Government

Supermarket giant Tesco and revitalised high-street giant Marks & Spencer spent £67m and £66m on advertising last year respectively. If you combine their advertising budgets you are still a way off matching the amount of money this government has wasted in its own self-publication advertising in the past twelve months. They have managed to burn up £137m television adverts, radio stations, billboards, newspapers, cinemas and other outlets. What an incredible waste of money!  When they are not telling us how to live our lives, they are misusing public money to further the Labour party’s agenda and self-interest. It is not how the electorate expect their money to be spent and yet they appear to be getting away with it. Our taxes are not meant to be spent on publicising the Labour party nor drumming home relentlessly on how we should live our lives. Stop wasting our money and stop nannying us.

Tony Blair, when not trying to save the planet or fight the just wars of the Middle East, is making his stake to be Britain’s leading philanthropist. The government will give £1 for every £2 donated to English universities in an attempt to embed a "culture of charitable giving" across higher education. There is nothing wrong with former students and businesses donating money to the universities – from a business point of view it may well be a wise investment. However, the government claiming it will “embed a culture of charitable giving” by giving away money that was raised by the tax payers in the first place is absolute nonsense.

The tensions of excess, both in private and public sectors, are starting to display themselves in debates over the just level of wages for various occupations. These debates occur every now and then, usually provoked by a sense of disparity related to imbalances in the economy, themselves created by lopsided government intervention. Not surprisingly, given Gordon's predilections for the City, big corporates and micro-management by an overweening bureaucracy, the focus at the moment is on the remuneration of bankers, business leaders, management consultants, politicians and senior civil servants.

Following the recent announcement of record profits and record bonuses at many of the leading Wall Street and City banks, the Telegraph reports today that the number of public sector staff on six-figure salaries (i.e. > £100,000) has trebled in the past five years, whilst Brendan Barber (general secretary of the TUC, but usually a measured critic of business) has called for a "debate" about "how big and how justified" the rewards of directors of FTSE 100 companies should be, given that they have increased 105% in real terms since 2000, while average wages have increased only 6%. Put another way, these bosses now earn 98 times more than their employees. Bosses of AIM-listed businesses haven't been doing too bad either, some of them being paid over £1m for the first time. MPs' recent claims that they deserve an increase in their basic salary from around £60,000 to £100,000 received mixed press - some people feeling that it was worth paying to get a better quality of politician, others feeling that they didn't deserve a pay increase given their supposedly poor levels of performance and the pay squeeze on other public servants. There was further criticism of the high levels of pay for many public-sector executives (i.e. quangocrats), whose average pay awards are now second only to bosses in the City financial sector. Quangocrats' pay levels have been causing concern for a while now, without any sign of a retreat.

These debates are always characterised by an absence of intellectual consistency. Most participants argue that those they favour should be paid as much as is necessary to get "the best person for the job", whilst those they do not favour should be paid no more than is necessary to fill the post. Some eschew these generalisations for even greater simplicities - people should be paid according to the amount of work they put in, according to their performance / the results of their efforts, or, for the unreformed socialists, according to their needs. Whatever system is used, what unites almost all commentators is that they seem determined to invent their own personal scale of worth, as though it would be possible to devise a just scale of wages that could be imposed from above if only people would recognise the truth of the commentator's personal value system.

What is the truth? How are we to know whether people are being paid enough or too much?

For the past decade, the West has been relatively immune to price-/wage-inflation, despite significant expansions of the money supply and movement of various national balances from credit to debit, thanks to the deflationary effects of competition from emerging nations such as China and India. This has bred a complacent attitude that all it takes to control inflation is interest-rate policy designed to keep a cap on price-increases. The lessons of the twentieth century, which showed clearly that money supply was linked to inflation, that government interventions that caused an imbalance between the natural levels of saving and consumption were connected to the "boom-and-bust" trade cycles and that inflation, once started, could be very hard to stop, have largely been relegated in the concerns of policy-makers. Wage competition from immigrants, price competition from the East, and regular tweaking of inflation indices and interest rates are enough, so the theory goes, to make the old disciplines unnecessary.

It is probably this complacent consensus that explains why there has been so little comment on the inflationary aspects of the current dispute over NHS wages. There has been much sympathetic coverage of the below-inflation wage offer that has been made by the Government to NHS workers. They are deemed to be justified in their complaints, because a below-inflation wage offer is, so the analysis goes, a real-terms cut in wages. Nevermind that NHS wages have gone up, sometimes massively, above inflation in the last few years. And critically, nevermind that the corollary of that argument is that public servants should always receive pay offers that are no less than the current rate of inflation.

If employees feel that a pay offer in line with inflation is no increase at all, and therefore a minimum offer, then what happens as inflation creeps higher, as is happening? Wage offers track or exceed price-increases, which feeds the inflationary spiral. This is exactly back to the territory of the 1970s, and yet no one seems to have noticed.

Gordon Brown has come out in favour of devolving power. But his idea of devolution is a little different to ours. Ideally, power should be devolved to the individual. (Actually, ideally the individual, not the government, should have the power in the first place, but we have to start from where we are.) Markets are devolution of power to the individual, who can use his "dollar votes".