In Great Britain, with changes in the type of work people do, and as capital has been reallocated from manufacturing to services, real household income has increased across every wage bracket. According to the Survey of Personal Incomes, families in the 90th percentile were paid 32 percent more in 2017 than they were in 1994. During this period, the bottom 20 percent experienced average annual real growth of between one percent and two percent, figures not matched by most of the rest of the income distribution range, so how can that old canard that “the poor keep getting poorer” possibly be true?
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Samizdata quote of the daySamizdata Illuminatus (Arkham, Massachusetts) · Economics, Business & Globalization · Slogans & Quotations · UK affairs October 9th, 2018 |
 21 comments to Samizdata quote of the day |
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Wages have gone up. Due to an excess of regulators running amok (many of them located in Brussels), food and house prices have gone up way faster.
The cost of living for families is considerably higher than it was in the late nineties.
The party that, instead of offering freebies, offers a lower cost of living, and delivers, will keep themselves in government for a generation.
Privatise the BBC, cut regs, and now we’re on our way out of the EU cut all tariffs and subsidies. It’s a start
Statistics are one thing.
The vast oversupply of taxi drivers, delivery people on bicycles, middle aged pizza delivery ‘boys’ and ‘girls’, the reappearance of hiring people by the day in the new form of zero hour contracts, food banks doing a roaring trade, more homeless people, the increase in people needing taxpayer help even when they are in work etc tell a different story.
So does the scrum for discounted food at my local supermarket every evening. It used to be a couple of old ladies. Now it is a small crowd.
There has been a collapse in decently paid jobs in factories and offices and a great increase in low paid and minimum wage work, short hour contracts and casual work.
That’s how it is in allegedly booming Manchester where the luxury flats go up in the centre but no locals can afford to rent them.
This.
“The poor are getting poorer” is a tenant of religious faith. It’s not based on anything concrete.
Dammit, the idea does not live in religious faith, it is religious faith. “Tenet” =/= “tenant”.
Sorry, but I’ve been seeing this mistake so often lately that it drives me to gibbering.
Hahaha. I stand corrected.
For the PMO Organization to parse and expand upon; especially the latter parts:
The link didn’t take. Trying again:
https://quillette.com/2018/05/11/elites-inequality-rise-fall-managerial-class/
It was in the 1860s that Karl Marx explained that the rich would get richer (and fewer) and the poor would get poorer (and more numerous).
Either modern socialists assert that the poor are poorer than they were in 1867, or they believe that Marx only started being right more recently. In that case, the obvious question is: when? In what past year were the poor more rich than they are now? When did capitalism stop making the poor richer and start obeying Marx’ orders?
pete, one possible explanation is that all those things you mention are visible. People quietly working in service industries are hidden. So a slight increase in certain visible problems may or may not be outweighed by a large number of people being quietly a bit richer. You’d need to do some measuring and some statistics to figure it out.
Why does the quoted bit force us to reconcile “32 percent more [over a 23 year period]” with “1 to 2 percent more per year”. Why can’t people write intelligently about simple facts involving numbers? As a sage has pointed out, educated people can typically cite the title of a work by Shakespeare, but nothing about basic mathematics or science. The writer should have said that the growth in real income for both groups [top 10% and bottom 20%) was about the same (or a bit more or a bit less for the one group vs the other…however the properly presented numbers fall…really can’t tell since “32 percent” has an apparent uncertainty of about 3% whereas “1 to 2 percent” is much more uncertain (points for those who can calculate how much more uncertain it is)].
All that aside, statistics based discussions of such things are invariably wrong because the statistics are used in ways not intended or the statistics themselves are just flat wrong. Example: unemployment is at its lowest rate since 1969, or so I’ve read. But didn’t the government change how it calculates unemployment? First under Clinton? Probably at other times as well.
I think the author’s thesis is correct; I’ve no doubt Marx was wrong. But let’s get the argument right; avoid using government statistics if at all possible. Sorry, but I also can’t say where we will get reliable statistics if our arguments must be based in part on statistical information. Example: I wish I could get basic data on energy costs from the U.S. Department of Energy website, but all I can find is either a one page version with motherhood statements about green energy…or 100 page reports with what I want (possibly!) buried within. My point being that it would be nice if we had access to reliable information, but I don’t think we do very often.
p.s., sorry, but I’ve now read/skimmed Mr. Parvini’s article. It’s much better than the sloppy presentation of statistics in the quoted part. A broad range of observations (possibly “facts”? statistics again!) spanning hundreds of years and multiple measures of prosperity. As I said above, I can’t argue with the thesis even if some of the facts are questionable (only because solid statistics are not available/possible).
“food and house prices have gone up way faster.”
I’ll give you the latter, but the former is bollocks. People spend less % of their income on food than they ever have, and what they do spend on food is considerably different to what they used to – ie someone buying frozen chips today would have been buying loose potatoes to make into chips themselves 40 years ago. A good deal of the nominal increase in food expenditure is actually not an increase in expenditure on the calorific content, but an increase in expenditure on a service – someone preparing/creating/cooking food for us via manufactured food products. You can buy the same amount of calories today far cheaper than in years gone by, but we prefer to pay more for something that has been prepared/cooked for us nowadays. Because we can, because we’re so much wealthier as a society.
The fiction of ‘better paid’ manufacturing jobs, much better than today’s ‘crap’ service jobs, is prevelant among people too young to have had to leave school age 15 and spend the next 50 years doing a boring, repetitive task, standing long hours at a factory bench, or arduous jobs in mines, shipyards, engineering works, digging ditches, for example, and for not much pay and income tax rates starting at 35%, mortgage rates 16%, inflation over 20% – and no supermarkets either. You bought expensive food in greengrocers and corner shops, with little choice, poor quality and limited availability.
Most of the wilting weeds and delicate flowers of today would not last a day in the manufacturing jobs of times past nor survive living standards of their imagined golden age of yesteryear. No food banks, dole only if you could prove you were looking for work and had paid your stamp, limited welfare.
Cure for poverty = work. Cure for inequality = work harder. If you are homeless it is a choice given the amount of State and private resources available to provide accommodation for those in difficulty.
Jim,
Food price inflation has been consistently above 0, in some cases quite a bit above, for most of the 2000s and 2010s. It has been negative lately, which is good.
See here.
As someone who does the shop for a family of 6, food has definitely got much more expensive in the 16 years I’ve been married. After rent it is by far our biggest household expenditure. You’re right that the quality has generally improved, which is also good. When I first got married and we had no kids our total food bill for the month (admittedly eating very low quality fare) was around £80 (price per head £40). Now with 4 more mouths to feed (and again, admittedly eating better quality), our monthly food bill is more like £650 (price per head £108).
That’s a 271% increase per head. We are not eating 271% better.
Thanks to things like the Common Agricultural Policy, food delivery is highly regulated. There’s a whole continent of Africans who’d like to sell me grain but can’t due to the external tariff structure of the EU. The places where capitalism has most benefited us are the areas with least regulation, notably consumer electronics. I have a phone in my pocket right now that richest man on earth couldn’t have afforded back in the early 2000s, but by today’s standards it’s rather out of date and I’m looking to upgrade.
We’ve not reaped quite so many benefits when it comes to daily essentials though. Food and housing have got more expensive (because politicians keep messing with them). Clothes and electronics have got a lot cheaper, which is good. But I need food and shelter more than I need clothes and computers.
Sound-bytes like the poor getting poorer/richer is an oversimplification. Things have got better in some areas and worse in others. The areas where things have gotten worse are usually attributable to state action and consequently fixable if only people would recognize the cause.
John B,
You’re starting to sound like the Four Yorkshiremen Sketch. Some things are better. Some things are worse. The people alive today don’t have to deal with the problems of the past because they don’t have those problems. Their problems are different. On the plus side we don’t have actual Nazis in Messerschmidts actually trying to kill us. On the downside we have to deal with an entire governmental and societal apparatus that has been infiltrated by authoritarian psychopaths. On the whole I’d take today’s troubles over yesterday’s, but lets try and retain some sense of perspective m’kay?
The farm gate price of food is no different now in cash terms to what it was 30 years ago. In real terms its dropping consistently, I should know I’m a farmer.
The reason that prices in the shops are higher is that consumers demand manufactured products now, which allows the food processors to control their own pricing more. Even allowing for that the food and non-alcoholic drinks price index is roughly what it was 10 years ago, and not much above what it was 20 years ago:
https://www.gov.uk/government/publications/food-statistics-pocketbook-2017/food-statistics-in-your-pocket-2017-prices-and-expenditure
Thus as real incomes have risen over the last 20 years it follows people spend less on food than they have ever done, as a percentage of income. Of course they also spend a fair amount on eating out/takeaways etc, but thats a far more expensive way of eating than buying basic ingredients and cooking your own.
Basically the way people eat has changed – they don’t cook for themselves much any more, and pay someone else to do it for them, either in a factory or a restaurant. This is going to be more expensive than doing it yourself.
“There’s a whole continent of Africans who’d like to sell me grain” No there isn’t. Africa does not produce grains. Imports of those come from Russia, Australia, Canada, places like that, not Africa. And the world price of wheat is the same today as it was 25 years ago, roughly speaking. I got £140/tonne in the aftermath of Black Wednesday when we fell out of the ERM, and I got £130/tonne last year (this year is a bit better at £160/tonne). In between its been as high as £200 and as low as £110. And thats cash world prices, so not artificially boosted by the CAP at all, or inflation adjusted.
So, like, it’s more then? I’m happy to admit that the reasons why my food bill has gone up may be complex. I’m happy to admit the bulk of my cost of living increases have come from housing. But given that I buy my food at the supermarket and not the farm gate, food has contributed. And my cost of living has gone up noticeably. I have more money than I’ve ever had, and yet making ends meet is a way bigger struggle than it seems like it should be given my income increase. Something isn’t right.
I said they’d like to, not that they currently do. There is considerable potential for growing grain in Africa which is not currently realized. The reason I chose to talk about grain is the French grow a lot of it, which means it tends to be subject to punitive tariffs in the EU. They don’t bother taxing the stuff no-one in the EU actually grows. Nonetheless this applies to lots of foodstuffs, and certainly serves to distort the marketplace which I am compelled to buy things within.
RRS,
Interesting article. Thanks.
Poor people today die from diseases and conditions that only rich people ate well and lived long enough to get a hundred years ago.
There’s a whole continent of Africans who’d like to sell me grain but can’t due to the external tariff structure of the EU.
I think this is more to do with the anti-GMO rules of the EU, and in Africa you need GMO crops to reap any kind of significant profit and compete in the subsidized EU/US market.
“There’s a whole continent of Africans who’d like to sell me grain” No there isn’t. Africa does not produce grains.
See above.
The EU anti-GMO policy is actually killing Africans as well because the rules would affect food made for African consumption as well.
Regarding some of the costing here, bear in mind that inflation over 16 years is around 50% and that food prices rocketed around 2007 but have been falling ever since, still not back to where they were,
It is unwise to use food prices as they are an infinitely variable quantity dependent on so many factors, the point is that despite the food price rises no-one actually starved and no-one started a “spring” like they did in Tunisia and the Arab world, on reflection it is a testament to the improvement of the cost of living that food price rises have much less effect and are bearable.