Thursday 15 June 2023

Slowing the rate of decline


There is a scene in ‘the Scottish play’ where a somewhat drunken porter explains the effects of drink to Macduff and Lennox. One of the things which he says is impacted by drink is lechery. As he puts it: “Lechery, sir, it provokes, and unprovokes; it provokes the desire, but it takes away the performance”. Leaving aside any question about the extent to which this may be literally familiar to some politicians, the political parallel which actually brought this to mind is the impact of an increasing cost of living on wage rises. It provokes the desire for wage rises, but takes away the value of any that are actually achieved.

Yesterday, the PM stood up at PM’s Questions and claimed that the government was “…delivering… the fastest wage growth in years”. In absolute terms, it’s probably true, or at least as close to being true as any words that emerge from the mouths of ministers these days. But given the efforts which the government has been making to control pay rises, it’s a strange thing to claim as a ‘success’. And whilst it may be true in absolute terms, in relative terms wages are still lagging behind prices. He could, with an equal level of veracity, have announced that the government is “…delivering the fastest decline in real wages in years”. Some might argue that that would also be a ‘success’ for a government hell-bent on reducing the standard of living of the many as a way of opening the door to tax cuts for the few.

It isn’t the only ‘creative’ presentation of economic statistics. Other ministers have been saying things like ‘a fall in inflation is the best type of tax cut’, and ‘when inflation is halved and people see prices starting to fall, they will feel better off’. It’s possible that their level of mathematical understanding is so low that they believe this stuff, and that they really don’t understand what inflation is. Occam’s Razor tells us that the simplest explanation (‘they’re just stupid’) is probably more likely than the more complex one (‘they know that they’re talking rubbish, but think they can fool us’). Those of us who live in the real world understand that, whilst falling inflation is, on the whole, a good thing (even if zero inflation is not necessarily so good) a world in which wage growth lags behind price increases simply means that we become poorer more slowly, not that we become better off.

Ultimately, that is the very best economic proposition on offer from the current government – 'we’ll slow down the rate at which you get poorer'. Trying to spin abject failure as success is all they have left – the desperate last throw of the dice.

1 comment:

dafis said...

When the majority of people are struggling, and have struggled, with the effects of inflation at whatever rate a spell of zero or negative inflation would be seen as bonus. Longer term deflation would bring its own challenges but we've yet to experience that in our time ( post WW2). Rishi& Co now far too dependent on their spin script writers.