Monday, February 02, 2015

Politicians. Why are they so ignorant?

Okay, so there was some politician* ranting on the Today programme about how utopia would arrive when she became Lord Protector (I think.) Anyway, the usual spend, spend, spend (costings to be explained in our manifesto in March) but this wasn't, definitely, not, a manifesto for the 2015 General Election. No way.

Anyway ...

One of her key points was "to raise the Living Wage to £10 per hour". Now, this is pig ignorance of the highest quality, and went unchallenged by the leftists on BBC Radio's flagship programme. Demanding that, or stating that they would, increase the Minimum Wage, that would be logical, if not necessarily sensible.

However, the Living Wage is a measure of what you need to be able to spend to not be considered poor. It is a combination of Purchasing Power Parity rates and social expectations (Adam Smith's linen shirt example.) Raises the Living Wage is a matter of general inflation and changes in social attitudes, not political diktat. In an ideal world, the Living Wage should be very low (although as social attitudes and spending expectations change, it is unlikely ever to go below Minimum Wage levels, whether legally enforced or set by the markets.)

If you assume that the Living Wage Foundation, who have taken this over from the Joseph Rowntree Trust, spend reasonable care in their calculations, then this probably is a better guide to an aspiration wage (remembering in work benefits) although I'm still more convinced by Tim's arguments about the difference between the taxed Living Wage and a putatively untaxed Minimum Wage (both at current rates.)

* Google suggests it was Natalie Bennet. This means that what she is actually talking about is the maximum wage anybody can afford to pay once Green Party economic policies have been widely implemented. 

1 comment:

Bloke in North Dorset said...

And here's a real world example of what happens as your tart raising the minimum wage, calling it a living wage doesn't change the consequences.

HTTP Error 403: You are not authorised to access the file "\real_name_and_address.html" on this server.

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