Inequality in Britain has been rising for 30 years. If current trends continue, we will be back to the inequality of the Victorian age within 20 years. That’s the message behind Inequality Briefing, which launched this short video summary of the problem yesterday.
It’s interesting that the video includes what we think inequality should look like – we know that there has to be some, and that absolute inequality is not the goal. The fact that the reality is so far from what we’d expect ought to be a bit of a wake-up to politicians content to ignore the issue.
The more people are aware of just how extreme inequality is becoming, the harder it will be for it to be ignored, so please share the video around.
- The source data for the video is here, for those who want more information.
- 10 reasons to care about inequality
- More on inequality
The Earthbound Report 
Hi,
I didn’t take part in this survey, but if I had I would have given an answer that followed the Praedo principle, 20% of people will control 80% of the wealth’, too be honest I am not too surprised with the results provided.
My problem with it is that this is described as inequality, and I think this is perhaps a bit unfair, for example I went to school with a guy who went on to move to Australia, started his own business, he eventually became very successful, this was through a mix of hard work, determination and good fortune. Another guy In our class ended up homeless and dying of a drug overdose. Now there should be something to help the people with problems, whether it is substance abuse, crime, poverty or whatever, no question about that. My problem is taking the example of my first classmate, why should he be lumped in with a group that is being labeled as the elite, or privileged or whatever.
Now maybe my friend isnt the actual target of this, perhaps it is the people who didn’t earn the money themselves but inherited it, maybe they are all privileged wasters, I don’t know many people in this category so I can’t say, however, I intend to leave my money to my kids so I assume their parents will have the same rights.
Basically I don’t see what is wrong with people being rich, except of course that it isn’t me. I know that people will say that the rich don’t pay their taxes and cheat the system, or that the system is biased in their favor, it is difficult to say for sure, but I know that the more I earn the more tax I pay. I know that there are some dubious rules in the tax system that allows people to pay less tax, personally I take advantage of every one of them that I can, as do every single person I know, I mean who among us wants to pay more tax than they have to. As long as they are not breaking the law I don’t see a problem.
The other thing I have a problem with is that this type of thing makes it sound like the richest people are sitting on big mounds of gold bars 🙂 Most of them are rich because they own businesses that are worth lots of money, I mean how much would the likes of Richard Branson have in is cheque and saving accounnts, i’ll bet it’s less than 10% of his net worth, some of the rest will be in his possessions and properties, but the majority will be in his businesses and investments, earning him more money and providing jobs etc for other people.
It would be very interesting to see how much of the total wealth is controlled by self made people or their children.
In case anyone wonders I am much closer to the bottom 20% than the top 20% 😦
Jim
Important questions – I think there are good reasons and bad reasons to be wary of excess wealth at the top. Among the bad ones are envy, false ideals about everyone being worth the same, or suspicion that wealth is morally corrupting.
Among the good reasons are the issue of ‘rent-seeking’, where those with wealth are able to generate more wealth without creating any useful new economic activity. That’s a major problem in our economy at the moment.
Another good reason is that all sorts of things are justified in order to encourage economic growth – but if ordinary people don’t benefit from that growth, that’s fundamentally unfair.
Another reason is that money buys influence. We already have an economy that disproportionately benefits the top 20%, or the top 1%. They can afford lawyers and lobbyists and the poor can’t, so it becomes self-perpetuating and democracy is undermined.
There’s nothing wrong with people getting rich if they do so honestly (also a problem, incidentally) – it’s all to do with how that money is made, and how inclusive our economy is.
Two points wrong with this. Firstly it is focusing on wealth, not income. Most UK wealth is in property and pensions. This is held by the old who we expect to have greater wealth, since they have had longer to save it up. The young are more likely to have low income (fewer skills) and also fewer assets (less time to accumulate them). In fact the young often have negative assets (student loans). This does skew the figures.
Secondly this doesn’t account for the redistribution of wealth we already carry out to reduce inequality. A state pension entitlements would be worth many thousands of pounds if it were from the private sector yet that entitlement is not calculated in these figures but private pensions are. Same with NHS coverage. How much would you pay for that via BUPA? Thus the figures here aren’t describing the true situation.
Older people have children, and they help them to buy houses, perpetuating inequality across generations. If you have a government like ours that boosts the housing market as a form of economic stimulus, those with property see their wealth soar while their incomes stay static – while the poorest gain nothing. So there are good reasons why equality campaigns focus on overall wealth and not just income.
On your second point, the richest are entitled to a state pension and NHS care too, whether or not they choose to claim those things. So adding them in would just add a certain amount to people’s theoretical wealth without changing the percentages. We’d just have huge inequality at a slightly higher level.
But then in your philosophy inequality doesn’t matter, right? So I’m not sure I see the point of quibbling over how it’s calculated.
I do think inequality matters, just not as much as you and most of the proposed ‘solutions’ end up making everyone poorer.
Then you obviously don’t think accurate figures matter.
Nothing to do with accuracy, all to do with definitions. I agree with the way that ONS calculate the figures and you don’t. And I share the government’s definition of poverty as relative and you don’t.
I’d be interested to know at what point you think we should intervene in inequality – when the top have 200 times what the poorest have? 1000 times? If it matters, when does it start to matter enough to do something?
I don’t have a ratio, I only want that pretty much everyone benefits from rising prosperity. If the wealth of the top is increasing faster than that of the poor, I don’t mind AS LONG AS THE WEALTH OF THE POOR IS INCREASING. We can cut inequality quite simply by destroying the wealth of the rich, but that doesn’t make the poor richer.
Tackling rent-seeking is a necessary task, though that is about widening markets rather than regulation by fiat.
What ratio do you think we should cap inequality at then?
Hi,
I pretty much agree with everything you are saying there, but I think I’m maybe looking at it from a different perspective.
I had not heard of the term ‘rent-seeking’ before, but after a quick trip to wikipedia I am still a little confused by what it means, I think, it is where a person or organisation tries to buil their profits by preventing others from competing fairly. An example that springs to mind is the battle some time ago between BA and Virgin and some of the dodgy tactics that were reported. My answer to that is that the law should be fair and should be applied equally. That of course brings us to the other point you made that the rich can afford lawyers and lobbyists to affect and/or control the legal system, the problem is that this is a double edged sword in that if there is no way to change or influence the law or the legal system then nothing will ever change, if the system allows charities, environmentalists, and churches etc to use this type of process then we have to allow rich people to do it.
I could go on picking little points, and to be honest, based on your knowledge and skill at writing (I love your blog 🙂 I’ll not come off very well in an argument. The thing is that i am more worried about us, as a society, blaming the rich for all our ills and expecting them to fund the economy. Or to put it another way I felt the video had an undercurrent saying that the bottom 20% are poor because the top 20% are rich. This is not true, in many cases the bottom 20% are poor for very specific reasons most of which are to do with themselves rather than the ‘Rich’, I know lots of people who don’t work, and don’t want to work, but I don’t know so many who lost their job because of some asset stripping billionaire that bought their company and sold off the bits.
Good Luck
Jim
I’ll have to write more about rent seeking, as it’s a technical term that isn’t used much. I’ll come back to that!
I think one of the strengths of the video is that it doesn’t blame the rich for the inequality. It doesn’t show grasping hands nicking the poor’s share, or money flying away into the hands of the rich, the populist sort of thing they could have gone for. The fact is that some rich people are greedy and willing to tread on others for their personal gain, but then some poor people are like that too! The problems we’re talking about are systemic, to do with our politics, how we create money, that sort of thing. It doesn’t need to be personal.
Your definition of poverty is too narrow DevonChap, but let’s take inequality on your terms for a moment – is everyone benefiting from growth? And since you prefer income rather than wealth, let’s look at that.
As I’ve covered before, average incomes began to plateau around 2001, well before the financial crisis. Men’s salaries haven’t tracked GDP since 1980, so I’d date the problem from there. But even you ought to recognise that static or declining incomes is a problem if the economy is growing. People aren’t benefiting from growth.
http://makewealthhistory.org/2011/11/11/whats-growth-done-for-you-lately/
Other countries are far worse, which is why this is a growing international problem.
Didn’t see your reply till today.I notice that you dodge the challenge you set me. I make my conclusions from that.
Two things, firstly as I’m sure you would agree wages aren’t everything. We have spent an increasing amount of our national wealth on things like health,and the environment. So while our income might not be rising well being has.
Secondly our flatter wages have been part of a global reducing of inequality as workers from the undeveloped world get added to the global labour market. More of anything will reduce the unit price though the aggregate amount will be bigger. Good thing and worth holding back our wages. Better than the alternative.
So you acknowledge that the poorest aren’t getting an equal share of growth?
As for capping inequality, my challenge to you isn’t to set an ideal ratio. The question is about when we start to say ‘this is a problem we should do something about’. An exact ratio would artificial and impossible to maintain, but it’s clear from the survey that the public thinks there is a rough level of equality that we can expect, and that we are well beyond that.
For those who see inequality as a low priority, the question that needs to be answered is really about how far ahead of public opinion you want to let inequality run. History suggests you either manage inequality, or you ignore it until it becomes a point of conflict, and then changing anything is a much more fraught and disruptive process.
If by the poorest you mean the millions who have been lifted out of poverty then I think they have been benefiting just fine.
That public opinion doesn’t like huge inequality is an issue. One motivated more by envy than anything but if you want to pander to that go ahead. Playing teh deomcracy card suggesting we should be horrible to migrants because most people don’t like them, Or maybe bring back hanging, that’s popular too? Or just maybe doing what is for the best means doing things that are unpopular.
You haven’t looked at my link, have you?
Reblogged this on Understanding Alice and commented:
This is such an important study. The next question being of course… what do we DO about it?