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What’s big, scary and way more important than Brexit?

January 29, 2019

You might think that after a business trip to Barcelona that ended in disaster – a missed flight back to the UK, a cancelled weekend jaunt and the theft of a rucksack full of laptop, IPad and other stuff – I would be pretty down on the striking taxi drivers who started the debacle by declining to take me to the airport.

Though I didn’t know it at the time, the cause of their action and focus of their fury was Uber. I should have known.

A couple of months ago my wife and I were in Penang, Malaysia. There the battle between the conventional taxis and Malaysia’s equivalent of Uber is all but over. How could it be otherwise when the cost of a ride on Grab, the local Uber clone, is around a quarter of that in a conventional cab, and almost everyone has a smart phone with the app they need to summon a driver from nowhere?

And back in the UK, who needs The Learning, the encyclopaedic knowledge of London’s streets that licensed cabbies need to master in order to drive their black cabs, when Uber drivers (as well as the rest of us) all have Google Maps on their smart phones?

I have much sympathy for the taxi driver because those who drive licensed cabs are finding their living eroded to the point that their income is fast becoming insufficient to feed their families.

But I also feel for the Uber drivers who are dependent on low rates that will never allow them to earn above a paltry minimum without working absurdly long hours. Theirs is the classic gig economy living: insecure, unpredictable and subject to the whims of an “employer” whose concern for them stretches no further than whatever it takes to be able to operate legally under a given jurisdiction.

So the only winners are us, the customers, unless, as in my case, striking taxi drivers attack the Uber driver who came to take me to Barcelona airport and led him to make a quick getaway without his passenger (I was unaware at the time that the dispute was about Uber).

It’s quite rare for a consumer to witness the human consequences of cheap products and services. Most of us don’t think of farmers when we buy milk and vegetables whose price is forced down by bullying purchasers at large retailers desperate to outdo each other in price-matching wars. We don’t give much thought to the warehouse workers employed on low wages who make it possible for us to get our products from Amazon within a day of purchase.

We do worry about our kids being saddled with five-figure debts for tuition fees when the economy can’t meet the expectations of graduates that they will be earning salaries commensurate with their academic achievements and those kids end up working on the minimum wage – or not working at all.

But we – and now I’m speaking for the generation born in the Fifties – are surprised when the unemployed, the farmers, the Amazon workers and the taxi drivers don their yellow jackets – literal or metaphorical and erupt with rage against those they see as responsible for their failure to prosper in our globalised economy, and blame the targets identified by demagogues – governments, the EU, the “elite”, the deep state, foreigners, George Soros, Mexicans, Muslims and Jews.

Every age has its Les Miserables. The difference between Victor Hugo’s poor in 19th Century France and the discontented of modern France, Britain and America is the scale of deprivation rather the gap between the haves and the have-nots. Today – in the West at least – we have safety nets that prevent people from dying of starvation and reduce infant mortality to a level undreamed of two hundred years ago. But that’s hardly much consolation to those who, having made it through childhood, face a lifetime of poverty.

This gloomy scenario brings me to an evening we recently spent in the company of Sir Martyn Lewis, the former TV journalist and newscaster. He was sneered at in the 90s for suggesting that BBC should seed the news with positive stories. That doesn’t sound such a bad idea in the current decade, which puts the 90s to shade when it comes to wrist-slashing tales of misery and desperation around the globe.

Lewis, who was giving a talk to a group of old farts like me, is unchanged in his views on good news stories. In fact it seems that the world of journalism has caught up with him since then. He pointed us towards a movement called Constructive Journalism, which is all about encouraging media to place bad news in context by reporting on solutions as well as problems. It’s taking hold in some of the saner parts of the world, such as Denmark, which hosts the Constructive Institute, based at Aarhus University.

Here’s a very succinct definition from the Institute’s website:

I am neither a professional journalist nor an optimist by nature, at least about the current yawning gap between rich and poor. But in the spirit if not the letter of constructive journalism as defined above, here’s how I would go about alleviating the toxic situation I described earlier.

I would start by doubling the minimum wage. Yes, doubling, and that would include piecework and hourly rates in the gig economy.

Such a measure on its own would result in howls of objection from employers who would have to bear the additional cost, and consumers who would have to pay a higher price for goods and services.

But then I would provide smart discount cards that entitle pensioners who have no other income beyond the state pension to buy energy, essential foodstuffs and local travel at a discount over normal prices. And I would include those on state benefits in the same scheme

I would offer retailers such as supermarket chains a rebate on corporation tax in return for providing the discounts. And I would provide government subsidies to essential service providers such as care homes that will enable them to stay in business despite the increase in wage bills.

The intended result?

Millions of lower-paid workers would be lifted out of subsistence living.

There would be price increases as businesses are forced to charge more in order to cover their higher wage bills. There would also be an increase in government spending. Both effects could be managed if the measure was phased in over, say, three years. But the negative consequences would be counterbalanced by a boost to the economy (and increased tax receipts) as those who have been lifted out of poverty use their increased spending power.

As for the price increases, the main burden would be born by those who can afford them rather than by those who can’t. Of course, such a measure would be characterised by politicians as a stealth tax on the middle class. And yes, a large number of people who are well above the poverty line would find the cost of living rising, but not their taxes.

I for one would not object. It’s easy to forget, when we go off to Tesco and buy our cheap meat and vegetables, order our TVs from Amazon and sup our pints at Wetherspoons, that cheap comes at a cost to people who make low prices possible by having to choose between unemployment and working for a pittance.

Why not go for the rich as well? I’m not an economist. But I know stupid policies when I see them. Punitive taxes on the rich is one of them. If we don’t realise by now that the ultra-wealthy can at the drop of a hat take their money and their businesses to other countries that offer them better terms, we are truly stupid. We are about to find out how easily as Brexit Day looms larger.

But the brutal reality is that the middle classes are not so mobile, and if a no-deal Brexit grips us in its deadly embrace they will be even less mobile and certainly less wealthy. The pips might squeak, but most of those who would be squeezed, including me, would be going nowhere.

Simplistic? Unworkable? More holes than a block of Emmental? Maybe. I don’t pretend that this is the only potential solution, and it doesn’t address the other critical imperative for mitigating inequality – getting people into employment in the first place. But if I was in government, it’s the kind of idea I would chuck at the civil servants and think tanks with a challenge to make something close to it work.

I realise that if any political party were to campaign on doubling the minimum wage, they would be unlikely to find themselves in government. But it’s time we realised that there are some issues more important than Brexit. Right now, barring climate change and the future effects of AI on employment, the gap between rich and poor is Britain’s most pressing problem. Though actually you could argue that a better definition of the gap would be between those who are comfortably off and those who aren’t.

How am I qualified to pontificate on such matters? No more than anyone else who has watched with deep concern as this awful decade has unfolded.

Granted, what I propose might strike you as the kind of thing Mr Bean might come up if he was Chancellor of the Exchequer, or you might wonder if I’ve just taken a break from standing with a placard and a weather-beaten raincoat at Hyde Park Corner. But is it any crazier than a no-deal Brexit, which has none of the upsides and all of the doom-laden risks?

Whatever happens to Brexit, inequality isn’t going away. It will never go away entirely, but there are surely ways of pushing it in the right direction. No excuses – let’s get on with it.

From → Business, Politics, Social, UK

  1. baritone2 permalink

    I dont know why its taken you so long to reach this conclusion, I’ve been advocating a similar policy for a decade. Granted its a vote loser and evn old JC wouldn’t present his policy in those terms but … it is what this country needs.

    • Better late than never, eh? Anyway, I’m glad I’m not the only one! S

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