The FT reports this morning that:
Between 2012 and 2014, the wealthiest 20 per cent of households had 117 times more assets than the poorest 20 per cent of households.
Two years previously, the same comparison showed the gap at 97 times more wealth in the top fifth of households compared with the bottom fifth. The level of these ratios is high because the poorest fifth of households have hardly any wealth.
The increase in inequality is reported to relate to increasing house prices. I suspect that may be true, but these things are, I am sure, correct.
First, this inequality hinders the life prospects of millions.
Second, nothing is being done to address it: the Osborne economic plan (such as it is)is heavily dependent on house price growth continuing, which is why he has put in place policies to maintain it.
Third, the case for the reform of land taxation is overwhelming. I address the issue in The Joy of Tax.
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I’m not sure that the top 20 vs bottom 20 has has ever been a useful statistic: we’ve always had an underclass with zero assets, and this ‘statistic’ is about aggregating the top decile and the ninth decile.
It also hides the state of the ninth decile – the remnant of the ‘well to do’ middle classes – who would do well to know that they, too, are probably now on the wrong side of the accelerating inequality in wealth. That number is politically sensitive, and could be used in an effective campaign to reduce the Conservative ‘core’ vote – if only there was a media outlet with the will, and the communication skills, to communicate a moderately difficult statistic rather than a soundbite.
In short: ten versus ninety, or twenty versus eighty, is a better ‘headline’ indicator of increasingly wealth inequality.
Or one percent versus the rest of us.
And, at the risk of being flippant, we would do well to consider what the bottom quintile are actually worth the people at the very top of the wealth distribution: do they represent an economic resource to Osborne’s generous friends for benefit farming, outdoor relief, for-profit prisons, or even the recoverable value of their internal organs? You and I know that we could build a far, far, better society that included every citizen, rather than treating them as an underclass for exploitation and a resource for ‘scrounger’ propaganda: but we don’t run the country, and the Wonga’s and Group 4’s and A4E’s of our economy’s benthic layer have as powerful a voice as bankers.
Good points
Data anyone?
Just empirical evidence from me, watching friends and family work hard for little reward. A caravan holiday is what is aimed for , nothing too grand. Violins playing again. Just respect, a stake in society, and the wonderful safety net of 1st class health care, to be valued and to have hope. Everyone matters so don’t be quiet, fight your corner.
Thank you Mr Murphy for a place to air our views, you field the blog well.
Enough is really important
Economics has never worked out what it means
This subject is explored by the book ‘How Much Is Enough’ by Skidelskey and son. Larry Elliot says this in his review:
“Economics, a narrowly focused discipline in which there is no distinction between wants and needs, has driven to the end of a cul-de-sac. As in 1930, the Skidelskys say, the short-term need to get the global economy moving again should not deflect policy-makers from reforms that will lay the foundations of a saner, more stable world.”
The tragic thing is that the vapidity of neo-liberalism deprives us of so much that is basic to a meaningful life:
Trust
Psychological security
Collegiality
Cultural life
Health/social care
Life long learning (spiritual/intellectual development)
neo-liberalism leaves us with an undignified scramble to get on the rentier rung while we beggar our neighbours.
Quite a good book
Fourth, it is an inefficient waste of potential and added aggregate value. Concentrating more and more value on fewer and fewer people stifles, erodes and ultimately destroys the “blood” supply circulation necessary to maintain a capitalist process.
Application of rational criteria provides the conclusion that continuation along such a trajectory, where the acceleration of this inefficiency increases over time, is neither sustainable or realistic.
Agreed
As has been said, it’s a good headline but not very useful. Take out the top very few exceptional billionaires and those deliberately feckless, who are always going to be anomalous, and the gap is nothing like the same. Surely we need to consider means/medians and not averages if the stats are to be in any way useful.
Hang on!
You think the extremes don’t matter?
How wrong can you be?
It depends what you’re trying to prove or measure… but merely presenting that X% have y% of the wealth is pointless unless there’s a context.
So to say “20 per cent of households had 117 times more assets than the poorest 20 per cent of households”
So WHAT? It’s an entirely arbitrary measure. Are people poor – i.e. lacking the basic essentials of a safe/dignified/aspirational existence? If so, that’s the problem. That other people have more doesn’t really matter, unless you’re a communist who sees that as a defacto problem or are just generally into redistribution of wealth. The 1% aren’t the problem, they’re just a scapegoat. The problems are created long term by governments who think short-term; no further ahead than the next election. Afraid of real change for fear of upsetting the horses, or doing justified/prudent things for people of being unpopular. Populist politics and economics is far more damaging than some billionaire having more than me…but, sure, blame the billionaire as a smokescreen.
Go and read The Spirit Level
And ask for some empathy for Christmas
He has shown empathy though – he says it’s a problem if the poorest don’t have a safe and dignified existence. He just doesn’t care if the rich have money to burn which is a different issue to empathy.
No he hasn’t
Empathy us about understanding the other’s position
It is about relationship
And the claims made ignore the relationship between the parties
So my claim is justified