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Inequality and the 1%

By Danny Dorling

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The most important problem we are facing now, today … is rising inequality. Robert Shiller, recipient of the 2013 Nobel Prize in Economics

The top 1 per cent contribute to rising inequality, not just by taking more and more, but by suggesting that such greed is justifiable and using their enormous wealth to promote that concept.

In the UK members of the general public are now surer that the gap between rich and poor is unwarranted than ever before recorded, and they are becoming more sure of this with every year that passes.

Since 2008, after the initial shock of the drop in the value of their stock holdings, the rich in both the US and the UK manoeuvred to become much richer.

The British top 1 per cent last secured a share of UK national income as large as they do today back in 1937.

It is because of the growing divide between the 1 per cent and the 99 per cent that those at the bottom of the 1 per cent don’t often look down. A financial chasm is opening up between them and the best-off of the rest – the best-off of the 99 per cent.

We know that it is because of the huge cost of the top 1 per cent that there is more poverty in the UK than in any more equitable rich nation.

Many people are opposed to having a royal family, partly on cost grounds. However, on those grounds they should be looking at the 1 per cent, which is well over a thousand times more expensive in aggregate than all the royals combined.

A majority has begun to believe that the poor have no right to live near the centres of our most expensive cities, and it becomes possible for prime ministers to claim that cutting benefits to the poorest in society is part of some moral mission.

The US, Canada and the UK lead the rich world’s inequality league table. The countries of the rest of Europe and Japan show that the opposite is possible.

What causes the wealth of the superrich to implode? The simple answer is that the price of the rich becomes too high, the bubble grows too large, and eventually there are too few people left with enough assets to service it.

Today one of the most closely comparable countries to the UK in terms of income and taxation inequalities is Russia. But rich Russians still flee to the UK because they are even better off here.

Although we could afford to run 1,100 royal families for the annual income cost of the best-off 1 per cent, we could not afford to have 1,100 royal families as rich in wealth.

Without the support of the upper middle class, it becomes harder for the elite to rule, to secure the election of their favoured politicians, to control public opinion, to remain elite.

Among the top 0.01 per cent are people who fervently believe that inequality is good, that the poor deserve nothing more than to be poor because they do not have it in them to be any better, and that the rich are worth their riches.

So it is time we took a closer look at life at the top and its effects on us all.

The ideology that underlies elitism is imparted in childhood. For the elite, especially in the most unequal countries where the educational systems help to maintain the status quo, other people’s children can be greatly denigrated.

The country where the richest 1 per cent takes the most is also the rich country where sixteen- to twenty-four-year-olds are most likely to be innumerate – the United States of America. England is home to the third-most innumerate cohort of young adults in the rich world.

The easiest way to increase the value of private education is to reduce the quality of state education by simply spending less on it, just as reducing the quality of the NHS increases the benefits of private healthcare without having to do anything in particular to improve private healthcare.

When the top 1 per cent dominates society, as it does in the US and the UK today, it is able to shape what we call education to work more in its favour, to become less about learning and more about ranking. Children are repeatedly tested and channelled towards what they are told is their allotted place along the continuum.

As the divisions within our society grow, the main aim of teachers becomes no longer to educate the child for life, but increasingly just to try to keep their school out of trouble. They must teach children how to pass tests rather than how to learn.

The UK’s education system is beginning to look more like that of the US than like the schools and universities of other countries in Europe. Many American private universities now spend just a sixth of their fee income on teaching. These private providers take more than a fifth of fees in profit, and spend even more on marketing.

Social mobility is lowest where local ‘choice’ in education superficially appears highest. The Manchester local authority of Trafford has the highest level of educational social segregation. This is due to secondary moderns and grammar schools having been retained there, as well as private school provision being high.

Rather than socially preparing children for the wider world, a private education is likely to restrict the breadth and depth of their social contacts later in life.

The country that many educationalists look to for good lessons is Finland, where 99.2 per cent of school education is state funded. In Finland there is no inspection of teachers or league tables.

British children are highly segregated by income right from birth, and through all their school days.

In the UK more money is spent on private education than almost anywhere else on the planet.

When the 1 per cent have held so much sway over our society for so many decades, the effect can be that otherwise sensible people begin to believe that it is fair if the poorest are only given a minimum of resources, and just enough education for their children, so that if one of them should turn out unexpectedly to have ‘potential’, then it can be realised.

As the middle class shrinks, it becomes easier for the rich to argue that they deserve to pass more of their wealth to their children, who, in turn, deserve to receive it.

The idea of progressive improvement generation after generation is now a distant memory.

When the historical abnormality of today’s highest incomes is pointed out some still suggest that its recipients must be worth so much pay – presumably because other people have become relatively worthless.

Huge wage packets do not appear to make them better bosses. Instead, extreme pay means that stranger and more maladjusted people end up becoming selected for the top jobs.

The majority of the population appear to accept that the bankers were out of control, and caused the financial crisis. But the 1 per cent has subsequently behaved as if the 99 per cent are fools, and persuaded the current government to place the blame for Britain’s economic crisis at the door of the previous government’s spending.

Despite the greed of those at the top of the heap, many still find fault first with the unfortunates struggling at the bottom. Young people who cannot find employment typically appear among these innocent targets. Foremost among those casting aspersions on the young is David Cameron.

Until most allowances were cancelled, in 2010, there was an exceptionally high uptake of Educational Maintenance Allowances by those choosing to study rather than claim dole.

Almost all young people would choose work over the dole – almost any work. You have to be completely out of touch not to know this.

For the 2.5 million young adults who are unemployed or underemployed in Britain, the monies required to finance the kinds of jobs they could do are instead being sucked up by a tiny elite of one hundred individuals who cannot possibly need it.

The World Economic Forum, a body of some 700 global experts, ranks growing inequality as the greatest risk to the economic health of the world. Climate change comes second, and the high and rising levels of unemployment third. These experts are no radical leftists.

You cannot wait for those much richer than you to act; and if the disparity between us and them continues to widen, there are many far broader reasons to be concerned than pure self-interest.

In reporting all this in 2013, the master of Hertford College, Oxford, Will Hutton, was forced to conclude: ‘We are governed by charlatans.’ And he asked his readers: ‘Who cares for the condition of Britain or its people?

But too many of today’s 1 per cent have been brought up to think they know what is best for those beneath them. And, like the worst of their Victorian antecedents, some think it helps the poor to have money taken away from them.

Thousands of unemployed people are now compelled to work without pay. The companies employing them are allowed to keep the number of wageless workers toiling for them secret. Even charities, such as the Salvation Army, are involved.

The 1 per cent cannot allow the bottom 10 per cent to be paid decently if they themselves are to remain so disproportionately rich.

By the end of 2013 the richest 300 people in the world held $3.7 trillion, or about $12 billion each, and their collective wealth rose the most in that year – by 16.5 per cent. The idea that they had earned that money is highly questionable.

Inequality continues to grow rapidly. There is perhaps no country where this trend is more pronounced than in the United Kingdom. The wealth of the richest one hundred people in the UK now equates to that of the poorest 30 per cent of all UK households, and that ratio is worsening.

In 2013 a rich British man and his wife bought their seventh house in London – a four-storey, £1.35 million Georgian townhouse – for their twenty-seven-year-old son, Nicky, whose computer games firm and football agency were being dissolved five years after their launch. This would be just another story of the rich buying up more property than they can use if it were not that Nicky’s father was former prime minister Tony Blair.

A whole generation is growing up asking where the money is, why they have to pay to study, and why there are so few good jobs – let alone homes they can afford.

The current government’s actions, typified by George Osborne’s 2014 budget of give-aways for the rich, are designed to increase poverty among the majority.

Britain is a rich country, but it is set to share out what it has ever more unfairly, ensuring that the 1 per cent get even richer.

Some of the world’s leading economists place rising inheritance as the third-most-important factor driving up income inequality, after lower taxes on the rich and the recent lowering of the collective bargaining power of unions.

In the 1970s the average politician represented the interests of the median voter. Researchers have shown that political representation has moved from representing the median voter to representing mainly the views of the 1 per cent.

In other words, the UK parliament’s main function today is not to represent the people, but to preserve the power of a few.

The rich rarely become so through their own efforts – and it is partly because it is not their work that has made them rich that many so carefully orchestrate the defence of their wealth.

Britain in the twenty-first century is a deeply divided nation. Whilst a handful of people at the top have never had it so good, millions of families are struggling to make ends meet. Growing numbers of Britons are turning to charity-run foodbanks, yet at the same time the highest earners in the UK have had the biggest tax cuts of any country in the world. And whilst low-paid workers are seeing their wages stagnate, the super-rich are seeing their pay and bonuses spiral up. Oxfam, 2014

The current ‘quantitative easing’ policies of central banks have had the effect of making the rich richer. The Financial Times has described the policy as ‘designed by the rich for the rich’.

A progressive government would have given more to those who had least – especially since all of the money would then have been spent, rather than hoarded, and might have then boosted demand.

The Bank of England itself has noted that Britain’s richest 5 per cent own almost half of all the assets that have increased most in value due to quantitative easing.

Soon the very rich will know even less about the lives of the rest. But the rest are learning more and more about them, and the harm that comes from their current extremely expensive existence.

Just as the New Scientist was revealing a consensus that inequality was bad for health, the British prime minister announced that he no longer wanted the UK government to assess the effect its policies have on social equality.

The 1 per cent sees the NHS as a river of money coming from the government which can be partially diverted into private healthcare – an historically lucrative source of income for them.

In the US, if you do not have insurance then you do not receive that care. In fact, only the 1 per cent can afford to be seriously ill in the US.

Men who die in Kensington and Chelsea are, on average, fourteen years older than men who die in Glasgow; for women, the gap is twelve years. If the richest are compared to the poorest, the average gaps are far wider.

Growing economic inequality as the richest take more and more for themselves is bad for everyone’s health.

As the bankers take more and more, the old and poor begin to die younger.

Inequalities in income and wealth will rise in future as a result of the student loan system – and when such inequalities rise, inequalities in health follow suit.

Some 1,125 families in the UK hold $100 million or more in assets – far more than in any other country in Europe, despite other countries such as Germany being both more prosperous and more populous.

Unequal political power is the endgame of widening inequality – its most noxious and nefarious consequence.

When money is spread around as poorly as today, the stink of corruption becomes very hard to disguise, and the harm caused to those at the bottom, who are robbed of almost every last penny, becomes palpable. *

Our grandparents’ generation created the National Health Service while ours came up with the National Lottery.

The UK has a very expensive problem that the rest of Europe has managed largely to avoid: an overpaid and underachieving 1 per cent.

These exceptionally highly paid bankers are the people who caused the financial crisis in the UK.

The subsequent Libor scandal dwarfed all previous financial scams in the history of markets. And the UK’s banks are still by far the most indebted in Europe. So much for paying the most to get the best.

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.

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.

It is clear that higher taxation can reduce greed at the top more effectively than any other mechanism.

The alternative is to see the 1 per cent become richer and richer, pollute more, and lecture the rest of us on our behaviour, while they plot ever more elaborate ways of behaving badly.

All of us need to believe more strongly that better outcomes can be achieved – just as feminists, anti-racists and democrats have done in the pdecades, and has appointed a series of close advisors not just from the 1 per cent, but often from his own school; and, hardly surprisingly ast. *

It is up to the rest of us to control these people – for their own good as well as ours.

This stupidity needs to be halted. become relatively worthless. Today a non-violent war of attrition on concentrated wealth is needed

In the UK the prime minister was a member of the 1 per cent by dint of his wealth long before he entered parliament. He presides over a cabinet containing more members of the 1 per cent than has been the case for decades, and has appointed a series of close advisors not just from the 1 per cent, but often from his own school; and, hardly surprisingly he does not explain to his electorate how the business strategies of his friends have impoverished the middle of British society.

Is it any wonder inequalities in the UK continue to rise?

When the elite now in charge hear of a young mother, denied benefits, jumping from a balcony holding her child, some do not shudder.They think this is ‘collateral damage’ in their ‘war on poverty’.