Everything’s fine!

The headline of this BBC article reads: “Average earnings rise by 1.4% to £26,500, says ONS.”

Hurrah!

But, wait! Hold your hurrahs because a few paragraphs in we read: “There was a cut in the real value of pay, however, as inflation was higher during the same period, at 3.5%. And the ONS data also reveals that inflation has outstripped the rise in average pay for the past 12 years.”

Once we have the context it becomes obvious that the headline, although not a false statement in itself, is grossly misleading. It can only lead all those who merely glance at the headline and not read the article to believe that the average wage earner has more money to spend; that they are wealthier. They are not. They are receiving a higher wage, yes, but that amount of money buys them less than it did 12 years ago because prices (as measured by the Retail Price Index) have risen by 43% in the last 12 years, 3% more than the average wage has increased over the same period.

So, the simple truth is that the average wage earner in the UK can buy less than he could over a decade ago; he is poorer. But that wouldn’t make much of a headline now would it.

The article continues:

“However, the trend has accelerated in the past five years since the onset of the international banking and financial crisis, the consequent recession in the UK and the imposition of austerity measures by the government.

In just five years since April 2007, prices have risen by 18%, while average annual earnings have gone up by just 10%.

That has left wages and salary increases lagging behind inflation by 8% in just five years.”

It’s curious how the author makes no attempt to explain the original cause of this impoverishing trend in the UK, but is confident that they know the cause of its recent acceleration and merely states these, perhaps in the hope that the reader will not consider the preceeding 7 years of declining purchasing power of the average wage earner before the “international banking and financial crisis” happened. The author chooses to ignore the elephant in the room.

The author also makes the error of believing in the myth of austerity. The UK government (like most others in Europe) is borrowing money at more or less the same rate as it was before the global financial crisis. That’s not austerity. That’s just doing what you were doing before. If you insist on calling it austerity, then what they were doing before was also austerity. The author has no excuse for not knowing that government is continuing to deficit finance like there’s no tomorrow as this is a fact that can be easily verified through the data collected by the ONS; the very same source the author is using for the data in this article.

When the UK government does finally stop deficit financing it will be because it is broke, not because it has elected to impose austerity measures.

Advertisements

Got thoughts?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s