Clearly you listened to him, or you wouldn’t have written this piece.

Darling is desperate to keep inflation down and was probably hoping that someone would break the habit of a lifetime and start listening to him. Even the Bank of England admit that nothing can be done in the short-term to keep inflation down.

http://lettersfromatory.wordpress.com

The combination of global markets (including, as Chris rightly points out, a global labour market) and finite physical resources can only mean declining living standards in this country – and in Europe, America and the rest of what used to be called the “first world” – for a generation. That is the analysis of senior Treasury officials, and whatever you think of their track record, we don’t seem to be overwhelmed with people saying they’re wrong.

The question is whether any decline is going to overall take us below the standards we had, say, a decade ago.

The signalling effects of markets surely don’t require that we do not restrain pay, because the signalling effects depend on the relative prices of goods, not the absolute rate of increase in those prices. Also, isn’t there an assumption that labour markets are perfect lurking somewhere here? Equally, doesn’t the claim that no-one cares about the provision of collective goods imply that we should all be Hobbes’ state of nature, where the collective goods of stable property rights, public trust, and so on, are absent, since if no-one cares about the provision of collective goods, then no-one should be supplying them. Moral incentives can be incentives. So it makes perfect sense for Darling to call for pay restraint, even if you think that it’s not likely to make much difference.

I don’t mean to defend the man but…

Calling for pay restraint is part of the Chancellor’s job. He does, after all, pick up a fairly hefty wage bill himself and a bill moreover that is paid for by taxes which are not, in any way, voluntary.

Employees and their representatives are, of course free to ask for whatever pay settlement they think they can get – that is their job.

I fear that your post confuses the two sides of the pay bargaining debate (or assumes that the Chancellor is an impartial observer of the process?

Iron wage discipline will not, in itself, kill inflation dead but huge pay rises will certainly increase both inflation and taxes making us all poorer in the long run as well as panicking the market, increasing the likelihood and severity of any recession and making us poorer in the short run.

However, on your final comment, in all other circumstances, Alastair Darling is stupid enough for just about anything. I doubt he could think his way out of a damp paper bag.

The call for wage restraint from Darling is dangerously close to provocation, coming on the heels of the fuel drivers 14% over two years deal. It challenges a fight for those who are willing to take him on, but is he talking to teachers, nurses and police or to bankers, brokers and underwriters?
When was the last time members of the British Banking Union went on strike??
The statement pins his colours firmly to the mast that he wishes to encourage growing economic inequality to match current levels of political disparity.