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January 11, 2023



" where will these workers come from? The answer used to be simple: migrants and the dole queues"

That answer only became the default in the Blair post-EU accession world. I can just remember a capitalist system where, if you couldn't attract workers at £10 an hour, you raised your wages, and if you couldn't afford to raise wages you went out of business. Think it had a name "creative destruction".

Only post-2005 has the notion become rooted that "my coffee shop needs staff" and that it's HMG's job to import them.

This has happened in the past, of course - 60s mill-owners in Lancashire and Yorkshire, metal bashers in the Black Country, hospital recruiters in London, didn't want to pay First World wages so imported Third World people. The mills still shut and the foundries still closed, but the people remain.

The old fashioned way of getting new workers was making it possible for young men and women to get together and raise families, something so obvious that it didn't have a name, until someone coined Affordable Family Formation.

But... house prices and rents are the things you need in place to start a family.

28 used to be the kind of age when young people would settle down... now you have people with postgrad degrees sharing a house like students into their late 30s.


"My daughter recently completed an M.Sc. in user interface design, and quickly got a job at a major educational publisher. She's on £28,000 a year, can't afford to live in the city where she works (but she mostly works remotely, so she lives with me) and her student loans amount to over £40,000."

Perhaps we need to sort the situation where employers offer wages that employees can't afford to live on. Late 20s used to be the age when you bought your first house, not when you found you couldn't afford a rented room.


There's also the weird assumption that all workers are interchangeably the same. I'm not talking about things like training or education, I'm simply talking about aspects of personality etc.
For instance, you could employ me as a shop assistant, but it would be a very bad idea unless you wanted to actively discourage customers.

And this is merely a manifestation of a wider problem which can be traced directly to the moment "people" became merely assets on a spreadsheet. That applies to education, health care, the criminal justice system and so on, just as much as it does to employment. It's one of those flaws that's so big that it makes the term "the elephant in the room" feel inadequate.


I fear we are seeing a wider problem. We are entering a long period of stasis, no really good new technologies - apart from pharma and biosciences. I reckon EVs will plateau and make little contribution, fusion power will be a long way off. Semiconductor technology will get more difficult and expensive.

This is why the Americans seem to be retrenching and trying to limit the Chinese. There are few new goodies around and the US wants to have them. Europe is usefully hobbled by Russia and energy. Asia is still too chaotic. Pull up the drawbridge time. Which leaves the UK cut loose.

The UK's current employment problem is partly due to the foolishness of Brexit and partly due to everyone having a degree and wanting a degree-type job to go with it. But no such new degree-type jobs can exist outside of law and beancounting and medicine. The education system that delivered these degrees was based on a 1950s to 1970s model of employment. Now what sells is Influencer Studies and Harry & Meghan Studies.

Meanwhile we do indeed have more lawyers and accountants/capita than even the Americans. Clever people all and quite likely not paying much tax either. Bully for them, that is the new industry, no PAYE.

Solutions - take a chainsaw to all flummery, all but Charles can get a job and he can squeeze his own toothpaste. Our army has more horses than tanks - off to the pie factory with them followed by our useless tanks to the steel mills. Then scrap planning permission but ensure strict and enforcable building standards. And get a lot less fussy about who we will work with.


"I was looking for a job, and then I found a job"


I fear we are seeing a wider problem. We are entering a long period of stasis, no really good new technologies - apart from pharma and biosciences...

[ Forgive me, but this makes no sense. Simply look at the state of British infrastructure, hard and soft, and think of what it could and should be. ]


Notice that productivity in the UK has declined since 2007, which is of course what austerity unfortunately assured would happen:


November 1, 2014

Total Factor Productivity at Constant National Prices for United States, United Kingdom, France and Germany, 2000-2019

(Indexed to 2000)


November 1, 2014

Total Factor Productivity at Constant National Prices for United States, United Kingdom, France and Germany, 2000-2019

(Indexed to 2019)


«But where will these workers come from? The answer used to be simple: migrants and the dole queues.»

In a market economy, "The Markets" are supposed to adjust prices, like wages, to transfer resources from less useful to more useful productive activities, because resources are scarce. It is not the for the government to expand supply of workers or restrict the supply of jobs to make resources less scarce for "investors". But we don't have a market economy, but a rentier one.

«We need other policies: tax simplification; deregulation in some sectors and more regulation in others; nationalization; carbon taxes and Pigou taxes; worker democracy; cultural change to valorise care work; better financial education; and so on.»

A plurality of voters seem to think this is just COMMUNISM! and the policies we need are those to boost property prices and rents that are too low, as too many renters or buyers can afford their own room or live only 2 to a room.

«(The level of unemployment is not a sufficient metric here: what also matters are mismatches between demand and supply).»

One of the many things that noddy keynesianism and noddy liberalism has erased from political economy discussions is the difference between "general gluts" (all or nearly all markets have an excess of supply wrt demand) and "special gluts" (only some sectors have that). It is good that our blogger is hinting at that important but (deliberately) forgotten difference.

«For decades, we've thought of full employment as an ideal. Which in many ways it is: joblessness is a big cause of unhappiness.»

Actually for decades a large number of voters have thought of a tight housing market as an ideal. Which it is: for them taking 6 months to find a buyer or a renter for a property is a big cause of unhappiness.

The question is whether for a voter "the economy" is better when it takes 6 months to find a job or a place to live vs. 6 months to fill a vacancy or a tenancy,

For the past 40 years english politics have aimed to ensure that it takes 6 months to find a job or a place to live.


As penance this is almost on topic.

The young cannot get employment, and immigration was let Rip by Tony Blair (Prime-minster until 2007), but apparently we still have a Labour shortage.

In the last fifty or so years (1970-current), four factors mean the political elite could ignore the economy.

North Sea Oil (until the 2007).
Immigration - Import labour
Globalisation - Export Jobs.
Fictionalisation - Finance loots the economy (and Housing).

All of which immigrate the working class.

As their can't be a shortage of labour, perhaps the 'talk of a tight labour market' is an excuse to discipline the strikers and the working class in general, in the face of high inflation and corporate profit taking?

After all if the economic pie is not growing...the elite needs a bigger slice...


«As their can't be a shortage of labour»

An Economist could tell you that there is a shortage of labour as long as the price of labour is higher than the lowest cost of living and reproduction of workers. As long as workers are not collectively on the edge of starvation, have any free time, and are not living 8 to a room, they are exploiting their employers by profiteering thanks to a shortage of labour. Just as an Economist could tell you that there is a shortage of capital as long as interest (or profit) rates are higher than zero.

But employers don't even need the analytical power of neoclassical Economics to figure that out, they just look at "The Markets", and know that the global wage rate is well below £1/hour therefore as the UK wage rate is 10 times higher can only be due to a gigantic shortage of labour in the UK, of which UK workers take advantage to exploit their employers by extracting from them a huge surplus thanks to the coercive power of the state and trade unions.

Imagine this: you ask two tradesmen for a quote for improving your conservatory, and you get two quotes:

* Mr Wang from the other side of town quotes £60 and says that by working 12 hours per day he can get it done over this week in 5 days so you can enjoy your conservatory already the next weekend.

* Mr. Briggs from your parish quotes £800 plus pension contribution plus health insurance plus paid holidays, and tells you he will be working 7 hours a day not including short breaks, and that will take 2 weeks, and he cannot start for a month because there is a labour shortage and he is fully booked, and when you mention mr. Wang's quote he says that he lives in your same parish instead of the other side of town, and the local council backs him to maintain "standards".

Therefore Peter Mandelson argued as to New Labour that in "the urgent need to remove rigidities and incorporate flexibility in capital, product and labour markets, we are all Thatcherites now" because New Labour cared about social justice, to protect exploited employers from the greed of parasitic UK workers:

* Those “flexibilities in capital, product” to make employers free to move their capital to states with more social justice (e.g. Bangladesh), and freely import the commodities produced there.

* The flexibility in “labour markets” to help employers fight the huge exploitation by UK workers by hiring immigrant workers who only expect the global wage.

It may surprise some readers, but most employers are marxist to a fault, they just do marxism the other way round.


«discipline the strikers and the working class in general, in the face of high inflation»

Actually the other way round: the tool is high inflation, it is not the context, because this period of high inflation looks like a standard policy choice to discipline greedily exploitative workers, and thus also help them win the race to the bottom. Excessive wages compared to worldwide markets can be reduced via some policy alternatives:

* External devaluation: the national currency gets constantly devalued so local labour costs in nominal terms stay constants but in hard currency become more competitive. Places like Italy and Greece kept doing that, and so has the UK been doing for a long time too in a less flamboyant way.

* Internal disinflation (of labour prices): by way of triggering a recession, or by installing a government (like Pinochet's for example) keener on social justice for employers, wages, working conditions and additional costs like pensions and taxes can be lowered in nominal terms to become more competitive.

* Internal inflation (of consumer prices): by way of triggering temporary surge of inflation, while local labour costs remain constant in nominal terms, the cost of living rises making real labour costs more competitive. Among others housing cost inflation can be a powerful means to achieve that also in the long term.

The latter policy is what is happening in the UK, the BoE and Treasury seem to have planned 2-3 years of 10-20% consumer inflation to cut real UK wages by around 25-30%, with consumer inflation returning to 1-2% by the end of 2024, in time for the next general elections.

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