Monday, 9 December 2013

"It's grim"

From City AM:

REAL wages are still falling, on average, and nobody seems to know what to do about it…

There is a growing body of evidence – including an excellent new report from Towers Watson – that shows that rising non-wage employment costs are crowding out wages and are the primary structural cause of depressed wages.

Employers are paying more to employ people – but the staff aren't noticing because hidden taxes and especially employer pension contributions are crowding out wage hikes…

As the Towers Watson paper shows, this represents a transfer from those without pensions or with defined contribution pensions – typically low income or younger workers – to those with final salary pensions – older workers and pensioners.

I don't believe in generational warfare, but young people struggling to afford housing are also taking a pay cut to finance generous pensions of a sort that will never be accessible to them.

It's grim. Auto-enrolment will cut pay packets further in the years ahead.

As per usual, as long as Heath sticks to facts, figures and micro-economics, he makes good sense. He glosses over the fact that price-inflation is a deliberately engineered by governments to help transfer wealth from savers to landowners, and to act as a handy ex post justification for Home-Owner-Ism ("It's the only asset which beats inflation"), but hey.

One thing which is not clear, and probably not to him either, is his throwaway remark "I don't believe in generational warfare".

Does he mean he doesn't believe it exists (as in "I don't believe in God") or does he accept that it exists (having just provided plenty of evidence for it) but that he thinks it is A Bad Thing (as in "I don't believe in capital punishment")?


Kj said...

One thing which is not clear, and probably not to him either, is his throwaway remark "I don't believe in generational warfare".

My bet is that it means that; the baby-boomers are getting defined benefit pensions, the younger generation is paying for it, but not going to get it themselves. And that this sucks, but we can´t do anything about it (promises were made etc.)

And it also covers any other policy that would redress "generational inequities" as off the table, especially more efficient ones that would affect PWIM´s.

PleaseSpyOnMe said...

Recently I registered with forums. I made about 3 posts, then a couple of days later all my posts had been removed and I was being moderated. The most contentious post I made was when replying to someone who was considering buying a house.

I said words to the effect of "it is fine to buy now, careful of being too swayed by internet message boards, HPCers do not have a good record in market prediction, whether it be equities, housing, whatever."

If I have done anything wrong over there it can only be this post. LOL, is that enough to mess you up over there? Is that why the facebook group came about?

Mark Wadsworth said...

Kj, he will talk reasonable sense right up to the moment where PWIMs are involved, then he turns into a gibbering wreck of complete nonsense.

PSOM, we got sick of the current site-owner Jonathan Black aka Flashman aka lots of other aliases, who has also been emailing me with death threats again, using yet another alias.

At this stage I will not rule out the possibility that you are yet another Jonathan Black alias.

Lola said...

All true, but some of us have been saying this for years and years.

Turnbull2000 said...

PSOM - Any poster over the last few years who dared suggest that house price may not crash was stealthily banned.

I was banned in 2008 for arguing that the government will intervene heavily to prevent major prices falls, with the usual nutters also accusing me of being an Estate Agent VI.

Mark Wadsworth said...

L, good, well keep saying it until people listen.

T2, I'm not aware that people got banned for talking up house prices, the site owner is very much a house price bull.

Your prediction that the govt would do anything and everything was correct, but most of us knew that, the only question was whether it would "work" or not, and so far it has.

But it won't much longer - the last six years were like the lull between the original, little remembered land price crash in 1924 or thereabouts and the proper crash in everything in 1930.

Anonymous said...

"price-inflation is a deliberately engineered by governments to help transfer wealth from savers to landowners"

The EU are currently 'engineering' price deflation, accompanied by collapsing property markets in the periphery. So it does appear that the obsession with property prices seems a rather British obsession, or perhaps Anglo American.

Mark Wadsworth said...

PC, the EU as presently constituted is a mechanism for subsidising "the centre" and to Hell with "the periphery". Also known as "corporatism" or "Fascism" depending on your point of view.

Broadly speaking, London is part of "the centre" and most of the rest of the UK is "the periphery", just to give you an example, I could say the same for Munich vs East Germany.

Bayard said...

"the EU as presently constituted is a mechanism for subsidising "the centre" and to Hell with "the periphery"

Hasn't that always been the case with empires since empires began?

Lola said...

B. Yes, And..?

DBC Reed said...

"known as corporatism or Fascism depending on your point of view" Problem is : Mussolini ,( a bit of an expert?) said corporatism and fascism were synonymous so no matter what your point of view they'd still be identical.In my youth I campaigned against the Common Market with sundry undesirables and we were regularly assailed by Mosleyite last gaspers called the Union Movement.The clue's in the name: union with Europe was first formally proposed by British fascists.The whole bone headedly simple minded concept is reflected in George Orwell's 1984 division of the World into Oceania , Eurasia ,Eastasia so the idea must have been current during and after the war.
John Laughland devotes a whole book to the source of European thinking in wartime Fascist (and Communist! theory).His book is tellingly called The Tainted Source.What gets me about UKIP and the reflex anti Europeans is that they are so right wing in their "Critque" of "Social Europe"
that they are protecting the black fascist core/coeur of the European project.

George Carty said...


Not quite, in the Soviet empire (and to a lesser extent the Tsarist Russian empire) the centre subsidized the periphery.