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Will paying people more money improve the economy?

A new report thinks so

The Institute for Public Policy Research (IPPR) says an easy way to boost the UK economy would be to raise the minimum wage.

What it means: Right now the UK economy isn’t growing all that fast. Whether you think that’s a problem or not depends on whether you think growth rate is a good way to measure how well a country is doing. (Bhutan, for example, judges itself on how happy people are instead).

Plenty of people do think a slow growth rate is not good, however, so the IPPR decided to come up with a solution. Their crack team included a famous fund manager (makes sense), the head of a powerful trade union (seems relevant) and the Archbishop of Canterbury (sorry, what?).

They concluded that if wages were at least £8.75 an hour (£10.20 in London because it costs more to live there) then people would do their jobs much better. This matters because the better we all do our jobs - the more burgers we flip, the more bricks we lay, the more reports we write - the higher the UK’s productivity is, and the faster its economy grows. Mo’ stuff = mo’ money, basically. (If you like growth, remember).

But people who oppose raising the minimum wage say it makes it too expensive for companies to hire lots, or any, workers. The end result is that more people won’t be able to get a job at all. If you’ve read about the big profits many companies make (we hear Amazon has a spare few quid lying around) you might think that sounds suspect. But pay can be a big expense for small companies and startups, and they employ 60% of private-sector workers.

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Reader Comments

  • RW

    Your right to a degree. You mentioned “the wandering Jew”.

    I elaborate that the Jewish people, historically have tended to migrate almost exclusively to locations that are economically and culturally vibrant already. I would speculate that Jews have thrived in these places and have often improved the bounds of their economies and knowledge base.

    You can also ask; how many massive entertainment conglomerates, Nobel winners or billionaires has Isreal developed? If Jews are so capable, why isn’t Tel Aviv the Rome of our time?

    Jews are successful because they value education, maintain a strong social cohesive, they actively monitor and have a good sense for Zeitgeist wherever they are and they carefully choose the places they settle and congregate themselves heavily in these choice locations.

    But most importantly (haulocaust increased the importance of this aspect), they actually designed their culture for success. They not only attend Harvard, they use what they learned to better the group as a whole. With as much, they studied intricate networking systems, adapted to it and in many cases improved upon them. (See how Japan acquired Aegis warships and made them better).

    Of course there is nothing wrong with any of this. It’s when you elaborately gain disproportionate power in any society where you would stand out, you must take care when attempting to make a society better (Civil Rights movement) and rewriting that society all together (mass immigration). Ask blacks in China, Mexico, Philippines or India how much opportunity they have? Go to businesses owned by their American diaspora and see how many blacks they hire. Go to Silicon Valley and see how many East or South Asian tech workers wish they could work with more black people. California might work as a state, but as a nation, I think your rolling the nuclear dice here. I hope we can succeed as a tolerant pluralistic superpower but at this stage in human societal development, it’s a pipe dream.

    And if Jews really are the icon for success, they would see that fundamental human successes happen over generations. Just look at the rest of the planet? Are we ready?