Monday, October 05, 2009

Clueless, starring Kezia Dugdale

Kezia Dugdale: not to be confused with Kezie Ostrich. The latter is very common roasting on a barbeque at the Edinburgh farmer's market (on Castle Terrace) of a Saturday morning; the former is just common and currently roasting in The Kitchen.

A couple of weeks ago, your humble Devil horned in on a debate between @keeprightonline and @keziadugdale (the latter being some sort of NuLabour apparatchik of the Scottish persuasion).

My main contribution to the debate was this:
@kezdugdale Re: the tax problem, would you lobby for a higher personal allowance—£12,000, say? Then those on MNW would pay no income tax...

I thought that this would be a no-brainer. After all, surely the point of socialist policy is to ensure that the poor are not so... well... poor?

OK, I admit it: given NuLabour's continued hammering of the poorest in our society, I fully expected to get some excuse explaining why taxing the lowest-earners in our society is absolutely tickety-boo.

And I wasn't disappointed, for Kezia promptly got onto her Soapbox.
Labour’s MSP for Glasgow Shettleston, Frank McAveety is hosting a Members' Debate tonight on the campaign for a Living Wage – a campaign that I fully support.

Anyway, @DevilsKitchen soon got involved as well. He said if I was so concerned about poverty, why didn’t I support raising the personal tax allowance so that no one earning the national minimum wage would pay any income tax.

I disagree with that idea because I think that sends the wrong message about the national minimum wage. Branding it as more of a benefit than a right.

For fuck's sake...

[Cue Devil speaking slowly and clearly, as though explaining a simple point to a small and slightly doltish child.]

Kezia, your mission is, supposedly, to redistribute wealth so that the poorest in society are able to feed and clothe themselves—this is the desired, or at least professed, outcome of your economic engineering policies. It is not to make those people feel good about the fact that they are living off charity; which the National Minimum Wage (which uses the force of the law to net workers more money than they would otherwise have) most certainly is.

Now, one can argue that we, as a society, have decreed that x amount is the minimum that someone should decently earn. We can even say that we, as a society, benefit from them earning this minimum wage because it provides an incentive for people to work rather than lie around, rotting on benefits.

However, as Timmy pointed out at Comment Is Free, if we—as a society—think that people should earn a minimum wage then we, as a society, should pay the price.
Rather, it is that if we as a society decide that a certain price is immoral, then we have to pay for that price to change. As you can see from the numbers above, the burden of the minimum wage falls on three groups. Those who employ low-skilled labour see their profits shrink. Those who buy goods made with such labour see the prices rise. And of course many low-skilled workers lose their jobs (or have their hours reduced). But if we really think that wages of below £5.73 an hour are immoral then we should all be dipping into our pockets to increase wages to that sum. That means that we all get taxed and the money redistributed.

In other words, we should not force one particular group—in this case, business shareholders—to pay for our collective conscience. The price should be paid by all of us, through the redistribution of taxes (of everyone earning more than our positied minimum).

So, Kezia supports something that she calls the Living Wage; she does not explicitly state what amount she considers this to be, but I think that we can make an educated guess from the following section.
If we’re talking about tackling the poverty of those in work, I’m utterly convinced that a living wage is the answer.

700,000 Scots are low paid. Some facts:

  • Around 70% of workers in the hotel and restaurant sector earns less than £7.00 per hour. Three fifths of these are women.

  • Almost 60% of workers in the retail and wholesale sector earns less than £7.00 per hour. Again three fifths are women.

  • 20% of directly employed staff in the public sector earns less than £7.00 per hour with over three quarters of these being women.

Now, I am not going to get into the equal pay based on sex debate here—that has already been comprehensively covered elsewhere.

However, I think that we can conclude, from the list cited above, that Kezia's Living Wage would be £7 per hour. So, let's do the maths on this, shall we?

  1. A full-time worker on the current National Minimum Wage earns £5.80 x 40 hrs per week x 52 weeks in the year = £12,064. Your humble Devil would like to see this entirely untaxed, and so the net yield for the worker is £12,064.

  2. A full-time worker on £7 per hour earns £7 x 40hrs per week x 52 weeks in the year = £14,560. Given Kezia's original answer to me, one can assume that she would levy tax on this, so the net yield for the worker is £11,970.05.

  3. In this specific instance, the policy of the eeeeeevil right-wing libertarian would ensure that our worker was better off by nearly £100 per year, compared to the policy of the bleeding-heart socialist.

Of course, there are a number of papers that have researched just what the minimum living wage should be—one of the most recent (and comprehensive) was that published by the very-definitely-not-eeeeevil-right-wight Joseph Rowntree Foundation.
A single person in Britain needs to earn at least £13,400 a year before tax for a minimum standard of living, the Joseph Rowntree Foundation (JRF) says.

Note, please, that the JRF's estimate is pre-tax: after tax, the net yield is £11,169.65. The conclusion here, of course, is that both Kezia and I are being far too generous.

And such generosity does, of course, have unintended (though quite predictable) consequences: workers get laid off, or their hours are reduced and suchlike. Or, of course, the business goes bust.

None of these consequences are mentioned by Kezia in her fascinating post—and nor is the provenance of the money to pay for her proposal. However, since she wishes to tax the income of our toiler, one can assume that she means to make businesses pay the higher wage rate—please bear this in mind as we continue dissecting this truly extraordinary post.
Ensuring that more workers receive a living wage will not alone end income inequality, but it will provide some justice for those who work in essential jobs, ones that everyone relies on, but which few people value.

And that's the point, Kezia: these jobs are low value. They require little training, no degree and, as a consequence, any monkey could do them. As such, they are low-paid jobs.
And it's not just about individuals and poverty—it's good for business.

Oh, this is going to be good...
Employers in the private and public sectors who pay a Scottish Living Wage will help lift the pay of thousands of low paid workers and increase an employer’s productivity, reduce staff turnover and absenteeism, meet Corporate Social Responsibility standards and contribute to boosting the economy more generally.

And how the fuck is all of this going to happen, precisely?
  1. Businesses do not exist in order to "help lift the pay of thousands of low paid workers": they exist to provide a return to their shareholders. In fact, the directors of the business have a fiduciary duty to provide as good a return to the shareholders as possible. And if they don't do this—through making a profit—then they will cease to be a business and their workers will be workless.

  2. And how, exactly, does forcing a business to pay its workers a higher wage for the same outcome "increase an employer’s productivity"? It doesn't: in fact, it does the very opposite. Quite obviously, paying a worker more for doing the same does not increase productivity—it decreases it.

    One could argue that the worker will work harder if promised a higher wage but even this falls down in this case. For when said worker knows that the employer must pay this higher wage, by law, then the worker sees the higher wage as his right: why should he work harder and thus be any more productive?

  3. And the idea that a higher minimum wage across the board will "reduce staff turnover and absenteeism" is absolute crap. It won't reduce staff turnover in the slightest; if someone leaves a company to go to another one, it will often be because that company is offering higher wages. Upping the minimum that companies are reuiqred to pay does not reduce the incentives to find a new job at all: how could it when the current minimum wage has not?

    And reduce absenteeism—how? Again, all employers must pay the same legal mimimum, so staff are not likely to be any more inclined to show up for work. If they don't show for work, then they will be sacked. In many jobs, this would represent a cost to the employer in training new recruits but, as we have already pointed out, these are low-value jobs.

  4. And who cares that employers "meet Corporate Social Responsibility standards": this is just more government-imposed red tape—red tape that stifles job creation.

  5. Having been through the above, I think that we can dispense with the idea that the Living Wage will "contribute to boosting the economy more generally".

    What it will do is to make goods and services far more expensive for everyone, thus wiping out any possible gains for the £7 an hour worker anyway. Plus, of course, fuelling inflation.

So, having concluded that Kezia has fuck all understanding of economics, business drivers or worker psychology, let us plough on manfully to the end of this missive.
None of this is an attack on the national minimum wage or what it has achieved. In fact, there has not been nearly enough recognition of the fact that Labour has increased the national minimum wage year on year since 1997. Gordon Brown pledged this week at the TUC conference that he would continue to do so.

And for the reasons that I have outlined above, the National Minimum Wage "achievement" should be thrown as Gordon—along with the rotten fruits and turds—when he is finally driven out of Downing Street.

And the unemployed should be on the front line because, of course, the NMW has had another effect: someone whose labour is worth less than £5.80 per hour will now never, ever get a job. And that means that they cannot get either the experience or finance to better themselves—and that means that they are condemned to a life rotting away on benefits, a seam of potential destroyed.

And Kezia's Living Wage would destroy yet more lives, for there will be far more people whose labour is worth less than £7 per hour. That's yet more thousands of people consigned to the scrapheap of life, thanks to Kezia Dugdale.
Some people might say that is "in spite" on the current economic difficulties. I would say that it is even more important that we increase the NMW "because" of the recession.

Then you are a moron.
Particularly as low paid workers face more risk during this time. They are more likely to be less secure at work, face a higher risk of unemployment and have fewer resources to fall back on. Whether that may redundancy pay or personal savings.

Uh-huh. So, tell me, Kezia, do you think that forcing cash-strapped businesses to pay workers £7 per hour will make said workers' jobs:
  1. more secure, or

  2. less secure.

If you answered "1", then you really are a complete idiot. If you answered "2", there may just be a small sliver of hope that you might actually understand what I am talking about—all hope is not lost (unlike the poor souls that you Living Wage would fuck up).
It just makes sense and it requires bold and confident governance from the powers that be.

Kezia Dugdale, ladies and gentlemen, pushing compassionate policies for a more bankrupt and miserable Scotland. It's almost worth moving back to the 'Burgh, just so that I can spend my time hunting Kezia through the streets and wynds of Edinburgh, that I might pelt her with neeps, turds and tatties.

Fucking hellski.

UPDATE: on this subject, the lovely Bella has constructed a simple model showing how Kezie Kezia's £7 per hour might impact on a factory owner.
Worst-case scenario? My partners and I sack our 100 employees and sell the factory. My employees are now earning £0/hr. My partners and I go off to teach maths to left-wing dunderheads who, despite our efforts, will never understand that occasionally, just occasionally, raising the costs of a business means it is no longer worthwhile to operate that business.



CountingCats said...

And the reason you single out this one person is?


She is New Labour, you don't seriously expect joined up thinking on any topic, by any of them, do you?

BTW, good outpourings of rage lately,

Jiks said...

From their point of view I think it works like this:

Person on benefits = Labour core voter as paid by state to do nothing = Good

Person moving off benefits into work = possible lost vote = Bad

So its in Labour interest to raise as many hurdles as possible to low skilled potential workers getting actal jobs, hence this kind of bollocks...

John B said...

"Businesses do not exist in order to "help lift the pay of thousands of low paid workers": they exist to provide a return to their shareholders."

I'm not sure you're right there, at least when it comes to limited liability companies (all ltds and plcs). The directors of a LLC are obliged to prioritise return-to-shareholders-within-the-law above all else, but the LLC in the first place is an artificial, mid-1800s creation of the government in the first place, because the government thought that the incursion on people's natural right to pursue their debtors was justified by the benefits of allowing companies to raise capital from multiple, diversified investors.

It's something which libertarians don't pay enough attention to in general: an individual's (or partnership of individuals all acting as individuals) natural, free-born rights are very different from the regulations applied to an organisation that only exists by state decree.

(and one of the reasons why NuLab NuTory cronyist government is particularly bad is that it completely fails to draw that distinction in legislation. It's right that Unilever should have to be transparent, fair and compliant in its hiring; it's not right that Jenny Smith should have to follow the same rules when she hires a babysitter.)

Lee said...

First class ranting, I don't know if I should be laughing or crying at the sheer lunacy of this socialist scum

TheFatBigot said...

I find myself torn on the subject of the NMW. It is only at the margin, and I mean right at the margin, that a business will stand or fall depending on whether it pays NMW or a bit less.

And if it can only retain its current workforce by paying a bit under NMW, it by no means follows that having to pay NMW will cause it to fold. There are other options such as (i) retaining all existing staff but requiring higher productivity in order to justify the pay increase, (ii) reducing staff numbers while paying NMW and requiring higher productivity from those who remain and (iii) finding cost savings in the business and diverting those savings to increasing the wages of the bottom rung of employees. We should not be too dogmatic that increasing staff costs at the lowest level will make-or-break a business. It can happen but the likelihood should not be overstated.

Businesses often have to adjust to take account of external factors that affect cost. The price of raw materials can increase overnight for a manufacturer and the price of stock can increase for a retailer. The managers have to decide how much of that increase can be passed on to customers and how much has to be absorbed by adjusting the costings of the business as a whole. Wage costs are only one factor.

Of course we see businesses fold because costs go up beyond the capacity of their customer's purse. NMW and "living wage" are examples of that, but they are not necessarily determinative of the ability of a business to remain profitable.

Having said that, there is one respect in which NMW is simply evil. I refer to young Wayne and Sharon who have no skills to offer but are willing to work and learn. They live with their parent(s) and will be proud to earn pin money rather than be on the dole. They have so little to offer a business that NMW is absurd over-payment. Perhaps they are worth £2 an hour, perhaps a bit more, perhaps a bit less; but they'll work for pocket money in order to gain knowledge and experience. Then in a couple of years they will be worth NMW and, if they continue to work hard, a little while later they will be worth more.

They are, to my mind, the true victims of NMW.

It's a double-whammy. As the education system fails to bring out their potential, despite the frustrated desire of so many good teachers to do just that, Wayne and Sharon then find they can't get work because NMW makes them too expensive.

Anonymous said...

"And if it can only retain its current workforce by paying a bit under NMW, it by no means follows that having to pay NMW will cause it to fold."

I don't believe anyone has claimed that _all_ business will collapse because of the minimum wage.

But, as you say, if a company is forced to pay more for its unskilled employees, then it will demand higher productivity, and those who can't be that productive will be permanently unemployable. I remember some years ago watching a news story about the minimum wage where some cleaners were talking about how wonderful it was that the government had forced their employer to pay them an extra couple of pounds an hour, but now the evil bosses, those sick bastards, expected them to do the same amount of work in far less hours!

And, if my experience is anything to go by, said cleaners will by now have been laid off and replaced with Eastern Europeans who are more productive than the native Britons who used to do the job.

The only thing a minimum wage does is price the least productive out of the job market; if the company can't find more productive workers for the same amount of money then they will instead look at automation, foreign workers (either immigrants or by moving the company abroad) or simply closing down. As such it is an utterly evil and typically leftist piece of bureaucratic nonsense which harms the very people it's supposed to 'help'; any decent person should oppose it for those reasons.

Roger Thornhill said...

Most Socialist "use(less)ful idiots" actually DO think companies' prime purpose is to "provide employment".

of course the Fabians will not be content until they can dictate who employs whom, for how much and to do what.

Forcing out small and independent companies in favour of State provision and Corporate providers is a useful benefit lf such a stance along with ever greater regulation.

It is all so depressingly predictable.

Andy said...

I have no problem with the broad strokes of your argument. However, I wonder if the argument has an unsound basis.

The actual numbers of a minimum wage are irrelevant, since X gross will equal Y net. That makes the minimum wage Y, and the personal allowance can be left as it is.

It seems to be the wrong argument to say that "if you think the minimum wage should be X, then you presumably support raising the personal allowance", since that would necessarily change Y, the take home minimum wage.

Dave said...

Good post DK, but you've not taken into account the Law of Unintended Consequences re the National Minimum Wage.

The reality is that the NMW is also the National Maximum Wage. Once upon a time the laws of supply and demand would mean that someone who is more able, more talented, more employable could ask for more money. Not now.
Once upon a time a firm might need to pay more to attract better staff. Not now.
Retail management has seen the biggest real fall in salaries. 25 years ago I could get 10k to manage a store in a small town. 20 years ago I earned 18k to manage a store in a county town high st. My friend was assistant manager and key holder in a Waterstones, and earned the NMW. No chance of him buying a house and starting a family etc.
NMW = National maximum wage

Nick said...

I'm not completely against a MW. Here's the reason.

Given the existance of a benefits system, there needs to be a gap between the income you receive on benefits, and the income you get from working or there is no incentive to work. Needs no explaination.

The important part is that its income received. ie. After taxes.

If you're on the MW, you are taxed at around 2.5K a year. That is the real scandal. Stop taxing MW, and there is more of an incentive to work. I would also cap benefits. None of this 175K a year in housing benefits any more.

ie. Clear gap between benefits and working, and there is an incentive to work. Those on benefits are smart enough to work out what is best for them.

Same with benefits itself. If everyone has to self insure first, then the incentive to work is higher.

ie. You have to save whilst working. When unemployed, you have to spend those savings first, before any help. If you don't use this, you get to spend the money. Ditto, no benefits until you have paid into the system.


Anonymous said...

I think your very cruel talking about a young lady who looking at her so obviously suffers from downs syndrome.
And does not shave regularly enough.
Pure hatred of anything Nulabour.
I just hate them .

Anonymous said...

This post is profoundly offensive, DK.

Ostriches are sweet, intelligent animals that should not (a) be eaten or (b) compared to ZanuLabor fuckwits and retards.

Old Greeny said...

Strikes me as a good idea to raise the tax allowance to much higher levels. I mean, what's the point in taking the money away and then giving it back in tax credits etc, etc? Must cost more that way as well?

Rob said...

The minimum wage has an advantage over raising the tax allowance, if you are a socialist - it allows unions to raise wages across the board to maintain 'differentials'.

Of course, don't underestimate the joy socialists feel by sticking it to businesses in this way.

Chapel said...

Not to sound like the Nulab hippy scum you have been savagely crushing with wit and sarcasm, but i think the point you raised with regards to the people whose labour is worth less than the NMW should be explored in more depth,
In the past in the healthcare sector it was possible to “Employ” a service user as part of a life skills plan to perform some simple task and get paid for it.
The work performed would never be of a good standard and the pay was merely a token. However in comes NMW like a shit missile and we all get fucked, Nulab in their infinite retardation say we have to pay the said service user the minimum wage.... putting an end to that program.
The fuck wits..

Anonymous said...

"Businesses do not exist in order to 'help lift the pay of thousands of low paid workers': they exist to provide a return to their shareholders."

Historically, corporations were created to allow large scale industry to bring about benefits for the world that partnerships could not provide. Massive undertakings such as railways required huge amounts of capital, and corporations evolved as a way of gathering that capital and providing benefits to the population. They came about to serve the population not as a means to rake in profit. They are (or were intended to be) simply a tool to improve things for society. We tend to forget this these days.

The idea that they are somehow the most efficient and best way of doing things seems taken as given. We only need to look at the banks however to see how blind faith in corporations and the goal of profit doesn't always turn out how we imagine.

What is wrong with using the corporation as a tool to better society? I don't understand why people feel it best to let corporations behave in any way they feel. If we'd like business to have free reign on everything, would you be worried if say one corporation managed to gain control of all water supplies for example? I am not against business, it's vital for us, but like everything in life you have to have limits.

Nick said...

If some companies don't go bust, then they aren't competing. People will be overcharged.

If they are forced by competition to cut prices, the inefficient are culled.

End result the efficient is left, and the price to the customer is lowered.

Alternatively, Gordon Brown will decide all. You have to put up with the goods from the central list, at the prescribed price. It will be higher of course, because if it isn't high, he can't pay his comrades the money they deserve.

Anonymous said...

Excellent post DK though as any native of Embra' will tell you it's dunderheids not dunderheads