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Does inequality matter?

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Does inequality matter?

Post by Ivan on Fri Nov 30, 2012 2:01 pm

First topic message reminder :

In May 2011, the High Pay Commission reported that, if current trends continue, by 2030 the highest 0.1% of earners in the UK will see their remuneration rise to 140 times average income. The last time someone in the top tenth of one per cent of the income distribution was deemed to be worth 140 other people was when we had a fully functioning aristocracy and Queen Victoria was on the throne.

In 1998, Peter Mandelson stunned many of us on the left by declaring: "We are intensely relaxed about people getting filthy rich". Maybe that didn’t seem to matter so much in the good times; the UK economy grew continuously from 1995 until 2008, the longest period of sustained growth for at least 200 years. Inequality in Britain is the fourth highest in the developed world, after the USA, Portugal and Singapore, but in those good years most people were slightly better off than previously, and public services, which the poor use more than the rich, were receiving vast injections of cash. Under thirteen years of Labour rule (1997-2010), spending on the NHS trebled and spending on education doubled. (Despite all the Tory lies to the contrary, the percentage of our GDP spent on welfare actually fell between 1997 and 2008.) So does it matter if some are much, much better off than most?

Economically, Britain was at its most equal ever in either 1968 or 1976, depending on which figures you use. Inequalities have been rising since Thatcher became Prime Minister in 1979. The highest paid 10% received incomes that were eight times higher than the lowest paid 10% in 1985 – by 2008 they were twelve times higher. It is also reported that income inequality has grown faster in the UK than anywhere else. Now, the wealthiest 10% receive 40% of total UK income, while the poorest 10% get 1%. Since 1979, the share of the national income going to wages and salaries has fallen, while the proportion going to profits has risen. If the share had increased at the same rate as national income, incomes in the middle would now be nearly £3,000 higher.

Just before he became Deputy Prime Minister, Nick Clegg lamented that between 1997 and 2007 the wealthiest 20% had seen their post-tax incomes rise so much more than others that they were receiving 7.2 times the incomes of the poorest 20% by the time Tony Blair left office (as opposed to 6.9 times as much when he became Prime Minister). Before he weedled his way into power with Clegg’s help, David Cameron commented on ‘The Spirit Level’, a book by Richard Wilkinson and Kate Pickett. He said it showed "that among the richest countries, it's the more unequal ones that do worse according to almost every quality-of-life indicator". That implied that he thinks inequality does matter, but much of what his vicious government has done has only made things more unequal.

The 2011 statistics from the Institute of Fiscal Studies (IFS) suggested that inequalities were increasing substantially again and in a far shorter period of time, not least because incomes at the bottom are now falling in real terms. An IFS report in September 2011 revealed that the least well off 20% of British households will lose 6% of their income per year between 2011 and 2014 due to government cuts. The charity ‘Save The Children’, best known for helping some of the world's poorest families, has now launched an appeal to help UK children. The charity says the UK's poorest children are bearing the brunt of the austerity measures, with some missing out on regular hot meals or new shoes. IFS figures estimate that there are 3.5 million children living in poverty in the UK and predict a steep rise in the numbers in coming years.

Meanwhile, the 1,000 richest people in Britain saw their average personal wealth rise from £336 million each in 2010 to £369 million by 2011, and then to £414 million by 2012. In 2010/11, the incomes of the chief executives of the largest 100 companies in the UK increased by nearly 50%, while the average pay rise in the private sector was just 2.7%. Because prices increased by 5.2%, most private sector workers actually became poorer and pay freezes meant that many public sector workers did even worse. Author and commentator Owen Jones has written: “The coalition’s mantra that ‘we’re all in this together’ has shifted between the ludicrous and the offensive ever since it came to power: while the average Briton faces the most protracted squeeze in living standards since the 1920s, the Sunday Times Rich List reveals an ever-booming elite.”

The only countries (for which there are comparable statistics) in which the richest 1% ‘earn’ more than in Britain are Argentina, Singapore, South Africa and the USA. In Finland, France, Japan, New Zealand, Norway and Spain the richest 1% earn only nine times average earnings (or less) – in Switzerland only 7.8 times; in Sweden 6.7 times; and in the Netherlands only 5.4 times the average income. As Professor Danny Dorling says: “The Swiss have bankers, the Swedes industrialists, and the Dutch host multinational companies; they all just don’t tolerate such excess.”

Admittedly it’s in a different economic climate, but Ed Miliband clearly isn’t so “relaxed” as Mandelson was about the filthy rich. In September 2010, in his first major speech as Labour leader, Ed said: "I do believe this country is too unequal and the gap between rich and poor doesn't just harm the poor, it harms us all." Greater inequality does matter. Owen Jones argues that inequality weakens social cohesion and a sense of community, and produces more crime and violence. He quotes the example of the riots of August 2011, pointing out that London is one of the most unequal cities on earth, where the richest 10% receive 273 times more than the poorest 10%.

It’s ironic that greater inequality, which right-wing policies always cause, increases the need for big government, which right-wing politicians so detest. Inequality creates the need for more police, more prisons and more health and social services of every kind. (The USA imprisons people at fourteen times the rate of Japan, the UK some five times.) Most of these services are expensive and only very partially effective.

Most companies produce goods or services for the general public, such as houses, clothes, household goods, foodstuffs and insurance. When wealth is concentrated in the hands of fewer people, demand falls; the rich might buy luxury goods, but not enough of the things that most companies offer. Increasing inequality means that many can no longer afford to consume, or can only do so by getting into too much debt, as in the USA subprime mortgage crisis that sparked off the global crunch. Borrowing works for a while, but not for ever. Where no one can borrow any more money, goods and services cannot be sold, factories and businesses close, jobs are lost, and the world goes into recession.

Professor Dorling sums up: “Pay restraint at the top saves more money than any programme of government cuts to public sector jobs can ever achieve. Pay and benefit increases at the bottom are the most efficient means of increasing consumer demand. It was redistribution of wealth which changed this country from thirties misery to swinging sixties.”

Sources used:-

http://www.newstatesman.com/society/2010/11/inequality-social-health-essay

http://classonline.org.uk/docs/Why_Inequality_Matters.pdf

http://www.bbc.co.uk/news/education-19478083

http://www.newleftproject.org/index.php/site/article_comments/rack_of_inequality








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Re: Does inequality matter?

Post by Phil Hornby on Sat Feb 25, 2017 8:50 pm

I am talking about eateries which are far from those frequented by the rich - these folk are people who have simply a healthy income based upon a good occupational or private pension ( and further supported by savings) which they could afford to fund and which future generations will not be able to afford at anything like the same level.

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Re: Does inequality matter?

Post by oftenwrong on Sat Feb 25, 2017 11:23 pm

Phil Hornby wrote:I am talking about .... people who have simply a healthy income based upon a good occupational or private pension ( and further supported by savings) which they could afford to fund and which future generations will not be able to afford at anything like the same level.

The timeline relevant to such observations as the above begins of course in 2008, when Bank Rate had dropped from 5.75% the previous year down to 2% and reached a record low of 0.5% in the following year; where it remained until recently but is now a quarter of one percent.

For the comfortable classes that meant that they could no longer live adequately on the interest earned by their savings. Treasury policy has consistently encouraged people to support the national economy by spending their savings. Sometimes referred to as "eating the seed-corn", it means that pensioners' reserves may well run out before they do. By which stage many will have to "spend the kids' inheritance" to stay alive.



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Re: Does inequality matter?

Post by Ivan on Sat Feb 25, 2017 11:24 pm

Capitalism periodically destroys itself when inequality becomes so great that consumers cannot afford to buy goods and services in sufficient quantities to keep the system afloat. Then many of them will get into too much debt and we end up with financial crashes, as in 1929 and 2008.
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Re: Does inequality matter?

Post by Claudine on Sun Feb 26, 2017 3:05 pm

Inequality will always matter to those people with even a semblance of a conscience.

Financial inequality is a permanent requirement for those in power. They seek to oppress and dominate those with little choice but to continue to prop up their lifestyles. Prices for good & services will always rise to stretch the income of those people that need those same goods & services to survive. Keeping the majority of society in subsistence level is their priority because that is what keeps them above that strata, what keeps them wealthy.

Financial inequality is a must for the masses because it works for the wealthy minority.
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Re: Does inequality matter?

Post by oftenwrong on Sun Feb 26, 2017 5:35 pm

Recent research in the USA suggests that Trump is already having an effect on the confidence of investors, who see stock exchange values motoring upwards since his election as President.

So far there has been little discernible improvement in the labour market, but businessmen are talking about expansion, which is positive. What nobody has an answer to however is that for every American citizen registered as unemployed there are two citizens who are neither employed nor looking for employment. That's storing up trouble for the future.
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Re: Does inequality matter?

Post by oftenwrong on Wed Oct 11, 2017 10:58 pm

When America sneezes - the UK has pneumonia!

British business almost inevitably follows the American trend, so changes in business practice arrive here as often as atlantic gales.

The rotation of the globe means that assumptions made elsewhere are seldom questioned here, and those with the power to effect change ensure that only they can make changes.
Accordingly with the onset of AI the ruling classes ensure that the workers are the only ones subject to measurement.

Neat! Let's see whether the Robots will have favourite partners.
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Are the .1% are shooting themselves in the foot by hording.

Post by Greatest I am on Tue Oct 17, 2017 7:26 pm

Are the .1% are shooting themselves in the foot by hording.

Presently, the rich preside over a demographic pyramid that is top shaped and de-stabled.

Ironically, because the rich have put themselves so far from the base, they themselves have become the most unstable part of the pyramid. This is not good for the rich.

Trickle down, an economic concept which is what we all live in, if increased would remedy the stability problem.

With the world below being de-stabilized by the rich, due to their distance from the bottom, and the rich knowing the benefits of stability, would be well advised to lower its demographic position and bring profits to the whole demography.

To the rich, with profits to all being possible, I would ask, what are you waiting for?

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Re: Does inequality matter?

Post by oftenwrong on Tue Oct 17, 2017 7:49 pm

I am constantly frustrated by the American-English spellchecker on this forum which changes every "s" into a "z" but there are more important things to worry about - such as the word "hording" which defies parsing.

Hlep!
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Re: Does inequality matter?

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