Workers may be forced to give up rights for shares


by Sarah McAlpine    
1:44 pm - October 8th 2012

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George Osborne has today announced that in the future new employees could be forced to exchange worker rights for shares in their company.

In exchange for shares between £2000 and £50,000 employees may be asked to sacrifice their rights on unfair dismissal, redundancy, the right to request flexible working and time off for training and they will be required provide double the notice of a firm date of return from maternity leave.

Firms opting into the new form of contract, called ‘owner-employee’, will not be required to offer any other kinds of contract when taking on new hires. This could mean that workers will have to sacrifice their rights in order to find employment. Existing workers may be offered the new contracts, but will not be obliged to partake.

Any gains on the shares will be exempt for Capital Gains Tax. When an employee is dismissed, the company will buy the shares back at ‘a reasonable price.’

The Treasury claims that the contracts are intended to stimulate growth for small and medium sized businesses by creating a ‘flexible work force’, but companies of any size will be able to use them.

Legislation to bring in the owner-employee contracts will come later this year, with companies able to use them from April 2013. Details will be consulted on late in the month.

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About the author
Sarah McAlpine is a News Editor at Liberal Conspiracy, and volunteer Co-Editor at www.womensviewsonnews.org. Raging Feminist. She likes Politics, Smashing Patriarchy & Animal Videos - though not necessarily in that order.
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Story Filed Under: Law ,News ,top ,Trade Unions


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Reader comments


, , , .

Perhaps employers can also trade in any responsibility for having a safe working environment: all your shares bought back at “reasonable price” if you happen to die in a horrific accident at work.

I’m on a roll now: are you gay? Don’t you want to sign away your rights to equal treatment? Tick this diversity box on the job application form and good luck.

This is just a way of forcing workers to take the risk instead of the investors/management. If a startup offers shares and does badly because of bad management, the workers will lose their jobs, have no comeback and be left holding worthless shares.

It seems that investing in a business now have become a way of avoiding risk, whereas getting a job means you are taking on a risk you can’s afford to take in exchange for no rights. Doesn’t sound like a very good deal to me. Wonder how it will work for NHS staff, the police, teachers, etc…

It’s not just “start-ups” and their share investment schemes where a chunk of your income is tied to the hoped-for share-price rise. According to that government BIS website, anyone will be able to do it to “new hires” – or owned employees.

Every sane employer wouldca have a long hard think about dropping new salaries by £2000, and offering that £2000 back in the form of shares at advantageous rates and no capital gains if they ever should rise in value? Bargain! Treasury-approved free money!

Oh, by the way, sign away your long fought-for employment rights here.

Has April Fools’ Day come early, or late?

It’s not even as if there’s any evidence that this will promote more start-ups and create business / industry in some vague, unspecified way. This will promote badly-planned, ill thought-through startups where the owned employees shoulder even more risk.

To an extent, short-term hires, hiring people by the hour already does this. So on the face of it – it’s just not even necessary. But now the employers have another way of ‘encouraging’ people to sign away what little protection they have against the worst sort of exploitative employers.

“We’re all in it together”. Unless you own some employees.

Opportunity for the government here: allow companies to invest in housing stock to improve fluidity in the housing market and kick-start investment leading to increases in house prices. Encourage employees to take advantage of paying their rent for the corporation’s house direct from salary before national insurance is deducted. Bargain! Maybe the land-owners could spearhead this one with tenant farmers under new owned employee contracts. Mill owners could do the same. And servants. If you are unlucky enough to be sacked, you lose your home, but the government won’t pursue you for the national insurance you saved. Same sort of logic.

At the risk of a Godwin, wasn’t this the sort of thing the Nazis did? A car for every worker, we promise?

Proof, if ever it were needed, that sorting out the economy is not in fact one of the Tories objectives, but ensuring a social heirarcy is maintained and enforced is.

“Firms opting into the new form of contract, called ‘owner-employee’, will not be required to offer any other kinds of contract when taking on new hires. This could mean that workers will have to sacrifice their rights in order to find employment. Existing workers may be offered the new contracts, but will not be obliged to partake”

It’s interesting that in the OECD study on employment rights and their wider economic impact – the one Worstall cited in support of his argument for fewer rights, despite the fact it said no such thing – the main rights that harmed the labour market were those that existing employees built up over new employees – such as the right to larger redundancy payments. This harmed the labour market because workers are naturally risk adverse, and so wouldn’t move from jobs (thus creating vacancies) where they had accumulated rights for new jobs where they didn’t have any.

So the logical conclusion is that workers should have the same rights from Day 1, and time in a job shouldn’t automatically give you additional legal protections (most companies will give loyalty payments anyway). None of you will be suprised then, that the tories are going the opposite direction to logic by removing the rights of new employees, and extending the qualification period before you get rights.

8. Steve Carter

That will reduce bureaucracy for small commpanies wont it!!!! Can you get your rites back if the company performs like a dog!

what if you work for a Not for Profit organisation!

9. Man on Clapham Omnibus

The problem that many small businesses face is workers whose priorities change once they are at work. Some mark time,some take the piss,some moonlight and some are deliberately disruptive. If you are a large company you have HR departments to sort out these issues. For small companies however these issues can be enough to collapse the enterprise.
Additionally, if the company is predominately staffed by women of childbearing age this too can have dramatic consequences particularly if they use their pregnancy to refuse to do their job. If they then return to work they are pretty much untouchable. In these cases they are best left in the corner undisturbed. Not a good recipe for small business expansion I would suggest.

Maybe Gideon is thinking along these lines.

As usual, a deplorable propaganist headline!

All sounds fine to me – as outlined, no-one is being “forced” to do anything. Rather, employees are being invited to be shareholders and partners in a business – breaking down the them-and-us barrier, and encouraging mutual and national prosperity.

What not to like, in principle?

11. Man on Clapham Omnibus

@10

I think the forced bit refers to the fact that it wouldn’t be an arrangement that someone would necessarily want to enter into in order to gain employment.

12. Chaise Guevara

@ 10 TONE

“As usual, a deplorable propaganist headline!

All sounds fine to me – as outlined, no-one is being “forced” to do anything. ”

From the OP:

“Firms opting into the new form of contract, called ‘owner-employee’, will not be required to offer any other kinds of contract when taking on new hires.”

If you originally would have had rights, and then the decision whether to give you said rights is handed to someone else, and that person decides to deny you said rights, it seems reasonable enough to say you were forced to give up such rights.

Of course, you could argue that nobody’s forcing you to take that job at all. But that’s an argument against worker’s rights full stop, and ends with people being killed by poorly maintained machinery, sacked for visiting dying loved ones, or fined a week’s wages for leaving the window open, all with the justification of “Quit if you don’t like it!”

“This is just a way of forcing workers to take the risk instead of the investors/management. If a startup offers shares and does badly because of bad management, the workers will lose their jobs, have no comeback and be left holding worthless shares.”

Shares or not if the company does badly those employed there will find them selves looking for a new job.

PS @ 7:

“…in the OECD study on employment rights and their wider economic impact ….the main rights that harmed the labour market were those that existing employees built up over new employees – such as the right to larger redundancy payments. This harmed the labour market because workers are naturally risk adverse [sic], and so wouldn’t move from jobs (thus creating vacancies) where they had accumulated rights for new jobs where they didn’t have any.”

OK, perhaps.

“So the logical conclusion is that workers should have the same rights from Day 1, and time in a job shouldn’t automatically give you additional legal protections (most companies will give loyalty payments anyway).”

1. “logical conclusion”.

Nope. Logic tells us nothing about the world. Only science and observation can do that.

2.”workers should have the same rights from Day 1, and time in a job shouldn’t automatically give you additional legal protections ”

Errr…But bad performers can take months or even years to show up…Sadly, you appear to have zero mangement experience.

3. “the tories are going the opposite direction to logic by removing the rights of new employees, and extending the qualification period before you get rights”…

Logic has nothing to with it: it’s purely a matter of evidence – a matter of what works.

4. As for “workers should have the same rights from Day 1, and time in a job shouldn’t automatically give you additional legal protections” , this will only increase inefficiency in the public sector (in which I spent 10 years), encouraging duffers to hang on and making it harder to get rid of said duffers.

[Out of curiosity, at what institutions were you so under-educated that you cannot distinguish between the logical and the empirical? - You make me fear for the future of my country, and to think about possible limitations to the franchise.]

CG @ 12:

“Firms opting into the new form of contract, called ‘owner-employee’, will not be required to offer any other kinds of contract when taking on new hires.”

If you originally would have had rights, and then the decision whether to give you said rights is handed to someone else, and that person decides to deny you said rights, it seems reasonable enough to say you were forced to give up such rights.

Of course, you could argue that nobody’s forcing you to take that job at all. But that’s an argument against worker’s rights full stop, and ends with people being killed by poorly maintained machinery, sacked for visiting dying loved ones, or fined a week’s wages for leaving the window open, all with the justification of “Quit if you don’t like it!””

This is party conference season – where cloudy rhetoric feeds autumnal mists (and vice-versa). So let’s not get too excited. As I understand employment law, no-one could be forced to re-negotiate their current T & C’s – without significant compensation. So nothing to get excited about! And it just might help the economy!

As usual, a deplorable propaganist headline!

All sounds fine to me – as outlined, no-one is being “forced” to do anything. Rather, employees are being invited to be shareholders and partners in a business – breaking down the them-and-us barrier, and encouraging mutual and national prosperity.

What not to like, in principle?

When a contract is offered to a candidate, with the understanding that if they don’t give up their rights they don’t get the job.

TONEy babes

In your capacity as our resident empiricist could you find out and tell us if these shares will constitute a say in the direction of the business – like they do under normal shareholder arrangements? (Y’know to help break down the ‘us n’ them’ divide.)

“it’s purely a matter of evidence – a matter of what works.” Oh right, and what’s the evidence for this policy then and its efficacy? Last I heard it hadn’t come into effect yet.

At what institutions and in what family were you so under-resourced in basic humility? If you were ‘thinking about possible limitations to the franchise’ what exactly do you imagine that would achieve? Are you a policy maker in the position to make such a change? Or just a sneering narcissist?

BTW are you a supporter of free markets?

17

I think the concept of free entry and exit applies only to those with the power.

@9 ClaphamOmnibus

Small businesses don’t have shares. This marvellous policy will give giant corporations yet another tool in their arsenal to crush small business. Which is a major reason why Osborne likes it, I’m sure.

@10 TONE

Not compulsory? Of course it’s bloody compulsory. Do you want a job, or are you a scrounger? Well then, you take what’s bloody offered. You’re not about to get very far turning your nose up at stuff, especially if you’re unfortunate enough to be on benefits. One whiff of that sort of above-your-station attitude and the DWP will have you crawling through the aisles of Lidl scrubbing the floors and begging forgiveness for your insolence and your benefits back so you can buy food.

That’s the world we live in, now, TONE, thanks to your fantastic ideology. Thanks a bunch. It’s much appreciated.

Osborne today declared war on the vast majority of working people. This is class war brownshirt style. It blows away any notion of the tories as a reformed changed modern party. Lie dems must be so proud to be propping up these monsters.

The rich want it ALL. Not a fair amount but all. They want workers as slaves. They want to pay no tax and have total control over their workers. And when you get sick these same rich monsters want to contribute not a penny to your pension or your healthcare. And for the usual brownshirt trolls who revel in the misfortune of others the voluntary nature of this is clap trap. All this will be imposed through bullying and threats. New employees will only be offered contracts with these new rules. You have a right to join a union, try getting a job interview if you put that on your cv.

This also shows the folly of New labour 3rd way bollocks.You can’t negotiate with people who want to destroy you. For the rich it is never enough. We have had 3o year of cutting taxes and loopholes for the rich. Deregulation of labour markets, and destruction of private sector union jobs. The gap between rich and poor has grown to levels not seen for 100 years. But it is still not enough for these bullies. The Blair’s and Cleggs will be no defence in this out and out war

Osborne today declared war on the vast majority of working people. This is class war brownshirt style. It blows away any notion of the tories as a reformed changed modern party. Lie dems must be so proud to be propping up these monsters.

The rich want it ALL. Not a fair amount but all. They want workers as slaves. They want to pay no tax and have total control over their workers. And when you get sick these same rich monsters want to contribute not a penny to your pension or your healthcare. And for the usual brownshirt trolls who revel in the misfortune of others the voluntary nature of this is clap trap. All this will be imposed through bullying and threats. New employees will only be offered contracts with these new rules. You have a right to join a union, try getting a job interview if you put that on your cv.

This also shows the folly of New labour 3rd way bollocks.You can’t negotiate with people who want to destroy you. For the rich it is never enough. We have had 3o year of cutting taxes and loopholes for the rich. Deregulation of labour markets, and destruction of private sector union jobs. The gap between rich and poor has grown to levels not seen for 100 years. But it is still not enough for these bullies. The Blair’s and Cleggs will be no defence in this out and out war. Only Guillotines and carts will do.

@5 The KdF-Wagen. The scheme started in 1938. Suckers were pressured into buying saving stamps for these vehicles. The war started and production was switched to Kubelwagens for the military. No-one ever got a car. (VW did give a discount for full books of stamps after the war)

Sounds great – the last time I went for a job my first priority was to get rid of any of my pesky ‘rights’ so I could be exploited by my employer.

@TONE – saying there is choice among employees is ridiculous in a job market where there is a surplus of workers. If one worker doesn’t want to have his rights eroded, there are plenty of other desperate people that will – and so declining to have your rights taken away will mean you don’t get a job.

So in some respects, yes, you have a choice. Sacrifice your rights or don’t get the job. That’s not a choice people are crying out for.

@22 Schmidt

Thanks. The similarities are notable.

25. Chaise Guevara

@ 15 TONE

“This is party conference season – where cloudy rhetoric feeds autumnal mists (and vice-versa). So let’s not get too excited. As I understand employment law, no-one could be forced to re-negotiate their current T & C’s – without significant compensation. So nothing to get excited about! And it just might help the economy!”

You seem to be deliberately missing the point. I’m talking about new hires, not existing employees. Also “let’s not get too excited” isn’t an argument, it’s rhetoric.

There are lots of things we could do to help the economy. Some of them aren’t worth the human cost. This is one of them.

Firstly, I am so angry with this government this morning and can barely believe what I am reading. I like my rights and so should my employers. They mean that they can’t treat me unfairly and therefore I can work hard for them without worry. It’s a mutual contract that works quite well. This new proposal is shocking and will promote terrible bullying. Shares in my small company are not worth giving up my rights. Neither will they be if I work harder and I work hard enough as I enjoy my job. Where has this proposal come from? It’s utterly ridiculous, shows a complete lack of understanding of the work place and means employers hold all the cards which they can play whenever they feel like it, regardless of their workforce. All in this together? What? The Tories are creating more division than I thought possible.

Employment contracts are for the most part, and should be, voluntary arrangements. An employer agrees to hire the labour of an employee and vice versa and it is the voluntary nature of the contract that makes it valuable.

Any interference, by the state, to impose conditions on such a contract by legislation (including NMW)is to be deplored and such intervention inevitably reduces the value of the contract to both sides.

All issues relating to an employment contract (how it can be terminated, the number of hours to be worked, what happens if there is illness, pregnancy etc) can, and should, be written into the contract itself and should be a matter of negotiation between the two parties. However, it is certainly not any business of government to enforce such terms.

The existence of employment legislation tends to make potential employees lazy about the nature of the contracts they enter into as they assume that they have been granted “rights” by the state through employment law and that these will protect them from exploitation.

In fact, all employment law is utterly pernicious, both in principle and in its practical effects.

“. However, it is certainly not any business of government to enforce such terms”

I think you’ve used the wrong choice of words here. I didn’t think you were against government enforcing mutually agreed contracts, what you really mean is that government should have no role in specifying the content of contracts.

Here’s a thought experiment – if labour/the greens/whoever proposed that employees should automatically recieve equity in their workplace, would we see the positions taken above reversed?

30. Man on Clapham Omnibus

@19

They can have. Depends how they are set up.

The existence of employment legislation tends to make potential employees lazy about the nature of the contracts they enter into as they assume that they have been granted “rights” by the state through employment law and that these will protect them from exploitation.

Thanks Pagar, that’s the answer to something I’ve been puzzling over for some time.

See, human nature is crystal clear on one point: people seriously dislike reading pages and pages of legalistic fine-print, and as often as not they don’t bother.

Of course, lengthy legal documents are terrifyingly ubiquitous in libertarian land, since all laws have been abolished, apart from the state’s duty to enforce contracts. (So, when you buy a bag of crisps which then turns out to be full of poisonous frogs, you’re basically screwed unless you carefully checked the no-toxic-amphibian clause of the snack-procurement-document you cosigned with the shopkeeper.)

So how do libertarians address this little problem? Ah – of course – people’s intense dislike of legalese is the state’s fault. Why didn’t I guess?

32. Man on Clapham Omnibus

28

‘Employment contracts are for the most part, and should be, voluntary arrangements’

Whether or not employment contracts are voluntary is, like wage levels, high dependent on supply and demand,as is the ability for employers to change said contracts for operational reasons(eg work shifts or your out!,sleep under a London bridge and you might get offered a job!)

Any interference, by the state, to impose conditions on such a contract by legislation (including NMW)is to be deplored and such intervention inevitably reduces the value of the contract to both sides.

Thats totally incorrect. How does minimum wage reduce the value of the contract to both sides?

All issues relating to an employment contract (how it can be terminated, the number of hours to be worked, what happens if there is illness, pregnancy etc) can, and should, be written into the contract itself and should be a matter of negotiation between the two parties. However, it is certainly not any business of government to enforce such terms.

Not if there are social externalities, otherwise we might get lorry drivers driving about on no sleep.

In fact, all employment law is utterly pernicious, both in principle and in its practical effects.

I was saying something similar to the kid I just shoved up the chimney.

@ Planeshift

I didn’t think you were against government enforcing mutually agreed contracts, what you really mean is that government should have no role in specifying the content of contracts.

It is the courts who should enforce mutually agreed contracts and yes, government should have no role in specifying what goes in them.

Here’s a thought experiment – if labour/the greens/whoever proposed that employees should automatically recieve equity in their workplace, would we see the positions taken above reversed?

If the proposal was to compel companies to give away equity, then yes. And I’m not even too comfortable with the Osborne proposal of “encouragement” (if you agree to suck my dick, I’ll take my foot off your neck).

Having said that, I am very much in favour of employee share schemes and mutual ownership organisations but these have to be founded on voluntary principles.

@ Larry

So, when you buy a bag of crisps which then turns out to be full of poisonous frogs, you’re basically screwed unless you carefully checked the no-toxic-amphibian clause of the snack-procurement-document you cosigned with the shopkeeper.

Err no. The no-toxic-amphibian clause would not be upheld by the court as reasonable when you sued the person who sold you the crisps to recover the losses or injuries you sustained.

http://en.wikipedia.org/wiki/Donoghue_v_Stevenson

@ MOCO

Whether or not employment contracts are voluntary is, like wage levels, high dependent on supply and demand

Wrong. They are always voluntary. Anything else is slavery.

How does minimum wage reduce the value of the contract to both sides?

By prohibiting the voluntary agreement both parties wish to enter into at a wage below NMW.

I was saying something similar to the kid I just shoved up the chimney.

You SHOVED him.

Sorry, mate, that’s not on. Maybe, if you’d offered to pay him a bit more, he’d have gone of his own accord.

Meh if the kids whines he’ll just unfairly dismiss him no problem.

36. Robin Levett

@pagar #34:

You can always rely upon certain libertarians to contradict themseleves if they ever utter two sentences on the same topic.

The no-toxic-amphibian clause would not be upheld by the court as reasonable when you sued the person who sold you the crisps to recover the losses or injuries you sustained.

How does that square with your insistence that the state(and the Courts are for this purpose a manifestation of the state) not interfere with freedom of contract. Why should the state prevent my customer from contracting with me on terms of his choice? My customer chose to contract with me on terms that excluded my liability for inclusion of toxic amphibians. He was fully aware that without that exclusion, my price for crisps would have to rise to include the cost of checking that no toxic amphibians had got into them. Your idea of the state imposing some kind of reasonableness requirement on the contract is wholly pernicious – it raises the price for him and increases my costs.

37. Robin Levett

@TONE #15:

And it just might help the economy!

That’s absolutely right. I was just saying to George this morning – what the economy needs right now is measures that will further depress demand; and he fell for it!

This is all so predictable. First you take away the power of the unions, using riot police, and propaganda about anti democratic bah blah, then with the workers nicely softened up with a global depression you take away their employment rights. Pretending that it will be ‘voluntary’ you give the lie that it is all free people with equal power making their own decisions.

Of course it is not equal power. On one side rich wealthy employers who have millions in the bank, on the other side mostly poor desperate employees with little more tan 2 months money in the bank. And of course any employees who won’t sign can be take to one side (off the record with no witnesses about) and told ever so politely, that there will never be any promotion for that employee if they refuse to sign.

This is to be rushed through parliament,( always a good sign the people are getting screwed over) with the support of Clegg and his orange tory scum. Where Mr Clegg is this in your manifesto? Nowhere, just like all the other shite you have voted for. The Lib Dems have always been the helpers of the tories. Even in the 80s with their left of centre policies they split the anti tory vote to ensure tory domination for 18 years. Now they are in govt with them. Don’t knock on my door Mr Clegg at the next election because I will punch you in the mouth.

39. Chaise Guevara

@ 34 pagar

“You SHOVED him.

Maybe, if you’d offered to pay him a bit more, he’d have gone of his own accord.”

Just to clarify, are you ok with the Victorian chimney sweep tradition – i.e. pre-teens doing unhealthy jobs, with a good chance of being maimed or killed, for not much money? In other words, is the shoving the only thing you object to in MoCO’s scenario?

40. Man on Clapham Omnibus

@34

Whether or not employment contracts are voluntary is, like wage levels, high dependent on supply and demand

Wrong. They are always voluntary. Anything else is slavery.

Only in the context that a person may be forced to take a shit job or not eat. Where there is a real choice say in the case of employee shortages maybe the contract is voluntary.

How does minimum wage reduce the value of the contract to both sides?

By prohibiting the voluntary agreement both parties wish to enter into at a wage below NMW.

No minimum wage is a benefit to the employee I think your find and against the employers better interest.

I was saying something similar to the kid I just shoved up the chimney.

You SHOVED him.

Sorry, mate, that’s not on. Maybe, if you’d offered to pay him a bit more, he’d have gone of his own accord.

No, shoving is part of his contract which, in the face of starvation, he willingly entered into.

@ Robin

Why should the state prevent my customer from contracting with me on terms of his choice? My customer chose to contract with me on terms that excluded my liability for inclusion of toxic amphibians.

One of the few legitimate roles of the state is to uphold the rule of law. Ultimately, the decision as to whether or not the “no toxic amphibians” exclusion clause in the contract was reasonable would be up to the courts. I am supposing that they would decide it was not.

@ Chaise

Just to clarify, are you ok with the Victorian chimney sweep tradition – i.e. pre-teens doing unhealthy jobs, with a good chance of being maimed or killed, for not much money?

Depends on the alternative they faced. If the alternative were starvation or prostitution, then I think I am. The same would apply to the current child labourers in Cambodia.

@ MOCO

No minimum wage is a benefit to the employee I think your find and against the employers better interest.

What benefit is it to the employee if it prevents him getting employment?

He really is an incompetent little shit.

On the plus side this could be the final nail in this coalitions coffin.

43. Chaise Guevara

@ pagar

“Depends on the alternative they faced. If the alternative were starvation or prostitution, then I think I am. ”

Fair, but can you then see why we would want to design a system to ensure that people never have to choose between those alternatives, perhaps by use of benefits and workers’ rights?

44. Man on Clapham Omnibus

@43

“Depends on the alternative they faced. If the alternative were starvation or prostitution, then I think I am. ”

Fair, but can you then see why we would want to design a system to ensure that people never have to choose between those alternatives, perhaps by use of benefits and workers’ rights?

Er no not fair. There happens to be externalties here which might be worth looking at . Dead bodies on streeet = not good for public health. Similarly with prostitution.
Moreover ill health is costly especially if you need. But the worst thing is poor people make crap consumers.

@41 Pagar

No minimum wage is a benefit to the employee I think your find and against the employers better interest.

What benefit is it to the employee if it prevents him getting employment?

No evidence min wage has done that.

45. Man on Clapham Omnibus

@43

Moreover ill health is costly especially if you need. But the worst thing is poor people make crap consumers.

should have read

Moreover ill health is costly especially if you need people for state business ie war. But the worst thing is poor people make crap consumers.

I am not going to dismiss this out of hand, but some of it is quite baffling to me. I freely admit I don’t know much about the law of company shares so would welcome some explanation. Who enforces/determines how many shares are worth what amount of money, at the point of employment, and later?

And what happens if the employee immediately quits or is sacked for gross misconduct? The latter event must presumably lead to some loss of the right to the payment, which will lead to satellite litigation effectively equivalent to the present law of unfair dismissal law. And a minimum of £2k payment on dismissal is similar to present unfair dismissal rights.

I’m actually struggling to see what’s in this for the employer, absent some kind of trickery.

Okay. I know LC is not known for it’s accurate titles, but this is just plain misleading. It is not ‘forcing’ anyone. In fact the specific statement is:

“Employee-owner status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires.”

The words ‘optional’ and ‘choose’ should be noted.

@Tom – Apparently upon the worker being sacked the employer can or has to forcibly buy back the shares at a ‘reasonable price’.

49. Chaise Guevara

@ 44 MoCO

“Er no not fair. There happens to be externalties here which might be worth looking at . Dead bodies on streeet = not good for public health. Similarly with prostitution.”

Um, that would make choosing a dangerous job over starvation/prostitution MORE fair.

Is the scheme for between £2,000 a £50,000 worth of shares each, or is that the full pot that’s shared among the workforce?

51. Chaise Guevara

@ 47 Freeman

“The words ‘optional’ and ‘choose’ should be noted.”

“Optional” is only guaranteed for existing employees. “Choose” refers to employers, not workers. So the headline is accurate insofar as people will be forced to give up benefits or turn down the job.

@51

Exactly, they can choose to take the job. No one is forcing anything here. It ‘can’ be a condition of employment. Just as a condition of some employment is night shifts, or where someone can only receive a job if they opt-out of the working time directive.

53. Planeshift

Thinking about this some more – it doesn’t even pass the test the government sets for it (whether it will reduce the cost to small firms of employing people). Lets consider someone who is self employed but considering taking somebody on.

Currently we are supposed to believe that many people won’t because they are afraid of getting sued if the person they take on proves to be useless. Lets leave that aside for now. Now lets consider how this new proposal that workers will be given equity in a business instead of employment protection will influence the self employed person’s decision.

Does anybody here think that the self employed person will find it any easier to pick the right person under this new system? They will have to explore all sorts of laws and regulations based on ownership of companies, find out what is a fair market value for their company (and hence how many shares to offer), and face their new employee having shareholder rights. Are they really going to find this easier than simply hiring someone and taking out insurance against a lawsuit further down the line?

@ Chaise

can you then see why we would want to design a system to ensure that people never have to choose between those alternatives, perhaps by use of benefits and workers’ rights?

The way to ensure people don’t have to starve or prostitute themselves is to create wealth. The reason we don’t have child labour in the UK any more is not because there is a law forbidding it, but because we are, relatively, wealthy.

If we are to continue to have more affluent workers in the future we need to stop interfering with the freedom of employment markets to operate because we are competing in a global market with other countries where they allowed to do so.

@ MOCO

No evidence min wage has done that.

Empirical evidence of the effect of the NMW on employment is never meaningful because it is impossible to know what the unemployment rate would be if it had not been introduced. But standard economic theory indicates that it must be suppressing employment.

This is another peculiarity of libertarian-world, where “force” has a notoriously strange meaning.

Back in the real world, if you have a ‘choice’ between accepting X or going hungry and homeless, then most people would agree that X has indeed been forced upon you.

56. Chaise Guevara

@ 52 Freeman

“Exactly, they can choose to take the job. No one is forcing anything here. ”

Certainly the employer isn’t forcing the prospective employee. But the situation created by the government will, in many cases, force people to choose between unemployment and losing their worker’s rights. So realistically they won’t have a choice.

57. Man on Clapham Omnibus

@49

Um, that would make choosing a dangerous job over starvation/prostitution MORE fair.

Completely lost on this one.

I know this site is full of watered down liberals but surely someone here might recognise that in the context of modern Britain Employers choose who works and who doesn’t work. The notion of everyone’s free to determine their terms of work is a complete nonsense. Worse by implication it suggests that everyone who isn’t currently working is choosing not to do so. ‘I’m just on the dole whilst I negotiate a contract with a potential employer’

Of course Greece have more people in ‘negotiation phase’.
55% of their youth are currently ‘negotiating’ as we speak.

I think the youth of Spain are in a much better position with 50% ‘negotiating’.

Ya never know, soon 100% of Greece will be in ‘negotiating phase’ (apart from the army and cops and the golden dawn)

The conclusion to all this everybody is as free as birds to do anything they want.

@46 Tom

Baffle away along with the rest of us. You might like to tune into

http://www.taxresearch.org.uk/Blog/2012/10/09/how-are-those-shares-osborne-is-suggesting-companies-should-issue-to-employees-to-be-paid-for/

to note how an accountant is baffled too.

One things for sure ,anyone employee coming for my shares will encouraged to voluntarily exit my employ forthwith.

58. Chaise Guevara

@ 54 pagar

“The way to ensure people don’t have to starve or prostitute themselves is to create wealth. The reason we don’t have child labour in the UK any more is not because there is a law forbidding it, but because we are, relatively, wealthy.”

A bold statement that rather begs the question of why laws against child labour exist.

One thing that wealth creation absolutely does not do is ensure that people don’t starve. All else being equal, more wealth should raise average living conditions. But because the economy isn’t a benign, conscious being that purposefully makes sure that everyone has enough to eat. If you rely entirely on the creation of wealth, then people who are seen as valueless will starve, and people who work in an employer’s market will be ruthlessly exploited.

This is my problem with libertarianism. It’s a concept that, like any other Big Idea, comes with its inherent drawbacks, but rather than face up to those drawbacks, its advocates tend to pretend that they don’t exist. So, in their minds, it becomes a simple solution that, through some kind of magic, is expected to solve all the world’s problems.

“If we are to continue to have more affluent workers in the future we need to stop interfering with the freedom of employment markets to operate because we are competing in a global market with other countries where they allowed to do so.”

I’m pretty sure what actually happens in these circumstances is that the few grow fat on the misery of the many. CF people working in sweatshops in many third-world states where rich companies are allowed to do basically whatever they want.

59. Chaise Guevara

@ 57 MoCO

“Completely lost on this one.”

Pagar basically said that, if the only available options are doing a dangerous job or dying, then doing the dangerous job is probably the better choice. Which is true, hence me agreeing. Don’t extrapolate that out to mean “It’s morally ok that people have to do dangerous jobs.”

“I know this site is full of watered down liberals but surely someone here might recognise that in the context of modern Britain Employers choose who works and who doesn’t work. The notion of everyone’s free to determine their terms of work is a complete nonsense. ”

I agree with this and indeed have been referring to it in the thread, so I’ve no idea why you’re addressing this to me as if I’m a libertarian or something. Are you sure you’re arguing with the right person?

60. Man on Clapham Omnibus

@ 54 pagar

“The way to ensure people don’t have to starve or prostitute themselves is to create wealth. The reason we don’t have child labour in the UK any more is not because there is a law forbidding it, but because we are, relatively, wealthy.”

…..and the legislation prohibiting it.

So the freeman troll views choice as this….”be my slave or starve to death”

Doesn’t sound like much of a choice to me. Especially as benefits are being cut for those who “won’t work.” The capitalist class always like economic crises. They are so good for screwing over their workers.

And as for existing workers having the choice to refuse. Good luck with that. I’m sure companies are compiling black lists as we speak. Those who won’t sign will be told, ever so politely, off the record, with no witnesses around if they don’t make the “right choice” they can forget any hope of promotion. And they can look forward to all the shit jobs. And if they leave, they will only have to sign onto this contact with another company as a new employer.

This is about the rich stealing more from their employees. The consumer is on his back. Weighed down with higher food and energy prices. So the rich elites will have to pick the bones of their workers. The greed of these people is limitless. The originator of this is a hedge fund owner billio

So the freeman troll views choice as this….”be my slave or starve to death”

Doesn’t sound like much of a choice to me. Especially as benefits are being cut for those who “won’t work.” The capitalist class always like economic crises. They are so good for screwing over their workers.

And as for existing workers having the choice to refuse. Good luck with that. I’m sure companies are compiling black lists as we speak. Those who won’t sign will be told, ever so politely, off the record, with no witnesses around if they don’t make the “right choice” they can forget any hope of promotion. And they can look forward to all the shit jobs. And if they leave, they will only have to sign onto this contact with another company as a new employer.

This is about the rich stealing more from their employees. The consumer is on his back. Weighed down with higher food and energy prices. So the rich elites will have to pick the bones of their workers. The greed of these people is limitless. The originator of this is a hedge fund owner who sits on his arse all day moving air around. Lovely.

63. Man on Clapham Omnibus

@54

Empirical evidence of the effect of the NMW on employment is never meaningful because it is impossible to know what the unemployment rate would be if it had not been introduced. But standard economic theory indicates that it must be suppressing employment.

Yes I have heard a lot about ‘standard economic theory’. That’s the one with the right wing notion that if you cut demand you will get growth.

Had you ever thought that the minimum wage, because it goes to the poorest who have a greater marginal propensity to spend, might actually creating the demand for more jobs.

64. Man on Clapham Omnibus

@62

Hey Sally what are those pills you are on?

I need some!

65. Albert Spangler

Is this like, some kind of strange bastardisation of the concept of employee ownership of companies?

I have this horrible tinfoil hat suspicion that the Tories are trying to destroy every single progressive idea they can by watering it down with awful garbage.

“Oh, employee owned companies? We tried that before, everyone hated it”.

Social activism (destroying the voluntary sector/public sector in the name of ‘Big Society’), electoral reform (AV, mayors), work experience (workfare) and potentially, employee ownership of companies (allowing potential dismissal of the concept cooperatives/mutual companies). It’s like they take every decent idea they can and cover it in poisonous slime so no-one wants to touch it any more.

I’d almost suspect some Machiavellian genius at work if it weren’t so apparent that they’re just incredibly thick.

66. Richard Carey

Firstly, my view is that this is just another gimmick from the government. The chancellor’s speech was half free market rhetoric and half declarations that the government will manage the economy with this or that scheme and this or that investment.

Secondly, against various strawman attacks on libertarians;

Selling poisonous frogs labelled as a snack is clearly a violation of something, and no system of libertarian law, under whatever theoretical framework ever said otherwise;

The minimum wage laws do cause unemployment to anyone whose productivity is less than the minimum wage. If you don’t believe this, then why don’t we put the minimum wage up to £50 per hour, and then we’ll all be rich, right? Empirical data is, as Pagar said, unable to say anything about this, but what you would expect to see is a group of long-term, low-skilled unemployed people and high youth unemployment.

Regarding child labour in previous centuries; it continued until the wealth of the nation increased, and the mechanisation of low-skilled jobs, so as to make it unnecessary. The rules that outlawed child labour also outlawed women working, btw.

@ 55 Larry,

“This is another peculiarity of libertarian-world, where “force” has a notoriously strange meaning.”

Wrong. Force is understood by libertarians with the standard definition. We usually stick to the old definitions as a general rule.

“Back in the real world, if you have a ‘choice’ between accepting X or going hungry and homeless, then most people would agree that X has indeed been forced upon you.”

We are all forced to work by nature, in order to provide for ourselves, unless someone else supports us, but there is a fundamental distinction between slavery and freedom, which you are obscuring with your definition of ‘force’.

I think this will fail at the consultation phase.

Assuming for a moment that this is intended as a positive thing for all concerned (not impossible, there’s an election to win), there’s a germ of an idea here. Something to do with flexibility for employers, performance-related benefits for workers, whatever.

However, there are so many potential drawbacks and complications, I’d want it led by someone who, at the very least, can organise a pasty tax.

Conference bollocks I reckon.

Yeah right, give up your liberties for shares in a company which will crash with the rest of the economy, and then you are left owing when the company fails. look between the words for the truth. welcome to the New world Order

I thought it was conference bullshit, but by all accounts both Clegg and Cable have agreed to this. They are going to try to ram this through Parliament quickly. I may be wrong but I think the fix is in.

Clegg might as well put up a blank piece of paper as their next manifesto, because when they write stuff down they just ignore it.

Picking up on the NMW thing – what it protects most is the taxpayer. At present, and in the near future with Universal Credit, the taxpayer tops up low paid people’s incomes to a basic level they can live off. The lower people’s wages are, the more of the cost of employing people is transferred from the employer to the taxpayer.

Of course, we could get rid of benefits that top up low incomes and allow people to starve, but this could prove very expensive in terms of the impact on health, on the need to take children into (expensive) care, on places in prisons for people who steal to live or who breach asbos and local exclusion orders against begging.

71. Richard Carey

@ 70 David,

“Picking up on the NMW thing – what it protects most is the taxpayer. At present, and in the near future with Universal Credit, the taxpayer tops up low paid people’s incomes to a basic level they can live off. The lower people’s wages are, the more of the cost of employing people is transferred from the employer to the taxpayer.”

Right, but surely the top-up benefits give an incentive for employers to keep wages low, either at minimum level or near it? So, now we have a group of unemployable people, due to the minimum wage, and another group of poorly-paid workers, who are kept on low wages, due to the top-up benefits, and everyone, low paid or not, is labouring under the high taxes to pay for it all.

“Of course, we could get rid of benefits that top up low incomes and allow people to starve…”

Cut the regressive taxes that pick the pockets of the low paid, and they won’t need to ask for charity from the lovin’ government.

72. Robin Levett

@Richard Carey #71:

Cut the regressive taxes that pick the pockets of the low paid, and they won’t need to ask for charity from the lovin’ government.

Show your workings, please.

And isn’t it a little unusual for a libertarian to argue in favour of taxes on income and against taxes on consumption?

Oh please, libertarians are like demented parrots. Their answer to every problem is always the same…..”cut taxes, cut taxes ,cut taxes”

I am afraid you have cancer. “Cut taxes, cut taxes”
I can’t put a roof over my head “cut taxes, cut taxes”

Very much a broken record.

“The way to ensure people don’t have to starve or prostitute themselves is to create wealth.”

Come off it. Pagar – wealth creation in and of itself has never done any such thing.

Look at the Victorian era – there’s never been a more time more obsessed wealth creation for its own sake, and yet it’s still held up today as a time when the most squalid, abject poverty was the norm for the vast majority: starving and prostitution were amoing the only options for huge numbers of the populace.

Wealth creation for the public good, my arse…

75. Richard Carey

@ Robin 72,

“Show your workings, please.”

Do your own workings. Taxes like VAT, fuel duty and tobacco duty are all very regressive, and Employer NI is ridiculous, once you realise it’s just going into the pot of general expenditure.

“And isn’t it a little unusual for a libertarian to argue in favour of taxes on income and against taxes on consumption?”

I wasn’t arguing in favour of income taxes, but I do think they are less bad than consumption taxes, which may be unusual amongst libertarians, but I can back it up with support from Frederic Bastiat, who you may not have heard of, but libertarians have. We all agree on cutting the burden (as Sally has noted), and simplifying the system.

You would have to be nuts to sign away your employment rights for shares that may end up worthless. Especially for so little as £2000. But some people will, because they are desperate for a job. They are broke or have kids to feed. This is a backwards step. Why stoop so low for so little.

77. Richard Carey

@ 74 Keith,

“Look at the Victorian era – there’s never been a more time more obsessed wealth creation for its own sake, and yet it’s still held up today as a time when the most squalid, abject poverty was the norm for the vast majority…”

Held up today by ignorant people who do not compare it to what came before the Victorian era, which was much worse. What you may be missing is that wealth is not about money, but things. Creating wealth is about creating things, such as shoes, shirts, cars etc. Industrialisation meant mass production, and mass production is production for the masses.

A general point. The reason why the Tories and Orange Book Lib Dems are obsessing about employment rights is that their economic theory (the neo-classical synthesis) says that this depression (indeed any) is imposasible. Rational markets will always respond instantly to fill demand gaps. This isn’t happening. They can’t change tack without abandoning the beliefs of a lifetime. So, they reach for the classical (pun intended) get-out clause: externalities. In other words the market is trying to behave according to the model, but is being prevented by some external factor. As capitalists (by their definition) always behave rationally, this can only mean that they are inhibited by labour costs: hence the drive to deregulate.

keynes demonstrated this view to be absolute rubbish between the wars, and classical economists have been doing the academic verion of putting their fingers in their ears and going “La, la, la” ever since.

David @70

Picking up on the NMW thing – what it protects most is the taxpayer. At present, and in the near future with Universal Credit, the taxpayer tops up low paid people’s incomes to a basic level they can live off. The lower people’s wages are, the more of the cost of employing people is transferred from the employer to the taxpayer.

I have no problem with everyone receiving a basic income to live on, whether this is achieved by means of a top-up to low income in the form of a tax credit or, rather better, in the form of a CBI (which I hope the Universal Credit is the first move toward).

But the effect of the NMW on the taxpayer is clearly negative as it prices some potential workers out of the market and the taxpayer has to fund their support in full rather than top up their income.

80. Chaise Guevara

@ 77 Richard

“Held up today by ignorant people who do not compare it to what came before the Victorian era, which was much worse. What you may be missing is that wealth is not about money, but things. Creating wealth is about creating things, such as shoes, shirts, cars etc. Industrialisation meant mass production, and mass production is production for the masses.”

True, but the Victorian era is a pretty appalling spectre nonetheless. Two reasons: they allowed abject misery despite having far more wealth than previous periods, and their system would be possible to recreate under current values (indeed, the Tories are drifting slowly in that direction), whereas feudalism etc wouldn’t.

The Victorians had the gift of industrialisation, and unfortunately used it with the wrong priorities in mind. It’s not really surprising: the potential money to be gained would put stars in most people’s eyes.

Keith @74

Look at the Victorian era – there’s never been a more time more obsessed wealth creation for its own sake, and yet it’s still held up today as a time when the most squalid, abject poverty was the norm for the vast majority: starving and prostitution were among the only options for huge numbers of the populace.

In terms of GDP we are more than 20 times wealthier today than we were in 1850. A few had made the leap from extreme poverty in Victorian times but the fact that everyone has now achieved that is due to this massive increase in wealth.

The Victorians put in place the foundations for building wealth through industrialisation and trade and, as Richard points out, 1850 was certainly a lot better than 1750 when almost everyone was hitting the ground with a stick and dreaming of jobs as prostitutes and chimney sweeps.

82. Richard Carey

@ 80 Chaise,

“Two reasons: they allowed abject misery despite having far more wealth than previous periods”

What does ‘allowed’ mean in this context? There was plenty of misery, but as wealth grew, so did the population, as did the average standard of living, life expectancy etc., and the wealth was used to improve sanitation, build schools, hospitals etc. Such things improved the lives of the many, and were unthinkable in earlier times. Rather than complain that the Victorians weren’t more generous with their wealth, we should look at the world around us now. There is still plenty of poverty and hunger, and after 100 years plus of state intervention and socialism, rather than laissez-faire capitalism, you can’t blame the Victorians for that.

“The Victorians had the gift of industrialisation, and unfortunately used it with the wrong priorities in mind.”

Such as what?

“But the effect of the NMW on the taxpayer is clearly negative as it prices some potential workers out of the market”

Whilst the effect of NMW on overall employment levels was negligable, worstall and dillow were fond of citing results that showed employers cut hours as a result of it (despite the fact the overall report was far more positive about NMW).

However the other effects of NMW – set at an a appropiate level are:

* Employers invest in making workers more productive to ensure they get value for money (=more demand for upskilling)

* Technology is used to automate tasks previously done by unskilled workers (=more demand and development of technology)

* Low paid workers get a pay rise per hour, which even if leads to fewer hours worked can be a net gain (20 hours at £5hr is the same as 16 hours at £6.25 plus the worker gets more free time)

* Employees are more motivated to work, and may be less likely to look for other jobs.

When combined with the new deal – which specifically aimed to upskill those priced out of the labour market by NMW (people who would otherwise be spending their careers in unskilled work before the inevitable onset of ill health) – the overall effect in the long run is clearly quite positive for the taxpayer, the employer, and the worker.

The key to making to the policy work is getting the level of NMW correct, with a lower rate for young people to create an incentive for the provision of starter jobs, and ensuring a welfare system that identifies those who have been priced out by NMW and invests in upskilling them.

It is also worth pointing out that the growth of cheap labour and sweatshops in the developing world would have meant fewer unskilled jobs in the UK anyway over the time period of NMW.

84. Chaise Guevara

@ 82 Richard Carey

“What does ‘allowed’ mean in this context?”

What it usually does: failed to prevent.

“There was plenty of misery, but as wealth grew, so did the population, as did the average standard of living, life expectancy etc., and the wealth was used to improve sanitation, build schools, hospitals etc. Such things improved the lives of the many, and were unthinkable in earlier times. ”

Because of technology, which is my point. The Victorians weren’t better people that their predecessors, they just had better tech – and they used the wealth generated by said tech with great callousness.

“Rather than complain that the Victorians weren’t more generous with their wealth, we should look at the world around us now. There is still plenty of poverty and hunger, and after 100 years plus of state intervention and socialism, rather than laissez-faire capitalism, you can’t blame the Victorians for that.”

You’re conflating the world with the UK. After all those years of socialism, this country no longer allows children to starve in the street, it no longer gives the poor the choice between the workhouse and death. It now gives every child an education, every adult a vote, and everyone the medicines they need to live.

Whereas laissez-faire and botched/faux-socialism are both responsible for much of the misery around the world. In any case, I never blamed the Victorians for today’s problems.

“Such as what?”

Such as focusing on wealth at the expense of human beings.

85. Richard Carey

@ 84 Chaise,

“Because of technology, which is my point. The Victorians weren’t better people that their predecessors, they just had better tech – and they used the wealth generated by said tech with great callousness.”

Technological advances mean nothing without the capital to implement them. We have the technology to irrigate the Sahara, what we don’t have is the spare capital to make it happen. I don’t know where you get the ‘great callousness’ from. No doubt you could drag up some callous quotes, but I could drag up some altruistic quotes from the period. I can also point to numerous schools and other amenities in my general area (south London) which were built in that era.

“You’re conflating the world with the UK.”

No, I’m just pointing out that there is appalling poverty in the world today, so we shouldn’t sit on a high horse judging the Victorians for not being able to solve it at a stroke. Had we not spent the 20th century engaged in massive wars, economic protectionism,totalitarian ‘experiments’ etc., who can say how much better off we would all be?

“After all those years of socialism, this country no longer allows children to starve in the street”

This is just an emotive, unjustifiable claim. I accept that the average socialist (not counting the Marxist ideologues) wanted and still wants a better life for the poor. Unfortunately as an economic system, it doesn’t deliver. This is the case both theoretically and empirically.

86. Richard Carey

@ 83,

“The key to making to the policy work is getting the level of NMW correct, with a lower rate for young people to create an incentive for the provision of starter jobs, and ensuring a welfare system that identifies those who have been priced out by NMW and invests in upskilling them.”

This is, I note for other readers, an admission of the point being made by the libertarians, that minimum wage laws cause unemployment to those whose productivity is less than the cost of their labour, which shouldn’t be at all controversial.

@ Planeshift

To take your NMW benefits in turn.

Employers invest in making workers more productive to ensure they get value for money

Possible marginal side effect. May have a downward influence on employee churn.

Technology is used to automate tasks previously done by unskilled workers

I think you’ll agree that this happened before NMW and will continue to happen.

Low paid workers get a pay rise per hour, which even if leads to fewer hours worked can be a net gain (20 hours at £5hr is the same as 16 hours at £6.25 plus the worker gets more free time)

Making our companies uncompetitive in the global marketplace and encouraging outsourcing of work to other countries.

Employees are more motivated to work, and may be less likely to look for other jobs.

Really? They are already being paid above the market rate so NME means it will be more difficult to achieve a wage increase, and that is demotivating.

But I have to agree that, overall, the effect on the economy of NMW, as currently set, is at the margin. However the real objection is not at its consequences but at its principle.

I want a job cutting your grass. You are happy to employ me at £5 an hour and I am happy to work at that rate.

In my view no third party, including the state, has the right to prohibit the legitimate arrangement we both want to enter into and it certainly has no right to threaten you with sanctions if the contract is agreed.

This might not seem an important principle to some, but that only demonstrates how far, and unthinkingly, we have travelled down the increasingly authoritarian road.

88. Chaise Guevara

@ 85 Richard Carey

“Technological advances mean nothing without the capital to implement them. We have the technology to irrigate the Sahara, what we don’t have is the spare capital to make it happen.”

Sure, which is why you strike a balance between wealth generation and humanitarianism, rather than clinging to one extreme or the other.

“I don’t know where you get the ‘great callousness’ from. No doubt you could drag up some callous quotes, but I could drag up some altruistic quotes from the period. I can also point to numerous schools and other amenities in my general area (south London) which were built in that era.”

I’m not thinking of quotes. I’m thinking of a system that treated the working classes as little better than slaves, keeping them in thrall to the rich. It’s not just industry, either. A Victorian maid accused of stealing would not only lose her job, but be blacklisted, which could be fatal. I shudder to think how many lives were destroyed because a maid was blacklisted after her master misplaced something, or something was stolen by a family member or guest, or the mistress saw the maid as a competitor for her husband’s affections.

I’m not saying all Victorians were bastards. Charity existed, and in some cases was at the level of great public works. But the fashionable system was inherently callous, leaving charity to inadequately plug the gaps left by the state.

“No, I’m just pointing out that there is appalling poverty in the world today, so we shouldn’t sit on a high horse judging the Victorians for not being able to solve it at a stroke. Had we not spent the 20th century engaged in massive wars, economic protectionism,totalitarian ‘experiments’ etc., who can say how much better off we would all be?”

Agreed with that. The Victorians barely tried, though, which is the issue. At least at the political level; individual philanthropists deserve full credit.

“This is just an emotive, unjustifiable claim.”

What? Why?

“I accept that the average socialist (not counting the Marxist ideologues) wanted and still wants a better life for the poor. Unfortunately as an economic system, it doesn’t deliver. This is the case both theoretically and empirically.”

This claim is somewhat at odds with the fact that most states with high wealth and good quality of life are to some degree socialist.

89. Chaise Guevara

Richard:

I’m not sure that we mean the same thing when we say “socialism”, so let me clarify my meaning. I earlier condemned “botched/faux-socialism”, which is a bit unclear. What I meant by that was systems that are either fascist states wearing a socialist mask (Stalinism, Maoism) or socialist states that go too far and put the ideological cart before the practical horse (like old Labour and its insane punitive tax rates on high incomes).

When I talk about socialism I mean the sort of thing we have now: universal healthcare and education, worker and consumer rights, but with incentives still existing to generate wealth and jobs. And democratic, obviously.

Chaise @56: “But the situation created by the government will, in many cases, force people to choose between unemployment and losing their worker’s rights. So realistically they won’t have a choice.”

On the other hand, if this is not allowed, the situation created by the government will force people to choose between unemployment and unemployment. Realistically, I see this as a smaller amount of choice available.

What we have is not shortage of work to be done. What we have is shortage of people and organisations who can afford to hire someone and have an incentive to do so. Governments have spent so much money that they’ve lost not only what they collected in taxes but also what they have borrowed – as much as they could.

The proposal to opt in for ownership instead of a highly “protected” worker’s status seems to be an attempt to create incentives to hire and get hired. Not a bad target IMO. I don’t know if this proposal is any good, but much of the criticism is based on very strange economic assumptions.

91. Robin Levett

@Richard #75:

(Reinstating the whole dialogue)

Cut the regressive taxes that pick the pockets of the low paid, and they won’t need to ask for charity from the lovin’ government.

“Show your workings, please.”

Do your own workings.

No, it doesn’t work like that; you made the claim that the low-paid get less back in benfits than they pay in taxes – you support it with evidence or drop it.

Taxes like VAT, fuel duty and tobacco duty are all very regressive, and Employer NI is ridiculous, once you realise it’s just going into the pot of general expenditure.

That’s as maybe, but doesn’t actually address the claim you made.

92. Robin Levett

@pagar #41:

Why should the state prevent my customer from contracting with me on terms of his choice? My customer chose to contract with me on terms that excluded my liability for inclusion of toxic amphibians.

One of the few legitimate roles of the state is to uphold the rule of law. Ultimately, the decision as to whether or not the “no toxic amphibians” exclusion clause in the contract was reasonable would be up to the courts. I am supposing that they would decide it was not.

You’ve lost me, I’m afraid. At what point did you decide that the government was entitled to interfere with contracts freely negotiated between contracting parties? And if the government can interfere by insisting that all contractual terms must be reasonable, what possible argument can you have against employment law?

93. Chaise Guevara

@ 90 pjt

“On the other hand, if this is not allowed, the situation created by the government will force people to choose between unemployment and unemployment. Realistically, I see this as a smaller amount of choice available.”

I’m not convinced that this will create significant amounts of work, and even if it does it’s hardly the only way to do so. But let’s assume for argument’s sake that it will work and that it’s the only option on the table – that we have a straight choice between this and the status quo:

If this is simply a harsh necessity in the current job climate, what assurances has the government given that it will reinstate workers’ rights once we’re out of trouble?

Also, added to other government programmes, I believe that it would be more accurate to say that this little idea will force people to choose between exploitation and destitution: if someone turns down a job because their rights would be taken away, would that refusal not be used as an excuse to stop their benefits?

94. Robin Levett

@pjt #91:

On the other hand, if this is not allowed, the situation created by the government will force people to choose between unemployment and unemployment.

In a far smaller proportion of cases. Employers need employees; it’s kind of their raison d’etre; without employees, they’d not be employers.

I’d love to see your statistics that show that there is a huge pool of work to be done that will only be done if the employers are allowed to force the employees to sign away their rights. And that none of the jobs advertised currently without that option for the employer will ever be filled.

78. MarkAustin

” A general point. The reason why the Tories and Orange Book Lib Dems are obsessing about employment rights is that their economic theory (the neo-classical synthesis) says that this depression (indeed any) is imposasible. ”

A general point that is completely wrong. Neoclassical synthesis is pretty much the same thing as New Keynesianism. The NK believe the economy is in a liquidity trap and only the government or a long period of time on its own can get it out of the liquidity trap. The Neoclassicals believe different things. However, Neoclassicals and New Keynesians are different groups and the synthesis is from taking the micro from one with the macro of the other.

96. Richard Carey

@ Chaise,

“Sure, which is why you strike a balance between wealth generation and humanitarianism, rather than clinging to one extreme or the other.”

I think I agree with the sentiment, although I don’t think it follows from the point I made. In any case, you need the first before the second becomes possible, and, as I said above somewhere, wealth should be seen in terms of material goods and not units of money, so I don’t see a clash between wealth generation and humanitarianism.

“But the fashionable system was inherently callous, leaving charity to inadequately plug the gaps left by the state.”

This is a little bit anachronistic. The state did not exist in its present form, size and scope. Also, bear in mind how callous a Victorian would see us, discharging our moral responsibilities to care for those less fortunate onto the impersonal state.

“The Victorians barely tried, though, which is the issue.”

I disagree. They tried very much, as the schools and hospitals around me illustrate. All you can say is they should have done more. But be realistic. If poverty was as widespread and grinding as you say – and I’m not disagreeing – it simply could not be solved in a short space of time. What we do see is a steady improvement in conditions, in parallel with a considerable growth in population.

“When I talk about socialism I mean the sort of thing we have now: universal healthcare and education, worker and consumer rights, but with incentives still existing to generate wealth and jobs. And democratic, obviously.”

Okay, but this isn’t really socialism as per the dictionary, but rather the fruits of a successful economy. The argument between socialists and liberals was (/is) mainly about the best way to achieve such benefits for society. I think part of the problem can be found in J S Mill, who said something like ‘the problems of production have been solved, now we must deal with the problems of distribution’. However this was a mistake, as production and distribution cannot be separated. I think socialists (a generalisation, I know) take, as Mill did, production for granted.

@ Robin

At what point did you decide that the government was entitled to interfere with contracts freely negotiated between contracting parties?

I didn’t.

I was referring in this (rather silly) scenario to the civil courts who would agree that the poisonous frog exclusion clause was unreasonable and award damages to those poisoned by the frogs.

I can’t believe I’ve just typed that…….

“This is, I note for other readers, an admission of the point being made by the libertarians, that minimum wage laws cause unemployment to those whose productivity is less than the cost of their labour, which shouldn’t be at all controversial”

That almost every policy ever suggested has both strengths and weaknesses isn’t remotely uncontroversial to all but the most ideologically dogmatic. What matters is recognising this, and taking additional steps to mitigate the weaknesses of this. Do I think the NMW at the current level is overall a good thing? yes. Would I support raising it to £50/hr? Absolutely not.

Do I wish we could move on beyond a dogmatic battle over this policy that will never be won by any side over it? Yes. I’d rather we were discussing creative ideas to increase employment that don’t require either more government spending, or removal of workers rights, – ideas that could be supported by many parts of the political spectrum and might just be a bit more valuable in the current situation than arguments based on the ‘copy and paste’ function that became boring a long time ago.

99. Richard Carey

@ Robin,

“No, it doesn’t work like that; you made the claim that the low-paid get less back in benfits than they pay in taxes – you support it with evidence or drop it.”

Who appointed you the great arbiter? In any case, I did not make that claim, nor would I make a quantitative claim such as X will be greater than Y, as economics cannot be used to make such claims. If we want to help the poor, we should cut back the regressive taxes. This is even more important if benefits are being cut.

to your point @ Pagar,

“You’ve lost me, I’m afraid. At what point did you decide that the government was entitled to interfere with contracts freely negotiated between contracting parties? ”

You’re sweating a silly argument. Contracts do not have to have clauses stating that neither party will defecate in their hand and throw it in the face of the other party, or any other abstract thing. There is also the notion of an implicit contract, and if the case involves selling poisoned frogs under the guise of selling food, then it sounds like fraud.

100. Richard Carey

@ 98 Planeshift,

“Do I wish we could move on beyond a dogmatic battle over this policy that will never be won by any side over it? Yes. I’d rather we were discussing creative ideas to increase employment that don’t require either more government spending, or removal of workers rights”

Fair enough. You know, the only reason we go on about it, is because so many of our interlocutors refuse to accept the simple point or acknowledge that there are indirect consequences as well as direct. On top of this they demand ‘evidence’, which can never be supplied, as we don’t have a parallel universe where everything is exactly the same apart from having no NMW.

As for creative ideas; abolish Employer NI, which is nothing but a tax on employing people.

@94: “Employers need employees;”

This is the problem: they don’t need as many as we’d like.

If it’s not economically feasible to hire someone, employers are not going to be employers, they don’t need employees. Employing someone is not paying off. It’s not easy to solve this problem, but I would start by being nicer to possible employers and by making it easier to hire someone, not by accusing employers for not employing enough. I’d also consider that perhaps it would be good to make it more sensible for employees themselves take part in the employer side, instead of being in the mode “someone must give me good wages or good benefits, or I’ll have a fit. It’s my right!”.

102. Robin Levett

@Richard, pagar;

On the issue of governemnts interfering with contracts freely negotiated between willing parties; it is only recently that English courts have had statutory powers to interfere with contractual terms that are merely unreasonable. Prior to that, the common law limited itself to interpreting contractual terms, not striking them down (with the pretty much sole exception of a term repugnant to the contract).

There is a contradiction between your apparent joint view that the state through the Courts properly has a power to interfere with the terms of a freely-negotiated contract made between willing parties to ensure that all terms are reasonable in its view as between the parties, and the usual libertarian view that the state is there to enforce, not rewrite contracts. That is relevant here, because you are relying upon that standard view to reject employment law.

103. Robin Levett

@Richard Carey #99:

“No, it doesn’t work like that; you made the claim that the low-paid get less back in benfits than they pay in taxes – you support it with evidence or drop it.”

Who appointed you the great arbiter?

Me? Not me; do you really propose that debate ssuch as this should be conducted on the basis that it is my job to disprove your claims, not yours to prove them?

n any case, I did not make that claim,

Oh, yes, you did…

Here (#71):

Cut the regressive taxes that pick the pockets of the low paid, and they won’t need to ask for charity from the lovin’ government.

…which relies upon an assumption that the low paid pay more taxes than they get back in benefits. If they don’t then even relieving them of all taxation will still leave them requiring benefits. Stands to reason, don’t it?

nor would I make a quantitative claim such as X will be greater than Y, as economics cannot be used to make such claims. If we want to help the poor, we should cut back the regressive taxes. This is even more important if benefits are being cut.

Perhaps you should think through the claims you do make, then?

104. Churm Rincewind

@ Chiase Guevara 88

“The Victorians barely tried, though, which is the issue. At least at the political level; individual philanthropists deserve full credit.”

I think you traduce the Victorians. They were much occupied by the problems of poverty, as opposed to the previous century when it was seen as a natural state for many.

It may well be that their solution, which was to emphasise self reliance over state support, is no longer considered adequate or even appropriate. But they did try.

105. Chaise Guevara

@ Richard Carey

“I think I agree with the sentiment, although I don’t think it follows from the point I made.”

It follows from a combination of your position on socialism and mine on laissez-faire.

“In any case, you need the first before the second becomes possible, and, as I said above somewhere, wealth should be seen in terms of material goods and not units of money, so I don’t see a clash between wealth generation and humanitarianism.”

There isn’t an inherent clash. Sometimes they work together, other times they work against each other. They’re not opposites or anything.

“This is a little bit anachronistic. The state did not exist in its present form, size and scope.”

If you like. The point is that these gaps have since been filled by the state. And whoever we hold accountable for the gaps back in Victorian times, it can’t be denied that the gaps were there.

“Also, bear in mind how callous a Victorian would see us, discharging our moral responsibilities to care for those less fortunate onto the impersonal state.”

Your hypothetical Victorian thinks that whether or not the help people get is delivered in a “personal” fashion is more important then whether or not people actually get help in the first place. I’m really not bothered if someone with that messed-up a values system thinks bad things about me.

“I disagree. They tried very much, as the schools and hospitals around me illustrate.”

I did explicitly say that they didn’t try enough at the state level. How many of those schools and hospitals were funded by philanthropy?

“All you can say is they should have done more.”

Well, yeah, that’s exactly what I’m saying.

“But be realistic. If poverty was as widespread and grinding as you say – and I’m not disagreeing – it simply could not be solved in a short space of time.”

Perfection fallacy. They could have done a lot more with what they had. They could have created workers’ rights, funded universal education even if it was basic, outlawed the practice of imposing exploitative fines on employees.

“What we do see is a steady improvement in conditions, in parallel with a considerable growth in population.”

Yes, but only with a wide lens. We also see a lot of people sacrificed on the altar of personal wealth.

“Okay, but this isn’t really socialism as per the dictionary, but rather the fruits of a successful economy.”

“Socialism” as used covers a lot of different bases and is a breeding ground for arguments at cross-purposes, hence my clarification. It certainly gets used to mean what I describe (as often by its detractors as its proponents). I suspect dictionaries would give you several contradictory definitions.

“I think socialists (a generalisation, I know) take, as Mill did, production for granted.”

There may be a tendency towards oversight in that area, yeah. That’s what Labour got wrong back in the day with its massive tax (90%? 95%?) on high incomes.

106. Chaise Guevara

@ 104 Churm

“I think you traduce the Victorians. They were much occupied by the problems of poverty, as opposed to the previous century when it was seen as a natural state for many.”

At a personal level, yeah. A future civilisation scanning works and conversations from present-day Britain might conclude that we are very concerned about the third world; if the same civilisation looked at how we actually treat the third world, they might not look at us so kindly. At that’s a harder problem in some ways: the third world, unlike starving Victorians, is not within Britain jurisdiction.

“It may well be that their solution, which was to emphasise self reliance over state support, is no longer considered adequate or even appropriate. But they did try.”

Seems more like a rationalisation to me, the old “poor people only have themselves to blame” chestnut.

107. Richard Carey

@ 102 Robin,

“There is a contradiction between your apparent joint view that the state through the Courts properly has a power to interfere with the terms of a freely-negotiated contract made between willing parties to ensure that all terms are reasonable in its view as between the parties”

Pagar can argue for himself. Firstly, you have based your argument on the silly example of poisonous frogs being sold under the label of food, which in your view would be fine, as long as there is not a specific clause forbidding this agreed prior to the sale. I have dealt with this above.

“the state through the Courts properly has a power to interfere with the terms of a freely-negotiated contract made between willing parties”

I don’t agree to this, nor do I see the courts as one and the same as the state, although I can see that courts may decide, in the interests of justice, to rule against certain contractual claims. This would usually occur if there was doubt over it being freely-negotiated between willing parties. This may be the case if one party was not made aware of certain obscure clauses, or was misled as to their meaning. So a court may take into account not just a piece of paper, but what was said at the time. However, if it becomes the case that no contract is worth the paper it is written on, because of too much interference from courts or the state, then we will have big problems.

As for employment law, the state is enshrining such interference. and is thereby limiting what willing parties may freely agree, and there may be instances where this prevents jobs being created. However, much that comes under the general heading of employment law would fall under other headings, if there wasn’t specific employment law, such as health and safety matters, or bullying at work, you would have a lot of the same issues, but they would be handled slightly differently. Much as our enemies like to misrepresent our position, we are not in favour of employees getting electrocuted or abused in any way. It’s usually the case that we favour general principles being applied, rather than specific regulations about every possible imaginable scenario.

@ 103,

I didn’t make the claim you say, although it is somewhat implied, but what I said does not rely on the assumption that cuts to regressive taxes would amount *more* than a loss in benefits, as such a sum would be different for every individual. What is undoubtedly the case is that, if regressive taxes were cut, the worse off would have more money (by the very definition of ‘regressive taxes), and, if benefits are going to be cut, then there is every reason to cut regressive taxes.

108. Richard Carey

@ Chaise,

“They could have done a lot more with what they had. They could have created workers’ rights, funded universal education even if it was basic, outlawed the practice of imposing exploitative fines on employees.”

Well, the laws prohibiting labour unions were abolished and universal education was established during the Victorian era, and as the century progressed, and wealth accumulated, restrictions on children working (and women btw) became more stringent, as were the various factory acts.

It may not be enough to satisfy you in the 21st century, but I don’t think you are taking into account just how much was done, nor the relationship between government legislation and the society in which it is enacted. Such legislation may sometimes be in advance of public opinion, but often it is in step or trailing behind public opinion.

Perhaps if academia hadn’t become so infested with communists like Hobsbawn, people would appreciate the Victorians more for what they achieved…

109. Chaise Guevara

@ 108 Richard

It’s entirely possible that there was more enlightenment in the period than I realise; I’m taking a general view of quite a long reign, and therefore may not be properly accounting for everything, especially if it was towards the turn of the century.

This has all spiraled somewhat away from my main point, which was that Victorian-style laissez-faire, of the kind that treated the working class like cattle, is a Bad Thing and to be avoided, and British history from when that attitude was in effect warns us of the terrible cost of letting capitalism run wild.

If that isn’t a fair reflection of the entire period, feel free replace it with “the early Victorian period” or whatever. I’m simply saying that laissez-faire destroys the vulnerable, hence my rejection of it.

110. Richard Carey

@ Chaise,

“I’m simply saying that laissez-faire destroys the vulnerable, hence my rejection of it.”

Okay, if that’s the argument, I will have to take issue. Laissez-faire meant, in the context of the times, the dismantling of numerous monopolies, oligopolies and protectionist measures, the argument being that they enabled a minority to benefit, at the expense of everyone else. The most important of these was undoubtedly the Corn Laws, which restricted foreign corn, and allowed large land-owners and other connected interests to rake in the profits delivered by an artificially-restricted market.

The case for the abolition of such laws was made on the basis that abolition would be to the benefit of everyone, bar the handful of privileged insiders. With regard to the Corn Laws, that poor people could afford bread.

Naturally, those who benefited from the status quo ante did not argue to keep the laws on the grounds of their own ill-gotten profits, but rather they too claimed it was for the little people, such as the rural poor, who would suffer if they, the big land-owners could not keep their monopoly prices. However, the free trade argument won the day, and everyone got cheaper bread.

Much time has passed, and now, to argue in favour of laissez-faire is supposedly to argue against the protection of the vulnerable, but its main target is as before; the protectionist measures which favour the well-connected against competitors and would-be competitors. This is why regulations are disliked by laissez-faire types, because they often favour large established companies and fall more heavily on smaller competitors and raise the bar to market entry.

The underlying arguments for laissez-faire have not, however, changed. Those who earnestly advocate it are doing so because they believe it is for the general benefit of everyone, and is a far better way of achieving the goals you set out @ 89 than either the oligarchic protectionism of earlier times or the centrally-planned economic models we saw in the 20th century, or indeed the supposedly alternative ‘best of both worlds’ interventionist model that Tories and Labour fight to control.

111. Chaise Guevara

@ 110 Richard

I’m talking about the side of laissez-faire economics that says tax should be as little as possible, and that we shouldn’t spend money on things like welfare and equalising opportunities. I’ve always used the term to refer to both the anti-tax thing and the anti-regulation thing; apologies if that’s not how it’s normally used.

I have no problem with anti-protectionism per se, and generally think that regulation is too complex an issue to take a straight GOOD/BAD [delete as appropriate] stance on the matter.

112. Robin Levett

@Richard Carey #107:

<blockquote.Firstly, you have based your argument on the silly example of poisonous frogs being sold under the label of food, which in your view would be fine, as long as there is not a specific clause forbidding this agreed prior to the sale. I have dealt with this above.

Not so; the issue was whether a clause excluding liability for poisonous frogs would be struck down. Are you happy with consumer protection legislation generally? Larry’s point was that the classic libertarian position of “freedom of contract” leads to the absurd position of having to go through life spending your time checking the small print on any transaction into which you enter. There should be, accordign to that position, no control on what the parties (taken by libertarians always to be willing) might freely (as the libertarians would have it) negotiate. Any restriction on freedom of contract leads to market distortions that are to tbe benefit neither of the seller nor the buyer.

You and pagar, however, seem to argue that the state should be entitled to interfere with freedom of contract by having a court apply a reasonableness test to a contractual clause when the beneficiary seeks to enforce it; but, in the poisonous frogs case, if the vendor is forced to test his product for the presence of poisonous frogs (or any other nasty) he will incur costs that he will then pass on to the consumer in higher prices. So interference in freedom of contract in that instance (whether it be poisonous frogs or nuts that is the subject of the clause) has the effect that the classic libertarian contends for; higher prices for the purchaser and more cost for the vendor.

Neither of you therefore seem to accept the classic principled position in the case of consumer protection legislation; so what is different about employment legislation?

What is undoubtedly the case is that, if regressive taxes were cut, the worse off would have more money (by the very definition of ‘regressive taxes), and, if benefits are going to be cut, then there is every reason to cut regressive taxes.

With which I agree. But your claim went beyond this – you claiemd that if regressive taxes were cut there would be no need for welfare benefits – not a reduced need.

113. Richard Carey

@ chaise,

I don’t think you need to apologise. Laissez-faire is usually used in a pejorative way.

Robin,

I figure you’re trying to get me to say one of two things: either that in a libertarian system, if you buy some chips and drop dead because they’re poisoned, hey ‘caveat emptor, pal, read the small print’, or that the lovin’ government has the right to override any and every provision of a contract between two parties. Sorry to disappoint. Neither reflects my view, and the problem is, because the example you have used is so absurd, it’s difficult to give a reasoned response.

I reject your (or Larry’s) assertion that freedom to contract inevitably leads to everyone poring over long contracts before they hand over the cash for a cup of coffee, or before even they enter the coffee shop, in case there’s a clause that doing so equates to consenting to be chloroformed and buggered by the busboy.

The libertarian principle – the general rule – is if you enter willingly into a contract, then you are bound to fulfill it or face the consequences. I doubt that I could claim the above as exclusive to libertarianism. It’s the plot of Marlowe’s ‘Dr Faustus’, for one thing.

There is a purpose to having contracts. It is to facilitate trade and commerce. Such things cannot flourish without confidence, either in the ability and intention of the other party to fulfill their part of the bargain, or in some other means to protect one’s interests, such as a well-functioning legal system.

Disputes between contracting parties can and do arise all the time, now under the status quo, as indeed we must assume under a purely libertarian system. How such disputes are dealt with will feedback into the way contracts are drawn up. If there is no efficient way to resolve the inevitable disputes, then the contracts will not be fulfilling their raison d’etre of facilitating trade and commerce. This same point applies to legislation.

108

‘Perhaps if academia hadn’t been infested with communists like Hobsbawm, people would appreciate Victorians more for what they achieved’

To be fair, unless you are a degree student of history, it is doubtful if you would have encountered Hobsbawm. My experience is that the negative view of the Victorians was fostered by one, Charles Dickens, a c/Conservative, who hated liberalism and laissez-faire and who is widely read/known by the majority of the population. Scrooge was the caricature of the greedy, self-interested individual.

The main British socialist writers of the 19th century were Owen, Marx and William Morris, Marx waxed lyrical about the liberal, industrial revolution in The Communist Manifesto and, of course, like libertarians, he disliked the state.

115. Chaise Guevara

@ 113 Richard Carey

“The libertarian principle – the general rule – is if you enter willingly into a contract, then you are bound to fulfill it or face the consequences.”

How do you feel about this? You want to buy something from an online shop. To do so, you have to set up an account, which involves ticking one of those “I have read the T&Cs no really” buttons. The next month, £100 vanishes from your account. You contact the company and find that a clause buried on page 8 of the T&Cs says that you have agreed to pay them £100 a month forever.

“If there is no efficient way to resolve the inevitable disputes, then the contracts will not be fulfilling their raison d’etre of facilitating trade and commerce. This same point applies to legislation.”

But the raison d’etre of any given contract is not to facilitate trade and commerce. It’s to support the interests of the contract-signer. These two things may or may not be the same. You might think of contracts as commerce facilitators, but you’ve just created a low-regulation system where companies can apply their own interpretations.

Certainly, the exploitative contract sketched out above would be fulfilling its raison d’etre of making the company lots of money.

116. Robin Levett

@Richard Carey:

As I understand it, then, you’re happy with consumer protection legislation applied to poisonous frogs, but not to nuts (or presumably snails). Have fun drafting *that* legislation.

The Unfair Contract Terms Act was introduced precisely to prevent vendors including unfair exclusion clauses in their standard form contracts; in small print, of course.

The Sale of Goods Act was introduced to lay down the basic framework of such contracts; precisely to avoid having to read each individual sale contract to make sure there are no small-print nasties in it.

The idea that left to its own devices the market will ensure that all this is unnecessary is rather undermined by the history of commercial and consumer law.

You still haven’t explained why you’re happy with (some forms of) consumer protection legislation despite the fundamental principle of freedom of contract, yet object on grounds of freedom of contract to employment legislation.

117. Richard Carey

@ Chaise,

“But the raison d’etre of any given contract is not to facilitate trade and commerce. It’s to support the interests of the contract-signer.”

Yeah, but a contract has two parties, and if voluntarily agreed, must be perceived to be mutually beneficial. Also, most transactions do not have written contracts but rather the contract is implicit. If I go into a restaurant, there is an implicit contract that I don’t abuse the staff or vandalise the toilets, likewise that I don’t get served a fried rat when I order fried chicken.

If one party to a written contract has abused the process to gain an advantage through deception, as in the example you give, then I don’t see why the other party should be held to it, although it is certainly wise to read a contract before signing it. As I said above, the way a contract is interpreted and enforced by law will feed back into how contracts are written. If it were the case that failure to read a contract to buy a potted plant could result in being dragged off to a sultan’s harem (“didn’t you read clause 53?”), I expect people would pay more attention than they do now.

@ Robin,

“The idea that left to its own devices the market will ensure that all this is unnecessary is rather undermined by the history of commercial and consumer law.”

Just because a government introduces legislation, does not necessarily mean the legislation was needed. Indeed, the fact that governments are always introducing legislation, which replaces previous legislation indicates that the previous legislation wasn’t necessary or didn’t do what it was supposed to do. Furthermore, it was hardly the case that prior to the legislation you cite that there was an unfettered market.

“You still haven’t explained why you’re happy with (some forms of) consumer protection legislation despite the fundamental principle of freedom of contract, yet object on grounds of freedom of contract to employment legislation.”

I haven’t explained, because you are constantly trying to put words in my mouth and then you demand an explanation for those words, but I think you are confusing two situations. One is that one party tries to use the contract to dishonestly exploit the other, and the other is that both parties agree something but the state rules the agreement is forbidden.

The truth is here: http://www.youtube.com/watch?v=2frJ3e0hxPE

The country and world is being run by unbelievably sick people watch the video,


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