[hamsforlegs]

The more I think about that paper the more I think Sloper is right; some force is causing both slow growth and suppression of wages for the poorest. Thus growing inequality and poor growth are linked but not causally.

That force might be worsening standards of education or the lack of well paid industrial jobs, I don't know.

I speculate that this is down to issues well discussed elsewhere on here. Technological, communications and regulatory changes perhaps? These have contributed to a situation where capital is massively mobile, and therefore able to reap returns ahead of the general growth rate (a la Piketty, though I tend to think this is a contingent rather than necessary state) .

This has (inevitably) developed an increasingly concentrated pool of very wealthy and influential people. Their incentive is to look for low overall risk, but to insist on decent returns by essentially saying 'play on our terms or we'll take the money away'. It's obviuosly not that simple, but there is certainly a net effect where governments struggle to get large organisations (ie the operational front ends through which capital is deployed) and wealthy individuals to pay their way and to fund the education and infrastructure that would support long term growth. They also struggle to achieve any degree of openness about who actually owns things (ie beneficial ownership), which is a huge problem when it comes to understanding what is driving investment decisions, even where they are of strategic or social significance.

This effect also means that capital and those who structure its deployment (financiers and lawyers) has taken pretty much all the proceeds of growth for a long time, with very little going to wages ie to those who actually do and make stuff, so productivity isn't all that great and there isn't a lot of money sloshing around among ordinary people and small/medium businesses.

I don't make the latter point as some sort of Marxist dig, but it seems obvious to me that if you don't want to invest massively in education and infrastructure, and you don't want to pay healthy wages, then you've essentially cut off some key pathways to growth over the long term. Even technological improvements (which is probably what will structure our economy in the long term) are driven by short-medium term considerations of individual organisations, so probably aren't developed in a way that will maximise overall growth. Certainly it won't drive wages...

It's a sad irony that those who own and deploy large amounts of capital will frequently champion the need for economic growth, but by virtue of their own (legitimate) wish to squeeze the most out of their wealth they might be entrenching global financial/regulatory/political structures that limit the same.

There ends my speculation...

[hamsforlegs]

This in part might be that historically a child could leave school at 16 with no qualifiactions on the Friday and walk into a reasonably well paid job on the Monday.

Interesting post. In relation to the above, the end of this option has had a pretty big impact on a lot of people in the UK, particularly since you now need not just some qualifications, but really a very high level of education to get any form of meaningful employment (though there will always be exceptions to this rule), because there is a small and vanishing amount of it available. In a sense, the game is up in post-industrial societies. A fair chunk of people now realise that:

a) a pretty large percentage of people are always going to have uncertain, low quality, poorly paid work
b) no one is interested in or capable of doing much about it
c) if you're at the bottom of the pile you'll have climb a long way up it to be sure of a reasonable payoff

Rightly or wrongly, this doesn't do much to encourage people to take personal growth all that seriously.

[Sloper]

This in part might be that historically a child could leave school at 16 with no qualifiactions on the Friday and walk into a reasonably well paid job on the Monday.

Interesting post. In relation to the above, the end of this option has had a pretty big impact on a lot of people in the UK, particularly since you now need not just some qualifications, but really a very high level of education to get any form of meaningful employment (though there will always be exceptions to this rule), because there is a small and vanishing amount of it available. In a sense, the game is up in post-industrial societies. A fair chunk of people now realise that:

a) a pretty large percentage of people are always going to have uncertain, low quality, poorly paid work
b) no one is interested in or capable of doing much about it
c) if you're at the bottom of the pile you'll have climb a long way up it to be sure of a reasonable payoff

Rightly or wrongly, this doesn't do much to encourage people to take personal growth all that seriously.

Sorry I disagree, plenty of skilled trades don't require a degree and are very well paid, not allow low(er) paid work is uncertain i.e. teaching assistants, postmen, lower rank civil servants and so on.

[hamsforlegs]

Sorry I disagree, plenty of skilled trades don't require a degree and are very well paid, not allow low(er) paid work is uncertain i.e. teaching assistants, postmen, lower rank civil servants and so on.

Very reasonable point about skilled trades. Education and training policy has not helped to give these the profile they deserve. Also one of the few areas where there is real largescale demand for more people.

The list you provide of lower paid secure work doesn't look that robust to me.

Teaching assistants are absolutely front-of-the-queue for redundancy as schools cut costs to make current contributions to capital. To be secure most will need to get higher level qualifications soon, and many will not have the educational background to do so.

I'm not sure of the situation with postmen, though I seem to know lots of people (edit, this is a lie - I mean three people) who have taken up the work and been given such a jumble of uncertain hours and shifts that they have found it impossible to keep up. The movement of private sector companies into 'last mile' postal services, and the growth of delivery services paying drivers per drop has hardly made this sector more secure recently.

Lower rank civil servants probably do still have quite a bit of security, though I can't see the numbers going anywhere other than down in the near future. The outsourcing of major government schemes means that many jobs are now transferred to private operators who offer less secure employment. Similar local authority clerical and managerial work has been massively cut back since the crisis. Again, I think it's reasonable to think of this as a shrinking and less certain area of work.

None of these areas are necessarily any less certain than elsewhere in the economy, but that's sort of the point. Being paid not very much and with a very uncertain future is not an inspiring goal in life.

[Sloper]

Indeed, which is why it so bizzare that so many in the lowest quartile have such a negative view of education & etc

[Oldmanmatt]

Walking out of school at 15/16, was usually followed by low paid service sector employment or a long, arduous apprenticeship on low wages.

Neither of those things were a bad thing, in fact
 (Speaking as the product of one of the last such) the latter is slowly re-emerging and a fantastic alternative to academic FE.

Young people, with low skills and little experience, are of limited value in the workplace.
Few of them understand that.

I started on a salary of £112 per month, at a time when the Dole was £45 per week.

Like it or lump it. The minimum wage has caused unintended consequences in SME's.
Zero hour contracts for instance.

[Sloper]

Zero hours contracts were around well before the NMW, I was on a 0HC in the 1980s as a student, we called it 'temping'.

did you know that solicitors have up to a 2 year apprentiship with the minimum being about £14k? (although high flying city types can be on £50k during their TC)

[Johnny Brown]

Oh the poor lambs! However do they manage?

[Sloper]

Yes, because with 3 years graduate debt and  year post grad debt including £15k fees £14k is just so rewarding 

How much do junior doctors, teachers, police officers get? 

[a dense loner]

And how much does every other graduate get? Not many fuck alls

[Oldmanmatt]

And how much does every other graduate get? Not many fuck alls

Yeah, I wrote a long post, and deleted; that Dense just put into one line.

The problem is, most Graduates are smart enough to realise they are worthless in the workplace and are willing to put in the grind.

At the other end of the academic scale, it's a different story.

As a society, we have devalued and lost respect for the skilled trades (partly due to the Cowboys that sprang up all over during the '80s).

An apprenticeship as (say) a Plumber, is available. But, at £2.73 an hour, it's hard to find takers.
But, a 16 year old school leaver is not worth 14K per year. They simply don't add that kind of value to a business.
That pay rate is only for the first year, and there are pretty strict limits on working hours and training is provided and monitored by an outside agency.
Even if the company running the apprenticeship can't keep them on at the end (and plenty of small businesses simply can't (think how much extra business you need to bring in to cover that minimum wage, plus employers contributions, holiday pay, holiday cover etc)).

I ditched Uni for a 4 year Engineering apprenticeship (and an HND), at £112 per month (when the Dole was £45 per week).
One of the last such apprenticeships (Royal Navy, Marine Engineering Artificer).
I was still better off than my mates that continued at Uni and was earning 32K pa by the time I was 23.
(Ok, I went and did other things for 3 or 4 years shortly after qualifying and that gave me an extra skill set to trade, but it laid the foundation for my post MOB career).

But, getting these kids to see the value and future potential,  of such training, is almost impossible.

 

[Sasquatch]

 - Speaking only to first world inequality (not worldwide, just say UK or US as that what i know.) -

One thing that I find interesting is to think about the idea that workers be paid what they're worth, and how that compares to what they're actually earning.  If you take a standard bell curve, there should be people at both end of the spectrum and along some curve in between.  in reality, you can't really make negative money, so while there is a lower bound, there is no upper bound.  This means you'll automatically have a long tail at one end. 
Some people are shitty workers and really don't deserve to get paid much.  Some are actually more of a liability to the company than an asset.  These are at the bottom end of the curve.  Some are fantastic and paid well for it and are at the upper end of the curve.   These tend to be be really good gamblers, inherited wealth, or extremely specialized work (surgeons, pro athletes, etc.), and fall at the other end of the curve. 

I wonder how a standard earnings curve really looks.  Does it follow a natural curve, or are there odd spikes and humps.  How do different countries compare?  Is there something to be learned from this comparison?

I've not seen one of these, though I'd guess they must exist. 

[Sasquatch]

Never mind.  Decided to look it up and they're readily available.  Although like most stats, the devil is in the details.  Those that support showing inequality show a highly left skewd chart, while those espousing lower income inequality show a more right skewed chart.......

[Falling Down]

Picking up on Stu and Slopers discussion a few posts earlier, there's definately somethjng going on but no-one can really agree on what it is.  I'd assert that information technology and communications are playing a really significant role in radically restructuring value chains, economies, the movement of capital and information.  Mostly positive but there are real unintended consequences.  We live in a time as transformational as the adoption of agriculture or the beginning of the industrial revolution and it's no wonder that were struggling to understand what's happening.  When you couple this with a climate that's becoming more unstable and influenced by us then it all looks very confusing, unsettling and even frightening. 

[Oldmanmatt]

https://publications.credit-suisse.com/tasks/render/file/?fileID=5521F296-D460-2B88-081889DB12817E02


The 1%....

[Sloper]

Picking up on Stu and Slopers discussion a few posts earlier, there's definately somethjng going on but no-one can really agree on what it is.  I'd assert that information technology and communications are playing a really significant role in radically restructuring value chains, economies, the movement of capital and information.  Mostly positive but there are real unintended consequences.  We live in a time as transformational as the adoption of agriculture or the beginning of the industrial revolution and it's no wonder that were struggling to understand what's happening.  When you couple this with a climate that's becoming more unstable and influenced by us then it all looks very confusing, unsettling and even frightening.

Th affect of technology is interesting, for example when WP replace typewriters the number of typists went down by a small %, when computers replaced WPs the number went down hugely as standard letters were linked to databases and so on. Then there was digital dictation that allowed the dictation to be sent to mumbai or south africa and now we have a generation who type themselves.

So in a couple of generations we'll have lost an entire type of employment and in reality it's no great loss and the world carries on regardless.

I am also slightly less peturbed by the rise of twitter and so on as while everyone 'now has a voice' the blathering of a billion morons doesn't really seem to have a lot of influence on actual politics.

[tomtom]

Surprised you're not on twitter Sloper - would have thought you'd like it....

[Oldmanmatt]

I think several former Middle Eastern Dictators may take issue with your views on Social Media.

[Sloper]

I think several former Middle Eastern Dictators may take issue with your views on Social Media.

Apologies, I should have made myself clear, I was referring to British politics.

[Duma]

I think several former Middle Eastern Dictators may take issue with your views on Social Media.

Also the Greeks. And the new Spanish party certainly wouldn't be where it is now without social media. It's also arguable that the green surge, and the engagement of the youth in the Scottish ref are a result of effective use of fb et al,  shame there wasn't a similarly good use for the pr ref.

[Stubbs]

Sloper this one comes to mind as a change from social media backlash but I can't think of many others http://www.theguardian.com/environment/2011/feb/16/forests-sell-off-cameron-uturn

unless you count sacking someone because they tweeted a picture of a transit van...

[Sloper]

The sale of the Forestry Commission was as close to a non issue on the political stage as you can imagine,  Miliband sacking the shadow minister for that tweet was crass, stupid and weak.

Personally I'd say that facebook, twitter and so on follow the crowd rather than drawing the agenda (in the UK).

[finbarrr]

summing-up:"inequality is the root cause of stagnation"

http://www.theguardian.com/business/economics-blog/2015/jan/25/davos-inequality-root-cause-stagnation

[Sloper]

Summing up, total bollocks.

Many of the fastest periods of growth have been when there has been the greatest inequality and there has been stagnation when inequality was lower.

[slackline]

The problem with the 'inequality' debate is that it is a stinking pile of shit.

the problem with the 'inequality' debate is that it ignores the qualification of comparators and also the causes of the inequality. For these reasons it is a pretty meaningless debate.

...

Many of the fastest periods of growth have been when there has been the greatest inequality and there has been stagnation when inequality was lower.