I wrote yesterday about the need or redistribution in society.
When I wrote I was not aware that the Households Below Average Income (HBAI) survey for 2008/09 had just been published. The following comes from Chapter 2 on household income distributions:
Let’s be clear, the absence of the 3.6 million people (not earners) living in households enjoying income of more than £52,000 a year after tax skew the data a little: I know that. But this graph covers 94% of all people living in the UK. And for these people median household income is £21,164 a year.
And just look at how the graph is skewed. Our society is built around a bias to the rich: it’s that 3.6 million to whom the whole of society is orientated.
I believe we need a new bias to the poor — incidentally the title of a book I recommend written by Bishop David Shepherd in the early 80s which annoyed Thatcher intensely — and all the better for it.
The rich — and yes, if you’re one of the 3.6 million you are rich — are able to look after themselves, by and large. My concern is for the rest. But that’s not true of most — and it’s certainly not true of the libertarian right.
I remember several years ago interviewing Alvin Rabushka — creator of the madness of flat taxes — and he said:
“The only thing that really matters in your country is those 5% of the people who create the jobs that the other 95% do. The truth of the matter is a poor person never gave anyone a job, and a poor person never created a company and a poor person never built a business and an ordinary working class guy never drove economic growth and expansion and it’s the top 5% to 10% who generate the growth for the other 90% who pay the taxes to support the 40% in government. So if you don’t feed them [i.e. the 5%] and nurture them and care for them at the end of the day over the long run you’ve got all these other people who have no aspiration for anything more than, you know, having a house and a car and going to the pub. It seems to me that’s not the way you want to run a country in the long run so I think that if the price is some readjustment and maybe some people in the middle in the short run pay a little more those people are going to find their children and their grandchildren will be much better off in the long run. The distributional issue is the one everyone worries about but I think it becomes the tail that wags the whole tax reform and economic dog. If all you’re going to do is worry about overnight winners and losers in a static view of life you’re going to consign yourself to a slow stagnation.”
That’s the callousness of the right. His idea is so brutal: let the middle and poor pay to support the rich. Note how his statistic happens to fit so neatly with the above graph.
Rabushka says none of these people matter.
I say they do.
That’s the difference between left and right.
That underpins what this blog is, in its UK context, about.
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Society is not biased for the rich. It is biased towards those with an education and skills. (At least salaries are.) After all, most people who you deem ‘rich’ still have to work and their wealth is dependent on a sustained income from their working.
@fred Fry
That may be your US view
It’s not true of the UK
This society is very biased to the rich
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Sorry, Fred Fry
Society has always been biased towards the rich. The whole market based myth of ‘choice’ is geared to being able to afford the best services. Once that starts then their offspring already have an inbuilt advantage over those who cannot ‘choose’. That then distorts earning power into the hands of an ever decreasing minority.
It doesn’t matter what country or society, the model is self evident. If you cannot see the observational truth then you must be one of those that are benefitting from the inherent bias.
For instance, who do you think benefits most from the tax avoidance de facto fraud machinery? If that framework is not part of society then what is it?
Not exactly sure what your point is, Richard.
One of the problems with these statistics is that those people between jobs, with no earnings at all, tend to skew the results.
Interesting, if you look at those who have persistently low incomes (i.e.the percentage of the group below the threshold in at least 3 out of 4 years) the numbers below the 60% of median income are in fact falling.
If you take working age adults in 1991-94, 8% were below 60% of the median. This had fallen to 5% by 2004-07 (the latest figs available). So the trend is definitely in the right direction.
@Peter Verstage
So you’d rather ignore the involuntarily unemployed would you?
That is – as you are no doubt aware = the classical approach
Let’s just assume the poor are no longer with us, shall we?
Will you never learn?
And that also explains the shift in stats – Labour were darned good at creating employment
Perhaps you missed that too?
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“That may be your US view
It’s not true of the UK
This society is very biased to the rich”
Umm, not really. Looking at the Pikketty and Saez numbers for the US (and there’s a similar paper for the UK as well which shows much the same thing) we see that while income differentials are as wide as they were in the 20s there’s been a huge change in where those incomes come from. 90 years ago the high incomes were going to those who had accumulated wealth. Rentiers if you like. Today the high incomes are, in large part, going to those who are earning them.
Still possible to argue about whether such income differentials are justified (and I’m sure we’ll agree to differ) but the source and composition of those high incomes is very different now from what it was 90 years ago.
its a bit odd as average male full time earnings in 2008 were 631 pounds and average female full time earnings were 485 , so the average couple would be way off the top of the chart , I guess the average man plus average woman does not form the average household but its interesting non the less …
The other fly in the ointment is in London with 52k you cant even think about getting close to buying the worst 1 bed flat in the worst area , so really if you are going to redistribute it should be wealth not income, as redistributing income alone is just going to set the current social strata fixed for ever …… And if you really went to do a good job then start with farmers who never have any of their wealth taken from them but suckle from the teat of massive subsidy and pass down through generations with no inheritance etc to worry about….