We Shall Not Look Upon Her Like Again

Ken Livingstone summed her up well, although he had a lot more negative things to say about her :

Ken Livingstone, Labour’s former London Mayor who clashed with Lady Thatcher during his time running the Greater London Council in the 1980s, said her personal “courage and drive” made her “the most admirable prime minister of modern times”.

“She didn’t worry about focus groups, she didn’t read the newspapers,” he said.

“There was real courage.”

However, Mr Livingstone said it had been “a tragedy for Britain” that her policies had been so badly flawed.

The Thatcher years were the start of the world we live in today. Her Premiership saw:

a) The start of the debt-fuelled culture which crashed in 2008 - remember "takes the waiting out of wanting" ?
b) The rise of the UK underclass, bastardy and drug use
c) The rise of the deregulated financial “economy” and decline of manufacturing
d) The rise in house prices
e) a collapse in the birth rate as
f) more women participated in the workforce (so they could afford a house!)
g) a dramatic rise in crime – linked to b)
h) the sell-off of vital infrastructure – power generation and distribution being the most important

While winning her economic wars, she was defeated in the culture wars – I’m not sure she even realised she was fighting one, let alone that she was losing. At any event, the Britain of 1990 was a lot further from Alderman Roberts’ Grantham than the Britain of 1979.

But the thing is – every government since has overseen the continuation and perhaps intensification of all the baleful trends above – with the one glorious exception of the Blessed Michael Howard’s noble reversal of the previous 50 years penal policy.

And, of course, Blair added a few more baleful trends all of his very own - including massive immigration and stopping all nuclear development in 1998.

We see in the Thatcher years yet again the contrast between the post-68 left's total dominance of the social agenda and their defeats on the economic agenda. A former girlfriend was a trainee social worker in 1980 - those girls hated Thatcher, more for her conservative social beliefs and her personal style than her economics. Such a straight !

Thatcher’s small-town conservative social values were almost redundant by the end of her reign, with rocketing rates of crime, bastardy, drug use, STIs.

The 80s were when the 60s went mainstream – I can still remember finding a bunch of lager-drinking ‘lads’ from my local picking magic mushrooms one September – their counterparts of ten or fifteen years before would have avoided such things like the plague.

So why did Mrs Thatcher’s social agenda fail so dismally while her economic agenda – at least as regards crippling union power – succeed?

Because individual capitalists – especially in the financial sector – found that none of that made much difference to their profits. Some things, like the influx of women into the labour market, and a move from manufacturing to services, were a positive boon as far as reducing militancy and strikes were concerned. The destruction of the existing cultural landscape was no problem to people who didn’t particularly identify with it – like Rupert Murdoch.

Bastardy, crime and the underclass were much more of a problem for working class people than the elite, who didn’t have to live with it or send their kids to school with it. Not much anti-social behaviour in Roy Jenkins’ Oxfordshire village – plenty in the Valleys where he was born.

Sure, taxes were quite high to pay the benefits bill – but they were coming down, and compared to the 1960s they were massively reduced. And North Sea oil paid the bills and enabled us to keep the balance of payments deficit getting too outrageous – while the City tax take climbed ever higher. You can only take one step at a time – IIRC Mrs Thatcher’s share of state spending was around the same when she left as when she arrived – remarkable when you think what the state no longer did – steel, coal, gas, water, power.

It's arguable (I tend to agnosticism) that Mrs Thatcher's curbing of the unions may have been a good thing in a relatively closed society. But when that was combined with immigration on the scale of the Blair years, it was an invitation to capitalists to fill their boots, then grind them in the faces of the poor. The toxic synergy of capitalist economic ideas (up to a point - would Adam Smith have bailed out the banks?) and post-68 left social ideas have between them created the Britain we see today - and it's not a pretty sight.    

"Open borders make the eventual abolition of the welfare state imaginable"

Thanks to blogger BenSix in the comments for this, from libertarian economist Bryan Caplan.

(Graphs from Alesina, Glaeser, and Sacerdote's "Why Doesn't the United States Have a European-Style Welfare State?")

Caplan thinks that the end of the journey is not only possible, but desirable. Key paragraphs :

"Diversity undermines solidarity. People don't mind paying high taxes to support people "like them." But free money for "the other" leads to resentment and political pushback.

That's exactly what we're seeing in the UK, and why Osborne and Shapps may get away politically with a real-terms benefits cut. They noted the outrage among working people in 2011 when benefits rose by 5% at a time of static wages.

If you're a social democrat, this implies a tragic trade-off between social justice for natives and social justice for potential immigrants. But if you're a libertarian, the opposite is true. The welfare state doesn't make open borders impossible. It's open borders that makes the eventual abolition of the welfare state imaginable."

Caveat - the first graph is based on 1990-1998 figures, the second on 1998 figures. Ireland and the UK, for example, are considerably more diverse than they were then. And the US is a lot more Hispanic than it was in 1998.

UPDATE - another academic blogger takes issue with Prof. Caplan  - no comfort here, I fear:

" In particular, let me stress once again that even if open borders makes the majority population more anti-government, after a while their preferences will not matter, since they will inevitably become a minority of voters. "

 But at some stage the money runs out, no matter what the voters want.

Prof Caplan responds - no comfort again :

"The claim isn't that open borders will "destroy" solidarity or the welfare state, but merely that open borders will undermine both.  And while free-marketers may well agree that some degree of solidarity is good, it's also hard for free-marketers to deny that current levels of solidarity are excessive.  Solidarity stands in the way of free-market reforms in pensions, education, health care, taxation, agricultural policy, and much more."

 Can't say we've not been warned.

More On Universal Credit - Stable Door Edition

When I wrote about the Universal Credit rules for the self-employed, which will do such damage to the self-employed handyman or the single mum selling her crafts at local fairs, I forgot about another target - the Big Issue Benefits Loophole :

"A Big Issue seller is claiming victory in a landmark case to have her work classed as a proper job and thus be eligible for extra benefits.

Romanian Firuta Vasile was refused housing benefit because a local authority judged that her job selling the magazine "didn't count".

But she has successfully argued that because she bought the Big Issues and sold them at her own profit or loss she was self-employed.

Speaking through an interpreter, Vasile, 27, said she came to the UK in 2007 to look for a job, but could only find work selling the Big Issue."

Romanians and Bulgarians aren't allowed to work here unless they're self-employed. And you'll have noticed the terrible shortage of Big Issue sellers which is crippling British industry. But it sounds as if the Big Issue is their flexible friend :

"The Big Issue exists to offer homeless people and those at risk of homelessness the opportunity to work and earn an income. This is offered irrespective of a person’s background or origin. Earning their own money reduces dependency on hand-outs from the state, charities and the public.. "

Even when the entire raison-d'etre of "earning their own money" is to get "hand-outs from the state" ? It's not surprising that Roma Big Issue sellers are an increasingly common sight.

The good news is that, come October, all this will stop and our self-employed sellers will be assumed to have an income of around £250 pw - whether they have or not.

The bad news is that, come December, the entire populations of Romania and Bulgaria will be free to move to the UK, self-employed or not.  

I do wonder if the aim of our rulers is actually to push immigration to the levels where the Brits will, of their own volition, call for the end of the Welfare State. Maybe that Grant Shapps isn't as stupid as he sounds, only as unpleasant as he sounds.

"I do think that it’s right for the taxpayer at large, who after going out, working hard, paying their taxes, should feel that they’re not having to pay for people who are in receipt of benefits to get a higher effective pay rise than the people actually working. So I think this is an argument about fairness."

As I've said before, benefits are meant to afford a minimum standard of living. Raising them by 1% a year for three years, when inflation on necessities is probably over 5%, will drop them a long way below that standard. Now maybe that standard was set too high. But that's not what he's arguing. He's arguing that it's "fair" that a minimum standard set by Parliament should be reduced because other, better-off people are tightening their belts.

I said he's not stupid. People working and still struggling to pay the electric bill aren't going to be overly sympathetic, to put it mildly. Good politics if lousy humanity.     
 

"What's Wrong With The Left?" Part 296

Andy Newman at Socialist Unity is worried :

"I think there is another underlying problem, in writing about what the left is doing,  because the left really isn’t doing much at the moment which engages with the political mainstream. I will write a longer and more considered article on this, but I am interested in what our readers think. Has the left lost its way?"

Well there's a surprise. What could the matter be, I wonder ? In a week when the statutory consultation period for large-scale redundancy has been reduced from 90 days to 45, and the Agricultural Wages Board ('which permits the fixing of minimum wage rates and terms and conditions for agricultural workers') has been abolished, all with hardly a ripple of opposition, what could a left-winger in the UK possibly find to worry about except US gun control and gay marriage ?

But if Andy doesn't understand what's going on, his commenters can fill him in :

Alan Gibbons : 

"The Tories have been relatively successful at slicing away at public services. There has been no ‘big bang’ provoking a generalised fightback... anti-welfare rhetoric has struck a nerve with some sections of the population. The second national anti-cuts march, while substantial, was smaller than the first...what worries me more, from the perspective of somebody involved as an independent activist in the fight against the cuts and particularly the campaign to save the public library service, is that the Left looks much older, greyer, divided and less confident ..."

You're telling me ... I think this post needs a link.

"The time of salami-slicing in public services seems to be coming to a close and whole areas of public spending may be axed, as shown by Newcastle’s withdrawal from the Arts. The assault on redundancy, the privatisation of the NHS, the proposed onslaught on the teaching unions and accelerating attacks on benefits show a weak government with a fragile mandate going ahead regardless with an offensive strategy."

A slight diversion here - I think some areas of public spending OUGHT to be axed. The dynamic of the last sixty years in local government is

a) central government puts statutory obligation on local government
b) gives them some money to fund it.

Until a local authority gets far more of its money from central government than from local taxation, and this is cancerous to local democracy, because you don't really get what you vote for. As a school governor, for example, I saw our Conservative local authority zealously implementing Labour's hideous "Every Child Matters" agenda, and wondered what the point of a Tory vote was. If central government want something done, they should do it themselves.

So anyway, I wouldn't mind if some of the legislative nagombi (how many diversity consultants) was dropped. Alas, this isn't going to happen any time soon. What's more likely is that the local authority (LA) staff will end up being outsourced to whichever company promises the LA that they can do the same stuff as the council did, with the staff having the same terms and conditions (except pensions - a not inconsiderable point, as LA pensions are index-linked final salary i.e. what you don't see in the private sector any more) - and all at 10-15% less cost ! I invite the reader to imagine at whose expense these savings will come.

I digress.

Nadia Chem - fine old English name, but she talks sense (though should that be "overestimated"?) :

"What has been missed is the reality that the working class might not have the confidence to resist such an offensive. The atrophy of working class organization at workplace and community level cannot be underestimated... the locus of the offensive has been as much in a general attack on living standards as in cuts. This has generated an enormous well of bitterness but little active resistance... the fact that this attack on living standards started under the Labour government from 2006 weakens Labour’s ability to grasp the bitterness."

Mr Newman himself :

"My experience of knocking doors for Labour, is that people are open to a traditional Labour message, but not with any real conviction that labour would be even different, let alone better."       

Trust the people, Andy.

"I fear that much of the left – including the so-called revolutionaries – have actually given up on social change"

I wouldn't say that. We've seen unprecedented social change, and will see more.

BrokenWindow :

"the Left is as atomised as the workers collectively are atrophied. Underpinning this is an absence or failure to theoretically engage in wider debates about globalisation and nation states... most of all it must re-engage with the people it hates the most,the young working class white men and women who have gone to the right."

So there are plenty of people who can see that there's a problem. But in 175-odd comments, no one seems to really know why they're up the Swanee.

"the best thing we could do for the cause is to recruit more people to unions/help install a sense of discipline/participate in community campaigns and start working where people are rather than where we want them to be." 

Of course ! Like good old  Boxer in Animal Farm, "I must work harder" ! If only we were better socialists...

Laban dropped into the comments a quote from the anthropologist Peter Frost (of 'Fair Women, Dark Men') :

"In late capitalism, the elites are no longer restrained by ties of national identity and are thus freer to enrich themselves at the expense of their host society. This clash of interests lies at the heart of the globalist project: on the one hand, jobs are outsourced to low-wage countries; on the other, low-wage labor is insourced for jobs that cannot be relocated, such as in the construction and service industries.

This two-way movement redistributes wealth from owners of labor to owners of capital. Business people benefit from access to lower-paid workers and weaker labor and environmental standards. Working people are meanwhile thrown into competition with these other workers. As a result, the top 10% of society is pulling farther and farther ahead of everyone else, and this trend is taking place throughout the developed world. The rich are getting richer … not by making a better product but by making the same product with cheaper and less troublesome inputs of labor."  

I think Mr Frost describes it pretty well. The UK business elite in 1940, as noted in Harold Nicolson's diaries, were prepared to go down in flames rather than see Hitler triumph. But now ... even "conservatives" like Boris Johnson and Michael Heseltine* "are no longer restrained by ties of national identity", let alone businessmen who've seen their incomes soar, both absolutely and relatively. This is why the end of the journey will soon be in sight.
    
Anyway, Andy (or his gofer, I know not) deleted the post in about minutes one. They don't want to know, and that's why they'll continue to get shafted - along with the rest of us.

Andy is at this moment involved in  an industrial dispute between Carillion, an outsourcer, and their many Asian employees - mostly Goan Catholics and I'm sure good people (the details of the dispute make depressing reading - looks like third-world petty corruption is already here).

But you do have to wonder why people from half way round the world are needed to clean Swindon's hospital - especially as Swindon is a place where there are 30 applications for every vacancy in Next.

The answer to Andy's questions are literally staring him in the face - but there's none so blind as those who will not see.

    


* Heseltine gave a famous Spectator interview where, asked if he was worried about Britain being merged into a Greater Europe, replied "who now remembers the Heptarchy (the seven kingdoms of Saxon England)?" 

Vote Conservative !

For more expensive wine !

"The ban on cheap multi-buy deals will not apply to pubs, clubs and restaurants and is aimed at curbing binge drinking, especially by teenagers "pre-loading" on very cheap alcohol before they go for an evening out."

 I suppose enforcing existing laws on public drunkenness is a ridiculous idea. Far easier to penalise everyone. It's all about rewarding personal responsibility, you know.

I am going to take a weekend off, spend a night or two in France and fill the people-carrier to the gunwales with the more bearable products of Carrefour and Leclerc. About 300 bottles should suffice, and that nice M. Hollande needs the taxes.

(see also "a substance abuse counsellor has been charged with murder and drink-driving after she allegedly stuck a pedestrian and drove for more than two miles with the dying man embedded in the windscreen.")



For concreting over England !

More than 1,500 square miles of open countryside - over twice the area covered by greater London - needs to be built on to meet housing demand, the Government’s planning minister Nick Boles has said.

I suppose stopping letting half a million people a year into the UK is a ridiculous idea. Far easier to ruin the countryside and build on some of the best agricultural land in the world. Who needs food ?




For electricity bills, utility bills and train fares all increasing faster than inflation.

Who needs to keep warm in the winter ? Us Brits can take it ! 





For an India - EU trade deal which would allow 30,000 (above existing numbers) Indian IT staff into the EU  - because there are still one or two UK IT people earning over £30,000! The BBC were plugging it this morning on Radio Four. The Institute of Directors are very keen.

 "CEDEFOP (2010) estimates show a labour shortage of 12 million in the EU in 2020 cutting across all levels of workers."

You may have noticed how few unemployed there are in the EU.

"In 2007, about three million jobs were unfilled in sectors such as information technology (IT) and engineering (EurActive, 2007)."

Must be why IT salaries have gone up so much in the last six years.

(In India for IT staff it's like the 80s in the UK - wage rises three times a year, go to a jobs fair and pick a job from half a dozen offers. A former colleague told me that two years back he'd trained up three or four people so that they could move his job offshore. He trained them in .NET technologies, they went back to India to start supporting "his" applications - and immediately left, armed with their new skills, to work for a competitor! He's still supporting the apps - the company he works for seem a tad 'burned' by the experience.)

More Dreadful Tax Antics By Foreigners - The Government Acts

We've seen the dodgy deeds of various swarthy chaps documented in HMRCs Most Wanted.

But one should remember that if you want a decent job done, call a professional. All bar the top two or three of HMRC's bad-boys were six-figure tax dodgers or less.

If you want to keep nine, ten, eleven or even twelve figure sums out of the Revenue's sticky grasp and also get a Guardian column to argue how the other guy's tax money should be spent, or be appointed to a Government business task force, it's best to forgo concepts like "carousel fraud" and the "long firm", and think about ordering a Dutch Sandwich with a Double Irish to go.

You'll note the absence from HMRC's list of Starbucks, Google (whose execs have the brass neck to pontificate in the Guardian about how more kids should be taught programming in UK schools), Amazon (whose Luxembourgeois variant involves some interesting VAT shenanigans with the publishers),  Apple and a whole host of famous names. They avoid paying the corporation tax that unimportant sectors like manufacturing stump up - because their UK businesses make hardly any profit. Yet strangely, they don't want to close these loss-making enterprises - far from it. They're very profitable - but the profits are elsewhere.

Now most of these techniques involve vesting the company's "intellectual property" (IP) in some tax haven then levying a hefty transaction fee for use thereof, one which renders the business activity taking pace in a taxable jurisdiction (as it might be the UK) only marginally profitable or even loss-making. You'd see how it might be possible with software, where IP is all (how much does it cost to copy a disk?), but apparently a there's more intellectual property than coffee in Starbucks, for example :

"accounts filed for its UK, German and French units, which make up 90pc of European sales, showed an apparent loss of $60m, but Starbucks told investors its European business was profit-making...

Starbucks said that although it had paid no corporation tax in three of its “largest and most important markets” last year, it had paid value-added tax, social security costs and business rates...The coffee giant uses a range of measures to mitigate the impact of tax. For example, the European unit is required to pay a royalty rate of 6pc of sales to Starbucks for using its intellectual property. Starbucks, which has a complex financial structure..."

A paragraph back I mooted that IP was valuable stuff compared with the price of producing a CD. Well, yes and no - not if you're the biggest software company in the world.

 Steve Sailer on Microsoft :

"Microsoft has over 40,000 employees in the state of Washington in the United States. But they don't actually physically burn on to disks the software they develop. Instead, Microsoft, has a manufacturing plant in Puerto Rico employing 185 people that gets credited in Microsoft's books with a lion's share of Microsoft's Western hemisphere revenue and profits. It's making disks that's the really important thing that Microsoft does.

Despite all you've heard about Microsoft being a software company, they are actually a manufacturing company, at least for tax accounting purposes. To the IRS, Microsoft is basically a Puerto Rican, Irish and Singaporean industrial goliath with a money-losing R&D outpost in Redmond, WA."

Now call me naive, but I'm not sure how you can reasonably one day discover that all your intellectual property lives in an offshore haven. I thought Bill Gates set up shop in Washington State, and Steve Jobs worked out of a California garage. It's not as if they set up their firms in the Dutch Antilles or Caymans. I may be wrong, but I could have sworn that Facebook guy started at Harvard, not in Northern Cyprus.

Her Majesty's Revenue and Customs take a dim view of this sort of thing when done in the UK. I'm no tax lawyer (alas), but I understand the general rule is that if they consider a business arrangement to have been set up wholly or mainly as a tax avoidance measure, then they can knock it on the head, and Lord help you if you didn't put aside some of that money in case of an HMRC challenge.

Yet these rules don't seem to apply to multinationals. They seem able to extract the urine with impunity.

But wait ! What's this in the Telegraph ?

"New push on foreign firms’ tax"

"Political pressure to change the way foreign firms are taxed in Britain increased this weekend"

Lord Myners, the former City minister, and Margaret Hodge, the chairman of the PAC – which is carrying out its own inquiry into the issue – said the Government should look into a sales tax as a way of raising extra tax revenue from global companies.
Tomorrow the issue will again be in the public spotlight when Starbucks, Google and Amazon all give evidence on the issue to the PAC. The comments come in the wake of a string of disclosures surrounding the small amount of tax paid by large international companies.

The UK business of Starbucks, the coffee chain, reported sales of £398m and paid nothing in tax because it made a £32.9m loss. The online retailer Amazon paid no tax in the UK in 2010 despite generating sales of more than £3.3bn.

Lord Myners told The Sunday Telegraph that the current system for collecting corporation tax from multi-national companies (MNCs) is flawed. “Corporation tax for an MNC operating in the UK is close to being a voluntary payment,” he said. “The problem is that the tax environment many MNCs are interested in is a zero tax environment.”

Two points. First, is that this Margaret Hodge ?

"The Labour MP has been one of the fiercest critics of tax avoidance by companies such as Starbucks, Google and Amazon. However, she is likely to face questions over the limited tax paid by Stemcor, the steel trading company in which she owns shares and which was founded by her father and is run by her brother. Analysis of Stemcor’s latest accounts show that the business paid tax of just £163,000 on revenues of more than £2.1bn in 2011. However. it is not known whether the company – which made profits of £65m – used similar controversial tax avoidance measures criticised in the past by Mrs Hodge. Stemcor’s tax bill to the exchequer equates to just 0.01pc of the revenues it booked through its UK-based business. In accounts filed with Companies House, Stemcor revealed that despite generating about one third of its revenues in Britain, its UK tax contribution made up only 2.7pc of the tax the company paid globally. "

Now before Tim Worstall gets all cross, I know that taxes are levied on profits, not turnover, and that, for example, some capital investment or previous losses can be used to offset tax. But it doesn't look good. Be interesting to know how they do it.

The second point - if it's a sales/revenue tax they're proposing, how do they think they'll be able to impose it on Company A (notionally loss-making but remits vast sums to tax haven IP owner) but not on Company B (profitable although squeezed by Company A, pays its taxes) ?  Remember that Company A can probably hire brighter lawyers than HMRC.


I'd have thought the only long term solution was to stop the IP nonsense in its tracks i.e. for the law to adjust to todays business practices, treating IP more like a physical asset. If Microsoft made car parts at Redmond, then smuggled them out to a low-tax jurisdiction (as it might be Puerto Rico) to sell, senior guys would soon be doing eight-to-twenty-four stretches and everyone else doing the same would clean up their act.

The alternative is public and governmental pressure - a lot of it. Treat Amazon, Starbucks as if they were the late Jimmy Savile or the Medellin Cartel - or alternatively, the way the Obama administration treated BP and is about to treat HSBC and Barclays. Point out the Kobo as the ethical alternative to the Kindle, or that Amazon vouchers should be what South African sherry was in 1968. No cosy relationship with ministers, no invites to even a local Tory wine and cheese, let alone Chequers. Constant public reminders of what they're doing. No need to do a China (vis a vis Japan) and invite people to smash up their branches, just reiterate that they are not good corporate citizens - that, in short, they are Bad People. Most people want to be liked.

I'm not sure either party is capable of doing this, but you never know. Government has a lot of clout - if it wants to use it.

Last - I know it was originally published in 2010, but this was the strip on a colleagues Dilbert calendar on Wednesday.



        

The End Of The Journey Will Soon Be In Sight...

Mass immigration doesn't "just" depress wages and reduce the power of working people vis a vis employers.

I haven't blogged much over the last year due to long hours, but still sniped over at CiF - and this comment sums my emerging view :

The greatest prize for the very rich would be the total dismantling of the welfare state and the removal of its consequent tax burden (although venture capitalists, on 10% tax - "entrepreneurs relief", do pretty well already).

It's a lot easier to justify a welfare state when the recipients are "people like us" and therefore easier to identify with and to think "there but for the grace of God". Social solidarity among working people, whether it be support for a welfare state or a trades union, will always be stronger in the absence of cultural, religious or racial divisions. Social scientists like Robert Putnam have noted how diversity weakens a sense of community.

So were I an evil capitalist billionaire looking to reduce the power of trades unions and destroy the welfare state, I'd start by funding Left groups supporting mass immigration.

I'd encourage such groups, and left-wing lawyers too, to support the most outrageous abuses of the welfare system, knowing that it would discredit welfare in the eyes of ordinary working people - and I'd chuckle to see Telegraph and Mail readers - and BBC commenters, too - getting angry when benefits rise, as they should do, with inflation.

"The plan is working ... heh heh heh ..."

I'd suggest, with all its faults, that the Welfare State is the most outstanding instance of UK social solidarity - started in Edwardian times by Lloyd George and nailed down in the aftermath of WW2 by a strong people, annealed in the fire of two world wars and quenched in the depression years of the 1930s.

I'd also suggest that the plan is continuing to work :

Despite the tough economic climate, the study by independent social research agency NatCen reveals attitudes towards welfare and welfare claimants have toughened. Only 28% of those asked wanted to see more spending on welfare - down from 35% at the beginning of the recession in 2008, and from 58% in 1991.

Report author and NatCen chief executive, Penny Young, said the study showed the public's view on welfare was "in tune... with the coalition's policies".She said: "The recession doesn't seem to be changing things; attitudes continue to harden. One thing that we've seen is that even where groups are seen as perhaps more deserving - so retired people, disabled people - again for the first time since 2008 we've seen that the number of people who are prepared to see more money go on disability benefits has actually fallen."

 "Heh heh heh ...." - the BBC Today programme this morning couldn't get over it - in the early 90s recession 58% thought we should increase welfare spending, now it's down to 28%. What could possibly have changed since the early 90s? They just couldn't understand such a dramatic shift in attitude.

"You beat your pate, and fancy wit will come,
Knock as you please, there's nobody at home"

In various posts over the last year, I've aired the fancy that in ten, fifteen years, the Guardian will be simultaneously

a) bemoaning the end of the welfare state and the new poverty of the working class
b) celebrating our ever-greater diversity

and I've pointed out that

Western welfare states carry a high tax burden, which makes life uncomfortable for the mega-rich. It would be a lot easier for them if social solidarity was destroyed to the extent that the welfare state no longer existed and their taxes could come down. A good way to do that is to create atomised societies of competing ethnicities.

Mass immigration will IMHO mean the end of the Welfare State, probably in the next thirty years. A pity. It was a good concept - for 1948 Brits and their descendants. And as an ageing boomer, I don't want the NHS to turn into any more of a death factory for the old than it currently is.

But at least we'll all be equal in our barrios, looking up at the gated communities on the hills.







UPDATE - "The government is considering ending the automatic annual increase in benefits in line with inflation, sources have told BBC Newsnight.

The whole point of benefits is that they're meant to be a liveable minimum amount.So if inflation rises, so should that amount. But there'll be little sympathy for that view from those whose expenses are rising but whose wages are static - and that means most of us. 

"Heh heh heh ..."

UPDATE2 - "To promote prudence and responsibility, rather than the dependency and waste of the welfare system, we should return to mutual aid societies

"Heh heh heh ..."

Mass Immigration And The Lewis Turning Point

Ambrose Evans-Pritchard ponders the wealth of nations :

For China, the cheap labour era is over. It faces the "Lewis Point" where the limitless supply of migrants from the countryside dries up and urban wages surge.

Pay has already been rising at 16pc to 18pc annually in the Eastern cities for several years, and this is now happening in Chengdu and Chongqing in the heartland.

I'd heard vaguely before of the economist Arthur Lewis, the first black person to win an academic Nobel, and his famous model :

In his story a "capitalist" sector develops by taking labour from a non-capitalist backward "subsistence" sector.

At an early stage of development, there would be available an "unlimited" supply of labour from the subsistence economy which means that the capitalist sector can expand without the need to raise wages. This results in higher returns to capital which are then reinvested in further capital accumulation. In turn, the increase in the capital stock leads the "capitalists" to expand employment by drawing further labor from the subsistence sector. Given the assumptions of the model (for example, that the profits are reinvested and that capital accumulation does not substitute for skilled labor in production), the process becomes self-sustaining and leads to modernization and economic development.

The point at which the excess labor in the subsistence sector is fully absorbed into the modern sector, and where further capital accumulation begins to increase wages, is sometimes called the "Lewisian turning point" (or "Lewis turning point") and has recently gained wide circulation in the context of economic development in China.

So as long as there's a plentiful supply of new labour, our capitalist doesn't need to raise wages. In its original development context, we're talking early-to-mid nineteenth century - the stuff that people like Dickens and later Zola railed against (in Zola's case after it was well on the way out).

By the latter half of the nineteenth century the country had moved to town, working class living standards were rising - and they didn't stop until the 1970s.

Lewis was writing in a 1950s Britain where "Globalisation In One Country" was undreamt of. It didn't occur to him that a wealthy country might start to put in train the reverse process, bringing in millions of poor from all over the world (a process which a change of government shows no sign or intention of stopping) and stopping wage growth in its tracks, before reversing it. Inflation's been over 5% for three years now, wage rises around 1% a year. That's a hefty cut. Asset price inflation - especially housing - has been high for 25 years.

And, as Adam Posen will tell you, it's a lot easier to let inflation lower real wages than "crush" nominal ones.

But unlike China, where the Communist capitalists, having a concept of a nation and a national interest, won't start importing millions of foreigners the moment wages go up, Britain seems likely to see this "un-development model" continue indefinitely. There are only a finite number of peasants in China, and it's a big country. Eventually, if the Communist Party continue their impressive capitalist stewardship, the average Chinese may be comfortably off.

The UK is a very small country, and there are a lot more poor people in the rest of the world. It could be a very long time before the "limitless supply of migrants" dries up and the UK becomes the first world economy to experience a second Lewis point.

Maybe when I mooted the prospect of UK real wages reaching Chinese levels I was being over-optimistic.