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The cost of living crisis: five words that are likely to be repeated by Labour and the unions for another four months at least; yesterday’s rail fare increases being just the latest opportunity. For the opposition, it’s an easy hit and an easy narrative: the cost of x is rising faster than wages therefore people are getting worse off therefore the government is a failure.
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Politics seems irrelevant after that, but as you've so generously posted a thread … I thought the so-called cost of living crisis was pretty much now over anyway?
http://blogs.ft.com/ftdata/2014/12/03/the-end-of-the-cost-of-living-crisis/
You mention rail fares but fuel at the pumps is much more vital as, indeed, are things like the new slide in the euro making holidays cheaper.
I don't think the Tories will let this one just dribble on. When a General Election campaign reaches the final lap you have to be very careful about assuming that merely repeating something makes it somehow true, or meme-changing. If the facts are wrong it can do greater damage.
I hope your wife's recovery continues as it seems to be doing. It sounds very disturbing.
'Cost of living crisis-what crisis?' is not a smart retort from a political party particularly the Tories who are not noted for their compassion.
A public sector worker, for example has not only suffered a decrease in their standard of living, but seen colleagues hived off into lower-paying contractors and been told it was “all their fault”. If you’re on £25-30k pa, that’s a bit hard to take!
Best wishes to you both.
On facts being wrong -- well, the problem for both parties is that different voters will have different facts. Drivers will see lower fuel prices but rail commuters face higher train fares. There are more people in jobs but some are in fake self-employment, and so on. It is voters' personal economic circumstances that matter, and different voters will see either Osborne or Balls as being wrong and, probably worse, out of touch.
Consequently Gove especially is a hate figure, as are those who appointed him.
I'd like to think that the electorate wold be smart enough to accept this and not fall for Labour just shouting "rich thieving toffs!!" repeatedly but given the electoral geography, the divided right and the lack of anything else to say, you can understand why Labour think it's worth a shot
Sad to hear of your wife's accident, Mr. Herdson, but glad she'll likely make a full recovery.
Saw the Conservative poster yesterday. Tedious image, slogan too long and forgettable. Not downright awful (Miliband making Cameron look like Gene Hunt would be an example of that), but pretty worthless.
http://www.theguardian.com/money/2015/jan/03/new-consumer-debt-reaches-7-year-high
How does the cost of living crisis end? Deflation, improved productivity or reduced competitiveness?
To Pb Tories it's all above their head anyway
I'd advocate backing both, with stakes such as to be green either way.
William will seemingly lose up to 60bhp due to changing fuel/lubricants [I was surprised by that, but Mr. Max knows his beans], I don't think Red Bull will have the power to consistently challenge and McLaren has both a new engine and the need for better aerodynamics.
Not impossible someone else could win, of course, but I'd be surprised.
At new year I was at a family party with some cousins. One works for a council, will have a 25% chance of redundancy this spring, and it is hard to see how his department can continue to function with such reduced staff. The crisis is very real for him and his young family.
Best wishes to Mrs DH.
That isn't necessarily a bad thing at all. The global effect is that global productivity has risen by leaps and bounds, and some developing countries have done remarkably well. Moreover, our cost of living has been kept down by cheaper manufacturing. But the corollary to this process is that either (1) British-based firms need to move up the value scale to replace the losses of low-value production or (2) immigration at low wages will help firms stay in Britain and still compete or (3) real wages will decline. (1) hasn't happened to a sufficient degree, so we're seeing (2) and risk seeing (3) unless policies change. Britain needs a strategy to move up market or we are actually just seeing the start of a cost of living criss.
We saw a concrete discussion of this here recently over East Anglian farming. Socrates pointed out that it wasn't the only option to produce fruit at very cheap prices, requiring cheap labour (whether British or foreign); surely, I think he argued, we should be trying to move up market to more valuable production and buy our fruit from abroad (apologies if I'm mis-stating his argument). He may well be right. But the mechanism by which East Anglian farmers and their workers give up farming and move up to producing something higher-tech is not at all clear, and if it happened (through the development of a giant pharmaceutical business in Norfolk, say) it's quite likely that there would be a lot of losers from the process who would need help.
The Tories would be insane to try and say 'some people are doing ok despite others feeling a cost if living crisis' as that is the point Labour and Ukip are straining every sinew to make
On topic, running an economy with sustainable growth is bloody hard work. Labour just conveniently drops the "sustainable" bit, knowing the price is that they will be out of power for a while until others clean up their mess. Then back to their old crazy-money ways. Repeat ad nauseam. And the people who get their lives churned up in this economic turmoil? Invariably those who Labour claim to stand up for - the poorest in society.
And of course, that affects the good civil servants - the ones who want to do a good job, and take a pride in it, of which there are some left - but not the bad ones, who just make themselves unpleasant, or refuse to do necessary work because they are too bone idle to do what they are doing anyway. So we have the weird, inverted situation where bad officials are more or less forcibly promoted and good ones are held back by their own integrity.
Hence the expression which I am hearing a lot at the moment: Scum floats to the top.
Blocking large pay-offs to public sector fat cats (who invariably are BIG Labour supporters) will probably prove popular not only with people in the private sector who believe the public sector needs cut down to size but also low paid council workers who see few top chiefs getting axed when at the grass roots they are seeing jobs and budgets go.
Tories should be proud to argue about rolling back the size of the public sector. It is far too large. In the private sector, most people who lose their jobs get Statutory Redundancy. Public sector organisations should be forced to justify to the electorate why they and their employees should get 'gold plated' pay-offs at taxpayers' expense. Frankly I think the school dinner ladies and cleaners deserve enhanced pay-offs far more than the functionaries sitting in town hall offices.
One of the things about the decline in LEAs is that many of them have ended up grossly over-staffed: similarly with several equality and diversity departments, most of whose key functions are now embedded elsewhere. Yet there has been a real reluctance to reduce the overmanning, even by natural wastage. So while I am sorry for people who lose their jobs, I have to say that this is a situation I think needs sorting out.
(Before anyone asks why I didn't move across - for some reason ex-teachers were not welcome on LEA staff. My guess would be that they had an annoying habit of doing too much work...although I may be being cynical.)
What battle over the economy?
Labour have lost. They have lost every single economic argument over the entire course of this coalition government. Despite desperately " talking Britain down" at every opportunity none of it happened, in fact the direct opposite occurred. Balls is an utter madman and about to be given the keys to the economic sweetshop.
Labour, the party that created this unholy mess in the first place deserve to go down to a defeat the likes of which re rarely seen. No it was not the banks they applied the coup de Grace. Labours economy was in trouble in 2003 with warnings coming in, by 2005 international warnings wer coming in about the Labour party's direction. The Labour Party greeted with relief the financial crash of 2008 the seeds of which they sowed themselves. They could then blame all their mistakes on a single entity. Blair was a lucky general and it was stunning timing to hand over the utter clusterfuck to Brown at the point the socialist fues finally ran out.
Labours defeat though With the built in bias and postal voting that regrettably is unlikely to happen and over the next 5 years we will repeat the same left wing ideology that always brings us to the brink of catastrophe every time. This time I am sure Miliband will achieve what other Labour governments have only just failed. Think France and Greece combined. The total destruction of this country once and for all.
[On the plus side, I shall be casting my vote to try and defeat the irksome Balls].
With regard to buying in from abroad and keeping the cost of living down, yes that's true to an extent. However, the flip side of that is that unless we are making enough money from selling things to those economies we are buying from to cover the cost of those imports, we are in effect spending accumulated capital (and not replacing it). That will, of course, leave us poorer in the long run. In fact, it has been a constant theme of the writings of John Redwood for some years that many British businesses are being sold to foreign owners largely because our balance of payments is so far out - he sees it as a form of capital transfer.
However, one thought does occur to me - you've identified the problem, but what's the solution? And that, I fear, could be a metaphor for all our political parties at the moment, and possibly has been since the time of Thatcher.
No bites: All bets are open. Closing date; 31/01/2015. (See 01/01/2015 Archives for details).
:this-is-not-a-social-club-but-a-bear-pit:
I think that due to the reduction in oil price we are due to get a short burst of deflation. I have no idea whether this will cause improved corporate profits, higher wages and inflation in the future, or the start of Japan style decades of lost growth.
One of three things will happen.
1) Our living standards will drop about 30% until its competitive to do the work here compared to Asia
2) There will be a new Ludditism as the masses that increasingly won't benefit from globalisation start to kick back against it, and used their votes to bring in protectionism, UKIP is probably the first flickers of this.
3) We managed to stave off 1) and 2) until our salary and productivity approach those of China, but they have almost two billion people willing to work for a lot less than Brits are, and prepared to put up with a much lower standard of living - so its going to take a long time.
The cost of living crisis in a nutshell: The cost of half a loaf of freshly baked white bread from my locally run private bakery on Xmas eve, £1.50; on reopening 2nd January, £1.60.
My personal view - and I stress that I'm not speaking for anyone but myself - is that we need to give absolute priority to restructuring our economy - it's more important than any of our pet themes (lower taxes, more housing, better health care, stronger military forces), most of which depend in the long term on the restructuring. There is scope for debate about how to do it, but elements include making it more profitable to invest, improving infrastructure (which is where I'll give a hearing to things like HS2) and making education more explicitly focused on developing high-end productive skills. I don't worship at the cult of manufacturing rather than anything else - there's nothing wrong with making lots of money from university courses that attract the world, for instance - but the first question for any policy should be "Will this affect our long-term economic viability?"
If Ed was clever he would undertake rent reform making it impossible for landlords to evict without good reason, make landlords offer 5 year leases, a right to renew the lease, compulsory registration of all landords, not just HMOs (with annual safety and habitability inspections by councils) and an independent eviction tribunal.
If he really wanted to be radical he could introduce right to buy with heavy discounts - for tenants of private landlords.
He could also remove the tax advantage landlords have over buy to live owners by introduction of a landlord tax and make landlords not tenants responsible for council tax.
Finally he could undertake reforms to bring house prices back down to 3x average wages. Capital gains tax on all house sales. 5% mansion tax on any property left unoccupied for a year, (10% if property above 100 sqaure metres) and a second owner mansion tax of 5% of the value of all properties owned by a person or couple if they own two or more properties. Essenitally making owning more than one property ruinously expensive for any person or couple.
And finally reform council tax so that it has two elements. The size of the property in square metres and the size of the curtilage (ie garden or estate) in square metres.
http://www.politicshome.com/uk/article/110600/the_times_saturday_3rd_january_2015.html
Seems like Balls has figured this out judging by his recent Guardian interview.
High productivity and earnings are quite possible for a substantial minority of the population, but the entirety of the population is not going to match that, leading to greater internal inequality.
Globilisation is acting to reduce differences between nations at the cost of increasing internal inequality. We see this in China too, where the gilded rich lead lives far removed from that of the factory worker and peasant.
Redistributive policies can soften this a bit, but do affect long term competitiveness, causing both brain drain and unskilled immigration.
I cannot see Balls offering a solution.
https://www.youtube.com/watch?v=5abamRO41fE
http://www.theguardian.com/money/2015/jan/03/new-consumer-debt-reaches-7-year-high
Same as it ever was ...
very pleased to hear your wife is on the mend.
SR
The total of consumer debt is flat since 2008.
It's not the missing 4 words (blimey Iain Dale has sour grapes about not getting selected) but the boring slogan. Whether the deficit is halved or down by 30% or 40% or whatever: no-one outside of journalism gives a flying ***. As long as it's coming down and the economy is growing, it's about the £ in the pocket and the risky alternatives.
No, the real problem is as you say M_D. It's bloody boring.
Jennifer's Ear comes to mind, but there are several others.
Anyhoos: You bore me. Please do not respond anymore. Life is too short; go play with Wodger.
https://www.youtube.com/watch?v=NuMtZstnoT8
http://www.bankruptcyclinic.co.uk/img/ukpersonaldebt.jpg
And that will have a major impact on the top 20%. Thus, redistribution of wealth is in their own interests. And the thing is, where will they go if they don't stay here? The problems we face in the UK are not unique to us.
We underestimate the effects of these at our peril. Millions must use cars for their work. Cabbies, carers, white van men - the list just goes on and on.
These people will decide the election.
It's not just the slide in the euro that will make holidays cheaper. Jets run on jet fuel. Airlines will be able to offer good deals.
I agree with Fox and Indigo that upscaling individuals to high-value production isn't a realistic option in many cases - as Indigo implies, if you're a farm worker and someone tells you that you need to become a research chemist, you will at best laugh and at worst thump him on the nose.
I am more optimstic than Fox about sharing out improved production, though, even though I thin his observation that "Globalisation is acting to reduce differences between nations at the cost of increasing internal inequality." is very percipient. This is where my Scandinavian background influences me. People will actually tolerate quite high levels of taxation if they see good services as a result (whereas they won't tolerate high levels of taxation merely to give the money to other people - they need to share in the results).
If - and it's a big if - we succeed in gradually moving the economy upscale and people then it should be part of the deal that we have suficient personal taxation at the higher levels to finance a society where the hypothetical farmworker feels that his life is OK even though his take-home pay isn't fantastic, since the essentials from healthcare to affordable transport are being provided. Fox reckons that this leads directly to emigration of the highly-productive people, but that's not my experience. People grumbled a bit about taxes in Denmark, which were certainly well above British levels, but emigration wasn't a big issue even though everyone had good enough English to make it feasible. People don't actually emigrate that readily.
Making it work is difficult, and avoiding the various pitfalls is difficult too. But we need to start work on it instead of just faffing around arguing about 2p more or less on this or that.
The problem is that we are used to a standard of living our productivity does not pay for, that not unique in industrialised countries, but its particularly the case in the UK because a culture of something-for-nothing "lifestyle dependency" has been allowed to grow up (or in some cases positively encouraged) by several governments.
Most of the rest of the world this isn't the case, here in Asia people are content with a much lower standard of living, and expect to work much harder for much less money. Sure there is huge inequalities in wealth, but the big difference is that people aspire to that wealth themselves or for their children, they mostly dont resent the rich, they just want to join them, and hope that by hard work they can move a little closer to them. Because all the jobs are moving to places like here, they are going to be endless opportunities for people to improve their lives. Most Asian governments understand this, hence there are lots of opportunities for investors to live tax free.
http://world.time.com/2013/11/01/the-welfare-state-isnt-dead-it-simply-moved-to-asia/
As are average salaries:
http://www.asiabriefing.com/news/2014/09/salary-planning-report-predicts-asia-pacific-wages-to-increase-in-2015/
These rises are much greater than those being seen in either the US or Europe. The only difference is that the base from where it is beginning is lower.
It's true that the overall economy isn't quite as Cameron and Osborne would have hoped five years ago but there are a lot of positives to trumpet, particularly un/employment (in marked contrast to the 30s and 80s - though that distinction is one reason more people are feeling the pain this time: it's not as concentrated). However, as long as austerity is seen by enough as a lifestyle choice rather than a necessity forced by natural constraints, that makes the alternative seem both viable and preferable to a lot of people.
It is an unusually civil and constructive discussion (and normal service will be resumed soon, no doubt!)
I am an internationalist by inclination so not too concerned by globalisation. I am glad that other countries are catching up with the OECD, it would be quite wrong for the third world to be kept permanently poor so that we can be rich.
I agree that people will tolerate Scandinavian levels of taxes if they get good services. It makes no sense to cut taxes ans spending to the point that I need private health insurance, private schools and private security. There would be no more money in my pocket.
China, Singapore, Korea etc have rapidly ageing populations and are going to need some form of welfare state soon to manage their elderly. I do think the Scandinavian model is creaking though under the strain, not least the failure to get immigrants to contribute, not just receive. The figures on unemployment and criminality of migrant communities there are scary.
Each country will adapt to globalisation in its own way, and in many ways it is the countries that are refusing to globalise (much of the middle east and North Africa) that represent the biggest threat. In the UK we need to have a social safety net and a chance for social mobility, but it is going to be scaled back from historic norms if it is to survive. The failure to reform the welfare state is the most certain way to collapse it.
http://www.tradingeconomics.com/thailand/government-spending
We may need to recalibrate how the money is spent, or at least the perception of how it is spent, so that the rich feel they are participating in the benefits. In the UK political context this is massively controversial though, it gets into all those arguments about people earning 100K getting Child Support, and millionaire pensioners getting bus passes.
Our welfare state is much less generous than it was in the 20th century. I paid nothing for any of my education at any stage. My kids will leave university owing tens of thousands of pounds. Under the last government and this it has become much harder for the unemployed to get social security, payments are far lower in real terms and conditions for on-going receipt are far more rigorous. Those of us who grew up in the 50s, 60s, 70s and 80s enjoyed the benefits of a welfare state that our children and grandchildren will never know.
I'm going to park my own participation in this one though, partly because I've other things to do and partly because I've a belting article I've been meaning to write for a while on globalisation and don't want to pre-empt it.
But they are nervous about the medium term when the engine slows down. For instance, the retirement age in China is typically 55 (sometimes less) - they can see that's not sustainable, but worry about how both they and everyone else will feel when it shoots up. Like us, they are part of a world that is changing faster than is altogether comfortable - their position is like being in a very fast carriage getting them towards where they want to go, but rocking and rattling dangerously.
1) Bad infrastructure or governance can reduce their effective productivity, even if they're doing more than the equivalent British worker to play their part in creating wealth.
2) It may be that they're paid too little, not the the British too much. Wages in developing economies can rise pretty fast once their infrastructure and governance get good enough, and although it takes time, the growth of their welfare state follows along too.
Peter Brookes @BrookesTimes · 13h13 hours ago
My cartoon Saturday @TheTimes. Dave unveils the first election poster of 2015 #Tories #Election2015 pic.twitter.com/yU445kikeS
The impact of the extended family in Asia is quite remarkable, especially on things like unemployment. When the expectation is that the rest of the extended family will support a member through the occasional bouts of unemployment, you get remarkably little lifestyle dependency: Son sits down at the dinner table, Father asks if he has found a job yet, Son says that he hasn't, collection of disapproving looks and meaningful sighs are exhibited around the table as they are all paying for his leisure, repeat each day... very soon the son decided that any job is better than no job and gets employed and feels better contributing to the family again. I agree, the depressing thing is that we are actually not spending any less money as a result,.our civil service is monstrously overmanned and featherbedded, which doesn't help, and local government is just as bad.
Nick, my only experience of Scandinavia is visiting my son who lives in Copenhagen but they do seem to be an easy-going bunch in general and are happy with high tax, high welfare.
They have had a lot of immigration in some parts recently and one or two cracks are beginning to show. The "we're all in it together ethos" is getting a good test.
http://www.theguardian.com/business/2013/sep/18/productivity-gap-uk-g7-output We are staggeringly less productive that even France and Germany and they have open borders and free trade with us.
I doubt many people would have had the nerve to do so even if it were allowed
Also what proportion of people went to University in those days?
Long hours, shitty pay and strong creation of low-paid work. I can see why the British might not like going in this direction, but economically it seems like a viable position to be in.
"In the 50s & 60s could someone out of work and claiming benefits have been able to refuse jobs that they were capable of doing and still claim full benefits?"
I suspect you know the answer to that. I remember working with people who were there only because of the threat to their dole. But remember people are a lot fatter now. However the jobs are less physical.
By the way, I don't think George and Dave could've dared dream the economy would be growing like this, with the deficit reducing, 5 years ago. It's a meme made in heaven for the Conservatives and they will go for it until everyone is bored sick of being told it.
Relieved to hear she will make a full recovery.
All the best to you and Mrs H.
G.