UKC

I've just been reading about him (in the same way you poke a spot, just to irritate yourself) and I saw that having graduated with a history degree he went to work at a capital management company. How does that work? How does a degree in history qualify you for pissing about with other people's money.

It must be quite stressful though, cos he's the same ages as me and looks about 65.

In reply to Yanis Nayu:


>
They teach you. What other degree would think qualifies you to "piss about with other peoples' money? (the correct answer is "none")

In reply to Yanis Nayu:

I think he managed his own money very well from an early age so had a good track record to start looking after OPM.

In reply to rossowen:


I suppose having the safety net of starting off with a shit-tonne of it helps in that regard.

In reply to Yanis Nayu:

Careful. You're starting to look a little green eyed there...

In reply to Postmanpat:

Economics, accountancy - something that involves money?

In reply to Yanis Nayu:


Accountancy would certainly be a good basis but it wouldn't provide all the other skills required. Perfectly reasonable to work on the basis that somebody who has demonstrated basic analytical, arithmetic, and communication skills can be taught the specific skills required once employed. In Mogg'sday that would have probably been done mainly through what amounted to an "apprenticeship". Nowadays graduates would be required to pass a series of qualifying exams and probably a CFA or an MBA before being let loose to "piss around with other peoples' money"..

In reply to Yanis Nayu:

A degree in History is an excellent basis for working with investments. Money management is about looking at all the arguments and selecting the strongest and being able to make sensible arguments / decisions based on the information available.

The pushing the numbers round bit is easy.

That doesn't mean I don't think the guys a twunt like.

In reply to Yanis Nayu:
Eton educated son of an influential peer; I'm sure he got the job primarily for being a thoroughly good chap, the degree would be somewhat secondary.

In reply to Yanis Nayu:

It can't hurt but I don't think it detracts from the fact he did it, rather than spending it or just sitting on it.

In reply to Yanis Nayu:

A degree in history will give the graduate a range of skills: researching things, finding appropriate evidence, analysing evidence, constructing arguments using that evidence, being objective, communicating stuff effectively, along with all the time-management, working to critical deadlines, team-working, independent working stuff that most graduates will have.

My students go on to do loads of different things - data analysis, media researchers, civil service, security services, accountancy, law, third sector, the list's very long. And includes investment banking. Yeah, and some go on to become history teachers, but most of them do other things that their degree prepares them for.

In reply to Yanis Nayu:

Perhaps I'm displaying my ignorance, but I don't think I've heard of you playing such a part in the life of the nation as J R-M.

Now let's try and get you really angry - John Redwood also runs an investment management business. He is a fellow of All Souls (not that you would know what that entails), but realised early on that it was possible to earn far more money as a merchant banker than as an academic and completed his PhD while travelling in to his job at Robert Fleming merchant bank while travelling on the tube.

I think J R-M looks pretty good for his age, actually.

In reply to Postmanpat:


That's nowhere near the skills required, and anyway JRM manifestly doesn't have any of them given the amount of simplistic stupidities that come out of his mouth.
No wonder he turned to politics

In reply to Yanis Nayu:

How does a degree in history qualify you for pissing about with other people's money.

He's more qualified than some senior MP's...

In reply to RomTheBear:
>
I didn't specify what skills are required so it is obviously not reasonable to say that a set of unknown skills is inadequate.

In reply to Yanis Nayu:

Get real Yanis. No way does he look 65 and you know that. Never voted Tory in my life but he's not an unreasonable guy when I've seen him on TV. Yes born with a silver spoon but doesn't make him a bad guy.

You sound a bit envious to me.

As for a history degree and accounting that's what my wife did and quite successfully.

As other posters have said the degree gives you the ability to think and reason which is then applied to the accounting job in Rees-Mogg's case.

He's likely never going to be Prime Minister but he is entertaining.

In reply to John2:


I'm never sure if his age is Victorian or Edwardian.

In reply to Yanis Nayu:


Thanks, I needed a good laugh.

In reply to Welsh Kate:

I understand that studying history provides a range of skills, and others have detailed how some of those may apply to money management, but let's be honest, he got the job through the old boys' network.

In reply to Yanis Nayu:


Possibly, given that he didn't join a mainstream company. But there is every chance that his degree and investment experience would have got him a job.

It's kind of ironic the way that you lefty chaps live in the past. The "old school tie" pretty much died as an an entry method for the City 30 years ago. It's all about qualifications, work experience and competitive internships. (which does of course benefit those who can afford to work for free). However, in lefty paradises like the media and the BBC it is still of course about who you know not what you know...

In reply to Yanis Nayu:

History? I don't believe that it exists. And the very itself word is sexist... No wonder that Ford declared it bunk.

FWIW I studded cobbling, and it never did me any harm... I can hear your clogs whirring, while you digest that one.

In reply to Clauso:

Cobblers.

In reply to Yanis Nayu:
One of the benefits of going to a 'good' school is that it gives you access to the old boy's network.
Social mobility isn't just driven by the education and qualifications you receive at good schools but by the people that you meet and the contacts that you make while receiving said education.
Many working class youths benefited from such opportunities so why shouldn't Mr Mogg?

In reply to baron:


Each year, many younglings that I interact with go off to all sorts of internships in all sorts of areas including finance. No old boy networks at play, rather a case of studiously examining what's on offer, picking things that match their interest and course and... applying. Shock, horror.

Perhaps there is an old boy network tucked away somewhere but there's no shortage of opportunities for people to get started on merit.

The same comments apply to the great job hunt - finance firms in particular seem to be working hard to find people with motivation and ability regardless of background; almost certainly because the wider they cast their net the better the returns.

In reply to wintertree:

^^^^ Yup.

In reply to Yanis Nayu:

Having had the misfortune to work in a Hedge Fund for 6 months, it seems the main qualifications for becoming a person of influence in a hedge fund seems to be possession of strange name such as Hamish, Orlando or Pixie, plus attendance at a private school. You did not meet anybody called Gary or anyone from a working class background who worked managing people money.

In reply to Postmanpat:

I'm sorry, I currently work in the city (and have done for the past 7 years) and I have to say the old boys network is absolutely still there - it may not be as express as it once was, but the school someone went to, or having an influential father / mother, still gets a foot in the door.

In reply to wintertree:

You're talking about now, rather than 25-30 years ago presumably.

In reply to baron:


Social mobility does not really exist any more, it been dropping since the 70 and has got worse under successive Tory and Labour governments. If your born poor you have a much greater chance of staying poor nowadays.

Possibly but many many more rich/wealthy people have benefited from such opportunities than the working classes

In reply to andyfallsoff:


How does it express itself?

In reply to Yanis Nayu:

I'm thinking now of the oil billionaire John Paul Getty. When asked why he employed so many classicists he said, 'Because classicists sell more oil'.

In reply to jasonC abroad:


https://www.ft.com/content/cdf4235e-6bc1-11e7-b9c7-15af748b60d0

The ft begs to differ.

In reply to jasonC abroad:
It's probably easier for children from poorer backgrounds to gain access to higher education today than it's ever been and yet social mobility is declining?
Poorer children staying poor?
Why does this happen despite the enormous efforts, time and money poured into society by successive governments?

In reply to baron:


Of course it isn't!

In reply to Yanis Nayu:
Yes it is.

In reply to wintertree:

Paid internships?

In reply to The New NickB:


Most of them are paid.

In reply to summo:
The article refers to disparities in income not wealth or social mobility, to return it to the subject of the thread I strongly suspect JRM's position has a lot more to do with wealth.

In reply to Postmanpat:

Access to work experience / internships outside the normal channels; people not wanting to get rid / turn down children of clients etc who apply for jobs; general "oh you went there, you must be a good chap" type acceptance...

I do think things have got better, and the bigger the organisation the more they tend to do to try and rectify the advantage that better connected people would have. But we aren't there yet - who you know / if you went to certain schools etc still helps (although it is unlikely to be enough on its own)

In reply to andyfallsoff:


Of course it all depends on the role, when I worked at Aberdeen most of the portfolio managers and analysts had extensive academic training, PhDs in applied stats, financial engineering or other fancy LSE degrees...

However you can definitely get in the industry in a managerial or executive role even if you can't add two and two as long as you have an extensive network of potential clients you can bring. I strongly suspect that JRM falls in this category

In reply to Yanis Nayu:

Will you lot shut up and let things take their course! I reckon Corby could beat JRM.

In reply to andyfallsoff:

Access to work experience / internships outside the normal channels; people not wanting to get rid / turn down children of clients etc who apply for jobs; general "oh you went there, you must be a good chap" type acceptance...

That type of behaviour isn't just restricted to the 'elite' though. Go to any small business in the country and they'll be employing friends and family in preference to others.

In reply to


I can't get past the paywall but does that article actually discuss social mobility? On the basis of the title it's about the income gap between rich and poor, which isn't the same thing.

In reply to Pekkie:


At what? https://www.dalemain.com/2017-award-winners/?

In reply to Postmanpat:

" However, in lefty paradises like the media and the BBC it is still of course about who you know not what you know..."

Lefty paradises like the Sun, the Telegraph, the Mail, is that what you mean? Or maybe you're thinking about how the two recent candidates for the Conservatives' director of communications were from the Beeb? Plenty of Tories at the BBC...

In reply to Yanis Nayu:

Back in the day any degree level education was seen as a sign of good general skills and a basis on which to build any career you fancy. This was partly because so few people had a degree. These days every Tom, Dick and Harry has a degree and the subject matter is becoming narrower and I dare say that in many universities the quality of the education is lowering (although this is a contentious subject).
Having studied at Eton and then Trinity Oxford you'd hope that Rees Mogg could turn his hand to most things, although isn't PPE (politics, philosophy and economics) considered the standard entry exam to the house of commons?

In reply to Bob Kemp:


That's the good news! Unfortunately they've not had time to crush the old lefty corruption and hypocrisy

In reply to The New NickB:


Well his nickname in parliament is the Right Honourable Member for the Early 20th Century so unless that's restricted to the the really, really earliest bit then probably Edwardian.

In reply to Postmanpat:

Hah! Had to give you a like for that...

In reply to Yanis Nayu:

You have got to admire his business acumen though

https://www.thesun.co.uk/wp-content/uploads/2017/06/nintchdbpict00032876345...

In reply to Bob Kemp:



But is cash in the bank, or narrowing wage gaps what really matters? Social class is just a label.

I know people who would describe themselves as lower or working class, but they live in a 4 bed house and have 70k of cars on the driveway.

In reply to summo:


try telling someone with no cash in the bank and a shrinking wage that it doesn't really matter.

In reply to Stichtplate:


That was Thatcher's genius: convincing people that, despite dire economic circumstances, all working class people could feel middle class, and therefore would support a party who claimed to be champion of the middle classes.

In reply to Yanis Nayu: Tania, I'm a bit confused - you say you've read an article on JRM, but it hasn't mentioned his prodigious financial activities from age 10 or whatever, and running his own funds when at school , university. That will get you a job. He is famed for his thorough research (you clearly not)

You employ someone for having a good degree, what it's in is often less important

In reply to Stichtplate:


That was the point of the ft article, whatever class you call them, wage gap has narrowed. Not by much, but it has. I doubt it's because the rich are poorer.

In reply to john arran:


But that was my point. Class labels are irrelevant. The ifs report in the ft article I linked, stated that wage gaps have narrowed a little recently. So some people must have more cash in their pockets and or the rich a little less. Of course there is a fair way to go.

Blair was just a red Thatcher preaching the same. Everyone can have a degree and enjoy wonderful employment prospects etc..

In reply to summo:


It is a combination of rising employment and falling wages. So the rich are earning less and the poor are more likely to get a job.

The article doesn't talk about social mobility, which is measured by things like which income distribution do you fall into compared with the income distribution your parents fell into. Whether you identify as working class or middle class tends not to be a measure as it would be almost entirely meaningless.

The income gap is the difference between rich and poor and social mobility is how easy it is for a poor person to become a rich person (and vice versa).

In reply to Bob Hughes:

But if wage gaps have narrowed then there must be some mobility?


Exactly


Of course. But I see the problem being that even if everyone enjoyed fantastic opportunities and left uni with first class honours etc.. everyone can't be middle management and upwards or say a master craftsmen. All the low skilled and low paid jobs would still need filling. How does a nation fund and fill those posts at a reasonable wage level. The only way is those in the mid ground and above have to earn less?

In reply to summo:


Actually, as a result of the Sterling crash and rising inflation, I suspect it's more the case that just about everyone has less cash in their pockets but that the rich may have seen a bigger drop than the poor.

In reply to john arran:


Perhaps. But the rise of the minimum wage and the tax threshold must be having some impact too.

The only way to assist the lowest paid is for goods and services to cost more and everyone needs to pay for it. I think taxing one and handing it to the other, might equal incomes on paper, but it could create a more bitter and divided society socially.

In reply to summo:


I might be being slow (it is Sunday morning) but how would higher prices for goods and services help those who are worse off - surely what you mean is we need wage inflation at the lower end?

In reply to andyfallsoff:


Yes. But how do you inflate it? Companies run at a loss, or do basic goods and services cost more because the lowest paid staff now get £10-12 /hr.

In reply to summo:


Not at all. Imagine a rich man earning 100k a year and his poor neighbor earning 10k a year. The rich man gets a pay cut meaning he is now earning 80k a year. The income gap has narrowed but he is still the richest man in the street. He and his poor neighbout both have children. In 30 years time, the rich mans son is the richest man in the street and the poor mans son is still the poorest man in the street. There has been no social mobility.


Social mobility is not about everyone actually actually having a senior position in the pecking order, it's about giving everyone the opportunity to work themselves up to have a senior position in the pecking order. By definition, not everyone will get there. But the who gets there and who doesn't shouldn't be a function of how much your parents earned.


In a totally closed system some of those jobs would be done by the children of rich parents. Social mobility is by definition a zero sum game. For every poor child who ends up in the top percentile of income distribution, a rich kid has to lose a few rungs. That doesn't mean that in an absolutely sense they would be poorer, but relative to everyone else they would be a rung or two below where their parents were.

The techno-utopian answer is that all those jobs will be done by robots....

In reply to summo:



Most inept thing you've said all week.

In reply to RomTheBear:

Oh font of all knowledge. How can we increase the wages of all the lowest paid then? Who will actually end up paying them?

How can you increase the wages of a burger flipper, crop picker, shelf stacker, factory cleaner.. . Without the end user paying more?

In reply to RomTheBear:


Quick with the put down, but slow with a better idea? You just have to look at the countries with better wage equality, basic goods nearly always 10-20% cost more.

In reply to summo:



The owner/shareholders of the business could pay them more and accept lower profits as a reasonable price for a clear conscience and playing their part in a fair society.

Part of my business is a call centre operation employing youngsters of around 18-21 years who start with no work experience. Instead of paying them minimum wage (which we would get away with) we pay £12 per hour because their efforts matter to us and we want to reflect that in the wage. We do the same for interns so that the opportunity is not restricted to the children of the wealthy.

In essence, as employer, we see ourselves playing a part in their lives, not exploiting them.

In reply to BnB:




Fair play. I suspect the bigger businesses get the less they care about anything but their bottom line.

In reply to BnB:


I agree, If share holders allow it though. Plus there would be a very modest impact on pensions and annuities, but probably barely noticeable.


What about smaller businesses with tighter margins who don't have that luxury and struggle to remain competitive, will be tough not to pass some costs onto the consumer.


I agree.

In reply to summo:

By increasing their productivity.


Did it occur to you that if workers are paid 10% more then the prices of the things they buy also increases by 10% ? They may have 10% more pounds in their pocket but their pounds can buy 10% less.

You want to increase the REAL wages of the poor ? The only way I'm afraid is to make them more productive. Maybe by increasing their skills, or increased automation, or moving them into higher value jobs.

In reply to summo:



Self identification is important but it's not how social class is defined by the ONS for example; the system that is then used in government statistics and the like.

In reply to summo:


My understanding was it is exactly that, and of course what we really mean is top incomes have come down, not that the rich are poorer - that's why people have been pointing out that income changes don't take into account wealth levels, where much of the disparity lies.

In reply to summo:

Yeah I look at them, and I see they have higher levels of productivity, a well educated workforce, and higher taxes.

In reply to RomTheBear:


That would only apply if the sole cost of goods were the labour costs. But when you spend say £100 in supermarket, some of that cost is also the produce, packaging, infrastructure AND Labour. So a 10% rise in the cleaners or stackers wages, doesn't put 10% on all the goods.


Are you suggesting that low skilled workers in the nordics are more productive? They clean faster, stack shelves quicker.. .

In reply to RomTheBear:


How educated do you need to be? Degree qualified? Higher taxes, yes, but that doesn't mean the low paid earn more.

Productivity, like zero hour contracts where people are only paid when needed and working ?

In reply to summo:

Who do you think makes the produce, the packaging, the transportation : also workers.


They may not be cleaning faster, of stack shelves quicker, but they may be benefit from more synergies between work in skill-intensive jobs, and training.
For example, maybe your factory floor cleaner is not just simply cleaning the floor, maybe he his also trained to do safety checks and maintenance, hence he adds more value, hence he is more productive, hence he can get higher wages.

In reply to summo:

No, but higher taxes may mean they get better education, so that they don't have to work badly paid job, it may mean they have better infrastructure which makes them more productive - hence earn more, etc etc...


Different topic, this is more a case of labour market flexibility.

In reply to summo:


If you allow companies not to pay a living wage, we tax payers have to fund their business model through welfare payments to their staff. In work poverty is a thing.

In reply to RomTheBear:


So who then does the low skilled work?

In reply to Shani:


???

Don't think anyone has suggested that. We are discussing who pays when staff are paid more. I think if you lift wages them everyone will pay more for goods. I don't see it as a bad thing, because the lowest paid don't suffer. A 10% rise in wages, doesn't mean everything will cost 10% more either as rom seems to suggest.

I'm quite happy to eat out less and pay more for basic goods, but at least when I do I know the person here is earning probably £5/hr more than they would doing the same job in the UK.

In reply to summo:

Who said we have to have low skilled work ? You seem to imagine there is a somehow a fixed supply of defined low skilled jobs that must be filled at all costs.

In reply to summo:



I'm not sure why you still understand that this does not create any extra wealth. If you've got 10% more pounds in your pocket and everything is 10% more expensive, you're exactly where you were before.

In reply to RomTheBear:


Are you really suggesting every job is highly skilled, requiring educated and trained people, who will then be appropriately paid?

In reply to RomTheBear:


I don't understand why you think that Labour costs are the only thing you pay for when buying something.

In reply to summo:


I'm not saying it is the case, I'm saying it doesn't have to be the case. There isn't a defined number of low skill jobs, that must be filled by people with low skills.

In reply to RomTheBear:


No, but low skilled jobs will always exist, until total mechanization. Cleaners, shop workers, production lines, crop pickers, some care workers... some might require vocational training, but not degree level education prior to employment

In reply to summo:

Because ultimately it is, everything you buy comes from someone doing some work, somewhere, although you may not always see it.

In reply to RomTheBear:


No raw materials, no energy costs etc...??

A bottle of wine, jewellery, a flash car.. are their costs entirely labour?

In reply to summo:

What do you think makes the price of the raw material ? Supply and demand.

Who creates the supply ? workers.
Who creates the demand ? workers.

Now you may argue that some may earn a lot more for their work than the marginal value they create, and some earn a lot less for their work than the marginal value they create, and you'd probably be right.


Ultimately yes, their price depends on how much they cost to make, and to make them you need people working, and it depends also on how much people are willing to pay for it, which also depends on how much they earn.

In reply to summo:

Who says the cleaner can only do cleaning ? who says the shop worker can only do the till ? Who says the fruit picker can only do fruit picking ?
More importantly, who says we have to do these jobs, if we have the ability to train and educate people so that they can create a lot more value and use their time better ?

The simple reality is that is you want high living standard then you need to be able to create more value with less effort. Simply setting higher wages by decree never created anything, at best it's neutral.

In reply to RomTheBear:


Unless you have today automation the fact we'll starve to death or die in filthy uncleaned operating theatres might mean someone has to stack shelves or push a mop round.

In reply to jasonC abroad:

>...If your born poor you have a much greater chance of staying poor nowadays...

Agreed. To use Jeremy Corbyn's words, we certainly do live in a "rigged society".

In reply to Ridge:

Yes, but at the moment there is nowhere any shortage of people in the world willing to do these jobs, so it doesn't have to be a problem in the foreseeable future.

But you are correct, a situation where have no choice but to hire educated people to do low skills jobs is entirely possible, in which case, they'll be creating less value than they would otherwise - hence they'll be poorer.

In reply to summo:


Where did you hear this? I thought it had widened.

Here is the current figure of 386:

https://www.theguardian.com/business/2017/mar/22/uk-ceos-national-living-wa...

IIRC, I have read that the corresponding figure was 10 in the late '70s and 50 in the late '90s.

M

In reply to Mark Bannan:
The main issue at least in the UK is not income inequality, but wealth inequality.
Careful analysis reveals this is due, in fact to mainly one thing : a dysfunctional housing market which has stifled supply response through heavy planning regulation, strongly biased in favour of the existing owners at the expense of others.
Demography and inheritance tax playing a big role as well.

In reply to Mark Bannan:

Where did you hear this? I thought it had widened.

https://www.theguardian.com/business/2017/mar/22/uk-ceos-national-living-wa...


Not sure if comparing the two extremes of the pay spectrum is a fair way to determine the nature of the wage gap.
I think you need to look at the situation at a more local level e.g. compare the wages at a Supermarket and see if the wage gap is widening or getting narrower. That then needs to be applied to other business sectors and only up to a realistic level of management. Yes, there are a handful of directors, etc. on massive wages, but does it really matter in the grand scheme of things? Apart from envy, it makes no difference to the average worker if 'Sir What's His Face' is on a £million upwards a year.
However, if that same worker finds out that all the managers in the Supermarket have had a bigger percentage annual pay rise than them, then expect ructions...

In reply to FactorXXX:

It makes a difference because if your family is struggling and you know that your CEO is earning 386 times your salary then the world feels that much more callous and unfair.

In reply to Stichtplate:

It makes a difference because if your family is struggling and you know that your CEO is earning 386 times your salary then the world feels that much more callous and unfair.

What's the point though?
It won't achieve anything apart from making yourself miserable about something that you can't do anything about and does hint that it's based more on envy than pragmatism. What's more important is how you stack up against your peers and immediate management - if there's a disparity there, then that is indeed something to ask questions about.

In reply to FactorXXX:



I might ask what's the point of pumping your salary up to 386 times that of your average employee? Bragging rights?
I've often wondered how you could go about quantifying the negative impact on productivity in companies where such huge disparities exist.

BnB didn't mention it in his post, but I would imagine his enlightened wage policy does wonders for productivity, staff retention and general morale.

In reply to Stichtplate:


It's been widely studied across countries, industries and regions. The level at which directors are paid seem to not really matter in term of marginal productivity gain (or loss)
Basically whether you pay one million or ten millions for your CEO, it seems to not make any difference.

One thing is sure, if you get directors sucking all the money out of the company and into their pocket, you have a problem. I wouldn't say it's the norm but I've seen it happen in many places, your best bet in those cases is to just run away and go work somewhere else.


Well his "enlightened wage policy" sounds like pretty much market rate to me ! Then again it depends what it is they are doing and where it's based.

In reply to Stichtplate:

I might ask what's the point of pumping your salary up to 386 times that of your average employee? Bragging rights

You've got your data wrong - it's 386 times more than a worker on the National Living Wage.
As for bragging rights, people get what they can get and that applies to everyone and not just the lucky few on £5.3m. These are private companies and in a results driven world, their respective boards pay them what they feel is correct to get those results.


I've often wondered how you could go about quantifying the negative impact on productivity in companies where such huge disparities exist.

Why do you assume that there is any negative impact?

In reply to FactorXXX:



Fair enough.


Human nature.

In reply to FactorXXX:




Part of the problem is that the compensation setting process is broken. Directors are often able to set their own pay regardless of performance, it can becomes rent extraction and not really justifiable wages.

In reply to RomTheBear:

£12 per hour for 18-21 year olds is a bloody good rate anywhere in the UK . Can't imagine why you'd locate a call centre in a high wage area.
As for high levels of wage disparity within a company not having an impact on productivity, I'm dubious. I'd want to look at methodology and who was funding the research.

Edit: let's not argue Rom , I'm quite enjoying the novelty of finding most of your recent posts entirely reasonable.

In reply to Stichtplate:

As I said, it depends what they do. If it's call centre work purely reading from a script work then yes it's a bloody good rate. If it's more akin to phone based tech support (which I have a suspicion it is, BnB can confirm or deny) then it's pretty much what you pay.

In reply to Stichtplate:

Human nature.

My experience of human nature in work is that despite grumbling, people just crack on with their jobs and get things done. There might be a slight downturn in productivity if a pay rise isn't as expected, etc., but that is short lived and normal work is resumed in a short space of time. I've certainly never heard the pay of the CEO being used as a reason for a downturn.

In reply to FactorXXX:


Yeah , like the CEO is going to stand up at the AGM and say 'downturn in productivity this year, probably related to my recent series of huge and unjustified pay rises' .

In reply to RomTheBear:

I certainly agree with you points, but I think both income and wealth inequality are problematic at the moment.

M

In reply to RomTheBear:

Ok. How many people today, Sunday, spent their day cleaning hotel rooms for the minimum wage. All day long. How can they have time for another role, how can you trained to add value to their job etc. ?


The simple reality is, you, I, can only enjoy the relatively high standard of living we do because someone somewhere else in the world is getting their hands dirty doing jobs we don't like, for less money then most of us are prepared to do it for. If they were paid as well as you and I, then we wouldn't be able to afford said item.

In reply to FactorXXX:

I realise it's not the only way, but it is one useful tool.

Do you mean within a supermarket? (or indeed any other workplace)

>Yes, there are a handful of directors, etc. on massive wages, but does it really matter in the grand scheme of things? Apart from envy, it makes no difference to the average worker if 'Sir What's His Face' is on a £million upwards a year.
It certainly does matter. Less money for top directors could mean more money for those on low incomes, which would lead to a fairer society. Financial inequality leads to more than just envy - relative poverty can greatly fuel resentment and is a factor in increasing crime. This envy itself is also not to be trivialised - why should millions of workers constantly put up with the injustice of the situation.

I do agree with this - I think greater transparency in wages earned (like in Norway) could help with this matter,

M

In reply to BnB:



I often disagree with you on many topics, but having worked many years in call centres and being pretty universally treated like shit I'd like to say very well done for this. Being on the phones is often a literally thankless task and very few appreciate the amount of soft skills that a really good agent brings to bear in a difficult call. Very well done.

In reply to summo:

Maybe by providing them the training they need to do something else ?
Essentially what you want is to keep people in low skills jobs and find ways to pay them more than the value their create, so that they can have a good standard of living. A commendable idea however don't fool yourself that it is possible without transferring wealth from the rich to the poir, that is a mathematical certainty.

A better solution, imo, is to train those people si they can do something elsew And as long as we need low skills jobs, they can be good jobs for newcomers in the labour market.



Yes, and that doesn't have to be the case. Look at what's improved our standard of living in the 21st century ? It has more to do with very well paid smart people who came up with new technologies, new ways of doing things cheaper and faster.

In reply to RomTheBear:


So the cleaning doesn't get done? You can't escape admitting that at present the world require people for some unskilled work.


Never said it was possible. We all pay a little more for our hotel stay, so the staff are paid more and we holiday less. Apply that across all aspects of middle class living.



Newcomers? after their high standard education, straight out of uni, then they have to learn to say "house keeping!", or "fries with that? ".

In reply to Yanis Nayu:

Anyway.
Mrs airborne was also reading an article about JRM today, which stated he has never changed a nappy in his life. This, and his penchant for giving those unfortunate children truly daft names, is what colours my thinking about the man.

In reply to MonkeyPuzzle:


Seconded. Nice one BnB!

In reply to Stichtplate:




This is correct. We are in the top 5 (of thousands) in our sector for staff retention and for productivity, according to the annual data analysis performed by one of the trade magazines.

In reply to RomTheBear:


These are non-graduate apprentices and undergraduate interns in the North of England. For the former the rate is probably 15-25% above the norm for the sector and location. For the latter, the rate is off the scale.

In reply to MonkeyPuzzle and Shani:

Thanks guys.

In reply to summo:


Can't we tax wealth (or charge for the use of land and money) instead of taxing income and consumption?

In reply to BnB:


Impressive. My own perspective is informed by working at the same firm for nearly two decades. Over that time we've gone from a successful, expanding business with 5 sites owned by the founder. Sold to a private equity firm whose only driver to increase profit has been to erode wage rates and radically restructure to remove middle management. We're now down to 2 sites and I'm taking voluntary redundancy. (3 shifts left ).

In reply to tom_in_edinburgh:


How would that help push up the wages of low earners? The lowest earners already pay zero or very little tax.

Would new tax dodges not appear? Close one door, another opens.

In reply to Yanis Nayu:
To take this thread full circle, the disparity in wages isn't the cause of inequality. It's the disparity of opportunity.

I was a little surprised by the OP's own bafflement that a graduate in History at Trinity College Oxford whose father was one of the most renowned intellects and public figures of a generation should have found a lucrative job in financial services. The city has an insatiable appetite for the best brains. And if those brains have been disciplined and tested by the gruelling process of gaining a place at Oxbridge then so much the better.

Coincidentally, I also went to Trinity College Oxford a few years before JRM. What I found there however, apart from many people much brighter than me, shocked me. All the students from well to do families seemed to have their futures mapped out in front of them. Let me be clear, this has nothing to do with the old school tie. It's just they were so well informed about their professional prospects and so clear about their objectives. By contrast I'd come from a lower middle class home where I had the support of only one parent, a teacher. And I hadn't a clue.

If I learned one thing at Oxford it was to appreciate the gulf in professional life skills between the well to do and the rest of us. One of my best pals during my time there was UKC hero George Monbiot. George appeared to come from another planet. His father, if I recall correctly, and he may not thank me for mentioning this, was CEO of a FMCG company. You recognised in an instant that here was a fellow who knew where he was going.

Things obviously worked out for me professionally when I latched onto the burgeoning IT industry but I regret to this day being denied a vision of the real world by my "small world" upbringing.

If only we could address this vacuum of perspective, we might see inequality fall and social mobility reverse it's sorry trajectory.

In reply to summo:


Simply untrue. The low paid pay a whole range of taxes (including national insurance) . They do pay less income tax.

In reply to BnB:

Yep, it's about opportunity and expectation.

In reply to Stichtplate:


Ah. The curse of the private equity firm. They do the same thing in many industries. They make the mistake of assuming the founder was too naive not to reduce people to numbers. Then they find out who's the fool. Often rather expensively.

In reply to John2:



Just goes to show they aren't infallible either.

In reply to BnB:
The founder knew the business inside out, valued his employees and built real relationships with people, whatever their position. As a consequence we were more than willing to go the extra mile for him.
The new owners are trying to strategise (maybe too grand a word for what they are doing) based entirely on the balance sheet.

Surprising how many people don't know that old adage 'the map is not the territory'.

In reply to BnB
Most children today have far more guidance and support in school and access to support agencies than children of previous generations.
What holds many children back isn't a lack of opportunity but a lack of realistic expectations from themselves but more importantly their parents.
Being poor in monetary terms isn't the issue, although it doesn't help, it's the poverty of realistic ambition that does the damage.

In reply to John2:


I like your use of rhyming slang in that post.

In reply to Stichtplate:


Of course. But income tax is the largest of all the various tax sources.

In reply to baron:




Yes, I agree. I didn't explain adequately. I wasn't talking about career guidance at school. It was my upbringing that left me behind the game. Not that I blame my mother. She had enough on her plate.

Of course, having been accepted into the technocratic class, I've now gone and made inequality worse by bringing up two children in whom I've tried to encourage ambition, hard work and acadamic achievement. But what's a parent to do?

In reply to BnB:
Not the easiest job in the world to bring up children. Sounds like you've done a good job!

In reply to BnB:


Ditto. I was kicked out of my school aged 15, my daughter at 22 has just completed a biology degree, with distinction, and is applying to do medical training next year, in the hope of becoming a surgeon.

In reply to BnB:


100% agree with this post

In reply to Bob Hughes:

I have some sympathy with this perspective; poverty of ambition. But I would also draw your attention to the work of Richard Reeves who has done much to address the hoarding of opportunity by the top 10%. He is worth a follow on Twitter at the very least.

In reply to BnB:


That's very well expressed and I completely agree. I had a similar upbringing (except my mum worked in the post office) and it took me a very long time to figure it all out and decide what I needed to do.

The usual argument about easy advantage from a particular old school or family connection misses the point. It's the lack of vision and poverty of ambition that's the problem.

In reply to Yanis Nayu: I don't think I can agree more with the sentiments expressed in these last posts. I came out of a farm in East Anglia via a comp where only 3 people out of 90 went to university. I think it's taken me a lifetime to get over that start

In reply to wbo:

Same at my comp in the NE. Less than 10% stayed on for A levels. The school saw it as their role to churn out the towns factory fodder, 5 gce' s was a success, you were apprenticeship material, the rest were lower wage Labour.

In reply to Dave Garnett:


The "old school tie" as a phrase incorrectly describes the problem but i think family connections and poverty of ambition all form part of the same problem.

Parents - good parents anyway - provide guidance and help to their children. If your you were raised by your single mum who is a teacher, that is the world she knows and is the world she is most likely to be able to help you into. The "poverty" of ambition (an unsatisfactory term, really) comes from the fact that your role model and expectations are set at the level of what you were brought up with. The old school tie comes into it as explicit help into jobs or internships. To the extent that it happens, it most likely happens at all levels. i.e. young people get help from their parents or the parents of their school friends regardless of whether that work is as a mechanic or an investment banker or an advertising executive. This is why "old school tie" is a misleading way to describe the problem.

Funnily enough - and just as a timely anecdote - as i arrived at work this morning i bumped into the former CEO. He retired about 6 years ago and this morning was dropping his great niece off for her first week of interning.

In reply to Postmanpat:


So not really that dead. Pretty much nobody I know (state schooled but from pretty well off background/area) could afford to work for free in London. For those that could it'd be by a sad quirk of fate (life insurance payout). That's a fine meritocracy you have there.
jk

In reply to Yanis Nayu:


You are aware that legally public companies are required to maximise their 'bottom line' as you put it (or share price to be exact)?

In reply to ClimberEd:


Often quoted, never sourced and complete rubbish.

The Companies Act 2006 requires directors to promote the success of the company, but with regard to six factors: the likely long-term consequences of a decision; the interests of employees; relationships with suppliers and customers; the firm’s impact on the community and the environment; its reputation for high standards of business conduct; and the need to act fairly between shareholders. The effect is precisely to prevent managements from automatically pleading a duty simply to maximise shareholder value.

In reply to BnB:

I would say it is true to an extent, and I agree with the rest of your excellent post.

However, it is touching only at the surface of the problem, which IMO, is much deeper than simply a disparity in access to opportunities. Even if we had a true, perfect meritocracy, inequalities would likely still be wide - maybe even wider, than they are today.

It's rather obvious (and well-evidenced) that intelligence is normally distributed amongst the population, with few people of high abilities, few of low abilities, and the bulk of the population sitting in or around the middle.

Now, in our society, the Abilities/Reward curve is exponential, the very few smart/brilliant people of high abilities get very high rewards, the bulk in the middle get small rewards, and those at the lower end... well, they'd probably get almost nothing at all if we were not giving them the scraps, essentially out of pity.

- Is that fair ?
I don't know, it's very much a philosophical question.

- Does it work in the short and medium run ?
Maybe it does. It's been the economic ideology for the past 30 years. Reward the best talents handsomely, give them all the power and money they need to do what they do best. They will increase the size of the pie, and the whole of society will hopefully benefit. It worked to a certain extent.

- Is it sustainable in the long run ?
I think historical and present evidence suggests it isn't. If you have a small elite reaping all the rewards, no matter how good they are and how much they deserve it, if they get it wrong at any point, you can be sure the people will come for them with pitchforks. You just need to look at the distrust of the population towards their elites today - whether they are politicans, scientists or businessmen. The consequences are impredictable, irrational, and often, not pretty.
Especially when some of the elite, usually of the political kind, seeing the pitchforks coming for them, cynically use their influence to redirect the anger towards all sorts of scapegoats - other countries, immigrants, minorities, you name it, anything goes.

So how do you flatten the Abilities/Reward curve a bit, so that the bulk of the population has a bigger stake in society ? I honestly don't know.

Redistribution through progressive taxation certainly helped, but it is not enough and fraught with problems - you need taxes so high for it to be effective, that it ends up killing the incentive.

Regulate to pay people more than they produce ? Maybe has a place, but as discussed with summo, this has a limited if not neutral impact, as it ends up right back in inflation.

Maybe we need to start looking at simply confiscating some of the pie from those with the biggest slices - no matter how great, talented or awesome they are - and give it away to everybody else. It is unfair ? Most likely, it is. But maybe the elite will realise that it is in their long term interest - unless they want to see the pitchfork coming for them. There are possibly soft touch ways to do it that would make the pill easier to swallow.

Or maybe it's not the right approach at all, and we need to start looking at other ways for the "bulk in the middle" to feel like they have a stake, this may mean attributing more value to a wider range of human characteristics, other than brain power an your ability to make money. And that implies a cultural shift.

Very much an open ending here. Suggestions welcome.

In reply to RomTheBear:

A thoughtful post, Rom. If only there were easy solutions. I do believe there's a good proportion of companies out there which take either a mutual (John Lewis) or paternalistic (Rowntree, yes it's an old example but a good one) approach to the matter of employment. I doubt their staff mind one bit that the senior executives earn a ridiculous multiple of their wages provided they feel that their lives and needs have been taken into consideration in the formulation of company policy. In this case the stake doesn't have to be measured in £s, although at JL that's very much the case, it's denominated in respect both for the workers' efforts and for the real impact that decisions made at board level have on families.

The period of my working lifetime has typically witnessed a loosening of the bonds that tie employer to employee. And both sides of relationship have been guilty of treating the other more and more as a resource to exploit, instead of investing in each other's futures. I sense however that this is changing, hopefully for the better. Family and stability are valued higher today than they were 20 years ago and that is surely a good thing.

In reply to RomTheBear:


I don't think it's all true that a small elite "reaps all the rewards". The amount of money in UK paypackets adds up to £1,000,000,000,000 per year. The vast bulk of that goes to the "people in the middle", and it dwarfs the income of the handful of billionaires.

Overall, the vast bulk of people have a standard of living that -- compared to any past time or alternative system -- can only be described as prosperous.

In reply to Coel Hellier:

But you're talking about income, not wealth. And wealth is power and influence.


Absolutely agree. But that's not the point I am making. It's not about living standard, it really is about power balance.
It's not enough for people to simply have their physiological needs taken care of. They also want to feel a sense of self-worth and the feeling they control their own lives.

Seeing it from that perspective, you understand why people regularly turn against the hand that feed them.

In reply to Coel Hellier:

I think you underestimate this problem. Income disparity is increasing greatly in the UK at the moment, bringing us more in line with the American system where the poor have limited access to health care. If you think I'm overstating this problem, look at the recent Grenfell Tower tragedy where it turned out that some of the surplus derived from council flat rents went to subsidise opera for some of the wealthiest residents in the UK rather than to improve living standards for the poor.

In reply to RomTheBear:


Wealth is just income added up. And I'm unconvinced that power and influence are that disparate. Yes, billionaires have much more power and influence than a typical person, but overall the "typical people" are in control owing to a democratic Parliament and universal suffrage.

If people don't feel personally in control, that's likely not because there are a few very rich people, but more because any one voter out of 40 million is inevitably going to have only a minor effect.

Complaints about "the system" are often code for disliking how swathes of their fellow citizens are voting.

In reply to Coel Hellier:


I fundamentally disagree with this. When house prices are c.10 times wages in London, aggregate income isn't enough to practically make up the difference. This is exactly the problem (and is exacerbated by policies like the student loan changes which then load more cost onto the young).

In reply to Coel Hellier:

No it's not. Let's say you create a billion pound business. You may take no income at all from it, and live in a shed. You still have a lot of wealth.That gives you tremendous power and influence (as well as responsibility) over the lives of all the people working in that business, and the wider environment around it.
It is more likely than not that you perfectly deserve all this and that you're a very smart, skilled and driven businessman, and the right person for the job. But despite all your qualities, people may well think that it's too much power in your hands. And they may well come for a share of it.



Yes, but exactly, a single vote to chose your masters every four years or so, doesn't really give you that much control over your life. Not unsurprisingly, it is often used as a mean to vent anger and frustration. This can give rather interesting results.

Have you noticed the return of identity politics ? Of course the causes are complex and numerous, but I think there is something there about people feeling left behind, humiliated in an economic system that gives status, power, and influence to a small technocratic elite and gives them no sense of pride and self-worth - even if they enjoy a high standard of living.
Identity politics gives them the possibility to turn the tables through cultural means, sometimes it's innocuous, but it can also take nasty forms, especially when it's based on forms of exceptionalism.

But then again, I could be talking complete horseshit, certainly not pretending to know the truth here, just putting forward a few ideas

In reply to Yanis Nayu:


Yep, thats how it works, mates help mates. I have mates who are brickies, he has mates who are Lords, is it fair not sure, but what I do know is, anyone who is over 18 and expects the world to be fair needs a good slapping.

In reply to RomTheBear:


Then what are you asking for?

Confiscating the wealth of billionaires is not going to solve that issue.

In reply to BnB:







This is one of the best posts I have read on this forum.

In reply to icnoble:

Seconded. Very insightful.

T.

In reply to RomTheBear:





I'd always considered those excised by identity politics as cry baby first worlders without enough real problems to concern themselves. I'd not considered this angle before . Good post (have they changed your medication or something? )

In reply to Coel Hellier:

As I said, I don't have a magic solution, I'm just trying to articulate the pitfalls of a pure meritocracy.


Well if you want to reduce wealth inequality, that's definitely the nuclear option. I'm not saying it's not fraught with problems, nor that it is the only solution.
It may have a role to play though. I'd be quite in favour of higher, more enforceable inheritance tax, and tax incentives to encourage sharing of company ownership with employees, for example.

In reply to RomTheBear:


Agreed on the "more enforceable" but not on the "higher". The 40% is quite a high rate, which is why there are then exemptions and any exemptions create loop-holes. I'd suggest a lower rate, say 20%, but with no exemptions at all (and a much lower starting threshold). I bet they'd get a higher "take'.

In reply to Coel Hellier:

Yeah not so sure, I think it needs to be much higher than 40% to have a real impact.
Btw it's actually, theoretically, quite enforceable, as most of the wealth is stored in urban real estate, and people die normally only once in their lifetime, so it's not too costly to collect properly.

In reply to RomTheBear:


Until recently I hadn't realised that far from being a desirable ideal, 'meritocracy' was originally conceived as a dystopian satire by Michael Young, one of the architects of the Open University.

https://en.wikipedia.org/wiki/The_Rise_of_the_Meritocracy

Apparently he wrote it to illustrate why selective education was a bad thing but everyone else seemed to think it seemed quite a good idea. A bit like racists liking 'Til Death Us Do Part'

Interesting R4 programme about it:
http://www.bbc.co.uk/programmes/b08lgq9n

In reply to RomTheBear:



There are tax incentives to share business ownership but they go to the employee not the employer. Rather odd when you think about it. Of course there are good business and ethical reasons for doing so and arguably the tax incentives reduce the value that needs to be passed over. However the whole business of employment related securities is so fiendishly complicated that it's rare to meet an employee who understands what they're being offered.

And this dramatically reduces the effectiveness of the policy. Some simplification would be welcome.

In reply to BnB:

I've always admired the Timpsons profit share method and their ex offender policy. But as I don't personally know any employees it's hard to know exactly how well it works in practice. The company is doing ok and could easily be floated but he refuses.

In reply to summo:


They've been in public ownership in the past and also owned by private equity but the Timpson family has come to the conclusion that the firm is better off in their hands. I very much doubt this has as much to do with profit as it has with extending "the family" to include all their employees. How Philip Green gets a knighthood and John Timpson does not, well, it beggars belief.

In reply to BnB:


Indeed. Probably because he is giving money to employees not to either of the two biggest political parties.

In reply to The New NickB:



Hahaha. All the above contribute to shareholder value in anything other than the very sort term. So they are simply a breakdown of underlying factors.
You can step down of your horse.

In reply to ClimberEd:



Your argument falls down if you reverse the circumstances. Too often decisions are made that enhance shareholder value in the short term at the expense of employees, customer relationships, the environment, the company's reputation and, above all, the long-term well-being of the company. Philip Green's tenure at BHS would be a high profile and rather apt example. And, from my personal experience, I resigned from the board of a quoted company because of the undue emphasis on shareholder value at the expense of the company's long-term health. It paid shareholders a great dividend until its inevitable decline.

In reply to BnB:

>
Here's a thought. In many cases, as you suggest, the focus on short term returns often, for the reasons you list above, reduces long term returns. In more general terms, through their through their behaviour undermine the integrity and credibility of the market economy on which they depend. Thus damaging themselves. Why don't activist shareholders take legal action against directors for this?

In reply to Postmanpat:

As you're possibly aware there was a very interesting Radio 4 programme on this very topic broadcast today (conclusion shareholder value is dead). The iplayer link doesn't seem to be working at the moment, but maybe later. http://www.bbc.co.uk/programmes/b08zxd90

In reply to BnB:


My argument is that shareholder value enhancement is the legal requirement of directors of public companies.
The underlying 'bullet points' can contribute to this, but shareholder value trumps all.

In reply to ClimberEd:

Listen to the programme that I referenced above. My favourite quote is from the investment banker who, realising that he worked in a world where he might be sacked at any moment and asked whether he should possibly be investing for the long term, replied, 'Short term plus short term equals long term'.

In reply to Bob Kemp:



Do political parties only employ people that are strong party supporters or do they employ the best person for the job?