04 November 2013

Why A Minimum Wage/Living Wage Is A Sticking Plaster Not The Solution To Poverty Pay.

It is a good thing that Ed Miliband is talking about a living wage and pledging to use tax breaks as an incentive to employers who pay it. But it isn't going to be enough to address the root cause of poverty - a massive widening in inequality.

Sadly even well meaning employers cannot afford to subsidise the poor having to pay rip off rents, exorbitant debt fuelled house prices and the rip off prices of privatised monopolies. Not to mention the unnecessary taxes that hit poverty pay hard.

Wages can only rise as far as productive value will allow. There is some scope as many jobs pay below their true value. The Tory horror stories of mass job losses from having a minimum wage have proved false.

But equally we shouldn't be taxing people earning less than the living wage. What we should be taxing are speculators, whether builders who profit more from sitting on land than building on it or casino bankers and traders who do nothing socially or economically useful.

It is time for a land value tax and a financial transaction tax to largely replace the stupidity of taxing things we should be encouraging - i.e. jobs, especially as only the little people pay income taxes and corporation taxes.

And despite the media onslaught, we should also help those with little or no work. In the US, attacking the poor is so advanced that even working 80 hours a week to make ends meet is not enough to avoid a "lazy" tag. The ideology where only the individual is king of their rise or demise has to be challenged. It is the lazy system that destroys lives not lazy individuals.

A basic income unconditionally paid to all will remove the financial disincentive to work. Pay workers the dole and no-one loses by taking a job.

But most of all we need a massive public housing programme to address an acute shortage that now afflicts 100s of thousands but in 20 years will affect 10s of millions.

Ed Miliband is right to enter this debate and it is progress that it is on the agenda, but the solutions require more than just scratching the surface of pay.

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