological divide of the post WW2 cold war was able to hold the potential for nuclear conflict in check - that no longer exists - and from an imperialist perspective, the use of nuclear weapons is an acceptable measure to achieve their political and economic aims - and Ukraine is a huge country with vast and largely untapped natural resources, including rare earth metals).

The Age of Disorder is also going to see increased social conflict - with the re-emergence of the far-right, and particularly a far-right with a greater willingness to engage in mindless acts of violence to assert its authority - and with oppressed layers demanding their rights (the right to bodily autonomy, marriage equality, trans rights etc) and the far-right engaging in a backlash in an attempt to turn back the clock to the 1930s. And, more importantly, it will also lead to increased class conflict - the strike wave in Britain (and in the USA, currently led by Amazon workers and now the writers guild - as well as France, Portugal, Greece, Germany, the Netherlands, Romania, Canada) - the class conflict in France over attacks on pension rights and racism by the police - the mass demonstrations in Israel against attempts by Netanyahu to impose a totalitarian regime on the country - the taxi-drivers strike in South Africa that has seen several deaths already - the coup in Niger (and the arrival of the Wagner group to confront French and American forces in the country) - the political crisis in Peru - the assassination of a presidential candidate in Ecuador - Pride protests in Hungary against the far-right government of Orban - mass protests in Manipur India over the gang rape of two women and the murder of male family members - mass protests by Rohingyha refugees in Bangladesh - hundreds of thousands on the streets of Poland over the death of a pregnant woman from sepsis because she couldn't have an abortion - and this list, which is far from exhaustive, is just in the last couple of months.

This is the future of capitalist society - an Age of Disorder - until capitalism eats itself completely and destroys the planet - or - is overthrown and replaced by a society based on providing for need, not profit.

 

[Jolly Red Giant]

yeah misread that second para. point is the wage-price spiral is a real problem, if we didnt have wage restraint we'd see inflation stick or rise in a feedback loop, rather than decrease as input prices fall.
that's the theory anyway. we could have done it different to the theory, just gave everyone inflation matching wages, hoped nothing bad would happen and revelled in new economic model. bit of a risk though, if inflation did carry on rising.

Of course the theory is bogus - it is a mechanism to drive down wages and increase profits.

Only once in the last 50 odd years has a measure been taken in a capitalist context that brought inflation to a shuttering halt. That well-known Republican chancer Richard Nixon, in an effort to cut inflation in 1971, implemented a wages and prices freeze. Unlike today - where the central banks are raising interest rates (and in the process transferring huge wealth from working class people to the wealthy) - by freezing wages (not something I would support) and freezing prices (something I would support), Nixon ensured that workers did not see a decline in their living standards because inflation was slashed. Of course the wealthy went ballistic, they need inflation to boost profits - and when Nixon announced his intention to renew the wages/prices freeze they forced the Republicans and Democrats in Congress to shaft his plans. The wage/price freeze contributed significantly to Nixon's re-election in 1972 but, no longer trusted, the rich elites arranged to remove Nixon from power (Watergate) and install Gerald Ford - a far more compliant President to implement their preferred economic policy of raising interest rates (which included nominating Rockefeller as his VP). Of course - raising interest rates didn't work and inflation trebled under Ford's presidency. Ford was followed by Carter who followed similar policies that ultimately led to the 1979 global recession - and paved the way for Reaganomics in the 1980s.

 

[nicko31]

But huge corps have raked in billions
CEO's have enjoyed 16% rises
and bankers bonuses were restored

But transport workers, NHS workers, teachers and other key workers have to suffer real terms pay cuts to curb inflation

Many of these CEO's are just managers, they are not entrepreneurs. They make huge amounts on the back of increasing shareholder value but have no liability in the event of failure. Its not their money, they don't have to put their house up as capital, its a win-win

Many of them just went to the right schools, joined the right network and then jumped on the gravy train

 

[Goldstone Guy]

To be fair, capitalism keeps the "good times rolling" for the 99% as well. At least, most people in capitalist countries seem to be a lot wealthier than their equivalents in non-capitalist countries. Are there any examples of countries that can prove me wrong?

I would say the USA proves you wrong. The ultimate capitalist society with ? 10% living in poverty, some of them in pretty desperate circumstances from what I've seen on TV documentaries. It's not very useful to compare to "non-capitalist" countries because I don't think anyone is saying pure communism works - we'd all agree it doesn't and the average person suffers in a communist society. But lots of countries could be considered more left-wing/socialist and less capitalist than the USA - Sweden, Denmark, other European countries for example and I think the average person is better off in this society (although depends how you define average - lots of very rich people in USA bring the average up). There has to be a balance - extreme capitalism or socialism will both end badly.