April Fool’s Day

Not really a day for joking. Today is the day that a large number of the coalition government’s new policies come into effect. This includes the introduction of the “bedroom tax”, changes to NHS commissioning that many think is one of the final steps in the privatisation of healthcare in England, the scrapping of the 50p tax rate for those earning over £150000, and changes to legal aid, to name some.

I don’t really know what to say about this. I think the “bedroom tax” is terrible, I think the reduction in the top-rate of tax is exactly the wrong thing to do at the moment, and I genuinely worry about the future of healthcare provision in the UK. The mantra that is continually used is that we can’t afford to maintain our current spending levels and we have to wean people off a dependence on benefits. Make no mistake, I would be quite happy if everyone was employed, contributing to the economy and getting paid a salary that allowed them to afford to live decently; and I’m quite happy with there being an income distribution with some being paid more than others. I just think the problems are much more complicated than suggested by the rhetoric used by the current government.

One of problems – in my opinion – is that income inequality has increased in the last 30 – 40 years. The top earners are taking a bigger fraction of the income than they were in the 1970s. It seems to me that if income inequality increases, welfare/social security spending will have to increase to help the increasing number of people on low incomes or who become unemployed. It’s my view that if we want to reduce welfare spending, we should act to reduce income inequality. I’ve written about this before, but since I think income inequality and welfare spending are related I thought I would link to this video (link at bottom of post) of Steve Machin, from University College London, discussing income inequality. It’s quite short and doesn’t really say all that much, but is quite interesting. It’s clear that inequality has increased since the 1970s and that this might be related to changes in technology that mean there is a demand for very qualified people and for those who do very basic tasks (that can’t easily be replaced by technology), but those in the middle doing skilled but repetitive tasks can often be replaced. He suggests that income inequality doesn’t have to continually increase and that good labour policies could help, but doesn’t really suggest what these might be. Worth a watch anyway.
http://cep.lse.ac.uk/_new/news/video.asp?index=2624

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