business economics

Creating a more inclusive economy

In the past 18 months, the UK has depended on its key workers to keep country running during the pandemic. While many people stayed locked down at home, key workers went to work in healthcare, kept the supermarkets open, ran government and council services, and delivered us the things we need. Despite being vital to the economy and society, many of these jobs are poorly paid. Recent research shows that 1 in 5 children of key workers is growing up in poverty.

Poverty, including child poverty, remains a reality in Britain, despite our apparent wealth. Growth is not adequately distributed, so increases in income go to the top. As I wrote about recently, it’s much easier for the rich to get richer than for the poor to get less poor – and during the pandemic the wealthiest households saw their wealth rise by £50,000 while the poorest got £86.

If we’re relying on growth then, poverty will never be solved. Poverty is relative, and so the richest are always running on ahead faster than the poor. In order to try and help people catch up, the traditional approach is to try and claw back some of that growth through taxation, and then redistribute it. But that creates incentives to dodge tax. It drives a wedge between income groups, and feeds mutual mistrust: ‘fatcats’ on one side, ‘scroungers’ on the other.

We’d be better off moving together, creating a more inclusive economy that doesn’t need constant patching. In time, we could make redistribution history, because the economy was structured in such as way that people weren’t constantly being left behind by the richest.

There are lots of ways to make a much more inclusive economy, one that gives everyone a stake in the first place. It’s what Katherine Trebeck and I describe in our book The Economics of Arrival: Ideas for a Grown-up Economy. They’re all things I write about on the blog from time to time, but here are a handful of possible ways to make a more inclusive economy.

Employee ownership models – if you work hard at your job, you should get the benefit of that hard work, rather than it going to shareholders. Oxfam highlighted this recently with their report Not in This Together. They describe how the supermarkets saw their profits rise during the pandemic, as other shops were closed. This windfall went to shareholders, not the workers and suppliers that had put themselves at risk to keep the stores open and the shelves stacked. An exception to that would be Waitrose, a supermarket chain that is fully owned by its employees, and thus any success that they reported as a company would be shared across the whole staff.

Ownership doesn’t just have to be your own workplace of course. I’m an advocate for community energy, where people get to own a stake in the wind farm or solar panels that generate their electricity. By being community owned, they can run at cost or on a not-for-profit basis, so everyone gets green energy that is also cheaper, with no profits removed from the company to pay dividends. The same goes for banking – mutuals and credit unions are able to offer cheaper loans because there is no pressure to deliver profits to investors. This is true across many different forms of not-for-profit enterprise. Not-for-profit doesn’t mean unprofitable. It means money is not being extracted from the business for external investors. It can be re-invested or shared or used to keep prices down, and social enterprise could play a big role in a more equal society.

Another way to create shared wealth is through public affluence, which is where you create shared resources and public spaces – parks, libraries, swimming pools, public transport, high quality streets and squares. We can’t provide big private gardens and private swimming pools for everyone, but by providing them collectively we all get the best of everything. The Victorians understood this, and if you look at a school or a railway station built in that era there’s a real sense that this was for everyone and everyone deserves beauty. These facilities don’t need to be run by the government. They can be run by and for the people. My local swimming pool is operated by Active Luton, for example, which is a Community Wellbeing Trust.

A related idea that we might want to consider is Universal Basic Services. We’re used to the idea that healthcare and education are essential services that should be provided to everyone, free at the point of use. Other countries have a longer list – Sweden provides childcare. Lithuania has solved the problem of digital exclusion by providing free broadband to everyone in the country. Cities in Croatia are solving transport poverty and pollution at the same time by providing free bus transport, something we do for over-60s in this country too. Shared services doesn’t have to mean Soviet-style state provision either, by the way. There can still be a dynamic market of competing providers. 

And one last thing – one of the best ways to improve people’s lives is to give them more time off. Shorter working hours would be a great way to improve wellbeing and mental health. That might be take the form of a four-day week at the radical end, but more moderate forms could include increasing statutory holiday time, or even just creating a couple more bank holidays in the year. This is hard to justify on purely economic grounds, because it means lost productivity – but the benefits to health and wellbeing are what matters most.  Shorter working hours works well alongside public affluence approaches, since people have more time to enjoy them.

There’s a lot more to creating financial inclusion, including the vast field of commons thinking. I mention these as a way of highlighting it as an approach, or a philosophy – one that lands squarely in-between the usual (and false) dichotomy of state-run services on one side and the free market on the other. A fair and sustainable wellbeing economy is neither of those, but it a people-focused hybrid.

4 comments

  1. Jeremy, have you looked much into the practical application.of a maximum wage? I would add that to the list you have but unsure how unpopular it might be but certainly seems like a good way to curb inequality… I’m conscious of your previous blog title so presume you have a strong thought on this and wondering why it didn’t make this list? 😊

    1. The old phrase used as an argument against a maximum wage was ‘the brain drain’ – leaving the UK to earn more elsewhere. I wonder how valid this is. But, sadly, governments have proved to put economy before well-being.

      1. Good question. If this would be true, it would follow we should pay our teachers and health care professionals more? We don’t ‘brain drain’ in education and health, do we?

Leave a Reply to Living Geo d'Arcy Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: