Why have we been worrying so much about the national finances? According to two ‘think tanks’ — sorry about stretching that term — the solution to our economic problems stares us in the face.
Instead of having a National Minimum Wage (NMW) we should have a higher National Living Wage (invented by statisticians).
If employers had to pay this, the Treasury would get £2 billion in extra income through more people having taxable incomes. And pigs might fly.
Perhaps they do in the rarefied atmosphere of The Resolution Foundation and the Institute For Public Policy Research. It is one of the sad facts of life that we have legions of professional economists who, despite their degrees and even PhDs, do not understand the law of supply and demand.
First reaction to the plan must be to ask why these Pollyanna economists are showing such moderation. If paying the NMW boosts the Treasury’s income, why stop there? Why not twice the NMW? Then the Treasury would be brimming over with cash and we would be well on the way to paying down the national debt.
In the real world, forcing employers to raise wages would lead to higher prices combined with curbing their workforce — in other words, a jump in unemployment. And you, the taxpayer, would have to pay out for a rising benefits bill.
If you want a demonstration of the already harmful effect of the National Minimum Wage, combined with all the other regulations surrounding employment, you have only to visit bigger supermarkets.
More... Paying workers a living wage 'would save the public purse over £2BILLION a year' Revealed: The crippling cost of childcare, with some full-time mothers forced to spend four months' salary a year Brussels plot to make Britain a second-class member of the EU denying country our veto and MEP seatsYou will find helpful staff offering to assist you in learning how to operate the do-it-yourself tills.
Do not, dear shopper, imagine for one moment the new procedure is there for your benefit. It just follows the trend to replace human beings with machines. The former are expensive. So are the latter, but machines have no minimum wage and are immune to national insurance. They can’t answer back.
There is no danger that they will take you to court for wrongful dismissal or demand that you meet every health and safety law, or submit to any other of the current employment regulations, some dreamt up by us and some by the EU. And this applies in all workplaces, whether shops, offices or factories.
A good idea? Politicians of all sorts, including Ed Miliband, are showing considerable interest in the National Living WagePoliticians of all sorts are showing considerable interest in the National Living Wage (NLW). Ed Miliband cautiously dubs it a good idea. Mayor Boris Johnson, who can be a complete child in economics, wants it to apply in London with adjustments for the expense of living in the capital.
Miliband is not so foolish as to make the NLW a party policy. He just wants to sound as if he is on the side of the low-wage earner. Much the same applies to Johnson, who is jolly keen on PR stunts.
The NLW has been set up by statisticians asking the public what it thinks a living wage should be.
The answers include having a car as an essential, which speaks for itself. Soon it will doubtless be having a mobile phone.
It would be instructive to know how many described as living ‘in poverty’, in particular children, already have their own mobiles.
Would the figure, if high, make statisticians rethink their concept of impoverishment? It is too much to hope for.
The CBI attacked Margaret Thatcher's economic policy, promising a 'bare-knuckle fight'. It lostRely on the CBI - to get it wrongThe Confederation of British Industry is warning us about the damage leaving the EU would cause. That organisation is wonderful: always on the wrong side of every major public issue for the past half-century. It used to give firm support to fixed exchange rates until the pound was forced to float and the CBI found the process liberating.It backed Harold Wilson and then Ted Heath’s Prices And Incomes policies, all acknowledged failures. It backed Labour’s short-lived National Plan of 1965. It attacked Margaret Thatcher’s economic policy, promising a ‘bare-knuckle fight’. It lost, fortunately. Later it was to back Chancellor Nigel Lawson’s scheme to shadow the German mark — a scheme that led to his resignation.The CBI warmly supported our membership of the ERM until we were rudely forced to eject on Black Wednesday in 1992, leaving financier George Soros billions richer.Needless to say, the CBI backed the creation of the euro and declared that we ought to join. All this is reassuring in its way. Tradition is upheld. The honours list has always been quirky. This time, one wonders why the awarders (including the Prime Minister) have decided to insult the violinist Nicola Benedetti. She gets an MBE, the sort of honour normally reserved for someone who devotes himself to polishing the PM’s shoes or collecting his laundry. For one of the world’s great musicians, also involved in her own charity work, this award is equivalent to a postcard from No 10. Various pop musicians have ranked much higher. Perhaps Cameron wondered, as he passed on the list, which group she played with.
