4/23/2008

The confused lessons in economics the Labour government dishes out

The one shining achievement Labour could boast about until 12 months ago was that they had proved that labour could run the economy well. But in the last few months this myth has been blown away by economic incompetence and the ability of the government to contradict itself time and time again.

Today Labour let it be known that they would try to rectify some of the damage they have done low wage earners by scrapping the 10% tax rate by raising the minimum wage.

But Hang on, isn't this the same government who have been handing out below inflation pay rises to workers in order to keep inflation low ?

Have Labour abandoned their inflation targets ?

I know that the increase in the minimum wage they are proposing is meant to offset the money they have taken away so this should not lead to inflationary increases. But let us not forget that the increase in their wages will have to be met by employers, who in turn will pass this on to the customers by raising prices, which will mean an increase in inflationary pressures.

What is ironic is that tomorrow the government will seek to paint a picture of the teaching profession as being insensitive to the economy because teachers are striking over the less than inflation pay deal that has been imposed on teachers. The government's case has always been that this low pay offer was because they government wants to keep control of inflation. So why raise the minimum wage ?

Of course the reason is that the government have no other solution in order to save their necks electorally, and will readily sacrifice principles in order to gain some political advantage.

Sadly, as anyone who knows the economy can attest, inflation since the mid 1990's has had very little do to with wage rises and is much more down to global factors, such as the shortage of fuel and food which is the main driver of inflationary pressure in the UK and will remain so in the future. Again, if the government don't realise this, why should we expect them to realise that making 5.3 million people worse off is not good either. After all, I suspect many more than 5.3 million people will be feeling worse off under labour before Gordon Brown's sorry spell as PM comes to an end.

6 comments:

Johnny Norfolk said...

You see I read the first line of your piece and am appauled. Labour have not run the economy well at all. It has all been done on the back of borrowing and future hidden dept. can you not see this.

You have believed what labour (and head lined by the BBC )have told you.

The economy is in tatters and the longer it goes on supported by opening comments like yours the worse it will become.

They have been a disaster from the moement they came in.Its a house of cards.

Anonymous said...

In order to "sacrifice principles", Gordon Brown had to have some in the first place.

Anonymous said...

But Nick refers to the Labour boasts of economic competence as "a myth" meaning it is untrue.

If I can read this, why can't you ?

Do you actually read what he writes ?

Anonymous said...

And the word is 'appalled' not 'apauled'

Johnny Norfolk said...

He praises the Labour lot in his first line if you would care to read again.
I went to a state school hence problem with spelling.

Nich Starling said...

No, I did not praise the Labour lot.

Re-read it. I made reference to Labour's boasts. The BNP boast they are not reacist, it does not make it so and does not mean I beleive it.

You used to boast in other postings about the marvellous education you got at the hands of ex-miltary types yet then you use your own schooling as an excuse.

Talk about flip flopping.

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