In the UK, an appearance of ‘growth’ is returning – the inverted commas are necessary because, as this column has reported before, a change to Gross Domestic Product is not a reliable indicator of growth. The Labour opposition, having used the same indicator itself during its dreadful metaphor of ‘flatlining’, would now lack credibility if it tried to highlight the unbalanced nature of recovery.
Instead, it is focusing on living standards. There is much talk of a living wage, and above-inflation increases to the minimum wage. This has been combined with attacks of profit-making by energy companies and a pledge to restore a 50p top rate of tax. The left wants profits squeezed and a fairer distribution of wealth.
Predictably, there is a backlash, with accusations of Labour being anti-business.
But as usual in these types of debate, left and right are both wrong. Both stick with the ‘zero sum’ mentality of accountancy-based economic theory. For example, businessman and former Conservative MP Archie Norman, writing in The Sunday Telegraph, said that an ‘incomes policy’ would cause business costs to rise, and said the minimum wage should be kept low, or people would be replaced by machines.
There are two wildly inaccurate assumptions that he makes: that the wage cost is the employment cost (it’s very different, as this blog explains), and that management is unimprovable. The cost of poor management – weak personal leadership skills; high staff turnover; lost custom through automated customer service systems – vastly outweighs the cost of improving wages. But good management, sadly, remains the exception.
What research and much experience now show is that you can improve wages and profits, simultaneously. There is an alternative to left-right sectarianism. It’s called better management.
Radical Shift 
I agree. Here in the US (the South particularly) I pay my employees (106) well above minimum wage because talent is worth it. Intangible value will always lose out to tangible costs to the short-sighted. Bean counters are paid to count beans, but that mentality often misses the point of value for the very reason that they can’t figure out how to measure ROI. You never wrote a truer word than: “The cost of poor management – weak personal leadership skills; high staff turnover; lost custom through automated customer service systems – vastly outweighs the cost of improving wages.” AMEN.