I am not Mark Wadsworth
Listened to The Moral Maze driving home last night. Didn’t hear all of it, but they seemed to be discussing how it could possibly be that bankers and footballers earned more than teachers. There was the usual lefty blaming ‘the market’, or ‘market failure’, but I was astounded to hear an American witness allowed to say (on the BBC!) that ‘actually, the market was us’.
It seems to me that here in the UK these wage anomalies (if you insist that this is the case) do have a common cause, but it is not us. It is not ‘the market’. It is, in fact, the government, or State if you prefer.
Consider. Teachers work for a monopoly, the State. The banks are a state sanctioned (and funded) cartel. Overpaid footballers (and yes, I do think they’re overpaid) work for football clubs owned by heavily leveraged rich men, able to borrow at low rates of interest set by the State.
So, in my hypothesis there is no ‘market’ at all operating in these three sectors, except insofar as talented footballers use skilled agents to broker their services from club to club, and even that is heavily regulated by the various Football Associations.
The State has intervened in each market. It has cartelised the banks with regulation that erects massive barriers to entry. It has colluded with them, through its agent central bank, to supply ever increasing quantities of credit, based on fractional reserves to inflate economies and buy votes, at too low a price. And the state has acted as rescuer when the banks over leverage themselves, turning private profit into socialised losses, a practice that has exponentially increased moral hazard.
In football rich operators have accessed this excess of under priced credit and bought into football clubs at over-inflated prices, usually as trophy purchases. And then set to in an arms race with other highly leveraged rich men to see who can get the big prizes first. And of course the fallout from this is that fat wages get paid to trophy players.
Teachers are employed by the State. There is an actual monopoly in education. There is no market at all. Consequently the State Education monopoly does what all monopolies do; it overcharges its customers and exploits its employees. Not all of its employees are exploited. Some are part of the monopoly management and as they either need keeping on side, or achieve positions of power in the governing bureaucracy, extract very high rewards and accolades (knighthoods for example) for very little work.
In all the three cases there is no ‘market’ as such. The State has intervened in the efficient functioning of human action with the predictable consequences that I have set out. Excess rewards for the wrong people, exploited workers and over-charged customers.
It seems to me that here in the UK these wage anomalies (if you insist that this is the case) do have a common cause, but it is not us. It is not ‘the market’. It is, in fact, the government, or State if you prefer.
Consider. Teachers work for a monopoly, the State. The banks are a state sanctioned (and funded) cartel. Overpaid footballers (and yes, I do think they’re overpaid) work for football clubs owned by heavily leveraged rich men, able to borrow at low rates of interest set by the State.
So, in my hypothesis there is no ‘market’ at all operating in these three sectors, except insofar as talented footballers use skilled agents to broker their services from club to club, and even that is heavily regulated by the various Football Associations.
The State has intervened in each market. It has cartelised the banks with regulation that erects massive barriers to entry. It has colluded with them, through its agent central bank, to supply ever increasing quantities of credit, based on fractional reserves to inflate economies and buy votes, at too low a price. And the state has acted as rescuer when the banks over leverage themselves, turning private profit into socialised losses, a practice that has exponentially increased moral hazard.
In football rich operators have accessed this excess of under priced credit and bought into football clubs at over-inflated prices, usually as trophy purchases. And then set to in an arms race with other highly leveraged rich men to see who can get the big prizes first. And of course the fallout from this is that fat wages get paid to trophy players.
Teachers are employed by the State. There is an actual monopoly in education. There is no market at all. Consequently the State Education monopoly does what all monopolies do; it overcharges its customers and exploits its employees. Not all of its employees are exploited. Some are part of the monopoly management and as they either need keeping on side, or achieve positions of power in the governing bureaucracy, extract very high rewards and accolades (knighthoods for example) for very little work.
In all the three cases there is no ‘market’ as such. The State has intervened in the efficient functioning of human action with the predictable consequences that I have set out. Excess rewards for the wrong people, exploited workers and over-charged customers.
Lola
9 comments:
Lola, re teachers - there's an interesting sub-category here.
Independent schools frequently operate a pay scale above that of the state but pegged to it. In addition, some - but by no means all - offer accommodation, with or without pastoral duties, and reduced school fees for staff children.
A teacher entering the private sector can, to a certain extent, negotiate an individual pay settlement with the school according to circumstances.
Perhaps I'd better shut up now, or they'll all want one....
L, excellent point on tycoons with trophy wives, trophy football clubs and trophy players.
McH, national pay scales are an outrage and should be scrapped. Notwithstanding that education vouchers would sort most of this out...
...re 'Trophy wives' - in my next life I'm coming back as something decorative and useless.....'Cheque book, Jerry!' (Only Margot wasn't entirely useless....)
I think we all remember from school, there were good teachers and really bad ones.
The system subsidises the bad ones at the expense of the talent. The talent get's fed up and leaves.
All agreed, except for the passing mention of "ever increasing quantities of credit, based on fractional reserves to inflate economies and buy votes".
You can't have banks really without fractional reserve banking - you certainly can't have loan finance. Consider if you insist on 100 percent reserves. So you put £100 in the bank. They can't lend it out because they need to hold 100 percent of it in reserve. And that's it. No loans - banks become just a safe place to store money - like a fortified version of your mattress.
Steven_L - 'The talent gets fed up and leaves.
...straight into the private sector. And then the powers-that-be start discriminating against privately-educated university applicants to remedy the situation, and so it goes on, in an eternal cycle of dumbing-down.
As MW says, vouchers are the only answer.
"Steven_L - 'The talent gets fed up and leaves."
Mrs L is a very talented teacher indeed. You should see the thank you notes she's been getting from the students leaving this year. Exploited, absolutely. And she is trapped. There are no posts in private schools she can access efficiently and there are no competing schools she can use to leverage her 'rate' with the current Head. She has a Head of Department who is utterly useless leaving Mrs L to run it, which the Head loves 'cos she gets it done well and cheap, and means she (the Head) doesn't have to sort out the little shit Head of Department. If any of you have teaching spouses in the state education system you will know how atrocious and dysfunctional it is. What success it achieves it achieves depsite the system and only by the dedication of the majority of teachers that are like Mrs Lola.
There is no such thing as a "free market", only freer markets.
There are a few distortions with football (like councils giving cheap rents, or in the case of Manchester, giving a ground to Man City), but it is essentially a free market sport. Tevez is hired because he's great at football, Beckham because he's great at selling merchandise.
You could compare it with something like Rugby or Athletics. Rugby seems to get nothing from government at all, which makes it towards the "freer" end of things. Athletics, on the other hand, would probably go out of business in the UK without government assistance.
Sounds just like local government Lola - oops, I just remembered - it is!
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