Tim Worstall

The pay gulf has more than doubled in the last two years, with the average earnings of public sector workers rising to £22,405 last year.

Until 2005, private sector workers received more than the typical state employee, but now they receive only £20,988 on average.

Figures published by the Office for National Statistics showed that staff employed by the state are enjoying bigger pay rises, working fewer hours and receiving pensions worth up to three times as much as those in the private sector.

Mmmm, gosh, hope that’s all worth it.

The pay gulf comes despite a decline in public sector productivity in the 10 years from 1997. It fell by 3.4 per cent compared with a rise of 28 per cent in the private sector over the same period.

Ah, so it’s not then.

Yes, the public sector workforce has a different skills profile than the private. Yes, productivity is more difficult to improve in services than it is in manufacturing and the State is mostly services. But then so is most of the entire economy services as well.

But even with all of those caveats, a widening of the productivity gap by 30% is an appalling result for all the extra that’s been spent.

At the ASI.

Look how quickly the combination of markets and capitalism pushed mobile phones out across the world.

So if the markets lead a double dip is nigh on certain.

Glorious.

So the man who tells us that markets don’t and cannot predict slumps (because they didn’t predict the, erm, slump) now tells us that markets can predict slumps.

Gotta love this intellectual consistency thing.

At the ASI.

So what has neo-liberalism done for us?

The murder rate has fallen to its lowest level in 20 years but police admit that the main reason may be the skills of paramedics and advances in medicine rather than a decline in violent attacks.

Murder is used as an indicative measure for overall crime. Because it’s one of the very few that are completely definable. You’ve got a body dead here by violent means. So we can use this as a proxy for other crime which can be more neulous in its definition.

However, if the number of attempted murders is static (and I don’t know whether they are) but murder itself is falling as a result of better medical treatment then perhaps the fall in the headline rate of murder is not indicative of a fall in general levels of crime or of violent crime against the person.

A similar point is made about battlefield deaths. Military health care is so much better than it was that the ratios of dead to wounded have changed dramatically over the past few decades.

The Russian government has set a minimum price for vodka that more than doubles the cost of the cheapest vodka on the market in an effort to fight rampant alcoholism.

The last time they tried this under Gorbachov the country ran out of sugar in two weeks.

Expect to see sales of black pepper rise and similarly, the number of cases of samogon poisoning to rise.

They could be plunged into “special measures” by Ofsted under new rules that place equality on a par with exam results and child safety for the first time.

Are we entirely sure that when a startling number leave 11 years of compulsory education without being able to read, write or do sums, that this is entirely the best allocation of limited resources?

Really?

I’m seriously having a difficult time digesting this.

Yes, I know, he’s the Nobel Laureate in international and trade economics and I’m just a lowly blogger.

But he seriously seems to be advocating a protectionist trade war against China.

WTF?

Let me quote from a classic paper by the late Paul Samuelson, who more or less created modern economics: “With employment less than full … all the debunked mercantilistic arguments” — that is, claims that nations who subsidize their exports effectively steal jobs from other countries — “turn out to be valid.” He then went on argue that persistently misaligned exchange rates create “genuine problems for free-trade apologetics.” The best answer to these problems is getting exchange rates back to where they ought to be. But that’s exactly what China is refusing to let happen.

The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation. So I’d urge China’s government to reconsider its stubbornness. Otherwise, the very mild protectionism it’s currently complaining about will be the start of something much bigger.

And Smoot Hawley worked so well, didn’t it?

Third,we have to pay teaches more.

Well, yes….

However, the rest of it….

The basic argument is that wages paid by businesses like Tesco are too low and that this, plus the lack of tax money being spent on education means that we’re locked into an underperforming economy by dint of the effects of a) depriviation and b) underspending on education.

The solution is thus that companies must pay more tax to fund education.

Hmm.

But average full time equivalent pay at Tescos in 2008 was under £13,000. Now, I know that might be distorted by pay in Asia – but the majority of employees are in the UK and so whilst pay may be higher than that in the UK on average it remains massively below UK average pay however calculated, which exceeds £20,000 by all measures used. And Tescos are the UK’s biggest private sector employer.

Lambert says that underachievement is linked to free school meals. These can be claimed by anyone with pay of less than £16,040. That’s on average all the staff at Tescos.

So like it or not Tescos, and employers like it, are paying the wages that ensure people claim free school meals which seem to be linked with a lack of aspiration and poor education results.

The solution to this is that there should be…. wait for it…..

The second is to massively reduce differentials in society by serious redistribution of income and wealth

You couldn’t see that one coming, couldn’t you?

Now there’s a logical error here. If we’re going to talk about how much more redistribution we should have then we need actually to be talking about how much redistribution we already have. We cannot simply look at market incomes and decide that more should be done: we have to look at market incomes plus what we already do to see whether more redistribution is justified or not.

Ritchie of course fails to do this.

But the real howler is here:

Third,we have to pay teaches more. Especially those in difficult subjects. It’s absurd for example that few state schools can offer really good science curricula now. This has nothing to do with quangos or anything else. this is undervaluing education. and business must pay for this by paying more tax.

Firslty, there’s the question of whether we do or do not pay enough for there to be a decent State education system. Cross country comparisons seem to show that Finland (often rated the best State education system in the world) spends less per pupil than we do (yes, adjusted or standard of living etc). Sweden is rated very well and they also spend less per head than we do. But their structures are different. For example, Finland has something like the grammar/secondary modern split. It’s not at 11, true, a couple of years later, but there are two different school systems, one for the academic goats and another for the vocational sheep.

It’s just ain’t yer Auntie’s comprehensive system.

Sweden of course famously has school vouchers.

Within country comparisons also don’t seem to show a lack of resources as being the problem. Private day schools (when you include capital and pensions budgets) seem to have similar costs to the State system. Again, famously in the US, parochial schools have much better results on much lower budgets than the State schools.

So we’d be justified in at least thinking that perhaps it’s the structure of the education system, the way the budget is allocated, which is the problem, not the size of the budget itself.

But the truly barking part is that business taxation should rise to pay for the effects on education of low wages.

For as Vince Cable and even Larry Elliott have agreed, businesses don’t pay taxes. People do. And in an open economy like ours, the largest share (according to the Congressional Budget Office at least, for the US) 70% of the burden of corporate taxation is carried by the workforce in the form of lower wages. Mike Deveraux (who Ritchie would never admit could be right about anything) has a paper out there that a £1 raised in corporate taxation reduces workers’ incomes by more than £1.

And it’s this (something I’ve already mentioned over at Sunny’s place) which absolutely drives me up the fucking wall about the varied unthinking leftists we have proposing policies.

Some of the goals I share: a better education system being one of them. Some of them I don’t particularly: equitable distribution in the sense of more equal distribution isn’t one of the scabs of our society I particularly care to pick. But my ire comes from those proposing things which will be entirely counter-productive. Things which on the surface sound vaguely plausible (Tax companies more to pay to teach Diddikins to read!) but on examination turn out to be barking mad.

Follow Ritchie’s chain of logic here. Companies don’t pay high enough wages which leads to deprivation. We should thus tax companies more to pay for the deprived to get a better education.

But on examination we find that the vast majority of corporate taxes come from lower wages for the workers: so the actual suggestion is that we should lower wages in order to deal with the effects of lower wages.

It’s barking, innit?

1) Smoke less.

2) Cycle more.

3) Eat better.

4) Drink better not less.

5) Be nicer.

6) No, we have enough dogs.

7) And cats.

Annoy Ritchie.

9) And the nef.

10) Well, looks like it’s about time to do it then. The Chinese are threatening to cut off rare earth exports meaning that the high tech industrial world will either collapse or all move to China. Scandium’s in short supply meaning that the fuel cell industry can’t advance to try and aid in halting climate change. We’ve done and paid for all the necessary testing and the investment money is available (ish). There’s that 8 million tonne flow a year of poisonous waste to clean up. Doing so would reduce bauxite mining, ilmenite mining and iron ore mining. So that’s the plan for this year.

Clean up Gaia, reduce the rape of Gaia, cool Gaia and all for the entirely selfish purpose of making money.

So, tell me, what are you going to do this year?

*

If there was no Internets, I’d have to stand on the overpass and yell at cars.

Sounds about right.

As you do under these circumstances, I then learned the whole chart off by heart, right down to the letters that were only a couple of millimetres high, by dint of leaving my right eye slightly open. A couple of days later the doctor told me that my eyesight appeared to have recovered, at which stage it was my turn to gaze at him horrified and tell him in no uncertain terms that his stupid chart was a test of memory, not a test of eyesight.

At the ASI.

Why the banning of incandescent light bulbs was a bad idea.

Well, and newspapers too.

In my opinion this is just Dr. Pachauri being a tad sensitive about all of his business links.

I mean, really, how could anyone even think, let alone accuse him of, an international bureaucrat feathering his own nest?

No, no, all these fees and payments from people with an interest in carbon trading and so on are simply the minimum due to hte head of the IPCC: after all, we do have to save the world, don’t we?

It’s absolutely correct that his lawyers should send a letter to those presumptuous enough to peek into his dealings.

Wouldn’t have thought that there’d be all that much atremblin’ and ashakin’ going on though. Christopher Booker’s been at Private Eye right from the start after all. Seen more than one generation of lawyer off.

I had a fantasy in which the Fed and the TSA (Transportation Security Administration) switched roles.

If a bank failed at 9 a.m. one morning and shut its doors, the TSA would announce that all banks henceforth begin their business day at 10 a.m.

And, if a terrorist managed to get on board a plane between Stockholm and Washington, the Fed would increase the number of flights between the cities.

Both Ritchie and the TUC are excited by this new IMF paper.

Those financial institutions which spent more on lobbying in the US issued more dodgy mortgages and required more help after the crash.

Woo!

Now that is a surprise: when a sector is regulated then those being regulated will spend money on politicians to try and amend that regulation. And it’ll be the dodgier characters that struggle the most to amend the regulations their way.

Of course, our two intellectual heavyweights think that this should lead to more regulation: not noting that this will of course mean more lobbying. And no, you cannot ban lobbying, not in the US. It’s a constitutional right to be able to petition the lawmakers……as of course it should be.

However, there’s also one interesting detail that all three, yes including the IMF, have managed to entirely overlook.

Who were the largest financial sector lobbyists? Who spent, by far and away, the most on attempting to bend the law to their will?

Hmm.

Fannie Mae and Freddie Mac spent $7.4 million on lobbying in the first six months this year — $2.9 million by Fannie Mae and $4.5 million by Freddie Mac. Their $174 million in combined lobbying expenses since 1998 put the two companies just behind the U.S. Chamber of Commerce and the American Medical Association and ahead of General Electric Co., according to the Center for Responsive Politics, a nonpartisan Washington-based group that tracks money in politics.

You mean that the Government Sponsored Enterprises, the ones that went bust with such a resounding smash, are the ones that lobbied most for changes in legislation? (Note that this lobbying expenditure was an order of magnitude larger than that by Countrywide, a company that the IMF report tuts at.)

You mean that it was at the nexus, the collusion point, between government and finance that the real problem occured? You mean that the structures entirely dependent upon the politician’s will shoveled the most money to the politicians?

Colour me unsurprised quite frankly.

Also colour me unsurprised that neither Ritchie nor the TUC see fit to mention this point: and the IMF are very naughty boys indeed for not making it clear whether they have included the GSEs in their calculations or not (and lord alone knows what the figures would be if we included Sallie Mae and the rest of the alphabet soup).

At the ASI.

Why we don’t want the government choosing technologies for us.

A very catty yet interesting line:

As I’ve said before, what always struck me about Obama’s appointment of Duncan to run the nation’s schools — and he is actually moving to do just that, more so than any previous federal administration — is that Arne Duncan ran the Chicago schools for seven years, and in that time he didn’t manage to produce a single school that the Obamas chose to send their own children to.

Talking of the Whole Foods CEO:

On the other, his naive belief in individual responsibility

Oh no, please Br’er Fox, don’t make me have to make a choice!

No, seriously, the bloke is complaining because Whole Foods sells regular ketchup as well as organic.