2020s >> 2020 >> no-1388-april-2020

Inequality: Labour’s Straw Men

When incoming left-wing Labour MP Zarah Sultana condemned the record of the Labour government in the Blair years, Tony’s representatives on Earth swung into action, reciting the litany of his good works: record investment in the NHS, minimum wage, Sure Start, Human Rights Act, Freedom of Information Act (the one he regrets), etc. What they forgot to mention was that in large measure politics is where it is now due to his regime’s greatest failing: its inability to increase the share of the national wealth for the poorest sections of society.

The Parliamentary report, Income inequality in the UK: Briefing Paper Number 7484, 20 May 2019 (tinyurl.com/u32xecy), lays the picture out clearly. The Gini coefficient is a measure of overall inequality in a society. As the report notes, ‘this summarises inequality in a single number which takes values between 0 and 100%. A higher value indicates greater inequality’. The trend line in the table in the summary is clear, in as much as the Thatcher years saw a significant increase in inequality, which the Blair/Brown years stabilised, albeit with a gentle increase during the first Labour term. (There is some scope for the effects of benefits and redistribution not being adequately accounted for in this measure, but as the report notes, this is at most likely to flatten the trend out, rather than alter its overall directions).

It is the detail, though, of this inequality that is significant. If we take a look at the comparative income distribution, we can see how the poorest sections of society fared worst. The chart on page 13 of the report looks at the gap between middle and lowest income groups (BHC = Before Housing Costs, AHC = After Housing Costs). So, although the rate of change slowed down, after the hammering of the Thatcher years, the Blair years still saw the lowest income group falling further behind middle income groups (and much further behind the very richest in society). This is despite the redistributive effects of welfare reforms in the period.

The report suggests the bigger divergence on the AHC ratio is due to the effect of home ownership and rises in the housing market values. So, the effect of the housing market was to aggravate relative poverty still further.

The other market involved was the labour market, as the Labour government began to invest in public services such as the NHS, staff, particularly skilled staff, began to push their wages up. The labour market does not register the importance of jobs, or social fairness, it merely looks at how difficult it would be to replace a given worker.

This is important: in an economy based on buying and selling using widespread division of labour, it becomes impossible to know the value of any given person’s contribution to the final product. The actual value of goods can only be found when they are sold. The assumption is that employers will not use labour unless they have to, so everyone’s contribution is equally essential to the production of the final product. Employers will pay whatever it takes to maintain and reproduce the willingness of a particular type of worker (possessing a particular type of skill) to do the work required.

Put another way, a Richard Branson or an Elon Musk could not have their millions and billions without office cleaners, receptionists and the whole other myriad so-called unskilled clerical and manual jobs undertaken in the economy. As an example, if you needed a life-saving operation, you’d want the world’s finest surgeon, but not at the price of being dragged by your hair to the theatre by the world’s worst hospital porter, to find that it had been disinfected by the world’s worst hospital cleaner.

The modern method of production sees an increasingly collective approach to generating wealth, but it is one in which the outputs are very unequally distributed. The work that is called unskilled actually requires very definite skill and aptitude to perform, but lacks formal qualifications and many people are available to perform that work, hence making it easy to replace staff and thus hold their wages down.

The people at the very bottom of society saw the Thatcher years make them poorer, and the Blair years do little to address it, the perception became clear that ‘They are all the same’ and that Labour cared more about the elite than it did about them, especially as the very rich could be seen to be getting very richer, and the middle income groups were gently drawing away.

The radical right-wing message that it was foreigners, who mostly came to work in the unskilled labour market, holding down their incomes, became a siren song that fuelled both a rise in the BNP vote during the Blair/Brown years, and also which in turn fuelled the Brexit coalition.

The Johnson government is pandering to this perception by their newly announced immigration policy. This policy is set to restrict immigration for low-paid jobs, setting a minimum income for incoming workers. Although, there has been talk about exempting particular industries that need labour, such as seasonal pickers.

The reality is that this policy is not about reducing overall migration, but reducing the legal rights of migrant workers, and opening the door to specifically use migrant labour that can be dismissed easily and sent away without any claim to those redistributive benefits that the Tories are set to try and hold down.

Although it goes unsaid in most quarters, the lack of improvement in the lives of many people coupled with the failure of a Labour government to make significant changes to their lives, underpins most of what is happening in politics today, even the rejection of the Corbyn Labour party, in the light of people’s refusal to believe it would mean a significant change.

The Blair years’ motto ‘Education, education, education’ was based on the premise that the way out of poverty is to get training/education/skills and get a higher paid job. But someone has to do the ‘unskilled’ work, it will never go away, and the wages system will always weigh against the people doing that kind of work. This disproportionately affects women, who tend to bear the brunt of child rearing, and so cannot develop the skills and experience to hold onto the higher-paid jobs.

The only way to improve the lot of the poorest in society is to lay claim to the wealth we collectively produce, and ensure that that wealth is put to our collective use as well.

PIK SMEET