Bad News on Redistributing Supermarket Salaries

Zoe Williams's article on top vs. bottom-end supermarket salaries is interesting and full of good intentions, but I fear it doesn't lead us anywhere useful.

Her argument is that supermarkets don't pay their staff a proper wage (perhaps because of in-work state benefits), which allows them to make excessive profits and pay their CEOs an exorbitant salary. To these CEOs she cries out, "To grab so much in excess of what you could ever spend or need, at a cost of so much hardship, to so many people, defies comprehension."

She also gives us lots of handy numbers: the supermarkets' workforce is 900,000-strong, and the CEOs' salaries are as follows:

• Justin King, the CEO of Sainsbury's, receives £3.2m a year;
• Philip Clarke of Tesco, £6.9m;
• Dalton Philips, of Morrisons, £4m;
• Andy Clarke of Asda's pay is not in the public domain.

I'll be generous and assume that Clarke earns as much as the 'market leader', i.e. the Tesco CEO salary of £6.9m. That gives us a total CEO salaries of the big four supermarkets of £21m.

Redistributing that CEO income equally amongst the full supermarket workforce would give each supermarket employee just £23 extra per year. While I don't dispute that Every Little Helps, I'm unconvinced that less than 50p per week would make a significant difference to the lives of ordinary shop-floor workers.

There are serious inequalities in our society which need tackling, but all this focus on people's incomes distracts us from the real source of systemic unfairness - inequality of wealth.

Meanwhile, if we are to aim for high levels of social mobility, then while education and equal opportunities are vital, they are only enablers to the only way social mobility is ultimately achieved - income.

Alcohol Minimum Pricing is OK, but can't we do better?

Alcohol is an addictive drug, with 1.5 million dependent users in the UK. There is nothing liberal about drug addiction. A life enslaved to a chemical is not a life with liberty.

Drinking is also a primary means of recreation and a national pastime. It is illiberal to restrict the recreational behaviour of adults when it is only themselves that may come to any harm.

Inevitably, when the issue of alcohol minimum pricing is raised, liberal opinion is split. Ewan Hoyle has made the case in favour, while Mark Thompson has made a harm reduction-based arguments against. As much as it matters, I support open-minded trials of alcohol minimum pricing to discover whether the benefits of such a policy would outweigh the negatives.

However, there seem to me to be flaws with alcohol minimum pricing within what its proponents wants to achieve. A price floor means that the alcohol supply chain gets to take all of the additional revenue that will be made from alcohol sales. This money may well end up being spend on more aggressive advertising campaigns by producers - something of an own-goal when the aim is to reduce alcohol consumption.

It would be far better if the government simply* raised alcohol duty. That way, a price floor would be created through tax, but the revenue would be taken by the government to fund rehabilitation services and education on the dangers of alcohol.

Clearly it is politically difficult to raise alcohol duty by such a large amount, so I would also make alcohol exempt from VAT at the same time. VAT is favoured by economists because of the way it encourages efficiency in the supply chain, but when it comes to addictive drugs, efficiency of supply should be of least concern. As a nice bonus, a switch from VAT to duty would also help put pubs and supermarkets on a level playing field. It is common knowledge that alcohol is cheaper in supermarkets than at the pub. Supermarkets are the epitome of an efficient supply, while pubs provide the added value of a social space in which alcohol can be consumed. With VAT, pubs pay more tax than supermarkets on alcohol that is equally as addictive.

* I say "simply", but the system of alcohol duty is far from it. The IFS has produced the chart below which shows the ridiculously complicated effective rates of alcohol duty currently imposed. All forms of alcohol should be treated like spirits, with taxes levied at a consistent rate relative to its ABV strength. This chart should be subtitled, "when lobbyists take control of the tax system".

Lib Dems Must Resist Any Further Restrictions Around 'Legal Highs'

The ACMD has today called for further punitive laws to be enacted to tackle the growing number of new psychoactive substances being marketed an consumed in the UK. It wants analogues of already illegal drugs to be banned in the assumption that they will have similar effects.

The coalition agreement does state that the Lib Dems will enable legislation that "will introduce a system of temporary bans on new ‘legal highs’ while health issues are considered by independent experts."

We have already done that. This exact legislation was part of the Police Reform and Social Responsibility Act which passed earlier this year.

Liberal Democrat policy was recently brought up-to-date at this year's conference with the passing of a motion on protecting the community from drug harms. The party's stance is now crystal clear. Any further drug policy legislation that can be voted for by Lib Dem MPs must involve:

• an independent panel to assess our current drug laws,
• a switch to the 'decriminalisation' approach which has shown beneficial outcomes in Portugal,
• or a legal framework to enable a strictly controlled supply of cannabis.

Now we must be practical. We should not outright ignore the work of the ACMD - that was the attitude taken during the dying years of the Labour government. However, if the Conservatives wish to progress with any further drug restrictions with us in government, they must also be open to considering some of our party's drug policies too.

50p Rate Blah Blah Blah

Maybe the 50p rate of income tax paid by the highest earners on incomes over £150,000 is bringing in a few hundred million a year. Maybe it isn't. Either way it won't be raking in billions.

What the debate about the 50p rate is all about generating headlines without really changing much. The government fiddles about with a few hundred million to grab headlines all the time. The government will spend £680bn this year. Throwing a fraction of one per cent of its tax raising and spending power changes nothing fundamental about the impact government has. The Coalition's commitment to raising the personal allowance to £10,000 (as promised by the Lib Dems) is a much bigger shift that will cost the Treasury £17bn once it has been realised (and benefits lower earners the most). Now that's what I call income tax reform.

There is nothing wrong with rewarding success - cutting the 50p rate to 40p would do this a very little bit. There is also nothing wrong with wanting to see the richest pay more of their fair share - keeping the 50p rate would do this a very little bit.

But given the trivial size of the change, it's frustrating is seeing progressives get drawn into this debate.

Yes, income tax is progressive and is directly linked to the ability to pay. Yes, the marginal rates look stupid when plotted on a graph and a few tweaks would make it technically fairer:



However, any changes to income tax of this nature would only affect a tiny amount of the money earned by the richest 5% shown in this graph:



Getting into a heated debate about the top end of income tax is like arguing over the position of a few grains of sand in a sandcastle, when what the argument should be about is what overall shape the sandcastle should actually be.

As an example, take property. The richest 5% of property owners have a hugely disproportional amount of wealth compared to the rest of us.



Fiddling with income tax will do nothing to redress this inequality. If anything it will distract attention from the fact that such a huge wealth disparity exists.

It is measures like Vince Cable's mansion tax that would really get the ball rolling on redistributive taxation.

(Hat-tips: Adam Corlett for the marginal income tax rate graph and ALTER for the income and property distribution charts from this PDF.)

Who's Getting Their Way On Spending Cuts?

Before the general election, all the main parties agreed that the deficit needed to be tackled over the next 5 years. The country couldn't go on spending £1 in every 4 raised just on debt interest.

The IFS scrutinised the deficit reduction plans of the three main parties in the run up to polling day. They calculated that the Conservatives were pledging £96bn of spending cuts by 2015, while the Lib Dems would cut £80bn.

We now know that these two parties would form a Coalition government. In October they announced their Comprehensive Spending Review. Its figures show that the Coalition will cut £81bn from government spending by 2015.

I know my readers are intelligent souls, so I'll leave you to work out whether £81bn is closer to the Lib Dem £80bn or the Tory £96bn.

Let's not forget Labour in this. The IFS calculated they would make £82bn of spending cuts, only the slightest bit different from the Coalition's £81bn. Labour now oppose every single cut the Coalition is making.

Another Anti-Immigration Myth Blown Out Of The Water

This was the Daily Express's frontpage on November 2nd 2007.



This myth has been circulated in our mainstream media for the last four years. There are more examples here, here, here, here, here, here, here, here, here, here and here.

Oh and here:



It is total nonsense. The 'maths' to make this myth work is basically equivalent to saying 2 - 2 = 4.

Thankfully, Left Foot Forward has today brilliantly destroyed this argument by doing the same calculation with disabled people.They took 219% of all new jobs last year!

The Net Migration Trap

Fraser Nelson's analysis of the latest net migration statistics is generally sound:

He correctly identifies that "the inflow to Britain has stayed steady, but the number emigrating from Britain has fallen" (which many other journalists got wrong).

He also states that "Cameron has a snowballs's chance in hell of meeting his target" of reducing net migration to the tens of thousands. That's true too. The immigration reforms brought in by the Coalition will already be deeply damaging on both an economic and humanitarian level. But they don't go far enough to cut net migration to such a low level. ConservativeHome's Tim Montgomerie has spotted why: "At every turn the Lib Dems have frustrated Damian Green and Theresa May's efforts". I'm appalled by what has been done to the already horrid immigration system left by Labour, but I dread to think how awful it would get if the Tories weren't reined back by the Lib Dems.

However, some of Fraser Nelson's analysis raises more questions than it answers. He decides that "Cameron should only ever have pledged to stem the inflow". This is problematic though, in two ways.

First, it changes your motives for wanting reforms to the system. If you are worried about immigration because of the pressure it puts on public services, infrastructure, the number of jobs available to British workers, these are better dealt with by looking at net migration, as this tracks the change in population size. If you only want to cut immigration, it changes your agenda to the more cultural arguments against immigration. It would be hard to defend such a policy without sounding like Enoch Powell.

Second, the government can only control non-EU immigration. EU immigration, after a lull during the recession, is back to its mid-2000s strength. It could even be that reducing non-EU immigration causes EU immigration. Oops!

Fraser Nelson also uses this odd argument - "Governments of free countries can't stop people emigrating". Why is it a right for people to migrate in one direction but not the other? (Of course what's really happening is that the government is responding to voters' selfish demand that they can move freely whilst insisting other people can't. That's nothing to do with freedom.)

So it would appear the government is trapped by its own net migration target. They even had a golden opportunity to make life much easier for themselves when the Home Affairs Select Committee suggested removing foreign students from the immigration statistics (they are much more like visitors than migrants). The government rejected the offer. Talk about own goals! Fraser Nelson says that Cameron "deserves the flak he'll get". Quite.

But we are where we are. Labour's already tight immigration policy will be further tightened by this government. The reality is that migration is a natural part of an increasingly interconnected world. Our border controls are futile against this overwhelming force. There's evidence that the wasted human potential created by immigration controls is stopping a boost to global GDP of between 67% and 147%. That's $39 trillion at the bottom end. The global economy could really do with that boost right now.

Why Don't CAMRA Practice What They Preach?

CAMRA have a long history of saying they promote responsible, healthy drinking. Their latest press release is no exception:

At the Great British Beer Festival today, CAMRA, the Campaign for Real Ale, has welcomed the Government's decision to introduce a 50% excise duty reduction on beers at or below 2.8% ABV from October 2011 in a move that will allow consumers to enjoy a lower priced and lower strength pint in their local.

CAMRA predicts the introduction of low strength beers - dubbed the 'People's Pints' - in pubs could be a huge boost to the licensed trade in light of new consumer research - out today - showing how 1 in 2 regular pub goers would like to see more pubs selling a low strength beer option.

Building on the success of a campaign which CAMRA has been leading since 2009, further new research has shown how pub goers would like to see more pubs selling low strength beers due to factors such as the ability to help regulate drinking levels, their more refreshing taste, their low calorie content, and their lower cost.

Last weekend saw the CAMRA-run Great British Beer Festival, which showcases 300 of the UK's finest real ales. Therefore you would expect CAMRA would be keen to showcase these "People's Pints" at its grandest event.

I'm a real ale drinker myself, and while I've been to the Great British Beer Festival in several times in the past, I didn't make it this year, so I don't have a guide in front of me. Handily though, their website provides a complete list of all the beers available. I went through it, and discovered that not a single beer available at the Great British Beer Festival was below 2.8% ABV.

The lowest ABV beer available was Bateman's Dark Mild, 3% ABV (FYI, it's a Cyclops-style dark mild, black in colour with a roasted smell and taste). Once you get up to 3.4% ABV there was a good selection available.

I can't find the June 2011 CAMRA Omnibus Survey where the statistic comes from, but let's trust that it's true that 1 in 2 regular pub goers say they want these less alcoholic beers. However what people say they'll do and what people actually do are not the same thing. I strongly suspect that breweries know that only beers above 3% ABV will find a market.

One possibility is that 3% ABV is the flavour cut-off point. Anything below this tastes bland, and there is a minimum level of alcohol content required as a base to bring out those delicious, complex flavours. However, CAMRA's own press release contradicts this:

On the eve of the Great British Beer Festival CAMRA conducted a taste test to find out whether beer experts could differentiate between a low and mid strength real ale. In a tasting consisting of real ales from 2% to 3.5% ABV, even a panel of experienced drinkers did not manage to correctly differentiate the products.

Who am I to argue with the panel of experienced drinkers?

This therefore suggests a different rationale - real ale drinkers don't just drink for the flavour, they drink to get drunk. To be clear, I'm no puritan - indeed this explanation would correlate with my own experience of real ale drinking.

There's plenty of evidence to suggest that this is what's going on too. Looking at the other end of the ABV spectrum available at the Great British Beer Festival, we find:

Black Sheep Riggwelter (5.9% ABV)
Raw Grey Ghost IPA (5.9% ABV)
Titanic Nine Tenths Below (5.9% ABV)
Thornbridge's Jaipur IPA (5.9% ABV) and Raven (6.6% ABV)
Acorn Gorlovka (6% ABV)
Flowerpots IPA (6% ABV)
Peerless Full Whack (6% ABV)
Spectrum Old Stoatwobbler (6% ABV)
Twickenham's Daisy Cutter (6.1% ABV)
Greene King's Abbot Reserve (6.5% ABV), Old Crafty Hen (6.5% ABV) and Very Special IPA (7.5% ABV)
Elland 1872 Porter (6.5% ABV)
Brains' Strong Ale (6.5% ABV, "exclusively available at the GBBF")
Arbor's Yakima Valley American IPA (7% ABV)
Inveralmond Blackfriar (7% ABV)
All Gates Mad Monk (7.1% ABV)
Brodies' Superior London Porter (7.1% ABV)
Yates' Yule Be Sorry (7.6% ABV)

All are more than double the 2.8% ABV CAMRA say they promote. And those are just the casks. For that extra-special headache, there's always a bottle of O'Hanlon's Brewer's Special Reserve 2010 (12.9% ABV).

Finally, here's a photo from that you'll see on all the pages their website:


'Nuff said.

CAMRA need to drop the pretence. They should acknowledge that their members like getting drunk.

This Is The Youth Of Today

Yesterday on Twitter... #londonriots

I went through three stages of emotion looking at my Twitter feed yesterday - confusion, amusement, and then downright despair. I find it hard to comprehend what's been going on in London, what motivates these rioters, what the cause is. Twitter answered none of these questions. What it did expose was how nasty and callous some political activists can be.

I must first address the jokes. Most were tasteless, some were stupid, few were funny, and all were unnecessary. I can understand why people make jokes in an incomprehensible situation. It's a way of coping. But looking back over them, I can't help feel that those who wrote them probably ought to question their appropriateness. I'm one of them. I tried to make light of the heaviest of situations. I shouldn't have.

However what really angered me, and what provoked me into hitting the 'new post' button right now, is seeing the political agendas being tagged onto these horrid events. I saw my allies do it as well as my opponents.

Left wingers stated that this proved that the government's cuts were having devastating repercussions.

Right wingers stated that this proved that multiculturalism has failed, and that the youth of today had no morality.

Liberals stated how this proved that allowing the government to tread on our civil liberties causes serious repercussions.

Fascists stated how this proved that immigration had ruined our way of life and must be stopped.

Anarchists stated how this proved that if the government is allowed to steal property, it will mean citizens stealing each other's property too.

I saw all of these exclamations yesterday. If I was being kind, I'd file these opinions as "guesswork at best". As they tumbled onto my screen, I tried to make sense of them. But it was like trying to find meaning in randomly generated numbers. As they continued pouring in, it actually became funny. I began chuckling at the desperation some people clearly must feel to constantly justify their political persuasion. But they didn't stop. As London went up in flames, along with countless livelihoods, there were still people determined to manipulate the situation to preach their political gospel.

Why are these people interested in politics? I thought the whole point of it was to secure positive outcomes for people's lives. When the worst hits, and all you're thinking of is the propaganda, why are you doing it?

There are so few facts about what is going on and the events that led up to it that we can't draw any conclusions. I don't pretend to have no gut instincts myself, but no-one needs to know about the contents of my gut. The only thing I know for certain is that anyone drawing proof of any underlying political argument from this is telling you more about themselves than they are about society.

And yes, it may be that one or two of the answers that are out there may turn out to be accurate. I can guarantee that whoever wrote them will let you know about the accuracy of their insight. But that random number generator will also occasionally give the correct solution to a problem too.