Corbyn’s plans

[Young Master Smeet]

So a bit of class struggle from Labour:

http://www.bbc.co.uk/news/uk-politics-35330331

Quote:

A Labour government could ban companies from paying dividends to shareholders unless they pay workers the living wage, Jeremy Corbyn has said.

So, some quick thoughts, whilst a push to achieve higher wages would be welcome, there are limits.

1) Banning dividends would mean investors would shift either to interest bearing bonds, or simply relying on rises in the asset value of shares.

2) Directors and others would still be able to take some of the profits as 'compensation'

3) Firms will only pay the living wage if they make enough profits, and investors could (and would) go overseas if they weren't making enough return on investment.

Lets not forget that the biggest recipients of dividends are pension funds, so some of those profits come back onto deferred wages.

[ALB]

The openly pro-business lot in the Labour Party will be horrified as they see it as a voter-loser (or, more importantly for them, as a seat-loser) but a promise like this won't necessarily lose the Labour Party votes at this juncture. Whether, if ever introduced, it would have the desired result is quite another matter. Reforms which impinge on the profitability of capitalist enterprises tend to backfire and have unintended consequences. In any event, Corbyn is still thinking in terms of a capitalist economy with profit-seeking enterprises and just wants to try to reform it.

[Young Master Smeet]

The other point is that the government could just declare the living wage (something Labourites have been campaigning for since the 1920's) as the minimum wage by fiat, thei 'interim measure' would in fact be pointless.

[ALB]

Here's the view of one of John McDonnell's economic advisers, Professor Danny Blanchflower, writing in today's New Statesman on this idea:

Quote:

The new Labour leaders are not economists and are going to have to learn fast. They will have to accept the realities of capitalism and modern markets, like it or not. No more silly stuff about companies not being able to pay dividends if they don’t do X or Y. If companies are not allowed to pay dividends, share prices will potentially rise instead. If you raise corporate taxes too high, companies may move to Ireland or elsewhere, where they are lower.

Every time there's been a Labour government they have learned this. So would Corbyn and McDonnell if they get the chance (though I doubt they will, get the chance that is).

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