4 Mar 2015

Putting two and two together

On Twitter today the Office for National Statistics made two announcements with accompanying graph.

Recovery in #GDP driven largely by strong household spending http://ow.ly/JUpoP  

Close to 60% of full time employees experienced a pay cut in 2010/2011 http://ow.ly/JUoIb  

And what do these two pictures tell us? That despite falling wages, households are spending more and driving an increase in GDP. That the people benefitting from the increase in GDP are only the top 10% of earners.

So this is a clear example of a transfer of wealth from the poor to the rich. 

Something is deeply wrong with the structure of the economy of the UK (and most other places too). Households are earning less but spending more. They can only do this in two ways: by spending their savings or by increasing their debts. Neither is good for the poor. And virtually all of the economic benefit is going to those whose remuneration has consistently out-stripped inflation and all other sectors, the top 10% of earners.

The trouble we have in the UK is that no mainstream political party is against this wealth transfer any longer. Labour used to be, but New Labour embraced economic Neoliberalism and the present crop of Labour politicians have no intention of doing anything different. The left have no one to vote for anymore.

UPDATE. For those who bought the Institute for Fiscal Studies line that living standards had returned to pre-crisis levels, look at Notayesmanseconomics's Blog today

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Keep is seemly & on-topic. Thanks.