All those wingeing about public sector workers and pensions

Increase the basic rate of income tax, while also increasing the tax free allowance, and reduce VAT.

Instant economy boost.

P.S I work in the private sector in sales, I do a fairly meaningless job in society compared to some yet earn more than many nurses teachers etc making a far more positive contribution to society than me. And my pension is total ****

miketually – Member
Increase the basic rate of income tax, while also increasing the tax free allowance, and reduce VAT.

Instant economy boost.

Hang on a cotton-picking minute there sunshine. Won’t that help the poorest the most? We can’t be having that!

Increase the basic rate of income tax, while also increasing the tax free allowance, and reduce VAT.

Absolutely spot on.

VAT is what hammers those who can least afford. And it spares no one – pensioners, the unemployed, low wage earners, are all hit with equal vigour.

Increase the basic rate of income tax, while also increasing the tax free allowance, and reduce VAT.

Instant economy boost.

I wholeheartedly agree with the raising of the tax free allowance – if it will take a meaningful proportion of the lower paid out of tax altogether. I also agree VAT is regressive and hits the poorest hardest.

Hang on a cotton-picking minute there sunshine. Won’t that help the poorest the most? We can’t be having that!

Amusingly enough CaptJon, if you’d read the Tullet Prebon paper I linked earlier (and its subsequent chapters) you’d have realised that the author you thought was an evil banker was actually advocating exactly what you agree with.

Most rational people know that to stimulate the economy the poorer sections of society need to be given more disposable income. The poor spend on things, the rich just invest.

There needs to be a redistribution from rich to poor for partly these reasons. There also needs to be a redistribution from the public sector to the productive private sector.

Berm Bandit – Member

“Very difficult to renegotiate contracts that have alraedy been signed”

PMSL : Apparently it isn’t, apparently CallmeDave and the lads can do it at the drop of a hat when it suits them. Haven’t you understood any of what this is about????

I LOL’d

There also needs to be a redistribution from the public sector to the productive private sector.

You want the government to divert public sector money into the private sector ?

I think you’ll find that the neo-liberals don’t like that, it’s called government intervention, and apparently ‘the market’ always knows best. Except when it comes to the railways, and the banks, and training, and nuclear energy, and affordable housing, and agriculture, and manufacturing, and infrastructure projects, and services, and education, and healthcare, and research, but other than that, the private sector has everything more or less buttoned up.

Still arguing about this? I thought it had all been said.

Nice work from the taggers – you must be really proud of yourselves. Is that how poor your argument is? Am I really that worthy a target?

Increase the basic rate of income tax, while also increasing the tax free allowance, and reduce VAT.
“Absolutely spot on.”

As somebody ever so slightly to the right of ernie, I agree on this one.

There also needs to be a redistribution from the public sector to the productive private sector.

Hasn’t there already been a pretty huge redistribution into the “productive” private sector banks. Tens of billions wasn’t it? How much more do you think they need then?
And how much of a profit did the taxpayer make on the sale Northern Rock?

Hasn’t there already been a pretty huge redistribution into the “productive” private sector banks. Tens of billions wasn’t it? How much more do you think they need then?
And how much of a profit did the taxpayer make on the sale Northern Rock?

You won’t find me defending that, except I will point out that the taxpayer made less of a loss on Northern Rock than most sane people expected (Branson overpaid). Not the point under discussion anyway as the private sector does not equal (solely) the banking sector, and do I really need to point out the truism that there is no public sector without a private sector to support it?

You want the government to divert public sector money into the private sector ?

I think you’ll find that the neo-liberals don’t like that, it’s called government intervention, and apparently ‘the market’ always knows best. Except when it comes to the railways, and the banks, and training, and nuclear energy, and affordable housing, and agriculture, and manufacturing, and infrastructure projects, and services, and education, and healthcare, and research, but other than that, the private sector has everything more or less buttoned up.

Neo liberal! I don’t even know what that means anymore. No-one is arguing that the role of the state be abolished – I entirely agree that there are public goods which require a public sector (I’d be very happy to see government spending on truly productive assets such as a new airport in the SE). It is instead a question of degree, does the public sector need to be as big as it is now?

As to diversion, if people aren’t paying taxes to support a bloated public sector, they have more disposable income with which to invest, or spend as they see fit. I’m not sure you can reasonably argue that the current ratio of the public to private sector in the UK is desirable, or indeed sustainable, and pensions are all part of that problem.

bainbrge

Our public sector is smaller than Germany and France and ours includes the health service – theirs does not mainly.

The problem is we are under taxed and the taxation is not progressive enough.

want decent public services that are taken for granted accross the EU then we need to pay the taxes for it.

Remember when you lok at the raw figures most of our healthcare is included, most of Germanys is not

Most rational people know that to stimulate the economy the poorer sections of society need to be given more disposable income. The poor spend on things, the rich just invest.

That is a very interesting (???) observation. We have just had an economic mirage based on consumption and leverage. I would be amazed if merely stimulating consumption was the answer.

Given the predominance of Keynsians on this forum – we have AD = Consumption + Investment+Government spending + ( exports – imports). Of these the path, to sustainable growth needs to be Investment. Consumption is merely the sugar rush, government spending is constrained so that leaves I plus stimulating X’s (via QE leading to a weaker £).

But the economic mirage was based on excess leverage at the household, corporate, bank and sovereign level. Corporates have arguably made the most progress but households, banks and sovereigns remain over-leveraged and their fortunes are completely intertwined. So any idea that there is a quick solution to this mess, is absurd.

There needs to be a redistribution from rich to poor for partly these reasons

.

Sorry, this seems to be absurd. There is an argument for redistribition based on equality, but the logic here ie, poor people spend, rich invest, leaves me gobsmacked.

There also needs to be a redistribution from the public sector to the productive private sector.

True – but there will be a lag in the short term. The private sector will not respond quickly enough to counter to reduction in public sector employment. Hence, the rocky road ahead and the fallacy of thinking that consumption will be our saviour.

The problem is we are under taxed

Perhaps the most absurd comment of the week/thread

and the taxation is not progressive enough

Better to say we are not taxed correctly

if people aren’t paying taxes to support a bloated public sector, they have more disposable income with which to invest

There you go, with the old myth that taxes don’t contribute to the wealth of the nation. Functioning railways help to make Britain wealthier, training and eduction helps to make Britain wealthier, grants and subsidies for manufacturing businesses helps to make Britain wealthier, investment in research helps to make Britain wealthier, road construction helps to make Britain wealthier, and so on – even keeping people healthy, helps to make Britain wealthy.

But people like you who talk about “the bloated public sector” would prefer to pretend that every pound paid in tax is a pound lost.

And if you are that bothered about taxation affecting people’s “disposable income”, then why aren’t you arguing in favour of other means for the government to receive revenue ? The public sector is perfectly capable of generating its own profits, if it is allowed to do so. EDF makes a nice tidy sum for the government. Unfortunately, it’s not our government, which is why I have already suggested nationalising the utilities.

I will point out that the taxpayer made less of a loss on Northern Rock than most sane people expected

Whilst I can’t give a cast-iron guarantee with regards to my sanity, I can assure you that I never expected the taxpayer to lose any money at all propping up a bank. Are you seriously suggesting that we should rejoice in the knowledge that the taxpayer made a less an expected loss propping up an industry who’s history is the history of unrelenting obscene mind-boggling profits ? I think you need to check your sanity out mate 🙂

Ernie – tax is a withdrawal from the economy. Government spending is the injection. So the debate is the balance between the two. Fine to use to tax to support G, if and only if G is the most effective and efficient manner of deliver ie, in the case of some public goods and where markets fail.

As the BBC program illustrated this week with comments from both Lab and Tory ministers, the key challenge with G is ensuring that it does not take on a momentum of its own.

[Damn, I had made it to 17:20 on a Friday and managed not to get involved in STW econ/political debate. Going cold turkey was just too difficult. C’mon effort, man!!!]

Still haven’t answered my question though TJ…

We could save a bloody fortune if people educated their own kids, looked after their own relatives when ill, old or infirm, sorted their own bins, maintained the stretch of road outside their own house, stopped wasting doctors time with a cold, stopped turning up at A and E Monday morning cos they don’t want to go to work, tolerated many minor ailments and infirmaties our ancestors had to rather than expecting increased levels of care etc.

Fine to use to tax to support G, if and only if G is the most effective and efficient manner of deliver ie, in the case of some public goods and where markets fail.

“Where markets fail” ? The markets “fail” !!! WTF ?? 😯

Now that’s not a term you ever hear the public sector bashers talk about.

Yeah, the markets fail ……..when it comes to the railways, and the banks, and training, and nuclear energy, and affordable housing, and agriculture, and manufacturing, and infrastructure projects, and services, and education, and healthcare, and research, etc, etc, etc.

Ernie – perhaps some balance to the argument, might make it stand up. Three legs to a stool, not one?

“Where markets fail” ? The markets “fail” !!! WTF ??

Whereas, governments have an excellent track record of allocating scarce resources?

Whereas, governments have an excellent track record of allocating scare resources?

Right, you’re now saying that the private sector is no worst than the public sector…….we’re getting somewhere !!!

EDIT : Or is it that the public sector is as bad as the private sector ? 😕

Either way, I like where this is going 😀

Ernie – we have a mixed economy. Why? Because history has shown us that there needs to be a balance between the two ends of the spectrum of resource allocation – ie, free markets versus state planning. Any basic student of economics knows this from term 1.

Personally, I think that framing the current debate in terms of the failure of capitalism is incorrect. With respect to markets, I think that history will tell us that we have seen a failure of capitalists rather than capitalism. We have also seen a massive failure in government allocation of resources and the absurdity (sorry for the over-use of this word!) of the European project.

What makes the current situation so challenging is that the fortunes of the household/banking and government sectors are so completely intertwined. Hence framing arguments around one end of the economic/political spectrum is unlikely to lead to the appropriate conclusion. IMHO, of course!!!

Take taxation – we have a system that is both progressive and regressive and distorted by the impact of benefits. But on balance it is clearly regressive. So why do we have sustained and arguably unequal distributions of income. It is far more complicated that the facile arguments presented by certain posters above!!

“You won’t find me defending that, except I will point out that the taxpayer made less of a loss on Northern Rock than most sane people expected (Branson overpaid)”

^^^ what a crazy comment. We were assured by the government it was an investment for the future. Then they sold it at a loss of millions. Our politicians seem to have an issue with telling the truth and/or making promises to teh public they cannot keep.

The Guardian’s piece on this is interesting, especially the ending:

Public sector pensions are more generous than private sector ones because they are far more likely to have one, and to have a defined benefit, rather than defined contributions scheme. This links their pensions to their final salary and is more generous. This is what some people refer to as the “gold-plated” schemes. However, the average public sector pension is £7,800, which, combined with the state pension would leave these people hovering around the poverty line. The question of whether pensions are affordable is a political one, but over the longer term their costs will fall as a proportion of GDP.

In the run-up to Wednesday’s strike I’m going to look into the claims about the impact of the changes that the government are proposing and how this will affect the situation. I’ll continue by scrutinising some of the claims and counter-claims made by the government and the unions in the row. To introduce that political debate, Dan Milmo, the Guardian’s industrial editor, writes:

Fairness is a concept that crops up a lot in the debate over public sector pension reform. For the government, it is only fair that state-backed workers pay more contributions – an extra £3bn a year by 2014/2015 – and work longer in order to justify pensions that, unlike most of their private sector counterparts, have a defined benefit or guaranteed monthly payout at the end of them. They are, after all, underwritten by the taxpayer.

For unions, it is unfair because a pension is a key reason for doing a job that can involve more mental and physical toil than the average private sector post (although experts claim that the real reason for decent public sector pensions is an historic wage disparity with the private sector). They also argue that the sheer scale of reform sought by the government is unjust: raising the retirement age in line with the state pension age; switching the rate at which benefits grow from the RPI rate of inflation to the less buoyant CPI; moving staff in the NHS, local government, civil service, schools and uniformed services from final salary schemes – where the payout is a proportion of the salary at the end of your career – to pensions schemes that payout a proportion of your average earnings over your whole career.

The average public sector pension is around £7,000 per year while in the private sector the average defined contribution (money purchase) pension pot is around £28,000 on retirement. That would buy annual income of about £1,650 if they bought a flat rate annuity that didn’t increase with RPI, or £1,050 if they linked it to inflation.

All a nice summary, before the killer blow:

You could argue, as do the unions, that neither the private nor public payouts look that attractive and it is private sector employees who should be the focus of attention.

Perhaps, the real message is that few of us can rely on a pension alone to support us in our old age?

I think it’s disingenuous to describe what we have as a “mixed economy”. We had a mixed economy 30 years ago, when the utilities, public transport, coal, steel, telecommunications, large chunks of engineering, etc, were nationalised industries. Since then, everything that can be privatised has been privatised, it can no longer be classified as a mixed economy – the only thing left is health, education, police/military, and bureaucracy.

Ernie – we do have a mixed economy. You could argue that we have an un-balanced economy, but you cannot say that we have either a free-market or a command economy.

Governments allocate resources directly and indirectly across all areas of economic activity. Markets do so in other areas. Both do some things better than others and vice versa – it was ever thus.

Anyway – nice debating briefly. Have a fun weekend – and keep the debate real/polite?

The Guardian’s piece on this is interesting, especially the ending

The only thing I find interesting in the Guardian is the news, the letters page, and Seumas Milne 🙂

On a general note. Such politic topics like these shouldn’t be allowed as there are always opposing sides trolling then getting upset. Its not good for general ‘health’ of the forum is it?

I’m no bloody angel either but its just a mission to anger and a online moshpit.

After my day at work I’ll fight for my pension. And I know at least one family who will support me.

Such politic topics like these shouldn’t be allowed as there are always opposing sides trolling then getting upset.

If anyone gets upset over politics then they deserve to be upset.

And there’s nothing wrong with a bit of trolling btw.

Some people need to sort themselves out and not get so easily wound up – if that’s the case.

“You won’t find me defending that, except I will point out that the taxpayer made less of a loss on Northern Rock than most sane people expected (Branson overpaid)”

^^^ what a crazy comment. We were assured by the government it was an investment for the future. Then they sold it at a loss of millions. Our politicians seem to have an issue with telling the truth and/or making promises to teh public they cannot keep.

The original comment was spot on. No sane person expected the Government to handle the sale appropriately!

That said, if everyone who owes NRAM money pays their loans and mortgages, the Govt is still likely to make a profit in the end.

I’ve said it on here a few times, but the financial crisis owes as much to people borrowing too much as banks lending too much. No bank ever forced anyone to take out a loan or mortgage.

No sane person expected the Government to handle the sale appropriately!

And you think that quickly selling off cheaply a company which is predicted to start making a profit next year was “appropriate” ?

David Cameron should make you Chancellor of the Exchequer mate ….. you sound like top notch material.

Ernie, you’ve not read things properly. I don’t think the Govt handled the sale appropriately. My point was that any sane person would have expected the Govt to have messed it up, because they always do!

edit: I think I would make an excellent chancellor / PM though. First thing I would do is change employment law to give employers the right to sack any striking workers with immediate effect and no payoff. If strikers actually have to consider what their skills are worth in the open market, they will have a better view on what is a fair pay settlement in their current position.

Ernie, you’ve not read things properly. I don’t think the Govt handled the sale appropriately.

Please accept my apologies dmjb4.

Although I’m shocked to discover that only the insane considered a Tory government capable of handling NR’s sale appropriately.

Them loopy right-wingers, eh ?

The guardian have been a bit naughty by comparing apples with oranges.

Whilst they may be correct that the “average” public sector pension is £7,000, that reflects that the “average” worker may have been a member of several schemes in their career, and indeed may have not worked for their full career in the public sector.

For the “average” private sector worker to secure an income of £28,000 in todays terms, they would need to contribute £732 a month on top of their empoloyers typical 3% contribution (based on average private sector salary of £26,000).

If you play with the numbers here:

Hargreaves Lansdown calculator

There’s no way of getting close to £28,000 income based on today’s average private sector salary unless employees pay in 32% of their income each month.

BTW dmjb4 RE :

First thing I would do is change employment law to give employers the right to sack any striking workers with immediate effect and no payoff.

First of all I suggest that you brush up on your ‘Employment Law’ before taking the job of Chancellor of the Exchequer, even though it won’t be in your brief. Because as the law stands, an employer can already sack their entire workforce for going on strike, and without a “payoff”.

You’re not too clued up are you ? …….perfect material for the Tory Party 8)

Amusingly enough CaptJon, if you’d read the Tullet Prebon paper I linked earlier (and its subsequent chapters) you’d have realised that the author you thought was an evil banker was actually advocating exactly what you agree with.

I didn’t call him an evil banker, just didn’t like the way he wrote. I can’t comment on his analysis because i couldn’t read it, but even if we have different interpretations of what happened in the past, doesn’t stop us agreeing about to do for the future.

If anyone gets upset over politics then they deserve to be upset.

And there’s nothing wrong with a bit of trolling btw.

Some people need to sort themselves out and not get so easily wound up – if that’s the case.

Finally! Something I agree with! 🙂

From the Guardian editorial:

For unions, it is unfair because a pension is a key reason for doing a job that can involve more mental and physical toil than the average private sector post

That one I find hard to believe, are unions really that naive? I don’t doubt for one moment that some public sector jobs can be highly stressful, or highly physical, but for every nightmare public job I can think of an equally bad private sector one… (Not to mention that there’s nothing to stop a public sector worker choosing an easier private sector job, assuming s/he can find one of course…)

If anyone gets upset over politics then they deserve to be upset.
And there’s nothing wrong with a bit of trolling btw.

Some people need to sort themselves out and not get so easily wound up – if that’s the case.

Finally! Something I agree with!

I agree as well. Nothing wrong with a bit of political chit-chat in the evenings. Just don’t take it personally!