Inclusive prosperity must mean pain for the 1 per cent. But no politician is brave enough

The interests of the banker and his cleaner are worlds apart

The shadow chancellor Ed Balls will today speak at the UK launch of a report by the Commission on Inclusive Prosperity.

The report, co-chaired by Balls and former US treasury secretary Larry Summers, sets out four global challenges caused by what is referred to as the ‘changing economic environment’.

This coincides with a call for a ‘better economic model’.

As Balls and Summers put it:

“Democracy must serve this common good, the cause of social justice and the aspirations of parents for their children. For democracies to thrive, rising prosperity must be within reach of all of our citizens.”

One concern is the relative timidity of the proposed solutions contained in the report, which are big on platitudes and low on specifics. The document also smacks of yet another utopian call for an unholy alliance between the haves and have nots, betraying an unwillingness to take on the powerful vested interests that aren’t particularly enamoured with the idea of making capitalism more ‘inclusive’ – at least not if it impacts negatively on their own dividends.

That aside, at least there is at last some public recognition of the inequities of the post-crash economic settlement. And inequities there are: so much so that calls for ‘inclusive prosperity’ don’t quite cut it.

Increasing global and national inequality

A new study published today by Oxfam has found that, on current trends, by next year just 1 per cent of the world’s population will own as much as the other 99 per cent combined. The charity’s research found that the share of the world’s wealth owned by the richest 1 per cent has increased from 44 per cent in 2009 to 48 per cent in 2014. Meanwhile the least well-off 80 per cent currently own just 5.5 per cent.

Even the institutions most associated with neo-liberalism recognise the problem: last year the World Bank issued guidance stating that without a great reduction in inequality no amount of economic growth would reduce poverty.

This mirrors the trend in this country. The top 1 per cent in Britain last secured a share of national income as large as they do today back in 1937. Meanwhile, since the 2008 financial crash there has been a 20 per cent rise in the share of all households living below the generally accepted minimal standard of living.

You know that thing activists say about us “not really being all in it together”? Well, it isn’t just a cliché.

Declining social mobility

“In every single sphere of British influence, the upper echelons of power…are held overwhelmingly by the privately educated or the affluent middle class.”

Those aren’t the words of Dennis Skinner or Fidel Castro; they fell from the mouth of former Conservative prime minister John Major – hardly a tribune of the lower orders.

He’s right though; at the top of British society in 2015 cut-glass accents and fatuous self-confidence are increasingly ubiquitous. Just 7 per cent of Britons are privately educated, yet, according to a government report published in August, 33 per cent of MPs, 71 per cent of senior judges and 44 per cent of people on the Sunday Times Rich List went to fee-paying schools.

By accepting large inequalities of wealth, Western politicians have willingly acquiesced in the decline of social mobility. Vastly unequal outcome render all notions of “equality of opportunity” redundant.

Nowhere to live

In 2013 house prices in London increased by more than £50,000 for an average flat or house; the average property now costs around £450,000. While young people find it increasingly hard to get on the ‘housing ladder’, landlords are raking it in: a property millionaire is now created every seven minutes in Britain, mainly in London.

As landlords and foreign buyers snap up the best real estate, those quant people who cling to the notion of housing as a place to live – rather than as part of a ‘portfolio’ – are increasingly frozen out.

Rather than creating a property-owning democracy, the free market is gradually turning us into a nation of renters. This should probably worry conservatives as much as the left; the appeal of socialism to those living precariously and with few assets ought to be obvious.

Job insecurity

British workers are feeling less secure at work now than at any time in the last 20 years, according to a 2013 survey of employees’ well-being. This is a reflection of the fact that many of the jobs created post-recession are more precarious than those which existed before the financial crash. Part-time work is at a record high and, according to figures out today, 100,000 people have had to take on second jobs since 2010 to make ends meet.

In this context, the much-vaunted notion of worker ‘flexibility’ tends to mean flexibility in the interests of the employer, with full-time work increasingly scarce and a proliferation of zero-hours contracts, which reached 1.4 million last year.

As a consequence of our changing economy, young people are now more likely to be living in poverty than pensioners. This isn’t, as some would suggest, because pensioner entitlements are ‘too generous’; rather it is because part-time and low-paid work, coupled with soring rents, are driving more young people into penury.

 

And so as should be obvious by now, platitudes won’t be enough; what’s needed is an unashamedly social democratic approach which recognises that the interests of the banker and his cleaner are worlds apart. Inclusive Prosperity is a good start; but if it is to mean aything then it has to mean that some financial pain is experienced by the 1 per cent.

Until that point is grasped and articulated, don’t expect real change any time soon. The real question is whether our politicians – let alone Ed Balls and Larry Summers – are brave enough.

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

26 Responses to “Inclusive prosperity must mean pain for the 1 per cent. But no politician is brave enough”

  1. LB

    You’ve taken 100% of poor people’s pension contributions and spent the lot.

    You’re an anti capitalist.

    Stop winging about the poor. They have no capital. You’ve achieved your aim.

  2. swat

    If the politicians are cowards and afraid to take on the 1% then it means that the 99% may have to take matters in their own hands. That means a revolution, something Britain has been immune from wheaeras the rest of the World has gone though the throes of, and probably done them a lot of good.

  3. TN

    Social mobility is a myth of a bygone era. It was just a way to expand the middle class in previous decades when there was a demand for it. That was then closed off.

  4. MattS

    “No politician is brave enough”? The Greens are making a wealth tax on the top 1% central to their election strategy, as Natalie Bennett regularly points out.

  5. madasafish

    at the top of British society in 2015 cut-glass accents and fatuous self-confidence are increasingly ubiquitous

    Mike Ashley – ranked 15th in the British Wealthy List – has no cut-glass accent and is a self made millionaire. Sorry Billionaire.

    Perhaps James Bloodworth will explain how he fits into his ode to envy?

  6. Guest

    So you’re trying to use anecdote to disprove statistics.

  7. Guest

    You’re confusing yourself and other people again.

  8. Leon Wolfeson

    I disagree. We’ve seen a revolution – the one the Tories have pushed through.
    Expecting a second revolution to fix things is about as likely as a second hurricane putting the roof back onto the house,

    Revolutions are terrible, terrible things.
    We should look to good, old fashioned values instead. Like, er, those of Labour in 1945.

  9. Leon Wolfeson

    And also raising energy prices so much that the poor will become poorer even with a basic income. So…right.

  10. blarg1987

    The other way is that the 99% vote more, and push the political consensus towards the middle over a couple of elections.

  11. madasafish

    No I am not and it’s obvious I am not.

    I am just pointing out that a class based approach conflicts with reality…The reality being a self made billionaire who does not talk with a cut class accent.

    But you want to snipe irrespective of content.. because you have nothing positive to say. As usual.

  12. derekemery

    Financialization has been the major cause of inequality since 1980 http://www.washingtonsblog.com/2014/03/whats-primary-cause-wealth-inequality-financialization.html

    Rising economic inequality was a major cause of the financial crisis. This is the conclusion of an emerging body of research into the links between inequality and the growth in scale and influence of the financial sector http://www.neweconomics.org/publications/entry/inequality-and-financialisation

    The graph shows that pre-tax income share for the 1% is ever rising. Since 2008 around 95% of new wealth has gone to the 1% http://money.cnn.com/2013/09/15/news/economy/income-inequality-obama/

    The process is not slowing down. The TPP offers new opportunities for the 1% to further increase their share http://www.salon.com/2015/01/07/robert_reich_the_trans_pacific_partnership_is_a_disaster_in_the_making_partner/

    The TTIP will involve the same US so the results will be the same i.e. increasing inequality to drive up the share for the 1%.

    Most decisions are not even at UK level so the UK is just a pawn in the game.

    Politicians are acolytes to big business but big business is the driving force for increased inequality.
    See http://www.forbes.com/sites/stevedenning/2014/10/29/the-surprising-truth-about-where-new-jobs-come-from/
    “Our economy grows when businesses and entrepreneurs create good-paying jobs here in an America where workers and families are empowered to build from the bottom up and the middle out—not when we hand out tax breaks for corporations that outsource jobs or stash their profits overseas.”
    It’s SMEs that generate the new jobs not the big companies that politicians are enamoured with

  13. Cole

    He’s on about thise pensiins again. Who knows what he’s talking about?

  14. Cole

    Quite a lot of these rich folk inherited their wealth – and many who didn’t came from priveleged backgrounds. No-one is seriously suggesting entrepreneurs shouldn’t be rewarded hadsomely, just that they pay a reasonable rate of tax. As for corporate bureaucrats – bankers, many CEOs – they’re clearly grossly overpaid, and ‘market’ has clearly failed.

  15. treborc1

    Colder maybe poorer well maybe, but if Ball’s and his party have anything to say it will be the hard working that gain the rest of us well we will be lucky to get the scarps off the top table.

    His speech if you can call it with Miliband last week spoke about working people not working class we are lucky they did not say hard working, pensioners or anyone who is not working are not on labour agenda these days.

  16. treborc1

    Well yes but the NHS came in during 1948 Labour went out of power in 1951, and did not get back in for a long time, so who revolution was it..

  17. robertcp

    This is the best article that James has ever written. I used to wonder what was the point of left-wing parties when they had acheived everthing that was needed for a fair society. Nobody in their right mind would think that now. Unashamed social democracy is what we need!

  18. It's the Greens, dummy.

    Somebody seems to have missed the news about the new third largest party in the country….

  19. It's the Greens, dummy.

    You seem to have missed the point of what a basic income is….it pays for those basics, like heating your home, whatever the cost is. Not to mention that with the estimated £12billion fossil fuel subsidies gone, and newly-insulted houses, there won’t be a need for as much energy and there will be a hell of a lot more money to pay for it. Then again, with 60% of Europe’s renewables potential in the UK, plus an estimated million jobs in a the potential renewables sector, we could say sod the insulation and still afford it.

  20. Leon Wolfeson

    No, I get it entirely. The problem is that the Green’s basic income, as has been admitted to me, would NOT be nearly sufficient to pay for housing and utilities under the Greens.

    Then you assume savings, and that every house will be insulated, etc.

    Then you make nonsense noises about % of renewables, and sod the poor, as you charge an order of magnitude or more for energy and the poor sit in the dark and cold.

    In reality, of course, we already have grossly excessive subsidies for renewables, which don’t take into account actual generation, and need to be building new nuclear plants (rather than coal and gas, or ****ing the poor)

    Then let’s have a basic income which actually cover’s people basic needs, rather than a third of the projected energy bill alone.

  21. Leon Wolfeson

    Cameron’s. He’s changed things around to blame the poor for everything.

  22. Leon Wolfeson

    And you find me supporting Labour *when* precisely?

  23. Guest

    So you’re claiming your post doesn’t exist, as you use your class-based snobbery to try and prove it doesn’t exist.

    I’m not the one here who loves snipers and blood, but keep saying that not loving death and hating the poor means I’m not “positive”. I’m not your kind of hater, rather, and I support Britain against your leeching.

    Pay tax.

  24. Guest

    Killing off the workers, it’s darn plain – they’re the assets he objects to!

  25. Leon Wolfeson

    Now now. Capitalism ain’t the market, as much as capitalists like to make it out so. The Nordics for example have far, far freer markets than we do…

  26. JHM125

    It’s quite a basic approach to lay blame for the UK becoming increasingly a nation of renters on the ‘market’. What is driving the supply and demand dynamics in London? Though it’s more complicated than this, the supply is largely fixed, due to the green belt, planning restrictions and only slowly improving transport links. It is dramatically increased demand that has pushed prices up.

    The feeling of job insecurity may well be a reflection of the type of a job that has become increasingly prevalent. But why are these low skilled jobs paying so little that it is necessary to work a second job at the same time? Again one could make a supply and demand argument; having contracted, demand is now returning to previous levels, supply of workers for this type of job has increased.

    Both issues of house prices and job insecurity are very legitimate concerns facing people in the UK today. One way of looking at this is through the lens of ‘not enough social democracy’. But this is not a particularly effective argument as it does not explain why events have taken their course, and it provides no obvious answers to the issues.

    I find it interesting and potentially concerning that UKIP also worries about these same issues, but they point to the large numbers of immigrants to the UK. They are also blaming the ‘market’ indirectly, but they can immediately explain (rightly or wrongly) why demand has increased for house prices (i.e. more people seeking accommodation) and why low skilled jobs have become more insecure (i.e. more competition from the ‘hard working East Europeans willing to work for less’).

    The left need to do better in articulating why things have happened, and real steps to changing things, or they risk losing votes and attention to others who do it better.

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