Wednesday, November 23, 2011

The Obvious Solution Is

Because it's working!!

UK households are facing pay cuts in real terms of more than 3.5% as salary increases fail to keep pace with inflation, official figures reveal.

The median salary for a full-time worker in the UK rose 1.4% in 2011 to £26,244, against a headline CPI inflation rate of 5% or higher, according to the Annual Survey of Hours and Earnings from the Office for National Statistics.

Once upon a time too many economists had a social welfare function was basically W=GDP. Growth was good and the distributional effects didn't matter. Now apparently the social welfare function is just some function of the public deficit and the inflation rate. The rest of it is unimportant.