Towards a Fairer Society

We live in a pretty good society, relatively speaking. We do not have to worry about food shortages (yet), we are for the time being provided with free education, should we have an accident we have fairly advanced hospitals (the UK is ranked 18^th in the world based on data from 1997), and we do not have to walk the streets with weapons. Meanwhile, technology has made our lives easier and more comfortable. Clothing is not an issue or a chore apart from choosing what to wear. Ok, our consumerism is repugnant and the prevailing current ideology is not what we would prefer. But life has never been easier. At no time in human history have things been this great, even despite current economic problems.

Yet there is one prevalent under-current in this society that is too often put under the rug; the endemic rise in income inequality and its effects.

Income inequality has never been higher in the modern age (since1945). The richest tenth of the population own 31% of income, the poorest half own 23%, with the poorest tenth owning less than 1% of income. In 1979 13.7% of the population lived in poverty, in 2010 it was 22.5% with over 30% of children living in poverty. That is just in Britain, whose rise has been faster than any other Western European nation. Globally the picture is starker.

Before 1979, although the rich were getting richer, the poor were getting richer at a faster pace thus inequality was declining. However, since 1982 there has been an explosion in poverty and inequality; the culprit is the Washington Consensus, Thatcherism and Reaganomics. In 1979 7.5million lived in poverty, of which 1million lived in extreme poverty. By 1997 that figure was 14million with 5million in extreme poverty. New Labour did a lot of good in its time; some figures show that poverty was cut by 49%. But during New Labour the rich gained £365 in weekly income while the poor lost £7. Inequality remained static; it did not go down or at least not a great deal. And now the forecast is gloomy; tax will hit the poor hardest, the poorest tenth are set to lose 8% of their net income while the wealthiest tenth will lose 3.2%. Even under Labour’s pre-June 2010 budget there was a disparity of 1.6%. This is part of the neo-liberal mantra of “get the rich to work harder by paying them more, get the poor to work harder by paying them less and taking away their benefits”.

Welfare payments are due to be slashed, but that is only part of the picture. Over nine million adults rely on state benefits as their source of income as of 2009. Two-thirds of welfare goes to pensions, which the government says it will protect (convenient that pensioners are more likely to vote Conservative or at all). That leaves only one-third of the welfare pot to tamper with to meet its Draconian targets, of which only 2% goes towards unemployment benefits. Speaking of getting tough on welfare claimants, £5billion a year is lost on welfare fraud. So it is right for the government to come down on that. But over £45billion a year is lost on tax dodging, yet the government makes Philip Green, who owes £5billion, a government advisor.  

This view of taxation is epitomised by the attitude towards the EU’s Financial Transaction Tax, a variant of the popular Tobin Tax. A tax that, at just 0.1%, would raise £50billion a year. It is opposed because it would disadvantage British and also European business. That logically leads to a conclusion that there can be no global market without global standards; Europe is being punished for implementing the minimum wage and protecting workers dignity. And now some economists from the city want a tax cut from the 50p top up rate. Boardroom pay of large corporations have risen in successive years by 16% (2003-2004), 13%, 28% and 37% (2006-2007) when inflation was just 2%. The ILO has concluded that there is no correlation between executive pay and performance. This is while some people in Britain, one of the richest five countries in the world, has over a fifth of the population in poverty.

The poor use state services more than the rich; the rich can afford private health, private schools and can afford a private pension. They do not need state pay-offs to live. Yet it would cost the poorest tenth 30% of their income to replace the services lost to them, with an average of 10%, and the richest tenth just 2%. There is currently a disparity; the number of GPs per person is double in affluent areas due to geographic size. So although the rich do not need state paid doctors, they have double the amount of those who need and use them.

Supporters would argue that Britain has become wealthier since then. While it is true that the GDP in Britain has increased, we have become socially poorer. An extreme example is the Irish Republic; hailed as the model neo-liberal state in the 1990s, before the ship sank Ireland had a higher GDP per capita than the UK. Statistically, the Irish were richer than the British. However, Ireland also had a higher poverty rate than the UK. Despite higher GDP per capita, British hospitals were rated better than Irish ones (and considerably better than US ones by 19 places). Wealth is pointless if it not spent right and redistributed effectively. What the country gained economically, we lost socially and morally.

The effects of income inequality go beyond economic wellbeing. The most striking is the effects on health. There is a direct correlation between life expectancy and relative wealth; a perfect correlation. The wealthiest tenth have a life expectancy of 79, the poorest of just 66. The average is 74. There are places in Glasgow where just crossing the street would increase life expectancy by ten years. More equal societies have less crime, better educational standards, better health both physical and mental, recycle more, have tighter communities – basically everything good increases in an equal society (except, strangely, suicide). These are not just statements; they are statistics too numerous to list here but I direct you to The Spirit Level: Why More Equal Societies Almost Always Do Better by Richard Wilkinson and Kate Pickett. There’s at least three copies in the library – so there’s no excuse not to read it.

Inequality and poverty are what the Labour party was created to fight. To create a fairer, freer and safer society we need a radical reforming plan, but not a revolution. We should fully support a Financial Transaction Tax, pursue a policy of free trade and fair trade, an ‘ethical tax’ against companies that do not pay the British minimum wage to overseas workers, a European tax and tariff on non-European good with a concomitant re-industrialisation of Europe, and a refocus of economic policy towards employment. Fighting inequality needs to be more than just policy, it needs to be the foundation of all policy. It is not impossible to overcome.

Until we tackle income inequality, a better society will remain an illusion. Until we end this endemic cycle, this sickness in our society, we have no right to play politics. Until we collectively acknowledge these statistics, until we recognise the social reality, until we put them forth and press this issue to those who have the power to change things – politicians, the media, corporations, until then no idealised society can come to fruition.

I don’t want to sound Biblical, but “the love of money is a root of all kinds of evil, and in their eagerness to be rich some have wandered away from the faith”. That “faith” need not be Christian or even socialist, but simple common decency and responsibility.