Perceived wealth distribution
I just saw a very interesting article about the real and perceived wealth distribution in the US. The core information consists of this this graph:
Note how the poorest 40% of the American population own so little that they aren’t even visible, but most people believe they own almost 10% of the nation’s wealth.
It’s also interesting that everybody – even rich people and Republicans – believe wealth ought to be spread out much more.
I’d love to see an equivalent graph for the UK and other European countries.
Underemployment
The Independent’s Sean O’Grady has written a good blog posting about underemployment.
He thinks that the rise in underemployment (that is, people working less than they want to) is going to create a much more unequal society: “Those who have traditional full time secure jobs with a pension are increasingly a blessed minority – the rest of the nation is scrabbling away trying to get work where and when they can, with not even paid holidays, let alone a final salary pension scheme.“
I think he makes an error in dividing the country into those two groups, though.
He makes it sound like those with secure jobs are in that category forever. In reality, however, very few people are allowed to stay in one job forever, at least in the private sector. Five, ten or perhaps fifteen years, and then redundancy looms.
Interestingly, banks still treats a “secure” job as being secure when it comes to getting a mortgage, so people will try to get a mortgage during those years they have a “real” job, given that it’s almost impossible to get one if you don’t have one.
So to return to O’Grady’s divided society: I think the dividing line will be between those who either have a really secure job (such a schoolteachers) or have made enough money to live comfortably for the rest of their lives without working again, and those whose working lives will be a patchwork of studies, full-time jobs, part-time jobs, unemployment and self-employment, with the disastrous consequences for savings and pensions that this is likely to entail.
Balls accused of lying
Do read this blog posting on The Spector’s Coffee House blog.
In an earlier blog posting, they had accused Ed Balls of lying, and for once the government didn’t send out its spin doctors:
Ed Balls has just called me up about my post from this morning, hopping mad. He instructed me to “take that post down now”. I thought he was joking: has there been some change to the constitution where ministers now have power over the media? But he was deadly serious. [...]
How to fix the pensions
More and more people are complaining about the fact that the public sector are still enjoying generous final-salary pensions while the private sector has mostly moved to much more modest defined-contribution schemes.
The solution recommended by most commentators is to reduce public-sector pensions.
This, however, is not likely to be enough for a comfortable retirement for most people. Pensioners in the UK are already much worse off than those in other developed countries.
The way I see it, defined-contribution schemes (which basically means you give people some money to invest in shares, without any guarantee how the investment will turn out) are far too risky for normal people.
Final-salary pensions, while great for the workers, are far too risky for companies, and they put established companies at a disadvantage compared with newer companies and companies in other countries without similar pension systems.
So a third way is needed. I would suggest something along the following lines:
- Set up some big pension organisations/companies (let’s call them POCs) to take contributions from workers and companies, invest this money and pay out generous pensions to retired workers.
- Make it obligatory for all companies, for self-employed people and the public sector to pay in a specific percentage of salaries to one of the POCs.
- Make sure sure the POCs insure each other and give them some sort of state backing to ensure people can be confident their pension will not suddenly disappear.
In this way, public and private sector workers would have equivalent pensions, and old companies wouldn’t struggle to compete with newer ones.
Also, when people change jobs, their pensions could still remain with the same POC, instead of having small pensions in many different places.
The reason I’m suggesting setting up multiple POCs rather than a single one is to avoid having an organisation that is too big to fail and too big for the state to save.
Can anybody spot any flaws in my suggestion?
A political quiz
I took a political quiz (thanks to Iain Dale for the link) which not only places you on the usual grid not also rates you according to you neo-conservativeness and cultural conservatism.
Here are my results:
My Political Views
I am a center-left moderate social libertarian
Left: 2.27, Libertarian: 2.76
Political Spectrum Quiz
My Foreign Policy Views
Score: -4.45
Political Spectrum Quiz
My Culture War Stance
Score: -5.66
Political Spectrum Quiz
Endorsed by Barack Obama?!?
Read this! (It started here, but there are more details in the former.)
It’ll be interesting to see whether Obama’s team will confirm Dawn Butler’s story.
He should throw himself in gaol!
As most other people, I’m totally horrified and appalled by the way the government let anti-terror police deal with an opposition spokesman who was just doing his job.
If they think that kind of behaviour should carry a gaol sentence, perhaps the Prime Minister would like to lock up himself first?
(Thanks to Guido Fawkes for the link.)
The effect of devaluation
The pound has been falling against the euro throughout the millennium.
This means that it’s becoming less and less attractive for foreigners to work here, and more and more attractive for British people to emigrate to the continent.
To show the effect, I’ve taken a hypothetical worker, earning £21k in the UK eight years ago, and the equivalent, €35k in the Eurozone. I’ve then increased the salary by 3% each year:
| Year | Exch. rate | Worker in the UK | Worker in Eurozone | Percentage | ||
|---|---|---|---|---|---|---|
| 2000 | 0.60 | £21000 | €35000 | £21000 | €35000 | 100% |
| 2001 | 0.62 | £21630 | €34887 | £22351 | €36050 | 97% |
| 2002 | 0.64 | £22279 | €34811 | £23764 | €37132 | 94% |
| 2003 | 0.70 | £22947 | €32782 | £26772 | €38245 | 86% |
| 2004 | 0.70 | £23636 | €33765 | £27575 | €39393 | 86% |
| 2005 | 0.69 | £24345 | €35282 | £27996 | €40575 | 87% |
| 2006 | 0.68 | £25075 | €36875 | £28418 | €41792 | 88% |
| 2007 | 0.71 | £25827 | €36377 | £30562 | €43046 | 85% |
| 2008 | 0.84 | £26602 | €31669 | £37243 | €44337 | 71% |
This is a dramatic change. In other words, seen from the continent, British people are now earning only 71% of what they did eight years ago.
Is devaluation good or bad?
As I blogged recently, I learnt at school that devaluation in the longer term is bad for you.
However, if you read Government-supporting media, such as The Guardian or The Times, you might now get the impression that devaluation is the best thing since sliced bread. See for instance this one by Anatole Kaletsky.
For a more orthodox view, see this one by Stephen King.
Don’t read the first article without getting the antidote from the second one!
Ohio
Fox News have just called Ohio for Obama. Given that Pennsylvania has already gone blue, this means Obama is now certain to become president. Good stuff!
I’m off to bed now.