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Inequality and the 1%: avarice

This is an extract from Danny Dorling's new book "inequality and the 1%", available from Verso.

Danny Dorling
20 October 2014

When a society becomes as unequal as the UK now is, avarice rises. As inequalities increase, people already at the top become ever more motivated solely by greed. The source of inequality is a failure to control the greedy. Often they feel that they need more money despite all their wealth. They are made to feel that way because status and respect are increasingly measured in purely financial terms. Just over thirty years ago, Neil Kinnock, then Labour Party leader, remarked: ‘If Margaret Thatcher wins on Thursday, I warn you not to be ordinary. I warn you not to be young. I warn you not to fall ill. I warn you not to get old.’ What he did not add, which would have been most prescient, was: ‘I warn you not to reach adulthood alongside Thatcher’s grandchildren. I warn you not to be young then, not to want to study then, not to want a rewarding job then, or to grow old then’. Years after Thatcher’s policies have made the rich so much richer and stripped so much power from the poor Kinnock’s words are no longer a warning but a description. Had he know he could have explained that in more equal societies, there is much less need to be mercenary. When inequality rises, more people become less concerned about how their behaviour impacts on others.

Following the financial crash in the rich world, only six out of thirty OECD countries saw a reduction in market (pre-tax and benefit) income inequalities. Of all OECD countries, it was in Spain that disposable income inequality rose fastest in the first three years after the financial crash.27 Ireland saw the highest increase in market income inequality, but state action resulted in the increase in disposable income inequality being modest (see Figure 1). The greedy used the crash to become richer, to buy assets cheaply, and to make new profits out of others’ impoverishment. But it doesn’t have to be this way. State action resulted in disposable income inequality falling between 2007 and 2010 in another dozen countries, most dramatically in Iceland, reversing the changes in market income inequality. Around the rich world the same shock is being handled very differently from one country to another. The crash tended to increase inequality, but there were large differences in how well various countries succeeded in tempering that increase.

Fig 1: Change in income inequalities in rich countries between 2007 and 2010

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  Source: European Centre for Disease and prevention Control,“Health, Inequalities and the Financial Crisis”, 2013

What is to be done? One option is simply to let things carry on as they are, wait until the average price of property in London doubles to £1 million a house, step back, and eventually watch the greatest bubble in history burst, along with what is left of the credibility of London’s banks and finance sector, which did nothing to stop the new bubble growing – and then hope that a chastened and poorer country becomes more equal again. But that is a giant gamble that might result in a poorer and even more unequal future.

What will it take for those towards the top of the 99 per cent who are losing out, as well as those who are falling out of the 1 per cent, to realise that even many people with healthy lifestyles and relatively well-paid jobs are heading for a fall? Currently they just blame it on bad luck when someone like themselves goes under, but eventually they will realise that it is due to an unsustainable system – especially when they look at the dramatically varying economic fortunes of their children and wider family.

In the world’s most affluent and unequal of countries, those at the top often say that people are poor because there are too many of them, either too many being born or too many immigrating. This is a common refrain of the elite. David Attenborough recently put it more subtly: ‘We are such a densely populated country... The world is only so big. You simply can’t go on increasing forever, so something’s going to stop it. Either we can stop it or the natural world will stop it for us.’ David is wealthy enough to be a member of the 1 per cent, and he was quoted on the BBC Website having said this on the Today Programme. When he says ‘we can stop it’, he may not have a very wide conception of ‘we’. I think we can stop inequality rising, and I know population growth is rapidly slowing; but part of stopping the crises to come will involve confronting the views of many people in David’s economic position.

Research published in Behavioural Ecology finds that elites like the 1 per cent can emerge when a lack of free-flowing information gives a few a growing advantage. The effect of such rising elitism on the group as a whole is doubly harmful. It is not only that less good gets done as the gaps between us are widened, but that ignorance is fostered. Those with power simply know very little about the lives of the majority. They can come to see ‘the masses’ as a seething sea of out-of-control bodies; but, looking up from below, the powerful appear to have very poor vision.

Technically speaking, rising elitism has harmed us all in the past because ‘the loss of efficiency of stratification is due to the lengthened information channels, whereas the additional loss of efficiency in the elite network is due to the information bottleneck emerging between the elite clique and the rest of the group’. The result is a rising culture of entitlement that is damaging to all. Increasingly, the rich feel that they are entitled to as much as they can possibly get away with – that they are entitled to say outrageous things and that no one else is entitled to anything much.

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