Mind the Gap - Is Corbyn’s Maximum Wage Idea Workable?

Jeremy Corbyn has suggested a ‘maximum wage’ amid a typically trying week for him and his party. Is there anything to it?


I’m going to save you the trouble of quoting Betteridge’s law and tell you what you probably already know about the question posed in this headline: the answer is, of course, no. Enforcing a maximum wage comes with all sorts of issues, and the main beneficiaries would be the dull accountants of the big four who would be forced in to more busy work that, in the grand scheme of things, is both a waste of their talents and ultimately useless. The secondary beneficiaries would be tax havens such as Panama, as the wealthy set up various opaque trusts to run their newly directed “dividends” (instead of salaries) through. Alongside the massive growth in shell companies would be a massive cost to HMRC chasing those ignoring the cap – that is if they actually bothered to prosecute more than a handful of wealthy rule breakers, or at least didn’t invite tax lawyers to write the laws they would soon be bending. Then there’s the chance that the high earners will simply leave, like they did when Egypt introduced a similar law.


So what is the point of Corbyn’s latest outburst? It isn’t an official Labour policy, has already been disowned by some MP’s, and seems to be following his unfortunate trend of half-stating an idea in an interview, as if prime-time Breakfast news shows were actually a nice warm shower in which he could mull over serious policy positions to himself, in between delivering a rousing rendition of The Red Flag and washing his hair. It also seemed to overshadow what was supposed to be the major topic of conversation: Labour’s viewpoint on Brexit. Hardly a triumphant set of interviews, it seems – although it must be stated that his lack of commitment to free movement this morning would have been great news to other key demographics that the country’s 2nd party is lagging behind in.


However, if you begin to look at the wage cap policy as a starting off point as opposed to a red line, then it seems that Corbyn may have stumbled on to something. After all, the policy was supported by 39% of the public in September 2015 (over 10% higher than Labour are currently polling), and given the wave of anti-establishment feeling that appears to have swept through the Western World over the last few months, that number may have grown. The policy also plays well among those who are 65+ and the Scots, both key demographics that Labour need to win back to have any chance in 2020.


Many popular policies are unworkable and absurd sounding in practice. Whether it be building a wall and getting Mexico to pay for it, draining the swamp of Washington excess, getting net migration down to below one hundred thousand, sending £350m a week to the NHS, or even turning the deficit in to a surplus within five years without irreparably destroying the economy, all that matters is that the soundbite is good and it captures the mood.  Nobody really cares that it’s impossible; nobody cares about the importance of government investment to stimulate the economy during times of economic downturn, just as nobody really cares that the only thing a ten foot high wall will do is create a market for 12 foot high ladders – they just want to hear someone say what they have been thinking: there are too many illegal immigrants crossing the border, the government needs to live within its means and execs should not be getting paid multi-million pound salary and bonuses after a year where they laid off half the company. Simple, right?


And that is the positive of this announcement from a Labour perspective. Nothing Corbyn says or does at this point can really make him seem less qualified to run a country in the eyes of certain parts of the electorate, so he may as well go all out with the populist playbook. Whilst the character of voters in the United States is vastly different to our own voters (in ways that are too numerous to start going in to here) there are some similarities, and the idea that the old certainties are no longer so certain is now prevalent among both groups. People are starting to realise that the world is not a set of “do’s” and “do not’s”, but that these labels are something that we have applied ourselves, and therefore are more a matter of will than a matter of possibility: we can’t tell multinational conglomerates to sod off unless they hire Western workers as they’ll leave? Fine, let them – we’ll impose tariffs instead! Who cares about the potential consequences? It makes us feel good!


A policy has always been successful if it plays well with the electorate and could make a constructive and positive difference to society, but in recent times that second factor is becoming less and less important. The wage cap is unworkable, yes – however the idea of the wage cap is a fairly powerful tool that can be exploited in the right time and place, by the right person. Whether Jeremy Corbyn is the right man to do this is still up for debate, but it’s safe to say that 2017 will be an interesting one for the Labour leader if this strategy plays out as intended.


Edit (22.02.2017): This did not seem to be an attempt to copy the Trump playbook, but more of Jeremy Corbyn rambling on about an idea.

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