TaxPayers’ Alliance in ‘not totally wrong’ shock
When discussing economic inequality, we on the left need to be very clear about precisely what it is we’re objecting to. As I’ve said before, I have a vague plan at some point of writing an extended post about this, and one of these days I might get round to actually writing the damn thing. For now, though, I’ll settle for saying that it’s vitally important not to fall into the trap of saying (or seeming to say) that some people earning grossly more than others is intrinsically wrong. Economic inequality is a problem in practice, not in principle. There are any number of good reasons to oppose it – because we live in a world where some have less than they need to survive, because wealth buys commensurate political influence, because more equal societies are healthier, happier and safer – and when we’re talking about inequality, that’s what we need to talk about. If we don’t, we lay ourselves open to the usual rightwing crap about levelling down and the politics of envy.
Image: lizjones112/flickr
With all that said, it is indisputably a serious problem when those at the top earn hundreds of times more than those at the bottom. And that remains true regardless of who it is that’s paying the overly generous salaries. So when the Taxpayers’ Alliance complains about senior public servants being paid too much, we should acknowledge, as Clifford Singer does, that they have a point. They may be a bunch of disingenuous free-market fundamentalist wankers, (see ‘What’s wrong with the TaxPayers’ Alliance?’ from the homepage of Singer’s site) but they’re still right to point out the obscenity of Adam Crozier daring to try and gut Royal Mail in the name of cost-cutting ‘efficiency’ when he’s paid £1.3 million a year. Of course, as Singer argues, the TPA’s real motivation for this campaign is undoubtedly to undermine popular support for the public sector as a whole, but merely pointing this out isn’t enough. Nor is it particularly persuasive to try and put a positive spin on the figures, as Singer also tries to do – the fact that some of the ‘public servants’ are actually the heads of nationalised banks serves more as a reminder of Brown and Darling’s craven failure to control the pay and bonuses of said bank executives than anything else.
A better response would be as follows: First, we should ask why the TPA is so exercised about high pay for senior public servants but not about the same issue in the private sector. Surely most people would agree that when the TPA’s John O’Connell says ‘Executive pay in the public sector is completely divorced from the reality of Britain’s fiscal crisis’, the words ‘in the public sector’ could perfectly well be omitted? Now, obviously the TPA would give to that the standard classical liberal response that the money that goes towards public sector pay packets is obtained by coercion – through taxation – while money in the private sector is obtained through voluntary transactions. That’s bollocks for various reasons: there are billions in taxpayers’ money currently propping up the un-nationalised bits of the financial sector, any number of massive corporations are paid billions in taxpayers’ money from local and national government contracts, and the ‘voluntary’ nature of plenty of commercial transactions are pretty dubious (if you live in a small village where the Tesco Extra’s the only food shop for 50 miles, in what sense are you ‘choosing’ to spend your money there?) But, bollocks or not, let’s accept it for the sake of argument. Now let’s think about why public sector high-ups are paid so much. Part of it is probably just good old-fashioned greed on the part of those getting the ludicrous salaries, but that’s far from the whole story. Another major factor is pretty likely to be that the public sector doesn’t exist in a vacuum – it exists in a world where private sector pay for senior managers has ballooned in the past few decades (the blog post in that link is about the US, but much the same applies in the UK). In such a world, if you’re a public sector recruiter and don’t want all your experienced senior executives to defect to the private sector, you’d better pay them a sufficiently high salary to keep that from happening (assuming that public sector executives are more or less as self-interested as those in the private sector). If senior public servants’ pay was unilaterally lowered, it’s plausible to imagine that recruitment for those positions would get pretty difficult. The result? Worse public sector managers, worse management of public services, and worse public services. The TPA don’t give a shit if public services get worse, of course, but most people do. Cutting overly generous executive public sector pay is a laudable aim, but the most sensible way to achieve that is to control pay in the private sector too. And that’s a cause any decent lefty should be happy to get behind.
Reader Comments
good post.i always suspected the tpa of being a bunch of free-market mental cases.
the idea that taxation of private companies is unjust because it profits from private transactions is also bollocks as most economic transactions aren’t entirely private; i may sell you a car for a good price, and you’ll part with your money knowlingly, but the cost in pollution to everyone else isn’t factored into the price; and, companies rely on much public spending to make their money in the first place. they don’t pay for the roads that transport their goods around the place; they don’t pay for the entire education of their workforce either, the state usually picks up the bill. these are social and goods and the state should be able to tax you for using them.
@Jon – surely, then, you’re only talking about transactions which have demonstrable externalities? What about all the other transactions that are taxed?
@Owen, why is economic inequality not wrong in principle?
It’s wrong in practice because economic inequality ultimately leads to the accumulation of private capital, by which the whole system of inequalities reproduces itself, right?
But isn’t the disparity in individual earnings not just an epiphenomenon of this wider process, and therefore just as wrong in principle?
*Agrees with David Semple on all counts*
@david semple – good point. i think transactions with no externalities can still be justifiably taxed due to the fact that the people engaged in that transaction still benefit from the state, which needs funding (not just roads but also police, a justice system etc). i could also side with the mob and say that they can be taxed because the majority have voted to make it so. democracy can be fun like that.
@Jon, yes, you can cite all the business going on in a country as benefitting from the State functions – police, justice system, defence etc. Yet these are tiny costs compared to the largest expenditures of the State – social services, education and health.
Do these benefit the capitalist economy? Well, that’s an open question. But there’s a fair point to make (using your “cui bono?” reasoning) that if those responsible for the transactions being taxed don’t avail themselves of social services, state education or health, then they shouldn’t have to pay.
This is the difficulty of assigning the cost according to who benefits. The reality is that the Left (including myself) don’t care whether the measure we want benefits those paying the cost. You frame this as “the majority” in a democracy becoming a master-signifier, to borrow from Lacan/Zizek.
I frame it as an exercise in class power; these measures benefit the working class, who are the basis for all production and profit, therefore those who own production and profit should be made to pay.
There is also of course a basic utilitarian argument for equality: namely as your earnings increase the marginal utility you derive from evach pound decreases. Put another way if you took £50 off a millionaire and gave to a pauper, the increase in living standards experience by the pauper would outweigh the reduction in living standards experienced by the millionaire
Off on a tangent somewhat, it’s not so much the salaries of high level public servants going up that concerns me. Far more, is what I percieve as the widespread sense that delivering value for money in the services provided is just not a priority, but trying to justify as much funding as possible, to grow the size and budget of departments.
I’m not claiming this is a conspiracy or anything, just a culture that has spread in a somewhat memetic evolution kind-of-way, with the departments best at justifying extra money expanding faster than the others. And of course, it takes a brave civil servant to say ” Hey Guys, if we can do this in a more efficient way, there won’t need to be as many of us, and some of us will be made redundant. Let’s go!”
All of which increases the public spending, which then means more taxation, and taking money from people to fund it.
If that’s your problem, then it should be the new structure of the civil and public services that should concern you.
Privatisation simply results in private companies trying to grab more money from the treasury honey pot rather than each department trying to grab more money. At least the departments still directly employed by the government aren’t trying to profit out of being lying, thieving, incompetent bastards.
In response to Dave’s first post:
I’m not sure we’re really in disagreement, except with regard to precisely what counts as ‘in principle’. I’d argue that there’s nothing inherent in money that makes economic inequality lead to other forms of inequality – it’s an empirical fact about human societies that it does. What practical significance this distinction has on the policies we should adopt is probably pretty minimal.
In response to Reuben’s marginal utility point:
True in most cases, though there are exceptions. But that’s a point in favour of prioritarian redistribution, not egalitarian.
Dave, I quite agree with you, and I am appalled by Brown’s attempt to hide his horendous debt off balance-sheet by using PFI. Tho book-cooking cunt. Fiscal prudence my arse.