Let’s Talk About Inequality (Galleon Piece)

Adding to my piece on Inequality and Poverty I attach a piece I have previously written for the Galleon , if you wish to view the rest of the Galleon content I have written you can view them all. Here

I have written a piece here for my blog on the topic of Inequality that also linked to my pieces on Food and Fuel poverty and more. You can view that piece. Here

The Office of National Statistics last year found that the richest 1% of the UK had as much wealth as the poorest 55%. Oxfam calculated that five families controlled the same level of wealth as 13 million people, and yesterday stated that the 85 richest people globally own the same wealth as 3.5 billion of the poorest. There are billions lost in tax revenue that could be spent on people, siphoned away through corruption or lost via schemes designed to hide money, then of course there are the off-shore tax havens which are all about privacy.

This gap between the have and have nots, the rich and the poor has been fought for years. Yet while there have always been fighters against inequality, it has always been considered an issue and rarely has it been so wide. Though more recently there has been a book published by French Economist Thomas Piketty titled Capital in the 21st Century. The book tackles not just the level of absolute poverty, but also the level of relative poverty throughout the various countries that the research had covered.

There has been many people trying to work out why this book has had such success, yet for me it seems obvious. It seems obvious because it was produced at a time when those in need of basics such as food and houses have increased rapidly. For example, a figure out last year stated over 330,000 children used a food bank between April 2013 and April 2014, and almost double that for adults. On top of the lack of food, there were, according to leading UK homeless charity ‘Shelter’, 90,000 children homeless this past Christmas.

At times inequality seemed to fall during the post-war years, as there was a strong rate of growth, the formation of and a growing use of the social security system, an expansion of public services and progressive taxation. Despite all of these now largely being accepted across much of Europe, the issue is that none are or have been enough to turn the tide and make society bridge the gap, curb or shrink inequality. The gap between the growth rate, the growth of average income and the return on wealth is leading to a higher and higher level of inequality. The choice is at what level is it considered acceptable in a modern society and we need to seriously look at making sure that growth means growth in the welfare of the majority of people’s incomes.

Piketty’s theory states that high growth rates mitigate the level at which inequality grows and this coupled with other policies has previously curbed the level of inequality that grows when the return on wealth is higher than the GDP growth rate. With the amount of research put into this, it gives a clear example of the level of inequality and an insight into what causes it. The theory gives a pretty damning insight into why the trickle down model seems to be going nowhere. This gives ammunition to what many people have been saying for a long time, the level of inequality matters and governments are not powerless to tackle it.

Growth has been, for many governments over many years, the main aim of policies. I am not going to argue that there has been fairly consistent growth over the years, though it has not always benefited the majority of the people that make up the economy. In the past five years, despite the presence of growth, wages have not been growing by anywhere near the same rate. It is not just the difference in growth and wage growth that is an issue either, but factors that also make a difference to well-being, such as spending on services has also been falling and most ‘social security’ payments have been frozen or capped.

The squeeze on peoples incomes has had quite a considerable effect on people’s well-being, though thankfully inflation has not been that high. The commuters, many of which are students, have seen bus prices increase by nearly 25% and train prices increase by 20% too, this on top of the trebling of tuition fees and the withdrawal of EMA for college students.

Putting aside the contention about proposed policies and leaving aside any of my own, there is room for policies from governments individually or collectively to turn the tide. It is important that people realise there is power, that the state and markets can make a difference. Piketty states that economies and the level of inequality cannot be made by technocrats, politicians or economists but by ordinary people. So I put this to you, what is the equitable level of economic equality and if you wanted to curb inequality, how?

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