back to article Feeling poor? WHO took all your money? NOT capitalist bastards?

Lies, damned lies and statistics: we all know the saying, but you'd be surprised just how many of these “facts” manage to enter the national consciousness, emerging as Guardian headlines and stories on Radio 4's Today. Allow me to tiptoe through the process as to how this happens. Let's start with this lovely little chart: A …

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    1. Why Not?
      Unhappy

      Because they can

      Gap between executive and worker pay widening.

      Cheap immigrant workers used to undercut workers and temporarily reducing the effects of offshoring. Thus preventing the crunch and government correction needed. No more boom & Bust.

      uncertainty in lower levels and so no pay rises.

      It was Gordon's Gift to the workers, ignoring wholesale tax avoidance and onshoring were by products.

    2. Tom 13

      Re: None of the above explains why I haven't

      Then you mustn't be a very good engineer. I thought engineers were supposed to be good with logic and numbers.

      Let's try a simpler example.

      Say your company could afford a total compensation package for you of 10,000 units in 2008. Of that 10,000 units, they have to pay 3,000 units directly to the government in taxes. In addition they have to pay for certain things like insurance and workers compensation (non-cash benefits to you) in the amount of 2,000 units. That leaves you with 5,000 units in pay.

      Now jump up to 2012 where the company can you 13,000 units. Meanwhile your benefits have gone up to 3000 units. And the taxes the company has to pay directly to the government have gone up to 5,000 units. That means you still only make 5,000 units in pay.

      1. This post has been deleted by its author

  1. blueprint

    bollocks indeed

    "But like any experts, all of you can tell when someone on the public stage is spouting bollocks."

    And I can also tell when someone is spouting it online. As someone above said, superb trolling as per. If your agenda wasn't so depressingly transparent it might even be slightly amusing.

  2. Ben Rose
    IT Angle

    The Blame

    Of course, I blame Mrs. Thatcher for all of this. Sadly, the Champagne is still on ice...for now at least.

    1. Anonymous Coward
      Thumb Up

      Re: The Blame

      Personally I blame those good old boys Tony and GB..... Or were you trying to blame somebody for allowing a non IT story in the hallowed pages of the register?

    2. AndrueC Silver badge
      Thumb Down

      Re: The Blame

      You blame Thatcher? That was 20 to 30 years ago. Why stop there? Why not blame Gladstone? Or how about Pitt the Younger?

      1. Ben Rose

        Re: The Blame

        The article clearly points out that inflation went through the roof in the late 70s and things went downhill from there. Who was in charge in the late 70s?

        1. chris lively

          Re: The Blame

          Nixon was in charge during the relevant period of the 70s. The rest of the world was taken for a ride.

        2. AndrueC Silver badge
          Facepalm

          Re: The Blame

          > Who was in charge in the late 70s?

          And you think that no-one in the 20+ years since she left office has been in a position to do anything about it? You really credit her with that much power and influence that her policies still shape and control our economy even now?

          Wow.

          So how long will her influence last then in your opinion? Will she still be to blame in another 20 years time? How about 100 years?

          I blame the state of the UK economy at the moment on a combination of Gordon 'Profligate Pillock' Brown and to a slowly increasing extent on the current government. There's been more than enough time since Maggie got booted out for remedial action.

          1. Tom 13

            Re: since Maggie got booted out for remedial action.

            Actually, that's your problem right there. Instead of recognizing how much good she did for you and the rest of the world, you've spent the last 20+ years remediating her actions instead of building on them to increase your productivity.

            Sadly, you've been less efficient at it on your side of the pond than we've been on ours. With the result that while you might have started somewhat closer to the Cliffs of Financial Armageddon, it looks like we're going over before you do. Even more unfortunate for you, once we do, you haven't got a chance either.

        3. TheOtherHobbes

          Re: The Blame

          "Who was in charge in the late 70s?"

          The Saudis. Oh, and the other oil producers - the ones who would never, ever manipulate the futures markets with the help of certain well-known financial institutions.

          And surely not for political reasons.

          You're welcome.

          Oh - and next time The Heritage Foundation or some other grubby think tank oozing intellectual pus pays for a 'feature' like this one, let's at least have that fact acknowledged. Thankyousomuch.

          1. Anonymous Coward
            Anonymous Coward

            Re: The Blame

            the price of a barrel of oil from 1971 to 1980.

            1971 $3.60

            1972 $3.60

            1973 $4.75

            1974 $9.35

            1975 $12.21

            1976 $13.10

            1977 $14.40

            1978 $14.95

            1979 $25.10

            1980 $37.42

            http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp

        4. Colin Millar
          Thumb Down

          Re: The Blame

          You can hardly blame Thatcher for "the late 70s" as she only took over in May '79.

          If you want to know why inflation went through the roof in the late seventies you are going to have to settle for something a bit more complicated than "it was {name your boogie man politician}'s fault". If not - you need to learn how to look up the dates in office of your favourite boogie man politician.

        5. The Axe
          FAIL

          In charge in late 70s.

          Maggie come to power in 1979. It was James Callaghan who was in charge in the late 70s. And if you look back to Labour and Tory governments, it is always the time at the end of Labour governments when the economy is worse off.

    3. Anonymous Coward
      Anonymous Coward

      Re: The Blame

      I thought she was a half bottle of whisky a day woman...oh, I see what you mean.

  3. Rich Harding
    FAIL

    One or the other

    Tim, as JimC points out, you're either a cretin or you think we are. Your figures include all the money that the top nobs skim off as wages, not as profits. Whilst this is econometrically correct, it's entirely bogus when the argument is about fair distribution.

    1. Anonymous Coward
      Anonymous Coward

      Re: One or the other

      Rich, it's you that is the cretin. If it is "skimmed off as wages" then tax is paid on it, at a high rate what's more. Much harder to avoid tax on wages. Fair distribution, we know what that means, leeching off the back of those who actually work.

    2. GitMeMyShootinIrons

      Re: One or the other

      It always amuses when people use the word 'fair'. You could say 'fair' is in the eye of the beholder.

      For example, you can make tax 'fair' by rationalising it down to a page or two saying that everyone who has an interest in this country (work, residence, investments) pays a given rate on income above (for example) minimum wage), no exceptions or loopholes. Trouble is, you'd never get such a scheme through the politicians. A complex system works well for either side of the political spectrum - on the right, you look after the tax accountants and lawyers, while the left needs to keep plenty of union dues flowing by justifying lots of tax office workers as well as the need to be seen punishing the rich.

      As for 'fair distribution', this is even more dodgy to define. Someone who has been able to acquire and exploit a particular (or unique or rare) skill should be rewarded by having more of a share of wealth than someone who won't/can't or has less valuable skills. Is it 'fair' to punish success? To those who aspire to the idea of a 'fair distribution' of the wealth, the answer is yes - after all, it's apparently 'fair' to reduce everyone to the lowest common denominator.

      At the end of the day 'fair' is an illusion - life wasn't fair to the dinosaurs, the dodo or the cart builders and lamplighters, but c'est la vie.

      Of course, this may not be a popular view, but I'm not fussed - after all, who said life was fair?

      1. Rich Harding
        Thumb Down

        Re: One or the other

        Remove the word "fair", upon which you've conveniently fixated, and my observation still stands.

        So, to recap without the word that has derailed your logical faculties: the argument is about distribution but the graphs used do not distinguish between remuneration for "capitalist bastards" (note: author's words, not mine) and those at the other end of the scale, they lump both together and compare them with corporate profit.

        1. The Axe
          Thumb Down

          Distribution

          So removing the word fair leaves just distribution. But on what basis is the distribution carried out? There has to be some formula. Is that formula going to be unfair then? Distribution can either be unfair or fair. Its binary. Any distribution is always carried out on the basis of the creator's beliefs. If Labour want fair distribution they aim it towards the poor to keep them voting Labour. If the Tories want fair distribution they aim it to businesses because they want them to generate more profit to go towards shareholders who then keep voting Tory.

      2. Michael Dunn

        Re: One or the other @GiveMeMyShootinIrons

        You ask: "Is it 'fair' to punish success?"

        I'm not getting into any argument over that, but what Britain manages to do so completely is reward failure and incompetence.

        I wouldn't have minded drawing GBP450,000 for 54 days' work - plus, no doubt, a decent pension pot.

        And then of course, they move on to equally well-paid jobs in some other set-up in the old boys' network.

  4. Dare to Think
    Alert

    Doesn't add up

    We here in the "west" have seen the outsourcing and offshoring of manufacturing, services, research and development to other nations around the world over the past three decades, whereas the profits from these experiments were and are pipelined to low tax havens.

    The western governments, desperate to kickstart economies and keep growth followed wrong advice from Keynesian economics to borrow money for big projects on one side and to ever more deregulate whole industries and markets on the other:

    Keynesianism never works in the long term, if tax receipts don't occur and/or are diverted to other nations or indeed if the work itself is diverted to another country. Milton Friedman's moneytarism does not work in the long term and leads to the rapid rise in commodity prices and excessive liquidity, which caused the housing bubble of 2004-2006 in the US and the inflated prices for food, oil and metal which in my opinion is the real reason for people feeling poor again! So it's not a bunch of nurses, teachers and fire fighters.

    So, what's the way of of this? Growth. Simple as that.

    We have to look to a country which has been in a stagflation for more than two decades and is burdened with a public dept of 238% of the GDP : Japan. The new prime minister, Shinzō Abe, now wants to realign the priorities of the national bank of Japan and puts economic growth before the containment of inflation. Fair enough, the theory behind this policy are from Michael Dean Woodford, but I think it's quite revolutionary to effectively depart from John Maynard Keynes and Milton Friedman.

    1. Anonymous Coward
      Stop

      Re: Doesn't add up; still won't work...

      Japan is about to suffer from hyperinflation. Friedman and Keynes were both wrong. The Austiran School will soon be proved correct.

    2. Colin Millar
      Pint

      Re: Doesn't add up

      Your understanding of keynesian theory is deeply flawed as is your assertion that the western nations have followed a keynesian model in recenty decades. You would have to go back to the sixties to see anything like a keynesian policy in Europe - the UK hasn't had a whiff of it since Wilson. There has never been any implementation of a keynesian based policy in the US - it has relentlessly pursued the Hamiltonian policy since for ever and continues to do so. Japan may have exerted closer control over its banks and done lots of public spending since the 80s but not to follow any discernible keynesian theory - it's policy appears to be "throw lots of money at things - after all - how much worse can it get" - the Japanese policy has actually equated more closely to early Leninism than anything else. To equate public spending with Keynesian theory is drivel - public spending forms part of the full range of economic approaches from rule the world Hamiltonianism to despot in trouble printing of monopoly money.

      The core element of keynesian theory is not public spending - it is balance. It acknowledges that public spending can have a role (for example during economic downturns) but insists on balance - public spending should be reduced during periods of economic growth - whereas western politicians have used periods of growth and prosperity to skyrocket public spending on their pet projects. The guy practically invented the economic medum term.

      It is this element of balance that is also missing from international economic relations. Keynes begged the IMF to create mechanisms to balance deficits and surpluses between nations before they became so imbalanced that they endangered the whole system. Everyone knew it made sense but the US said no so it didn't happen. The balancing mechanism we got instead is dumping a country's currency in the toilet and lauging at all the poor starving people.

      In the 90s we jumped straight from the Friedman/Waters notion that control of money supply was the key to controlling your economy via suppression of inflation (without acknowledging that those inflationary pressures were there for a reason) to the even dafter notion dreamed up by (it seems to me) a six year old explaining how money works that you could have constant economic growth by monetising more and more activities and creating free credit for all. The fact that inflation was remarkably easy to control during this period of credit fuelled "growth" should have had alarm bells ringing all over the place - yes - we were using the despot's method of economic control - printing lots of monopoly money and the only reason we weren't seeing horrifying inflation rates was that we were storing it all up on credit cards.

      And the solution is - "quantitative easing" - i.e. people stopped believing that the monopoly money is real so we need to keep printing more till they start believing it again.

      Happy new year

      1. Dare to Think
        Pint

        Re: Doesn't add up

        "your assertion that the western nations have followed a keynesian model in recenty decades." - maybe I should have mentioned here the worldwide resurgence of interest in Keynesian economics after the 2008 recession (http://en.wikipedia.org/wiki/Keynesian_economics_in_United_States_2008#In_the_United_States_and_Great_Britain), but all I'm saying is any public spending, keynesian or not, does not help a national economy if the work, the tax returns, the profits or a combination of these are going offshore.

        "even dafter notion...that you could have constant economic growth by monetising more and more activities" - I can only agree on this.

        1. Colin Millar

          Re: Doesn't add up

          It is worth noting that about the only thing that article in wikipedia gets right is a small mention of the point of intervention in Keynesian theory - to work towards increasing employment levels during a recession.

          It is not about fiscal stimulus for the sake of it or about increasing economic volumes per se - it is about keeping your economy and your people in a state to take advantage of the cyclical upswing.

          The rest of it tends to swallow the "New classical economics"* orthodoxy that Keynesian theory is about an ever increasing state control of the economy.

          * That thought free zone which is most attractive to politicians because it absolves policy makers of any responsibility for anything whatsoever - remember all those nice charts about M1 and inflation - wonder what happened to them? They got conveniently forgotten when politicians saw that NOT controlling the money supply was the real vote winner and got them off the hook for all kinds of shit.

  5. Anonymous Coward
    Anonymous Coward

    Rate this article: 1/5

    In the continued absence of the official Rate This Article Button:

    Upvote this post if you think it's a crap article.

    Downvote if you think it's a great article (sorry about the perverse logic but I do think it's a crap article).

    Copy this idea on other articles if you think this is a good idea (I am not Apple, I will not sue).

    Happy New Year.

  6. John King 1

    Howabout..

    If we abolished all forms of tax avoidance, evasion and dodgy corporate offshore financial practices then surely we could balance the countries books? Because at the moment I see no real recovery for our finances if we continue to allow most of our spending to end up in Luxembourg, Ireland or the Cayman Islands.

    Is there a prosperous way out for this country if this doesn't stop? Or are we just going to have a 60 year depression ending in a gated Plutocracy, with 95% of all workers earning the minimum wage. After the great Resouce Wars of course.

    I'm just looking for one decent forecast that shows us a way out.

    1. Anonymous Coward
      Anonymous Coward

      Re: Howabout..

      I hate to burst your bubble, John, but we are in for a round of inflation the likes of which has not been seen since Jimmy Carter was president. Everything they teach about economics in school today is blatantly wrong. Don't buy gold, buy something useful like copper pipe. The price on copper items will shoot up about as fast as the price of gold and sliver, but the governments will not be able to force you to sell it to them at their price the way FDR did back in the 1930's. You want to know what is going on today? It's pre-world war II happening all over again. Hit the history books. They are an eye-opener.

      1. Anonymous Coward
        Anonymous Coward

        Re: Howabout..

        total bullshit

        see krugman on the zero lower bound

        1. Anonymous Coward
          Anonymous Coward

          @j arthur rhymingslang

          It's not clear who that is addressed to, nor why, but it might be interesting so feel free to expand a little.

    2. Armando 123

      Re: Howabout..

      John, money is like water: it will find the cracks.

      One of the issues Obama's people raised in both election campaigns is that American businesses are more interested in investing offshore. Well, partly: they're interested in making money, and sometimes your own country isn't the best place to invest in Doing X.

      But compounding this is that US companies will have to pay taxes on profits made overseas when the money is brought back into the US ... money that's already been taxed. So if you export your goods or services overseas, you are taxed in that country then taxed when it's brought back. Better, from the company's view, to keep it overseas to invest and make more money.

      The obvious solution here is to reduce or eliminate that tax so companies will be more willing to invest in their own country. However, Obama's view is that we should raise taxes on corporations to pay for more government ... so now they'll invest LESS in America.

      1. Andy Enderby 1
        Thumb Down

        Re: Howabout..

        Can't agree Armando....... The current incarnation of capitalism has throughly corrupted politics, the best place to invest is always somewhere else, and when doing so antics such as royalties are abused to make profitable companies appear to be basket cases, and therefore no tax is paid, pay the minimum wage concievable in any given market and all the money goes out of the country "invested" in whilst making use of the resources the tax payer paid for...... It makes no sense, is unsustainable and like the author of thie article is simply wrong.

        1. Anonymous Coward
          Anonymous Coward

          Re: Howabout..

          Sorry Andy, but you're quite simply wrong; either badly misinformed, or, like those actively peddling this line, maliciously pushing untruths to push a radical socialist style economic order. The sort of economy where you don't own your earnings but get a state endorsed share that you are allowed to keep.

          The resource the taxpayer paid for, is used by the taxpayer, fool, not companies. You only want someone else to pay for what you use; greed incarnate. Sadly far too many people seem to believe that there's this magic money tree that we can pluck to keep up this spend beyond our means entitlement society going. Good political meme, crap economics.

          1. Andy Enderby 1

            Re: Howabout..

            you really are quite rude bugger off back to the Daily Heil.

          2. Matt Bryant Silver badge
            Thumb Up

            Re: Howabout..

            ".....The resource the taxpayer paid for, is used by the taxpayer, fool, not companies. You only want someone else to pay for what you use; greed incarnate. Sadly far too many people seem to believe that there's this magic money tree that we can pluck to keep up this spend beyond our means entitlement society going. Good political meme, crap economics...." Just ask the Greeks (and now the Germans having to pay for the Greeks) how that worked out.

        2. Armando 123

          Re: Howabout..

          @Andy Enderby 1: "Can't agree Armando....... The current incarnation of capitalism has throughly corrupted politics,"

          Given that government has grown faster than the private sector for nearly a century, I'd say it's the other way around.

          1. Andy Enderby 1

            Re: Howabout..

            .....and the massive outsourcing of just about every government function currently underway in the UK resulting in directorships for the ministers concerned ?

      2. Anonymous Coward
        Anonymous Coward

        Re: Howabout..

        Next time you come to the UK, bring your Starbucks with you.

    3. h3

      Re: Howabout..

      Easy way - legalise all drugs and tax them. (Keep the quality high and at a price that cannot be matched by the criminals.) Overnight it would turn into a much smaller problem (Like we have with fake and cheap alcohol / cigs being sold in council estates.) People being able to grow hemp to make paper (Faster and Cheaper than using what they use now) might upset the status quo but it needs to be upset and the solution needs to be radical. (Cuts won't work not done in the way they are trying now anyway.)

      A solution that works (Because it will involve making a fairly big change) will never be popular with the Daily Mail reading types.

      The problem we have is the baby boomers basically who were given everything by their parents generation (Who also took part in a war from them and had a really hard time) have left nothing for their children and took everything for themselves. I was in a pub on Christmas Eve with a fair few people of my dad's generation I was close to punching a few of them. (They retired at 50 on really good pensions that cannot ever be reduced). I think each generation should have it better and easier than the last due to enhancements in Technology / Medical stuff.

      What we should be doing is trying to reduce the amount people have to work to 4 days.

      (My grandfather's generation used to work 4 1/2). Instead of just creaming off the profits to pay for the people who went to school and university with Cameron. (Clegg is worse though because it outright betrayed everyone who voted for him).

      People working for the Public Sector did so on the grounds that they would make less whilst they were working in return for a good pension. (My mother when she left university had 4 friends with the same results as her - 1st Pure Maths - She went into teaching because she wanted to do it but she could have been an acturer / finance director of big PLC's / Professor of Maths - screwing people over at the end of their lives is not a good thing to do.)

      I know a retired fireman (Over 70) gets an absolutely insane pension keeps going up. Same as police they retire early if they want to (With a full pension) and then get another job. No reason they couldn't do a desk bound job. (At the moment they just get another job.) That is nothing like teachers.

      It is going to get to the point where especially in London the only teachers are immigrants as they are the only people who could and are willing to work for what is on offer.

      The only way to improve is to invest in the young. It is only going to get worse if really expensive private schools are the only places with good teachers it won't work.

      Maybe we get a meteor hitting the earth or another ice age starting that changes things when people realise how pointless things are these days.

      (My parents will get a huge cash injection also when their parents die (They were born during the war and had nothing and lived in council estates and worked very hard and ended life pretty rich) for people starting now with nothing something like that just isn't possible. If your family is very poor now it is far more likely to stay so no matter what they do which is bad.

      1. Lord Voldemortgage

        Re: Howabout..

        "Easy way - legalise all drugs and tax them. (Keep the quality high and at a price that cannot be matched by the criminals.)"

        What criminals? Once the drugs are legal there are no criminals.

        And who else would be ready to supply this new market?

        The former criminals would become the new legitimate entrepreneurs and the only issue would be around collecting the relevant tax / duty.

        Smuggling would therefore continue at some level but it might well be possible to convince the new industry this was something it ought to help police - the cost of doing so is easily outweighed by the benefits of being 'legit' - a competitor who was rocking the boat and at the same time undercutting your supply would be welcome to no one.

      2. JimC

        Re: Baby Boomers

        ...Baby Boomers who were the first generation to pay National Insurance and fo the NHS for their entire working lives and who paid the pensions of the previous generations who hadn't... Funny how the whingers never mention that...

        1. Jediben
          FAIL

          Re: Baby Boomers

          JimC, the generation BEFORE the boomers had been involved in a rather awkward little situation called World War II. I think it's a little harsh to suggest that they start coughing up taxes to pay for all the work they should have been doing instead of fighting off the Nazis invasion of Europe...

          1. JimC

            Re: Baby Boomers/Jediben

            AH yes, good point. The baby boomers also spent their working lives paying for WW2... Aprt, of course from the Seppos, who were beig paid...

      3. J.G.Harston Silver badge

        Re: Howabout..

        "What we should be doing is trying to reduce the amount people have to work to 4 days"

        I can't afford to stay alive on four days pay!

      4. Robin 12
        Thumb Up

        Re: Howabout..

        For most of what you wrote I agree with. The biggest problem is that the kids of the baby boomers have decided to borrow for everythings. Bigger and better every few years. Baby boomers and their parents would live in the same house for most of their lives. Moving up never gets you out of debt and thus doesn't leave anything for the kids. An investment in a house is useless until you sell it and you may not recover all the money in interest or inflation.

        I am a baby boomer and a government worker. I have lived in the same house for over 30 years. I have tried to get myself 100% out of debt and will be before I retire. Run 20 year old vehicles which I do most of the work on myself. Still don't have a HDTV as my old CRT still works. 7 year old laptop which has had a new screen.

    4. Anonymous Coward
      Anonymous Coward

      Re: Howabout..

      You're just buying into the narrative that all that money that others earn, it's OURS ! (wah, wah, wah is the usual accompaniment as well). Tax avoidance is LEGAL, how can you not understand that, and much of what you think of as avoidance is simply obeying the EU dictated law of the land allowing companies to trade across boundaries.

      Read up, too, about tax incidence. Companies, to put it simply, don't "pay" tax, and they don't "benefit" from it either. Tax is paid ultimately by some combination of employees, customers, and shareholders, plus to a certain extent, wider stakeholders also pay the tax. Research suggests that the major portion of a tax burden on a company is borne by the employees and customers, capital is more able to move in response to the burdens imposed.

      So, it SOUNDS good, just take all that money from those evil corporations, but in practice what you're doing is taking it from its employees and customers. You've bought into the scam, the intention of which is to tax more and more but by indirect means so you think that somehow it isn't you (and yours) paying it but SOMEONE ELSE; YAY !

      Mug.

      1. The Axe

        Scam

        AC @ 19:48, you're right it is a scam - by UKUncut. They want more tax to be paid by companies even though it's the employees who suffer. In the case of UKUncut who want workers to be appreciated more and paid more, except if they are Starbucks workers in which case UKUncut will do their best to disrupt their job and ensure they are paid less.

  7. Andy Enderby 1
    Thumb Down

    economics......

    Is apparently a science..... That being the case maybe an economist would care to state why it is that they perform no better than tossing a coin when making predictions.

    Maybe they'd also like to comment on the disparity between rampantly buoyant boardroom pay and what every body else gets, and maybe on the impact that has on an economy???????? S'funny it's all gone quiet.....

    Maybe the author of the article would like to comment on the impact on the economy if everybody was in a position to stick two fingers up at the tax man ???????? ........crickets......

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