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Wednesday, 26 September 2007

Inequalities and monetary tweaks

Here begins my new political rantings.


First thing i need to do is get onto MPs about the financial inequalities. With public sector workers bearing the pressures on their wages whilst private sector execs are making shit loads, i have to wonder if its right. And i think not.

Firstly, I don't believe the inequalities are fair because i don't think one is worth so much less than the other.

The economics of the thing are quite different from any moral calculation. They are thus:

public sector workers' salaries must be restrained because they would cause upwards pressure on inflation. Private sector salaries pose no such threat, apparently. I assume this because they are allowed to roam free at the whim of the market. But i would imagine that those massive bonuses would be more inflationary because they would be spent more on luxuries than relative necessities. After all, how many yachts can one use at once?

The only economic reason i can think of is that their marginal propensity to consume must be much lower, so that their extra saving will put up interest rates, in addition to the fact that money is of course being saved rather than spent.

BUT, the money is then banded around by the banks, as happened in the 1970s with the petro-dollar crisis. Silly buggers have now done it again. Events in history repeat themselves, the first as tragedy and secondly as farce. Good call Karl. Now, the excessive salaries of board members are stuffed into banks who are too greedy to bother checking for bad lending, exactly what happened in the 70s.

The board execs high pay results from their ability to directly create wealth, as opposed to the public sector workers who contribute to wealth creation in a far less obvious way.

Personally, I'd like to see a fiscal tweak because i can see where Gordie is coming from with his Crossland-inspired economics. The idea is to grow the economy and then share the greater growth. The problem is that getting a third of a large cake is still a third of a cake. Inequalities remain, or even increase when too much emphasis is placed on growing the economy through a liberalised financial market as we are in Britain.

I'd personally like to see much more emphasis and resources put into the foundations and infrastructure of the country, rather than relying on the whims of bloody financial markets.

Tax those fuckers more, certainly as a percentage and INVEST it, don't just throw it away.

I mean, a 2.5% pay rise over two years is nothing like a £3,000,000 BONUS. Surely the words BONUS and SALARY are clues as to which is most inflationary.

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