Author Topic: Election Thoughts & Reflections  (Read 7724 times)

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Offline The Oakhurst Avenger

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Re: Election Thoughts & Reflections
« Reply #20 on: June 03, 2015, 03:20:10 PM »
Not at all Oakhurst.

If you all have the percentage wage rise, you still have the same percentage of total income.

The reason that we have disparity is that the market, and I am a great believer in the market, rewards the factors of production differently.
Left to the market alone Capital and land will always achieve a greater reward than labour.

In absolute terms the richer person has seen the gap between their salary and the poorer person widen. In my example they would have £300 more disposal income than the poorer person than they had before. Not sure how that can be disputed...
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Offline Phil Chitty

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Re: Election Thoughts & Reflections
« Reply #21 on: June 03, 2015, 03:49:38 PM »
On a purely cash level you are of course correct, although in terms of buying power their relative position remains unchanged.

When economists talk about the gap they are not talking in pure cash terms, but as a share of national income.

Offline The Oakhurst Avenger

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Re: Election Thoughts & Reflections
« Reply #22 on: June 03, 2015, 09:18:54 PM »
On a purely cash level you are of course correct, although in terms of buying power their relative position remains unchanged.

When economists talk about the gap they are not talking in pure cash terms, but as a share of national income.

Ah economists! In the real world you and I live in cash is king. In my example I can buy a £300 TV that the poorer person cannot. That gives me the power to buy that TV that the poorer person cannot. Not sure how that leaves our relative positions unchanged....I have a tv the poorer person has not. But hey I am not an economist!
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Offline moley

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Re: Election Thoughts & Reflections
« Reply #23 on: June 03, 2015, 11:02:23 PM »
On a purely cash level you are of course correct, although in terms of buying power their relative position remains unchanged.

When economists talk about the gap they are not talking in pure cash terms, but as a share of national income.

Ah economists! In the real world you and I live in cash is king. In my example I can buy a £300 TV that the poorer person cannot. That gives me the power to buy that TV that the poorer person cannot. Not sure how that leaves our relative positions unchanged....I have a tv the poorer person has not. But hey I am not an economist!

Worth pointing out that my salary would say I should have done well under the Conservatives... but my disposable income has dropped significantly under the previous government (due to lost child benefit which was NOT compensated for by taxation changes).

I wouldn't necessarily complain about this (we're all in this together) but plenty of families with a significantly greater combined income than we have still receive this benefit.

Also worth pointing out that people on a significantly greater income than I have are paying much less tax than they paid in 2010 (due to the cut in the top rate of tax).

I remember seeing an article a few months ago that broke down the gain in income under the last government.. the people at the very top and something like 3rd/4th decile from bottom had done best under the current government... (but the changes had the most profound impact on the people at the top),  But people in the bottom decile in particular had suffered.... because they typically didn't pay any tax anyway (and there was a clampdown on benefits).

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Offline Spunkymonkey

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Re: Election Thoughts & Reflections
« Reply #24 on: June 04, 2015, 12:00:16 AM »
Spunkey to your question about Labour going to the centre or to the left, it would make no difference to  either one as my previous blog stays true i think that the Inequality gap is getting bigger each year. Both the U.K and the U.S. have the most inequality in the world,look to the research done by the book the sprit level.

Helen - Thanks, I have ordered a copy off of Amazon.

I would question whether equality is actually possible even if there was a will. Even if everyone was given an equal share there will always be black markets, theft, good luck, bad luck to upset the balance. It wouldn't take long for inequality to return.

As for the US and UK having the widest gap I think it depends how you measure it. Do you measure in monetary terms, percentage share of GDP or living conditions?

If you measure in monetary terms, then wealthy countries will have a wider gap. Is that financial gap a true measure when you compare it to a third world country where the poor are starving and have no access to healthcare or education and the rich are living in palaces? Is the gap wider between two people in the UK earning £10k and £20K or between two people in Africa earning £1 and £100? Which of those 4 people would you prefer to be?

The way that the gap is measured can be chosen or manipulated to suit the conclusion that they want to reach.

Offline Spunkymonkey

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Re: Election Thoughts & Reflections
« Reply #25 on: June 04, 2015, 12:27:51 AM »
On a purely cash level you are of course correct, although in terms of buying power their relative position remains unchanged.

When economists talk about the gap they are not talking in pure cash terms, but as a share of national income.

Ah economists! In the real world you and I live in cash is king. In my example I can buy a £300 TV that the poorer person cannot. That gives me the power to buy that TV that the poorer person cannot. Not sure how that leaves our relative positions unchanged....I have a tv the poorer person has not. But hey I am not an economist!

If everyone received a 3% pay rise it wouldn't be long before inflation wiped out any increased buying power so the relative position remains the same.

I think the gap is more about accumulated wealth than income. The person on the low income struggles to get by whilst the person on the higher income can accumulate wealth which leads to bigger things.

There was an interesting lecture on the BBC a couple of years ago by a Danish professor. In one example, he examined the life of a relatively poor African man and his access to transport. The villagers all grew their own crops and struggled to get by. One man scrimped and saved and managed to buy himself a bicycle. He could then travel to a bigger town and sell his crops for a better price. The key was earning more than he needed to survive. By saving that tiny excess, he bought a bike which opened up new opportunities and allowed him to climb one rung up the ladder. The fact that his tiny income was fractionally greater than his living costs has allowed him to start the climb out of poverty. His ambition is now to save for a motorbike.

The same is true in the UK but with bigger numbers. The person on £10k struggles to get by, pays extortionate rent and if they need a top up have to borrow at inflated payday loan rates. The person on £20k can save a deposit for a house and escape the rental market, borrow more cheaply or earn a little interest. They can afford to study at college to improve job prospects or buy a car to widen their job opportunities and earning potential.

In terms of income £20k is double £10k, but if the cost of essential living is £9k the better paid person has the potential to climb out of poverty at 11 times the rate of the poorer person. The rich will always get richer.


Offline The Oakhurst Avenger

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Re: Election Thoughts & Reflections
« Reply #26 on: June 04, 2015, 07:39:30 AM »
Although capital, land and other forms of wealth are important I have read studies that wages are still one of, if not the most important factor, contributing to inequality.

At the moment I believe wages are starting to rise faster than inflation due to the depressed oil price which has a dominant influence on prices.
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Offline Donian

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Re: Election Thoughts & Reflections
« Reply #27 on: June 04, 2015, 10:06:21 AM »
Also worth pointing out that people on a significantly greater income than I have are paying much less tax than they paid in 2010 (due to the cut in the top rate of tax).

If you earned £100,000 in 2009/10 you'd take home £65,308. Same wage in 2015/16 you would take home £65,326.

£1,000,000 in 2009/10 would leave £596,308 take home compared to £540,586 in 2015/16.

Offline helen thompson

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Re: Election Thoughts & Reflections
« Reply #28 on: June 04, 2015, 07:44:04 PM »
Spukey Monkey, if you measure by G.D.P this can be different according what is going on in the world. For example  when BP had there  accident in  the US the clean up had a effect on the G.D.P. as it was money going into the Mr Osbornes accounts also G.D.P. does not include mortgages

Offline the gorgon

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Re: Election Thoughts & Reflections
« Reply #29 on: June 04, 2015, 08:51:31 PM »
Spukey Monkey, if you measure by G.D.P this can be different according what is going on in the world. For example  when BP had there  accident in  the US the clean up had a effect on the G.D.P. as it was money going into the Mr Osbornes accounts also G.D.P. does not include mortgages


GDP does include house prices though (and prostitution and drug dealing as well).

http://www.mindfulmoney.co.uk/wp/shaun-richards/how-the-uk-gdp-figures-are-being-gamed-and-manipulated/
http://www.theguardian.com/society/2014/may/29/drugs-prostitution-uk-national-accounts


Offline Tobes

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Re: Election Thoughts & Reflections
« Reply #30 on: June 05, 2015, 06:12:32 PM »
Quote
I think the gap is more about accumulated wealth than income. The person on the low income struggles to get by whilst the person on the higher income can accumulate wealth which leads to bigger things.

Wise words as usual from Mr Spunx - and a consideration which will most likely fly over the heads of our on-board party political ideologues.

The point is of course the use of credit; poor people absolutely need it to acquire high value items - and end up paying a premium through interest (be that buying a car, making the down payment of two months rental plus deposit for a house etc.) That means they effectively already get less value for what little money they have - much of it is spent servicing the costs of loans. Even being ostensible sensible by doing things like spreading payments for things like road tax costs extra, as the poor have to pay a preimium to do it.

The rich on the other hand face no such extra barrier. And the rate at which property is being bought up as a buy to rent asset also marks the way to the future - one which in combination with things like zero hours contracts and frozen public sector pay rates, looks increasingly feudal in nature - a nation divided between those with the assets to home and educate their children to the highest standards and who can propagate the advantages they had in their life for their descendants.

It may well be the 'way things always were' - but didn't we strive for a big chunk of the last century to make our society a more meritorious one?

I'm no Marxist - but what we face looks ever more like the realisation of High Capitalism to me...
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