>Mick Lynch is preparing to preside over a year of co-ordinated strikes to try and force a redistribution of wealth, as the trade union boss joined the Royal Mail picket lines.
>The general secretary of the Rail, Maritime and Transport union (RMT) has urged the entire union movement to take action to "redress the balance in society".
>His speech came as more than 100,000 Royal Mail workers walked out after snubbing an offer of a 5.5pc pay increase if they accepted changes in their working practices.
>Mr Lynch said “the billionaires, the millionaires, the shareholders and the big corporations” are telling working people to cough up for the problems in this society.
>He added that the wealthy believe "working people have to become poorer in terms of cash, in terms of dignity and respect in the workplace. And our message to them is enough is enough, we say no".
I'm on the side of the poor people over the multimillionaires, but what realistically happens if wages go up to the degree they want? I don't know enough about macroeconomics to offer an authoritative view, but my understanding is that raising everyone's wages just pushes inflation even higher, so it's ultimately self-defeating. Would a better solution just be for the government to pay everyone's energy bills for a year? Is there any solution that doesn't have a downside?
Tax the rich and large corporations more. That pays for public services and subsidising essentials for the lower classes with minimal risk to inflation.
Truss is basically proposing to reduce taxes for the wealthy groups of people who donate to the Tory party, and is trying to spin it as the tax cuts will benefit the middle classes. Tax cuts for the wealthy and big corporations will increase government borrowing, and leads to more money being spent on high-ticket items like cars and property which of course has a trickle down effect increasing inflation for everyone else.
>Is there any solution that doesn't have a downside?
Improve productivity. Britain has become a low-skill, low-wage, low-productivity economy due to decades of under-investment. We work longer hours than anyone in Europe, but we produce less per hour. The headline economic numbers don't reflect this reality because of our dependence on financial and professional services in London. On paper our average is dragged up by The City, but the reality is an ever-worsening north-south divide.
There's a tiny grain of truth in Liz Truss calling us all lazy bastards, but mainly the problem is that we're using obsolete technology and working methods. The Nissan plant in Sunderland is the most productive car factory in Europe, because Nissan started from a clean slate and built a state-of-the-art factory and a workplace culture based on trust and cooperation. We could repeat that success in every region in Britain, but we need courage and long-term ambition.
We don't have to run a balanced budget, it's often very sensible to run a significant deficit, but deficit spending is inherently inflationary. That was basically a non-issue five years ago, but it's a very serious issue now. From a Keynesian perspective, the last decade has been a colossal wasted opportunity.
>I don't know enough about macroeconomics to offer an authoritative view, but my understanding is that raising everyone's wages just pushes inflation even higher, so it's ultimately self-defeating.
The thing is, I don't actually buy that argument. And I don't just mean that in the usual delusional lefty principled kind of way, I mean it doesn't add up, and it drastically oversimplifies the matter. It's just the standard line of argument Conservatives always bring out about paying anyone better.
Compare it to raising the minimum wage, for example. The argument has always been basically the same there too- I've watched with interest as several states in the US have gone through that debate. And you know what? The evidence actually points the opposite way. Increasing people's wages increases their spending power, which makes businesses better off, in a greater margin than it impacts their overheads. Everyone prospers because there's more money circulating. It might inflate values slightly, but not enough to be self defeating. The thing about economics is that it's not about how much money we have, or how much money a business makes, it's about money circulating. Money being spent. Money changing hands. The more transactions are taking place, the better everyone does- The actual numbers are all pretty arbitrary. It's like the difference between speed and velocity, if that makes sense.
And the thing is in this particular circumstance, raising people's wages wouldn't even actually be raising them. We're just coming out of a decade of real terms wage stagnation. We wouldn't be just handing people money for nothing- Wed be putting their wages back where they already should be.
And I mean, beyond that, you do have to notice it's only the paupers this argument gets brought out against isn't it. Nobody bats an eyelid when the execs and the banks hand themselves six figure payrises on the back of fuck all. Somehow that doesn't cause inflation does it, eh?
I'll tell you whose side I'm on: I was on the side of MY bloody strikes thread that I made a couple of months ago. But fine. No, it's fine, really. It's totally okay. I told you it's fine.
Anyway, my big concern is that these strikes will be really successful, and people in those jobs will get massive raises, and the rest of us won't. If all wages everywhere went up by, say, 10%, then we'd all be groovy. If inflation goes higher and a few people have a much smaller real-terms wage drop, well, these things happen in economic crises. Sometimes you just have to deal with it. But I work for a small company and I don't want to leave. I like working there, mostly. They can afford raises now because we're doing well, and we're not getting them. There is plenty of discussion at work that we should all join a union, but as it stands, nobody has, I don't think, and I don't see how that would help us when there are less than ten of us. Anyway, this is just blogposting now. My point is that not everyone will go on strike. If all the strikers get big raises, good for them, but that will make things even worse for the people who don't strike. Nurses and care workers, and people on benefits, and doctors, and the fire brigade, are just going to be even more fucked. We either need a general strike (that would also cause a recession, which in turn would stop inflation, so it is unequivocally a great idea) or we need to literally rob the rich in any way possible to get our bloody money back. The money can't come from the government, or that would mean more inflation. Instead, it has to be redistributed fairly and equally. And violently, if it comes to that. Strikes are really the last thing to try before actual revolution.
>>39171 > It's like the difference between speed and velocity, if that makes sense.
Not to me it doesn't. Are you thinking of the difference between weight and mass? I remember learning at school that those are different, but I don't think they ever told me that speed and velocity are different.
>The thing about economics is that it's not about how much money we have, or how much money a business makes, it's about money circulating. Money being spent. Money changing hands. The more transactions are taking place, the better everyone does- The actual numbers are all pretty arbitrary. It's like the difference between speed and velocity, if that makes sense.
We do use the term "velocity of money" in economics and I'd encourage you to look it up.
The thing you're overlooking is the most fundamental concept in economics - supply and demand. Increasing the supply of money without increasing the supply of goods will inevitably lower the value of money relative to goods. Gas prices are going up right now because there isn't enough gas. House prices are insane because there aren't enough houses. Money is just a society-level IOU and the only value it has is the goods it can be exchanged for. Giving everyone (or close to everyone) more money achieves nothing except undermining confidence in money, because you haven't changed the underlying quantity of goods in the economy.
Of course, none of that should be read as an argument against redistribution, just an argument against the fallacy that we can make people better off without making anyone else worse off just by pumping money into the economy.
>Compare it to raising the minimum wage, for example. The argument has always been basically the same there too
Nobody is particularly concerned about minimum wage increases being inflationary within normal ranges - it'd only be a concern if you implemented massive and sudden increases that are occasionally bandied about. People do worry about the effect on employment; that's a very controversial debate, but we do have reasonably good evidence that increasing the minimum wage tends to increase unemployment, particularly youth unemployment.
The Low Pay Commission who set the rate of the minimum wage explicitly consider the impact of wage rates on employment, which is why there's a much lower rate for young people. Despite that, we've seen a significant increase in youth unemployment since the introduction of the NMW despite the overall labour market being quite buoyant. Many of our European peers with stronger labour rights also have higher rates of unemployment - hiring unskilled or inexperienced workers is less attractive when they cost more and they're harder to sack.
>Nobody bats an eyelid when the execs and the banks hand themselves six figure payrises on the back of fuck all. Somehow that doesn't cause inflation does it, eh?
Not significantly, no. Inflation happens when you've got an excess of money chasing after a shortage of stuff. Money only becomes inflationary when people spend it on something; interest rates are the key lever used to control inflation by giving people an incentive to save and a disincentive to spend. As brutal as it might sound, giving a tenner to a poor person is inherently more inflationary than giving a tenner to a rich person, because the poor person will rush out and spend it; the spending of high earners is much less closely tied to their income, because they've already got more money than they need. Wealth inequality and income inequality are intrinsically linked, because beyond a certain threshold nearly all additional income is converted directly to wealth.
The other key factor is that there are lots of people on low incomes and very few people on high incomes. Giving people on Universal Credit an extra £20 a week doesn't sound like a huge amount of money, but it costs more than £4 billion per year because of the sheer number of claimants. I think we should definitely bring back the £20 uplift, but we shouldn't kid ourselves that it's a painless decision because it's "only £20".
Royal Mail's chief exec receives a salary of £525,000, but Royal Mail as a whole has about 160,000 employees. If the entire executive team agreed to work for free and share out the money between the entire workforce, your postman would only get an extra 40p a week.
>Of course, none of that should be read as an argument against redistribution, just an argument against the fallacy that we can make people better off without making anyone else worse off just by pumping money into the economy.
Aye, but therein lies the rub, doesn't it. Nobody's asking for money to be pumped in to the economy for free. It's bordering upon dishonest misrepresentation to talk about it that way. They're asking companies that are making very healthy profits to make very slightly less profits and instead put some of it in their staff's pockets.
It's a different line when it comes to public services, but compared to the wider economy or the benefits system, it's still a drop in the ocean to pay them properly. Especially when you can commit £21bn out of nowhere to bribe pensioners to vote for you.
As fir the supply/demand etc etc stuff. The common argument about a "wage price spiral"- I don't but that in today's economy. It may have been true in the 70s and the great depression or whenever else. But we live in a globalised world now. Inflation in this country isn't as directly affected by wages in this country, because the things pushing inflation are imported anyway- A pack of pasta costs twice what it did in 2020, for instance, and that comes from Italy. Raising the wages of British workers won't impact on that.
I think part of the reason this country is in the mess it's in is because we've been stagnant for so long, and there's never been a jolt of stimulus to get the economy going. The government have been miserly Scrooge figures for over a decade, they begrudgingly did a bit of socialism-for-businesses during the pandemic, but they've let the ordinary people- ie consumers- become increasingly hard up. They've effectively starved the economy.
