Thread by @docrussjackson

#THREAD

Wages, only just back to 2008 levels once you account for inflation, are declining again.

Orthodox economics expected workers to get a better share of the pie during years of low unemployment, but 'free-market' #capitalism isn't working.

Why?

theconversation.com/wages-why-are-…

First, the decline of union power together with the rise in firm power: British workers are not able to collectively demand & secure pay rises via unions - despite profits being up around 60% in real terms in 20 years, compared to growth in workers’ real wages of about 14%.

Second, while recorded unemployment has fallen, the actual level of unemployment is higher: workers on incapacity benefits would be in work if suitable jobs were available, but are not counted in the official unemployment statistics.

https://twitter.com/docrussjackson/status/1528738229503016961?s=20&t=iwSOAjYEEyIsQ_aisS7krQ

Third, while wage inflation may not be rising by as much price inflation now, in the coming months, some argue it will begin to rise & perhaps even overtake price inflation. This argument has been put by the Bank of England Governor, leading him to call for wage restraint.

While the possibility of above-inflation wage rises cannot be ruled out, it seems far-fetched to think that under the @Conservatives, workers – in all sectors & regions – will be able to assert their power in ways that protect their real wages.

Central banks in the UK & other countries are fighting inflation by raising interest rates & reversing the “money creation” that they were doing under QE.

With inflation forecast to peak at around 10% in the next few months, this policy approach looks less & less convincing.

The Govt plans to increase corporation tax from 19% to 25% for most firms from 2023, but has only just imposed a #windfalltax. The lesson from this U-turn: the state has a responsibility to protect the economically disadvantaged, & that includes redistributing income in this way.

Restoring the bargaining power of workers necessitates radical reforms the @Conservatives will not introduce: it entails reimagining corporate governance structures & giving workers more of a say in firms, strengthening union power & widening forms of public & worker ownership.

For the wider context of how we got here, & why deregulatory free-market fundamentalism is catastrophic for democracy, the environment, & increasingly, 99% of people:

https://twitter.com/docrussjackson/status/1316654443836866560?s=20&t=12VvBRh9zxYShymxLqkm2w