Skip navigation

Tag Archives: middle income

Dear Brendan,

When it comes to Labour’s approach to the next general election, I disagree profoundly with you. However, let me be clear from the outset that in the next election I will vote Labour and then transfer to Fine Gael. I will do so for the reasons that you outlined in your Irish Times article.* It is very important not to risk what has been achieved. So, how then do I disagree with you? I disagree on a more fundamental level. I disagree with your political outlook – your view of Labour’s purpose in entering coalition. In brief and I don’t mean to offend, I find you unnecessarily liberal and insufficiently socialist.

You see three main reasons for Labour being part of a new government: i) that proportional to its strength in the next Dáil, Labour will push FG in a leftward direction mostly to do with tax relief and improving state services; ii) that Labour has a particular interest in increasing employment; and iii) that Labour will try to have the 8th amendment to the constitution rescinded.

With the possible exception of i) these three are not specifically socialist and could be championed by any half decent liberal party. Indeed if the tax relief is given to middle earners as “middle” is currently understood and if income relativities within state employment remain unchanged, none of the three is specifically socialist.

Before looking at the three in a little detail it would be right to say why liberal as opposed to left ambitions are just not enough. The first reason is that we’re talking about the Labour Party and if it doesn’t have explicitly left ambitions, it has very little purpose. It becomes a caring liberal party among a number of liberal parties all of whom exist to advance liberal ambitions. Secondly, if Labour doesn’t offer left ambitions to the electorate, left voters have no one for whom to vote. No leftist would be attracted to FF or FG and no decent person would vote SF.** There is a group of small left parties but they offer no more than protest. Indeed their function in Ireland is to act as a lightning conductor for unhappiness and dissent.***

Turning now to your reasons for entering government, when Labour talks in clichéd terms about tax relief for low and middle earners, it sounds like every other party in the country. This is because “middle” is not to be taken literally. In Ireland and indeed in Britain “middle income” includes the majority of the rich.**** I can say this because I regard the top 10% of earners as rich and their inclusion within “middle income” as a distortion of public discourse.

When Labour talks about expanding state services without expressing an intention to change pay structures within state employment, the party again sounds like every other party. Worse than that, it expresses an intention to maintain the practice of becoming rich – entering that top decile – through public service. It also shows disdain for those who object to rich public servants along with ludicrous pensions and for those who take seriously the notion that apart from a good standard of living, being a public servant is not primarily about maximising income.

It is hard to be critical of a Labour Party minister being enthusiastic about job creation. Indeed in present circumstances it might be hard to be critical of anyone being enthusiastic about job creation. That’s the point: everyone is in favour of job creation. Liberals are very much in favour of job creation; they call it trickle-down economics. You and every party member know that that creates inequality and that it would be quite simply evasive to say that redistribution and/or labour law must wait until near-enough full employment is reached.

Having opposed Labour’s involvement in liberal objectives, it might seem strange that I would support your ambition to rescind the 8th (“pro-life”) amendment to the constitution. Labour has, however, considerable history on this, being the one party right at the outset to refuse extreme Catholicism its demand to insert a ban on abortion into the constitution. Opposition to this and the sorry, cruel mess it created has been a feature of the Party’s recent history. That campaigning to delete the 8th amendment might attract liberal voters is a bonus but fundamentally it is the moral thing to do.

This amendment then should be the one point of contact between liberal Ireland and the Labour Party, a shared ambition.

What then of your two other ambitions? They are liberal and could be decent. The problem is that in themselves they support, if not promote, economic inequality, specifically inequality of income.

Labour could turn firmly left by stating a modest ambition to reduce inequality of income. This would also drive a left-right wedge into Irish political discourse and at the same time give voters who dislike the existing structure of inequality something for which to vote.

What then of coalition? Few journalists seem to realise that Labour cannot enter coalition without the approval of a full delegate conference. Regardless of what happens by way of voting pacts or suggestions, if the numbers after an election suggest a coalition which includes Labour, there will be negotiations to reach an agreed programme for government. In other words, journalists are failing to emphasise that Labour is precluded by its own rules from doing other than campaigning alone.

However, it is no longer credible to ask for voter support for a whole raft of policies and say that implementation will be proportional to whatever numerical strength the party achieves at election. Voters need to know in advance that if Labour enters coalition something particular will happen no matter how many or few Labour TDs are returned.

We are therefore talking about preconditions. They have to be few and focussed – and this is crucial: they have to be divisive.

The liberal one is already chosen: a government supported referendum to remove the 8th amendment from the constitution. Alone that’s neither sufficient nor leftist. The problem with the other ambitions, remember, was inequality. A second pre-condition should be a programmatic reduction – year on year over the lifetime of a government – of inequality of income.

There’s no reason to be side-tracked in controversy over measurement. Of course there is a number of measurements of inequality from which to choose but let’s not mess about; we all understand the basic objective.

The reduction demanded cannot be big or coalition could be refused by any liberal partner. Each year’s target for reduction will have to be modest. The point is to set Ireland on a radical new path to reduce inequality of income, to make the totality of government policy subject to this modest ambition, to place income inequality at the core of public discourse, to divide Irish society on the question of inequality and to give socialists and mild egalitarians something for which to vote.

Brendan, I’m not dismissive of this government’s achievement in restoring a liberal economy. I’m very aware of the threats to that progress. I’m not opposed to coalition; on the contrary I see it as the only route to leftward reforms. However, it’s time now to set out on that route: nothing revolutionary just a noticeable change in direction.

_______________________________________

* http://www.irishtimes.com/opinion/brendan-howlin-labour-and-fg-can-provide-state-with-vital-stability-1.2342504?fb_action_ids=10206995868311751&fb_action_types=og.recommends&fb_ref=.Ve1SQV6jS3M.like

** This might seem merely provocative. That is not the intention and I will argue it at length in a later blog.

*** Lightning conductor is an apt metaphor because these parties function along with media, activists and advocate groups to attract and conduct dissent harmlessly to ground, and maintain the structure of inequality.

**** https://colummccaffery.wordpress.com/2009/10/09/middle-income-and-a-distortion-of-public-debate/

Advertisements

Have a look at this article by Gene Kerrigan: http://www.independent.ie/opinion/columnists/gene-kerrigan/dirty-little-secret-is-that-those-at-the-top-feel-no-pain-29618475.html Comments on it are now closed. However, while comments were invited I attempted three times to post a comment. Each time a system message appeared to say that the comment had been received but it was never cleared for publication. There’s a small part of my character that is flattered by being censored. Here’s the comment that the Indo wouldn’t permit under the Gene Kerrigan article.
____________________________________________________________

This article is of a type. It is conservative behind a veneer of leftism. It attempts to limit “rich” to the top 1% and this allows the majority of the rich, say, the top 10% or perhaps the top 20% to hide. They can even pose alongside the poor as fellow victims of austerity and claim to be paying more than their “fair” share.

The article manages to ignore its own data. Have a look at this:
“In the period 2002-2009, the top 10 per cent of earners took 35 per cent of the income.

In 2010, according to the Central Statistics Office, the lowest-earning 10 per cent took a 26 per cent cut in disposable income. Middle earners were cut by 12 per cent. The top earners got an 8 per cent increase. This isn’t because they work harder.

Among the top 1 per cent, just over a quarter of their income comes from work, the rest comes from capital. Over the past 30 years there’s been a shift, with a higher and higher income share going to capital – rents, shares and bonds – and an ever-decreasing amount going to labour.”

Notice some features here which are typical of this type of writing: i) The top 10% with 35% of the income who are mentioned first, suddenly disappear. ii) “Middle earners” appear and they are presented as hard done by. (“Middle” is the hidey hole of the majority of rich people: https://colummccaffery.wordpress.com/2009/10/09/middle-income-and-a-distortion-of-public-debate/ ) iii) The trick is completed not simply by reducing “rich” to the top 1% but by saying that their income is suspect in contrast to hard-working rich people who choose to label themselves “middle”.

What’s going on here is that a conservative argument is masquerading as progressive. Essentially what it is saying is that if we could just soak the elusive 1%, the rest of our structure of inequality could be adequately financed in a “fair” way (https://colummccaffery.wordpress.com/2012/09/18/fairness-has-become-the-conservatives-shield/ ) and the vast majority of rich people on multiples of the minimum wage or indeed multiples of the average wage could continue to enjoy their relative advantage. Indeed, if the top 1% manage to evade controls, nothing at all should be done about income inequality because it wouldn’t be “fair” to take from some rich people unless all similarly rich or richer people were tackled at the same time! (https://colummccaffery.wordpress.com/2013/01/03/how-concerned-are-you-about-horizontal-fairness/ )

Here’s a motion which twice failed to get the support of ordinary members of the Labour Party and so didn’t make it onto the agenda for Conference 2012.

As a first move in establishing a priority list for current public spending, Labour marks the maintenance of public sector incomes above 100k p.a. and public sector pensions above 50k p.a. as the lowest priority. That is to say, in the event of any further reductions in public spending, Labour identifies the first cut:  a 100k p.a. income ceiling for public sector workers and a 50k p.a. ceiling on public sector pensions.

Here’s the argument:

Let’s be clear

This proposal has nothing to do with taxation. If taxes were raised or if a new rate of tax were introduced and if the money so raised meant that there would be no need of further cuts in public spending, then this proposal would be redundant. The point here is this: if there are to be cuts, what area of public spending is least important, what should be cut first? This proposal answers: if there are to be cuts in public services and/or the incomes of relatively poor people who depend on the state, then those cuts should be considered only after the incomes of the rich who are on the public payroll have been capped at an affordable and sensible but generous level.

 

The immediate background

Leaving aside revolutionary and populist posing, the bulk of expressed opposition to cuts in state spending has involved particular pleading.  Then our media – in making no demand that something constructive be said – have compounded the problem. Journalists and presenters fail time and again to ask the most obvious question: “If there must be cuts and you feel that ‘X’ has to be maintained, which areas of spending do you think are less important than ‘X’ and should be cut first?” The lack of stated priorities has ensured that cuts are spread and this has tended to copper-fasten existing deprivation and inequalities.

I have been arguing on FaceBook and elsewhere that the rich among our public servants are the least of our concerns and that income (to include pay, bonus, overtime, allowances etc.) and pension ceilings should be introduced before any other cut. While there has been negative reaction, there has also been support and some of the support has been to the effect that the proposition should be put to a Labour Conference.

 

A fundamental question for Labour at this time

Because revolution and populist posing must not feature in Labour thinking, a major and significant question looms, and it demands an answer now: What remains of Labour values when state spending must be cut? Two very old and basic Labour tenets begin to harmonise and form at least part of the answer. Firstly, while equality is central to Labour’s ambitions, the Party has been slow to emphasise the most crucial and controversial aspect of equality: equality of income or – at least – reduced inequality of income. The time is ripe to put that right. Secondly, Labour has always sought to defend the meagre incomes of the poor. Never was this more urgent.

A pay ceiling on public service incomes and pensions would

  • accept that money is tight and that we cannot have everything but that some spending is vastly more important than others, and lay down a marker that a start has been made to setting priorities for Irish public spending;
  • make savings in public spending such that vital services and the pay of poor and middle income public servants could remain untouched;
  • reduce the bizarre and shameful spectacle of rich people beside poor people on the public payroll;
  • place inequality of income on the public agenda;
  • make it clear that Labour in bad times and in good times is serious about reducing inequality.

 

Arguments against

There are of course arguments against. Actually there are basically just three arguments against:

i)             The fairness argument

ii)            The brain drain argument

iii)           The Croke Park argument

 

i) The fairness argument says that public servants should not be singled out and that nothing should be done unless all rich people are tackled. In a sense this is a “what about?” A “what about?” is very much a conservative position which hides opposition to a change by diverting attention to other – often larger – issues. In this case, limiting the income of rich public servants is opposed by diverting attention to the income of other rich people. In another sense it is a crazy distortion of the notion of equality because what it says is that it would be unfair to reduce the incomes of one set of rich people unless all rich people were similarly treated. That is to say, it is a demand that all RICH people be treated equally!

It needs to be emphasised that it is public money that is in short supply, that cuts are happening now and that clearly public sector pay can be cut. In other words, there is neither time nor compelling need to be concerned about other rich people.

ii) The brain drain argument takes two linked forms. It is said that a reduction in top pay among public servants would result in a flight of talent abroad or into the private sector. It is certain that some may flee. However, the idea of a mass flight is fanciful. There may – just may – have been a time when a dissatisfied public worker could walk and pick up a job in the private sector. That certainly is not the case today. Moreover, this is a familiar threat raised by the rich from time to time. Remember when bank bonuses had to be paid or there would be a flight of talent? It didn’t happen.

 

Another form of the argument suggests that a ceiling would prevent the recruitment of exceptional talent. This rests on an abuse of the word “exceptional”. A pay ceiling would not rule out exceptional pay for an exceptional talent in exceptional circumstances. It would control the income of numbers of ordinary, unexceptional, rich workers.

iii) It is pointed out that the Croke Park Agreement rules out a pay ceiling. This is true. However, it does not rule out talking about a pay ceiling. Moreover, the extent to which the CPA guarantees that a group of rich people stays rich needs to be discussed and addressed.

 

Summing up

  • Let’s face it: 100k or a pension of 50k would appear a king’s ransom to the ordinary people who are made to pay these rich people or whose services are cut to maintain them. No one could seriously argue that these ceilings are not generous.
  • A public servant or potential public servant so in thrall to money that they will not serve unless paid more than 100k is clearly “the wrong stuff”. Get someone who understands the meaning of public service!
  • We live today in the kind of times so strange and fraught that a proposal once thought unimaginably daring becomes ordinary and feasible.
  • While in government in a time of crisis and austerity, Labour desperately needs to rediscover its radical voice and fundamental tenets.
  • It is possible without upsetting the troika too much to use what sovereignty we have left to make a start on a less unequal society.

Leaving aside mathematical quibbles, in common speech we normally associate the middle with the average or thereabouts. However, when it comes to talking about income, the use of “middle” becomes so strange that it distorts public discussion.

Someone on, say, three times an average wage cannot sensibly claim the term “middle income”. The meaningful term is “high income” or “rich”. Those on greater multiples can be described as “very rich”, “filthy rich”, “obscenely rich” etc. etc. but NOT “middle income”.

Now, some rich people lay claim to the term “middle income” because they spend their money in a praiseworthy way (e.g. school fees, their home etc.) leaving little to spend on, say, entertainment and holidays. Such spending decisions might attract the terms, “prudent”, “sensible”, “family oriented”, but they have no bearing on categorization of income.