[Politics] Cost of Living Crisis

[beorhthelm]

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.

who has lower living standards that 1970s? we spend half as much on food and clothing, while double on leisure, doesnt sound like lower living standards. the doctors want twice what the inflation adjust pay would be, ignoring allowances (they dont like to mention all the add ons).

 

[nicko31]

who has lower living standards that 1970s? we spend half as much on food and clothing, while double on leisure, doesnt sound like lower living standards. the doctors want twice what the inflation adjust pay would be, ignoring allowances (they dont like to mention all the add ons).

In the 1970's we had one car and there was a bloke in the village that drove a Merc. Everyone said he was loaded. In 1978 we went on hols to the costas, we drove down through France in a Vauxhall Viva (insane). Flights were too expensive, seem to recall about £150 return to Alicante

Most people don't have lower living standards than the 1970

 

[dsr-burnley]

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.

I don't disagree that pure capitalism doesn't work. It needs a leavening of charity for those left behind. But an absence of capitalism leads to poverty all round.

 

[dsr-burnley]

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).

I can't match your reply for length, but two points:

1 - under Margaret Thatcher, wages rose 35% in real terms (after allowing for inflation).

2 - in the USA, inflation has averaged 3.8% per year since 1960, wages rises have averaged 6.2%. That's up by a factor of 4.

usa wages real rate of growth historic figures - Google Search

Inflation rates in the United States of America

Inflation developments of the past 63 years in the United States of America incl. a comparison to the European Union

www.worlddata.info

 

[chickens]

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.

Precisely this. What is required to effectively govern is balance. As America proves, permitting unfettered greed with no restraint leads to equilibrium being lost, and many being denied access to what all but the most-rabid right wing commentator consider basic human rights.

Personal safety, food, shelter, medical care and education are all an absolute lottery. The lack of these things drives crime.

Tightly regulated capitalism with checks and balances in place to prevent too much wealth and power accumulating in one place is the best hope we have in this country.

We (like America) fetishise the billionaire. They’re a problem, not a role model. No one individual should possess enough resources to bend entire governments to their will.

I’m all for people being driven by a passion and want them to succeed, but there comes a point where the hoarding of resources such as money serves no useful purpose and just becomes a means for ‘keeping score’, despite the fact that in doing so, it leaves others short of the basic resources required for life.

If these titans of industry were truly driven by their passion, the money would be willingly diverted back either to government or global programs in healthcare and education. The fact that most hold on to what they have gives them away.

The desire to hoard wealth at a nation state level is frankly an illness.

 

[Jolly Red Giant]

who has lower living standards that 1970s? we spend half as much on food and clothing, while double on leisure, doesnt sound like lower living standards. the doctors want twice what the inflation adjust pay would be, ignoring allowances (they dont like to mention all the add ons).

Food and clothing are significantly cheaper in real terms than 50 years ago - why -

1. Food is increasingly produced in huge ranches with large machinery - and are generally filled with chemicals to give them an increasingly longer shelf life. In 1800 it took 56 work hours to produce a acre of corn, in 1900 it was down to 38 hours, in 1960 that dropped to 7 hours and today it can be done in 1 work hour. Furthermore, the global agribusiness sector receives massive subsidies. For example, the EU spend over €100billion a year subsidising EU agriculture. In Ireland the average subsidy to a farmer is €18,000 a year. The USA provides subsidies of over $200billion every year to the US agri sector.

2. Clothing prices have dropped dramatically due to three factors, (a) new synthetic fibres have made clothes less expensive (b) new technology has reduced the cost of clothes, and (c) clothes are now mass produced in effectively bonded labour markets like Bangladesh, India and Sri Lanka, where garment workers earn less than have the living wage of those countries.

So - living standards haven't increased, the cost of producing certain items that previously took up a major part of a household budget have been dramatically reduced - at the same time the cost of many other items have increased significantly (there is a global housing crisis at the moment because of the cost of housing). In 1960 it cost 2s to go to a football match - now it can cost up to £80 to get into a game.

As for NHS doctors - in real terms junior doctors have seen a drop in their wages of 26% since 2008 - and because of inflation, the decline in wages is accelerating. Furthermore, since 2008 the Tories (and the Blairites) have increased the burden of work on doctors, with significant decline in working conditions as a result of underfunding of the NHS. Extra allowances for shift-work, night work and weekend work is common across all occupations. Britain now has significantly fewer doctors per capita than practically every other OECD country (including Ireland - and our health services are a disaster). Consultants in Ireland have recently been offered a new pay deal that would see them earn more than €300,000 a year (including allowances), significantly more than double what a consultant can earn in Britain (and the Irish consultants have rejected the contract and are refusing to sign up to the terms of the contract - leading to hundreds of unfilled consultant posts that are now filled on a locum basis when they are filled at all).

This is a long term strategy of the Tories (and the Blairites) - starve the NHS of funding - drive medical staff out of the service - and then dismantle the NHS and privatise the health system, forcing everyone to take out medical insurance (because of pre-existing health issues I have private health insurance because I can get to see a consultant in 3 weeks through the private system, whereas there are waiting lists of longer than 2 years in the public system - and I pay more than €2,000 a year for the insurance). In 2007 the Dutch privatised their health service and it now costs an average family more than €5,000 per year. In the USA the average is almost $8,000 per person and over $22,000 per family (and if you don't have insurance, hospitals will literally wheel you out of the hospital on a trolley and dump you on the footpath outside the hospital).

So - if you want to protect the NHS it is paramount that everyone supports the strikes by the NHS doctors - if they are forced into a climbdown then the Tories (and Starmer) will see it as a signal that they can attack the NHS and start full-blown privitisation. My daughter has been working as a doctor in the NHS for 6 years - she chose to go to the UK because she wanted to work in a public system, not a private system like in Ireland, and the NHS treated their junior doctors better than in Ireland. She is on the picketline every strike day because she believes the doctors need the pay increase and to defend the NHS. She is now talking about what happens if the doctor's strike is defeated - and she is discussing moving to New Zealand because she cannot afford to live in London and can see what the Tories and Starmer's Blairite party want to do to the NHS.

 

[dsr-burnley]

As for NHS doctors - in real terms junior doctors have seen a drop in their wages of 26% since 2008 - and because of inflation, the decline in wages is accelerating. Furthermore, since 2008 the Tories (and the Blairites) have increased the burden of work on doctors, with significant decline in working conditions as a result of underfunding of the NHS. Extra allowances for shift-work, night work and weekend work is common across all occupations. Britain now has significantly fewer doctors per capita than practically every other OECD country (including Ireland - and our health services are a disaster). Consultants in Ireland have recently been offered a new pay deal that would see them earn more than €300,000 a year (including allowances), significantly more than double what a consultant can earn in Britain (and the Irish consultants have rejected the contract and are refusing to sign up to the terms of the contract - leading to hundreds of unfilled consultant posts that are now filled on a locum basis when they are filled at all).

This is a long term strategy of the Tories (and the Blairites) - starve the NHS of funding - drive medical staff out of the service - and then dismantle the NHS and privatise the health system, forcing everyone to take out medical insurance (because of pre-existing health issues I have private health insurance because I can get to see a consultant in 3 weeks through the private system, whereas there are waiting lists of longer than 2 years in the public system - and I pay more than €2,000 a year for the insurance). In 2007 the Dutch privatised their health service and it now costs an average family more than €5,000 per year. In the USA the average is almost $8,000 per person and over $22,000 per family (and if you don't have insurance, hospitals will literally wheel you out of the hospital on a trolley and dump you on the footpath outside the hospital).

So - if you want to protect the NHS it is paramount that everyone supports the strikes by the NHS doctors - if they are forced into a climbdown then the Tories (and Starmer) will see it as a signal that they can attack the NHS and start full-blown privitisation. My daughter has been working as a doctor in the NHS for 6 years - she chose to go to the UK because she wanted to work in a public system, not a private system like in Ireland, and the NHS treated their junior doctors better than in Ireland. She is on the picketline every strike day because she believes the doctors need the pay increase and to defend the NHS. She is now talking about what happens if the doctor's strike is defeated - and she is discussing moving to New Zealand because she cannot afford to live in London and can see what the Tories and Starmer's Blairite party want to do to the NHS.

If the NHS is so useless that it pays doctors half what they are worth, and it can't supply the basic needs of yourself and many others, why should we want to protect it?

 

[Herr Tubthumper]

If the NHS is so useless that it pays doctors half what they are worth, and it can't supply the basic needs of yourself and many others, why should we want to protect it?

The principle of the NHS is fine......it's just that it's woefully underfunded. That said, we have a world class customer focussed health service here so I would not be against the UK using the German model.

 

[Jolly Red Giant]

I can't match your reply for length, but two points:

1 - under Margaret Thatcher, wages rose 35% in real terms (after allowing for inflation).

2 - in the USA, inflation has averaged 3.8% per year since 1960, wages rises have averaged 6.2%. That's up by a factor of 4.

usa wages real rate of growth historic figures - Google Search

Inflation rates in the United States of America

Inflation developments of the past 63 years in the United States of America incl. a comparison to the European Union

www.worlddata.info

1. Rusty Maggie

I did indicate above that the change to neo-liberalism did lead to economic growth - at least in its earliest stages (in fact that world economy was turning just as Thatcher was coming into power as the recession bottomed out in 1979).

I would dispute your figure of 35% - if you have a link it would be appreciated

When Thatcher came to power in 1979 the first thing she did was give public sector workers an immediate pay increase of 25% in order to stave off a winter of discontent.

But even if you are accurate, you cannot exclude the consequences of other measures Thatcher introduced.

a. Thatcher cut the top rate of tax from 83% to 40%. Between 1979-1992 the richest 1% saw their income increase by 35% (maybe that's where you are getting the figure from) - while in 1979 the bottom 10% of the population had a weekly income of £151.58 in 1979 and at the end of Thatcher's tenure that had risen to £158.57 (a massive rise of ..... 4.8% over 12 years). At the same time Thatcher increased indirect taxes - which disproportionally hit those on low incomes. And don't forget her attempt to impose the regressive Poll Tax in 1989.

b. The number of children living in poverty almost doubled from 1.7m to 3.3m under Thatcher. The number of pensioners in poverty increased from 3.1m to 4.1m.

c. The legacy of Thatcher's home ownership saw roughly 1 million council houses sold off to tenants - by 2020 over half of those houses were in the private rented sector where people were subject to market rents, not income controlled rents of council housing. Despite increasing population there are now over 1.3million fewer families living in social housing than when Thatcher came to power in 1979. It has been a disaster in so many ways.

d. Interest rates under Thatcher peaked at 17% and never fell below 7.4% during her tenure.

e. Inflation bounced between 5%-10% during her premiership

f. Unemployment was 5.9% in 1979 - went up to 11.9% in 1984 - and was still higher in 1992 than in 1979 at 7.8%.

g. And while the rich got richer - public spending was cut significantly from 44.6% of GDP to 39.1% - again, disproportionally hit those on low incomes.


2 - The USA

It is interesting that you ran a google search - and the used the first statistics that popped up to try and make claims of about wages in the USA. It is unfortunately that you didn't scroll down to the next item on the list which stated -

For most U.S. workers, real wages have barely budged in decades - Pew Research Centre - showing that, in today's money, the hourly wage in 1964 was $20.27 and in 2018 it had risen to $22.65 - a rise of 11% in 54 years - or a yearly rise of 0.2% per year.

or after that -

50 years of US wages, in one chart - World Economic Forum - which shows that in 1973 the Real Hourly Earnings of Production and non-Supervisory staff was $23.24 - and in 2019 it was $23.24.

or the next one from the Economic Policy Institute -which stated - The U.S. middle class had $17,867 less income in 2007 because of the growth of inequality since 1979.

But I will go back to my old friend, David Cay Johnston who pointed out that the median wage in the USA grew faster in 2020 than at any time in the previous 45 years - why - because 9.8million jobs were wiped out by the pandemic and they were all in the lowest 25% of paid jobs. A statistical anomaly allowed Trump to claim accelerated wage growth. The median wage rose because 10million of the poorest paid jobs were wiped out. And what was that increase - in 2020 the median wage in America (half make more - half make less) rose by less than 50 cents a week. In 2022 the 237,000 highest paid employees in America together made more wages than the lowest paid 60 million workers. Those 60m workers earned $25,000 or less. The lowest paid 30 million full-time workers (who earn $15,000 + each) made less than the total paid to the highest 506 bosses (their average pay - $151m each).

The story of capitalism - the top 1% get richer - everyone else gets poorer.

 

[Jolly Red Giant]

If the NHS is so useless that it pays doctors half what they are worth, and it can't supply the basic needs of yourself and many others, why should we want to protect it?

Because privatised health care is even worse - and we should know - Ireland has a hybrid part public part private health system.

The NHS is one of the most precious things that Britain has - one of the few national health systems in the world - fund it properly, pay the staff properly, stop privatisation by stealth - and the British population will live longer, healthier and happier lives.

This is what is coming down the line if you turn your back on the NHS -

 

[Jolly Red Giant]

The principle of the NHS is fine......it's just that it's woefully underfunded. That said, we have a world class customer focussed health service here so I would not be against the UK using the German model.

Yes - the German model - excellent health service - and mandatory health insurance - please tell us how much it costs?

 

[Weststander]

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.

I’d say that the median household in the US might be wealthier. But that’s of no benefit to the 10m’s literally on the bread line, their life expectancy lower than the middle class who have quality health insurance.

The model in some nordic nations is high personal taxation for almost all income brackets. To give the social care safety net and long paternity leave. It’s a different way of life, half of Swedes live in multiple occupancy buildings (mostly blocks of flats). There is a super rich …. nsc’s former Swedish correspondent was on their case. In Stockholm for example we saw beggars in a really bad way, literally as show offs in Ferraris roared past. But the poverty witnessed in NYC was on another level higher, terrible.

 

[Herr Tubthumper]

Yes - the German model - excellent health service - and mandatory health insurance - please tell us how much it costs?

Employer pays 7%, employee pays 7% but it is capped because you can opt out and take private insurance if this is cheaper. I have also found out that the state pension department also pays for some types of healthcare in addition to this e.g. physio and drug and alcohol rehab...so it is a litte bit more than 14% of your salary.

 

[Machiavelli]

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.

You're actually doing a cracking job of making my point for me.
There is a mantra/narrative about a wage-price spiral (informed by the 70s which has retrospectively been designated as a dreadful decade, when the vast majority of the population had it better than most of the succeeding decades), which you're also using here. That mantra has been applied to the UK over the past year or so.
Now moving away from mantras, we've actually had high inflation in the UK over the past year or so -- the highest since the 70s -- and it's been caused by multiple factors NONE OF WHICH have been wage rises (whether real or not). Yet the high inflation has caused workers to demand or be granted pay rises (most of which are nominal) in order to get by given the higher inflation. This is why I've flipped the term and said that there's a price-wage spiral. And just when nominal pay rises have reached their highest point, inflation has started to come down quite rapidly.
The wage-price spiral mantra has just been the latest iteration of an attempt to reduce real-term wages. It's been mighty effective in the public sector and in other industries over the past 13 years.

 

[Mo Gosfield]

The principle of the NHS is fine......it's just that it's woefully underfunded. That said, we have a world class customer focussed health service here so I would not be against the UK using the German model.

There should be an increase in doctors and nurses and a decrease in middle management ( for want of a hackneyed phrase...' paper pushers ' ) Too many £50k -£80k salaries. The NHS and Civil Service have overmanning in the wrong areas.

 

[Herr Tubthumper]

There should be an increase in doctors and nurses and a decrease in middle management ( for want of a hackneyed phrase...' paper pushers ' ) Too many £50k -£80k salaries. The NHS and Civil Service have overmanning in the wrong areas.

Can to provide some evidence to support this statement?

 

[Jolly Red Giant]

Employer pays 7%, employee pays 7% but it is capped because you can opt out and take private insurance if this is cheaper. I have also found out that the state pension department also pays for some types of healthcare in addition to this e.g. physio and drug and alcohol rehab...so it is a litte bit more than 14% of your salary.

Is there not a further 3% 'nursing care contribution' as well, along with prescription co-payments, payments for hospital stays, payments for home help, payments for travel?

And - if I am not mistaken there are also charges for vaccines, cancer screening under a certain age, IVF and contraception.

You also mention pensions - am I correct that if you are a pensioner you are obliged to continue paying for health insurance from your pension at the same rate as those employed?

 

[Herr Tubthumper]

Is there not a further 3% 'nursing care contribution' as well, along with prescription co-payments, payments for hospital stays, payments for home help, payments for travel?

And - if I am not mistaken there are also charges for vaccines, cancer screening under a certain age, IVF and contraception.

You also mention pensions - am I correct that if you are a pensioner you are obliged to continue paying for health insurance from your pension at the same rate as those employed?

There are small top ups for various things. What and how much I'm not exactly sure. I know there is a fee to pay if you use an ambuance for example, I think it is a percentage of the cost but a max of 10 euros.

My understanding regarding pensions, and anyone on benefits for that matter, is that you do still pay 7% and it comes out of your benefits/pension whatever.

 

[Jolly Red Giant]

I’d say that the median household in the US might be wealthier. But that’s of no benefit to the 10m’s literally on the bread line, their life expectancy lower than the middle class with quality health insurance.

The model in some nordic nations is high personal taxation for almost all income brackets. To give the social care safety net and long paternity leave. It’s a different way of life, half of Swedes live in multiple occupancy buildings (mostly blocks of flats). There is super rich …. nsc’s former Swedish correspondent was on their case. In Stockholm for example we saw beggars in a really bad way, literally as show offs in Ferraris roared past. But the poverty witnessed in NYC was on another level higher, terrible.

The Scandinavian 'model' pretty much went out the window with neo-liberalism - and the Nordic countries are not high tax economies and haven't been for some time

 

[Jolly Red Giant]

There are small top ups for various things. What and how much I'm not exactly sure. I know there is a fee to pay if you use an ambuance for example, I think it is a percentage of the cost but a max of 10 euros.

My understanding regarding pensions, and anyone on benefits for that matter, is that you do still pay 7% and it comes out of your benefits/pension whatever.

So - the average salary in Germany is about €48K - and the basic health insurance deduction would be €3360 per annum - on top of that you play a further €720 for the nursing contribution - an extra €10 to fill a prescription, up to €280 for a stay in hospital (per family member), and I think it is up to €750 a year for home help care.

It all keeps adding up - and the cost to a family with one earning on the average income for what is a good health system would be at least €4,000 and could possibly run to over €5,000 a year depending on the circumstances.

My health insurance is about the same - for myself and my wife about €4,000 - but we do pay about €600 a year for prescription medication, €55 per visit for a doctor, a physio or a dentist, and there is an excess of €300 each on the policy (we pay the first €300 of any hospital treatment). The Irish government subsidese private healthcare to the tune of €2billion a year, allows private companies to locate in hospital grounds and allows private consultants to see private patients and use hospital equipment. But who cares, someone is making a lot of money from the system. In the meantime if you need cataracts removed and you are waiting more than a year - they will stick you on a bus and send you to Belfast to get the NHS to sort it for you.

I like the idea of the NHS, properly funded and free at the point of delivery to all, irrespective of income.