State run bureaucracies are good
for the economy.
Over staffed and not totally
efficient state supported or nationalised industries are good for the economy.
Government supported jobs are
good for the economy.
At this time and especially with
a Labour government state sponsored jobs should be on the rise. But for some
reason the so called #Labour government are following Tory ideology and are
cutting jobs when they should be increasing them.
Here's why
and how... (this is a
Keynesian economic argument)
If you are like me your tax
burden is between 70/75% of your income. Income tax, national insurance and VAT
comes to about 50% of your income and every licence and 'duty' is a tax. When
you get to earnings of about £90K/annum and above your tax burden starts to
reduce.
Just an aside to the main
argument. Higher earners have less tax burden but they don't spend
proportionally more. Yes they have bigger houses and cars and holidaze etc but
- and this is a big but - they are able to save.
When the economy is not doing well as it is just now, savings are bad news and should be taxed, thus forcing the affluent to spend.
With the tax burden for most employees being around 75% if the government
directly employs a person, most of their wages goes straight back to the
government so the real cost of employment is around 25% of their wages.
If a person is working in a
nationalised or government supported industry and the government decides to
employ more people than is strictly necessary the percentage of extra cost to
the government is less than the notional 25% because there's a form of marginal
efficiency. The person is contributing towards the overall operation of the
organisation, corporation, division etc. There is a balancing act in that there
can't be too much additional staffing so as to not give people enough work to
do.
Government sponsored and
nationalised industries can and should be overstaffed to a varying level
depending on the state of the economy to mop up unemployment. calculations can
be done to get the right balance.
This happened to me and thousands of others when I was a Hawker Siddeley apprentice.
The
Thatcherite (neoliberal) counter argument
I know Thatcherism is now called
neoliberal but I prefer the term Thatcherism because it is a nasty
ideology The term Thatcherism fits how nasty this ideology is to ordinary consumers like you and me.
Thatcherites argue that state
supported and nationalised industries inefficient and they should be privatised
and the excess jobs be absorbed in the wider economy.
Fair enough you might say
because under this argument the savings in job losses should mean lower prices.
But - instead of lower prices the savings in job cuts went into higher profits.
Great for shareholders and top bosses but no good for you me or the wider economy.
It should be recognised that Thatcherism
has failed because it has led to consistently excess profits combined with
lower wages and a reducing standard of living.
In due
course this ever reducing standard of living will mean consumers can’t afford to spend
and this’ll bring an economic collapse. I don’t think this is far off!
Bureaucracies
are good for the economy.
The beauty of a bureaucracy is
that it can become a self-fulfilling, self contained entity. Yes inefficient
from a strict economic aspect but...
It mops up
jobs!
Especially graduate jobs. This is how a bureaucracy works.
- someone instigates a
report/review/research or similar (a project)
- a group of some sort is recruited to
ascertain the feasibility and then monitor the project.
- a group is recruited to carry out
the project
- the project needs to be assessed modified
added to changed and usually grown in size.
- a leader and another group is recruited
to act on the project
- various admin and support staff are need
to support all this work.
- some of the work needs to be outsourced.
Yes I know it means people seem busy, and can even
suffer workplace stress when they are often in effect busy doing (next to)
nothing.
And on it goes.
It is inefficient.
But in reality the bureaucracy will do some good, the government is only paying about 25% of each person's wages and the level of job mopping can be calculated to suit the macro (wider) economic conditions
In this way government sponsored
jobs over and above those strictly necessary and bureaucracies are good for
you, me and the economee.
