Demographic Time Bomb ?

As I have said more than once, I do not recognise or accept that the poor have been "heavily taxed through payroll penalties" and I do not see that you have supported this assertion. The low paid do pay NI contributions on more of their earnings than the high paid: because there is a ceiling on that, as I said. But the very poorest do not pay that: they receive benefits and their NI contributions are credited to them when they do. I am opposed to that ceiling, obviously.

But on the wider point it s because that is what we, as a society, have chosen to do. It is intrinsic to the ideology which currently holds sway. In that ideology (or economic and social theory, if you prefer), increasing inequality is not a bad thing. The story goes that it is beneficial to society as a whole to allow the rich to do what they like, free of interference and regulation etc. So we have moved away from "the post war consensus" which was reducing inequality over time. There have been various justifications for this: the one which was promulgated for a long time "trickle down". It doesn't work so we don't hear about it so much any more. But it did its job

What we are asked to believe is that the increased wealth of the very rich was generated from their enterprise, and smarts, and hard work and all those other good things which they have and the poor don't. But the truth is that most of it came directly out of the pockets of the poor. That is a consequence of plutocracy: and that is the essence of laissez faire capitalism.

There has been an increase in personal wealth following this change, certainly. In 1999 the total value of personal wealth in the uk was £2752 billion
That compares with £500 billion in 1979. One might conclude that this vindicates the theory in terms of the outcome: and it is possible to argue that it is the justification for the actions we have taken: the stance being that increased wealth is more important than how it is distributed. So long as "the country" is richer it does not matter how the individuals who live there are doing. That is a position which I reject. To me there is a "looking glass" flavour to all such thinking: I am bemused when I hear such phrases as "jobless recovery" for example: if the economy is thriving and the people are not I find it hard to get excited. "In the long run we are all dead", indeed. I would go further. I think the idea is incoherent gibberish.

What we see is that personal wealth has increased by about 4.5 times in that period. But some of this is illusory because it reflects the value of assets. For most people their biggest asset is their house. The nationwide survey shows that house prices have increased by about 9% a year since 1973, while general inflation has run at about 7%. In money terms the average price of a house was £19829 in 1979. It was £71122 in 1999 (using those years to stay in line with the figures given for personal wealth). So all other things being equal a large part of the increase in personal wealth is accounted for by increased house price (2.5 times in the same period, roughly). That increase does nothing at all in terms of economic activity: it is not an outcome of industry or wealth generation or anything useful at all. It does not make the person who has become richer by that amount any richer in the real world. It is a cushion in one way: if times get hard one can always sell the asset. But even that is not entirely true, because you have to live somewhere, and so unless you move to a cheaper area or to a smaller house you have not actually gained. Most people don't want to do that. Indeed given the concentration of work in certain areas most people cannot do that. And of course by now "hard times" means "falling house prices" to a large extent. Thus we hear hurrah words when trends in house prices are reported: the housing market is described as "strong" or "weak", for example. (strong = good, btw: thought I would mention that because it is not at all obvious unless you don't think about it ). Houses have been changed from "somewhere to live" to "investment", effectively.

Some of the rest of the increase in wealth is similar: the value of stocks and shares has shown a similar trend. I think, though I have not bothered to research the figures and might be wrong about that. My impression is that increased prices for those items is also part of the increase in wealth and with many of the same caveats (though one can argue that such assets to contribute something to the real world economy, as house price inflation does not.)

In 1985 49% of total personal wealth was held by the richest 10% of the people. In 1999 that figure had risen to 54%. Financial wealth showed a similar trend. The wealth redistribution did not adversely affect the middle classes, so that the wealth held by the top 50% ran at about 94% throughout the period 1980 to 1999. Just under 8 million people were living in poverty in 1979 according to the household expenditure survey: By 1999 that figure had risen to just under 14 million. Of course the measure of poverty is related to median income so a rise in income might be expected to result in increased poverty: but only if the poor do not enjoy the benefits afforded the rest of us. In fact the position is worse than that. Changes in the benefits rules meant that for at least some of the period the income of the poor fell. As an example, benefits rates used to be tied to the increase in wages or prices, whichever was the higher. That link was severed during this period with the result that it is estimated that retirement pensions are £30 per week lower than they otherwise would have been. There are many such examples. So where did that money go? It went to fund tax reductions for the rich. And that is why I say that the increase in the wealth of the rich came directly from the pockets of the poor, at least in part. It is not a measure of their superiority unless you believe that abuse of power in your own interest is in some sense "superior". I don't.



Yes, I am


No, I dont


Nope. Dont even know what that means


Don't know what that means: if it referring to tax exemtions then yes: I do not pay tax on interest from my small savings because they are in an ISA. But since there is less than 1% interest in payment that is not what I would call a "bevy" of exemptions. Interest rates on savings have to remain low, of course: because otherwise the housing market would be affected, and we can't have that.


It may surprise you to learn that hardly anyone has those things.

You are starting to sound like a commie, Stilicho: I could not do better with "bash the rich rhetoric" myself. But none of this is any more than wind unless you put some figures on it. I see what you did there, though, because every dog in the neighbourhood started barking I ignored it the first time and snipped it from what I replied to: but I see it was not an accident as I first thought



The are paying for the rich, I agree. But you will notice that this is not through their pension contibutions, which, as I said above, are nothing to do with this. All of the instances you cite are VAT rated. So how is your vaunted VAT solution going to help with any of this?


You cannot be serious, and this is mere propaganda. So far as I can see you are not even trying to address the problems in the real world and this is unworthy of you. I note the conflation of "the poor" with "the weak and the stupid" and I find it contemptible. I note the implication that the poor die young because they are not sensible in their choices: and the implication that they need to be saved from themselves. They don't. They need to be saved from you, and your free market ideology and propaganda; which has worsened their position while blaming them for that outcome. I also note the implication that my different analysis will lead to the gulag: because that is the note of your dog whistle. I expect better from you, Stilicho. But it should not surprise me. By now the version of economics you are pushing has become unused to challenge to its slogans and their truth. Perhaps you just cannot engage with what is actually being said: more likely you know you are avoiding it, though: for you are not stupid even though you appear to be rich

Edited by FionaK - 19/5/2011, 10:49