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.
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
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