Putting down roots in nourished soil

Posted: November 10, 2012 in Uncategorized
Tags: , , , , , ,

There has been some talk recently from Labour about the ‘living wage’. Not so much talking that they pledge to introduce it unfortunately; more that they wish to create an environment in which businesses feel obliged to pay it.

Now, as we know, the living wage is around about a pound an hour more than the current minimum wage, which is forty-odd pound a week more, £160 a month etc. So the question is, how do people working full-time on the minimum wage afford to live? By living we mean exist really. Shelter, basic heating, clothing and food. The answer is that they claim tax credits, which, as many people have alluded, are an absolutely farcical method of wealth redistribution. I’m not so sure how it stands with the new tax allowance, but previously anyway, people on minimum wage would be taxed, then be paid a salary they couldn’t exist on, so claimed money back from the State to allow them to exist. So they were taxed, only to receive it and more back because their employer exploited them. Maybe a strong term, but the level of the living wage is well known, so employers who are paying people over 21 this meagre wage are exploiting them in the full knowledge it is not enough for them to exist at a basic level.

The obvious point to make is why should taxpayers essentially subsidise big business profits, as essentially this is where money they save on wages will undoubtedly go? Although this argument is valid, it misses another question which would render this move unnecessary: why are living costs so high?

Some naysayers will try to soothe this with ‘realism’: food and energy costs are rising, ‘we all have to make sacrifices’. But this is patently blaming relentlessly poor crops without investigating the quality of the soil.

The economy functions best when money circulates as quickly as possible. In other words, is spent in businesses that purchase goods or services from other businesses, keeping the money moving to keep businesses solvent and confident of income. Certain items of expenditure can be termed ‘dead money’. These are expenses that are usually essential to maintain a standard of existence: housing, heating, and water. These don’t circulate around the economy, as they simply service the provider. To a lesser extent you could add fuel for a vehicle.

This dead money is sucked out of the economy, and contributes hugely to economic stagnation. Aside from the argument that the Government should not tax petrol and diesel twice, there are also the moral and sound economic arguments in favour of essential utilities being publicly-owned. If water, electricity and gas were all publicly-owned and run efficiently enough, they could even turn a profit for the treasury to maintain other integral public services and welfare. Of course, this does not fit in with the Neoliberal doctrine of the private sector running everything.

Even for those who don’t agree with nationalising anything, there is the little matter of housing. There are surely very few people who think housing is not extortionate across the country. This is the ultimate in dead money. Money which could flow around the economy instead flows straight to landlords, including of course our oversized housing benefit bill.

My main point is simply that we must ensure that we deal with the ‘dead money’ situation if we want a healthy economy. People may argue that houses should be expensive to buy, and I accept this to a degree. What we do desperately need are rent controls, which most of Europe deploys but which were abolished by the Conservative Government of the early 1990s. Housing is an essential tool for existence, and must be paid for before any other money circulates, as well as the lack of controls sending housing benefit bills to the taxpayer skyrocketing. Once you reduce the outgoings for this, the economy, and Government balance sheets, will miraculously improve. Either we convert ‘dead money’ to public use, or we reduce it through legislation to increase live money in the economy.

It makes me wonder what kind of society we strive for, when we need a ‘living’ wage, and ‘affordable’ housing. Should a living wage not be a given? And shouldn’t all housing be affordable?

A living wage might squeeze more out of a poor crop, but nourish the soil and you’ll really see results.

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