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Tuesday, 8 January 2013

It's the politics, stupid!

Today Parliament will debate welfare changes. The debate will be framed as doing what is economically necessary to deal with the economic situation we face. The economically poorest people, apart from pensioners and people with disabilities, must make their fair contribution in these times of austerity, 

This means that the burden of cuts fall heavily on 'the working poor'. At the same time the government insists wants to make sure that work pays i.e. that people are better off working than on benefits. In truth, today's debate has little to do with economics and a lot to do with a rather unpleasant politics

This is what I thought I understood about capitalism and the relationship between the private sector and the state in terms of labour in this country:

In capitalism labour has a price, that price is determined by market demand. Some jobs command a very low price in the market, too low to live on. 

The UK government negotiates with employers to set a minimum wage, this may be more than the job is actually worth in the marketplace.  So the employers are contributing from what would be their profit. To support this market economy, the government also contributes. Some jobs as well as being low paid are only needed part-time by employers. The state adds support through the welfare benefits system to top up wages to meet additional needs that someone on minimum wage and/or part-time hours has, such as children or housing etc. 

So if these benefits that support people working are reduced (and the cuts will affect this group drastically), what will this mean for the private sector and the creation of jobs? The rise in the number of jobs, against the trend that might have been expected, are low paid and part-time. The answer the government gives is that people in such employment, whilst being hit by the cuts today will  have their incomes improved when the universal credit comes in later in the year - how are they to live in the meantime? 

It appears that what is posed as economic necessity, is really just the unpleasant side of Conservative politics that label and scapegoat the most vulnerable.

John Lanchester writing this month in the London Review of Books sums it up very neatly:

Right-wing mythopoesis on the subject of welfare seems to have worked. In effect, the Tories have been saying that the trouble with the poor is that they have too much money. This negative image of welfare – of ‘dole scroungers’ living a life of ease and luxury, blithely turning down work because they prefer a life on benefits – contains no reality, and the single most important fact about the welfare bill is largely absent from the debate: the fact that two-thirds of the welfare budget is spent on pensioners. Since pensioners have been protected from the spending cuts, this means that any reduction in the welfare budget must be drawn from the working-age population. A large fraction of this group are in work but so poor they still attract benefits. If these things were better known, the debate about welfare would be more nuanced, but the Tories clearly think that this shift in attitudes gives them a useful, potentially election-winning, stick with which to bash Labour.