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BOE Chief Economist Says Britons ‘Need to Accept’ They’re Worse Off
- sunshinerag 3y agoHe would know, considering the banks complicit in debasing the pound aggressively
- badcppdev 3y agohttps://archive.is/0swGu https://archive.is/0swGu
- shadowpho 3y ago>A tight jobs market and strong corporate pricing power means that firms can pass on costs in higher prices and workers can demand wage increases, fueling inflation further Maybe it's better to curb the strong corporate pricing power instead?
- deleted 3y ago[deleted]
- bioemerl 3y agoWhen demand is higher than supply there will always be strong pricing power from the supply side, you can't fix that with price controls, you'll end up with shortages.
- quadrifoliate 3y ago> Pill was more direct. He said there’s a “reluctance to accept that yes, we’re all worse off and we all have to take our share.” They should look into taxing the various British Overseas Territories which usually top lists of tax havens across the world [1]. I am not sure if the regular British public is just ignorant of the existence of these, or prefers to run with the limited set of facts that their Conservative government (now in its 13th year) is presenting to them. The Brexit shitshow seems to suggest the former. ---------------------------------------- [1] https://www.theguardian.com/business/2021/mar/09/uk-overseas-territories-top-list-of-worlds-leading-tax-havens https://www.theguardian.com/business/2021/mar/09/uk-overseas...
- ChuckNorris89 3y ago>"we’re all worse off and we all have to take our share" Who is this 'we'? Only the poor and the middle class are worse off and being squeezed by the CoL. The big industry players, ruling, upper and asset owning class are all making bank. Do they think people like Tony Blair or Lord McMansion are affected that food, electricity and gas are all up? There is no 'we' here.
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- tleilaxu 3y agoGiven that the current prime minister is a non-dom himself… seems rather unlikely to be in his or any of his friends interests.
- samirillian 3y ago"Have you tried kill all the poor?" https://youtu.be/owI7DOeO_yg https://youtu.be/owI7DOeO_yg
- vibrio 3y agoI was expecting to hear Jello Biafra singing on the other end of that link.
- boeingUH60 3y agoGood karma for a former colonialist empire…anyways, their ceremonial king is a billionaire while the average citizens bear the grunt of the decline.
- rajin444 3y agoIronically enough, one of the strengths of a monarchy is a good king could absolutely prevent this and set the empire on a path to enriching the British populace. And if not they run a high risk of losing their head. Nowadays we’ve all embraced democracy (oligarchy run by demagogues) and it’s a lot harder to hold anyone accountable. Everyone knows the British monarch is “powerless”, so they quibble amongst one another over whos political party is to blame.
- fullshark 3y agoA monarchy is more responsive to the needs of its citizens than a representative democracy? I realize we've all become jaded cynics over the western flavor of republic recently, but history and even present day monarchies show this to be nonsense.
- version_five 3y agoI tried thinking through the upstream assertion, and I can't say I believe it. But I am curious about how the accountability structure of a feudal system rolling up to a monarch compares to modern democracy. To some extent isn't each level still accountable to the levels below it - a peasant uprising will be the downfall of a noble, and an aristocrat uprising will be the downfall of a king. It's not immediately clear either that this would be worse than whatever system we live under, which in most places has no accountability and where democracy (voting) is mostly a theatrical exercise that changes nothing.
- allemagne 3y agoIt's immediately clear to me that I'd rather not have to storm the bastille every time the Baron's nephew embezzles money from the city government. My neighbors and I just want someone competent in charge of local zoning policy. I'll take my theatrical vote over someone explicitly above the law theatrically pretending to give a shit.
- erehweb 3y agoJohn Authers, a Bloomberg columnist, discusses this a bit in https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inflation-boe-s-chief-economist-fails-find-the-right-words https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inf... and thinks his friend got a bit of a raw deal here in the public reaction. If you like Matt Levine's columns, you might find Authers's newsletter worth a look.
- legitster 3y agoI now really surprised how people are biting into the bait without looking at the context. This does not at all indicate the "blame the poor" meaning that people are putting on it.
- jarym 3y agoThank you, that does set some nice context.
- fmajid 3y agohttps://archive.ph/r8E4M https://archive.ph/r8E4M Considering Pill's boss Andrew Bailey was excoriated for making the exact same point last year, Pill can't claim he had no idea he would be misinterpreted. Or perhaps he is just as stupid as his boss (an incompetent buffoon who failed at the FCA but failed upwards because he was the only Brexiteer the Tories could find for the job). This wouldn't be out of character for the upper reaches of the British establishment. Authers' loyalty to his classmate is admirable, unlike the Cambridge alums who turned a blind eye to the Cambridge Five, but the incestuousness is a good part of why the UK is so badly misgoverned. As for how ordinary people can take action beyond striking for higher wages, one example is how they are switching to hard discounters Aldi and Lidl for their groceries (food inflation is at 17%). Luxury retailers like Waitrose or midrange ones like Tesco and Sainsbury thought, incorrectly, they were above the fray and tried to preserve their margins. The customers they have lost to Aldi and Lidl will not be coming back, even after inflation subsides.
- jarym 3y agoFunny, central bankers advocating for wage price restraints are in effect calling for price controls (on labour). Except when anyone calls for price controls in any other context (goods, commodities, services) they are generally shot down by mainstream economists because they create market distortions which eventually leads to unwanted side effects. Odd little disparity there.
- legitster 3y agoNo where is he quoted advocating for wage controls. If anything his actual conversation is explaining why changes in wages do not impact inflation.
- jarym 3y agoWell he isn't directly but: > someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. Coupled with prior remarks from the BoE governor: > In the sense of saying, we do need to see a moderation of wage rises, now that's painful. I don't want to in any sense sugar that, it is painful And add to that politicians using that (amongst other things) to deny pay rises for healthcare workers who've had a real-terms cut to wages of 25%+ over the past decade (when inflation was supposedly under control yet easy money was pumping risk assets like stocks). Together, it all paints a picture of: hey we can't control prices for food and energy, and because of inflation we have to increase taxes, and also we can't pay you more, oh and because we're going to support energy prices we will also have to tax you more. In totality, one should understand the frustration felt here is a culmination of the inequity that's been slowly building over a long time. I'm lucky, I'm relatively well off but I don't want to live in a system that screws (or at least appears to screw) the least-well off at every turn.
- justsee 3y agoPill (BOE economist) is advocating for wage price restraints, which is what the parent observed. The parent then said it is in effect calling for price controls on labor, which is true. Pill is then recorded as saying wages do contribute to inflation: > "He said that firms and workers are in a “pass the parcel game” that’s causing more persistent price pressures, contributing to the UK’s main inflation rate remaining stuck in double digits." The final parent comment captures a very common line in corporate media messaging: which is that wages always need to be suppressed lest inflation rear its head, but corporate profits never should because that is market distortion and not related to inflation.
- WalterBright 3y agoAll that free stuff from the government is expensive. "the British people need to accept they are poorer instead of seeking to claw back a historic drop in living standards after a jump in inflation."
- dukeyukey 3y agoAlthough the UK has an unusually low tax-to-gdp ratio compared to its neighbours, so it's probably not that.
- WalterBright 3y agoDeficits are paid for with inflation.
- dukeyukey 3y agoAnd the UK deficit is comparable with it's neighbours.
- WalterBright 3y agoThey have inflation, too.
- gghhzzgghhzz 3y agoIt's not expensive. It's expensive if you don't spend on good quality public services. Without the NHS then there would be no economy. Without social care then people are taken out of the economy to care for relatives. Without child care then parents can't afford to go back to work. The main issue is that an every increasing proportion of money spent on services ends up in profits for private companies, and in the administration of that profit and contracts. If money went directly to public sector workers, then the economy would boom.
- WalterBright 3y ago> Without the NHS then there would be no economy. There was a British economy before the NHS.
- moremetadata 3y ago[dead]
- legitster 3y agoA lot of commenters are obsessed with just finding money. You can't eat money. You can't build a house out of it (advisably). Money is only as valuable as the amount of stuff in an economy. More money with the same amount of stuff is just inflation. The Pound does not need more inflation. Money and trade are only valuable in so much as they aid exchange and efficiency. On a real, practical-level Brexit made England materially poorer. There are a lot of export commodities they no longer have a market for. And there are a lot of markets they can no longer import from cheaply. You can do what you want to make the distribution more equal, but it can also be true that the pie is smaller for everyone.
- krona 3y ago> There are a lot of export commodities they no longer have a market for Exports to the EU hit a record high in the summer of 2022, which ironically, was mainly because of commodities. Who'd have thought? https://www.ft.com/content/47fe0d2a-6e87-4f30-8212-3b37f7f099e4 https://www.ft.com/content/47fe0d2a-6e87-4f30-8212-3b37f7f09...
- eightysixfour 3y agoI can’t access the FT article - is that in inflation adjusted/real terms? I know that in 2022 as a whole their trade deficit with the EU broadly increased in size and percent.
- guardiangod 3y agohttps://www.export.org.uk/news/631720/UK-trade-deficit-with-EU-hits-record-high-according-to-latest-ONS-data.htm#:~:text=The%20UK's%20trade%20deficit%20with,in%20imports%20from%20the%20EU https://www.export.org.uk/news/631720/UK-trade-deficit-with-.... In total, imports from the EU, excluding precious metals, hit £82bn whilst exports to the EU were valued at £49.2bn. This represents an increase of 7.5% in imported goods and a decrease of 6.1% in exports. The UK’s total imports of goods decreased by £3.5bn (-2.1%) in Q4 2022 compared with Q3. Goods imports from non-EU countries fell in this time period (10.4%). Exports of goods over the same period decreased by £4.5bn (4.5%), with exports to both the EU and non-EU countries falling.
- acd 3y agoWe should welcome back Brittain to the European Union. To lessen inflation.
- bottlepalm 3y agoWe should get the band back together welcome it as a new state.
- gghhzzgghhzz 3y agoPeople are happy to ignore the reasons why the Brexit vote happened in the first place, or why similar anti-establishment votes keep happening throughout the western world. There are systemic issues that no main stream political project seems capable of addressing, it's pointless to simply remove some trade barriers again to paper things over, and then pat ourselves on the back and pretend they are being solved. Brexit has exposed some of those issues, and made it clear where the responsibility lies. by exposing them and focusing attention on them it has created a real opportunity to address them, although I imagine that opportunity will be missed.
- theGnuMe 3y agoYou say there’s fundamental reasons but don’t state the actual reasons. What are they? I’m gonna go with nationalists who don’t want foreigners moving to the uk to take our jobs.
- bagacrap 3y agoWell, no one wants to lose a job. Can't fault them for that. Globalization, technology, loose monetary policy all affect different socioeconomic strata differently. I think the fundamental issue is that not everyone in society is making the same progress.
- gghhzzgghhzz 3y agoThat the economic and political system didn't deliver for a large segment of people. They felt increasingly poorer and less secure. They were offered a big button by they government with a large '** you!' written on it, and they pressed it.
- nine_zeros 3y agoHow about they start the "acceptance" at the BOE. Cut their salaries. Then, cut all MP salaries. Then, cut government employee salaries. Then, tax the wealth of the rich (and not just income). When these noble people "accept" poverty themselves, that ought to bring inflation down.
- robocat 3y agoI think similar solutions have often been tried in the last decades in other countries and often fail. I’m thinking Zimbabwe (although I admit I am incredibly ignorant about the history there). Why do you think everyone would be better off after following your suggestions?
- nine_zeros 3y ago> Why do you think everyone would be better off after following your suggestions? When inequality is lower, economy booms.
- nh23423fefe 3y agoYou've written this like an implication but you forgot the reasoning.
- Symbiote 3y agoGovernment employee salaries are often below equivalent private salaries, and would be better being raised in many cases.
- simonbarker87 3y agoI have an unpopular opinion, MPs aren’t paid enough. For the level of public scrutiny and the responsibility/power they hold it is underpaid. A mid level engineering (not tech) manager can earn the same outside of London and most senior devs will be on around the same. If it were paid better then it would attract better quality candidates and reduce the desire to “earn” money from other means, and reduce the proportion of people coming in who are already wealthy. Government employee salaries are also generally lower than the private sector do again, if you want to attract the best and brightest then pay more
- lockhouse 3y ago"The Great Reset"... back to medieval serfdom.
- rnk 3y agoInflation is a worldwide thing, along with increased prices for oil and gas. But it doesn't seem like anybody is blaming Brexit much there?
- jacooper 3y ago> So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share, to try and pass that cost on to one of our compatriots. That pass-the-parcel game is generating inflation and that part of inflation can persist. How much bargaining power and pricing power exists for different actors in the value chain in the corporate side and in the labor market? That's the actual quote https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inflation-boe-s-chief-economist-fails-find-the-right-words?leadSource=uverify%20wall https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inf...
- monero-xmr 3y agoYou can only financially engineer and money print your way for so long. Once living standards and real wages fall far enough, UK costs will get low enough to attract foreign investment again. A very educated workforce that speaks English with a good time zone will eventually be attractive at a low enough price. The problems fall squarely on the British themselves, as it always does in democracies. They elected representatives who then made choices reflecting the collective will. Scape goat all you want but the answer is actually producing things of value that people around the world want to buy. Other than that it’s shell games.
- stooart 3y agoUnfortunately with first-past-the-post, and the likes of Murdoch and Rothermere owning our media, democracy is not functioning at all well.
- monero-xmr 3y agoSee this is the exact problem. Is the news causing society to decay or is the media a reflection of society, serving the news people want? I don’t buy the “media and rich elites brainwashed society” myth. It’s a modern take on “the Jewish money men caused all the problems” that was a frequent trope in the past. British voted and got what they deserved, period. Now they need to elect new leaders with new ideas.
- carlosjobim 3y agoGive a regular person the opportunity just once to participate in the corruption schemes that the elites use to sustain themselves and that regular person wouldn't even blink before accepting. The average person has become so spiritually impoverished that he or she will participate in corruption and unethical conduct without even realizing what they are doing is wrong. "Hey, I get some money, so that has to be good!". People sell themselves for as little as $500 in corruption money. Elites haven't reached their spot just by themselves, they rely on massive tree-like corruption networks, where the leader of each branch gets to benefit more the more people they have under them. In a given society you have a small percentage of people completely morally corrupted, a large majority who are just ignorant in every regard, and a handful of people who actually gives a damn - about anything.
- Mandatum 3y agoWeird to see a news article pop up here after seeing it in Murdoch-run press and TV. It's usually the other way around but this time it was more than 24 hours.
- saeranv 3y agoI have a couple of naive questions about this, that hopefully someone with more knowledge can answer: 1. If the central problem is the price of imports (i.e. natural gas) outpacing exports (service sector), is this problem a downstream effect of Brexit closing off valuable markets? This seems obvious to me, but I don't see any mention of Brexit as a causal factor in the BOE Chief Economists comments (perhaps I missed it), and so am wondering if I'm overestimating Brexit's impact on the UK economy. 2. If Brexit is a relevant, and significant factor, in theory, can post-Brexit trade negotiations increase the export sector to offset this? 3. Assuming the natural gas is primarily used for building energy, is it easy for the UK to transition to alternative thermal energy sources (i.e. switch to electric generated from non-gas sources, heat pumps)? I've always thought of the UK as a very efficient user of energy, like most European countries, due to it's high density and stricter efficiency standards relative to the US and Canada, and am surprised the natural gas price increase seems to be framed as a relatively permanent problem that the UK is powerless to stop. To be fair, I suppose a huge challenge is the older building stock can't easily use lower capacity electric heating, or heat pumps due to the historical reliance of thermal mass over insulation, but there are established ways to fix this, and shouldn't be an issue for modern buildings.
- theGnuMe 3y agoAhh the ever incredible British optimist.