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Monday 26 July 2010

Picking On The Poorest – 5

The so-called Taxpayers’ Alliance is not known as a source of philanthropy. So when it releases a report purporting to be of assistance to the less well off, the first question might be best directed at their own particular motivation. And, thanks to the candour of their so-called “Research Fellow” Mike Denham (or Wat Tyler, if you prefer) we can see clearly where the lowering of the poverty line, and the 55% “taper rate”, is heading.

Because where it’s heading is the abolition of the national minimum wage. This is not mere scaremongering: Denham blogged on June 7 last that “alongside a programme of welfare cuts, we need to junk the minimum wage”. Last week’s report is the welfare cuts, and, whatever the list of names on the front cover, Denham is the author of most of it (he is the one on rebuttal duty). If the poverty line were to be lowered, then the amount of earnings needed to hover just above it would be that much less.

This may, on the face of it, seem anachronistic, but in the world of Mike Denham, it makes complete sense. Here, the most recent significant economics textbook is probably Alfred Marshall’s Principles. It is a world where labour need only reduce its cost to enable the market to be cleared: wages remaining stubbornly high, or being “sticky”, are an aberration, as is lasting unemployment.

It is a worldview that does not allow for the possibility that jobs might just not be there, and as such, it is the kind of economics that failed us in the 1930s. Exhumed via the urging of Milton Friedman, high priest of economic quack doctory, in the late 70s and early 80s, it failed us again. Any further exhumation of this by now putrefying corpse will fail us once more, a certainty as sure as night following day.

That is not to denigrate Alfred Marshall: he told of the world as it was back in the nineteenth century. But that world has moved on. It is something that the so-called Taxpayers’ Alliance, and their so-called “Research Fellow” Mike Denham, are clearly reluctant to concede. Like the calculation of the poverty line, it is a case of “because it used to be done this way”.

And that, once more, is not good enough.

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