Monday, 7 March 2011

Eggy Jam

"When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less." "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master— that's all."*

The White Queen; ""The rule is, jam to-morrow and jam yesterday — but never jam to-day."

Somewhere in the, lets not beat about the bush, UK class structure, there is a magical dividing line. Beneath is “us”, above it “them”. The pay us receive is a potential threat to the economy, it is something the Bank of England is forever vigilant about in case us start getting above inflation pay rises that might lead onto a dangerous wage/price spiral. In simple terms us can’t get chunky pay rises and if us do well lets not kid ourselves the great and the good that set monetary policy would have to take action!

Above the line things appear very different. To run with the Alice in Wonderland motif a bitty longer, above the line the common sense that underpins UK economic policy is viewed through a looking glass. This is where the wealth creators and financial wizards that should never be taxed too much in case they run away to Zurich or else just pay an accountant to get all creative on Her Majesty’s Customs and Revenue’s ass live. Above the line sit private equity bods who pay proportionately less tax than their cleaners, Cayman Island registered hedge funders and the Monaco or Jersey domiciled, but make all their money here tax exiles, all of them clinging on to their multi-million pension pots that are thankfully at a remove from the RPI to CPI, final salary to life time average (or defined contribution), non-contributory to ramped up contributions us have to contend with. Them getting more money is actually a good thing it transpires as opposed to a danger; above inflation pay rises? Brilliant! That'll guarantees Britain retains high calibre execs and besides just think of all the extra goods and services they’ll buy and all the demand that creates for, err, well what really, fancy shoes?

Now you could say there’s no that many so why bother, except the actual magnitude of fivers the super-rich get their meaty fists around is fucking staggering. To take just one example, the £6.5m bonus paid to the Barclay’s CEO equates to 5,711 people on the average wage (as at Dec 10 and including bonuses) getting a pay rise in line with RPI inflation (also as at Dec 10) i.e. just one fucker giving up his bonus equates to all the wage earners in a fair sized town getting a pay rise decent enough to keep up with the cost of living. I would also guess yer bod on the average wage is paid in such a way that the tax man gets a good sniff of their earnings whereas a top whack investment banker is presumably paid thru a long enough chain of off shore, non-dom accounts and companies to put off all but the most forensic of forensic accountants.

Besides, in their own words these above the line feckers simply aren’t worth it. On the one hand you’ve got Sir Fred Goodwin sitting before the Treasury Select Committee saying it wisnae just me and on the other you’ve got Chuck Prince famously going on about how despite him being the CEO he had to keep dancing at the behest of shareholders, execs and what not i.e. the individual cunts getting all this dosh don’t necessarily make that much of a difference (unless they lied thru their teeth of course and they actually truly were completely omnipotent and as such completely liable).

More practical still are the Income Data Services numbers quoted in the latest Prviate Eye about how last year the total earnings of FTSE company directors went up 55% whereas actual FTSE share prices, the only real benchmark of a director's performance and worth only rose 9% (by contrast average weekly earnings in December 2010 grew a fuck all 1.1% according to this). Clearly, the rhetoric we have to live by is that some costs (i.e. "us") have to be contained whereas "talent" has to be retained, whatever the cost.

Translating the above rant into actual policy strikes me as easy enough. To be fair, there’s all this moaning right now about banker bonuses and not incentivising risk taking, yad-di-ya-di-yada and so on, except that’s kinda finite. Rather we should move from the current situation whereby average pay is the be all and end all when it comes to watching out for potential wage/price spirals to one where besides average pay, the pay rises received by different bands of earners should also be taken into account and responded to accordingly by monetary policy setters. There’s a clear “economic” rationale (I fucking hate using rhetorical flourishes like that, I’ll be saying “scientific” next) for doing so given people on different incomes tend to spend their earnings in systematically different ways that impact on inflation differently, so all good in my book. That it would also expose the different economic experience of different categories of wage earners over the medium to long term is of course beside the point. Obviously. You never know, exposing all of the above shite might result in more people getting jam today.

* This strikes me as a useful enough starting point when thinking about the bullshit rhetoric used to legitimise the unequal distribution of economic resources i.e. it emphasises economics is actually about the political economy as opposed to a psuedo science.

As an 8th March P.S. its a fucking laugh the police getting the big public sector spending cut shafteroo. Mebbe next time they'll no be so quick to tip protestors out of wheelchairs. Saying that the initial proposals suggest our lords and masters really are utter fuckwits given Thatcher's miners strike example of making sure the cops are on side before kicking the shit out of protestors.

A 9th March PS this time. So according to Hermann Gartner and Christian Merklthe "The roots of the German miracle" lie in its “wage moderation” that was the result of labour-market policies in the years preceding the global crisis. Really? Lets politely ignore realities like its export based economy and shit like the CD Rom some former private banker handed over to German authorities that showed how all these German bigwigs had been avoiding tax at the same time as most people were having their wages "moderated". Cunts squared. Utter cunts squared.

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