“In Britain there is a sharp rise in self- employed workers, whose ranks are swelling while their incomes are shrinking. They account for more than one in seven of the workforce, but earn less on average than they did in 1995. It cannot be right that an ever-larger slice of the labour market lives without holiday pay or maternity leave”. ( The Guardian Weekly, 4 November 2016)
And you can add other benefits these self-employed people don’t get: sick pay, a fair and reasonable benefit . Nor do the the self- employed get a pension contribution from their employer. In the old days most employers contributed towards pensions. At the remuneration levels we are now talking about no one can hope to save enough money to have a secure old age.
What are we doing to the working population, and in what form will it come back to bight us? I can foresee in 40 or 50 years hordes of indigent old people, trying to live on a privatised social “security” pension, struggling with a privatised medical system, the successor of the National Health, with no affordable housing and insufficient food? This will be the legacy of so- called free market conservatism, where all that matters is cutting government borrowing and reducing the contribution to society from the rich.
What is the point of life if all that matters is money and where you bully down the earnings, security and self- esteem of the workers – until they rebel. Rebel is what the Trump and Bernie voters have done; the trouble is that the ultra- conservatives may well interpret this rebellion as justifying the imposition of extreme conservative ideology, instead of a plea to actually help them.
Its a very dystopian picture you present, but fear not, I doubt it will happen. Partly because privatising social security and healthcare would be so unpopular as to be electoral suicide by any party that attempted it. Also in Britain, there has been a recent shift to the left as far as fiscal matters are concerned. Hammond is only longer pursuing the austerity agenda anywhere nearly as harshly as Osborne did, with plenty of money going into infrastructure and higher education, as well as the continuation of the triple-lock pension system. Combined with modest increases in the minimum wage, Britain is not tightening its belt the way Keynesian economics warned us against. Although this means that a surplus won’t be achieved by 2020 as promised, the fiscal stimulus is probably necessary given Brexit and weak demand from Europe. There’s also increasing political pressure from UKIP to pursue policies more favourable to the working class. And if the recent Liberal Democrat victory in Richmond is anything to go by, the Tories will be held to account for attempting a hard Brexit as well.
I’m not sure how you’d go about reducing the number of self employed people. You could try to cut payroll taxes, making it cheaper for employers to hire people, but the loss of revenue would deteriorate public services and increase the deficit. You could increase investments in infrastructure, science and education, but to an extent that is already happening, and such spending could be diverted from funds that would otherwise be spent elsewhere, or higher taxes. There are also benefits to having more self-employed people. More entrepreneurship is the obvious one. As you quite rightly point out, being self-employed is risky because you aren’t entitled to the same benefits as you are as an employee. The fact that many people choose to accept this risk in exchange for profits further down the line is a good sign. Compared with America, Europe’s economy has often been criticised for having too few risk-takers and innovators, with most Europeans preferring the security and peace of mind as an employee. If Britain is bucking that trend, I wouldn’t worry just yet.
You make an excellent point in your final paragraph. Although Trump has defied the establishment and won the White House, the people really in charge of the economy are mainstream Republicans, because the presidency has far more power over foreign than domestic affairs. All budgets originate in the House, and the Ayn Rand-admiring Paul Ryan is the Speaker. If Ryan’s tax plan passes, 99.6% of the benefits of the tax cuts will go to the top 1% of earners! Believe me, I wish I was exaggerating, I’m not.